Acasta Enterprises raises north of $100 mln in private placement

Acasta Enterprises Inc (TSX: AEF) said it has raised more than $100 million in a private placement in connection with its proposed acquisitions. Last month, Acasta said it will acquire Apollo Health & Beauty Care, JemPak Corp and Stellwagen Finance Co, which together have an estimated enterprise value of about $1.1 billion. The amounts raised include $70 million from new and existing shareholders. Acasta said it also received a proposal for a $160 million credit facility. The Toronto special purpose acquisition corporation (SPAC) is also planning to launch as a private equity firm.

PRESS RELEASE

Acasta Enterprises Inc. Announces Key Shareholder Support and Investor Commitments to Private Placement

Acasta has received support of in excess of $100 million for its private placement from new and existing institutional shareholders, including Founders’ investment of $30 million
Founders’ promote linked to private equity fund and value creation plan
Acasta has received proposal for $160 million financing facility for acquisitions and general corporate purposes

TORONTO, Dec. 13, 2016 /CNW/ – Acasta Enterprises Inc. (TSX: AEF) (“Acasta”) today announced that it is proceeding with its previously disclosed private placement of Class B shares in connection with its qualifying acquisition (“QA”). Based on indications received to date, the private placement will provide at least $100 million of new investment in Acasta at $10.00 per Class B share concurrent with closing of the QA.

The private placement includes indicative commitments of $70 million from certain of Acasta’s largest institutional shareholders and new investors, $7 million from vendors of businesses to be acquired in the QA, and $30 million from Acasta Founders, increasing the Founders’ total investment in Acasta threefold to $45 million. Subject to regulatory approval, Acasta may increase the size of its private placement.

The previously disclosed vendor redemption backstop of $63 million remains in place.

Value Creation Plan

Acasta’s Founders are demonstrating their commitment to Acasta’s success by directly linking the realization of their promote to the private equity strategy and value creation initiative for the consumer products platform. In addition to the previously disclosed condition that 50% of the promote shares (the “Contingent Shares”) will be contingent on Acasta’s share price being $15 (or $18 after 4 years), the followingcontingencies have been added:

half of the Contingent Shares will be contingent on Acasta raising a private equity fund of at least $1 billion within 2 years; and,
the other half of the Contingent Shares will be contingent on Acasta achieving a value realization event for the consumer products platform (as described below) within 2 years.

Immediately after closing of the QA, Acasta intends to commence the raising of its private equity fund and to accelerate the growth and development of its consumer products platform as a standalone business, which may take the form of a sale to Acasta’s private equity fund, a strategic merger with other similar businesses, or a separate public listing of the current platform or resultant combined entity.

Financing Proposal

To underpin its financial strength, Acasta has received a non-binding proposal for a credit facility of over $160 million from a syndicate of Canadian banks for acquisitions and general corporate purposes, and would be in place on closing of the QA.

Shareholders Meeting, ISS Recommendation and Closing

Acasta’s special meeting of shareholders (the “Meeting”) to approve the QA is scheduled for December 20, 2016.

On December 6, 2016, leading shareholder advisory firm Institutional Shareholder Services Inc. (“ISS”) recommended approval of Acasta’s qualifying acquisition alongside its launch as a long-term investment and private equity management firm. ISS noted that “In addition, the acquisitions will enable the company to transform into a long-term investment and private equity management firm, which is expected to generate substantial management fees and carried interests.”

The QA is scheduled to close on January 3, 2017, subject to the satisfaction of certain conditions as set out in the purchase agreements for the three businesses.

The prospectus and the information circular in respect of the Meeting are available under Acasta’s profile on SEDAR at www.sedar.com. Capitalized terms used but not defined herein are as defined in the prospectus.

About Acasta Enterprises Inc.

Acasta is a special purpose acquisition corporation that raised $402.5 million in its initial public offering of Class A restricted voting units of Acasta, in July 2015, with the purpose of effecting a qualifying acquisition. Following the Qualifying Acquisition, Acasta will become a private equity manager and will launch a private equity fund to pursue further market opportunities.

BMO Capital Markets, TD Securities, and Canaccord Genuity Corp. are acting as co-financial advisors, and Goodmans LLP is acting as legal counsel, to Acasta.

For further information: Please Contact: Richard Smith, Chief Operating Officer and Chief Financial Officer, Telephone No.: 647-725-6707

Photo courtesy of Reuters/Mark Blinch