ABC Technologies, a Toronto-based maker of automotive systems and components, has closed its rights offering, generating about C$337 million. The proceeds will be used mostly to fund the company’s acquisition of dlhBowles, a North Canton, Ohio-based maker of engineered plastics and fluid flow solutions, from Morgenthaler Private Equity. Following the rights offering, ABC shareholders Apollo Global Management and Oaktree Capital Management will hold stakes of about 65.2 percent and 28.3 percent, respectively.
ABC Announces Closing of Previously Annnounced Rights Offering
TORONTO, Feb. 15, 2022 /CNW/ – ABC Technologies Holdings Inc. (TSX: ABCT) (“ABC Technologies”, “ABC” or the “Company”), a leading manufacturer and supplier of custom, highly engineered technical plastics and lightweighting innovations to the global automotive industry, today announced the closing of its previously announced rights offering (the “Rights Offering”) and the issuance of 57,790,064 common shares of ABC Technologies (the “Common Shares”) upon the exercise of the rights at a subscription price of C$5.83 per Common Share, for aggregate gross proceeds of approximately C$336.9 million, which are intended to be used to finance the acquisition of dlhBowles, Inc. from MPE Partners, L.P. for approximately US$255 million (the “dlhB Acquisition”), plus the related transaction costs and expenses for the dlhB Acquisition with any remaining proceeds to be used to fund a portion of the purchase price payable by ABC with respect to the acquisition of Karl Etzel GmbH by ABC (the “Karl Etzel Acquisition”).
Further details relating to the dlhB Acquisition, the Rights Offering and the Karl Etzel Acquisition are provided in separate press releases issued by the Company on January 5, 2022, January 12, 2022, and January 21, 2022, respectively.
The following Common Shares were issued in connection with the exercise of rights pursuant to the Rights Offering:
53,239,137 Common Shares were issued pursuant to the basic subscription privilege. Of these, to the knowledge of the Company, 46,788,605 Common Shares were issued to persons who were insiders of ABC prior to the closing of the Rights Offering (the “Closing”), or as a result of the Rights Offering, as a group, and 6,450,532 Common Shares were issued to all other persons, as a group;
4,550,927 Common Shares were issued pursuant to the additional subscription privilege. Of these, to the knowledge of the Company, 4,531,426 Common Shares were issued to persons who were insiders of ABC prior to Closing, or as a result of the Rights Offering, as a group, and 19,501 Common Shares were issued to all other persons, as a group; and
No Common Shares were issued pursuant to the standby purchase agreement dated January 4, 2022 (the “Standby Agreement”) among ABC, AP IX Alpha Holdings (Lux) S.à.r.l, the Company’s controlling shareholder (“AP IX Alpha”) and a fund managed by affiliates of Apollo Global Management, Inc. (together with AP IX Alpha, the “Apollo Funds”), and funds managed directly or indirectly by Oaktree Capital Management, L.P. (“Oaktree”), OCM Luxembourg OPPS XI S.à.r.l. (“OPPS XI”) and OCM Luxembourg OPPS XB S.à.r.l. (“OPPS XB”, and together with OPPS XI, the “Oaktree Funds”, collectively with the Apollo Funds, the “Standby Purchasers”).
No standby fee will be paid to the Standby Purchasers under the Standby Agreement. Immediately following the Closing, 115,580,128 Common Shares were issued and outstanding (on a non-diluted basis).
As of immediately prior to the closing of the Rights Offering, (i) AP IX Alpha held 31,168,685 Common Shares, representing approximately 53.9% of the 57,790,064 issued and outstanding Common Shares on a non-diluted basis, and (ii) the Oaktree Funds held, in the aggregate, 15,607,349 Common Shares, representing approximately 27.0% of the 57,790,064 issued and outstanding Common Shares on a non-diluted basis.
Following the closing of the Rights Offering and the previously announced acquisition of Common Shares by AP IX Alpha from affiliates of Coliseum Capital Management, LLC (the “Private Transaction”) (assuming 10,000,000 Common Shares are acquired pursuant to the Private Transaction), AP IX Alpha will hold an estimated 75,356,835 Common Shares, representing approximately 65.2% of the 115,580,128 issued and outstanding Common Shares on a non-diluted basis. AP IX Alpha paid C$5.83 for each of the estimated 34,188,150 Common Shares acquired pursuant to the Rights Offering, representing estimated aggregate consideration of C$199,316,914.50.
Following the closing of the Rights Offering, the Oaktree Funds hold, in the aggregate, an estimated 32,726,659 Common Shares, representing approximately 28.3% of the 115,580,128 issued and outstanding Common Shares on a non-diluted basis. The Oaktree Funds paid C$5.83 for each of the estimated 17,119,310 Common Shares acquired pursuant to the Rights Offering, representing estimated aggregate consideration of C$99,805,577.30.
The Apollo Funds hold the Common Shares for investment purposes. Subject to compliance with applicable laws, the Apollo Funds or their affiliates may determine to purchase additional Common Shares, or sell all or some of the Common Shares they will hold, either on the open market or in private transactions, depending upon the price of the Common Shares, market conditions, economic conditions and other factors. Apollo may formulate other purposes, plans or proposals regarding the Corporation, any of its subsidiaries or any of their respective securities or may change its intention with respect to any and all matters referred to above.
The Oaktree Funds intend to hold the Common Shares for investment purposes. Subject to compliance with applicable laws, the Oaktree Funds may determine to acquire additional Common Shares or dispose of Common Shares through market transactions, public offerings, private agreement or otherwise, depending upon the price of the Common Shares, market conditions, economic conditions and other factors.
This press release is also being issued pursuant to National Instrument 62-103 –The Early Warning System and Related Take-Over Bid and Insider Reporting Issues (“NI 62-103”) in connection with the Rights Offering and the Private Transaction. The Apollo Funds and the Oaktree Funds will also each file an early warning report pursuant to NI 62-103 with the securities regulators in each of the provinces and territories of Canada with respect to the foregoing matters, a copy of which will be available under the Company’s profile at www.sedar.com. A copy of (i) AP IX Alpha’s early warning report may also be obtained by contacting James Elworth of Apollo Global Management, Inc. at email@example.com, and (ii) the Oaktree Funds’ early warning report may also be obtained by contacting Ivan Grbešić of Stikeman Elliott LLP, on behalf of the Oaktree Funds, at firstname.lastname@example.org.
About ABC Technologies
ABC Technologies is a leading manufacturer and supplier of custom, highly engineered, technical plastics and lightweighting innovations to the North American light vehicle industry, serving more than 25 original equipment manufacturer customers globally through a strategically located footprint. ABC Technologies’ integrated service offering includes manufacturing, design, engineering, material compounding, machine, tooling and equipment building that are supported by an experienced engineering team of approximately 600 skilled professionals and 6,150 employees worldwide. The Company operates in six product groups: HVAC Systems, Interior Systems, Exterior Systems, Fluid Management, Air Induction Systems, and Flexible & Other. ABC Technologies’ head office address is 2 Norelco Drive, Toronto, Ontario, Canada M9L 2X6.
Apollo is a global, high-growth alternative asset manager. In our asset management business, we seek to provide our clients excess return at every point along the risk-reward spectrum from investment grade to private equity with a focus on three business strategies: yield, hybrid, and equity. For more than three decades, our investing expertise across our fully integrated platform has served the financial return needs of our clients and provided businesses with innovative capital solutions for growth. Through Athene, our retirement services business, we specialize in helping clients achieve financial security by providing a suite of retirement savings products and acting as a solutions provider to institutions. Our patient, creative, and knowledgeable approach to investing aligns our clients, businesses we invest in, our employees, and the communities we impact, to expand opportunity and achieve positive outcomes. As of December 31, 2021, Apollo had approximately $498 billion of assets under management. To learn more, please visit www.apollo.com.
Oaktree is a leader among global investment managers specializing in alternative investments, with US$166 billion in assets under management as of December 31, 2021. The firm emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in credit, private equity, real assets and listed equities. The firm has over 1,000 employees and offices in 19 cities worldwide. For additional information, please visit Oaktree’s website at http://www.oaktreecapital.com/.