PE-backed QualTek to go public via merger with Roth CH III

QualTek, which is backed by Brightstar Capital Partners, has agreed to go public via a merger with Roth CH Acquisition III, a blank check company.

QualTek, which is backed by Brightstar Capital Partners, has agreed to go public via a merger with Roth CH Acquisition III, a blank check company. When the deal closes, the newly combined company will be renamed QualTek Services Inc and trade on the NASDAQ under the ticker symbol “QTEK.” QualTek is a provider of infrastructure services to the 5G wireless, telecom, and renewable energy sectors across North America.

PRESS RELEASE

BLUE BELL, Pa. & NEWPORT BEACH, Calif.–(BUSINESS WIRE)–BCP QualTek HoldCo, LLC (“QualTek” or the “Company”), a leading turnkey provider of infrastructure services to the 5G wireless, telecom, and renewable energy sectors, and Roth CH Acquisition III Co. (NASDAQ: ROCR) (“Roth CH III” or “ROCR”), a publicly-traded special purpose acquisition company with $115 million in trust, announced today the signing of a definitive agreement for a business combination that will result in QualTek becoming a public company. Upon closing of the transaction, the combined company will be renamed “QualTek Services Inc.” and is expected to remain listed on the NASDAQ under the new ticker symbol “QTEK.”

In connection with the merger announcement, the companies announced the execution of definitive agreements with institutional investors for the sale of a common stock PIPE of $66 million at $10.00 per share. In addition, the companies announced the execution of definitive agreements between institutional investors and QualTek for a private placement of $44 million in convertible notes to be funded immediately. The notes will automatically convert into common stock of ROCR upon the merger close. The proceeds from the private placement will be used for general working capital and acquisitions of previously identified accretive business targets.

Upon closing of the transaction, QualTek’s Founder and CEO Scott Hisey, along with the company’s senior management team, will continue to lead the new public company. Andrew Weinberg, Founder & CEO of Brightstar Capital Partners, will continue to serve as the Chairman of the Board of QualTek. The transaction is expected to close in the third quarter of 2021.

Founded in 2012, QualTek is a world-class, technology driven provider of infrastructure services to the 5G wireless, telecom, and renewable energy sectors across North America. QualTek has a national footprint with more than 80 operation centers across the U.S. and Canada and a workforce of over 5,000 people. The Company will report within two operating segments: Telecommunications, and Renewables and Recovery. Within the Telecommunications segment, QualTek’s Wireless Division provides carriers with real estate, engineering, project management, construction, and maintenance solutions. Its Wireline Division is a turnkey provider of fiber optic infrastructure services, including program management, engineering, permitting, splicing, testing, emergency restoration and maintenance. QualTek’s Renewables and Recovery segment provides specialized fiber optic and electrical services to wind farms, transmission lines, substations, and solar farms.
This transaction with ROCR will transform QualTek into a publicly traded company with expanded access to the capital markets to continue to take advantage of the rapid technology deployment in the telecommunications industry, including 5G wireless technology and future growth in the renewables and infrastructure industries.

QualTek Investment Highlights
QualTek is a proven leader operating in the early stages of a multi-year cycle of capital deployment by companies in the telecom and renewables sectors

The transaction and capital infusion will provide an opportunity for QualTek to execute on and further grow its current $1.7 billion backlog

QualTek is well positioned to take advantage of significant growth expected from future federal / municipal infrastructure spending

QualTek’s technology driven services resonate with its established blue-chip customer base
QualTek has a proven management team with over 200 years of combined experience in the 5G wireless, telecom, renewables, and recovery logistics sectors

Transaction with ROCR provides capital to accelerate organic growth opportunities, de-leverage the balance sheet and fund acquisition and vendor consolidation initiatives
Centralized and leverageable shared services platform allows for significant differentiation as well as attractive scale benefits

QualTek CEO Scott Hisey commented, “This merger positions QualTek to capitalize on the tremendous opportunities in the 5G wireless, telecommunications infrastructure and renewables industries. I am so proud of all that our employees and partners have accomplished in building this great company. We are very excited about the future as we continue to enhance our technology-driven service platform.”

Brightstar Capital Partners Founder & CEO Andrew Weinberg added, “Brightstar Capital Partners is looking forward to participating in QualTek’s next stage of growth as it transforms into a public company. This transaction will allow QualTek to continue providing best-in-class solutions to customers across the growing 5G wireless market and telecommunications infrastructure and renewables industries.”

Partners of Roth Capital and Craig-Hallum, sponsors of Roth CH III, stated, “We are extremely excited to announce our partnership with the QualTek leadership team. QualTek has established itself as a leading, trusted, and reliable provider of critical services across a range of end markets characterized by highly attractive long-term growth dynamics. The company is exceptionally well positioned to benefit from significant infrastructure demand related to both the buildout of 5G telecom networks as well as the secular trends fueling the renewable energy market.”

Transaction Overview
The transaction will be funded by a combination of Roth CH III’s cash held in its trust account (after redemptions by its public stockholders in connection with the closing), an effective full equity roll-over from existing QualTek ownership, and $66 million in proceeds from a common stock PIPE at $10.00 per share. The PIPE transaction is led by institutional investors and will close concurrently with the business combination. In addition, in connection with the transaction, certain institutional investors are also making a $44 million private placement funding into QualTek immediately.

The transaction implies a pro forma enterprise valuation for the combined company of approximately $829 million at closing, which equates to 7.8x projected CY2021 EBITDA of $106 million. The pro forma implied equity value of the combined company is $564 million at $10.00 per share, assuming no redemptions by the public stockholders of ROCR. Following the transaction and after payment of transaction expenses, QualTek is expected to have approximately $207 million of cash – inclusive of the private placement, PIPE, and $115 million of cash held in Roth CH III’s trust account, assuming no redemptions.
The requisite equity holders and board of QualTek, as well as the board of ROCR, have unanimously approved the transaction. The transaction will require the approval of the stockholders of ROCR and is subject to other customary closing conditions. The transaction is expected to close in the third quarter of 2021.

Advisors
Roth Capital Partners, LLC (“Roth”) and Craig-Hallum Capital Group LLC (“Craig Hallum”) are acting as placement agents for the PIPE transaction. Citi and Harris Williams are acting as financial advisors to QualTek. Kirkland & Ellis LLP is acting as legal advisor to QualTek and Loeb & Loeb LLP is acting as legal advisor to Roth CH III.

Webinar
Roth CH III has made available QualTek’s presentation, audio record and transcript with regard to the proposed transaction. To access the presentation, audio record and transcript of the audio record, please visit Roth CH III’s website at: https://www.rothch.com/.

About QualTek
Founded in 2012, QualTek is a world-class, technology driven provider of infrastructure services to the 5G wireless, telecom, and renewable energy sectors across North America. QualTek has a national footprint with more than 80 operation centers across the U.S. and Canada and a workforce of over 5,000 people. The company is also a leader in providing disaster recovery logistics services for electric utilities. For more information, please visit https://www.qualtekservices.com.

About Roth CH Acquisition III Co.
Roth CH Acquisition III Co. is a blank check company incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. Roth CH III is jointly managed by Roth and Craig-Hallum. It priced its initial public offering on March 2, 2021 raising approximately $115 million. For more information, visit https://www.rothch.com.

About Brightstar Capital Partners
Brightstar Capital Partners is a private equity firm focused on partnering with exceptional families, founders, entrepreneurs, and management teams where the firm is ideally positioned to drive value creation. Brightstar employs an operationally intensive approach that leverages its extensive experience and relationship network to help companies reach their full potential. For more information please visit www.brightstarcp.com.