ALDL FINA References in this report (the "Quarterly Report") to "we," "us" or the
"Company"or "Aldel" refer to
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Exchange Act that are not historical facts, and involve
risks and uncertainties that could cause actual results to differ materially
from those expected and projected. All statements, other than statements of
historical fact included in this Form 10-Q including, without limitation,
statements in this "Management's Discussion and Analysis of Financial Condition
and Results of Operations" regarding the Company's financial position, business
strategy and the plans and objectives of management for future operations, are
forward-looking statements. Words such as "expect," "believe," "anticipate,"
"intend," "estimate," "seek" and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect
management's current beliefs, based on information currently available. A number
of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to our final prospectus filed in
connection with our IPO (as defined below), under Cautionary Note Regarding
Forward-Looking Statements and Risk Factors. The Company's securities filings
can be accessed on the EDGAR section of the
Overview
Although the Company is not limited to a particular industry or geographic
region for purposes of consummating a Business Combination, the Company intends
to focus its search for a target business on companies that are exiting the
restructuring process or that have transient current ownership.
As of
Recent Developments
The registration statement for the Company's Initial Public Offering was
declared effective on
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after the completion of Business Combination and 12 months from the closing of the IPO, and will expire five years after the completion of Business Combination or earlier upon Company's liquidation.
Simultaneously with the closing of the IPO, the Company consummated private
placements (the "Private Placements") in which (i)
Each Private Unit consists of one Common Stock and one-half of one
non-redeemable warrant ("Private Unit Warrant"). Each whole Private Unit Warrant
will entitle the holder to purchase one share of Common Stock at an exercise
price of
The OTM Warrants will entitle the holder to purchase one share of Common Stock
at an exercise price of
The Company's Units are listed on the
Following the closing of the IPO on
The Company will provide its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. In connection with a proposed Business Combination, the Company may seek shareholder approval of a Business Combination at a meeting called for such purpose at which shareholders may seek to redeem their shares, regardless of whether they vote for or against the proposed Business Combination.
The Company will proceed with a Business Combination only if the Company has net
tangible assets of at least
If the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company's amended and restated certificate of incorporation will provide that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a "group" (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), will be restricted from seeking redemption rights with respect to 15% or more of the Public Shares without the Company's prior written consent.
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The holders of Public Shares will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (including any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company's warrants.
If a shareholder vote is not required and the Company does not decide to hold a
shareholder vote for business or other legal reasons, the Company will, pursuant
to its amended and restated certificate of incorporation, offer such redemption
pursuant to the tender offer rules of the
The Sponsor, FGSP, officers, directors and advisors (the "Initial Shareholders") have agreed (a) to vote their Founder Shares (as defined below) as well as any common shares underlying the Private Units, and any Public Shares purchased during or after the Offering in favor of a Business Combination, (b) not to propose an amendment to the Company's amended and restated certificate of incorporation with respect to the Company's pre-Business Combination activities prior to the consummation of a Business Combination unless the Company provides dissenting public shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment; (c) not to redeem any shares (including the Founder Shares as well as any common shares underlying the Private Units) into the right to receive cash from the Trust Account in connection with a shareholder vote to approve a Business Combination (or to sell any shares in a tender offer in connection with a Business Combination if the Company does not seek shareholder approval in connection therewith) or a vote to amend the provisions of the amended and restated certificate of incorporation relating to shareholders' rights of pre-Business Combination activity and (d) that the Founder Shares, the Private Units and OTM Warrants (including underlying securities) shall not participate in any liquidating distributions upon winding up if a Business Combination is not consummated. However, the Initial Shareholders will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares purchased during or after the Offering if the Company fails to complete its Business Combination.
The Company will have until 18 months from the closing of the IPO to consummate
a Business Combination (as such period may be extended pursuant to the amended
and restated certificate of incorporation, the "Combination Period"). If the
Company is unable to complete a Business Combination within the Combination
Period, the Company will (i) cease all operations except for the purpose of
winding up, (ii) as promptly as reasonably possible but no more than ten
business days thereafter, redeem 100% of the outstanding Public Shares, at a
per-share price, payable in cash, equal to the aggregate amount then on deposit
in the Trust Account, including interest earned (net of taxes payable and less
interest to pay dissolution expenses up to
The Sponsor has agreed that it will be liable to the Company, if and to the
extent any claims by a vendor for services rendered or products sold to the
Company, or a prospective target business with which the Company has discussed
entering into a transaction agreement, reduce the amounts in the Trust Account
to below
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Business Combination Agreement
On
Under the Business Combination Agreement, Aldel has agreed to acquire all of the
limited liability equity interests (the "Company Equity Interests") of Hagerty
for
At the effective time of the Merger (the "Effective Time"), by virtue of the Merger and without any further action on the part of Aldel, Merger Sub or Hagerty, each Company Equity Interest issued and outstanding immediately prior to the Effective Time shall be canceled and automatically converted into the right to receive: (i) in the case of Markel, the Equity Consideration; and (ii) in the case of HHC, the Mixed Consideration. As of the Effective Time, all Company Equity Interests shall thereafter cease to have any rights with respect thereto, except the right to receive the foregoing consideration. The units of equity interests of Merger Sub (the "Newco Units") that are issued and outstanding immediately prior to the Effective Time will, by virtue of the Merger and without further action on the part of Aldel, be converted into an aggregate number of Units equal to the number of Aldel's Class A common stock and Founder Shares issued and outstanding immediately prior to the Effective Time. Each Founder Share that is issued and outstanding immediately prior to the Effective Time shall be automatically converted into one share of Aldel's Class A common stock. No certificates or scrip representing fractional shares of Aldel's common stock will be issued pursuant to the Merger.
Aldel, Merger Sub and Hagerty have made customary representations, warranties and covenants in the Business Combination Agreement, including, among other things, covenants with respect to the conduct of Aldel and Hagerty prior to the closing of the Business Combination. The parties have also agreed to customary "no shop" obligations. The representations and warranties of Aldel, Merger Sub and Hagerty will not survive the closing of the Merger.
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The closing of the Business Combination is subject to certain customary
conditions of the respective parties, including, among other things, that: (i)
the applicable Aldel stockholder and Hagerty member approvals shall have been
obtained; (ii) there shall have been no Company Material Adverse Effect or Buyer
Material Adverse Effect (each as defined in the Business Combination Agreement)
since the date of the Business Combination Agreement; (iii) the waiting period
(or any extension thereof) applicable under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 shall have expired or terminated; (iv) the Aggregate
Cash Proceeds (as defined in the Business Combination Agreement) after deducting
certain transaction expenses and the repayment of any unpaid or contingent
liabilities of Aldel, including fees associated with Aldel's initial public
offering and operations prior to the date of the Business Combination Agreement,
shall not be less than
In connection with the proposed Business Combination, Aldel entered into
subscription agreements (the "Subscription Agreements") with certain "qualified
institutional buyers" or "accredited investors" as defined in the applicable
The closing of the sale of the
In connection with the Business Combination Agreement,
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through
For the three months ended
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For the nine months ended
Liquidity and Capital Resources
On
Simultaneously with the closing of the IPO, on
For the three months ended
For the nine months ended
In order to finance transaction costs in connection with a Business Combination,
the Sponsor or an affiliate of the Sponsor, or certain of our officers and
directors may, but are not obligated to, loan us funds as may be required
("Working Capital Loans"). As of
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination.
Off-Balance Sheet Arrangement
We have no obligations, assets, or liabilities, which would be considered
off-balance sheet arrangements as of
Contractual Obligations
Registration Rights
Pursuant to a registration rights agreement entered into on
Underwriting Agreement
The Company granted underwriters of the IPO for a period beginning on the closing of the IPO and ending on the later of 24 months after the closing of the IPO and 12 months after the consummation of our Business Combination, a right of first refusal to act as (i) exclusive financial advisor in connection with all of the Company's proposed business combinations for a fee of up to 3.5% of the proceeds of the IPO (subject to the Company's right to allocate up to 50% of such fee to another financial institution), and (ii) sole investment banker, sole book-runner and/or sole placement agent, at underwriters' sole discretion, for each and every future public and private equity and debt offering, including all equity linked financings, during such period for the Company or any successor to it or any of its subsidiaries, on terms agreed to by both the Company and underwriters in good faith.
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Related Party Transactions
Founder Shares
On
The Initial Shareholders have agreed not to transfer, assign or sell any of the
Founder Shares (except to certain permitted transferees) until, with respect to
50% of the Founder Shares, the earlier of (i) twelve months after the date of
the consummation of a Business Combination, or (ii) the date on which the
closing price of the Company's Class A common stock equals or exceeds
Administrative Services Agreement
We entered into an administrative services agreement (the "Administrative
Services Agreement") with the Sponsor on
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in
Basis of presentation
The accompanying financial statements are presented in
Emerging growth company
The Company is an "emerging growth company," as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
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Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company's financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Marketable Securities Held in Trust Account
At
Common stock subject to possible redemption
The Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities from Equity." Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company's control) is classified as temporary equity. At all other times, common stock is classified as stockholders' equity. The Company's common stock features certain redemption rights that are considered to be outside of the Company's control and subject to occurrence of uncertain future events.
Warrant Liabilities
The Company accounts for the 5,750,000 Public Warrants, 257,500 Private Unit
Warrants, 1,300,000 OTM Warrants and 28,750 Underwriter Warrants (described
below) issued in connection with the IPO and the Private Placements in
accordance with the guidance contained in ASC 815-40 "Contracts in Entity's Own
Equity". Such guidance provides that because the warrants do not meet the
criteria for equity treatment thereunder, each warrant must be recorded as a
non-cash liability. Accordingly, the Company classifies each warrant as a
liability at its fair value. This liability is subject to re-measurement at each
balance sheet date. With each such re-measurement, the warrant liability will be
adjusted to fair value, with the change in fair value recognized in the
Company's statement of operations. The Company utilizes a Monte-Carlo simulation
model to value the warrants at each reporting period. The Company recorded
Deferred offering costs
Deferred offering costs consist of underwriting, legal, accounting and other
expenses incurred through the balance sheet date that are directly related to
the IPO and that are charged to shareholders equity upon the completion of the
IPO. Offering costs amounting to
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Combination and with no redemption rights from the Trust Account. Each
Underwriter Unit consists of one share of Class A common stock of the Company,
par value
Income taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740, "Income Taxes," which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 740 prescribes a recognition threshold and a measurement attribute for
the financial statement recognition and measurement of tax positions taken or
expected to be taken in a tax return. For those benefits to be recognized, a tax
position must be more-likely-than-not to be sustained upon examination by taxing
authorities. The Company recognizes accrued interest and penalties related to
unrecognized tax benefits, if any, as income tax expense. There were no
unrecognized tax benefits as of
There was no provision for income taxes for the three months ended
Net loss per share
Net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. In the periods when net losses are incurred, no impact of dilutive securities is included in the calculation of diluted weighted average number of common shares outstanding. The weighted average shares outstanding are adjusted for the common shares subject to possible redemption.
Fair value of financial instruments
The fair value of the Company's assets and liabilities, other than the warrant liabilities described above, which qualify as financial instruments under ASC Topic 820, "Fair Value Measurement and Disclosures," approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature. The Company reported warrants issued at the consummation of its IPO as financial instruments recorded as liabilities at their respective fair values.
Recently issued accounting standard
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company's financial statements.
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