Item 8.01. Other Events.
Babylon Note Subscription Agreement
As previously announced, on
The material terms of the Note Subscription Agreement are as follows:
The Notes will be constituted on the terms of a deed poll to be issued by
Babylon, which is in agreed form between Babylon and the Note Subscribers (the
"Notes Deed Poll"). The aggregate principal amount of the Notes to be issued is
to be determined by Babylon and confirmed in writing to the Note Subscribers on
or prior to the occurrence of the effective time of the Combination Agreement
and shall not be less than
On the Closing Date, Babylon will issue an aggregate total of 1,757,499 warrants
(the "Warrants") to subscribe for Class A ordinary shares of
The obligation on each Note Subscriber to subscribe for the Notes is conditional
upon: (i) the execution and delivery by Babylon of the Notes Deed Poll and the
Warrant Instrument, (ii) the occurrence of the effective time of the Combination
Agreement, (iii) consent from the investors purchasing Class A Ordinary Shares
pursuant to the Subscription Agreements in connection with the Combination
Agreement, for a total aggregate price of up to
The Note Subscribers may, at any time, waive any of the Conditions Precedent excluding the Condition Precedent that the effective time of the Combination Agreement has occurred, which may only be waived with the prior written consent of Babylon. If on the Closing Date Babylon fails to issue the Notes or the Warrants or fails to fulfil any Conditions Precedent that have not been waived by the Note Subscribers to each Note Subscriber's satisfaction, the Note Subscribers will not be obliged to subscribe for the Notes.
The proceeds from the issue of the Notes will be used by Babylon for general
corporate purposes. Babylon is required to pay to the Note Subscribers an amount
equal to all costs and expenses properly incurred by them in connection with the
negotiation, preparation and execution of the Note Subscription Agreement, Notes
Deed Poll and Warrant Instrument and related documentation up to a maximum
aggregate amount of
Terms of the Notes due 2026
The terms applicable to the Notes (including the Notes Conditions) are set out in the Notes Deed Poll, which will be executed and delivered by Babylon on the Closing Date on the terms and subject to the conditions set out in the Note Subscription Agreement.
As set out in the Note Subscription Agreement, the Notes are to be issued at a
discount issue price of 95.50% of the stated Principal Amount. The Notes will
bear interest accruing on the Principal Amount (which for these purposes shall
include any capitalised interest from time to time) at the following rates: (i)
8.00% per annum for the period commencing from (and including) the date of issue
of the Notes (the "Issue Date") to (but excluding) the date falling two years
after the Issue Date; (ii) 10.00% per annum for the period commencing from (and
including) the date falling two years after the Issue Date, to (but excluding)
the date falling three years after the Issue Date; and (iii) 12.00% per annum
for the period commencing from (and including) the date falling three years
after the Issue Date. The applicable interest rate is subject to a step-up
margin of 6.5 basis points per annum if Babylon and its subsidiaries do not
achieve an agreed target of adding 100,000 Medicaid lives to value based care
contracts by
Interest will be payable on the Notes semi-annually, with the first interest payment expected to fall due in 2022 on the six-month anniversary of the Issue Date. At Babylon's election, up to 50.00% of the interest payable in respect of any interest period may be satisfied by the issuance by Babylon of further Notes to be immediately consolidated and form a single series with the outstanding Notes. The Notes will mature five years from the Issue Date (the "Final Maturity Date"). The exact interest payment dates and the Final Maturity Date will be determined upon the execution of the Notes Deed Poll at, or around, the Closing Date.
The prior written consent of Babylon is required for any transfer of Notes subject to certain exceptions. The Warrants are stapled to the Notes and no transfer of the Notes may occur unless an equivalent proportion of the Warrants is transferred at the same time.
Babylon is required to redeem the Notes (unless previously purchased and cancelled or redeemed) on the Final Maturity Date at 100% of the principal amount on such date. Babylon may redeem the Notes at any time at a redemption amount (the "Redemption Amount") equal to: (i) from (and including) the Issue Date to (but excluding) the date falling one year after the Issue Date, the amount that is the greater of (A) 104.00% of the principal amount (including capitalised interest) and (B) 104.00% of the principal amount (including capitalised interest) plus an interest make whole premium; (ii) from (and including) the date falling one year after the Issue Date to (but excluding) the date falling two years after the Issue Date, 104.00% of the principal amount (including any capitalised interest); and (iii) on or after the date falling two years after the Issue Date and until (but not including or after) the Final Maturity Date, 107.00% of the principal amount (including any capitalised interest). Each holder of Notes (each a "Noteholder") has the option to require Babylon to redeem the Notes held by such Noteholder at the Redemption Amount upon a "change of control" in respect of Babylon as specified in the Notes Deed Poll.
Subject to certain limitations and exceptions, the Notes Deed Poll contains covenants limiting the ability of Babylon and its subsidiaries to, among other things: incur additional debt; pay or declare dividends or distributions on Babylon's share capital; repay or distribute any share premium reserve or redeem, repurchase or retire its share capital; incur or allow to remain outstanding guarantees; make certain joint venture investments; enter into finance or capital lease contracts; create liens on Babylon's or its subsidiaries assets; enter into sale and leaseback transactions; pay management and advisory fees outside the ordinary course of business; acquire a company or any shares or securities or a business or undertaking; merge or consolidate with another company; borrow or receive investments from certain shareholders other than through Babylon; and sell, lease, transfer or otherwise dispose of assets. The Notes Deed Poll also contains customary events of default.
Terms of the Warrants
The terms applicable to the Warrants are set out in the Warrant Instrument, which will be executed and delivered by Babylon on the Closing Date on the terms and subject to the conditions set out in the Note Subscription Agreement.
The Warrants confer the right to subscribe for up to a maximum of 1,757,499 Class A Ordinary Shares exercisable on certain agreed exercise events (summarised below), subject to: (i) Babylon's right to elect to redeem the Warrants in whole or in part in cash upon an exercise event; (ii) an agreed adjustment formula to reduce the number of Class A Ordinary Shares to be issued upon exercise of the Warrants in certain circumstances linked to Babylon's trading performance; and (iii) customary adjustments for certain share capital reorganisations (such as share splits and consolidations).
The exercise events applicable to the Warrants occur: (i) on the first date
following which the closing price of the Class A Ordinary Shares has equalled or
exceeded
Upon any exercise event Babylon has a right to elect to satisfy the subscription
entitlement in respect of the Warrants by issuing Class A Ordinary Shares, by
making a redemption payment in cash, or by a combination of both (in such
proportions as Babylon may in its absolute discretion determine). The cash
redemption payment per Warrant shall be determined by reference to the closing
price for the Class A Ordinary Shares on such date as is specified in the
Warrant Instrument in respect of each exercise event, provided that if the
closing price is in excess of
Where Babylon elects upon exercise of the Warrants to issue Class A Ordinary
Shares in satisfaction in whole or in part of the subscription entitlement under
the Warrants, Babylon is required to issue one Class A Ordinary Share credited
as fully paid and free from all encumbrances (except as set out in Babylon's
memorandum and articles of association from time to time) per Warrant held,
subject to a proportionate downwards adjustment to the number of Class A
Ordinary Shares to be issued per Warrant where the closing price of the Class A
Ordinary Shares on such date as is specified in the Warrant Instrument in
respect of each exercise event is in excess of
The prior written consent of Babylon is required for any transfer of Warrants subject to certain exceptions. The Warrants are stapled to the Notes and no transfer of the Warrants may occur unless an equivalent proportion of the Notes is transferred at the same time.
The foregoing descriptions of the agreements do not purport to be complete and are qualified in their entirety by the terms and conditions of the actual agreements.
The Special Meeting
As previously reported, the Company has called a special meeting of its
stockholders (the "Special Meeting") for
Additional Information About the Business Combination
In connection with the proposed Business Combination, Babylon filed a
registration statement, as amended, on Form F-4 (File No. 333-257694) (the
"Registration Statement") with the
Participants in the Solicitation
The Company and its directors and executive officers may be deemed participants in the solicitation of proxies from the Company's stockholders with respect to the Business Combination. A list of the names of those directors and executive officers and a description of their interests in the Company is contained in the Registration Statement, and is available free of charge from the sources indicated above.
Babylon and its directors and executive officers may also be deemed to be participants in the solicitation of proxies from the stockholders of the Company in connection with the Business Combination.
Information Concerning Forward-Looking Statements
This Current Report on Form 8-K contains, and certain oral statements made by representatives of Babylon and the Company and their respective affiliates, from time to time may contain, a number of "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or our future financial or operating performance. When used in this Current Report on Form 8-K, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements include, without limitation, information concerning Babylon's or the Company's possible or assumed future results of operations, business strategies, debt levels, competitive position, industry environment, potential growth opportunities, Babylon's and the Company's expectations with respect to the future performance of the combined company, including whether this proposed Business Combination will generate returns for stockholder, the anticipated addressable market for the combined company, the satisfaction of the closing conditions to the Business Combination, and the timing of the transaction.
These forward-looking statements are not guarantees of future performance,
conditions or results, and involve a number of known and unknown risks,
uncertainties, assumptions and other important factors, many of which are
outside Babylon's or the Company's management's control, that could cause actual
results to differ materially from the results discussed in the forward-looking
statements. These risks, uncertainties, assumptions and other important factors
include, but are not limited to: (a) the occurrence of any event, change or
other circumstances that could give rise to the termination of the Merger
Agreement and the proposed Business Combination contemplated thereby; (b) the
inability to complete the proposed Business Combination due to the failure to
obtain approval of the stockholders of the Company or other conditions to
closing in the Merger Agreement; (c) the ability to meet New York Stock Exchange
listing standards following the consummation of the proposed Business
Combination; (d) the failure of investors in the PIPE to fund their commitments
upon the closing of the proposed Business Combination; (e) the risk that the
proposed Business Combination disrupts current plans and operations of Babylon
or its subsidiaries as a result of the announcement and consummation of the
transactions described herein; (f) the ability to recognize the anticipated
benefits of the proposed Business Combination, which may be affected by, among
other things, competition, the ability of the combined company to grow and
manage growth profitably, maintain relationships with customers and suppliers
and retain its management and key employees; (g) costs related to the proposed
Business Combination; (h) changes in applicable laws or regulations, including
legal or regulatory developments (such as the
Babylon and the Company caution that the foregoing list of factors is not exclusive, and caution readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Except as required by law, neither the Company nor Babylon undertakes any obligation to update or revise its forward-looking statements to reflect events or circumstances after the date of this release.
Disclaimer
This report shall not constitute a solicitation of a proxy, consent or authorization with respect to any vote in any jurisdiction in respect of the business combination. This communication shall also not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there by any sale of securities in any states or jurisdictions in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of section 10 of the Securities Act of 1933, as amended, or an exemption therefrom.
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