SUNWORKS, INC. Item 8.01. Other Events.
Supplemental Disclosures to the Proxy Statement/Prospectus
As previously announced, onAugust 10, 2020 ,Sunworks, Inc. , aDelaware corporation ("Sunworks"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with The Peck Company Holdings, Inc., aDelaware corporation ("Peck"), andPeck Mercury, Inc. , aDelaware corporation and direct wholly owned subsidiary of Peck ("Merger Sub"), pursuant to which Merger Sub will merge with and intoSunworks , withSunworks continuing as the surviving corporation (the "Merger").
This Current Report on Form 8-K (this "Form 8-K") is being filed to update and supplement the Joint Proxy Statement/Prospectus (the "Joint Proxy Statement/Prospectus") (1) included in the Registration Statement on Amendment No. 1 to Form S-4, File No. 333-249183 (the "Registration Statement"), filed by Peck with theSecurities and Exchange Commission (the "SEC") onOctober 14, 2020 and declared effective by theSEC onOctober 15, 2020 , (2) filed by Peck with theSEC as a prospectus onOctober 15, 2020 , (3) filed bySunworks with theSEC as a definitive proxy statement on Schedule 14A onOctober 15, 2020 , and (4) mailed bySunworks to its stockholders commencing onOctober 15, 2020 . The information contained in this Form 8-K is incorporated by reference into the Joint Proxy Statement/Prospectus. Terms used in this Form 8-K, but not otherwise defined, shall have the meanings ascribed to such terms in the Joint Proxy Statement/Prospectus. Following the announcement of the Merger Agreement and as of the date of this Form 8-K, eight lawsuits have been filed by alleged stockholders ofSunworks challenging the Merger.
Peck,Sunworks and the other named defendants deny that they have violated any laws or breached any duties to Peck's orSunworks' stockholders and believe that these lawsuits are without merit and that no supplemental disclosure is required to the Joint Proxy Statement/Prospectus under any applicable law, rule or regulation. However, solely to eliminate the burden and expense of litigation and to avoid any possible disruption to the Merger that could result from further litigation, Peck andSunworks are providing the supplemental disclosures set forth in this Form 8-K. Nothing in this Form 8-K shall be deemed an admission of the legal necessity or materiality under applicable laws of any of the disclosures set forth herein. If you have not already submitted a proxy for use at theSunworks virtual special meeting, you are urged to do so promptly. This Form 8-K does not affect the validity of any proxy card or voting instructions thatSunworks stockholders may have previously received or delivered. No action is required by anySunworks stockholder who has previously delivered a proxy or voting instructions and who does not wish to revoke or change that proxy or voting instructions. Supplemental Disclosures The following supplemental disclosures should be read in conjunction with the Joint Proxy Statement/Prospectus, which should be read in its entirety. To the extent that information in the supplemental disclosures differs from or updates information contained in the Joint Proxy Statement/Prospectus, the information in the supplemental disclosures shall supersede or supplement the information in the Joint Proxy Statement/Prospectus. Defined terms used but not defined in the supplemental disclosures have the meanings set forth in the Joint Proxy Statement/Prospectus. Paragraph and page references used herein refer to the Joint Proxy Statement/Prospectus before any additions or deletions resulting from the supplemental disclosures. The supplemental disclosures speak only as of the date on which the information contained therein was prepared and provided to the Board of Directors ofSunworks (the "Sunworks Board") in connection with, and at the time of, the Sunworks Board's evaluation of the Merger (including with respect to any forecasts, projections, or other forward-looking statements contained in the supplemental disclosures with respect toSunworks ), and no such information has been updated or otherwise revised to reflect subsequent events since such date. The inclusion of financial projections in the Joint Proxy Statement/Prospectus (the "Projections") should not be regarded as an indication that any ofSunworks or its respective affiliates, advisors or representatives considered such Projections to be predictive of actual future events, and the Projections should not be relied upon as such. The Projections constitute forward-looking statements and no assurances can be given that the assumptions made in preparing such Projections will accurately reflect future conditions. Accordingly, there can be no assurance that the prospective results will be realized or that actual results will not be significantly higher or lower than estimated. None ofSunworks or its respective affiliates, advisors, officers, directors, partners or representatives undertake any obligation to update or otherwise revise or reconcile these Projections to reflect circumstances existing after the date the Projections were generated or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the Projections are shown to be in error, in each case, except as may be required under applicable law.Sunworks advised the recipients of the Projections that its internal financial forecasts upon which the Projections were based are subjective in many respects. While presented with numerical specificity, the Projections were based on numerous variables and assumptions known toSunworks at the time of their preparation. These variables and assumptions are inherently uncertain and many are beyond the control ofSunworks . Unless stated otherwise, the revised text in the supplemental disclosures is underlined to highlight the supplemental information being disclosed.
1. The following disclosure replaces the second and third full paragraphs on
page 17 of the Joint Proxy Statement/Prospectus. The modified text is
underlined below:
Litigation Relating to the Merger (page 161)
On
of Chancery in the
regarding the Merger against each of the members of the Sunworks Board (the
"First Complaint"). On
stockholder of
Sub and each of the members of the Sunworks Board (the "Second Complaint").
On
stockholder of
members of the Sunworks Board (the "Third Complaint"). On
fourth complaint was filed in the
regarding the Merger against
Board (the "Fourth Complaint"). On
filed in the
purported stockholder of
each of the members of the Sunworks Board (the "Fifth Complaint"). On October
22, 2020, a sixth complaint was filed in the
the
regarding the Merger against
members of the Sunworks Board (the "Sixth Complaint"). On
seventh complaint was filed in the
regarding the Merger against
Board (the "Seventh Complaint"). On
filed in the
against
Complaint" and together with the First, Second, Third, Fourth, Fifth, Sixth,
and Seventh Complaints, the "Complaints").
The First and Sixth Complaints contend, among other things, that (i) the
consideration to be paid to
inadequate and (ii) the Registration Statement on Form S-4 filed with the
Commission by Peck on
Proxy Statement/Prospectus (the "Original S-4"), contained materially
incomplete and misleading information regarding the Merger. The First
Complaint further alleges that in facilitating the Merger for the alleged
inadequate consideration and the dissemination of the preliminary Joint Proxy
Statement/Prospectus, each member of the Sunworks Board breached his or her
fiduciary duties. The Second Complaint contends, among other things, that the
Original S-4 omits material information regarding the Merger, rendering it
false and misleading. The Third, Fourth, Fifth, Sixth, Seventh, and Eighth
Complaints contend, among other things, that the definitive proxy statement
on Schedule 14A, filed with the Commission by
(the "Proxy Statement"), omits material information regarding the Merger,
rendering it false and misleading.
Each of the Complaints seeks injunctive relief and an award of plaintiff's
costs, including reasonable attorneys' fees and experts' fees, and other
remedies.
For a more detailed description of litigation in connection with the Merger,
see the section entitled "The Merger-Litigation Relating to the Merger"
beginning on page 161 of this Joint Proxy Statement/Prospectus.
2. The following disclosure replaces the paragraph beginning at the end of page
131 and continuing onto page 132 of the Joint Proxy Statement/Prospectus. The
modified text is underlined below:
Opinion of Sunworks' Financial Advisor
financial advisor in connection with the proposed Merger. HCVT is a
nationally recognized advisory firm which is engaged in the valuation of
businesses and securities in connection with mergers and acquisitions and
valuations for corporate and other purposes.
HCVT's experience in transactions similar to the Merger and its reputation in
the investment community.
engaging HCVT on
conduct a quality of earnings analysis of Peck on
engaged HCVT to render an opinion regarding whether the Exchange Ratio is
fair to the
2020. HCVT had no previous working relationships with
two engagements.
3. The following table replaces the table on page 137 of the Joint Proxy
Statement/Prospectus. The modified text is underlined below:
Market Value Enterprise
Per Share of Equity(3) Value(4) Enterprise Value /
($ in millions) RevenueSelected Public Companies(1) Price(2) ($ in
millions) EBITDA
Backlog
$30.00 $1,463 $2,182
Ameresco, Inc. 2.29x
22.6 x 2.14 x
43.77 685 325
Argan, Inc. 1.20x
NMF 0.25 x
Canadian Solar Inc. 23.77 1,428 2,699
0.85x
5.5 x NA
First Solar, Inc. 65.73 7,013 5,931
1.98x
11.1 x NAGibraltar Industries, Inc. 61.07
1,996 1,899
1.74x
14.1 x 8.71 x
IES Holdings, Inc. 24.10 505 494
NMF
NMF 0.84 xInfrastructure and Energy Alts, Inc. 4.06
91 488
0.30x
4.0 x 0.24 x
Quanta Services, Inc. 42.78 5,988 7,131
0.61x
8.4 x 0.48 x
1.63 78 224
1.65x
18.1 x NA
Solar Integrated Roofing Corp 0.04
13 15
NMF
NMF NA
SPI Energy Co., Ltd. 1.59 88 110
NMF
NMF NASunnova Energy International Inc.* 27.50
2,450 4,316
30.21x
NMF 3.32 x
SunPower Corporation 11.50 2,049 2,739
1.46x
27.3 x 4.81 x
46.40 5,583 9,042Sunrun Inc.*
10.55x
NMF 1.39 x
The Peck Company Holdings, Inc. 4.52
24 32
NMF
NMF 1.08 xVivo Power International PLC 1.87
26 43
NMF
NMF NA
*Outliers excluded from summary data
NA = Not Available; NMF = No Meaningful Figure; projections per analysts' estimates or actuals, if available
Note: On
Note: Ameresco, Inc., Sunnova Energy International, Inc.,Gibralter Industries, Inc. , SunPower Corporation and Vivint Solar Inc. reported Q2'2020 results onAugust 4-5, 2020 , and therefore the figures above reflect actual Q2'2020 results.
1 No company used in this analysis for comparative purposes is identical to
2 Based on closing prices as of
stock + minority interests - cash and cash equivalents.
4. The following table replaces the first table on page 138 of the Joint Proxy
Statement/Prospectus. The modified text is underlined below:
Selected Public Companies Analysis Enterprise Value /
Revenue EBITDA Backlog
High 2.29 x 27.3 x 4.81 x
Mean 1.34 x 13.9 x 1.62 x
Median 1.46 x 12.6 x 1.08 x
Low 0.30 x 4.0 x 0.24 x
5. The following table replaces the second table on page 138 of the Joint Proxy
Statement/Prospectus. The modified text is underlined below:
Market Value Enterprise
Per Share of Equity Value
Price ($ in millions) ($ in millions) Enterprise Value /
Revenue EBITDA BacklogSunworks, Inc. (Implied Multiples)*$ 1.38 $ 23
$ 21 0.39x NMF 0.58x
* Implied multiples based on market capitalization plus net debt as of the most
recent public filing (Q1'2020) relative to non-public actual financials for
the latest twelve months ended Q2'2020.
6. The following disclosure replaces the second to last paragraph on page 138 of
the Joint Proxy Statement/Prospectus. The modified text is underlined below:
Based on the selected public companies analysis performed by HCVT described
above, it derived a range of multiples of 0.20x to 0.25x based on the (i)
enterprise value to projected revenue multiples based on the last 12 months
ended
as of the last reported backlog date, respectively. The derived range of
multiples gives consideration to size, profitability, industry segment,
intellectual property and other factors of comparable companies. Using these
various factors, HCVT concluded that Selected Public Companies with lower
revenue and backlog multiples were more comparable to
Public Companies with higher revenue and backlog multiples. Based on the
foregoing analysis, HCVT derived implied per share reference ranges from its
selected public companies analysis of (x)
the projected revenue multiples and (y)
the latest backlog multiples. The foregoing analysis indicated that the
implied per share consideration range derived by HCVT (as further described
in the Section titled "
than the implied per share reference range indicated by the backlog multiples
of the Selected Public Companies and within the implied per share reference
range indicated by the projected revenue multiples of the Selected Public
Companies.
7. The following table replaces the table on page 139 of the Joint Proxy
Statement/Prospectus. The modified text is underlined below:
Transaction Value(1) /
Announced Target Revenue
Acquiror
EBITDA
Vivint Solar, Inc.* Sunrun Inc.
07/06/2020 (NYSE:VSLR) (NasdaqGS:RUN) 8.05x
(29.9)x
Gruppo Green Power
08/06/2019 S.p.A. (BIT:GGP) Alperia S.p.A. 0.63x
19.7x
Jensyn Acquisition
02/27/2019 The Peck Company, Inc. Corp. (NasdaqCM:JSYN) 1.13x
9.1x
Recomm Co., Ltd.
12/17/2018 Sunden Co., Ltd. (JASDAQ:3323) 0.44x
NA
Gibraltar Industries,
08/23/2018 SolarBOS, Inc. Inc. (NasdaqGS:ROCK) 0.42x
NA
Oaktree Capital
12/04/2017 NAPEC Inc. Management, L.P. 0.74x
9.8x
Voltalia Portugal, Voltalia SA
08/19/2016 S.A. (ENXTPA:VLTSA) 0.06x
4.3x
Tesla Energy Tesla, Inc.
06/21/2016 Operations, Inc.* (NasdaqGS:TSLA) 11.90x
(11.7)x
Commonwealth Dynamics,
5/6/2016(2) Inc. Beroa Corporation LLC 0.12x
NA
Enercare Solutions
03/07/2016 Service Experts LLC Inc. 0.78x
NA
PowerSecure The Southern Company
02/24/2016 International, Inc. (NYSE:SO) 0.96x
18.7x
* Outliers and negative multiples excluded from summary data
NA = Not Available; NMF = No Meaningful Figure; EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization
Note: Transactions study based on announced and completed, controlling interest
acquisitions greater than
Note: Transactions with announcements dates between 2016 and the Opinion Reference Date for which purchase price multiples were available were considered.
Note: Target companies were required to have SIC codes of 15, 16, 36, 49 or 50.
Note: No transaction used in this analysis for comparative purposes is identical to the Merger.
Note: Based on reported metric for the most recent LTM period prior to the announcement of the transaction.
(1) Transaction value refers to the implied enterprise value of target company,
based on the announced transaction equity price and other public information
available at the time of the announcement.
(2) Purchase consideration includes an earnout of $3.9 million .
Sources: Capital IQ, public filings, earnings transcripts, and "heard-on-the-street."
8. The following disclosure replaces the paragraph beginning at the end of page
139 and continuing onto page 140 and the first full paragraph of page 140 of
the Joint Proxy Statement/Prospectus. The modified text is underlined below:
Based on the selected precedent M&A transactions analysis performed by HCVT . . .
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