Freedom Acquisition I Corp. (FACT) Merger with Complete Solaria (Private)

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October 5, 2022

  • Freedom Acquisition I Corp. (FACT) to acquire Complete Solaria (Private) in a transaction valuing the combined company at a pro forma enterprise value of $553 million ($888 million of equity value).
  • Complete Solaria shareholders will receive $450 million of equity consideration at $10.00/share (subject to adjustments).
  • Certain investors have agreed to purchase $7 million convertible notes from Complete Solar and the company is further intending to raise $23 million from additional investors before closing.
  • 40% Sponsor shares (*3.45 million shares) will be subject to earnout provision @$20.00 per share (3-years post-closing).
  • Sponsors have agreed to assign up to 1.0 million sponsor shares (or *11.59%) to SPAC Shareholder(s) for agreeing to enter into a Non-Redemption Agreement with respect to at least 7.0 million SPAC Class A Shares. If Freedom fails to execute such agreement and closing Cash in Trust < $70 million, then sponsors shall be required to forfeit sponsor shares subject to adjustments.
  • Minimum gross cash condition of $100 million.
  • The agreement includes bilateral termination fees of $3 million payable under certain circumstances. The defaulting party will be required to pay an additional $1.5 million where termination results from the failure to perform obligations and covenants or where the required shareholder approval was not obtained.
  • The business combination is expected to close in the first half of 2023.
  • SPAC Details:
    • Unit Structure: 1 Class A ordinary share + 0.25 Redeemable Warrant
    • #Cash in Trust: $345,700,519 (100.2% of Public Offering)
    • Public Shares Outstanding: 34.50 million
    • Private Shares Outstanding: 8.625 million
    • Reported Trust Value/Share: $10.02
    • Liquidation Date: March 2, 2023
  • Name of Target: Complete Solaria
  • Target Description: Complete Solaria combines two of the leading residential solar companies in the U.S., Complete Solar and Solaria. The combination of businesses will create a compelling customer offering with best-in-class technology, which is expected to include financing, project fulfilment, and service allowing the combined company to sell more product across more markets and enable a package of financing options for customers wishing to make the switch to a more energy-efficient existence. Complete Solaria is backed by a world- class group of investors, including T.J. Rodgers and certain sponsor shareholders of Freedom.
  • Announced Date: October 3, 2022
  • Expected Close: “First Half of 2023”
  • Press Release: https://www.sec.gov/Archives/edgar/data/1838987/000121390022060992/ea166651ex99-1_freedom1.htm
  • Transaction Terms (https://www.sec.gov/Archives/edgar/data/1838987/000121390022061524/ex99-1_026.jpg):
    • Enterprise Value: $553 million, 1.9x 2023E Revenue  
    • Market Cap Value:  $888 million
    • Target Shareholders Receive (~50.7%):
      • $450 million of equity consideration at $10.00/share (subject to adjustments)
  • PIPE / Financing:
    • Complete Solar:
      • Raised $7 million from convertible notes
      • Expected to raise up to $23 million in convertible notes before merger
  • Redemption Protections:
    • Freedom is required to execute SPAC Shareholder Non- Redemption Agreement before closing:
      • Non-redeeming shares ≥ 7.0 million Class A Shares (or *20.29%)
      • Closing Trust Amount ≥ $70 million
  • Support Agreement:
    • Standard voting support
  • Lock-up:
    • SPAC Sponsor and Key Target Shareholders: 12 months post-closing
      • Early Release: If equal or above $12 per share after 180 days post-closing
  • Closing Conditions:
    • Termination date: March 1, 2023 (September 1, 2023 if extended by Freedom)
    • Completion of Domestication
    • Minimum gross cash condition of $100 million
      • Cash includes:
 Cash in trust
Less:Redemptions
Add:Convertible Note Financing received by Complete Solar
Add:Additional financing received by Freedom (consented by Complete Solar)
Add:PIPE (received at least 30 days before closing)
Less:Freedom transaction expenses in excess of $20 million
  • Consummation of required transaction as per Required Transaction Merger Agreement
  • Other customary closing conditions
  • Termination:
    • Required Transaction not consummated by November 2, 2023 (within 30 days following date of BCA)
    • Non-receipt of fairness opinion by Freedom Board/Special Committee by November 2, 2023
    • Complete Solar’s non-issuance of $10 million (minimum) convertible notes by January 16, 2023
    • Other standard termination clauses
Termination fee payable to Freedom if:Termination fee payable to Complete Solar if:Amount of Payment
(a) There is a breach of representations & warranties, covenants, obligations etc.
(b) Required shareholder approval not obtained
(c) Acquisition proposal made for Complete Solar not withdrawn before termination
(d) Complete Solar executes/completes an alternative transaction within 12 months of termination		(a) There is a breach of representations & warranties, covenants, obligations etc.
(b) Required shareholder approval not obtained
(c) Change of recommendation w.r.t Business Combination
(d) Freedom executes/completes an alternative transaction within 12 months of termination		$3.00 million
Additional payment if the agreement is terminated due to reasons mentioned in (a) or (b) above$1.50 million
  • Advisors:
    • SPAC BOD Advisor (Fairness Opinion): Duff and Phelps
    • Target Legal Advisors: Cooley
    • SPAC Legal Advisors: Paul Hastings LLP
  • Equity Incentive Plan:
    • Initial share pool reserve = 10% of common stock outstanding post-closing
    • Includes an evergreen provision resulting in an automatic increase of 2%

*Denotes estimated figures by CPC

#Reported as on June 30, 2022