Horizon Acquisition Corporation II (HZON) to merge with Flexjet (private).
Transaction values combined company at a pro forma enterprise value of $3.1 billion ($2.63 billion equity value).
The transaction is backstopped with up to $300 million common equity capital commitment from Eldridge Industries (an affiliate of Horizon’s sponsor) and Horizon’s sponsor, which consists of $155 million in non-redemption agreements and an up to $145 million redemption back-stop.
Upon the closing of the transaction and assuming the full redemption back-stop is utilized, existing Flexjet shareholders (which includes affiliates of Eldridge Industries who are current investors in Flexjet) are expected to own 89% of the combined company.
A Special meeting is to be held on October 17, 2022 to extend HZON liquidation date from October 22, 2022 to September 30, 2023. If not approved, Horizon will pay Epic (Flexjet parent) the lesser of either the transaction expenses or $1,000,000.
Minimum gross cash condition of $300 million.
Business combination transaction is expected to close in the second quarter of 2023.
SPAC Details:
Unit Structure: 1 Class A ordinary share + 0.33 redeemable Warrant
#Cash in Trust: $526,663,097 (100.3% of Public Offering)
Public Shares Outstanding: 52.50 million
Private Shares Outstanding: 13.125 million
Reported Trust Value/Share: $10.03
Liquidation Date: October 22, 2022 (As on the date of announcement, HZON was seeking extension to September 30, 2023; Succeeded on 10/17/2022 and 17,223,528 shares remain post redemption)
Name of Target: Flexjet
Description of Target: Flexjet, Inc. reaches private jet users through various storefronts that include Flexjet, Sentient Jet, FXAIR, PrivateFly, and Sirio. Focusing on fractional jet ownership and leasing, jet cards, on-demand charter programs, and full aircraft ownership, each storefront has a unique business model and go-to-market strategy. Flexjet’s U.S. fractional aircraft program is the first in the world to be recognized as achieving the Air Charter Safety Foundation’s Industry Audit Standard, is the first and only company to be honored with 22 FAA Diamond Awards for Excellence, upholds an ARG/US Platinum Safety Rating, received a 4AIR Bronze Sustainability Rating and is IS-BAO compliant at Level 2. In Europe, Flexjet is compliant with IS-BAO, is a Wyvern Wingman Certified Operator and holds a 4AIR Silver Sustainability Rating. In 2015, Flexjet introduced Red Label by Flexjet, which features the most modern fleet in the industry, flight crews dedicated to a single aircraft and the LXi Cabin Collection of interiors. To date, Flexjet’s fleet in the U.S. includes the Embraer Phenom 300 and Praetor 500, the Bombardier Challenger 350, and the Gulfstream G450 and G650. Flexjet’s European fleet includes the Embraer Praetor 600 and the Gulfstream G650. Flexjet’s helicopter division sells fractional, lease, and on-demand charter access to its fleet of owned and operated Sikorsky S-76 helicopters serving locations throughout the northeastern United States, United Kingdom and Florida. Flexjet is a member of the Directional Aviation family of companies.
52.50 million shares of Flexjet Class A Common Stock
SPAC Sponsors:
13.125 million shares of Flexjet Class B Common Stock
Substantially all founder shares (received above) converted into warrants & nominal number of shares with a split 50%/50% with Directional Capital LLC (affiliate of Flexjet):
20 million Warrants having exercise price of $10.00
20 million Warrants having exercise price of $15.00
50,000 shares of Flexjet Class A common stock
Shares of Flexjet Class B Common Stock cancelled & exchanged for:
Exercise Price
Split between SPAC Sponsor & Directional Capital LLC
SPAC Sponsor
Directional Capital LLC
20,000,000 Warrants
$10.00
Equal
10,000,000 Warrants
10,000,000 Warrants
20,000,000 Warrants
$15.00
10,000,000 Warrants
10,000,000 Warrants
50,000 shares of Flexjet Class A Common Stock
—
25,000 shares
25,000 shares
Target Existing Shareholders Receive:
$2,326 million of equity consideration (89% of projected equity value)
PIPE / Financing:
None
Redemption Protections:
The transaction is backstopped with an up to $300mm common equity capital commitment from Eldridge Industries (an affiliate of HZON’s sponsor) and HZON’s sponsor:
Up to $145 million backstop arrangements by Eldridge (14.5 million shares at $10/share)
However, the amount of backstop amount shall be reduced if aggregate of backstop amount and PIPE investments (made by any person other than Eldridge) exceeds $275 million.
Backstop commitment fee of 3% (of the actualamount that is funded) will be paid to Eldridge by Flexjet at Closing
Horizon sponsor will execute a non-redemption agreement in respect of its $155 million investment in Horizon’s IPO (29.5% of total IPO Proceeds)
Support Agreement:
Standard voting support
Sponsor has executed a Non-Redemption and Support Agreement & has agreed not to redeem the $155,000,000 of Horizon Class A Stock it currently holds
Lock-up:
Investor
Lock-up Period
SPAC Sponsor & any investment vehicles or funds of Sponsor’s affiliates
3- months post-closing Early Release: If price equals or exceeds $12 per share AND average daily trading volume exceeds 500,000 shares after 30 days of closing
Target Shareholders
Closing Conditions:
Gross Minimum Cash of $300 Million (after redemption but before expenses)
Termination date: September 30, 2023
Other customary closing conditions
Termination:
In case of non-Approval of extension proposal, SPAC will pay Epic lesser of (a) Target companies transaction expenses or (b) $1,000,000
Other standard termination clauses
Advisors:
Target Financial Advisor
Jefferies LLC and Piper Sandler & Co.
SPAC Lead Financial Advisor
Credit Suisse Securities (USA) LLC
SPAC Capital Market Advisor
Deutsche Bank Securities Inc.
SPAC Financial & Capital Market Advisor
RBC Capital Markets, LLC
SPAC Special committee Financial Advisor
Houlihan Lokey Capital, Inc.
Target Legal Advisors
White & Case LLP
SPAC Legal Advisor
Sidley Austin LLP
Legal Advisor for: Credit Suisse Securities (USA) LLCDeutsche Bank Securities Inc. RBC Capital Markets, LLC
