We are offering 7,500,000 units at an offering price of $10.00 per unit. We
estimate that the net proceeds of this offering together with the funds we will
receive from the sale of the sponsor warrants (all of which will be deposited
into the trust account) will be used as set forth in the following table.
Without With Over-
Over-Allotment Allotment
Option Option
Gross Proceeds
Gross Proceeds from units offered to public (1) $ 75,000,000 $ 86,250,000
Gross proceeds from sponsor warrants offered in
private placement 3,125,000 3,125,000
Gross proceeds from units offered in private
placement 100,000 100,000
Total gross proceeds $ 78,225,000 $ 89,475,000
Offering expenses (2)
Underwriting commissions (2.5% of gross proceeds
from units offered to public, excluding deferred
portion) (3) $ 1,875,000 $ 2,156,250
Legal fees and expenses 250,000 250,000
Printing and engraving expenses 45,000 45,000
Accounting fees and expenses 45,000 45,000
Blue sky filing fees 40,000 40,000
SEC Fees 9,884 9,884
FINRA Fees 9,125 9,125
Roadshow expenses 50,000 50,000
Nasdaq listing and filing fees 80,000 80,000
Miscellaneous 95,991 95,991
Total Offering Expenses (other than underwriting
commissions ) 625,000 625,000
Proceeds after Offering Expenses $ 75,725,000 $ 86,693,750
Held in Trust Account $ 75,100,000 $ 86,068,750
% of public offering price and units offered in
private placement 100.0 % 99.7 %
Not held in Trust $ 625,000 $ 625,000
The following table shows the use of the $625,000 of net proceeds not held in
the trust account and all of the interest earned on our trust account that may
be released to us to cover operating expenses, currently anticipated to be
approximately $150,000. (4)
Use of Net Proceeds not Held in Trust Percentage
Legal, accounting, due diligence, travel, and other
expenses in connection with any Business Combination $ 210,000 27.1 %
Legal and accounting fees related to regulatory
reporting obligations 150,000 19.3 %
Payment for office space, administrative and
support services 210,000 27.1 %
Directors’ and officers’ insurance 100,000 12.9 %
Working capital to cover miscellaneous expenses 105,000 13.6 %
Total $ 775,000 100.0 %
(1) Includes amounts payable to public stockholders who properly redeem their
shares in connection with our consummation of our initial Business
Combination.
(2) A portion of the offering expenses have been paid from the proceeds of a
$100,000 loan from ROIC Acquisition Holdings LP, our sponsor. This loan
will be repaid upon consummation of this offering out of the $625,000 of
offering proceeds that has been allocated for the payment of offering
expenses other than underwriting commissions. In the event that offering
expenses are less than set forth in this table, any such amounts will be
used for post-closing working capital expenses.
(3) The underwriters have agreed to defer $2,250,000 of their underwriting
commissions (or $2,587,500 if the underwriters’ over-allotment option is
exercised in full), which equals 3% of the gross proceeds from the units
offered to the public, until consummation of initial Business Combination.
Upon consummation of our initial Business Combination, $2,250,000, which
constitutes the underwriters’ deferred commissions (or $2,587,500 if the
underwriters’ over-allotment option is exercised in full) will be paid to
the underwriters from the funds held in the trust account, and the
remaining funds will be released to us.
(4) These expenses are estimates only. Our actual expenditures for some or all
of these items may differ from the estimates set forth herein. For
example, we may incur greater legal and accounting expenses than our
current estimates in connection with negotiating and structuring our
initial Business Combination based upon the level of complexity of such
Business Combination. In the event we identify an acquisition target in a
specific industry subject to specific regulations, we may incur additional
expenses associated with legal due diligence and the engagement of special
legal counsel. In addition, our staffing needs may vary and as a result,
we may engage a number of consultants to assist with legal and financial
due diligence. We do not anticipate any change in our intended use of
proceeds, other than fluctuations among the current categories of
allocated expenses, which fluctuations, to the extent they exceed current
estimates for any specific category of expenses, would not be available
for our expenses. Based on the current interest rate environment, we
anticipate that approximately $150,000 will be available to us from
interest income to be earned on the funds held in the trust account. The
interest rate used to calculate the $150,000 of interest was calculated
using an assumed semi-annual interest rate of approximately 0.05% on the
trust account over 21 months.
A total of $75,100,000 (or $86,068,750 if the underwriters’ over-allotment
option is exercised in full) of the net proceeds from this offering and the
sale of the sponsor warrants described in this prospectus, including $2,250,000
(or $2,587,500 if the underwriters’ over-allotment option is exercised in full)
of deferred underwriting commissions, will be placed in a trust account in the
United States with Continental Stock Transfer & Trust Company acting as trustee
and will be invested only in U.S. government treasury bills with a maturity of
180 days or less or in money market funds meeting certain conditions under Rule
2a-7 under the Investment Company Act and that invest solely in U.S.
Treasuries. Except for the interest income that may be released to us to fund
our working capital requirements, as discussed below, and any amounts necessary
to purchase up to 15% of our public shares if we seek stockholder approval of
our Business Combination as will be permitted under the investment management
trust agreement to be entered into between us and Continental Stock Transfer &
Trust Company, none of the funds held in the trust account will be released
from the trust account until the earlier of: (1) the completion of our initial
Business Combination within 21 months after the closing of this offering and
(2) the redemption of 100% of our public shares prior to any voluntary winding-
up in the event we do not complete a Business Combination within 21 months
after the closing of this offering.
The net proceeds held in the trust account may be used as consideration to pay
the sellers of a target business with which we ultimately complete our initial
Business Combination. If our initial Business Combination is paid for using
shares or debt securities, or not all of the funds released from the trust
account are used for payment of the purchase price in connection with our
Business Combination, we may apply the cash released from the trust account
that is not applied to the purchase price for general corporate purposes,
including for maintenance or expansion of operations of acquired businesses,
the payment of principal or interest due on indebtedness incurred in
consummating the initial Business Combination, to fund the purchase of other
companies or for working capital. Although we believe that the net proceeds of
this offering, including the interest earned on the proceeds held in the trust
account that may be available to us for our initial Business Combination, will
be sufficient to allow us to consummate our initial Business Combination,
because we have not yet identified any prospective target business we cannot
ascertain the capital requirements, if any, for any particular transaction or
the sources of such potential financing. Such financing may not be available
on acceptable terms, if at all. The current economic environment has made it
especially difficult for companies to obtain acquisition financing. To the
extent additional financing proves to be unavailable when needed to consummate
our initial Business Combination, we would be compelled to either restructure
the transaction or abandon that particular initial Business Combination and
seek an alternative target business candidate.
We believe that amounts not held in trust, as well as the interest income that
may be released to fund our working capital requirements will be sufficient to
pay the costs and expenses to which such proceeds are allocated. This belief is
based on the fact that while we may begin preliminary due diligence of a target
business in connection with an indication of interest, we intend to undertake
in-depth due diligence, depending on the circumstances of the relevant
prospective acquisition, only after we have negotiated and signed a letter of
intent or other preliminary agreement that addresses the terms of our initial
Business Combination. However, if our estimate of the costs of undertaking in-
depth due diligence and negotiating our initial Business Combination is less
than the actual amount necessary to do so, or the amount of interest available
to use from the trust account is less than $150,000 as a result of the current
interest rate environment, we may be required to raise additional capital, the
amount, availability and cost of which is currently unascertainable. In this
event, we could seek such additional capital through loans or additional
investments from members of our management team, but such members of our
management team are not under any obligation to advance funds to, or invest in,
us.
Commencing on the date that our securities are first listed on the Nasdaq, we
have agreed to pay the Clinton Group, an affiliate of our sponsor, a total of
$10,000 per month for office space, utilities and secretarial and
administrative services. This arrangement is being agreed to by the Clinton
Group for our benefit and is not intended to provide our sponsor compensation
in lieu of salary or other remuneration. We believe that such fees are at least
as favorable as we could have obtained from an unaffiliated person. Upon
completion of our initial Business Combination or our liquidation, we will
cease paying these monthly fees.
As of the date of this prospectus, our sponsor has advanced to us a total of
$100,000 to be used for a portion of the expenses of this offering. These
advances are non-interest bearing, unsecured and are due at the earlier of
March 31, 2012 and the closing of this offering. The loan will be repaid upon
the closing of this offering out of the $625,000 of offering proceeds that has
been allocated to the payment of offering expenses.
In addition, in order to finance transaction costs in connection with an
intended initial Business Combination, our sponsor or an affiliate of our
sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required. If we consummate our initial Business
Combination, we would repay such loaned amounts. In the event that the initial
Business Combination does not close, we may use a portion of the offering
proceeds held outside the trust account to repay such loaned amounts but no
proceeds from our trust account would be used to repay such loaned amounts. Up
to $500,000 of such loans may be converted into warrants of the post Business
Combination entity at a price of $0.75 per warrant at the option of the lender,
upon the sole discretion of the lender. The terms of such warrants would
otherwise be identical to the sponsor warrants. The terms of such loans by our
officers and directors, if any, have not been determined and no written
agreements exist with respect to such loans.
Unlike many blank check companies, if we seek stockholder approval of our
initial Business Combination and we do not conduct redemptions in connection
with our Business Combination pursuant to the tender offer rules, prior to the
consummation of our initial Business Combination, the investment management
trust agreement to be entered into between us and Continental Stock Transfer &
Trust Company will permit the release to us from the trust account of amounts
necessary to purchase up to 15% of the shares sold in this offering (1,125,000
shares, or 1,293,750 shares if the underwriters’ over-allotment option is
exercised in full) commencing two business days after the filing of a
preliminary proxy statement for our initial Business Combination and ending on
the business day immediately preceding the record date for the vote to be held
to approve our initial Business Combination. Purchases will be made only in
open market transactions at times when we are not in possession of any material
non-public information. It is intended that purchases will comply with Rule
10b-18. Purchases under Rule 10b-18 are subject to certain conditions,
including with respect to the manner of sale (sales are required to be effected
through one broker on a single day, subject to certain exceptions), timing
(purchases are subject to certain restrictions at the beginning and end of the
trading session), pricing (the purchase price may not exceed the highest
independent bid or the last independent transaction price, whichever is higher)
and volume of purchases (the total volume of Rule 10b-18 purchases effected by
us or any affiliated purchasers on any single day generally must not exceed 25%
of the average daily trading volume of our common stock). If the conditions of
Rule 10b-18, as in effect at the time we wish to make such purchases, are not
satisfied, we will not make such purchases. Any purchases we make will be at
prices (inclusive of commissions) not to exceed the per-share amount then held
in the trust account ($10.00 per share or approximately $9.97 per share if the
underwriters’ over-allotment option is exercised in full). We can purchase any
or all of the 1,125,000 shares (or 1,293,750 shares if the underwriters’ over-
allotment option is exercised in full) we are entitled to purchase. It will be
entirely in our discretion as to how many shares are purchased. If investors
elect not to sell their shares of common stock separately from their units, we
may be unable to purchase any or all of the 1,125,000 shares (or 1,293,750
shares if the underwriters’ over-allotment option is exercised in full) we are
entitled to purchase. Purchasing decisions will be made based on various
factors, including the then current market price of our common stock and the
terms of the proposed Business Combination. All shares purchased by us will be
immediately cancelled. Such open market purchases, if any, would be conducted
by us to minimize any disparity between the then current market price of our
common stock and the per-share amount held in the trust account. A market price
below the per-share trust amount could provide an incentive for purchasers to
buy our shares after the filing of our preliminary proxy statement at a
discount to the per-share amount held in the trust account for the sole purpose
of voting against our initial Business Combination and exercising redemption
rights for the full per share amount held in the trust account. Such trading
activity could enable such investors to block our initial Business Combination
by making it difficult for us to obtain the approval of such Business
Combination by the vote of a majority of our outstanding common stock.
If we seek stockholder approval of our initial Business Combination and we do
not conduct redemptions in connection with our Business Combination pursuant to
the tender offer rules, we may enter into privately negotiated transactions to
purchase public shares from stockholders following consummation of the initial
Business Combination with proceeds released to us from the trust account
immediately following consummation of the initial Business Combination. Our
directors, officers, advisors or their affiliates also may purchase shares in
privately negotiated transactions either prior to or following the consummation
of our initial Business Combination. Although we do not currently anticipate
paying any premium purchase price (over the trust value) for such public
shares, in the event we do, the payment of a premium may not be in the best
interest of those stockholders not receiving any such premium. In addition, the
payment of a premium by us after the consummation of our initial Business
Combination may not be in the best interest of the remaining stockholders who
do not redeem their shares. Such stockholders may experience a reduction in
book value per share compared to the value received by stockholders that have
their shares purchased by us at a premium. Except for the limitations described
above on use of trust proceeds released to us prior to consummating our initial
Business Combination, there is no limit on the amount of shares that could be
acquired by us or our affiliates, or the price we or they may pay, if we hold a
stockholder vote.
In no event will we redeem our public shares in an amount that would cause our
net tangible assets to be less than $5,000,001. Furthermore, the redemption
threshold may be further limited by the terms and conditions of our initial
Business Combination. In such case, we would not proceed with the redemption of
our public shares or the Business Combination, and instead may search for an
alternate Business Combination.
A public stockholder will be entitled to receive funds from the trust account
only upon the earlier to occur of: (1) our consummation of our initial Business
Combination, and then only in connection with those shares of common stock that
such stockholder properly elected to redeem, subject to the limitations
described herein or (2) the redemption of our public shares if we are unable to
consummate our initial Business Combination within 21 months following the
closing of this offering, subject to applicable law and as further described
herein and any limitations (including but not limited to cash requirements)
created by the terms of the proposed Business Combination. In no other
circumstances will a public stockholder have any right or interest of any kind
to or in the trust account.
Our sponsor has agreed to waive its redemption rights with respect to its
founder shares and public shares in connection with the consummation of our
initial Business Combination. In addition, our sponsor has agreed to waive its
right to liquidating distributions with respect to its founder shares if we
fail to consummate our initial Business Combination within 21 months after the
closing of this offering. However, if our sponsor or any of our officers,
directors or affiliates acquires public shares in or after this offering, they
will be entitled to receive liquidating distributions with respect to such
public shares if we fail to consummate our initial Business Combination within
the required time period.
more businesses or assets, which we refer to throughout this prospectus as
our initial Business Combination. We have not identified any acquisition target
and we have not, nor has anyone on our behalf, initiated any discussions with
an entity that we will acquire in our initial Business Combination.
While we may pursue an acquisition opportunity in any business industry or
sector, we intend to focus on industries or sectors that complement our
management team's background, and to capitalize on the ability of our management
team to identify, acquire and operate a business, focusing on the consumer
sector, and in particular the restaurant industry in the United States or
globally. We believe our management team is positioned to take advantage of
investment opportunities focused in the consumer sector, and in particular the
restaurant industry in the United States or globally, to create value for our
stockholders, and that our contacts and sources, ranging from owners of private
and public companies, private equity funds, investment bankers, attorneys,
accountants and business brokers in the consumer sector, including the
restaurant industry, will allow us to generate attractive acquisition
opportunities. Our management team is led by Thomas J. Baldwin, who has over 30
years of experience in operating, advising, and investing in companies in the
restaurant industry. We are supported by Clinton Group, Inc., or the Clinton
Group, which we expect will help facilitate sourcing, evaluating, structuring
and operating any business we may acquire. However, we have not entered into a
binding agreement with the Clinton Group in this regard, and even a strong
infrastructure or network cannot guarantee we will find a suitable acquisition
opportunity within 21 months or consummate a successful initial Business
Combination. Members of our management team are not obligated to devote any
specific number of hours to our matters but they intend to devote as much of
their time as they deem necessary to our affairs until we have completed our
initial Business Combination. The amount of time that Mr. Baldwin or any other
members of our management will devote in any time period will vary based on
whether a target business has been selected for our initial Business Combination
and the current stage of the Business Combination process.
Our sponsor is an affiliate of the Clinton Group, which is an established
private equity and public equity investor in the consumer sector, and the
restaurant industry in particular. Clinton Group has accumulated a strong track
record as a long-term investor in this sector. Clinton Group's recent and
current equity investments in the consumer sector, including the restaurant
industry, consist of investments in both private and public companies such as
California Pizza Kitchen, Inc., Carrols Restaurant Group, Inc., Morton's
Restaurant Group, Inc., O'Charley's Inc., Red Robin Gourmet Burgers, Inc. and
McCormick & Schmick's Seafood Restaurants, Inc.
We anticipate structuring our initial Business Combination to acquire 100% of
the equity interest or assets of the target business or businesses. We may,
however, structure our initial Business Combination to acquire less than 100% of
such interests or assets of the target business, but we will only consummate
such Business Combination if we (or any entity that is a successor to us in an
initial Business Combination) will become the majority stockholder of the target
or are not required to register as an "investment company" under the Investment
Company Act of 1940, as amended, or the Investment Company Act. We will not
consider any transaction that does not meet this criterion. Even though we will
own a majority interest in the target, our stockholders prior to the Business
Combination may collectively own a minority interest in the post Business
Combination company, depending on valuations ascribed to the target and us in
the Business Combination transaction. For example, we could pursue a transaction
in which we issue a substantial number of new shares in exchange for all of the
outstanding capital stock of a target. In this case, we would acquire a 100%
controlling interest in the target. However, as a result of the issuance of a
substantial number of new shares, our stockholders immediately prior to our
initial Business Combination could own less than a majority of our outstanding
shares subsequent to our initial Business Combination.
Consistent with this strategy, we have identified the following general criteria
and guidelines that we believe are important in evaluating prospective target
businesses. We will use these criteria and guidelines in evaluating acquisition
opportunities, but we may decide to enter into our initial Business Combination
with a target business that does not meet these criteria and guidelines.
• Middle-Market Business. We will seek to acquire one or more businesses with
an enterprise value of approximately $150,000,000 to $400,000,000,
determined in the sole discretion of our officers and directors according
to reasonably accepted valuation standards and methodologies. We believe
that the middle market segment provides the greatest number of
opportunities for investment and is the market consistent with our previous
investment history. This segment is where we believe we have the strongest
network to identify opportunities and proven track record of investment.
• Established Companies with Proven Track Records. We will seek to acquire
established companies with sound historical financial performance. We will
typically focus on companies with a history of strong operating and
financial results and strong fundamentals. We do not intend to acquire
start-up companies or companies with recurring negative free cash flow.
• Companies with, or with the Potential for, Strong Free Cash Flow
Generation. We will seek to acquire one or more businesses that already
have, or have the potential to generate, strong, stable and increasing free
cash flow. We will focus on one or more businesses that have predictable
revenue streams.
• Strong Competitive Position. We intend to focus on targets that have a
leading, growing or niche market position in their respective sectors. We
will analyze the strengths and weaknesses of target businesses relative to
their competitors. We will seek to acquire a business that demonstrates
advantages when compared to their competitors, which may help to protect
their market position and profitability.
• Experienced Management Team. We will seek to acquire one or more businesses
with a strong, experienced management team that provides a platform for us
to further develop the acquired business' management capabilities. We will
seek to partner with a potential target's management team and expect that
the operating and financial abilities of our executive team will complement
their own capabilities.
• Business with Revenue and Earnings Growth or Potential for Revenue and
Earnings Growth. We will seek to acquire one or more businesses that have
achieved or have the potential for significant revenue and earnings growth
through a combination of organic growth, new unit expansion, brand and new
product development, increased production capacity, expense reduction,
synergistic follow-on acquisitions and increased operating leverage.
• Benefit from Being a Public Company. We intend to acquire a company that
will benefit from being publicly traded and can effectively utilize the
broader access to capital and public profile that are associated with being
a publicly traded company.
These criteria are not intended to be exhaustive. Any evaluation relating to the
merits of a particular initial Business Combination may be based, to the extent
relevant, on these general guidelines as well as other considerations, factors
and criteria that our management may deem relevant. In the event that we decide
to enter into our initial Business Combination with a target business that does
not meet the above criteria and guidelines, we will disclose that the target
business does not meet the above criteria in our stockholder communications
related to our initial Business Combination, which, as discussed in this
prospectus, would bein the form of tender offer documents or proxy
solicitation materials that wewould file with the SEC.
Over the course of their careers, the members of our management team and board
of directors have developed a broad network of contacts and corporate
relationships that we believe will serve as a useful source of investment
opportunities. This network has been developed through our management team's:
• experience in sourcing, acquiring, operating, developing, growing,
financing and selling businesses;
• reputation for integrity and fair dealing with sellers, capital providers
and target management teams;
• significant experience as advisors on transactions; and
• experience in executing transactions under varying economic and financial
market conditions.
This network has provided our management team with a flow of referrals that have
resulted in numerous transactions. We believe that the network of contacts and
relationships of our management team will provide us with an important source of
investment opportunities. In addition, we anticipate that target business
candidates will be brought to our attention from various unaffiliated sources,
including investment market participants, private equity groups, investment
banking firms, consultants, accounting firms and large business enterprises.
Certain members of our management team have spent significant portions of their
careers working with businesses in the consumer sector, and the restaurant
industry in particular, and have developed a wide network of professional
services contacts and business relationships in that sector. In addition, Thomas
J. Baldwin has experience acquiring and growing regional restaurant chains into
national chains with an international presence and securing franchise
partnerships domestically and internationally. The members of our board of
directors also have significant executive leadership in the restaurant industry,
as investors, operators and franchisors.
In evaluating a prospective target business, we expect to conduct a thorough due
diligence review which will encompass, among other things, meetings with
incumbent management and employees, document reviews, inspection of facilities,
as well as a review of financial and other information which will be made
available to us.
We are not prohibited from pursuing an initial Business Combination with a
company that is affiliated with the Clinton Group or our sponsor, officers or
directors. In the event we seek to complete our initial Business Combination
with a company that is affiliated with the Clinton Group or our sponsor,
officers or directors, we, or a committee of independent directors, will obtain
an opinion from an independent investment banking firm which is a member of the
Financial Industry Regulatory Authority, or FINRA, that our initial Business
Combination is fair to our stockholders from a financial point of view.
Thomas J. Baldwin, our Chairman and CEO, and George E. Hall, our Chief
Investment Officer and Director, will directly or indirectly own common stock
and warrants following this offering, and, accordingly, may have a conflict of
interest in determining whether a particular target business is an appropriate
business with which to effectuate our initial Business Combination. Further,
each of our officers and directors may have a conflict of interest with respect
to evaluating a particular Business Combination if the retention or resignation
of any such officers and directors was included by a target business as a
condition to any agreement with respect to our initial Business Combination.
Each of our officers or directors (other than our independent directors)
presently has, and any of them in the future may have additional, fiduciary or
contractual obligations to another entity pursuant to which such officer or
director is required to present a Business Combination opportunity to such
entity. However, each of our officers and directors (other than our independent
directors) has agreed, pursuant to a written agreement with us, that until the
earliest of our initial Business Combination, our liquidation or such time as he
ceases to be an officer or director, to present to us for our consideration,
prior to presentation to any other entity, any suitable business transaction
opportunities. In the event that we and such officer or director mutually agree
that it is in our best interests and the best interests of our stockholders not
pursue such opportunity, such officer or director may then present the
opportunity to other entities. Certain members of our management team also have
fiduciary obligations to private equity funds managed by the Clinton Group. In
order to minimize potential conflicts, or the appearance of conflicts, which may
arise from these affiliations, the Clinton Group and its one private equity fund
that may consider acquisition opportunities in the restaurant sector have
granted us a "right of first refusal" with respect to any agreement to purchase
or invest in any company or business in the restaurant sector. Pursuant to this
right of first refusal, we will be entitled to pursue any such potential
transaction opportunity in the restaurant sector unless and until a majority of
our directors have determined for any reason that we will not pursue such
opportunity. If a majority of our directors has determined that the Company will
not pursue such opportunity, we will release the Clinton Group from this right
of first refusal so that it can explore such opportunity. This right of first
refusal will expire upon the earlier of: (1) our consummation of an initial
Business Combination and (2) 21 months from the date of this prospectus.
Furthermore, we have agreed that any target company with respect to which the
Clinton Group or its private equity fund party to the right of first refusal
currently invests or has initiated any contacts or entered into any discussions,
formal or informal, or negotiations regarding such company's acquisition prior
to the completion of this offering will not be a potential acquisition target
for us, unless such fund declines to pursue an investment in such company.
Our officers have agreed not to participate in the formation of, or become an
officer or director of, any other blank check company until we have entered into
a definitive agreement regarding our initial Business Combination or we have
failed to complete our initial Business Combination within 21 months after the
closing of this offering. None of our officers or directors has been involved
with any blank check companies or special purpose acquisition corporations in
the past.
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Our executive offices are located at 9 West 57 th Street, New York, New York
10019, and our telephone number is (212) 825-0400.