Item 2.01
|
Completion of Acquisition or Disposition of Assets.
|
The disclosure set
forth in the Introductory Note above is incorporated into this Item 2.01 by reference. On November 3, 2016, the Business Combination was approved by the Companys stockholders at the Special Meeting in Lieu of 2016 Annual Meeting of
Gores Holdings, Inc. Stockholders (the Special Meeting).
Pursuant to the terms of the Master Transaction
Agreement, the aggregate purchase price for the Business Combination and related transactions was approximately $2.2 billion. The consideration paid to the Selling Equityholders consisted of a combination of cash and stock consideration. The
aggregate cash consideration paid to the Selling Equityholders was approximately $446.4 million, consisting of (i) approximately $375.5 million of cash available to us from the Companys trust account that holds the proceeds from the
Companys initial public offering (the Trust Account), after giving effect to taxes payable,
plus
(ii) gross proceeds of approximately $298.3 million from the Companys private placement of approximately 32,678,578
shares of Class A Stock (the Private Placement) with a limited number of accredited investors (as defined by Rule 501 of Regulation D) pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the Securities
Act),
less
(iii) certain transaction fees and expenses, including the payment of deferred underwriting commissions agreed to at the time of the Companys initial public offering,
less
(iv) certain payments to
Hostess management under the Hostess Brands Long Term Incentive Plan,
less
(v) approximately $170.1 million that will be used to repay a portion of the existing indebtedness of Hostess. The remainder of the consideration paid to the
Selling Equityholders consisted of stock consideration (Stock Consideration), including 22,098,139 newly issued shares of publicly-traded Class A Stock and 29,870,688 shares of Class B Stock, which includes 5,446,429 shares of Class B
Stock representing the partial rollover of Hostess CDM Co-Invests equity investment in Hostess. In addition, Mr. Metropoulos received 2,496,000 Class B Units (and an equivalent number of shares of Class B Stock) pursuant to the Executive
Chairman Employment Agreement.
The foregoing consideration paid to the Selling Equityholders and Mr. Metropoulos may be
further increased by amounts payable under the Tax Receivable Agreement, and amounts payable as earn-out shares of Class A Stock or Class B Stock and an equivalent number of Class B Units, as applicable. AP Hostess LP received shares of Class A
Stock, and the CDM Holders received shares of Class B Stock and hold an equivalent number of Class B Units. The Class B Units (including the Class B Units issued to Mr. Metropoulos under the Executive Chairman Employment Agreement) may be exchanged
(together with the cancellation of an equivalent number of shares of Class B Stock) by the holders thereof for, at the election of the Company, shares of Class A Stock or the cash equivalent of such shares, in accordance with the Exchange Agreement.
In order to facilitate the Business Combination, our Sponsor has agreed to the cancellation of approximately 4,062,500 of the shares of the Companys Class F Common Stock, par value $0.0001 per share (Class F Stock), held by it and
to the acquisition of shares of Class A Stock and Class B Stock by the Selling Equityholders (pursuant to the Master Transaction Agreement) and the participants in the Private Placement (pursuant to subscription agreements entered into in connection
therewith) at a discount. The remaining shares of Class F Stock were automatically converted into shares of Class A Stock on a one-for-one basis at the Closing and will continue to be subject to the transfer restrictions applicable to such shares of
Class F Stock.
The material terms and conditions of the Master Transaction Agreement are described on pages 141 to 154 of
the Companys definitive proxy statement filed with the SEC on October 21, 2016 (the Proxy Statement) in the section entitled Proposal No. 1 Approval of the Business Combination The Master Transaction
Agreement, which is incorporated by reference herein.
5
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Company makes forward-looking statements in this Current Report on Form 8-K. These forward-looking statements
relate to expectations for future financial performance, business strategies or expectations for our business. Specifically, forward-looking statements may include statements relating to:
|
|
the benefits of the Business Combination;
|
|
|
the future financial performance of the post-combination company following the Business Combination;
|
|
|
changes in the market for our products;
|
|
|
expansion plans and opportunities; and
|
|
|
other statements preceded by, followed by or that include the words may, can,
should, will, estimate, plan, project, forecast, intend, expect, anticipate, believe, seek, target or
similar expressions.
|
These forward-looking statements are based on information available as of the date
of this Current Report on Form 8-K and our managements current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as
representing our views as of any subsequent date. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or
otherwise, except as may be required under applicable securities laws.
As a result of a number of known and unknown risks
and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:
|
|
the inability to obtain or maintain the listing of the post-combination companys Class A Stock on the
NASDAQ Capital Market following the Business Combination;
|
|
|
the risk that the Business Combination disrupts current plans and operations as a result of the announcement
and consummation of the transactions described herein;
|
|
|
the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among
other things, competition, the ability to integrate the Hostess and the Company businesses, and the ability of the combined business to grow and manage growth profitably;
|
|
|
costs related to the Business Combination;
|
|
|
changes in applicable laws or regulations;
|
|
|
the inability to launch new Hostess products or to profitably expand into new markets;
|
|
|
the possibility that we may be adversely affected by other economic, business, and/or competitive factors; and
|
|
|
other risks and uncertainties indicated or incorporated by reference in this Current Report on Form 8-K,
including those set forth in the Risk Factors section in the Proxy Statement beginning on page 65 of the Proxy Statement, which is incorporated herein by reference.
|
Business
The
business of Hostess prior to the Business Combination is described in the Proxy Statement in the section entitled Information About Hostess beginning on page 264 of the Proxy Statement, which is incorporated herein by
reference. The business of Gores Holdings prior to the Business Combination is described in the Proxy Statement in the section entitled Information About the Company beginning on page 244 of the Proxy Statement, which is
incorporated herein by reference.
6
Risk Factors
The risk factors related to our business and operations are described in the Proxy Statement in the section entitled Risk
Factors beginning on page 65 of the Proxy Statement, which is incorporated herein by reference.
Selected Consolidated Historical
Financial and Other Information
The following table contains summary historical consolidated financial and other
data for Hostess Holdings for the twelve months ended September 30, 2016, the nine months ended September 30, 2016 and September 30, 2015 and for the years ended December 31, 2015, December 31, 2014 and for the period from February 6, 2013
(inception) through December 31, 2013. Such data as of December 31, 2015 and December 31, 2014 and for the years ended December 31, 2015 and December 31, 2014 and for the period from February 6, 2013 (inception) through December 31, 2013 have been
derived from the audited consolidated financial statements of Hostess Holdings included or incorporated by reference elsewhere in this Current Report on Form 8-K. Such data as of September 30, 2016 and for the nine months ended September 30,
2016 and September 30, 2015 have been derived from the unaudited consolidated financial statements of Hostess Holdings included or incorporated by reference elsewhere in this Current Report on Form 8-K. Results from interim periods are not
necessarily indicative of results that may be expected for the entire year. The data for the twelve months ended September 30, 2016, which are unaudited, have been calculated by adding the nine months ended September 30, 2016 to the year ended
December 31, 2015, and subtracting the nine months ended September 30, 2015. This presentation is not in accordance with U.S. GAAP. Hostess believes this presentation provides useful information to investors regarding Hostess Holdings recent
financial performance. The information below is only a summary and should be read in conjunction with the information included or incorporated by reference elsewhere in this Current Report on
Form 8-K
under the heading Managements Discussion and Analysis of Financial Condition and Results of Operations and in Hostess Holdings audited consolidated financial statements and unaudited interim condensed consolidated financial
statements and the related notes included or incorporated by reference elsewhere in this Current Report on Form 8-K.
The
historical financial statements of Hostess Holdings have been presented herein, as opposed to those of the various entities of the Selling Equityholders. The Selling Equityholders entities are holding companies without any operations, and no
material assets beyond their investment in Hostess Holdings. The Selling Equityholders entities are not permitted to consolidate Hostess Holdings under GAAP. As such, the historical Hostess Holdings financial statements represent the highest level
of consolidated financial statements that presents the full financial position and results of operations of the underlying business.
Statement of
Operations Data
The following table sets forth Hostess Holdings net revenues, operating costs and expenses
attributable to Hostess Holdings operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Twelve Months
Ended
September 30,
2016
|
|
|
Nine Months
Ended
September 30,
2016
|
|
|
Nine Months
Ended
September 30,
2015
|
|
|
Year Ended
December 31,
2015
|
|
|
Year Ended
December 31,
2014
|
|
|
February 6,
2013
(Inception)
through
December 31,
2013
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
695,784
|
|
|
$
|
548,758
|
|
|
$
|
473,789
|
|
|
$
|
620,815
|
|
|
$
|
554,695
|
|
|
$
|
237,418
|
|
Cost of goods sold
|
|
|
395,427
|
|
|
|
309,461
|
|
|
|
269,997
|
|
|
|
355,963
|
|
|
|
320,763
|
|
|
|
145,498
|
|
Special employee incentive
compensation
(1)
|
|
|
|
|
|
|
|
|
|
|
2,649
|
|
|
|
2,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
300,357
|
|
|
|
239,297
|
|
|
|
201,143
|
|
|
|
262,203
|
|
|
|
233,932
|
|
|
|
91,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising and marketing
|
|
|
34,395
|
|
|
|
27,529
|
|
|
|
25,101
|
|
|
|
31,967
|
|
|
|
32,197
|
|
|
|
19,354
|
|
Selling expenses
|
|
|
29,876
|
|
|
|
23,175
|
|
|
|
22,783
|
|
|
|
29,484
|
|
|
|
25,664
|
|
|
|
10,544
|
|
General and administrative
|
|
|
38,951
|
|
|
|
31,442
|
|
|
|
24,250
|
|
|
|
31,759
|
|
|
|
32,894
|
|
|
|
21,624
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of customer relationships
|
|
|
1,159
|
|
|
|
1,003
|
|
|
|
467
|
|
|
|
623
|
|
|
|
851
|
|
|
|
226
|
|
Special employee incentive
compensation
(1)
|
|
|
|
|
|
|
|
|
|
|
1,274
|
|
|
|
1,274
|
|
|
|
|
|
|
|
|
|
Impairment of property and equipment
|
|
|
8,050
|
|
|
|
7,300
|
|
|
|
1,950
|
|
|
|
2,700
|
|
|
|
13,241
|
|
|
|
|
|
Acquisition and bakery start-up
costs
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,029
|
|
Loss on sale/abandonment of property and equipment and bakery shutdown costs
(3)
|
|
|
3,617
|
|
|
|
440
|
|
|
|
1,005
|
|
|
|
4,182
|
|
|
|
5,150
|
|
|
|
|
|
Related party expenses
|
|
|
4,038
|
|
|
|
3,432
|
|
|
|
3,700
|
|
|
|
4,306
|
|
|
|
4,468
|
|
|
|
2,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
120,086
|
|
|
|
94,321
|
|
|
|
80,530
|
|
|
|
106,295
|
|
|
|
114,465
|
|
|
|
68,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
180,271
|
|
|
|
144,976
|
|
|
|
120,613
|
|
|
|
155,908
|
|
|
|
119,467
|
|
|
|
23,330
|
|
Other expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
71,953
|
|
|
|
53,748
|
|
|
|
31,806
|
|
|
|
50,011
|
|
|
|
37,447
|
|
|
|
27,766
|
|
Loss on debt extinguishment
(4)
|
|
|
|
|
|
|
|
|
|
|
25,880
|
|
|
|
25,880
|
|
|
|
|
|
|
|
|
|
Other (income) expense
(5)
|
|
|
9,348
|
|
|
|
9,411
|
|
|
|
(8,680
|
)
|
|
|
(8,743
|
)
|
|
|
556
|
|
|
|
1,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense
|
|
|
81,301
|
|
|
|
63,159
|
|
|
|
49,006
|
|
|
|
67,148
|
|
|
|
38,003
|
|
|
|
28,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before taxes
|
|
|
98,970
|
|
|
|
81,817
|
|
|
|
71,607
|
|
|
|
88,760
|
|
|
|
81,464
|
|
|
|
(5,594
|
)
|
Income tax provision
|
|
|
294
|
|
|
|
294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
98,676
|
|
|
|
81,523
|
|
|
|
71,607
|
|
|
|
88,760
|
|
|
|
81,464
|
|
|
|
(5,594
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income attributable to the non-controlling interest
|
|
|
5,037
|
|
|
|
4,110
|
|
|
|
3,580
|
|
|
|
4,507
|
|
|
|
4,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Hostess Holdings, L.P.
|
|
$
|
93,639
|
|
|
$
|
77,413
|
|
|
$
|
68,027
|
|
|
$
|
84,253
|
|
|
$
|
77,197
|
|
|
$
|
(5,594
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Cash Flows Data
The following table sets forth selected elements of Hostess Holdings Consolidated Statements of Cash Flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Nine
Months
Ended
September 30,
2016
|
|
|
Nine
Months
Ended
September 30,
2015
|
|
|
Year Ended
December 31,
2015
|
|
|
Year Ended
December 31,
2014
|
|
|
February 6,
2013
(Inception)
through
December 31,
2013
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
89,513
|
|
|
$
|
112,377
|
|
|
$
|
132,972
|
|
|
$
|
108,329
|
|
|
$
|
(29,672
|
)
|
Net cash provided by (used in) investing activities
|
|
|
(71,653
|
)
|
|
|
21,080
|
|
|
|
17,880
|
|
|
|
(91,393
|
)
|
|
|
(422,498
|
)
|
Net cash provided by (used in) financing activities
|
|
|
(18,113
|
)
|
|
|
(293,709
|
)
|
|
|
(296,002
|
)
|
|
|
(9,769
|
)
|
|
|
654,626
|
|
Balance Sheet Data (at period end)
The following table sets forth selected attributes of Hostess Holdings Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
September 30,
2016
|
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
64,220
|
|
|
$
|
64,473
|
|
|
$
|
209,623
|
|
Property and equipment, net
|
|
|
147,025
|
|
|
|
128,078
|
|
|
|
112,732
|
|
Total assets
|
|
|
710,666
|
|
|
|
613,871
|
|
|
|
765,494
|
|
Long-term debt and capital lease obligation
|
|
|
1,189,542
|
|
|
|
1,193,667
|
|
|
|
473,175
|
|
Total liabilities and partners equity
|
|
|
710,666
|
|
|
|
613,871
|
|
|
|
765,494
|
|
8
Other Financial Data
The following table sets forth Adjusted EBITDA
(6)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Twelve Months
Ended
September 30,
2016
|
|
|
Nine Months
Ended
June 30,
2016
|
|
|
Nine Months
Ended
June 30,
2015
|
|
|
Year Ended
December 31,
2015
|
|
|
Year Ended
December 31,
2014
|
|
|
February 6,
2013
(Inception)
through
December 31,
2013
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Adjusted EBITDA
|
|
$
|
204,476
|
|
|
$
|
162,459
|
|
|
$
|
135,913
|
|
|
$
|
177,930
|
|
|
$
|
145,343
|
|
|
$
|
40,285
|
|
(1)
|
For the year ended December 31, 2015, a one-time special
bonus payment of $2.6 million and $1.3 million was paid to employees at Hostess Holdings bakery facilities and corporate employees, respectively, as compensation for their efforts in the successful recapitalization of Hostess.
|
(2)
|
In April 2013, Hostess Holdings began the process of bringing four of its acquired bakeries into operation and
completed this process in July 2013. For the period from inception through December 31, 2013, Hostess Holding incurred bakery start-up costs totaling $6.7 million, including repairs, materials and supplies, labor costs, and ingredients used in
testing, and acquisition-related costs of approximately $7.3 million.
|
(3)
|
For the nine months ended September 30, 2016, Hostess
Holdings incurred a loss on sale/abandonment of property and equipment and bakery shutdown costs of $0.4 million, primarily due to utilities, insurance, taxes and maintenance expenses related to the Schiller Park, Illinois bakery. For the nine
months ended September 30, 2015, Hostess Holdings incurred bakery shutdown costs of $1.0 million associated with the closure and relocation of assets. For the years ended December 31, 2015 and December 31, 2014, Hostess Holdings incurred bakery
shutdown costs associated with the closure and relocation of assets of $1.2 million and $1.4 million, respectively. Also, for the year ended December 31, 2014, Hostess Holdings incurred bakery shutdown costs associated with employee severance and
Worker Adjustment and Retraining Notification (WARN) Act payments of $2.9 million. Hostess Holdings recorded a loss on sale and abandonment of property and equipment of $3.0 million and $0.8 million for the years ended December 31, 2015 and December
31, 2014, respectively.
|
(4)
|
For the nine months ended September 30, 2015, Hostess
Holdings recorded a loss on extinguishment of Hostess Holdings original Term Loan of $25.9 million, which consisted of prepayment penalties of $9.9 million and write-off of deferred financing costs of $16.0 million. For the year ended December
31, 2015, Hostess Holdings recorded a loss on extinguishment related to Hostess Holdings original term loan dated April 9, 2013 of $25.9 million, which consisted of prepayment penalties of $9.9 million and write-off of deferred financing costs
of $16.0 million.
|
(5)
|
For the nine months ended September 30, 2016, other
expense of $9.4 million primarily consisted of legal and professional fees related to Hostess Holdings business combination agreement with Gores Holdings, Inc., transaction costs attributable to the acquisition of Superior, and the pursuit of
a potential acquisition that has since been abandoned. Other income for the nine months ended September 30, 2015, primarily consisted of $12.0 million of proceeds from the sale of foreign trademark rights and perpetual irrevocable licenses to
certain know how in certain countries in the Middle East. For the year ended December 31, 2015, other income consisted of $12.0 million of proceeds from the sale of foreign trademark rights and perpetual irrevocable licenses to certain
know how in certain countries in the Middle East, partially offset by $3.3 million for professional service fees related to Hostess Holdings pursuit of a potential sale of Hostess. For the year ended December 31, 2014 and the
period February 6, 2013 (inception) through December 31, 2013, other expense was $0.6 million and $1.2 million, respectively.
|
(6)
|
Adjusted EBITDA is a non-GAAP financial measure commonly
used in Hostess Holdings industry and should not be construed as an alternative to net income as an indicator of operating performance or as an alternative to cash flow provided by operating activities as a measure of liquidity (each as
determined in accordance with GAAP). Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Hostess Holdings has included Adjusted EBITDA because it believe it provides management and investors with
additional information to measure Hostess Holdings performance and liquidity, estimate Hostess Holdings value and evaluate Hostess Holdings ability to service debt.
|
Hostess Holdings defines Adjusted EBITDA as net income adjusted to exclude (i) interest expense, net, (ii) depreciation and
amortization and (iii) as further adjusted to eliminate the impact of certain items that Hostess Holdings does not consider indicative of its ongoing operating performance. These further adjustments are itemized below. You are encouraged to evaluate
these adjustments and the reasons Hostess Holdings considers them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future Hostess Holdings may incur expenses that are the same as or similar to
some of the adjustments set forth below. Hostess Holdings presentation of Adjusted EBITDA should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items.
Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation, or as a
substitute for analysis of Hostess Holdings results as reported under GAAP. For example, Adjusted EBITDA:
|
|
|
does not reflect Hostess Holdings capital expenditures, future requirements for capital expenditures or
contractual commitments;
|
|
|
|
does not reflect changes in, or cash requirements for, Hostess Holdings working capital needs;
|
|
|
|
does not reflect the significant interest expenses, or the cash requirements necessary to service interest or
principal payments, on Hostess Holdings debt; and
|
9
|
|
|
does not reflect any cash requirements for the assets being depreciated and amortized that may have to be
replaced in the future.
|
Hostess Holdings presentation of Adjusted EBITDA does not exclude related
party expenses associated with its employment agreement with Mr. Metropoulos as the Chief Executive Officer and/or Executive Chairman. The amounts of such related party expenses were: $4.0 million for the twelve months ended September 30, 2016, $3.4
million for the nine months ended September 30, 2016, $3.7 million for the nine months ended September 30, 2015, $4.3 million for the year ended December 31, 2015, $4.5 million for the year ended December 31, 2014 and $2.8 million for February
6, 2013 (Inception) through December 31, 2013. Following completion of the Business Combination, these expenses will be approximately $0.3 million annually.
The following table sets forth Hostess Holdings reconciliation of Adjusted EBITDA (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Twelve Months
Ended
September 30,
2016
|
|
|
Nine Months
Ended
September 30,
2016
|
|
|
Nine Months
Ended
September 30,
2015
|
|
|
Year
Ended
December 31,
2015
|
|
|
Year
Ended
December 31,
2014
|
|
|
February 6,
2013
(Inception)
through
December 31,
2013
|
|
Net income (loss)
|
|
$
|
98,676
|
|
|
$
|
81,523
|
|
|
$
|
71,607
|
|
|
$
|
88,760
|
|
|
$
|
81,464
|
|
|
$
|
(5,594
|
)
|
|
|
|
|
|
|
|
Plus non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
294
|
|
|
|
294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
71,953
|
|
|
|
53,748
|
|
|
|
31,806
|
|
|
|
50,011
|
|
|
|
37,447
|
|
|
|
27,766
|
|
Loss on debt extinguishment
(i)
|
|
|
|
|
|
|
|
|
|
|
25,880
|
|
|
|
25,880
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
11,732
|
|
|
|
9,054
|
|
|
|
7,158
|
|
|
|
9,836
|
|
|
|
7,113
|
|
|
|
2,611
|
|
Unit-based compensation
|
|
|
806
|
|
|
|
689
|
|
|
|
1,264
|
|
|
|
1,381
|
|
|
|
372
|
|
|
|
315
|
|
Acquisition and bakery start-up costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,029
|
|
Other (income) expense
(ii)
|
|
|
9,348
|
|
|
|
9,411
|
|
|
|
(8,680
|
)
|
|
|
(8,743
|
)
|
|
|
556
|
|
|
|
1,158
|
|
Impairment of property and equipment
|
|
|
8,050
|
|
|
|
7,300
|
|
|
|
1,950
|
|
|
|
2,700
|
|
|
|
13,241
|
|
|
|
|
|
Loss on sale/abandonment of property and equipment and bakery shutdown costs
(iii)
|
|
|
3,617
|
|
|
|
440
|
|
|
|
1,005
|
|
|
|
4,182
|
|
|
|
5,150
|
|
|
|
|
|
Special employee incentive
compensation
(iv)
|
|
|
|
|
|
|
|
|
|
|
3,923
|
|
|
|
3,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
204,476
|
|
|
$
|
162,459
|
|
|
$
|
135,913
|
|
|
$
|
177,930
|
|
|
$
|
145,343
|
|
|
$
|
40,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
For the nine months ended September 30, 2015, Hostess
Holdings recorded a loss on a partial extinguishment of Hostess Holdings original Term Loan of $25.9 million, which consisted of prepayment penalties of $9.9 million and write-off of deferred financing costs of $16.0 million. For the year
ended December 31, 2015, Hostess Holdings recorded a loss on extinguishment related to Hostess Holdings original Term Loan of $25.9 million, which consisted of prepayment penalties of $9.9 million and write-off of deferred financing costs
of $16.0 million.
|
|
(ii)
|
For the nine months ended September 30, 2016, other expense of $9.4 million primarily consisted of legal and
professional fees related to Hostess Holdings business combination agreement with Gores Holdings, Inc., transaction costs attributable to the acquisition of Superior, and the pursuit of a potential acquisition that has since been abandoned.
Other income for the nine months ended September 30, 2015, primarily consisted of $12.0 million of proceeds from the sale of foreign trademark rights and perpetual irrevocable licenses to certain know how in certain countries in the
Middle East. For the year ended December 31, 2015, other income consisted of $12.0 million of proceeds from the sale of foreign trademark rights and perpetual irrevocable licenses to certain know how in certain countries in the
Middle East, partially offset by $3.3 million for professional service fees related to Hostess Holdings pursuit of a potential sale of Hostess. For the year ended December 31, 2014 and the period February 6, 2013 (inception) through
December 31, 2013, other expense was $0.6 million and $1.2 million, respectively.
|
|
(iii)
|
For the nine months ended September 30, 2016, Hostess
Holdings incurred a loss on sale/abandonment of property and equipment and bakery shutdown costs of $0.4 million, primarily due to utilities, insurance, taxes and maintenance expenses related to the Schiller Park, Illinois bakery. For the nine
months ended September 30, 2015, Hostess Holdings incurred bakery shutdown costs of $1.0 million associated with the closure and relocation of assets. For the years ended December 31, 2015 and December 31, 2014, Hostess Holdings incurred bakery
shutdown costs associated
|
10
|
with the closure and relocation of assets of $1.2 million and $1.4 million, respectively. Also, for the year ended December 31, 2014, Hostess Holdings incurred bakery shutdown costs
associated with employee severance and Worker Adjustment and Retraining Notification (WARN) Act payments of $2.9 million. Hostess Holdings recorded a loss on sale and abandonment of property and equipment of $3.0 million and $0.8 million for the
years ended December 31, 2015 and December 31, 2014, respectively.
|
(iv)
|
For the year ended December 31, 2015, a one-time special
bonus payment of $2.6 million and $1.3 million was paid to employees at Hostess Holdings bakery facilities and corporate employees, respectively, as compensation for their efforts in the successful recapitalization of Hostess.
|
Selected Unaudited Pro Forma Condensed Combined Financial Information
The information set forth in Exhibit 99.2 to this Current Report on Form 8-K is incorporated herein by reference.
Managements Discussion and Analysis of Financial Condition and Results of Operations
The information set forth in the section of the Proxy Statement entitled Hostess Managements Discussion and
Analysis of Financial Condition and Results of Operations beginning on page 280 of the Proxy Statement and the information set forth in the section of Exhibit 99.1 to this Current Report on Form 8-K entitled Managements
Discussion and Analysis of Financial Condition and Results of Operations is incorporated herein by reference.
Properties
The Companys principal executive office is located at 1 East Armour Boulevard, Kansas City, Missouri 64111. Our
principal operating locations are described in the Proxy Statement in the section entitled Information About Hostess Properties on page 275 of the Proxy Statement, which is incorporated herein by reference.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information known to the Company regarding beneficial ownership of shares of common stock of the
Company as of the Closing Date by:
|
|
|
each person known by us to be the beneficial owner of more than 5% of our outstanding common stock;
|
|
|
|
each of our executive officers and directors that beneficially own shares of our common stock; and
|
|
|
|
all executive officers and directors as a group.
|
Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial
ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days. Shares of Class A Stock or Class B Stock
issuable upon exercise of options or warrants currently exercisable or exercisable within 60 days, as well as shares of Class A Stock issuable upon exchange of shares of Class B Stock are deemed outstanding solely for purposes of calculating the
percentage of class and percentage of total voting power of the beneficial owner thereof. Accordingly, the percentage of class and percentage of total voting power of some beneficial owners may be lower than the percentage of class and percentage of
total voting power of some other beneficial owners for whom a higher number of shares beneficially owned is reported.
The
beneficial ownership of the common stock of the Company is based on 129,955,905 shares of common stock of the Company issued and outstanding as of the Closing Date, which calculation includes all shares of Class A Stock and Class B Stock issued
and outstanding as of the Closing Date.
11
Unless otherwise indicated, we believe that all persons named in the table below
have sole voting and investment power with respect to all shares of common stock or common stock beneficially owned by them.
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|
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|
|
|
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
Stock
|
|
|
Class B
Stock
|
|
Name and Address of Beneficial Owners(1)
|
|
Number of
Shares
|
|
|
Percentage
of Class
|
|
|
% of Total
Voting Power
|
|
|
Number of
Shares
|
|
|
Percentage
of Class
|
|
|
% of Total
Voting Power
|
|
Gores Sponsor LLC
(2)
|
|
|
22,324,732
|
|
|
|
21.0
|
%
|
|
|
16.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Alec Gores
(2)
|
|
|
22,324,732
|
|
|
|
21.0
|
%
|
|
|
16.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
The Northwestern Mutual Life Insurance
Company
(3)
|
|
|
8,169,644
|
|
|
|
8.4
|
%
|
|
|
6.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
AP Hostess LP
(4)
|
|
|
22,098,139
|
|
|
|
22.6
|
%
|
|
|
17.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Hostess CDM Co-Invest
(5)
|
|
|
27,544,567
|
|
|
|
22.0
|
%
|
|
|
21.2
|
%
|
|
|
27,544,567
|
|
|
|
85.1
|
%
|
|
|
21.2
|
%
|
CDM Hostess
(5)
|
|
|
2,326,120
|
|
|
|
2.3
|
%
|
|
|
1.8
|
%
|
|
|
2,326,120
|
|
|
|
7.2
|
%
|
|
|
1.8
|
%
|
C. Dean Metropoulos
(6)
|
|
|
33,866,687
|
|
|
|
26.0
|
%
|
|
|
26.0
|
%
|
|
|
32,366,687
|
|
|
|
100
|
%
|
|
|
24.9
|
%
|
Andrew Jhawar
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark R. Stone
|
|
|
155,358
|
|
|
|
*
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laurence Bodner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neil P. DeFeo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerry D. Kaminski
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig D. Steeneck
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William Toler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Peterson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Cramer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew Jacobs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stuart Wilcox
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burke Raine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jolyn Sebree
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group (14 individuals)
|
|
|
34,022,045
|
|
|
|
26.2
|
%
|
|
|
26.2
|
%
|
|
|
32,366,687
|
|
|
|
100
|
%
|
|
|
24.9
|
%
|
(1)
|
Beneficial ownership is determined in accordance with the rules of the SEC. Except as described in the
footnotes below and subject to applicable community property laws and similar laws, we believe that each person listed above has sole voting and investment power with respect to such shares. Unless otherwise indicated, the business address of each
of the entities, directors and executives in this table is 1 East Armour Boulevard, Kansas City, Missouri 64111.
|
(2)
|
Represents shares held by Gores Sponsor LLC, which is controlled indirectly by Mr. Alec Gores and Mr. Tom
Gores. Includes 8,500,000 shares of Class A Stock issuable upon exercise of warrants held thereby. Each of Alec and Tom Gores may be deemed to beneficially own the shares of Class A Stock held by our Sponsor and jointly exercises voting and
dispositive power of the securities held by our Sponsor. Voting and disposition decisions with respect to such securities are made jointly by Alec and Tom Gores. Each of Alec and Tom Gores disclaims beneficial ownership of these securities except to
the extent of any pecuniary interest therein. The business address of each of Gores Sponsor LLC, Alec Gores and Tom Gores is 9800 Wilshire Blvd., Beverly Hills, California 90212.
|
(3)
|
Consists of (i) 7,556,920 shares of Class A Stock held directly by The Northwestern Mutual Life Insurance
Company, (ii) 326,786 shares of Class A Stock held by The Northwestern Mutual Strategic Equity Fund IV, LP, of which The Northwestern Mutual Life Insurance Company may be deemed to have beneficial ownership as a result of its control thereof and
(iii) 285,938 shares of Class A stock held by The Northwestern Mutual Life Insurance Company for its Group Annuity Separate Account, of which The Northwestern Mutual Life Insurance Company may be deemed to have beneficial ownership as a result of
its control thereof. The business address of The Northwestern Mutual Life Insurance Company is 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
|
(4)
|
The shares are held of record by AP Hostess Holdings, L.P. (APHH). AP Hostess Holdings
GP, LLC (APHHGP) is the general partner of APHH. Apollo Management VII (Management VII) is a private equity fund investment adviser registered with the SEC as an investment adviser and is the sole manager of
APHHGP. AIF VII Management , LLC (AIF VII) is the general partner of Management VII. Apollo Management, LP (Apollo Management) is registered as an investment adviser with the SEC and is the sole member and manager of AIF
VII. Apollo Management GP, LLC (Apollo Management GP) is the general partner of Apollo Management. Apollo Management Holdings, LP (Management Holdings) serves as the sole member and manager of Apollo Management GP.
Apollo Management Holdings GP, LLC (Management Holdings GP, and, together with APHH, APHHGP, Management VII, AIF VII, Apollo Management, Apollo Management GP and Management Holdings, the Apollo Entities) serves as the general
partner of Management Holdings. The managers and principal executive officers of Management Holdings GP are Messrs. Leon D. Black, Joshua Harris and Marc Rowan.
|
Each of the Apollo Entities disclaims beneficial ownership of any shares of the Companys common stock owned of record by
APHH and Messrs. Black, Harris and Rowan, disclaims beneficial ownership of any shares of the Companys common stock owned of record by APHH, in each case except to the extent of any pecuniary interest therein.
12
(5)
|
Consists of shares of Class B Stock which may be
exchanged by the holder thereof for shares of Class A Stock.
|
(6)
|
Consists of (i) 500,000 shares of Class A Stock held
directly by Mr. Metropoulos, (ii) 1,000,000 shares of Class A Stock issuable upon exercise of warrants held directly by Mr. Metropoulos, (iii) 2,496,000 shares of Class B Stock held directly by Mr. Metropoulos which may be exchanged for shares
of Class A Stock, (iv) 27,544,567 shares of Class B Stock held by Hostess CDM Co-Invest, of which Mr. Metropoulos may be deemed to have beneficial ownership as a result of his control thereof and which may be exchanged for shares of Class A Stock
and (v) 2,326,120 shares of Class B Stock held by CDM Hostess, of which Mr. Metropoulos may be deemed to have beneficial ownership as a result of his control thereof and which may be exchanged for shares of Class A Stock.
|
Directors and Executive Officers
Information with respect to the Companys directors and executive officers immediately after the Closing is set forth in
the Proxy Statement in the section entitled Management After the Business Combination beginning on page 321 of the Proxy Statement, which is incorporated herein by reference.
On November 3, 2016, each of Messrs. C. Dean Metropoulos, Andrew Jhawar, Mark R. Stone, Laurence Bodner, Neil P. DeFeo, Jerry
D. Kaminski and Craig D. Steeneck were elected by Gores Holdings, Inc.s stockholders to serve as directors of the post-combination company effective upon consummation of the Business Combination. Messrs. Jhawar and Stone were elected to serve
as Class I directors with a term expiring at the Companys annual meeting of stockholders in 2017. Messrs. Kaminski and Steeneck were elected to serve as Class II directors with a term expiring at the Companys annual meeting of
stockholders in 2018. Messrs. Metropoulos, Bodner and DeFeo were elected to serve as Class III directors with a term expiring at the Companys annual meeting of stockholders in 2019. The size of the Board is seven members. Biographical
information for these individuals is set out in the Proxy Statement in the section entitled Management After the Business Combination beginning on page 321 of the Proxy Statement, which is incorporated herein by reference.
The Board appointed Messrs. Bodner, Kaminski and Steeneck to serve on the Audit Committee, with Mr. Steeneck serving as its
Chairman. The Board appointed Messrs. Bodner, DeFeo and Kaminski to serve on the Compensation Committee, with Mr. Bodner serving as its Chairman. The Board appointed Messrs. DeFeo, Kaminski and Steeneck to serve on the Nominating &
Governance Committee, with Mr. DeFeo as its Chairman. Information with respect to the Companys Audit Committee, Compensation Committee and Nominating & Governance Committee is set forth in the Proxy Statement in the section entitled
Management After the Business Combination Committees of the Board of Directors beginning on page 325 of the Proxy Statement, which is incorporated herein by reference.
In connection with the consummation of the Business Combination, on November 4, 2016, William Toler was appointed to serve as
the Companys President and Chief Executive Officer, Thomas Peterson was appointed to serve as the Companys Executive Vice President, Chief Financial Officer, Michael Cramer was appointed to serve as the Companys Executive Vice
President, Chief Administrative Officer, Andrew Jacobs was appointed to serve as the Companys Senior Vice President, Chief Customer Officer, Stuart Wilcox was appointed to serve as the Companys Senior Vice President, Chief Operating
Officer, Burke Raine was appointed to serve as the Companys Senior Vice President, Chief Marketing Officer, and Jolyn Sebree was appointed to serve as the Companys Senior Vice President, General Counsel. Biographical information for
these individuals is set forth in the Proxy Statement in the section entitled Management After the Business Combination beginning on page 321 of the Proxy Statement, which is incorporated herein by reference.
In connection with the Closing, on November 4, 2016, each executive officer of Gores Holdings, Inc. immediately prior to the
Closing resigned from his respective position as an executive officer of the post-combination company.
Executive Compensation
The compensation for Gores Holdings, Inc.s executive officers before the Business Combination is generally descried in
the Proxy Statement in the section entitled Information About the Company Executive Compensation beginning on page 254 of the Proxy Statement, which is incorporated herein by reference. The compensation of Hostess named
executive officers before the Business Combination is set forth in the Proxy
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Statement in the section entitled Executive Compensation beginning on page 311 of the Proxy Statement, which is incorporated herein by reference. The compensation for the
Companys executive officers after the Closing of the Business Combination is set forth in the section entitled Management After the Business Combination Post-Combination Company Executive Compensation beginning on page 326
of the Proxy Statement, which is incorporated herein by reference.
In connection with the Closing, the Company entered
into the Executive Chairman Arrangement with Mr. Metropoulos, which includes the Executive Chairman Employment Agreement and the Executive Chairman Director Agreement with Mr. Metropoulos. A description of the Executive Chairman
Arrangement, including a description of the Executive Chairman Employment Agreement and the Executive Chairman Director Agreement, is included in Item 1.01 of this Current Report on Form 8-K and is incorporated herein by reference.
On November 3, 2016, the stockholders of Gores Holdings, Inc. approved the Incentive Plan. The description of the Incentive
Plan is included in Item 1.01 of this Current Report on Form 8-K and set forth in the Proxy Statement in the section entitled Proposal No. 9 Approval of the Incentive Plan, Including the Authorization of the Initial Share Reserve
Under the Incentive Plan and Also for Purposes of Complying with Section 162(m) of the Code beginning on page 233 of the Proxy Statement, which is incorporated herein by reference. A copy of the full text of the Incentive Plan is filed as
Exhibit 10.28 to this Current Report on Form 8-K and is incorporated herein by reference.
Director Compensation
As of the date of this Current Report on Form 8-K, the compensation arrangements for the Board have not been determined.
Any such arrangement will be reviewed and approved by the Compensation Committee of the Company and will be publicly disclosed by the Company when such arrangements are approved.
Certain Relationships and Related Transactions
The description of certain relationships and related transactions is included in the Proxy Statement in the section entitled
Certain Relationships and Related Transactions beginning on page 345 of the Proxy Statement, which is incorporated herein by reference.
The information set forth in the section entitled Contribution Agreement, Exchange Agreement,
Tax Receivable Agreement, Registration Rights Agreement and Executive Chairman Arrangement in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Director Independence
NASDAQ listing standards require that a majority of the Board be independent. An independent director is defined
generally as a person other than an officer or employee of a company or its subsidiaries or any other individual having a relationship which in the opinion of the board of directors of such company, would interfere with the directors exercise
of independent judgment in carrying out the responsibilities of a director.
The Company currently has four
independent directors as defined in the NASDAQ listing standards and applicable SEC rules: Messrs. Bodner, DeFeo, Kaminski and Steeneck.
Legal Proceedings
Information about legal proceedings is set forth in the Proxy Statement in the section entitled Information About Hostess
Legal Proceedings on page 275 of the Proxy Statement, which is incorporated herein by reference.
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Market Price of and Dividends on the Registrants Common Equity and Related Stockholder Matters
Information about the market price, number of stockholders and dividends for the Companys securities is set
forth in the Proxy Statement in the section entitled Price Range of Securities and Dividends on page 350 of the Proxy Statement, which is incorporated herein by reference. As of the Closing Date, there were approximately 80
holders of record of the Companys common stock.
In connection with the Closing, the Companys Class A Stock
and public warrants have been listed on NASDAQ under the symbols TWNK and TWNKW, respectively. Our public units automatically separated into the component securities upon consummation of the Business Combination and, as
a result, no longer trade as a separate security.
Recent Sales of Unregistered Securities
Information about unregistered sales of Gores Holdings, Inc.s equity securities is set forth in Part II, Item
15 of Amendment No. 2 to Gores Holdings, Inc.s Registration Statement on Form S-1 (File No. 333-205734) filed with the SEC on August 10, 2015, in Part II, Item 2 of Gores Holdings, Inc.s Quarterly Report on Form 10-Q filed with
the SEC on May 6, 2016, under Item 3.02 of Gores Holdings, Inc.s Current Report on Form 8-K filed with the SEC on July 5, 2016, and in Part II, Item 2 of Gores Holdings, Inc.s Quarterly Report on Form 10-Q filed with
the SEC on August 9, 2016.
The description of the Stock Consideration under Item 2.01 of this Current Report on
Form 8-K is incorporated by reference herein. The shares of the Companys common stock issued as Stock Consideration and in the Private Placement were not registered under the Securities Act in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act and/or Regulation D promulgated thereunder.
Description of the Companys Securities
A description of the Companys common stock and the Companys warrants is included in the Proxy
Statement in the section entitled Description of Securities beginning on page 329 of the Proxy Statement, which is incorporated by reference herein.
The Company has authorized 261,000,000 shares of capital stock, consisting of (i) 260,000,000 shares of common stock,
including (A) 200,000,000 shares of Class A Stock, (B) 50,000,000 shares of Class B Stock, and (C) 10,000,000 shares of Class F Stock and (ii) 1,000,000 shares of preferred stock, par value $0.0001 per share. The outstanding
shares of our common stock are duly authorized, validly issued, fully paid and non-assessable. As of the Closing Date, there were 129,955,905 shares of common stock outstanding, held of record by approximately 80 holders of common stock, no
shares of preferred stock outstanding and 56,500,000 warrants outstanding held of record by approximately 2 holders of warrants. Such numbers do not include Depository Trust Company participants or beneficial owners holding shares through
nominee names.
Indemnification of Directors and Officers
Information about the indemnification of the Companys directors and officers is set forth in the Proxy Statement in the
section entitled Information About the Company Limitation on Liability and Indemnification of Officers and Directors on page 254 of the Proxy Statement, which is incorporated herein by reference.