(1) Share amounts as of December 31, 2017 have been retroactively restated to reflect the forfeiture of 1,125,000 shares in
January 2018 as a result of the underwriters not exercising the over-allotment option.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 1. Description of Organization and Business Operations
Organizational and General
Regalwood
Global Energy Ltd. (the
Company
) is a blank check company incorporated in the Cayman Islands on September 14, 2017. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share
purchase, reorganization or similar business combination with one or more businesses (an
Initial Business Combination
). Although the Company is not limited to a particular industry or geographic region for purposes of consummating
its Initial Business Combination, the Company intends to make investments in oil and gas exploration and production, midstream, refining and marketing and energy services companies outside of North America that may provide opportunities for
attractive risk-adjusted returns. The Company is an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended, (the
Securities Act
) as modified by the Jumpstart Our Business
Startups Act of 2012 (the
JOBS Act
).
As of March 31, 2018, the Company had not yet commenced operations. All activity
through March 31, 2018 relates to the Companys formation, the initial public offering (the
Public Offering
) and the search for a prospective Initial Business Combination. The Company will not generate any operating revenues
until after completion of its Initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income on investments from the net proceeds derived from the initial public offering and a portion of the
proceeds from the sale, simultaneous with the consummation of the Public Offering, of 5,333,333 warrants (the
Private Placement Warrants
) at a purchase price of $1.50 per warrant to the Companys sponsor, CIEP Sponsor Ltd., a
Cayman Islands company (the
Sponsor
) in a private placement (the
Private Placement
).
The Company
intends to finance its Initial Business Combination with proceeds from the Public Offering (Note 3), the sale of the Private Placement Warrants (Note 3), and additional issuances of the Companys capital stock, debt or a combination of the
foregoing. Upon the closings of the Public Offering and the sale of the Private Placement Warrants, approximately $300,000,000 was placed in a trust account (the
Trust Account
) (discussed below).
The registration statement for the Companys Public Offering (as described in Note 3) was declared effective by the U.S. Securities and
Exchange Commission (the
SEC
) on November 30, 2017.
Trust Account
The proceeds held in the Trust Account are and will be invested only in U.S. government securities with a maturity of one hundred eighty
(180) days or less or in money market funds that meet certain conditions under Rule
2a-7
of the Investment Company Act of 1940, as amended, and that invest only in direct U.S. government treasury
obligations, as determined by the Company. These funds will remain in the Trust Account until the earlier of (i) the consummation of the Initial Business Combination or (ii) the distribution of the Trust Account proceeds as described
below. The remaining proceeds outside the Trust Account may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses.
The Companys amended and restated memorandum and articles of association provides that, other than the withdrawal of interest to pay tax
obligations, none of the funds held in the Trust Account will be released until the earliest of: (i) the completion of the Initial Business Combination; (ii) the redemption of any Class A ordinary shares included in the Units (the
Public Shares
) sold in the Public Offering that have been properly tendered in connection with a shareholder vote to amend the Companys amended and restated memorandum and articles of association to affect the substance or
timing of its obligation to redeem 100% of such Public Shares if it has not consummated an Initial Business Combination within 24 months from the closing of the Public Offering; or (iii) the redemption of 100% of the Public Shares if the
Company is unable to complete an Initial Business Combination within 24 months from the closing of the Public Offering. The proceeds deposited in the Trust Account could become subject to the claims of the Companys creditors, if any, which
could have priority over the claims of the Companys public shareholders.
Initial Business Combination
The Companys management has broad discretion with respect to the specific application of the net proceeds of the Public Offering,
although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating an Initial Business Combination. The Initial Business Combination must occur with one or more target businesses that
together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at the time of the agreement to enter into
the Initial Business Combination. Furthermore, there is no assurance that the Company will be able to successfully effect an Initial Business Combination.
The Company, after signing a definitive agreement for an Initial Business Combination, will either (i) seek shareholder approval of the
Initial Business Combination at a meeting called for such purpose in connection with which shareholders may seek to redeem their shares, regardless of whether they vote for or against the Initial Business Combination, for cash equal to their pro
rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business
7
REGALWOOD GLOBAL ENERGY LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Combination, including interest but less taxes payable, or (ii) provide shareholders with the
opportunity to sell their Public Shares to the Company by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as
of two business days prior to the consummation of the Initial Business Combination, including interest but less taxes payable. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be
less than $5,000,001. In such case, the Company would not proceed with the redemption of its Public Shares and the related Initial Business Combination, and instead may search for an alternate Initial Business Combination. The decision as to whether
the Company will seek shareholder approval of the Initial Business Combination or will allow shareholders to sell their Public Shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors
such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek shareholder approval, unless a vote is required by law or under New York Stock Exchange rules. If the Company seeks
shareholder approval, it will complete its Initial Business Combination only if a majority of the ordinary shares voted are voted in favor of the Initial Business Combination.
If the Company holds a shareholder vote or there is a tender offer for shares in connection with an Initial Business Combination, a public
shareholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business
Combination, including interest but less taxes payable. As a result, such Class A ordinary shares are classified as temporary equity upon the completion of the Public Offering, in accordance with the Financial Accounting Standards Board
(
FASB
) Accounting Standards Codification (
ASC
) 480,
Distinguishing Liabilities from Equity
.
Pursuant to the Companys amended and restated memorandum and articles of association, if the Company is unable to complete an Initial
Business Combination within 24 months from the closing of the Public Offering, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, subject to lawfully available funds therefor, redeem the Public Shares, at a
per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest
earned on the funds held in the Trust Account and not previously released to the Company to pay income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which
redemption will completely extinguish public shareholders rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the Companys remaining shareholders and the Companys board of directors, dissolve and liquidate, subject in each case to the Companys obligations under Cayman Islands law to provide
for claims of creditors and the requirements of other applicable law. The Sponsor and the Companys officers and directors have entered into a letter agreement with the Company, pursuant to which they agreed to waive their rights to liquidating
distributions from the Trust Account with respect to any Founder Shares (as defined below) held by them if the Company fails to complete an Initial Business Combination within 24 months of the closing of the Public Offering. However, if the Sponsor
or any of the Companys officers or directors acquires any Class A ordinary shares in or after the Public Offering, such person will be entitled to liquidating distributions from the Trust Account with respect to such shares if the Company
fails to complete an Initial Business Combination within the prescribed time period.
In the event of a liquidation, dissolution or
winding up of the Company after an Initial Business Combination, the Companys shareholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for
each class of ordinary shares, if any, having preference over the ordinary shares. The Companys shareholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the ordinary shares, except that
the Company will provide its shareholders with the opportunity to redeem their Public Shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, upon the completion of the Initial Business
Combination, subject to the limitations described herein.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying
unaudited condensed financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (
GAAP
) and pursuant to the accounting and disclosure
rules and regulations of the SEC, and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position as of March 31, 2018 and the
results of operations and cash flows for the period presented. Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. Interim results
are not necessarily indicative of results for a full year.
The accompanying unaudited condensed financial statements should be read in
conjunction with the audited financial statements and notes thereto included in the Form
10-K
filed by the Company with the SEC on March 29, 2018 and with the audited balance sheet included in the Form
8-K
filed by the Company with the SEC on December 11, 2017.
8
REGALWOOD GLOBAL ENERGY LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Emerging growth company
The Company is an emerging growth company, as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and
it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration
statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to
non-emerging
growth companies but any such election to opt out is irrevocable. The Company has elected not
to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised
standard at the time private companies adopt the new or revised standard. This may make comparison of the Companys financial statements with another public company which is neither an emerging growth company nor an emerging growth company
which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of estimates
The preparation of
condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed
financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management
to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed financial statements, which management considered in
formulating its estimate, could change in the near-term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Concentration of credit risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. As of March 31, 2018
and December 31, 2017, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair value of financial instruments
The
fair value of the Companys assets and liabilities, which qualify as financial instruments under FASB ASC Topic 820,
Fair Value Measurements and Disclosures
approximates the carrying amounts represented in the accompanying
balance sheets, primarily due to their short-term nature.
Income taxes
The Company follows the asset and liability method of accounting for income taxes under FASB ASC Topic 740,
Income Taxes
.
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred
income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
FASB ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of
tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be
more-likely-than-not
to be sustained upon examination by taxing authorities. The
Companys management determined that the Cayman Islands is the Companys only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no
unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2018 or December 31, 2017. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material
deviation from its position.
9
REGALWOOD GLOBAL ENERGY LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
There is currently no taxation imposed on income by the Government of the Cayman Islands. In
accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Companys condensed financial statements.
Redeemable ordinary shares
As discussed
in Note 1, all of the 30,000,000 Public Shares contain a redemption feature which allows for the redemption of such shares under the Companys amended and restated memorandum and articles of association. In accordance with FASB ASC Topic 480,
redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entitys equity
instruments, are excluded from the provisions of FASB ASC Topic 480. Although the Company has not specified a maximum redemption threshold, its amended and restated memorandum and articles of association provides that in no event will the Company
redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001.
The Company recognizes changes
in redemption value immediately as they occur and will adjust the carrying value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable Class A ordinary shares shall be affected by charges against
additional paid in capital.
Accordingly, as of March 31, 2018 and December 31, 2017, 28,639,579 and 28,578,060, respectively,
of 30,000,000 Public Shares were classified outside of permanent equity.
Private Placement Warrants
Each whole Private Placement Warrant is exercisable for one whole Class A ordinary share at a price of $11.50 per share. A portion of the
purchase price of the Private Placement Warrants has been added to the proceeds from the Public Offering to be held in the Trust Account such that at the closing of the Public Offering $300,000,000 was held in the Trust Account. If an Initial
Business Combination is not completed within 24 months from the closing of the Public Offering, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject
to the requirements of applicable law) and the Private Placement Warrants will expire worthless. The Private Placement Warrants will be
non-redeemable
and exercisable on a cashless basis so long as they are
held by the Sponsor or its permitted transferees.
Net income (loss) per ordinary share
Net income per ordinary share is computed by dividing net income applicable to ordinary shares by the weighted average number of ordinary
shares outstanding for the period. The Company has not considered the effect of the warrants sold in the Public Offering and Private Placement to purchase an aggregate of 15,333,333 Class A ordinary shares in the calculation of diluted income
per share, since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income per ordinary share is the same as basic net income per ordinary share for the period.
The Companys statement of operations includes a presentation of net income (loss) per share for ordinary shares subject to redemption in
a manner similar to the
two-class
method. Net income per ordinary share, basic and diluted for Class A ordinary shares is calculated by dividing the interest income earned on the Trust Account, less
applicable income tax expense, by the weighted average number of Class A ordinary shares outstanding for the period. Net loss per ordinary share, basic and diluted for Class B ordinary shares is calculated by dividing the net income, less
income attributable to Class A ordinary shares, by the weighted average number of Class B ordinary shares outstanding for the period.
Related Parties
The Company follows FASB
ASC subtopic
850-10
for the identification of related parties and disclosure of related party transactions.
Pursuant to
Section 850-10-20,
related parties include:
(a) affiliates of the Company (
Affiliate
means, with respect to any specified person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control
with such person, as such terms are used in and construed under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the
Fair Value Option Subsection of
Section 825-10-15,
to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees,
such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party
controls or can
10
REGALWOOD GLOBAL ENERGY LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
significantly influence the management or operating policies of the other to an extent that one of the
transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in
one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
Subsequent Events
The Company evaluates
subsequent events and transactions that occur after the balance sheet date for potential recognition or disclosure. Any material events that occur between the balance sheet date and the date that the condensed financial statements were issued are
disclosed as subsequent events, while the condensed financial statements are adjusted to reflect any conditions that existed at the balance sheet date.
Recent Accounting Pronouncements
The
Companys management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Companys condensed financial statements.
NOTE 3. PUBLIC OFFERING
In the Public
Offering, the Company sold 30,000,000 units at a price of $10.00 per unit (the
Units
). The Sponsor purchased 5,333,333 Private Placement Warrants at a price of $1.50 per warrant in a private placement that occurred simultaneously
with the completion of the Public Offering.
Each Unit consists of one Class A ordinary share, $0.0001 par value, and
one-third
of one warrant (each, a
Warrant
and, collectively, the
Warrants
). Each whole Warrant entitles the holder to purchase one Class A ordinary share at a price of
$11.50 per share. No fractional shares will be issued upon separation of the Units and only whole Warrants will trade. Each Warrant will become exercisable on the later of 30 days after the completion of the Companys Initial Business
Combination or 12 months from the closing of the Public Offering and will expire five years after the completion of the Companys Initial Business Combination or earlier upon redemption or liquidation. Once the Warrants become exercisable,
the Company may redeem the outstanding Warrants in whole and not in part at a price of $0.01 per Warrant upon a minimum of 30 days prior written notice of redemption, if and only if the last sale price of the Companys Class A
ordinary shares equals or exceeds $18.00 per share for any 20 trading days within a
30-trading
day period ending on the third trading day prior to the date on which the Company sent the notice of redemption to
the Warrant holders.
The Company granted the underwriters a
45-day
option to purchase up to
4,500,000 additional Units to cover any over-allotments at the initial public offering price less the underwriting discounts and commissions. The Units that would be issued in connection with the over-allotment option would be identical to the Units
issued in the Public Offering. The option to purchase the additional units was not exercised and therefore 1,125,000 Founder Shares were forfeited by the Sponsor.
The Company paid an underwriting discount of 2.0% of the per Unit offering price to the underwriters at the closing of the Public Offering,
with an additional fee (the
Deferred Discount
) of 3.5% of the gross offering proceeds payable upon the Companys completion of an Initial Business Combination. The Deferred Discount will become payable to the underwriters
from the amounts held in the Trust Account solely in the event the Company completes its Initial Business Combination.
NOTE 4. RELATED PARTY
TRANSACTIONS
Founder Shares
In
September 2017, the Sponsor entered into a Securities Subscription Agreement, for the purchase of 8,625,000 Class B ordinary shares by the Sponsor (the
Founder Shares
) in exchange for a capital contribution of $25,000,
or approximately $0.003 per share. As used herein, unless the context otherwise requires, Founder Shares shall be deemed to include the Class A ordinary shares issuable upon conversion thereof.
The Founder Shares are identical to the Public Shares except that the Founder Shares are Class B ordinary shares which automatically
convert into Class A ordinary shares at the time of the Companys Initial Business Combination and are subject to certain transfer restrictions, as described in more detail below.
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earliest
of (a) one year after the completion of the Initial Business Combination or (b) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction after an Initial Business Combination that results
in all of the Companys shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property. Any permitted transferees
11
REGALWOOD GLOBAL ENERGY LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
will be subject to the same restrictions and other agreements of the Sponsor with respect to any Founder
Shares. Notwithstanding the foregoing, if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any 20
trading days within any
30-trading
day period commencing at least 150 days after the Initial Business Combination, the Founder Shares will be released from such transfer restrictions.
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days
after the completion of the Initial Business Combination.
In January 2018, the Underwriters over-allotment option expired and as a
result the Sponsor forfeited 1,125,000 Class B ordinary shares. This forfeiture is retroactively reflected in the accompanying condensed financial statements.
Registration Rights
The holders of
Founder Shares, Private Placement Warrants and Warrants that may be issued upon conversion of working capital loans, if any, will be entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to
Class A ordinary shares) pursuant to a registration rights agreement entered into in connection with the consummation of the Public Offering. These holders will be entitled to certain demand and piggyback registration rights.
However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act
to become effective until termination of the applicable
lock-up
period. The Company will bear the expenses incurred in connection with the filing of any registration statements under the agreement.
Forward Purchase Agreement
On
December 5, 2017, the Company entered into a forward purchase agreement (the
Forward Purchase
Agreement
) pursuant to which the Sponsor agreed to purchase units consisting of an aggregate of up to 25,000,000
Class A ordinary shares, plus an aggregate of up to 8,333,333 warrants (the
Forward Purchase Warrants
), for an aggregate purchase price of up to $250,000,000 or $10.00 per unit (collectively, the
Forward Purchase
Units
). The Forward Purchase Warrants have the same terms as the Private Placement Warrants.
The obligations under the Forward
Purchase Agreement do not depend on whether any public shareholders elect to redeem their shares in connection with the Initial Business Combination and provide the Company with a minimum funding level for the Initial Business Combination.
Additionally, the obligations of the Sponsor to purchase the Forward Purchase Units are subject to termination prior to the closing of the sale of such units by mutual written consent of the Company and the Sponsor, or automatically: (i) if the
Initial Business Combination is not consummated within 24 months from the closing of the Public Offering, unless extended up to a maximum of sixty (60) days in accordance with the amended and restated memorandum and articles of association; or
(ii) if the Sponsor or the Company become subject to any voluntary or involuntary petition under the United States federal bankruptcy laws or any state insolvency law, in each case which is not withdrawn within sixty (60) days after being
filed, or a receiver, fiscal agent or similar officer is appointed by a court for business or property of the Sponsor or the Company in each case which is not removed, withdrawn or terminated within sixty (60) days after such appointment. In
addition, the obligations of the Sponsor to purchase the Forward Purchase Units are subject to fulfillment of customary closing conditions, including that the Initial Business Combination must be consummated substantially concurrently with the
purchase of the Forward Purchase Units.
Promissory Note Related Party
The Sponsor agreed to loan the Company up to $300,000 to be used for the payment of costs related to the Public Offering. The loan was
non-interest
bearing, unsecured and due upon demand on the earlier of the closing of the Public Offering or April 30, 2018. The Company borrowed $300,000 under the promissory note in order to pay offering
costs. The outstanding balance on the loan was repaid in full in March 2018.
Advances from Related Parties
An Affiliate of the Companys executive officers and the Sponsor paid certain administrative expenses and offering costs on behalf of the
Company. These advances were due on demand and were
non-interest
bearing. These related parties paid certain administrative expenses and offering costs on behalf of the Company in the amount of $209,373. The
outstanding balance on the advances was repaid in full in March 2018.
Administrative Service Fee
The Company agreed, commencing on the effective date of the Public Offering through the earlier of the Companys consummation of an
Initial Business Combination and its liquidation, to pay an Affiliate of the Sponsor a monthly fee of up to $20,000 for office space, and secretarial and administrative services. The Company incurred $60,000 for such expenses under the
administrative services agreement for the three months ended March 31, 2018.
12
REGALWOOD GLOBAL ENERGY LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Related Party Loans
In order to finance transaction costs in connection with an Initial Business Combination, an affiliate of the Sponsor may, but is not obligated
to, loan the Company funds as may be required (
Working Capital Loans
). If the Company completes an Initial Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released
to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements
exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of an Initial Business Combination, without interest, or, at the lenders discretion, up to $1,500,000 of such Working Capital Loans may be
convertible into warrants of the post Initial Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants.
NOTE 5. SHAREHOLDERS EQUITY
Class
A Ordinary Shares
The Company is authorized to issue 350,000,000 Class A
ordinary shares with a par value of $0.0001 per share. Holders of the Companys Class A ordinary shares are entitled to one vote for each share. As of March 31, 2018 and December 31, 2017, there were 30,000,000 Class A ordinary
shares issued and outstanding, of which 28,639,579 shares and 28,578,060 shares were classified outside of permanent equity, respectively.
Class
B Ordinary Shares
The Company is authorized to issue 50,000,000 Class B
ordinary shares with a par value of $0.0001 per share. Holders of the Companys Class B ordinary shares are entitled to one vote for each share. As of March 31, 2018 and December 31, 2017, there were 7,500,000 and 7,500,000,
respectively, Class B ordinary shares issued and outstanding. The number of Class B ordinary shares outstanding as of March 31, 2018 and December 31, 2017 excludes 1,125,000 Class B ordinary shares that were forfeited in January
2018 since the over-allotment option was not exercised by the underwriters. The Class B ordinary shares will automatically convert into Class A ordinary shares on the first business day following the consummation of the Initial Business
Combination. The ratio at which Class B ordinary shares will convert into Class A ordinary shares will be such that the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal, in the
aggregate, on an
as-converted
basis, 20% of the sum of (i) the total number of Class A ordinary shares outstanding upon the completion of the Public Offering, plus (ii) the sum
of (a) the total number of Class A ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to
the consummation of the Initial Business Combination (excluding securities issued as part of the Forward Purchase Units), excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A
ordinary shares issued, or to be issued, to any seller in the Initial Business Combination and any warrants issued to the Sponsor upon conversion of Working Capital Loans, minus (b) the number of Public Shares redeemed by public shareholders in
connection with the Initial Business Combination.
Holders of Class A ordinary shares and Class B ordinary shares will vote
together as a single class on all matters submitted to a vote of shareholders except as required by law.
Preference Shares
The Company is authorized to issue 10,000,000 preference shares with a par value of $0.0001 per share. As of March 31, 2018 and December 31, 2017, there were no preference shares issued or outstanding.
Warrants
Warrants may only be exercised for a whole number of shares. No fractional Warrants will be issued upon
separation of the Units and only whole Warrants will trade. The Warrants will become exercisable on the later of (a) 30 days after the completion of an Initial Business Combination or (b) 12 months from the closing of the Public Offering;
provided in each case that the Company has an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the Warrants and a current prospectus relating to them is available (or the
Company permits holders to exercise their Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later than 15 business days,
after the closing of the Initial Business Combination, the Company will use its reasonable best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A ordinary shares issuable upon
exercise of the Warrants. The Company will use its reasonable best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the
Warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the Warrants is not effective by the sixtieth (60th) day after the closing of the
Initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise Warrants on a
cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption. The Warrants will expire five years after the completion of the Initial Business Combination or earlier upon redemption or liquidation.
13
REGALWOOD GLOBAL ENERGY LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
The Private Placement Warrants are identical to the Warrants, except that the Private
Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of an Initial Business Combination, subject to
certain limited exceptions. Additionally, the Private Placement Warrants will be
non-redeemable
so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held
by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Warrants.
The Company may call the Warrants for redemption (except with respect to the Private Placement Warrants):
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in whole and not in part;
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at a price of $0.01 per warrant;
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upon a minimum of 30 days prior written notice of redemption; and
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if, and only if, the last reported closing price of the ordinary shares equals or exceeds $18.00 per share for any 20 trading days within a
30-trading
day period ending on the
third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
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If the
Company calls the Warrants for redemption, management will have the option to require all holders that wish to exercise the Warrants to do so on a cashless basis, as described in the warrant agreement.
The exercise price and number of Class A ordinary shares issuable upon exercise of the Warrants may be adjusted in certain circumstances
including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, the Warrants will not be adjusted for issuance of Class A ordinary shares at a price below its exercise price. Additionally, in
no event will the Company be required to net cash settle the warrant shares. If the Company is unable to complete an Initial Business Combination within 24 months from the consummation of the Public Offering and the Company liquidates the funds held
in the Trust Account, holders of Warrants will not receive any of such funds with respect to their Warrants, nor will they receive any distribution from the Companys assets held outside of the Trust Account with the respect to such Warrants.
Accordingly, the Warrants may expire worthless.
Note 7. Fair Value Measurements
The following table presents information about the Companys assets that are measured on a recurring basis as of March 31, 2018 and
December 31, 2017 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active
markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are
unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability.
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Description
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Fair Value
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Quoted
Prices
in Active
Markets
(Level 1)
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Significant
Other
Observable
Inputs
(Level 2)
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Significant
Other
Unobservable
Inputs
(Level 3)
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Cash and marketable securities held in Trust Account
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March 31, 2018
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$
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301,175,693
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$
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301,175,693
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$
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$
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December 31, 2017
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$
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300,225,208
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$
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300,225,208
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$
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$
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14