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Cohn Robbins Holdings (CRHC) Secures $260M Backstop for Allwyn Deal
by Nicholas Alan Clayton on 2022-08-29 at 9:06am

Cohn Robbins (NASDAQ:CRHC) announced that it has secured a $260 million backstop for its combination with Swiss lottery operator Allwyn.

European investment group PPF has agreed to buy up to 26,000,000 shares at $10 per share as needed, adding to 4,000,000 it already owns. In return, PPF is to receive up to 4,000,000 Class B shares depending on how many shares it is ultimately called up on to purchase.

Should it purchase the maximum amount of shares as part of the agreement, it is expected to own about 4.99% of the combined entity at close. The SPAC’s sponsor will now subject up to 7,200,000 promote shares (34.7%) for forfeiture, up from 3,286,400 (15.8%) and 7,500,000 (36.2%) will now be subject to an earnout with price targets of $12 and $14, up from 5,443,100 (26.3%).

The deal includes a relatively high minimum cash condition of $850 million. But, taken together with the transaction’s $353 million PIPE and €323 million ($323.5 million) in convertible notes, this backstop should more than cover this amount.

Cohn Robbins is however hoping that its structures also lead to fewer redemptions to begin with. It was one of the first teams to offer a pool of bonus shares to non-redeeming shareholders. It made 6,600,000 shares available for this purpose, which in the case of 40% redemptions, would drop the per share cost basis for SPAC shareholders to $8.82, according to its announcement presentation.

While this was considered to be a downside scenario at the time this deal was announced in January, it would now mark an inspiring result as average redemptions to date for SPACs reaching completion in 2022 sits at 85.2%. Only three completed SPACs have managed redemptions under 40% this year – Gores Guggenheim with 20.3% in the Polestar (NASDQA:PSNY) deal, Power & Digital’s 35.8% with Core Scientific (NASDAQ:CORZ) and Spring Valley’s 37.4% for NuScale Power (NYSE:SMR).

But, with up to 31.4% of shares now accounted for with this backstop, Cohn Robbins has a chance to join this club when its shareholders go to vote on September 7.

The parties initially announced their $9.3 billion deal on January 21. Lucerne, Switzerland-based Allwyn operates lottery games in five European countries through both brick-and-mortar retail and online.

Allwyn today also reported second quarter earnings of €277.1 million ($277.7 million) in EBITDA from €550.9 million ($552.2 million) in total gaming revenue, for 50% margins.


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