And Amends the Public Warrants.

Act II Global Acquisition Corp. (ACTT), announced today that it has entered into a private placement transaction, at a $10.00 per share “benchmark“, with a consortium of investors and accounts led by institutional investor Baron Small Cap Fund for gross proceeds of $75 million. However, “benchmark” is an interesting term. We only have a press release to go by right now, so we’ll have to wait and see if that term is meaningful of something other than $10.00, or a “benchmark” for something else.

In the meantime, there were additional changes to the deal as well. Per the press release:

Substantial Reduction in Dilutive Securities

• Following the closing, the Sellers will no longer receive the previously agreed 1.0 million shares in escrow
• the Sellers will also forfeit their contingent right to any additional earnout consideration, which had totaled up to approximately 2.7 million shares;
• Act II Global LLC (the “Sponsor”) will forfeit 3.0 million Class B ordinary shares;
• 61% of the Sponsor’s private placement warrants will be eliminated at the closing of the business combination;
• as a condition to the parties’ obligations to complete the private placement, Act II will amend all other publicly-held warrants so that each such warrant holder will receive, following the closing of the business combination a cash payment of $0.75 per warrant (with the Sponsor and the private placement investors waiving the right to any such cash payment) and the warrant will be exercisable for one-half of a Class A ordinary share for an exercise price of $5.75 for each one-half share ($11.50 per whole share), effectively eliminating 50% of the dilution from the public warrants.

Improved Leverage Profile

• Net leverage following the consummation of the private placement and warrant amendment is expected to be approximately 2.0x, as opposed to 3.0x as previously announced.

The most notable change probably being to the publicly held warrants, which eliminates half of the public warrants, bringing the public overhang to a 1/4 warrant. However, the Sellers and Act II have re-struck their deal in an effort to make this deal more attractive as well.  Specifically, the sponsors are cancelling 3.0 million of their original 7.5 million founder shares, or 40% of their total. Plus, 61% or their at-risk private placement purchase of warrants.  That’s a big cut.  As for the sellers, they’re eliminating their contingent earnout and the 1.0 million shares in escrow.

However, let’s see what the filed documents have to say about the PIPE “benchmark” price of $10.00 before we fully evaluate these changes.  It could mean nothing or it could mean something.  It looks good so far, but let’s wait for the docs and see.