In a day chock-full of SPAC news, B. Riley Principal Merger Corp., (BRPM), capped it off tonight by announcing they have entered into a definitive agreement with Alta Equipment Holdings Inc. (“Alta”), a leading provider of premium industrial and construction equipment and related services. The transaction has an implied enterprise value of approximately $550 million.

BRPM intends to change its name to Alta Equipment Group Inc. (“Alta Equipment”) and intends to apply to list its shares of common stock on The New York Stock Exchange under the ticker symbol “ALTG.” Alta Equipment is anticipated to have pro forma revenue of $900 million for the year ended December 31, 2019, after taking into account the effect of the acquisition of two dealers by Alta, contingent on the closing of the business combination, which are currently under non-binding letter of intent and pending negotiation of definitive agreements (the “Potential Acquisitions”).

Founded in 1984, Alta owns and operates as one of the largest integrated equipment dealership platforms in the U.S., providing diversified product and service offerings across the industrial and heavy construction equipment markets for an array of manufacturers including Hyster-Yale Materials Handling, Inc., AB Volvo, and JCB Co., Ltd., among more than 30 others. Alta’s business model consists of populating its geographies with new, used and rental equipment and contracting with its vast customer base to provide product support and services.

Following the consummation of the business combination and the closing of the Potential Acquisitions, Alta Equipment will operate in 43 locations across Michigan, Illinois, New England, New York and Florida. The business combination is expected to accelerate Alta’s acquisition strategy, including its geographical market expansion plans.

The business combination is expected to close in the first quarter of 2020.

Quick Takes:  There seems to be a trend lately where a SPAC announces their combination via press release without providing any filed documents or a presentation.  Those materials get filed shortly thereafter, but it makes any initial impressions challenging when items like a PIPE are spoken about in generalities without providing a purchase price.  Additionally, as mentioned in tonight’s press release, the combination will result in it being “the only publicly-listed industrial and construction dealership group in the country.” Again, also challenging since without a peer group, it’s tricky to evaluate and see how it stacks up. However, BRPM is only eight months out from IPO, so they have a solid 10 more months until they expire – plenty of time to close this transaction.  Plus, B. Riley does have the Crescent Term with a threshold at $9.20, so there is some PIPE protection in the event their PIPE is done below that price. At first blush Alta certainly sounds interesting, but let’s wait for the finer details.  This post will be updated post-conference call and release of documents

TRANSACTION SUMMARY

The approximately $550 million business combination is expected to be funded through a combination of equity and debt financings, including:

• $300 million in a new asset-based revolving credit facility being arranged by JPMorgan Chase Bank, N.A., of which approximately $140 million will be drawn at closing;
• $170 million in a new term loan credit facility under documentation with a syndication of institutional investors;
• $35 million of common stock committed to be sold in a private placement with certain institutional and accredited investors; and
• $25 million of units consisting of one share of common stock and one-half of one redeemable warrant to be sold to B. Riley Principal Investments or its designees at $10.00 per unit in a private placement pursuant to a forward purchase agreement.

Proceeds from the financings will be used to complete the Potential Acquisitions and to repay all existing Alta indebtedness. In addition, Mr. Greenawalt and management will roll a substantial majority of their equity interests in Alta into Alta Equipment common stock.

MANAGEMENT TEAM & BOARD

• The Alta Equipment executive management team will continue to be led by Chief Executive Officer, Ryan Greenawalt.
• The board of directors is expected to include Mr. Greenawalt, who will serve as Chairman, and Dan Shribman, Chief Investment Officer of B. Riley Financial and the Chief Financial Officer of BRPM.

CONFERENCE CALL

December 13, 2019, at 10:00 a.m. EST

• Domestic toll-free access number is (844) 270-2148
• International toll-free access number is (412) 902-6510.

Once connected with the operator, request access to the B. Riley Principal Merger Corp. and Alta Equipment Holdings, Inc. Business Combination Call.

A replay of the call will also be available from 11:00 a.m. EST on December 13, 2019 until 11:59 p.m. EST on December 27, 2019. To access the replay, the domestic toll-free access number is (877) 344-7529 and the international toll-free access number is (412) 317-0088. Participants should provide the pin code of 10137517 and request access to the B. Riley Principal Merger Corp. and Alta Equipment Holdings, Inc. Business Combination Call.

ADVISORS

• B. Riley FBR, Inc. is acting as the exclusive placement agent to BRPM
• Winston & Strawn LLP is acting as legal advisor to BRPM
• KPMG is acting as financial advisor to Alta
• Howard & Howard is acting as legal advisor to Alta