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PART I
In this Annual Report on Form 10-K (the “Form 10-K”), references to “Capitol” or the “Company” and to “we,” “us” and “our” refer to Capitol Investment Corp. IV.
Introduction
We are a Cayman Islands exempted company incorporated on May 1, 2017 for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities.
We maintain a website located at http://www.capinvestment.com. Our corporate filings, including our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, our proxy statements and reports filed by our officers and directors under Section 16(a) of the Securities Exchange Act of 1934, as amended, and any amendments to those filings, are available, free of charge, on our website as soon as reasonably practicable after we electronically file such material with the Securities and Exchange Commission. We do not intend for information contained in our website to be a part of this Annual Report on Form 10-K.
In addition, you can read our SEC filings, including the registration statement, over the Internet at the SEC’s website at www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facility at 100 F Street, N.E., Washington, D.C. 20549.
You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.
Company History
In May 2017, we issued an aggregate of 10,062,500 Class B ordinary shares (“founders’ shares”) to Capitol Acquisition Management IV LLC and Capitol Acquisition Founder IV LLC (collectively, the “Sponsors”) for $25,000 in cash, at a purchase price of approximately $0.0025 share, in connection with our organization. Our Sponsors subsequently transferred a portion of these founders’ shares to certain individuals, including our independent directors, for the same purchase price originally paid for such shares. The founders’ shares included an aggregate of 1,312,500 shares that were subject to forfeiture if the underwriters’ over-allotment option was not exercised in full in our initial public offering (“Offering”).
On August 21, 2017, we consummated the Offering of 40,250,000 units, including 5,250,000 units subject to the underwriters’ over-allotment option, with each unit consisting of one Class A ordinary share and one-third of one redeemable warrant, each whole warrant to purchase one Class A ordinary share. The Class A ordinary shares and the warrants included in the units traded as a unit until October 6, 2017 when separate trading of Class A ordinary shares and warrants began. No fractional warrants were or will be issued and only whole warrants trade. Holders now have the option to continue to hold units or separate their units into the component pieces. Each whole warrant entitles its holder, upon exercise, to purchase one Class A ordinary share for $11.50 subject to certain adjustments, during the period commencing 30 days after we complete an initial business combination and terminating on the five-year anniversary of the completion of our initial business combination. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $402,500,000.
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Simultaneously with the consummation of the Offering, we consummated the private placement (“Private Placement”) of 6,533,333 warrants (“Private Placement Warrants”) at a price of $1.50 per warrant, generating total proceeds of $9,800,000. The Private Placement Warrants were purchased by our Sponsors and our directors. The Private Placement Warrants are identical to the warrants included in the units sold in the Offering except that the Private Placement Warrants: (i) are not redeemable by us and (ii) are exercisable for cash or on a cashless basis, in each case so long as they are held by the initial purchasers or any of their permitted transferees. The purchasers of the Private Placement Warrants have also agreed not to transfer, assign or sell any of the Private Placement Warrants, including the ordinary shares issuable upon exercise of the Private Placement Warrants (except to certain permitted transferees), until 30 days after the completion of an initial business combination.
We paid a total of $8,050,000 in underwriting discounts and commissions at the closing of the Offering (up to an additional $14,087,500 of deferred underwriting expenses may be paid upon the completion of a business combination) and $565,157 for other costs and expenses related to our formation and the Offering.
After deducting the underwriting discounts and commissions and the offering expenses, the total net proceeds to us from the Offering were approximately $393,900,000 and net proceeds from the Private Placement were $9,800,000. Of these amounts, $402,500,000 was deposited into a trust account established in connection with the Offering. We may withdraw from the trust account interest earned on the funds held therein necessary to pay our income taxes, if any, and for our working capital purposes, subject to an annual limit of $750,000. Except as described above, these funds will not be released to us until the earlier of the completion of a business combination or our liquidation upon our failure to consummate a business combination within the required time period (which may not occur until August 21, 2019).
BUSINESS
We were formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. We are not limited to any particular industry or geographic location in selecting a target business with which to engage in a business combination.
We are seeking to capitalize on the extensive experience and significant contacts of our executive officers in consummating an initial business combination. Mark D. Ein, our Chief Executive Officer and the chairman of our board of directors, has over 25 years of private equity, venture capital, and public acquisition company investing experience, and L. Dyson Dryden, our President and Chief Financial Officer and a member of our board of directors, has approximately 20 years of investment banking and investing experience. Mr. Ein and Mr. Dryden are sometimes referred to herein collectively as our “founders.”
Mr. Ein is the founder and Chief Executive Officer of Venturehouse Group, LLC, a holding company that creates, invests in, grows and builds technology, communications and related business services companies. Venturehouse was founded in 1999 to work closely with a small number of portfolio companies at any one time and to provide operational, strategic, and financing support throughout their lifecycle. Since January 2007, Mr. Ein has been the Co-Chairman and majority owner of Kastle Systems, a firm specializing in building and office security systems, which he acquired through his personal investment holding company, Leland Investments Inc. Prior to forming Venturehouse, from 1992 to 1999, Mr. Ein was a Principal with The Carlyle Group, a leading global private equity firm. Mr. Ein led many of Carlyle’s technology and telecommunications private equity investment activities. Earlier in his career, from 1989 to 1990, Mr. Ein worked for Brentwood Associates, a leading West Coast growth-focused private equity firm, and from 1986 to 1989 for Goldman, Sachs & Co.
Track Record with Similarly Structured Acquisition Vehicles
Mr. Ein and Mr. Dryden have a ten-year track record of successful execution with the following similarly structured public acquisition vehicles, the only ones our management have sponsored.
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Capitol I/Two Harbors
Capitol Acquisition Corp., or Capitol I, was a special purpose acquisition company that completed its initial public offering in June 2007. Mr. Ein was the founder, Chairman and Chief Executive Officer of Capitol I. Capitol I completed its business combination with Two Harbors Investment Corp., or Two Harbors, in October 2009. Two Harbors was a newly formed Maryland real estate investment trust, or REIT, established to focus on residential mortgage backed securities in partnership with Pine River Capital Management L.P. Two Harbors’ common stock is traded on the New York Stock Exchange, or NYSE, under the symbol “TWO”. Mr. Ein served as Vice-Chairman of the board of directors of Two Harbors from October 2009 to May 2015. During Mr. Ein’s tenure as Vice-Chairman, Two Harbors completed the spin-off of Silver Bay Realty Trust, which was the first ever publicly traded single family housing REIT. Mr. Dryden served as Capitol I’s investment banker throughout the search process and assisted with the execution of the Two Harbors transaction.
Capitol II/Lindblad Expeditions
Capitol Acquisition Corp. II, or Capitol II, was a special purpose acquisition company that completed its initial public offering in May 2013. Mr. Ein was the Chairman of the Board and Chief Executive Officer and Mr. Dryden was Chief Financial Officer and Director of Capitol II. Capitol II completed its business combination with Lindblad Expeditions, Inc., or Lindblad, in July 2015. Lindblad is a global leader in expedition cruising and extraordinary travel experiences offering captivating trips featuring highly curated content to 40+ remarkable destinations on all seven continents in partnership with National Geographic. Lindblad’s merger with Capitol II enabled it to pursue attractive growth opportunities including new ship builds, expanded charters and acquisitions. Lindblad’s common stock is traded on the NASDAQ under the symbol “LIND” and its public warrants are traded on the NASDAQ under the symbol “LINDW”. Since the closing of the business combination, Mr. Ein has continued to serve as the Chairman of the Board and Mr. Dryden has continued to serve as a Director of Lindblad.
Capitol III/Cision
Capitol Acquisition Corp. III, or Capitol III, was a special purpose acquisition company that completed its initial public offering in October 2015. Mr. Ein was the Chairman of the Board and Chief Executive Officer and Mr. Dryden was President, Chief Financial Officer and Director of Capitol III. Capitol III completed its business combination with Canyon Holdings S.a r.l., or Cision, in June 2017. Cision is a leading media communication technology and analytics company that enables marketers and communicators to effectively manage their earned media programs in coordination with paid and owned channels to drive business impact. As the creator of the Cision Communications Cloud™, the first-of-its-kind earned media cloud-based platform, Cision has combined cutting-edge data, analytics, technology and services into a unified communication ecosystem that brands can use to build consistent, meaningful and enduring relationships with influencers and buyers in order to amplify their marketplace influence. Cision solutions also include market-leading media technologies such as PR Newswire, Gorkana, PRWeb, Help a Reporter Out (HARO) and iContact. Cision serves over 75,000 customers in 170 countries and 40 languages worldwide, and maintains offices in North America, Europe, the Middle East, Asia, and Latin America. Cision’s ordinary shares are traded on the NYSE under the symbol “CISN” and its public warrants are traded on the NYSE under the symbol “CISN WS”. Since the closing of the business combination, Messrs. Ein and Dryden have continued to serve as directors of Cision.
Additionally, two of our three independent directors were directors of Capitol I, Capitol II and Capitol III and the third was a Special Advisor for Capitol I. Our executive vice president of corporate development was a member of the Capitol II and Capitol III teams, as well as an investment banker to Capitol I. The past performance of our founders and other members of our management team is not a guarantee that we will be able to identify a suitable candidate for our initial business combination or of success with respect to any business combination we may consummate. You should not rely on the historical record of our management’s performance as indicative of our future performance.
Acquisition Strategy
We employ a pro-active acquisition strategy focused on companies that have demonstrated a potential for future growth or companies for which we believe we can be the catalyst to accelerating growth. Our acquisition selection process will leverage our team’s extensive network of industry, private equity and venture capital sponsor relationships as well as relationships with management teams of public and private companies, investment bankers, attorneys and accountants who we believe should provide us with significant business combination opportunities.