CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this report that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Annual Report on Form 10-K may include, for example, statements about:
The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in this Annual Report. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Landcadia Holdings III, Inc.
PART I
References in this report to “we,” “us” or the “Company” refer to Landcadia Holdings III, Inc. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsors” refer to TJF, LLC, a Delaware limited liability company, and Jefferies Financial Group, a New York corporation.
Item 1. Business
Overview
We are a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (“Business Combination”). We were formed as Automalyst LLC, a Delaware limited liability company on March 13, 2018, and converted into a Delaware corporation on August 24, 2020. We consummated an initial public offering (“Public Offering”) on October 14, 2020.
We intend to use the cash proceeds from our Public Offering and Private Placement (as defined below) as well as additional issuances, if any, of our capital stock, debt or a combination of cash, stock and debt, including the Private Investment in a Public Company (“PIPE Investment”), to complete the Business Combination. We have neither engaged in any operations nor generated any revenue to date. Based on our business activities, the Company is a “shell company” as defined under the Exchange Act of 1934 (the “Exchange Act”) because we have no operations and nominal assets consisting almost entirely of cash.
The Company’s management team is led by Tilman Fertitta, our Co-Chairman and Chief Executive Officer, and Richard Handler, our Co-Chairman and President. Mr. Fertitta is the sole shareholder, Chairman and Chief Executive Officer of TJF, LLC (“TJF Sponsor”) and Mr. Handler is the Chief Executive Officer of Jefferies Financial Group Inc. (“JFG Sponsor”), and its largest operating subsidiary, Jefferies Group LLC, a global investment banking firm. The Company’s sponsors are TJF Sponsor and JFG Sponsor (collectively, the “Sponsors”).
On October 14, 2020 we consummated a $500,000,000 Public Offering consisting of 50,000,000 units at a price of $10.00 per unit (“Unit”). Each Unit consists of one share of the Company’s Class A common stock, $0.0001 par value (the “Class A common stock”) and one-third of one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share. Simultaneously, with the closing of the Public Offering, we consummated a $12,000,000 private placement (the “Private Placement”) of an aggregate of 8,000,000 warrants (“Sponsor Warrants”) at a price of $1.50 per warrant. The Sponsor Warrants are identical to the Public Warrants sold as part of the Units in the Public Offering except that, so long as they are held by our Sponsors or their permitted transferees, (i) they are not redeemable by us, (ii) they (including the Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our Sponsors until 30 days after the completion of our initial Business Combination and (iii) they may be exercised by the holders on a cashless basis.
Prior to the Public Offering, in 2018, JFG, through a subsidiary, purchased 100% of the membership interest in the Company for $1,000. On August 24, 2020, TJF purchased 51.7% membership interest in the Company for $1,070. Simultaneously, the Company converted from a limited liability company to a corporation and its previously outstanding membership interests converted into shares of Class B common stock. The total number of authorized shares of all classes of capital stock to 401,000,000, of which 380,000,000 shares are Class A common stock; 20,000,000 shares are Class B shares at par value $0.0001 per share (the “Founder Shares”); and 1,000,000 shares are preferred stock at par value $0.0001 per share. The Sponsors held an aggregate of 11,500,000 Class B shares based on the proportional interest in the Company. On September 16, 2020, the Company conducted a 1:1.25 stock split of the Founder Shares so that a total of 14,375,000 Founder Shares were issued and outstanding. An aggregate of 1,875,000 Founder Shares were forfeited because the underwriters did not exercise their over-allotment option. As of December 31, 2020, JFG and TJF owned an aggregate of 12,500,000 Founder Shares based on their proportional interest in the Company.
Upon the closing of the Public Offering and Private Placement, $500,000,000 from the net proceeds of the sale of the Units in the Public Offering and the Private Placement (including $17,500,000 of deferred underwriting commissions) was placed in a U.S.-based trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee (the “Trust Account”). The Company’s second amended and restated certificate of incorporation 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 Business Combination; (ii) the redemption of any shares of Class A common stock included in the Units being sold in the Public Offering (“Public Shares”) properly submitted in connection with a stockholder vote to amend the Company’s second amended and restated certificate of incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete the Business Combination by October 14, 2022 (within 24 months from the closing of the Public Offering); or (iii) the redemption of the Public Shares if the Company is unable to complete the Business Combination by October 14, 2022, subject to applicable law. The proceeds held in the Trust Account can only be invested in permitted United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. As of December 31, 2020, we had a balance in cash and investments held in trust of $500,078,624. As of December 31, 2020, no funds had been withdrawn from the Trust Account to pay taxes. We expect to pay our franchise tax liability of $71,388 from the trust earnings in the first quarter of 2021.
The remaining $12,000,000 held outside of trust was used to pay underwriting commissions of $10,000,000, loans to our Sponsors, and deferred offering and formation costs. As of December 31, 2020, we had an unrestricted balance of $1,017,406 to satisfy our working capital purposes.
Proposed Business Combination
On January 24, 2021, our board of directors, unanimously approved an agreement and plan of merger, dated January 24, 2021, by and among the Company, Helios Sun Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), HMAN Group Holdings Inc., a Delaware corporation (“Hillman Holdco”) and CCMP Sellers’ Representative, LLC, a Delaware limited liability company in its capacity as the Stockholder Representative thereunder (in such capacity, the “Stockholder Representative”) (as it may be amended and/or restated from time to time, the “Merger Agreement”). If the Merger Agreement is adopted by our stockholders and the transactions under the Merger Agreement are consummated, Merger Sub will merge with and into Hillman Holdco with Hillman Holdco surviving the merger as a wholly owned subsidiary of the Company (the “Proposed Transaction”). Hillman Holdco is a holding company that indirectly holds all of the issued and outstanding capital stock of The Hillman Group, Inc., which, together with its direct and indirect subsidiaries (Hillman Holdco, The Hillman Group, Inc. and its direct and indirect subsidiaries, collectively, “Hillman” and each such entity, a “Hillman Group Entity”), is in the business of providing hardware-related products and related merchandising services to retail markets in North America. In connection with the consummation of the Proposed Transaction, the Company will be renamed “Hillman Solutions Corp.” and is referred to herein as “New Hillman” as of the time following such change of name.
Consummation of the Proposed Transaction is subject to customary conditions of the respective parties, including the approval of the Merger Agreement, the Proposed Transaction and certain other actions related thereto by our stockholders and Hillman Holdco’s stockholders, and the availability of a minimum amount of cash in the Trust Account (and/or from other specified sources, if necessary), after giving effect to redemptions by the Company’s public stockholders, if any. The Merger Agreement may also be terminated by either party under certain circumstances.
For additional information regarding Hillman Holdco, Hillman, the Merger Agreement and the Proposed Transaction, see the Proxy Statement/Prospectus initially filed by the Company on February 3, 2021.
Other than as specifically discussed, this report does not assume the closing the Business Combination.
Subscription Agreements
Concurrently with the execution of the Merger Agreement on January 24, 2021, we entered into the subscription agreements with certain institutional investors, including JFG Sponsor (the “PIPE Investors”), pursuant to which, among other things, we agreed to issue and sell in private placements an aggregate of 37,500,000 shares of our Class A common stock to the PIPE Investors for $10.00 per share (the “PIPE Private Placement”).
The PIPE Private Placement investment is expected to close substantially concurrently with the Closing. In connection with the Closing, all of our issued and outstanding shares of Class A common stock, including the shares of Class A common stock issued to the PIPE Investors, will be exchanged, on a one-for-one basis, for shares of New Hillman common stock.
The shares of New Hillman common stock to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. We will grant the PIPE Investors certain registration rights in connection with the PIPE Private Placement. The PIPE Private Placement is contingent upon, among other things, the closing of the Proposed Transaction.
A&R Letter Agreement
In connection with the execution of the Merger Agreement, the Company, our Sponsors, each member of our Board and each of our executive officers entered into an amended and restated letter agreement (the “A&R Letter Agreement”). Like the letter agreements entered into by such persons in connection with our initial public offering or their appointment to the board, pursuant to the A&R Letter Agreement each of our Sponsors, directors and members of the management team have agreed to (i) waive their redemption rights with respect to their founder shares (as defined below) and public shares in connection with the completion of the Proposed Transaction; (ii) waive their redemption rights with respect to their founder shares and public shares in connection with a stockholder vote to approve an amendment to the second amended and restated certificate of incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of the public shares if the Company does not complete a Business Combination by October 14, 2022, or to provide for redemption in connection with a Business Combination and (iii) waive their rights to liquidating distributions from the Trust Account with respect to their founder shares if the Company fails to complete a Business Combination by October 14, 2022, although they will be entitled to redemption or liquidating distributions from the Trust Account with respect to any public shares they hold if the Company fails to complete a Business Combination within the prescribed time frame; (iv) vote any founder shares held by them and any public shares purchased during or after the IPO (including in open market and privately-negotiated transactions) in favor of the Proposed Transaction, (v) not to transfer or sell (subject to certain limited exceptions) (1) the founder shares until the earlier of (A) one year after the completion of our initial business combination or (B) subsequent to our initial business combination, (x) if the reported closing price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading-day period commencing at least 150 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property, or (2) the private placement warrants and the Class A common stock underlying such warrants, until 30 days after the completion of our initial business combination.
In addition, the A&R Letter Agreement provides that, at the Closing, (i) our Sponsors will waive any adjustment to the conversion ratio set forth in our governing documents or any other anti-dilution or similar protection with respect to the shares of Class B common stock (whether resulting from the PIPE Private Placement or otherwise), and (ii) the Sponsors will forfeit an aggregate of 2,828,000 shares of our Class B common stock otherwise issuable to them upon conversion of their founder shares and that the TJF Founder will forfeit an additional 1,000,000 shares of our Class B common stock otherwise issuable to it upon conversion of its founder shares.
Hillman Holdco Voting and Support Agreement
In connection with the execution of the Merger Agreement, certain Hillman Holdco stockholders (the “Hillman Holdco supporting stockholders”) entered into a voting and support agreement with the Company. Under the Hillman Holdco voting and support agreement, the Hillman Holdco supporting stockholders agreed that they will not transfer, and will deliver a written consent with respect to their shares of Hillman Holdco common stock in favor of the adoption and approval of the Merger Agreement and the transactions contemplated by the Merger Agreement, promptly following the time at which the registration statement of the shares issuable in connection with the Proposed Transaction shall have been declared effective.
Registration Rights Agreement
At the Closing, New Hillman, our Sponsors and the Hillman Holdco supporting stockholders will enter into an Amended and Restated Registration Rights Agreement (the “A&R Registration Rights Agreement”), pursuant to which, among other things, (i) New Hillman will agree to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of New Hillman common stock and other equity securities of New Hillman that are held by the parties thereto from time to time, (ii) our Sponsors and the Hillman Holdco supporting stockholders will be granted certain registration rights and (iii) our Sponsors will reaffirm the lock-up they agreed to in the A&R Letter Agreement and the Hillman Holdco supporting stockholders will agree to a lock-up under which they will not sell, for the period set forth therein, the shares of New Hillman common stock they will receive in the Business Combination.
In addition, the A&R Registration Rights Agreement will provide for shelf, demand and piggyback registration rights. In addition, the A&R Registration Rights Agreement will provide that, notwithstanding such registration rights, affiliates of CCMP shall not transfer any securities of New Hillman for six months following the Closing and each Sponsor shall not transfer its Founder Shares for one year after the Closing, subject to certain customary expectations.
Effecting Our Initial Business Combination
General
We are not presently engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate our initial Business Combination using cash held in the Trust Account, our equity, debt or a combination of these as the consideration. We may seek to complete our initial Business Combination with a company or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If our initial Business Combination is paid for using equity or debt securities, or not all of the funds released from the Trust Account are used for payment of the consideration in connection with our initial Business Combination or used for redemptions of our Class A common stock, we may apply the balance of the cash released to us from the Trust Account for general corporate purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial Business Combination, to fund the purchase of other companies or for working capital.
We may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our initial Business Combination, and we may effectuate our initial Business Combination using the proceeds of such offering rather than using the amounts held in the Trust Account. In addition, we intend to target businesses with enterprise values that are greater than we could acquire with the net proceeds of the Public Offering and the Private Placement, and, as a result, if the cash portion of the purchase price exceeds the amount available from the Trust Account, net of amounts needed to satisfy any redemptions by public stockholders, we may be required to seek additional financing to complete such proposed initial Business Combination. Subject to compliance with applicable securities laws, we would expect to complete such financing only simultaneously with the completion of our initial Business Combination. In the case of an initial Business Combination funded with assets other than the Trust Account assets, our proxy materials or tender offer documents disclosing the initial Business Combination would disclose the terms of the financing and, only if required by law, we would seek stockholder approval of such financing. There is no limitation on our ability to raise funds through the issuance of equity or equity-linked securities or through loans, advances or other indebtedness in connection with our initial Business Combination, including pursuant to forward purchase agreements or backstop agreements. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise. None of our Sponsors, officers, directors or stockholders are required to provide any financing to us in connection with or after our initial Business Combination.