Notes
to Financial Statements
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1.
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Nature of Business and Subsequent Events
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Business
Landcadia Holdings II, Inc., (the “Company”),
was formed as CAPS Holding LLC, a Delaware limited liability company on August 11, 2015 and converted into a Delaware corporation
on February 4, 2019.
The Company has not had any significant operations
to date. The Company was formed to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or
similar business combination with one or more businesses (the “Business Combination”). The Company has not yet identified
a Business Combination. There is no assurance that the Company’s plans to consummate a Business Combination will be successful.
All activity through September 30, 2019 relates to
the Company’s formation and its initial public offering of units (the “Public Offering”), which is described
below.
Sponsors
The Company’s sponsors are Fertitta Entertainment,
Inc. (“FEI”) and Jefferies Financial Group Inc. (“JFG” and, together with FEI, the “Sponsors”).
FEI is wholly owned by Tilman J. Fertitta, the Company’s Co-Chairman and Chief Executive Officer.
Financing
The Company intends to finance its Business Combination
in part with proceeds from its $316,250,000 Public Offering and $8,825,000 private placement (the “Private Placement”),
see Notes 4 and 5. The registration statement for the Public Offering was declared effective by the U.S. Securities and Exchange
Commission (“SEC”) on May 6, 2019. The Company consummated the Public Offering of 31,625,000 units, including the issuance
of 4,125,000 units as a result of the underwriters’ exercise of their over-allotment option in full (the “Units”),
at $10.00 per Unit on May 9, 2019, generating gross proceeds of $316,250,000. Simultaneously with the closing of the Public Offering,
the Company consummated the Private Placement of an aggregate of 5,883,333 warrants (the “Sponsor Warrants”) at a price
of $1.50 per Sponsor Warrant. Upon the closing of the Public Offering and Private Placement, $316,250,000 from the net proceeds
of the sale of the Units in the Public Offering and the Private Placement was placed in a U.S.-based trust account maintained by
Continental Stock Transfer & Trust Company, acting as trustee (the “Trust Account”).
Trust Account
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.
The Company’s third amended and restated certificate
of incorporation (the “Charter”) 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 sold in the Public Offering (“Public
Shares”) properly submitted in connection with a stockholder vote to amend the Charter 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 May 9, 2021 (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 May 9, 2021, subject to applicable law.
Initial Business Combination
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Public Offering and Private Placement, although substantially
all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance
that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business
Combinations having an aggregate fair market value of at least 80% of the value of the assets held in the Trust Account (excluding
deferred underwriting commissions and taxes payable on the interest earned on the Trust Account) at the time of the Company’s
signing a definitive agreement in connection with an initial Business Combination. The Company will only complete a Business Combination
if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act.
The Sponsors and the Company's officers and directors
have entered into a letter agreement with the Company, pursuant to which they have agreed to (i) waive their redemption rights
with respect to their Founders Shares (as defined below) and Public Shares in connection with the completion of the Business Combination,
(ii) waive their redemption rights with respect to their Founders Shares and Public Shares in connection with a stockholder vote
to approve an amendment to the Charter 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 May 9, 2021, 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 Founders
Shares if the Company fails to complete a Business Combination by May 9, 2021, although they will be entitled to 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; and (iv) vote any Founders Shares held by them and any Public Shares purchased during or after the Public
Offering (including in open market and privately-negotiated transactions) in favor of the Business Combination.
The Company, after signing a definitive agreement
for the Business Combination, will either (i) seek stockholder approval of the Business Combination at a meeting called for such
purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the
Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account calculated
as of two business days prior to the consummation of the Business Combination, including interest earned on the Trust Account and
not previously released to the Company to pay its taxes, or (ii) provide stockholders with the opportunity to sell their shares
to the Company by means of a tender offer for an amount in cash equal to their pro rata share of the aggregate amount then on deposit
in the Trust Account calculated as of two business days prior to commencement of the tender offer, including interest earned on
the Trust Account and not previously released to the Company to pay its taxes. The decision as to whether the Company will seek
stockholder approval of the Business Combination or will allow stockholders to sell their shares in a tender offer will be made
by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether
the terms of the transaction would otherwise require the Company to seek stockholder approval. If the Company seeks stockholder
approval, it will complete the Business Combination only if a majority of the outstanding shares of common stock voted are voted
in favor of the Business Combination. However, in no event will the Company redeem the Public Shares in an amount that would cause
its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of the Public
Shares and the related Business Combination, and instead may search for an alternate Business Combination.
Notwithstanding the foregoing redemption rights,
if the Company seeks stockholder approval of the Business Combination and it does not conduct redemptions in connection with the
Business Combination pursuant to the tender offer rules, the Charter provides that a public stockholder, together with any affiliate
of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined
under Section 13 of the Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its
shares with respect to more than an aggregate of 15% of the shares sold in the Public Offering, without the Company’s prior
consent.
The Public Shares subject
to possible redemption have been recorded and classified as temporary equity
(“Redeemable Shares”), in accordance with the Financial Accounting Standards Board Accounting Standards
Codification (“FASB ASC”) 480, ‘‘Distinguishing Liabilities from Equity.’’ The amount in
the Trust Account was initially $10.00 per Public Share ($316,250,000 held in the Trust Account divided by 31,625,000 Public
Shares). See Note 3.
The Company will have until May 9, 2021 to complete
the Business Combination. If the Company does not complete the Business Combination within this period of time, it shall (i) cease
all operations except for the purposes of winding up; (ii) as promptly as reasonably possible, but not more than ten business days
thereafter, redeem the Public Shares for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay
its taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares,
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining
stockholders and its board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under
Delaware law to provide for claims to creditors and the requirements of other applicable law. The Sponsors and the Company’s
officers and directors have entered into a letter agreement with the Company, pursuant to which they have waived their rights to
liquidating distributions from the Trust Account with respect to any Founders Shares (as defined below) held by them if the Company
fails to complete its Business Combination by May 9, 2021; however, the Sponsors, officers and directors are entitled to liquidating
distributions from the Trust Account with respect to Public Shares held by them if the Company does not complete the Business Combination
within the required time period. In the event of such distribution, it is possible that the per share value of the residual assets
remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per Unit
in the Public Offering.
Pursuant to the letter agreement referenced above,
the Sponsors, officers and directors agreed that, if the Company submits the Business Combination to the Company’s public
stockholders for a vote, such parties will vote their Founders Shares and any Public Shares in favor of the Business Combination.
Subsequent Events
The Company has evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date the financial statements were issued. The Company did not identify any
subsequent events that would have required adjustment to or disclosure in the financial statements.
Fiscal Year End
The Company has a December 31 fiscal year-end.
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2.
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Summary of Significant Accounting Policies
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Basis of Presentation
These unaudited financial statements include the
accounts of Landcadia Holdings II, Inc., and have been prepared in conformity with accounting principles generally accepted in
the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. The interim financial information
provided is unaudited, but includes all adjustments which management considers necessary for the fair presentation of the results
for these periods. Operating results for interim periods are not necessarily indicative of the results that may be expected for
the full year period and should be read in conjunction with the Company’s audited financial statements and notes thereto
included in the Company’s prospectus filed with the SEC on May 6, 2019, and the Company’s audited balance sheet and
notes thereto included in the Company’s Form 8-K filed with the SEC on May 15, 2019.
Use of Estimates
The preparation of these financial statements requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart
Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to,
not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of
the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of
any golden parachute payments not previously approved.
Further, section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies
(that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities
registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act
provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging
growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition
period which means that when a standard is issued or revised and it has different application dates for public or private companies,
the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or
revised standard. This may make comparison of the Company’s financial statements with another public company which is neither
an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Cash and Cash equivalents
The Company considers cash equivalents to be all
short-term investments with an original maturity of three months or less when purchased.
Cash consists of proceeds from the Public Offering
and Private Placement held outside of the Trust Account and may be used to pay for business, legal and accounting due diligence
for the Business Combination and continuing general and administrative expenses.
Concentration of Credit Risk
Financial instruments that potentially subject the
Company to concentrations of credit risk consist of cash accounts with a financial institution which may exceed the Federal depository
insurance coverage of $250,000. The Company has not experienced losses on these accounts and the Company believes that it is not
exposed to significant risks on such accounts.
Fair Value of Financial Instruments
The fair value of the Company’s
assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurement and Disclosures,”
approximates the carrying amounts represented in the balance sheet.
Offering Costs
The Company complies with the requirements of FASB
ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A-“Expenses of Offering.” Offering costs
of approximately $700,000 consisted of costs incurred for legal, accounting, and other costs incurred in connection with the formation
and preparation of the Public Offering. These costs, together with $17,393,750 in underwriting commissions, were charged to additional
paid-in capital upon the closing of the Public Offering.
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities were $118,036
as of September 30, 2019, and primarily consist of costs incurred for the formation and preparation of the Public Offering with
corresponding amounts charged to Offering costs.
Loss Per Common Share
Basic loss per common share
is computed by dividing net income applicable to common stockholders by the weighted average number of common shares outstanding
during the period. All shares of Class B common stock are assumed to convert to shares of Class A common stock on a one-for-one
basis. Consistent with FASB ASC 480, shares of Class A common stock subject to possible redemption, as well as their pro rata share
of undistributed trust earnings consistent with the two-class method, have been excluded from the calculation of loss per common
share for the three and nine months ended September 30, 2019. Such shares, if redeemed, only participate in their pro rata share
of trust earnings, see Note 3. Diluted loss per share includes the incremental number of shares of common stock to be issued in
connection with the conversion of Class B common stock or to settle warrants, as calculated using the treasury stock method. For
the three and nine months ending September 30, 2019 and 2018, the Company did not have any dilutive warrants, securities or other
contracts that could, potentially, be exercised or converted into common stock. As a result, diluted loss per common share is the
same as basic loss per common share for all periods presented. In accordance with FASB ASC 260, the loss per share calculation
reflects the effect of the stock splits as discussed in Note 3.
A reconciliation of net loss
per common share as adjusted for the portion of income that is attributable to common stock subject to redemption is as follows:
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Three months ended,
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Nine months ended,
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September 30,
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September 30,
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2019
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2018
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2019
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2018
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Net income
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$
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1,181,113
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|
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$
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-
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$
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2,002,647
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$
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-
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Less: Income attributable to common stock subject to possible redemption
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(1,237,769
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)
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-
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(2,139,843
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)
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-
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Net loss available to common shares
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$
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(56,656
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)
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$
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-
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$
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(137,196
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)
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$
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-
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|
|
|
|
|
|
|
|
|
|
|
|
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Basic and diluted weighted average number of shares
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9,341,939
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|
|
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3,317,875
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|
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7,589,177
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|
|
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3,317,875
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Basic and diluted loss available to common shares
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$
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(0.01
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)
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$
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-
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$
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(0.02
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)
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$
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-
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Income Taxes
The Company complies with the accounting and reporting
requirements of FASB ASC 740, “Income Taxes,” which requires an asset and liability approach to financial accounting
and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement
and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and
rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount expected to be realized.
There were no unrecognized tax benefits as of September
30, 2019 and December 31, 2018. FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement
recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized,
a tax position must be more-likely-than not to be sustained upon examination by taxing authorities. The Company recognizes accrued
interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest
and penalties at September 30, 2019 and December 31, 2018. The Company is currently not aware of any issues under review that could
result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations
by major taxing authorities since inception.
The effective tax rate for the nine months ended
September 30, 2019 was 21.3%. There was no income tax provision for the nine month period ended September 30, 2018.
On December 22, 2017 the U.S. Tax Cuts and Jobs Act
of 2017 (“Tax Reform”) was signed into law. As a result of the Tax Reform, the U.S. statutory tax rate was lowered
from 35% to 21% effective January 1, 2018, among other changes. The Company converted to a corporation in February 2019, therefore
this Tax Reform has no effect on the Company’s financial statements.
Recent Accounting Pronouncements
Management does not believe that any recently issued,
but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial
statements.
In 2015, JFG purchased an aggregate of 1,000 shares
of the Company’s common stock (100% of the issued and outstanding shares) for $1,000. On February 14, 2019, the Company amended
the total number of authorized shares of all classes of capital stock to 221,000,000, of which 200,000,000 shares are Class A shares
at par value $0.0001 per share; 20,000,000 shares are Class B shares at par value $0.0001 per share (the “Founders Shares”);
and 1,000,000 shares are Preferred stock at par value $0.0001 per share. Simultaneously, the Company reclassified all of its issued
and outstanding shares of common stock to Founders Shares and conducted a 1:2,775 stock split. Also, on February 14, 2019, the
Company issued 2,975,000 additional Founders Shares to FEI for $10,000. On March 13, 2019, the Company conducted a 1:1.25 stock
split and on May 6, 2019 a 1:1.10 stock split of the Founders Shares. The financial statements reflect the changes from these splits
retroactively for all periods presented.
Following these transactions, the Sponsors owned
7,906,250 issued and outstanding Founders Shares and the Company had $11,000 of invested capital, or approximately $0.001 per share.
Redeemable Shares
All of the 31,625,000 Public Shares sold as part
of the Public Offering contain a redemption feature as defined in the Public Offering. In accordance with FASB ASC 480, redemption
provisions not solely within the control of the Company require the security to be classified outside of permanent equity. The
Company’s amended and restated certificate of incorporation provides a minimum net tangible asset threshold of $5,000,001.
The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of the security
to equal the redemption value at the end of each reporting periods. Increases or decreases in the carrying amount of Redemption
Shares will be affected by charges against additional paid-in capital.
At September 30, 2019, there were 31,625,000 Public
Shares, of which 30,185,504 were classified as Redeemable Shares, classified outside of permanent equity, and 1,439,496 classified
as Class A common stock.
For further information on the Founders Shares, see
Note 5.
Public Units
In the Public Offering,
which closed May 9, 2019, the Company sold 31,625,000 Units at a price of $10.00 per Unit. Each Unit consists of one share of
the Company’s Class A common stock, $0.0001 par value and one-third of one redeemable warrant (each a “Public
Warrant”). Under the terms of the warrant agreement, the Company has agreed to use its best efforts to file a new
registration statement to register the shares of common stock underlying the warrants under the Securities Act following the
completion of the Business Combination. Each whole Warrant entitles the holder to purchase one share of Class A common stock
at a price of $11.50 per share. Each Public Warrant will become exercisable on the later of 30 days after the completion of
the Business Combination or 12 months from the closing of the Public Offering. However, if the Company does not complete the
Business Combination on or prior to May 9, 2021, the Warrants will expire at the end of such period. If the Company is unable
to deliver registered shares of Class A common stock to the holder upon exercise of Public Warrants issued in connection with
the Units during the exercise period, there will be no net cash settlement of these Public Warrants and the Public Warrants
will expire worthless, unless they may be exercised on a cashless basis in the circumstances described in the warrant
agreement. Once the Public Warrants become exercisable, the Company may call the warrants for redemption: (i) in whole and
not in part; (ii) at a price of $0.01 per warrant; (iii) upon not less than 30 days’ prior written notice of redemption
to each warrant holder; and (iv) if, and only if, the reported closing price of the Class A common stock equals or exceeds
$18.00 value per share for any 20 trading days within a 30-trading day period ending three business days before the
Company sends the notice of redemption to the warrant holders.
Underwriting Commissions
The Company paid an underwriting discount of $6,325,000
($0.20 per Unit sold) to the underwriters at the closing of the Public Offering on May 9, 2019, with an additional fee (“Deferred
Discount”) of $11,068,750 ($0.35 per Unit sold) payable upon the Company’s completion of the Business Combination.
The Deferred Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the
Company completes its Business Combination. See Note 5 for further information on underwriting commissions.
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5.
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Related Party Transactions
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Founders Shares
The Founders Shares are identical to the Public Shares
except that the Founders Shares are subject to certain transfer restrictions and automatically convert into shares of Class A common
stock at the time of the Business Combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights.
The initial stockholders collectively own 20% of the Company’s issued and outstanding shares of common stock after the Public
Offering.
The holders of the Founders Shares have agreed not
to transfer, assign or sell any of their Founders Shares until one year after the completion of the Business Combination, or earlier
if, subsequent to the Business Combination, (i) the closing price of the Company’s 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 the Business Combination or (ii) the date on which the Company
completes a liquidation, merger, stock exchange or other similar transaction after the Business Combination that results in all
of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property
(the ‘‘Lock Up Period’’).
The Founders Shares will automatically convert into
shares of Class A common stock concurrently with or immediately following the consummation of the Business Combination on a one-for-one
basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to
further adjustment. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed
issued in connection with the Business Combination, the number of shares of Class A common stock issuable upon conversion of all
Founders Shares will equal, in the aggregate, 20% of the total number of all shares of Class A common stock outstanding after such
conversion (after giving effect to any redemptions of shares of Class A common stock by public stockholders), including the total
number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked
securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial
business combination, excluding any shares of Class A common stock or equity-linked securities exercisable for or convertible into
shares of Class A common stock issued, or to be issued, to any seller in the Business Combination and any private placement-equivalent
warrants issued to the Sponsors, officers or directors upon conversion of working capital loans; provided that such conversion
of Founders Shares will never occur on a less than one-for-one basis.
Sponsor Warrants
In conjunction with the Public Offering that closed
on May 9, 2019 the Sponsors purchased an aggregate of 5,883,333 Sponsor Warrants at a price of $1.50 per warrant ($8,825,000 in
the aggregate) in the Private Placement. A portion of the purchase price of the Sponsor Warrants was added to the proceeds from
the Public Offering to be held in the Trust Account such that at closing of the Public Offering, $316,250,000 was placed in the
Trust Account.
Each Sponsor Warrant entitles the holder to purchase
one share of Class A common stock at $11.50 per share. The Sponsor Warrants (including the Class A common stock issuable upon exercise
of the Sponsor Warrants) are not transferable, assignable or salable until 30 days after the completion of the Business Combination
and they are non-redeemable so long as they are held by the initial purchasers of the Sponsor Warrants or their permitted transferees.
If the Sponsor Warrants are held by someone other than the initial purchasers of the Sponsor Warrants or their permitted transferees,
the Sponsor Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the warrants included
in the Units being sold in the Public Offering. Otherwise, the Sponsor Warrants have terms and provisions that are identical to
those of the Public Warrants except that the Sponsor Warrants may be exercised on a cashless basis. If the Company does not complete
the Business Combination, then the proceeds will be part of the liquidating distribution to the public stockholders and the Sponsor
Warrants issued to the Sponsors will expire worthless.
On June 12, 2019, FEI assigned and transferred all
of the 2,941,667 Sponsor Warrants and 4,090,625 Founders Shares held by it to Tilman J. Fertitta for the same prices originally
paid by FEI for such securities ($4,412,500.50 and $10,000, respectively). In connection with such transfer, Mr. Fertitta entered
into the registration rights agreement entered into by the Sponsors and the Company in connection with the Public Offering, which
registration rights are described below.
Registration Rights
The holders of the Founders Shares, Sponsor Warrants,
shares of Class A common stock issuable upon conversion of the Founders Shares, Sponsor Warrants or Working Capital Loans will
be entitled to registration rights. These holders will be entitled to make up to three demands, excluding short form registration
demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have ‘‘piggy-back’’
registration rights to include their securities in other registration statements filed by the Company. Notwithstanding the foregoing,
JFG may not exercise its demand and “piggyback” registration rights after five and seven years, respectively after
the effective date of the registration statement relating to the Public Offering and may not exercise its demand rights on more
than one occasion. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Commissions
Jefferies LLC is the underwriter of the Public Offering,
and its indirect parent, JFG, beneficially owns 48.25% of the Founders Shares. Jefferies LLC received all of the underwriting discount
that was due at the closing of the Public Offering, and will receive the additional Deferred Discount payable from the Trust Account
upon completion of the Business Combination. See Note 4 for further information regarding underwriting commissions.
Administrative Services Agreement
The Company entered into
an administrative services agreement in which the Company will pay FEI for office space, utilities and secretarial and
administrative support, in an amount equal to $10,000 per month ending on the earlier of the completion of a Business
Combination or May 9, 2021, if the Company is unable to complete the Business Combination. The Company has recorded
administrative services fees of $30,000 and $80,000 for the three and nine months ended September 30, 2019.
Sponsor Indemnification
The Sponsors have agreed that they will be jointly
and severally liable to the Company if and to the extent any claims by a third party for services rendered or products sold to
the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality
or similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of
(i) $10.00 per Public Share or (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation
of the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable; provided
that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and
all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims
under the Company’s indemnity of the underwriters of the Public Offering against certain liabilities, including liabilities
under the Securities Act.
Sponsor Loans
On February 14, 2019, the Sponsors agreed to loan
the Company up to an aggregate of $300,000 by the issuance of unsecured promissory notes to cover expenses related to the Public
Offering. These loans of $83,470 were repaid in full on May 14, 2019.
In addition, the Sponsors will not be prohibited
from loaning the Company funds in order to finance transaction costs in connection with the Business Combination. Up to $1,500,000
of these loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant at the
option of the lender. The warrants would be identical to the Sponsor Warrants. The terms of such loans have not been determined
and no written agreements exist with respect to such loans. See Note 4 for the terms of the warrants.
Landcadia
Holdings II, Inc.