NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
NOTE 1.
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DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
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Collier Creek Holdings
(the “Company”) is a blank check company incorporated in the Cayman Islands on April 30, 2018. The Company was
incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar
business combination with one or more businesses that the Company has not yet identified (a “Business Combination”).
Although the Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination,
the Company intends to focus on the consumer goods industry and related sectors. The Company’s sponsor is Collier Creek Partners
LLC, a Delaware limited liability company (the “Sponsor”).
All activity for the
period from April 30, 2018 (inception) through March 31, 2020 relates to the Company’s formation, its initial public
offering (the “Initial Public Offering”), which is described below, and its search for a Business Combination target.
The Company has selected December 31 as its fiscal year end.
The registration statement
for the Initial Public Offering was declared effective on October 4, 2018. On October 10, 2018, the Company consummated the Initial
Public Offering of 44,000,000 units (the “Units” and, with respect to the Class A ordinary shares included
in the Units being offered, the “Public Shares”), including the issuance of 4,000,000 Units as a result of the underwriters’
partial exercise of their over-allotment option, at $10.00 per Unit, generating gross proceeds of $440 million (Note
3), and incurring offering costs of approximately $25.02 million, inclusive of $15.45 million in deferred legal fees
and underwriting commissions (Note 5).
Simultaneously with
the closing of the Initial Public Offering, the Company consummated the private placement (the “Private Placement”)
of 7,200,000 warrants (the “Private Placement Warrants”) at a price of $1.50 per warrant to the Sponsor, generating
gross proceeds of $10.8 million (Note 4).
Upon the closing of
the Initial Public Offering and the Private Placement, $440 million ($10.00 per Unit) of the net proceeds of the sale of the
Units in the Initial Public Offering and the Private Placement was placed in a trust account (the “Trust Account”)
and was invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company
Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended
investment company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (c)(2),
(c)(3) and (c)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the
completion of a Business Combination and (ii) the distribution of the funds in the Trust Account as described below.
The Company’s
management has broad discretion with respect to the specific application of the net proceeds of its Initial Public Offering and
Private Placement, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business
Combination. The Company’s initial Business Combination must be with one or more operating businesses or assets with a fair
market value equal to at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working
capital purposes and excluding the amount of any deferred underwriting discount held in the Trust Account) at the time the Company
signs a definitive agreement in connection with the initial Business Combination. However, 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 Company will provide
its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination
either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender
offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer
will be made by the Company, solely in its discretion. The public shareholders will be entitled to redeem their Public Shares for
a pro rata portion of the amount then in the Trust Account (initially approximately $10.00 per share, plus any pro rata
interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
The per-share amount to be distributed to public shareholders who redeem their Public Shares will not be reduced by the deferred
underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). These Public Shares subject to potential
redemption were recorded at a redemption value and classified as temporary equity, in accordance with Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with a Business Combination
if (i) the Company has net tangible assets of at least $5,000,001 upon such consummation of such Business Combination and meets
any additional requirements (including but not limited to cash requirements) agreed to in connection with such Business Combination
and (ii) a majority of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by
the law and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant
to its second amended and restated memorandum and articles of association (the “Second Amended and Restated Memorandum and
Articles of Association”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange
Commission (the “SEC”), and file tender offer documents with the SEC prior to completing a Business Combination. If,
however, a shareholder approval of the transactions is required by law, or the Company decides to obtain shareholder approval for
business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy
rules and not pursuant to the tender offer rules. Additionally, each public shareholder may elect to redeem their Public Shares
irrespective of whether they vote for or against the proposed transaction. If the Company seeks shareholder approval in connection
with a Business Combination, the Initial Shareholders (as defined below) agreed to vote their Founder Shares (as defined in Note
4) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition,
the Initial Shareholders agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection
with the completion of a Business Combination.
COLLIER CREEK HOLDINGS
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Notwithstanding the
foregoing, the Company’s Second Amended and Restated Memorandum and Articles of Association provide that a public shareholder,
together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group”
(as defined under Section 13 of the Securities 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% or more of the Public Shares without the prior
consent of the Company.
The Company’s
Sponsor, officers and directors (the “Initial Shareholders”) agreed not to propose an amendment to the Company’s
Second Amended and Restated Memorandum and Articles of Association to modify the substance or timing of the Company’s obligation
to provide for the redemption of its Public Shares in connection with a Business Combination or to redeem 100% of its Public Shares
if the Company does not complete a Business Combination, unless the Company provides the public shareholders with the opportunity
to redeem their Class A ordinary shares in conjunction with any such amendment.
If the Company is
unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or October 10,
2020 (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up,
(ii) as promptly as reasonably possible but no more than five business days thereafter, redeem 100% of the outstanding Public Shares
which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further
liquidation distributions, if any), subject to applicable law and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the remaining shareholders and the Company’s board of directors, proceed to commence a voluntary
liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations to provide for claims of creditors
and the requirements of applicable law.
In connection with
the redemption of 100% of the Company’s outstanding Public Shares for a portion of the funds held in the Trust Account, each
holder will receive its pro rata portion of the amount then in the Trust Account, including any pro rata interest earned
on the funds held in the Trust Account and not previously released to the Company to pay the Company’s taxes (less taxes
payable and up to $100,000 of interest to pay dissolution expenses). The Initial Shareholders agreed to waive their liquidation
rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period.
However, if the Initial Shareholders should acquire Public Shares in or after the Initial Public Offering, they will be entitled
to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business
Combination within the Combination Period. The underwriters agreed to waive their rights to their deferred underwriting commission
(see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination
Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund
the redemption of Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets
remaining available for distribution (including the Trust Account assets) will be only $10.00 per share initially held in the Trust
Account, or less due to reductions in the value of the Trust Account assets. In order to protect the amounts held in the Trust
Account, the Sponsor agreed that it will be 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 other 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 and (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 Public 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 Initial
Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities
Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims
of creditors by endeavoring to have vendors, service providers, prospective target businesses or other entities with which the
Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies
held in the Trust Account.
COLLIER CREEK HOLDINGS
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Going Concern Consideration
The
accompanying unaudited condensed financial statements have been prepared assuming that the Company will continue as a going concern,
which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business.
As of March 31, 2020, the Company had approximately $585,000 in cash and working capital
deficit of approximately $1.1 million. In addition, in order to finance
transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s
officers and directors may, but are not obligated to, loan the Company Working Capital Loans (as defined in Note 4) as may be required.
As of March 31, 2020, there were no amounts outstanding under any Working Capital Loan.
The Company’s
liquidity needs prior to the Initial Public Offering were satisfied through receipt of a $25,000 capital contribution from the
Sponsor in exchange for the issuance of the Founder Shares (as defined below), and $155,000 in loans available from the Sponsor
under a promissory note (the “Note”). The Company fully repaid the Note on October 17, 2018, after the closing of
the Initial Public Offering. The Company’s liquidity needs for and following the Initial Public Offering have been satisfied
by the portion of the net proceeds from the Private Placement held outside the Trust Account.
In connection with
the Company’s assessment of going concern considerations in accordance with the Financial Accounting Standard Board’s
‘(“FASB”) Accounting Standards Update 2014-15, “Disclosures of Uncertainties about an Entity’s Ability
to Continue as a Going Concern,” management has determined that the Company’s liquidity position, mandatory liquidation
and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments
have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate and dissolve after
October 10, 2020.
NOTE 2.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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Basis of presentation
The accompanying unaudited
condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in
the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of
the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management,
the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary
for the fair statement of the balances and results for the periods presented. Operating results for the three months ended March
31, 2020 are not necessarily indicative of the results that may be expected through December 31, 2020.
COLLIER CREEK HOLDINGS
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
The accompanying unaudited
condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in
the Company’s Annual Report on Form 10-K filed by the Company with the SEC on March 12, 2020.
Emerging Growth Company
The Company is an
“emerging growth company,” as defined in Section 2(a) of 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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, 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 shareholder 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 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 accountant standards used.
Use of estimates
The preparation of
the financial statements in conformity with GAAP 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.
Making estimates requires
management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition,
situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could
differ significantly from those estimates.
Class A
ordinary shares subject to possible redemption
The
Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic
480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any)
are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including
Class A ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption
upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all
other times, Class A ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary
shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence
of uncertain future events. Accordingly, at March 31, 2020 and December 31, 2019, 41,913,174 and 42,018,501 Class A ordinary
shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the
Company’s balance sheets, respectively.
Net Income (Loss) per Share
Net income (loss)
per share is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the periods.
The Company has not considered the effect of the warrants sold in the Initial Public Offering and Private Placement to purchase
an aggregate of 21,866,667 shares of the Company’s Class ordinary shares in the calculation of diluted income per share,
since their inclusion would be anti-dilutive under the treasury stock method.
COLLIER CREEK HOLDINGS
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
The Company’s
unaudited condensed statements of operations include a presentation of income (loss) per share for ordinary shares subject to redemption
in a manner similar to the two-class method of income (loss) per share. Net income per share, basic and diluted for Class A ordinary
shares is calculated by dividing the interest income earned on the Trust Account of approximately $1.4 million and $2.5 million
for the three months ended March 31, 2020 and 2019, respectively, by the weighted average number of Class A ordinary shares outstanding
for such periods. Net loss per share, basic and diluted for Class B ordinary shares is calculated by dividing the net income, less
income attributable to Class A ordinary shares, by the weighted average number of Class B ordinary shares outstanding for such
periods.
Income taxes
The Company complies
with the accounting and reporting requirements of ASC Topic 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 statements 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.
ASC Topic 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’s management determined that the Cayman Islands is the Company’s
only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income
tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2020 and
December 31, 2019. The Company is currently not aware of any issues under review that could result in significant payments, accruals
or material deviation from its position.
There is currently
no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman Islands income tax regulations,
income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements.
The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the
next twelve months.
Concentration of credit risk
Financial instruments
that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which,
at times may exceed the Federal depository insurance coverage of $250,000. At March 31, 2020 and December 31, 2019 the Company
had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair value of financial instruments
The fair value of
the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements
and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their
short-term nature.
COLLIER CREEK HOLDINGS
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Fair Value Measurements
Fair value is defined
as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between
market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers
include:
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Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
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•
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Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
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•
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Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
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ASC
820, Fair Value Measurement and Disclosures, requires all entities to disclose the fair value of financial
instruments, both assets and liabilities for which it is practicable to estimate fair value, and defines fair value of a
financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing
parties. As of March 31, 2020 and December 31, 2019, the recorded values of cash, cash and marketable securities held in the
Trust Account approximate the fair values due to the short-term nature of the instruments.
Recent Accounting Pronouncements
Management does not
believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have an effect
on the Company’s financial statements.
NOTE 3.
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INITIAL PUBLIC OFFERING
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On October 10, 2018,
the Company sold 44,000,000 Units at a purchase price of $10.00 per Unit in the Initial Public Offering, including
4,000,000 Units issued pursuant to the partial exercise of the underwriters’ over-allotment option. Each Unit consists of
one Class A ordinary share and one-third of one redeemable warrant (“Public Warrant”). Each whole Public Warrant
entitles the holder to purchase one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment
(see Note 6).
NOTE 4.
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RELATED PARTY TRANSACTIONS
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Founder Shares
On May 2, 2018,
the Company issued 2,875,000 Class B ordinary shares to the Sponsor (the “Founder Shares”) in exchange for a capital
contribution of $25,000. On September 7, 2018, the Company effected a share capitalization resulting in the Sponsor holding
10,937,500 Founder Shares. On September 10, 2018, the Sponsor transferred 45,000, 45,000, 52,500 and 52,500 Founder Shares
to each of Antonio F. Fernandez, Matthew M. Mannelly, William D. Toler and Craig D. Steeneck, respectively. On October 4,
2018, the Company effected a share capitalization resulting in an aggregate of 12,375,000 Founder Shares. On October 10, 2018,
the underwriters partially exercised the over-allotment option, and 500,000 Founder Shares were subsequently surrendered to the
Company by the Sponsor for no consideration on October 19, 2018. Of the 11,875,000 Class B ordinary shares outstanding as of March
31, 2020 and December 31, 2019, the Sponsor owned 11,680,000 Class B ordinary shares and the independent directors owned an aggregate
of 195,000 Class B ordinary shares.
The Founder Shares
will automatically convert into Class A ordinary shares concurrently with or immediately following the consummation of a Business
Combination, or earlier at the option of the holder, on a one-for-one basis. However, if additional Class A ordinary shares or
any other equity-linked securities are issued or deemed issued in connection with the initial Business Combination, the number
of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, 20% of the total number
of Class A ordinary shares outstanding after such conversion (after giving effect to any redemptions of Class A ordinary shares
by public shareholders), including the total number of Class A ordinary shares 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 (including the Forward Purchase Shares, but not the Forward Purchase Warrants
(both as defined below)), excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible
into Class A ordinary shares issued, or to be issued, to any seller in the initial Business Combination and any Private Placement
Warrants issued to the Sponsor upon conversion of Working Capital Loans, provided that such conversion of Founder Shares will never
occur on a less than one-for-one basis.
COLLIER CREEK HOLDINGS
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
The holders of the
Founder Shares agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (i) one year
after the completion of the initial Business Combination or (ii) the date on which the Company completes a liquidation, merger,
share exchange or other similar transaction after the initial Business Combination that results in all of the Company’s shareholders
having the right to exchange their Class A ordinary shares for cash, securities or other property (except to certain permitted
transferees). Any permitted transferees will be subject to the same restrictions and other agreements of the Initial Shareholders
with respect to any Founder Shares. Notwithstanding the foregoing, if the closing price of the Class A ordinary shares equals
or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like)
for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination,
the Founder Shares will be released from the lock-up.
Private Placement Warrants
On October 10, 2018,
the Company sold 7,200,000 Private Placement Warrants to the Sponsor at $1.50 per warrant, generating gross proceeds of $10.8 million
in the Private Placement. Each Private Placement Warrant is exercisable to purchase one Class A ordinary share at $11.50 per
share. A portion of the net proceeds from the Private Placement was added to the net proceeds from the Initial Public Offering
held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement
Warrants will expire worthless.
Related Parties Loans
The Company’s
Sponsor had agreed to loan the Company up to $200,000 to be used for the payment of costs related to the Initial Public Offering
(the “Note”). The Note was non-interest bearing, unsecured and was due on the earlier of December 31, 2019 or the closing
of the Initial Public Offering. The Company had borrowed $155,000 under the Note, which was fully repaid on October 17, 2018.
In addition, in order
to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain
of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (the “Working
Capital Loans”). If the Company completes a Business Combination, it would repay the Working Capital Loans out of the proceeds
of the Trust Account released to the Company. In the event that a Business Combination does not close, the Company may use a portion
of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be
used to repay the Working Capital Loans. Up to $1.5 million of such Working Capital 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 Private Placement Warrants. Except as set forth above, to date, the terms of the Working Capital Loans, if any, have not been
determined and no written agreements exist with respect to such loans. The Company has no borrowings to date under this arrangement.
Administrative Service Fee
The Company agreed,
commencing on the effective date of the Initial Public Offering through the earlier of the Company’s consummation of a Business
Combination and its liquidation, to pay an affiliate of the Sponsor a monthly fee of $10,000 for office space, and secretarial
and administrative services. The Company recorded $30,000 in general and administrative expenses in connection with this administrative
services agreement in each of the accompanying statements of operations during the three months ended March 31, 2020 and 2019.
As of March 31, 2020 and December 31, 2019, the Company has accrued approximately $177,000 and $147,000, respectively, for services
in connection with such agreement on the accompanying balance sheets.
Forward Purchase Agreements
On September 7, 2018,
the Company entered into forward purchase agreements with the Sponsor and the Company’s independent directors (the “Forward
Purchase Agreements”) which provide for the purchase of an aggregate of 3,500,000 Class A ordinary shares (the “Forward
Purchase Shares”), plus an aggregate of 1,166,666 redeemable warrants (the “Forward Purchase Warrants”)
to purchase one Class A ordinary share at $11.50 per share, for an aggregate purchase price of $35,000,000, or $10.00 per
Class A ordinary share, in a private placement to close concurrently with the closing of the initial Business Combination. The
Forward Purchase Warrants will have the same terms as the Public Warrants. These purchases will be made regardless of whether any
Class A ordinary shares are redeemed by public shareholders. The Forward Purchase Shares and Forward Purchase Warrants will be
issued only in connection with the closing of the initial Business Combination. The proceeds from the sale of Forward Purchase
Shares may be used to fund part of the consideration to the sellers in the initial Business Combination, expenses in connection
with the initial Business Combination or for working capital in the post-transaction company.
COLLIER CREEK HOLDINGS
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
NOTE 5.
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COMMITMENTS & CONTINGENCIES
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Registration Rights
The holders of the
Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A
ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of
Working Capital Loans) are entitled to registration rights pursuant to a registration rights agreement entered into on the effective
date of the Initial Public Offering. The holders of these securities are entitled to make up to three demands, excluding short
form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration
rights with respect to registration statements filed subsequent to the consummation of a Business Combination. The Company will
bear the expenses incurred in connection with the filing of any such registration statements.
Pursuant to the Forward
Purchase Agreements, the Company agreed to use its commercially reasonable best efforts (i) to file within 30 days after the
closing of a Business Combination a registration statement with the SEC for a secondary offering of the Forward Purchase Shares
and the Forward Purchase Warrants (and underlying Class A ordinary shares), (ii) to cause such registration statement to be
declared effective promptly thereafter and (iii) to maintain the effectiveness of such registration statement until the earliest
of (A) the date on which the Sponsor and all of the independent directors or their respective assignees cease to hold
the securities covered thereby and (B) the date all of the securities covered thereby can be sold publicly without restriction
or limitation under Rule 144 under the Securities Act. In addition, the Forward Purchase Agreements provide these holders will
have certain “piggy-back” registration rights to include their securities in other registration statements filed by
the Company.
Deferred Underwriting Fees
Pursuant to the Company’s
Initial Public Offering, the underwriters were entitled to underwriting discounts of $0.20 per unit, or $8.8 million in
the aggregate, paid upon the closing of the Initial Public Offering. In addition, the underwriters were entitled to a deferred
underwriting commission of $0.35 per unit, or $15.4 million in the aggregate. The deferred underwriting fee will become
payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business
Combination, subject to the terms of the underwriting agreement.
Deferred Legal Fees
The Company is obligated
to pay deferred legal fees of $50,000 upon the consummation of an initial Business Combination for services performed in connection
with the Initial Public Offering. If no Business Combination is consummated, the Company will not be obligated to pay such fee.
Risk and Uncertainties
Management is currently evaluating the impact of the COVID-19 pandemic on the industry and has concluded
that while it is reasonably possible that the virus could have a negative effect on the Company's financial position, results
of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these
financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 6.
|
SHAREHOLDERS’ EQUITY
|
Class A
Ordinary Shares — The Company is authorized to issue 400,000,000 Class A ordinary shares with
a par value of $0.0001 per share. Holders of the Company’s Class A ordinary shares are entitled to one vote for
each share. As of March 31, 2020 and December 31, 2019, there were 44,000,000 Class A ordinary shares issued and outstanding,
including 41,913,174 and 42,018,501 Class A ordinary shares subject to possible redemption, respectively.
COLLIER CREEK HOLDINGS
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Class B
Ordinary Shares — The Company is authorized to issue 50,000,000 Class B ordinary shares with a
par value of $0.0001 per share. Holders of the Company’s Class B ordinary shares are entitled to one vote for
each share. On May 2, 2018, 2,875,000 Class B ordinary shares were issued and outstanding. On September 7, 2018, the
Company effected a share capitalization resulting in 10,937,500 Class B ordinary shares outstanding. On October 4, 2018, the Company
effected a share capitalization resulting in 12,375,000 Class B ordinary shares outstanding. On October 10, 2018, the underwriters
partially exercised the over-allotment option, and 500,000 Founder Shares were surrendered to the Company by the Sponsor for no
consideration on October 19, 2018. As of March 31, 2020 and December 31, 2019, there were 11,875,000 Class B ordinary shares outstanding.
The Class B ordinary
shares will automatically convert into Class A ordinary shares on the first business day following the consummation of the
initial Business Combination, or earlier at the option of the holder thereof, on a one-for-one basis. However, if additional Class
A ordinary shares or any other equity-linked securities are issued or deemed issued in connection with the initial Business Combination,
the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal, in the aggregate,
20% of the total number of Class A ordinary shares outstanding after such conversion (after giving effect to any redemptions
of Class A ordinary shares by public shareholders), including the total number of Class A ordinary shares 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 (including the Forward Purchase Shares,
but not the Forward Purchase Warrants), excluding any Class A ordinary shares or equity-linked securities exercisable for
or convertible into Class A ordinary shares issued, or to be issued, to any seller in the initial Business Combination and
any Private Placement Warrants issued to the Sponsor upon conversion of Working Capital Loans, provided that such conversion of
Class B ordinary shares will never occur on a less than one-for-one basis.
Preferred Shares — The
Company is authorized to issue 1,000,000 preferred shares with a par value of $0.0001 per share. At March 31, 2020 and December
31, 2019, there were no preferred shares issued or outstanding.
Warrants — Public
Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the
Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days
after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided
in each case that the Company has an effective registration statement under the Securities Act covering the Class A ordinary
shares issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits
holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the
Securities Act). The Company agreed that as soon as practicable, but in no event later than 15 business days, after the closing
of a Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration,
under the Securities Act, of the Class A ordinary shares issuable upon exercise of the Public Warrants. The Company will use
its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a
current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant
agreement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not
effective by the sixtieth (60th) day after the closing of the initial Business Combination, warrant holders may, until such time
as there is an effective registration statement and during any period when the Company will have failed to maintain an effective
registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities
Act or another exemption. The Public Warrants will expire five years after the completion of a Business Combination or earlier
upon redemption or liquidation.
The Private Placement
Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private
Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will not be transferable,
assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.
Additionally, the Private Placement Warrants are non-redeemable so long as they are held by the initial purchasers or such purchasers’
permitted transferees. If the Private Placement Warrants are held by someone other than the Initial Shareholders or their permitted
transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis
as the Public Warrants.
COLLIER CREEK HOLDINGS
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
The Company may call
its warrants for redemption (except with respect to the Private Placement Warrants):
|
•
|
in whole and not in part;
|
|
•
|
at a price of $0.01 per warrant;
|
|
•
|
upon a minimum of 30 days’ prior written notice of redemption; and
|
|
•
|
if, and only if, the last reported last sale price of the Class A ordinary shares equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
|
Additionally, commencing
ninety days after the Public Warrants become exercisable, the Company may redeem its outstanding warrants (except with respect
to the Private Placement Warrants) in whole and not in part, for the number of Class A ordinary shares determined by reference
to the table set forth in the Company’s prospectus relating to the Initial Public Offering based on the redemption date and
the “fair market value” of the Class A ordinary shares, upon a minimum of 30 days’ prior written notice
of redemption and if, and only if, the last sale price of the Class A ordinary shares equals or exceeds $10.00 per share (as
adjusted per share splits, share dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date
on which the Company sends the notice of redemption to the Public Warrant holders. The “fair market value” of the Class A
ordinary shares is the average last reported sale price of the Class A ordinary shares for the 10 trading days ending
on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants.
If the Company calls
the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants
to do so on a “cashless basis,” as described in the warrant agreement.
The exercise price
and number of Class A ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including
in the event of a share capitalization, or recapitalization, reorganization, merger or consolidation. However, the warrants will
not be adjusted for issuance of Class A ordinary shares at a price below its exercise price. Additionally, in no event will
the Company be required to net cash settle the warrants shares. If the Company is unable to complete a Business Combination within
the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any
of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside
of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
NOTE 7.
|
FAIR VALUE MEASUREMENTS
|
The following table
presents information about the Company’s assets that are measured at fair value on a recurring basis as of March 31, 2020
and December 31, 2019 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine
such fair value.
March 31, 2020
Description
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Other
Unobservable
Inputs
(Level 3)
|
|
Money market funds
|
|
$
|
452,430,869
|
|
|
$
|
-
|
|
|
$
|
-
|
|
December 31, 2019
Description
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Other
Unobservable
Inputs
(Level 3)
|
|
Money market funds
|
|
$
|
451,020,841
|
|
|
$
|
-
|
|
|
$
|
-
|
|
None of the balance
in the Trust Account was held in cash as of March 31, 2020 and December 31, 2019.
NOTE 8.
|
SUBSEQUENT EVENTS
|
The Company evaluated
subsequent events and transactions that occurred after the balance sheet date up to the date financial statements were available
to be issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or
disclosure in the financial statements.