Verde Investment Highlights
Verde Bioresins & TLGY Acquisition Corp. - Transaction Overview
Overview
TLGY
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Founded in 2020, Verde Bioresins, Inc is a full-service bioplastics company, that specializes in sustainable product innovation and manufacturing of proprietary biopolymer resins,
providing comprehensive design and development solutions for companies seeking alternatives to conventional plastics.
TLGY Acquisition Corporation is a Special Purpose Acquisition Company (SPAC), with deep roots in private equity and transformational operations that reflect the career of our
founder, Jin-Goon Kim, as both a blue-chip private equity partner and a public and private company CEO, with $78 million of cash held in trust (after recent resizing down from $230
million at IPO).
The Proposed Transaction is expected to allow Verde to expand commercial capacity and meet expected demand for its innovative and proprietary bioplastics products while
further advancing its global sustainability initiatives.
Valuation
Pre-money enterprise value of $365 million¹ (pro forma EV of $433 million, excluding additional earnout consideration), which, we believe, represents a discount to its potential
value based on our view of its financial outlook medium to long-term and our analysis of the current public valuation comps of relevant peers in the sustainable materials industry.
Other Key Terms
$63 million of expected pro forma cash: $78 million TLGY cash in trust less up to $15 million in estimated transaction expenses, assuming no further redemptions. This amount
neither includes any PIPE to be raised, nor a Founder commitment of the lesser of $25 million or 10% of the PIPE raised from Institutional Investors (subject to certain carve-outs).
Minimum cash condition: $15 million of net proceeds at closing, which is not a closing condition but provides the Company an option to terminate the transaction with certain cost
reimbursement obligations.
Non-detachable warrants: In order to incentivize public market investors to buy into the common shares and continue to invest in TLGY at the closing of the Proposed Transaction,
TLGY shall grant to the non-redeeming shareholders at closing an additional 5,750,000 publicly tradable warrants.
➤ As an illustration, each non-redeeming common share to receive a minimum of ~0.79 unit of such warrant, which would increase with further redemptions since these warrants
would pool into a smaller group of non-redeeming shareholders. Correspondingly, each non-redeeming common share would receive 1.57 units at 50% redemption and 3.14
units at 75% redemption.
Non-detachable warrant conversion right²: TLGY intends to offer the right to convert the above warrants to common shares at a ratio of 5:1
➤ As an illustration, each common share to receive a minimum of ~0.16 common share, which would increase with further redemptions. Correspondingly, each common share
would receive up to 0.31 additional common share at 50% redemption and 0.63 additional common share at 75% redemption (conversion into whole unit shares).
Interest alignment between public shareholders, the Company, and the Sponsor:
➤ Sponsor founder share (Class B) lockup: All founder shares are subject to lock up generally consistently with the lock-up provisions described in the IPO S-1
Sponsor private warrants ("Private Warrants") forfeiture: Except for up to 10% that are set aside for the management incentive plan, all remaining Private Warrants shall be
forfeited at closing; in exchange, up to 2.75 million common shares may be granted subject to the sponsor achieving certain capital raise targets.
Verde performance-based earnouts: Based on the combined company's stock price achieving an IRR of 35% over a 5-year horizon, Verde may receive a maximum of 36.5
million shares.
Sponsor performance-based earnouts: Based on the combined company's stock price achieving an IRR of 35% over a 5-year horizon, sponsor may receive a maximum of 3
million shares (also in exchange for the forfeiture of Private Warrants).
Note:
Verde™
1. Valuation based on referenced industry peer comps for FY24 and FY25 Revenue and EBITDA multiples. Peers include NYSE: DNMR, NASDAQ: PCT, and NASDAQ: ORGN
2. We intend to offer to shareholders who do not redeem their shares in connection with the closing of an initial business combination the option to receive distributable redeemable warrants, as described in our IPO prospectus, or one share of
common stock in lieu of every five of such distributable redeemable warrants.
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