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GRASSMERE ACQUISITION Corp
|
S-1
May 4, 5:24 PM ET
GRASSMERE ACQUISITION Corp S-1
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Contents
228
Registration No: 333-
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Grassmere Acquisition Corporation
801 W. 47th Street Suite 400 Kansas City, MO 64112 Tel: (816) 531-0700
Brian M. Hagenhoff Chief Financial Officer 801 W. 47th Street Suite 400 Kansas City, MO 64112 Tel: (816) 531-0700
CALCULATION OF REGISTRATION FEE
$75,000,000
GRASSMERE ACQUISITION CORPORATION
7,500,000 Units
GRASSMERE ACQUISITION CORPORATION
TABLE OF CONTENTS
SUMMARY
General
Our Management Team
Initial Business Combination Strategy
Sourcing of Potential Acquisition Targets
Executive Offices
The Offering
Risks
Summary Financial Data
RISK FACTORS
We are a newly formed development stage company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
Our public stockholders may not be afforded an opportunity to vote on our proposed business combination, unless such vote is required by law, which means we may complete our initial business combination even though a majority of our public stockholders do not support such a combination.
If we seek stockholder approval of our initial business combination, our initial stockholders have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
Your only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek stockholder approval of the business combination.
The ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with a target.
The ability of our stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure.
The ability of our stockholders to exercise redemption rights with respect to a large number of our could increase the probability that our business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
The requirement that we complete a business combination within 24 months from the date of this prospectus may give potential target businesses leverage over us in negotiating a business combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to complete a business combination on terms that would produce value for our stockholders.
We may not be able to complete a business combination within 24 months from the date of this prospectus, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate.
If we are unable to complete our initial business combination within the prescribed time frame, our public stockholders may receive less than $10.00 per share on our redemption and our warrants will expire worthless.
Our purchase of common stock in the open market may support the market price of the common stock and/ or warrants during the buyback period and, accordingly, the termination of the support provided by such purchases may materially adversely affect the market price of the units, common stock and/or warrants.
If we seek stockholder approval of our business combination, we, our sponsor, directors, officers, advisors and their affiliates may elect to purchase shares of common stock from stockholders, in which case we or they may influence a vote in favor of a proposed business combination that you do not support.
Our purchases of common stock in the open market or in privately negotiated transactions would reduce the funds available to us after the business combination.
Purchases of common stock in the open market or in privately negotiated transactions by us or our sponsor, directors, officers, advisors or their affiliates may make it difficult for us to list our common stock on a national securities exchange.
Our purchases of common stock in the open market or in privately negotiated transactions may have negative economic effects on our remaining public stockholders.
You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.
We do not intend to establish an audit committee or a compensation committee until the completion of an initial business combination. Until such time, no formal committee of independent directors will review matters related to our business, and such lack of review could negatively impact our business.
Our securities will be quoted on the Over-the-Counter Bulletin Board quotation system, which will limit the liquidity and price of our securities more than if our securities were quoted or listed on a national securities exchange and result in our stockholders not receiving the benefit of our being subject to the listing standards of a national securities exchange.
If there are no market makers for our securities on the OTCBB, our securities could be removed from quotation on the OTCBB, and the liquidity of our securities would be further limited.
You will not be entitled to protections normally afforded to investors of many other blank check companies.
If we seek stockholder approval of our business combination and we do not conduct redemptions pursuant to the tender rules, and if you or a “group” of stockholders are deemed to hold in excess of 10% of our common stock, you will lose the ability to both redeem and vote all such shares in excess of 10% of our common stock.
Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete a business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share (or approximately $9.97 per public share if the underwriters’ over-allotment option is exercised in full) on our redemption, and our warrants will expire worthless.
If the net proceeds of this offering not being held in the trust account, together with the interest earned on the proceeds in the trust account (net of franchise and income taxes payable) which may be released to us for working capital purposes, are insufficient to allow us to operate for at least the next 24 months, we may be unable to complete our initial business combination.
The current low interest rate environment could limit the amount available to fund our search for a target business or businesses and complete our initial business combination since we will depend on interest earned on the trust account to fund our search, to pay our franchise and income taxes and to complete our initial business combination.
Subsequent to our completion of our initial business combination, we may be required to subsequently take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment.
If the size of the offering is increased, the portion of the trust account attributable to the proceeds of the sale of sponsor warrants will be allocated pro rata among a greater number of public shares, which will reduce the per-share amount payable to our public stockholders upon our liquidation or our public stockholders’ exercise of redemption rights.
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than approximately $10.00 per share.
Our directors may decide not to enforce Mr. Brown’s indemnification obligations, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders.
If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.
If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete a business combination.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations.
Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
We do not currently intend to hold an annual meeting of stockholders until after our completion of a business combination and you will not be entitled to any of the corporate protections provided by such a meeting.
We are not registering the shares of common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants and causing such warrants to expire worthless.
The grant of registration rights to our sponsor may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of our common stock.
Because we are not limited to a particular industry sector or any specific target businesses with which to pursue a business combination, you will be unable to ascertain the merits or risks of any particular target business’ operations.
None of our officers or directors has ever been associated with a blank check company, which could adversely affect our ability to complete a business combination.
We may seek investment opportunities in sectors outside of the consumer and leisure sectors (which may or may not be outside of our management’s area of expertise).
Although we identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into a business combination with a target does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.
Unlike many blank check companies, we are not required to acquire a target with a valuation equal to a certain percentage of the amount held in the trust account. Management’s unrestricted flexibility in identifying and selecting a prospective acquisition candidate, along with our management’s financial interest in completing an initial business combination, may lead management to enter into an acquisition agreement that is not in the best interest of our stockholders.
We are not required to obtain an opinion from an independent investment banking firm, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our stockholders from a financial point of view.
We may issue additional common or preferred shares to complete our initial business combination or under an employee incentive plan after completion of our initial business combination, which would dilute the interest of our stockholders and likely present other risks.
Resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders may only receive approximately $10.00 per share (or approximately $9.97 per public share if the underwriters’ over-allotment option is exercised in full) on our redemption, and our warrants will expire worthless.
We are dependent upon our officers and directors and their loss could adversely affect our ability to operate.
Our ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following a business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
We may have a limited ability to assess the management of a prospective target business and, as a result, may effect a business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
The officers and directors of an acquisition candidate may resign upon completion of a business combination. The loss of an acquisition target’s key personnel could negatively impact the operations and profitability of our post-combination business.
Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete a business combination.
Our officers and directors may in the future become affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be presented.
Our officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated with our executive officers, directors or existing holders which may raise potential conflicts of interest.
Since our sponsor will lose its entire investment in us if a business combination is not completed and our officers and directors have significant financial interests in us, a conflict of interest may arise in determining whether a particular acquisition target is appropriate for our initial business combination.
We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
We may only be able to complete one business combination with the proceeds of this offering, which will cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification may negatively impact our operations and profitability.
We may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete an initial business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
We may attempt to complete our initial business combination with a private company about which little information is available, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
We may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
Unlike many blank check companies, we do not have a specified maximum redemption threshold. The absence of such a redemption threshold will make it easier for us to complete a business combination with which a substantial majority of our stockholders do not agree.
The exercise price for the public warrants is higher than in many similar blank check company offerings in the past, and, accordingly, the warrants are more likely to expire worthless.
In order to effectuate a business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete a business combination that our stockholders may not support.
The provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement governing the release of funds from our trust account) may be amended with the approval of 65% of our stockholders, which is a lower amendment threshold than that of many blank check companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation to facilitate the completion of an initial business combination that our stockholders may not support.
We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination. If we are unable to complete our initial business combination, our public stockholders may only receive approximately $10.00 per share (or approximately $9.97 per public share if the underwriters’ over-allotment option is exercised in full) on our redemption, and our warrants will expire worthless.
Our initial stockholders control a substantial interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Our initial stockholders paid an aggregate of $25,000, or approximately $0.01 per founder share and, accordingly, you will experience immediate and substantial dilution from the purchase of our common stock.
We may amend the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least 65% of the then outstanding public warrants.
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
Our warrants may have an adverse effect on the market price of our common stock and make it more difficult to effectuate a business combination.
The determination of the offering price of our units and the size of this offering is more arbitrary than the pricing of securities and size of an offering of an operating company in a particular industry. You may have less assurance, therefore, that the offering price of our units properly reflects the value of such units than you would have in a typical offering of an operating company.
There is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
Because we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses.
If you are not an institutional investor, you may purchase our securities in this offering only if you reside within certain states in which we will apply to have the securities registered. Although resales of our securities are exempt from state registration requirements, state securities commissioners who view blank check offerings unfavorably may attempt to hinder resales in their states.
Compliance obligations under the Sarbanes-Oxley Act of 2002 may make it more difficult for us to effectuate a business combination, require substantial financial and management resources, and increase the time and costs of completing an acquisition.
Provisions in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our common stock and could entrench management.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
USE OF PROCEEDS
DIVIDEND POLICY
DILUTION
CAPITALIZATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Results of Operations and Known Trends or Future Events
Liquidity and Capital Resources
Controls and Procedures
Quantitative and Qualitative Disclosures about Market Risk
Related Party Transactions
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results
PROPOSED BUSINESS
Introduction
Business Strategy
Our Management Team
Initial Business Combination Strategy
Sourcing of Potential Acquisition Targets
Status as a public company
Financial Position
Effecting our initial business combination
General
Sources of target businesses
Selection of a target business and structuring of our initial business combination
Lack of business diversification
Limited ability to evaluate the target’s management team
Stockholders may not have the ability to approve a business combination
Permitted purchases of our securities
Redemption rights for public stockholders upon completion of our initial business combination
Manner of Conducting Redemptions
Tendering stock certificates in connection with a tender offer or redemption rights
Redemption of public shares and liquidation if no initial business combination
Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419
Comparison of This Offering to Those of Many Blank Check Companies Not Subject to Rule 419
Competition
Facilities
Employees
Periodic Reporting and Financial Information
Legal Proceedings
MANAGEMENT
Directors and Executive Officers
Number and Terms of Office of Officers and Directors
Director Independence
Executive Officer and Director Compensation
Board Committees
Code of Conduct and Ethics
Conflicts of Interest
Limitation on Liability and Indemnification of Officers and Directors
License Agreement
PRINCIPAL STOCKHOLDERS
Transfers of Founder Shares and Private Placement Warrants
Registration Rights
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
DESCRIPTION OF SECURITIES
Units
Common Stock
Founder Shares
Preferred Stock
Warrants
Public Stockholders’ Warrants
Private Placement Warrants
Dividends
Our Transfer Agent and Warrant Agent
Our Amended and Restated Certificate of Incorporation
Certain Anti-Takeover Provisions of Delaware Law
Securities Eligible for Future Sale
Rule 144
Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies
Registration Rights
Quotation of Securities
UNDERWRITING
State Blue Sky Information
Notice to Prospective Investors in the European Economic Area
Notice to Prospective Investors in the United Kingdom
Notice to Prospective Investors in France
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND ADDITIONAL INFORMATION
GRASSMERE ACQUISITION CORPORATION (a development stage company)
INDEX TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
GRASSMERE ACQUISITION CORPORATION (a development stage company) BALANCE SHEET April 21, 2011
GRASSMERE ACQUISITION CORPORATION (a development stage company) STATEMENT OF OPERATIONS For the Period from April 15, 2011 (date of incorporation) to April 21, 2011
GRASSMERE ACQUISITION CORPORATION (a development stage company) STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY For the Period from April 15, 2011 (date of incorporation) to April 21, 2011
GRASSMERE ACQUISITION CORPORATION (a development stage company) STATEMENT OF CASH FLOWS For the Period from April 15, 2011 (date of incorporation) to April 21, 2011
GRASSMERE ACQUISITION CORPORATION (a development stage company) NOTES TO FINANCIAL STATEMENTS For the Period from April 15, 2011 (date of incorporation) to April 21, 2011
1. Description of Organization and Business Operations
GRASSMERE ACQUISITION CORPORATION (a development stage company) NOTES TO FINANCIAL STATEMENTS For the Period from April 15, 2011 (date of incorporation) to April 21, 2011
1. Description of Organization and Business Operations – (continued)
2. Basis of Presentation
3. Summary of Significant Accounting Policies
(a) Development stage company
(b) Net loss per common share
(c) Concentration of credit risk
GRASSMERE ACQUISITION CORPORATION (a development stage company) NOTES TO FINANCIAL STATEMENTS For the Period from April 15, 2011 (date of incorporation) to April 21, 2011
3. Summary of Significant Accounting Policies – (continued)
(d) Fair value of financial instruments
(e) Use of estimates
(f) Deferred offering costs
(g) Income taxes
(h) Recently issued accounting standards
4. Proposed Public Offering
GRASSMERE ACQUISITION CORPORATION (a development stage company) NOTES TO FINANCIAL STATEMENTS For the Period from April 15, 2011 (date of incorporation) to April 21, 2011
4. Proposed Public Offering – (continued)
5. Related Party Transactions
(a) Note Payable
(b) Administrative Services Fees
(c) Due to Affiliates
(d) Sponsor Warrants
GRASSMERE ACQUISITION CORPORATION (a development stage company) NOTES TO FINANCIAL STATEMENTS For the Period from April 15, 2011 (date of incorporation) to April 21, 2011
5. Related Party Transactions – (continued)
(e) Registration Rights
6. Founder Shares
7. Income Taxes
8. Commitments
GRASSMERE ACQUISITION CORPORATION (a development stage company) NOTES TO FINANCIAL STATEMENTS For the Period from April 15, 2011 (date of incorporation) to April 21, 2011
8. Commitments – (continued)
$75,000,000
Grassmere Acquisition Corporation
7,500,000 Units
PROSPECTUS
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Item 14. Indemnification of Directors and Officers.
Item 15. Recent Sales of Unregistered Securities.
Item 16. Exhibits and Financial Statement Schedules.
Item 17. Undertakings.
SIGNATURES
POWER OF ATTORNEY
EXHIBIT INDEX