SEC Filing | Investor Relations | Williams Scotsman

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 

CURRENT REPORT

 


 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): July 30, 2018 (July 24, 2018)

 

WILLSCOT CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-37552

 

82-3430194

(State or other jurisdiction of
incorporation)

 

(Commission File Number)

 

(I.R.S. Employer Identification No.)

 

901 S. Bond Street, #600

Baltimore, Maryland 21231

(Address, including zip code, of principal executive offices)

 

(410) 931-6000

(Registrant’s telephone number, including area code)

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

 

 



 

Item 1.01                                           Entry into a Material Definitive Agreement

 

As previously disclosed, in connection with WillScot Corporation’s (the “Company”) pending acquisition of Modular Space Holdings, Inc. (the “ModSpace Acquisition”), on July 9, 2018, Williams Scotsman International, Inc. (“WSII”) and certain other subsidiaries of the Company entered into a first amendment (the “First Amendment”) to their ABL credit agreement, dated as of November 29, 2017 (the “ABL Credit Agreement”), among WSII, the guarantors party thereto, the lenders party thereto and Bank of America, N.A., as agent and collateral agent.

 

On July 24, 2018, WSII and certain of its subsidiaries entered into a second amendment to the ABL Credit Agreement (the “Second Amendment” and the ABL Credit Agreement, as amended by the First Amendment and the Second Amendment, the “Amended ABL Facility”) to its ABL Credit Agreement, to make technical amendments to the ABL Credit Agreement to permit the offering of the Unsecured Notes (as defined in Item 8.01 below). The Amended ABL Facility will not become effective until the closing of the ModSpace Acquisition.

 

Item 7.01.                                        Regulation FD Disclosure.

 

In connection with the financing for the ModSpace Acquisition, Mason Finance Sub. Inc., a newly-formed finance subsidiary of the Company (the “Escrow Issuer”), plans to offer to potential investors up to $300 million in aggregate principal amount of senior secured notes due 2023 (the “Secured Notes”). If the offering is consummated, the gross proceeds thereof will be deposited by the initial purchasers into a segregated escrow account pursuant to an escrow and security agreement. Concurrently with the closing of the ModSpace Acquisition, the escrowed proceeds will be released to fund the ModSpace Acquisition and to pay related fees and expenses. Upon consummation of the ModSpace Acquisition, the Escrow Issuer will merge with and into WSII, with WSII continuing as the surviving corporation, and WSII will assume the obligations of the Escrow Issuer under the Notes and the indenture governing the Secured Notes.

 

In connection with the proposed offering, the Company disclosed certain information to prospective investors.  The Company is furnishing herewith such information as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference in this Item 7.01.

 

This Current Report on Form 8-K does not constitute an offer to sell or a solicitation of an offer to buy the Secured Notes. The Secured Notes have not been registered under Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

 

The information furnished pursuant to this Item 7.01 of this Current Report on Form 8-K, including the exhibit hereto, shall not be considered “filed” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be incorporated by reference into future filings by the Company under the Securities Act of 1933, as amended or under the Exchange Act, unless the Company expressly sets forth in such future filing that such information is to be considered “filed” or incorporated by reference therein.

 

Item 8.01              Other Events

 

In connection with the financing for the ModSpace Acquisition, on July 28, 2018, the Escrow Issuer entered into a note purchase agreement with certain affiliated or managed funds or accounts of AlbaCore Capital LLP and Canyon Value Realization Fund, L.P. (together, the “Unsecured Lenders”), pursuant to which the Unsecured Lenders agreed to subscribe for the Escrow Issuer’s unsecured notes in an aggregate principal amount of $200.0 million (the “Unsecured Notes”). The gross proceeds thereof will be deposited by the Unsecured Lenders into a segregated escrow account pursuant to an escrow and security agreement. Concurrently with the closing of the ModSpace Acquisition, the escrowed proceeds will be released to fund the ModSpace Acquisition and to pay related fees and expenses. Upon consummation of the ModSpace Acquisition, the Escrow Issuer will merge with and into WSII, with WSII continuing as the surviving corporation, and WSII will assume the obligations of the Escrow Issuer under the Unsecured Notes and the indenture governing the Unsecured Notes. We expect the offering of the Unsecured Notes by the Escrow Issuer will close on or about August 3, 2018.

 

This Current Report on Form 8-K does not constitute an offer to sell or a solicitation of an offer to buy Unsecured Notes. The Unsecured Notes have not been registered under Securities Act, or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

 

Cautionary Notice Regarding Forward Looking Statements

 

This Current Report on Form 8-K contains statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended as “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on the current expectations of the Company’s management. Discussion of risks and uncertainties that could cause actual results to differ materially from current projections, forecasts, estimates and expectations of the Company is contained in the Company’s filings with the SEC. Specifically, the Company makes reference to, and incorporates herein by reference, the section entitled “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2017. In addition to the risks and uncertainties set forth in the Company’s SEC filings, the forward-looking statements described in this Current Report on Form 8-K could be affected by, among other things, (i) conditions to the closing of the transaction may not be satisfied; (ii) problems may arise in successfully integrating ModSpace’s business into the Company’s current portfolio, which may result in the Company not operating as effectively and efficiently as expected; (iii) the Company may be unable to achieve expected synergies or it may take longer than expected to achieve such synergies; (iv) the transaction may involve unexpected costs or unexpected liabilities; (v) the Company may be unable to obtain regulatory approvals required for the transaction or required regulatory approvals may delay the transaction or result in the imposition of conditions that could have a material adverse effect on the Company; (vi) the business of the Company may suffer as a result of uncertainty surrounding the transaction; and (vi) the Company may be adversely affected by other economic, business, and/or competitive factors.

 

Any or all of the Company’s forward-looking statements may turn out to be wrong or differ materially from actual results. They can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors, many of which are beyond the Company’s control. The Company undertakes no obligation to update or revise publicly, any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

 

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Item 9.01                                           Financial Statements and Exhibits.

 

(d)  Exhibits

 

Exhibit No.

 

Exhibit Description

99.1

 

Certain company information

 

3



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

 

WillScot Corporation

 

 

 

 

By:

/s/ Bradley Bacon

Dated: July 30, 2018

 

Name: Bradley Bacon

 

 

Title: Vice President, General Counsel & Corporate Secretary

 

4


Exhibit 99.1

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

The following unaudited pro forma condensed combined financial information sets forth selected pro forma consolidated financial information for WillScot Corporation (the “Company,” “WillScot” or “we,” “us,” or “our”) and is derived from and should be read in conjunction with, the consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 10-K”), the consolidated financial statements and related notes in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 (the “Q1 2018 10-Q”), and ModSpace Holdings, Inc.’s (“ModSpace”) historical consolidated financial statements included as Exhibits 99.1 and 99.2 to the Current Report on Form 8-K filed on July 24, 2018 incorporated by reference in this offering memorandum.

 

On June 21, 2018, we entered into an agreement and plan of merger (the “Merger Agreement”) with ModSpace pursuant to which our newly-formed acquisition subsidiary, Mason Merger Sub, Inc. (“Merger Sub”) will merge with and into ModSpace, with ModSpace as the surviving entity and continuing as our indirect subsidiary (the “ModSpace Acquisition”). The unaudited pro forma condensed combined financial information set forth below has been prepared to reflect adjustments to our financial condition and results of operations to give effect to the following items:

 

i.                                          the consummation of the ModSpace Acquisition, including our issuance of shares of our common stock, par value $0.0001 per share (the “Common Stock”), and warrants to purchase shares of Common Stock (the “the Warrants”) to the sellers of ModSpace;

 

ii.                                       the Financing Transactions (as defined and discussed below),

 

iii.                                    the effects of the acquisition of Acton Mobile Holdings, LLC (“Acton”), which closed on December 20, 2017 (the “Acton Acquisition”);

 

iv.                                   the effects of the business combination of Double Eagle Acquisition Corp. and Williams Scotsman International, Inc., which we completed on November 29, 2017 (the “Business Combination”), on the historical capital structure; and

 

v.                                      Transaction costs expected to be incurred in connection with the ModSpace Acquisition and Financing Transactions.

 

As referred to above, the “Financing Transactions” includes:

 

·                  our issuance of 8,000,000 shares of our Common Stock in an underwritten public offering at $16.00 per share (the “Equity Offering”),

 

·                  the entry by our indirect subsidiary, Williams Scotsman International, Inc. (“WSII”) and certain of its subsidiaries into a first amendment (the “Amended ABL Facility”) to the ABL Credit Agreement, dated as of November 29, 2017 (the “ABL Facility”) among WSII, the guarantors party thereto, the lenders party thereto and Bank of America, N.A., as agent and collateral agent. The Amended ABL Facility will become effective upon the closing of the ModSpace Acquisition and increases borrowing capacity under the ABL Facility from $600 million to $1.35 billion, with an accordion feature allowing aggregate borrowing capacity of up to $1.8 billion. Upon the closing of the ModSpace Acquisition, we expect total borrowings of $852.3 million under the ABL Facility, which represents an incremental $505.0 million in proceeds;

 

·                  WSII’s issuance of $300 million in aggregate principal amount of senior secured notes (the “Secured Notes”) to qualified institutional buyers pursuant to Rule 144A and

 

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Regulation S under the Securities Act of 1933, as amended (the “Securities Act”) (the “Secured Notes Offering”); and

 

·                  WSII’s issuance of $200 million in aggregate principal amount of senior unsecured notes (the “Unsecured Notes”) in a private placement transaction (the “Unsecured Financing”).

 

We refer to the entry into the Amended ABL Facility and the amounts to be funded thereunder, the Secured Notes Offering and the Unsecured Financing collectively as the “Other Financing Transactions.” We refer to the Equity Offering and the Other Financing Transactions collectively as the “Financing Transactions.” We refer to the ModSpace Acquisition, the Acton Acquisition, the Business Combination and the Financing Transactions collectively as the “Transactions.”

 

In connection with our entry into the Merger Agreement and pursuant to an amended and restated commitment letter (the “ABL/Bridge Debt Commitment Letter”), dated July 5, 2018, by and among Bank of America, N.A., Deutsche Bank AG New York Branch, Barclays Bank PLC, Morgan Stanley Senior Funding, Inc., Credit Suisse AG and ING Capital LLC (collectively, with certain of their respective affiliates, the “Lenders”) and us, the Lenders committed to provide (i) an incremental ABL loan facility in an aggregate principal amount of up to $750.0 million; (ii) a senior secured bridge loan facility in an aggregate principal amount of up to $280 million (the “Secured Bridge Facility”); and (iii) a senior unsecured bridge loan facility in an aggregate principal amount of up to $320 million (the “Unsecured Bridge Facility”), on the terms and subject to the conditions set forth in the ABL/Bridge Debt Commitment Letter, to fund a portion of the Cash Consideration for the ModSpace Acquisition and to pay related fees and expenses. Although we do not currently expect to make any borrowings under the Unsecured Bridge Facility or the Secured Bridge Facility, there can be no assurance that such borrowings will not be made. In that regard, we may be required to borrow under the Unsecured Bridge Facility and/or the Secured Bridge Facility if we do not generate sufficient net proceeds from the Equity Offering to partially finance the ModSpace Acquisition and related fees and expenses. The ABL/Bridge Debt Commitment Letter provides that any net cash proceeds received by us from the Equity Offering will, to the extent they are to be used to fund the ModSpace Acquisition, reduce the commitments of the Lenders as follows: (i) first, the commitments of the Lenders in respect of the Unsecured Bridge Facility will be automatically and immediately reduced and terminated, on a dollar-for-dollar basis, by the first $70.0 million of such proceeds and (ii) second, to the extent those proceeds exceed $70.0 million, amounts to be funded under the ABL Facility will be automatically and immediately reduced, on a dollar-for-dollar basis, by the amount of such excess. We expect the Bridge Facilities to be undrawn at the closing of the ModSpace Acquisition as a result of the Financing Transactions.

 

In connection with our entry into the Merger Agreement and pursuant to a commitment letter (the “Unsecured Debt Commitment Letter”), dated July 24, 2018, by and among AlbaCore Capital LLP, Canyon Value Realization Fund, L.P. (collectively, with certain of their respective affiliated or managed funds or accounts, the “Unsecured Lenders”) and us, the Unsecured Lenders committed to purchase senior unsecured notes (the “Unsecured Notes”) in an aggregate principal amount of up to $200.0 million, on the terms and subject to the conditions set forth in the Unsecured Debt Commitment Letter, to fund a portion of the Cash Consideration for the ModSpace Acquisition and to pay related fees and expenses. To the extent that the aggregate gross proceeds from (i) the Equity Offering and (ii) the Unsecured Financing (to the extent the proceeds from the Unsecured Financing are funded into an escrow account for the purpose of funding the Cash Consideration for the Modspace Acquisition) are at least $300 million, then the Unsecured Bridge Facility commitment under

 

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the ABL/Bridge Debt Commitment Letter will be cancelled and terminated in full. The Unsecured Notes will mature 5 years and 3 months after the date of issuance. The Unsecured Notes will bear interest at a rate of 10.0% per annum if paid in cash (or if paid in kind, 11.5% per annum) for the first 2 years and 6 months after the date of issuance and thereafter increasing to 12.5% per annum with no paid in kind option, in each case payable semi-annually. The Unsecured Notes will be WSII’s general unsecured obligations and will rank pari passu in right of payment with all of WSII’s existing and future senior indebtedness, effectively junior to all of WSII’s existing and future secured indebtedness, including the Amended ABL Facility, WSII’s existing 7.875% senior secured notes due 2022 (the “2022 Notes”) and the Secured Notes, to the extent of the value of the collateral securing such indebtedness, and senior in right of payment to any of WSII’s future unsecured subordinated indebtedness. In connection with the Equity Offering, we granted the underwriters a 30 day option to purchase up to an additional 1,200,000 shares of our Common Stock at $16.00 per share less underwriting discounts. In the event the underwriters exercise this option in whole or in part we expect to reduce on a dollar for dollar basis the size of our incremental borrowings under the Amended ABL Facility. A reduction in incremental borrowings under the Amended ABL Facility of $1 million would cause our interest expense presented in the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2017, the three months ended March 31, 2017 and the three months ended March 31, 2018 to decrease by approximately $46 thousand, $12 thousand and $12 thousand, respectively.

 

The following unaudited pro forma condensed combined financial information is based on the historical financial statements of WillScot, Acton and ModSpace described below. Our fiscal year is different than ModSpace’s historical fiscal year. Our fiscal year ends on December 31, while ModSpace’s historical fiscal year ends on September 30. In preparing the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2017, certain historical financial information for ModSpace was reclassed to align with WillScot’s annual reporting period. To adjust the historical operating results of ModSpace’s September fiscal year, we added the operating results for the three months ended December 31, 2017 (Successor), and subtracted the operating results for the three months ended December 31, 2016 (Predecessor) from the year ended September 30, 2017 for ModSpace Statement of Operations, to arrive at the reclassed statement of operations for the twelve months ended December 31, 2017 for ModSpace. The ModSpace operating results for the three months ended December 31, 2017 and 2016 are derived from the historical unaudited interim financial statements of ModSpace included in our Current Report on Form 8-K filed on July 24, 2018 incorporated by reference in this offering memorandum. The periods were derived by taking the ModSpace historical unaudited statement of operations for the six month ended March 31, 2017 and 2016, respectively, and subtracting the three months ended March 31, 2017 and 2016, respectively. In addition, certain reclassifications were made to the reported financial information of ModSpace to conform to the reporting classifications of WillScot.

 

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2017 combines:

 

·                  the audited historical consolidated statement of operations of Willscot for the year ended December 31, 2017;

 

·                  the reclassed unaudited historical consolidated statement of operations of ModSpace for the twelve months ended December 31, 2017; and

 

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·                  the unaudited historical consolidated statement of operations of Acton for the period from January 1, 2017 to December 20, 2017.

 

The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2018 combines:

 

·                  the unaudited historical consolidated statement of operations of WillScot for the three months ended March 31, 2018 (historical statements include Acton operating results as it was a wholly owned subsidiary of WillScot during this period); and

 

·                  the unaudited historical consolidated statement of operations of ModSpace for the three months ended March 31, 2018.

 

The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2017 combines:

 

·                  the unaudited historical consolidated statement of operations of WillScot for the three months ended March 31, 2017; and

 

·                  the unaudited historical consolidated statement of operations of ModSpace for the three months ended March 31, 2017; and

 

·                  the unaudited historical consolidated statement of operations of Acton for the period from January 1, 2017 to March 31, 2017.

 

The unaudited pro forma condensed combined balance sheet as of March 31, 2018 combines:

 

·                  the unaudited historical consolidated balance sheet of WillScot as of March 31, 2018 (historical statements include Acton as it was a wholly owned subsidiary of WillScot during this period); and

 

·                  the unaudited historical consolidated balance sheet of ModSpace as of March 31, 2018.

 

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2017 is based on, derived from, and should be read in conjunction with, our historical audited financial statements as set forth in our 2017 10-K. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2017 is also based on, derived from, and reclassed from ModSpace’s historical audited financial statements for the fiscal year ended September 30, 2017 and should be read in conjunction with ModSpace’s historical audited financial statements included in this Current Report on Form 8-K filed on July 24, 2018 incorporated by reference in this offering memorandum, as adjusted to conform to our calendar year end, and the historical unaudited consolidated statement of operations of Acton for the period from January 1, 2017 to December 20, 2017. The unaudited pro forma condensed statement of operations for the year ended December 31, 2017 does not include the operating results of Tyson Onsite (“Tyson”), which we acquired on January 3, 2018.

 

Our balance sheet as of March 31, 2018 and our statement of operations for the three months ended March 31, 2018 and 2017 are based on, derived from, and should be read in conjunction with, our historical unaudited financial statements, included in our Q1 2018 for the quarter ended March 31, 2018. ModSpace’s balance sheet as of March 31, 2018 and statement of operations for the three months ended March 31, 2018 and 2017 are based on, and derived from, ModSpace’s historical unaudited financial statements, and should be read in conjunction with, ModSpace’s historical unaudited financial statements, included in the Current Report on Form 8-K filed on July 24, 2018 incorporated by reference in this offering memorandum.

 

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The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2017, the three months ended March 31, 2018, and the three months ended March 31, 2017 assume that the Transactions occurred on January 1, 2017. The unaudited pro forma condensed combined balance sheet as of March 31, 2018 assumes that the Transactions occurred on March 31, 2018. The unaudited pro forma condensed combined financial information has been prepared by management for illustrative purposes only and is not necessarily indicative of the consolidated financial position or results of operations that would have been realized had the Transactions occurred as of the dates indicated, nor is it meant to be indicative of any anticipated consolidated financial position or future results of operations of the combined company. In addition, the accompanying unaudited pro forma condensed combined statements of operations do not include any expected cost savings or restructuring actions which may be achievable or which may occur subsequent to the ModSpace Acquisition, or the costs to achieve these cost savings or restructuring actions. The pro forma financial information also does not include the impact of any non-recurring activity and one-time transaction-related costs. The historical consolidated financial information has been adjusted in the accompanying unaudited pro forma condensed combined financial statements to give effect to pro forma events that are (i) directly attributable to the Transactions related thereto, (ii) factually supportable and (iii) with respect to the unaudited pro forma condensed combined statements of operations, are expected to have a continuing impact on the combined results.

 

The ModSpace Acquisition will be accounted for as a business combination using the acquisition method of accounting under the provisions of Accounting Standard Codification No. 805, “Business Combinations,” (“ASC 805”) and applying the pro forma assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements. Under ASC 805, the Company values assets acquired and liabilities assumed in a business combination at their fair values as of the acquisition date. Fair value measurements can be highly subjective and the reasonable application of measurement principles may result in a range of alternative estimates using the same facts and circumstances. The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions by management, including estimating future cash flows, and developing appropriate discount rates. Under ASC 805, transaction costs are not included as a component of consideration transferred, and are expensed as incurred. The final valuation is expected to be completed as soon as practicable but no later than one year after the consummation of the ModSpace Acquisition. The purchase price allocation is subject to completion of the Company’s final analysis of the fair value of the assets and liabilities of ModSpace as of the effective date of the ModSpace Acquisition. Accordingly, the purchase price allocation in the unaudited pro forma condensed combined financial statements is preliminary. Adjustments to the preliminary purchase price allocation could be material. The Company believes the fair values assigned to the assets to be acquired and liabilities to be assumed are based on reasonable estimates and assumptions using currently available data.

 

This unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed combined financial information is presented for informational purposes only and does not purport to represent what our results of operations would actually have been if the Transactions had occurred on the dates indicated nor do they purport to project our results of operations for any future period.

 

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WILLSCOT CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF MARCH 31, 2018

(In thousands)

 

 

 

Historical
WillScot
as of
March 31, 2018

 

Equity
Offering
Adjustments

 

Pro Forma
As
Adjusted

 

Historical
ModSpace
reclassed
as of
March 31, 2018
(Successor)

 

ModSpace
Acquisition
Adjustments

 

Other
Financing
Transaction
Adjustments

 

Pro Forma
Combined

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,861

 

$

121,310

(3k)

$

124,171

 

$

9

 

$

(1,063,750

)(3a)

$

977,035

(3j)

$

37,465

 

Trade receivables, net of allowance for doubtful accounts

 

94,377

 

 

94,377

 

65,272

 

 

 

159,649

 

Inventories

 

10,336

 

 

10,336

 

7,783

 

 

 

18,119

 

Prepaid expenses and other current assets

 

13,518

 

 

13,518

 

6,069

 

 

 

19,587

 

Total current assets

 

121,092

 

121,310

 

242,402

 

79,133

 

(1,063,750

)

977,035

 

234,820

 

Rental equipment, net

 

1,065,988

 

 

1,065,988

 

847,374

 

(3b)

 

1,913,362

 

Property, plant and equipment, net

 

82,944

 

 

82,944

 

123,546

 

(3b)

 

206,490

 

Goodwill

 

32,972

 

 

32,972

 

 

234,318

(3c)

 

267,290

 

Intangible assets, net

 

126,059

 

 

126,059

 

12,814

 

(718

)(3d)

 

138,155

 

Other non-current assets

 

3,418

 

 

3,418

 

164

 

 

 

3,582

 

Total long-term assets

 

1,311,381

 

 

1,311,381

 

983,898

 

233,600

 

 

2,528,879

 

Total assets

 

$

1,432,473

 

$

121,310

 

$

1,553,783

 

$

1,063,031

 

$

(830,150

)

$

977,035

 

$

2,763,699

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

46,887

 

 

46,887

 

6,700

 

 

 

53,587

 

Accrued liabilities

 

41,508

 

 

41,508

 

26,738

 

36,144

(3e)

 

104,390

 

Accrued interest

 

8,723

 

 

8,723

 

2,202

 

(2,202

)(3f)

 

8,723

 

Deferred revenue and customer deposits

 

48,676

 

 

48,676

 

13,426

 

 

 

62,102

 

Current portion of long-term debt

 

1,884

 

 

1,884

 

449,759

 

(449,759

)(3f)

 

1,884

 

Total current liabilities

 

147,678

 

 

147,678

 

498,825

 

(415,817

)

 

 

230,686

 

Long-term debt

 

662,199

 

 

662,199

 

58,904

 

(58,904

)(3f)

977,035

(3j)

1,639,234

 

Deferred tax liabilities

 

119,209

 

 

119,209

 

45,057

 

(7,759

)(3g)

 

156,507

 

Deferred revenue and customer deposits

 

6,038

 

 

6,038

 

 

 

 

6,038

 

Other non-current liabilities

 

19,250

 

 

19,250

 

 

 

 

19,250

 

Long-term liabilities

 

806,696

 

 

806,696

 

103,961

 

(66,663

)

977,035

 

1,821,029

 

Total liabilities

 

954,374

 

 

954,374

 

602,786

 

(482,480

)

977,035

 

2,051,715

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A common Stock

 

8

 

1

(3k)

9

 

292

 

(291

)(3h)

 

10

 

Class B common stock

 

1

 

 

1

 

 

 

 

1

 

Additional paid-in-capital

 

2,122,047

 

121,309

(3k)

2,243,356

 

450,127

 

(315,635

)(3h)

 

2,377,848

 

Accumulated other comprehensive loss

 

(51,798

)

 

(51,798

)

1,784

 

(1,784

)(3h)

 

(51,798

)

Accumulated deficit

 

(1,640,466

)

 

(1,640,466

)

8,042

 

(36,612

)(3h)

 

(1,669,036

)

Total shareholders’ equity

 

429,792

 

121,310

 

551,102

 

460,245

 

(354,322

)

 

657,025

 

Non-controlling interest

 

48,307

 

 

48,307

 

 

6,652

(3i)

 

54,959

 

Total equity

 

478,099

 

121,310

 

599,409

 

460,245

 

(347,670

)

 

711,984

 

Total liabilities and invested equity

 

$

1,432,473

 

$

121,310

 

$

1,553,783

 

$

1,063,031

 

$

(830,150

)

$

977,035

 

$

2,763,699

 

 

See notes to unaudited pro forma condensed combined balance sheet.

 

P-6



 

WILLSCOT CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THREE MONTHS ENDED MARCH 31, 2018

(In thousands, except loss per share data)

 

 

 

Historical
WillScot for the
three months ended
March 31, 2018

 

ModSpace
reclassed for the
three months ended
of March 31, 2018
(Successor)

 

ModSpace
Acquisition
Adjustments

 

Other
Financing
Transaction
Adjustments

 

ProForma
Combined

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Leasing and service revenue:

 

 

 

 

 

 

 

 

 

 

 

Modular leasing

 

$

97,262

 

$

66,486

 

$

 

$

 

$

163,748

 

Modular delivery and installation

 

26,250

 

24,852

 

 

 

51,102

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

New units

 

7,428

 

10,553

 

 

 

17,981

 

Rental units

 

3,811

 

7,451

 

 

 

11,262

 

Total revenues

 

134,751

 

109,342

 

 

 

244,093

 

Costs:

 

 

 

 

 

 

 

 

 

 

 

Cost of leasing and services:

 

 

 

 

 

 

 

 

 

 

 

Modular leasing

 

27,162

 

17,260

 

 

 

44,422

 

Modular delivery and installation

 

25,521

 

20,623

 

 

 

46,144

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

New units

 

4,987

 

7,843

 

 

 

12,830

 

Rental units

 

2,315

 

4,612

 

 

 

6,927

 

Depreciation of rental equipment

 

23,845

 

11,762

 

 

 

35,607

 

Gross profit

 

50,921

 

47,242

 

 

 

98,163

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

45,214

 

37,769

 

 

 

82,983

 

Other depreciation and amortization

 

2,436

 

2,796

 

500

(4a)

 

5,732

 

Impairment losses on goodwill

 

 

 

 

 

 

Restructuring costs

 

628

 

 

 

 

628

 

Currency (gains) losses, net

 

1,024

 

 

 

 

1,024

 

Other income (expense), net

 

(2,845

)

(1,828

)

 

 

(4,673

)

Operating income (loss)

 

4,464

 

8,505

 

(500

)

 

12,469

 

Interest expense

 

11,719

 

7,773

 

 

10,139

(4d)

29,631

 

Interest income

 

 

 

 

 

 

Income (loss) from continuing operations before income tax

 

(7,255

)

732

 

(500

)

(10,139

)

(17,162

)

Income tax expense (benefit)

 

(420

)

(209

)

(129

)(4b)

(2,616

)(4e)

(3,374

)

Income (loss) from continuing operations

 

(6,835

)

941

 

(371

)

(7,523

)

(13,788

)

Income (loss) from discontinued operations, net of tax

 

 

 

 

 

 

Net income (loss)

 

(6,835

)

941

 

(371

)

(7,523

)

(13,788

)

Less net loss attributable to non-controlling interest, net of tax

 

(648

)

 

(606

)(4c)

 

(1,254

)

Total income (loss) loss attributable to WSC

 

$

(6,187

)

$

941

 

$

235

 

$

(7,523

)

$

(12,534

)

Historical per share information

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to WSC—basic and diluted (4f)

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.08

)

 

 

 

 

 

 

$

 

Weighted average shares

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

77,189,774

 

 

 

 

 

 

 

 

Pro forma loss per share data (4f)

 

 

 

 

 

 

 

 

 

 

 

Pro forma net loss per share

 

$

(0.07

)

 

 

 

 

 

 

$

(0.13

)

Pro forma weighted average shares

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

85,189,774

 

 

 

 

 

 

 

93,648,274

 

 

See notes to unaudited pro forma condensed combined statement of operations.

 

P-7



 

WILLSCOT CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THREE MONTHS ENDED MARCH 31, 2017

(In thousands, except loss per share data)

 

 

 

Historical

 

 

 

Historical

 

 

 

 

 

Historical ModSpace 
(Reclassed)

 

 

 

 

 

 

 

 

 

WillScot for
the three
months ended
March 31,
2017

 

Business
Combination
Adjustment

 

Acton from
January 1,
2017 to
March 31,
2017

 

Acton
Acquisition
Adjustment

 

Pro Forma As
Adjusted

 

January 1,
2017 to
March 2,
2017
(Predecessor)

 

March 3, 2017
to March 31,
2017
(Successor)

 

ModSpace
Acquisition
Adjustments

 

Other
Financing
Transaction
Adjustments

 

Pro Forma
Combined

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasing and service revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Modular leasing

 

$

68,987

 

$

 

$

11,552

 

$

 

$

80,539

 

$

41,493

 

$

11,575

 

$

 

$

 

$

133,607

 

Modular delivery and installation

 

19,004

 

 

9,127

 

 

28,131

 

16,961

 

10,294

 

 

 

55,386

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New units

 

5,486

 

 

666

 

 

6,152

 

7,924

 

3,746

 

 

 

17,822

 

Rental units

 

5,844

 

 

812

 

 

6,656

 

4,405

 

3,543

 

 

 

14,604

 

Total revenues

 

99,321

 

 

22,157

 

 

121,478

 

70,783

 

29,158

 

 

 

221,419

 

Costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of leasing and services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Modular leasing

 

19,102

 

 

3,770

 

 

22,872

 

11,414

 

6,144

 

 

 

40,430

 

Modular delivery and installation

 

18,133

 

 

5,442

 

 

23,575

 

14,652

 

8,773

 

 

 

47,000

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New units

 

3,720

 

 

553

 

 

4,273

 

6,445

 

2,742

 

 

 

13,460

 

Rental units

 

3,708

 

 

421

 

 

4,129

 

3,356

 

2,730

 

 

 

10,215

 

Depreciation of rental equipment

 

16,720

 

 

3,039

 

719

(6a)

20,478

 

10,808

 

3,726

 

 

 

35,012

 

Gross profit

 

37,938

 

 

8,932

 

(719

)

46,151

 

24,108

 

5,043

 

 

 

75,302

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

32,761

 

 

7,270

 

(104

)(6b)

39,927

 

18,209

 

10,771

 

 

 

68,907

 

Other depreciation and amortization

 

1,941

 

 

650

 

94

(6d)

2,685

 

1,383

 

772

 

500

(4a)

 

5,340

 

Impairment losses on goodwill

 

 

 

 

 

 

 

 

 

 

 

Restructuring costs

 

284

 

 

 

 

284

 

3,164

 

135

 

 

 

3,583

 

Currency (gains) losses, net

 

(2,002

)

1,718

(5a)

 

 

(284

)

 

 

 

 

(284

)

Other income (expense), net

 

130

 

 

 

 

130

 

(227

)

561

 

 

 

464

 

Loss on reorganization items, net

 

 

 

 

 

 

92,450

 

 

 

 

92,450

 

Operating income (loss)

 

4,824

 

(1,718

)

1,012

 

(709

)

3,409

 

(90,871

)

(7,196

)

(500

)

 

(95,158

)

Interest expense

 

24,661

 

(15,235

)(5b)

1,178

 

1,184

(6e)

11,788

 

15,275

 

2,585

 

 

(6

)(4d)

29,642

 

Interest income

 

(2,584

)

2,584

(5b)

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income tax

 

(17,253

)

10,933

 

(166

)

(1,893

)

(8,379

)

(106,146

)

(9,781

)

(500

)

6

 

(124,800

)

Income tax expense (benefit)

 

(4,869

)

2,821

(5c)

 

(531

)(6f)

(2,579

)

(9,516

)

(3,834

)

(129

)(4b)

1

(4e)

(16,057

)

Income (loss) from continuing operations

 

(12,384

)

8,112

 

(166

)

(1,362

)

(5,800

)

(96,630

)

(5,947

)

(371

)

5

 

(108,743

)

Income (loss) from discontinued operations, net of tax

 

2,205

 

 

 

 

2,205

 

 

 

 

 

2,205

 

Net income (loss)

 

(10,179

)

8,112

 

(166

)

(1,362

)

(3,595

)

(96,630

)

(5,947

)

(371

)

5

 

(106,538

)

Less net loss attributable to non-controlling interest, net of tax

 

 

 

 

 

 

 

 

(9,888

)(4c)

 

(9,888

)

Total income (loss) loss attributable to WSC

 

$

(10,179

)

$

8,112

 

$

(166

)

$

(1,362

)

$

(3,595

)

$

(96,630

)

$

(5,947

)

$

9,517

 

$

5

 

$

(96,650

)

Net (loss) income per share attributable to WSC—basic and diluted (4f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.85

)

 

 

 

 

 

 

$

(0.08

)

 

 

 

 

 

 

 

 

$

(1.11

)

Weighted Average Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

14,545,833

 

57,673,941

 

 

 

 

 

72,219,774

 

 

 

 

 

 

 

 

 

 

 

Total pro forma shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

88,678,274

 

 

See notes to unaudited pro forma condensed combined statement of operations.

 

P-8



 

WILLSCOT CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2017

(In thousands, except loss per share data)

 

 

 

Historical

 

 

 

Historical 

 

 

 

 

 

Historical ModSpace 
(Reclassed)

 

 

 

 

 

 

 

 

 

WillScot for 
the twelve 
months ended
December 31,
2017

 

Business 
Combination 
Adjustment

 

Acton from 
January 1, 
2017 to 
December 20,
2017

 

Acton 
Acquisition 
Adjustment

 

Pro Forma 
As Adjusted

 

January 1, 
2017 to 
March 2, 
2017 
(Predecessor)

 

March 3, 
2017 to 
December 31,
2017 
(Successor)

 

ModSpace 
Acquisition 
Adjustments

 

Other 
Financing 
Transaction 
Adjustments

 

Pro Forma 
Combined

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasing and service revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Modular leasing

 

$

297,821

 

$

 

$

47,091

 

$

 

$

344,912

 

$

41,493

 

$

209,237

 

$

 

$

 

$

595,642

 

Modular delivery and installation

 

89,850

 

 

38,460

 

 

128,310

 

16,961

 

95,547

 

 

 

240,818

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New units

 

36,371

 

 

4,869

 

 

41,240

 

7,924

 

40,402

 

 

 

89,566

 

Rental units

 

21,900

 

 

3,493

 

 

25,393

 

4,405

 

27,510

 

 

 

57,308

 

Total revenues

 

445,942

 

 

93,913

 

 

539,855

 

70,783

 

372,696

 

 

 

983,334

 

Costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of leasing and services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Modular leasing

 

83,588

 

 

16,152

 

 

99,740

 

11,414

 

61,347

 

 

 

172,501

 

Modular delivery and installation

 

85,477

 

 

22,394

 

 

107,871

 

14,652

 

78,511

 

 

 

201,034

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New units

 

26,025

 

 

3,733

 

 

29,758

 

6,445

 

31,676

 

 

 

67,879

 

Rental units

 

12,643

 

 

1,633

 

 

14,276

 

3,356

 

19,346

 

 

 

36,978

 

Depreciation of rental equipment

 

72,639

 

 

12,438

 

5,664

(6a)

90,741

 

10,808

 

41,678

 

 

 

143,227

 

Gross profit

 

165,570

 

 

37,563

 

(5,664

)

197,469

 

24,108

 

140,138

 

 

 

361,715

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

162,351

 

 

33,157

 

(5,410

)(6b)(6c)

190,098

 

18,209

 

101,304

 

 

 

309,611

 

Other depreciation and amortization

 

8,653

 

 

2,608

 

374

(6d)

11,635

 

1,383

 

8,158

 

2,000

(4a)

 

23,176

 

Impairment losses on goodwill

 

60,743

 

 

 

 

60,743

 

 

 

 

 

60,743

 

Restructuring costs

 

2,196

 

 

 

 

2,196

 

3,164

 

3,939

 

 

 

9,299

 

Currency (gains) losses, net

 

(12,878

)

10,830

(5a)

 

 

(2,048

)

 

 

 

 

(2,048

)

Other income (expense), net

 

2,827

 

 

 

 

2,827

 

(227

)

3,522

 

 

 

6,122

 

Loss on reorganization items, net

 

 

 

 

 

 

92,450

 

 

 

 

92,450

 

Operating income (loss)

 

(58,322

)

(10,830

)

1,798

 

(628

)

(67,982

)

(90,871

)

23,215

 

(2,000

)

 

(137,638

)

 

See notes to unaudited pro forma condensed combined statement of operations.

 

P-9



 

WILLSCOT CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (Continued)

FOR THE YEAR ENDED DECEMBER 31, 2017

(In thousands, except loss per share data)

 

 

 

Historical 

 

 

 

Historical 

 

 

 

 

 

Historical ModSpace 
(Reclassed)

 

 

 

 

 

 

 

 

 

WillScot for 
the twelve 
months ended
December 31,
2017

 

Business 
Combination 
Adjustment

 

Acton from 
January 1, 
2017 to 
December 20,
2017

 

Acton 
Acquisition 
Adjustment

 

Pro Forma 
As Adjusted

 

January 1, 
2017 to 
March 2, 
2017 
(Predecessor)

 

March 3, 
2017 to 
December 31,
2017 
(Successor)

 

ModSpace 
Acquisition 
Adjustments

 

Other 
Financing 
Transaction 
Adjustments

 

Pro Forma 
Combined

 

Interest expense

 

119,308

 

(77,373

)(5b)

5,049

 

4,199

(6e)

51,183

 

15,275

 

25,137

 

 

31,072

(4d)

122,667

 

Interest income

 

(12,232

)

12,177

(5b)

 

 

(55

)

 

 

 

 

(55

)

Income (loss) from continuing operations before income tax

 

(165,398

)

54,366

 

(3,251

)

(4,827

)

(119,110

)

(106,146

)

(1,922

)

(2,000

)

(31,072

)

(260,250

)

Income tax expense (benefit)

 

(936

)

14,026

(5c)

 

(2,084

)(6f)

11,006

 

(9,516

)

(9,023

)

(516

)(4b)

(8,016

)(4e)

(16,065

)

Income (loss) from continuing operations

 

(164,462

)

40,340

 

(3,251

)

(2,743

)

(130,116

)

(96,630

)

7,101

 

(1,484

)

(23,056

)

(244,185

)

Income (loss) from discontinued operations, net of tax

 

14,650

 

 

 

 

14,650

 

 

 

 

 

14,650

 

Net income (loss)

 

(149,812

)

40,340

 

(3,251

)

(2,743

)

(115,466

)

(96,630

)

7,101

 

(1,484

)

(23,056

)

(229,535

)

Less net loss attributable to non—controlling interest, net of tax

 

(2,110

)

 

 

 

(2,110

)

 

 

(20,095

)(4c)

 

(22,205

)

Total income (loss) loss attributable to WSC

 

$

(147,702

)

$

40,340

 

$

(3,251

)

$

(2,743

)

$

(113,356

)

$

(96,630

)

$

7,101

 

$

18,611

 

$

(23,056

)

$

(207,330

)

Net loss per share attributable to WSC—basic and diluted (4f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(8.21

)

 

 

 

 

 

 

$

(1.77

)

 

 

 

 

 

 

 

 

$

(2.50

)

Weighted Average Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

19,760,189

 

52,459,585

 

 

 

 

 

72,219,774

 

 

 

 

 

 

 

 

 

 

Total pro forma shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

88,678,274

 

 

See notes to unaudited pro forma condensed combined statement of operations.

 

P-10



 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

(in thousands, except share and per share data)

 

1. ModSpace Acquisition

 

On June 21, 2018, we and Merger Sub, entered into the Merger Agreement with ModSpace and NANOMA LLC, solely in its capacity as the representative of the Holders (as defined therein). Subject to adjustments contemplated by the Merger Agreement, including a net working capital adjustment, the aggregate consideration payable to the sellers of ModSpace in connection with the ModSpace Acquisition consists of (i) $1,063,750 in cash (the “Cash Consideration”), (ii) 6,458,500 shares of our Common Stock (the “Common Stock Consideration”), and (iii) warrants to purchase an aggregate of 10,000,000 shares of our Common Stock at an exercise price of $15.50 per share (the “ModSpace Warrants”).

 

The following table summarizes the components of the estimated total purchase price included in the pro forma condensed combined financial statements as if the acquisition had been completed on March 31, 2018:

 

Cash Consideration, net of cash acquired

 

$

1,063,750

 

Fair value of the Common Stock Consideration (assumes a per share price on Nasdaq of $15.80 on July 20, 2018)

 

102,045

 

Fair value of the ModSpace Warrants (1)

 

39,100

 

Estimated total purchase price

 

$

1,204,895

 

 


(1)                                 Fair value of the ModSpace Warrants was preliminarily determined utilizing a Black-Scholes model resulting in a $3.91 per warrant fair value. The warrant fair value determination is preliminary, subject to management’s final determination and based on our Common Stock per share closing price on NASDAQ of $15.80 on July 20, 2018.

 

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting under the provisions of ASC 805 and was based on the historical financial information of WillScot and ModSpace. Under the acquisition method of accounting, the total estimated purchase price of an acquisition is allocated to the net tangible and intangible assets to be acquired based on their estimated fair values as of the date the acquisition is consummated. Such fair values are based on available information and certain assumptions that we believe are reasonable. Management has made a preliminary allocation of the estimated purchase price to the tangible (including rental equipment) and intangible assets to be acquired and liabilities to be assumed based on various preliminary estimates. The final determination of these estimated fair values, the assets’ useful lives and the amortization methods are subject to completion of an ongoing assessment and will be available as soon as practicable but no later than one year after the consummation of the ModSpace Acquisition. Fair value measurements can be highly subjective and the reasonable application of measurement principles may result in a range of alternative estimates using the same facts and circumstances. The results of the final allocation could be materially different from the preliminary allocation set forth in these unaudited pro forma condensed combined financial statements, including but not limited to, the allocations related to identifiable intangible assets, rental equipment, property, plant and equipment, inventories, deferred taxes, goodwill, other depreciation and amortization, interest expense and income taxes:

 

Under the Merger Agreement, certain assets and liabilities will not transfer to us. Accordingly, pro forma adjustments have been reflected in the unaudited pro forma

 

P-11



 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(Continued)

 

(in thousands, except share and per share data)

 

1. ModSpace Acquisition (Continued)

 

condensed combined balance sheet to exclude these net liabilities from the purchase price allocation of the acquired business:

 

Accrued Interest

 

2,202

 

Current Portion of Long-Term Debt

 

449,759

 

Long Term Debt

 

58,904

 

Net Liabilities not Acquired

 

$

510,865

 

 

The following table summarizes the preliminary purchase price allocation. ModSpace emerged from bankruptcy in March 2017 applying fresh start accounting which resulted in a revaluing of its balance sheet at the time. Based on preliminary valuation procedures which are subject to completion upon the closing, limited fair value adjustments were identified given the close proximity to the application of fresh start accounting. The table reflects the allocation of fair value as if the ModSpace Acquisition had been completed on March 31, 2018:

 

Purchase Price

 

$

1,204,895

 

Cash and cash equivalents

 

9

 

Trade receivable, net

 

65,272

 

Inventories

 

7,783

 

Prepaid expenses and other current assets

 

6,069

 

Rental equipment

 

847,374

 

Property, plant and equipment, net

 

123,546

 

Other intangibles

 

12,096

 

Other assets

 

164

 

Total identifiable assets acquired

 

1,062,313

 

Accounts payable

 

6,700

 

Accrued liabilities

 

26,738

 

Deferred revenue and customer deposits

 

13,426

 

Deferred tax liabilities, net

 

44,872

 

Total liabilities assumed

 

91,736

 

Total Pro Forma Goodwill

 

$

234,318

 

 

2. Accounting Policies and Reclassifications

 

During the preparation of these unaudited pro forma condensed combined financial statements, we made a preliminary assessment as to any material differences between our accounting policies and ModSpace’s accounting policies. These unaudited pro forma condensed combined financial statements do not adjust for or assume any material differences in accounting policies between us and ModSpace.

 

Following the ModSpace Acquisition, ModSpace will conform to our accounting policies and financial statement presentation classifications. We will also be evaluating areas of operations in which ModSpace had an accounting policy for which we do not have an

 

P-12



 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(Continued)

 

(in thousands, except share and per share data)

 

2. Accounting Policies and Reclassifications (Continued)

 

accounting policy. For these matters we will make an accounting policy election post transaction close, as appropriate, to reflect any material changes in operating practices.

 

Financial information presented in the “Historical ModSpace” column in the unaudited pro forma condensed combined balance sheet and statement of operations has been reclassified to conform to our historical presentation as follows (all numbers are stated in thousands unless explicitly stated):

 

Historical ModSpace Balance Sheet As of March 31, 2018

 

 

 

Historical
ModSpace as of
March 31, 2018

 

Historical
ModSpace As
Reclassed

 

Assets

 

 

 

 

 

Cash and Cash equivalents

 

$

9

 

$

9

 

Trade receivables

 

 

65,272

 

Inventories

 

 

7,783

 

Accounts receivable, net of allowance for doubtful accounts

 

65,272

 

 

Lease receivables, net of allowance for doubtful accounts

 

1,624

 

 

Prepaid expenses and other current assets

 

12,228

 

6,069

 

Prepaid expenses

 

 

 

Other assets

 

 

 

Total Current assets

 

79,133

 

79,133

 

Rental equipment, net

 

846,512

 

847,374

 

Property, plant and equipment, net

 

 

123,546

 

Other property and equipment, net

 

123,546

 

 

Other assets

 

 

 

Goodwill

 

 

 

Intangible assets, net

 

12,814

 

12,814

 

Goodwill and other intangibles

 

 

 

Other non-current assets

 

1,026

 

164

 

Total Long-Term Assets

 

983,898

 

983,898

 

Total Assets

 

1,063,031

 

1,063,031

 

 

P-13



 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(Continued)

 

(in thousands, except share and per share data)

 

2. Accounting Policies and Reclassifications (Continued)

 

 

 

Historical
ModSpace as of
March 31, 2018

 

Historical
ModSpace As
Reclassed

 

Liabilities

 

 

 

 

 

Accounts payable

 

$

6,700

 

$

6,700

 

Accrued liabilities

 

 

26,738

 

Accrued expenses

 

31,170

 

 

Accrued interest

 

 

2,202

 

Deferred gain on sale of other property and equipment

 

 

 

Deferred revenue and customer deposits

 

 

13,426

 

Advance rents

 

11,196

 

 

Current portion of long-term debt

 

 

449,759

 

Current portion of term loans

 

5,664

 

 

Term loans

 

 

 

Asset based revolver

 

444,095

 

 

Senior notes

 

 

 

Deferred income taxes

 

 

 

Total current liabilities

 

498,825

 

498,825

 

Long-term debt

 

 

58,904

 

Term loans

 

58,904

 

 

Asset based revolver

 

 

 

Senior notes

 

 

 

Deferred tax liabilities

 

 

45,057

 

Deferred income taxes

 

45,057

 

 

Deferred revenue and customer deposits

 

 

 

Other non-current liabilities

 

 

 

Long-term liabilities

 

103,961

 

103,961

 

Total Liabilities

 

602,786

 

602,786

 

Commitments and contingencies

 

 

 

 

 

Class A common stock

 

 

292

 

Class B common stock

 

 

 

Common stock

 

292

 

 

Preferred Stock

 

 

 

Additional paid-in capital

 

445,157

 

450,127

 

Successor additional paid-in-capital

 

 

 

Warrants

 

4,970

 

 

Accumulated other comprehensive income (loss)

 

1,784

 

1,784

 

Accumulated deficit

 

 

8,042

 

Retained earnings

 

8,042

 

 

Total shareholder’s equity

 

460,245

 

460,245

 

Non-controlling interest

 

 

 

Total equity

 

460,245

 

460,245

 

Total liabilities and equity

 

$

1,063,031

 

$

1,063,031

 

 

P-14



 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(Continued)

 

(in thousands, except share and per share data)

 

2. Accounting Policies and Reclassifications (Continued)

 

Historical ModSpace Statement of Operations for the Three Months Ended March 31, 2018

 

 

 

Historical
ModSpace for the
three months ended
March 31, 2018

 

Historical
ModSpace As
Reclassed

 

Revenues:

 

 

 

 

 

Leasing and service revenues:

 

 

 

 

 

Modular leasing

 

$

 

$

66,486

 

Modular delivery and installation

 

 

24,852

 

Leasing

 

63,734

 

 

Sales:

 

 

 

 

 

New units

 

10,073

 

10,553

 

Rental units