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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Trean Insurance Group Inc | NASDAQ:TIG | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 6.16 | 6.46 | 6.25 | 0 | 01:00:00 |
|
| |
Per share
|
| |
Total
|
Price to the public
|
| |
$14.00
|
| |
$70,000,000
|
Underwriting discounts and commissions(1)
|
| |
$0.70
|
| |
$3,500,000
|
Proceeds, before expenses, to the selling stockholders
|
| |
$13.30
|
| |
$66,500,000
|
(1)
|
See “Underwriting” for a description of the compensation payable to the underwriters.
|
Joint Book-Running Managers
|
||||||
J.P. Morgan
|
| |
Evercore ISI
|
| |
William Blair
|
|
| |
Page
|
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| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
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| | ||
| | ||
| | ||
| |
•
|
We may experience disruptions related to COVID-19, including economic impacts of the COVID-19-related governmental actions;
|
•
|
Our Program Partners or our Owned MGAs may fail to properly market, underwrite or administer policies;
|
•
|
We depend on a limited number of Program Partners for a substantial portion of our gross written premiums;
|
•
|
Our business is subject to significant geographic concentration;
|
•
|
We may suffer a downgrade in the A.M. Best financial strength ratings of our insurance company subsidiaries;
|
•
|
We may be unable to accurately underwrite risks and charge competitive yet profitable rates to our clients and policyholders;
|
•
|
Technology breaches, failures or service interruptions of our business partners’ systems could harm our business and/or reputation;
|
•
|
We are subject to extensive regulation;
|
•
|
Regulators may challenge our use of fronting arrangements in states in which our Program Partners are not licensed;
|
•
|
Regulation may become more extensive in the future;
|
•
|
We have elected to use the extended transition period for complying with new or revised accounting standards;
|
•
|
the impact of our “controlled company” exemptions under Nasdaq listing standards and the expected loss of such exemptions following completion of this offering, subject to applicable phase-in periods;
|
•
|
we may present as few as two years of audited financial statements and two years of related management’s discussion and analysis of financial condition and results of operations in this prospectus;
|
•
|
we are exempt from the requirement to obtain an attestation report from our auditors on management’s assessment of our internal control over financial reporting under the Sarbanes-Oxley Act of 2002 for up to five years or until we no longer qualify as an emerging growth company;
|
•
|
we are permitted to provide reduced disclosure regarding our executive compensation arrangements pursuant to the rules applicable to smaller reporting companies, which means we do not have to include a compensation discussion and analysis and certain other disclosures regarding our executive compensation; and
|
•
|
we are not required to hold non-binding advisory votes on executive compensation.
|
•
|
is based on 51,148,782 shares of our common stock outstanding as of May 7, 2021 and excludes 4,547,021 shares of common stock reserved for future issuance under the Trean Insurance Group, Inc. 2020 Omnibus Incentive Plan; and
|
•
|
assumes no exercise of the option granted to the underwriters to purchase up to an additional 750,000 shares of common stock to cover over-allotments.
|
|
| |
Three
Months
Ended
March 31
|
| |
Year ended December 31
|
|||
|
| |
(in thousands, except share and per share data)
|
||||||
|
| |
2021
|
| |
2020
|
| |
2019
|
Gross written premiums
|
| |
$146,730
|
| |
$484,249
|
| |
$411,401
|
Increase in gross unearned premiums
|
| |
(18,431)
|
| |
(52,215)
|
| |
(13,598)
|
Gross earned premiums
|
| |
128,299
|
| |
432,034
|
| |
397,803
|
Ceded earned premiums
|
| |
(87,165)
|
| |
(323,567)
|
| |
(311,325)
|
Net earned premiums
|
| |
41,134
|
| |
108,467
|
| |
86,478
|
Net investment income
|
| |
1,592
|
| |
8,324
|
| |
6,245
|
Gain on revaluation of Compstar investment
|
| |
—
|
| |
69,846
|
| |
—
|
Net realized capital gains
|
| |
13
|
| |
3,365
|
| |
667
|
Other revenue
|
| |
4,655
|
| |
12,104
|
| |
9,125
|
Total revenue
|
| |
47,394
|
| |
202,106
|
| |
102,515
|
|
| |
|
| |
|
| |
|
Expenses:
|
| |
|
| |
|
| |
|
Losses and loss adjustment expenses
|
| |
24,881
|
| |
50,774
|
| |
44,661
|
General and administrative expenses
|
| |
11,891
|
| |
38,668
|
| |
20,959
|
Other expenses
|
| |
—
|
| |
13,427
|
| |
—
|
Intangible asset amortization
|
| |
1,414
|
| |
2,573
|
| |
46
|
Non-cash stock compensation
|
| |
211
|
| |
506
|
| |
—
|
Interest expense
|
| |
427
|
| |
1,922
|
| |
2,169
|
Total expenses
|
| |
38,824
|
| |
107,870
|
| |
67,835
|
|
| |
|
| |
|
| |
|
Other income
|
| |
121
|
| |
1,025
|
| |
121
|
Income before taxes
|
| |
8,691
|
| |
95,261
|
| |
34,801
|
|
| |
|
| |
|
| |
|
Provision for income taxes
|
| |
1,900
|
| |
6,825
|
| |
7,074
|
Equity earnings in affiliates, net of tax
|
| |
—
|
| |
2,333
|
| |
3,558
|
Net income
|
| |
$6,791
|
| |
$90,769
|
| |
$31,285
|
Adjusted net income(1)
|
| |
$8,042
|
| |
$32,779
|
| |
$33,231
|
|
| |
Three months ended
March 31, 2021
|
| |
Year ended
December 31, 2020
|
| |
Year ended
December 31, 2019
|
Per share data(2):
|
| |
|
| |
|
| |
|
Earnings per share:
|
| |
|
| |
|
| |
|
Basic
|
| |
$0.13
|
| |
$2.08
|
| |
$0.84
|
Diluted
|
| |
$0.13
|
| |
$2.07
|
| |
$0.84
|
Weighted average shares outstanding:
|
| |
|
| |
|
| |
|
Basic
|
| |
51,148,782
|
| |
43,744,003
|
| |
37,386,394
|
Diluted
|
| |
51,179,820
|
| |
43,744,744
|
| |
37,386,394
|
(1)
|
Adjusted net income is a non-GAAP financial measure. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Reconciliation of non-GAAP financial measures” in our Annual Report on Form 10-K for the year ended December 31, 2020 for a reconciliation of adjusted net income to net income in accordance with GAAP.
|
|
| |
At March 31,
|
| |
At December 31,
|
|||
|
| |
2021
|
| |
2020
|
| |
2019
|
|
| |
(in thousands)
|
||||||
Balance sheet data:
|
| |
|
| |
|
| |
|
Investments
|
| |
$381,109
|
| |
$409,610
|
| |
$350,873
|
Cash and cash equivalents
|
| |
130,940
|
| |
153,149
|
| |
74,268
|
Restricted cash
|
| |
5,996
|
| |
4,085
|
| |
1,800
|
Accrued investment income
|
| |
2,253
|
| |
2,458
|
| |
2,468
|
Premiums and other receivables
|
| |
121,740
|
| |
109,217
|
| |
62,460
|
Income taxes receivable
|
| |
—
|
| |
1,322
|
| |
—
|
Related party receivables
|
| |
—
|
| |
—
|
| |
22,221
|
Reinsurance recoverable
|
| |
360,911
|
| |
343,213
|
| |
307,338
|
Prepaid reinsurance premiums
|
| |
110,298
|
| |
107,971
|
| |
80,088
|
Deferred policy acquisition cost, net
|
| |
5,029
|
| |
1,332
|
| |
2,115
|
Property and equipment, net
|
| |
8,050
|
| |
8,254
|
| |
7,937
|
Right of use asset
|
| |
5,844
|
| |
6,338
|
| |
—
|
Deferred tax asset, net
|
| |
—
|
| |
—
|
| |
1,367
|
Goodwill
|
| |
140,640
|
| |
140,640
|
| |
2,822
|
Intangible assets, net
|
| |
73,903
|
| |
75,316
|
| |
154
|
Other assets
|
| |
9,334
|
| |
6,878
|
| |
3,123
|
Total assets
|
| |
$1,356,047
|
| |
$1,369,783
|
| |
$919,034
|
Unpaid loss and loss adjustment expenses
|
| |
485,532
|
| |
$457,817
|
| |
$406,716
|
Unearned premiums
|
| |
176,460
|
| |
157,987
|
| |
103,789
|
Funds held under reinsurance agreements
|
| |
151,268
|
| |
174,704
|
| |
163,445
|
Reinsurance premiums payable
|
| |
56,975
|
| |
57,069
|
| |
53,620
|
Accounts payable and accrued expenses
|
| |
23,148
|
| |
61,240
|
| |
14,995
|
Lease liability
|
| |
6,372
|
| |
6,893
|
| |
—
|
Deferred tax liability, net
|
| |
10,620
|
| |
12,329
|
| |
—
|
Debt
|
| |
31,473
|
| |
31,637
|
| |
29,040
|
Income taxes payable
|
| |
1,224
|
| |
—
|
| |
714
|
Total liabilities
|
| |
943,072
|
| |
959,676
|
| |
772,319
|
Redeemable preferred stock
|
| |
—
|
| |
—
|
| |
5,100
|
Total stockholders’/members’ equity
|
| |
412,975
|
| |
410,107
|
| |
141,615
|
Total liabilities and stockholders’/members’ equity
|
| |
$1,356,047
|
| |
$1,369,783
|
| |
$919,034
|
|
| |
Three months
ended
March 31,
|
| |
Year ended December 31,
|
|||
|
| |
2021
|
| |
2020
|
| |
2019
|
Underwriting and other ratios:
|
| |
|
| |
|
| |
|
Loss ratio(1)
|
| |
60.5%
|
| |
46.8%
|
| |
51.6%
|
Expense ratio(2)
|
| |
28.9%
|
| |
35.6%
|
| |
24.2%
|
Combined ratio(3)
|
| |
89.4%
|
| |
82.4%
|
| |
75.8%
|
Return on equity(4)
|
| |
6.6%
|
| |
32.9%
|
| |
25.5%
|
Adjusted return on equity(5)
|
| |
7.8%
|
| |
11.9%
|
| |
27.0%
|
Return on tangible equity(6)
|
| |
13.8%
|
| |
54.6%
|
| |
26.1%
|
Adjusted return on tangible equity(7)
|
| |
16.4%
|
| |
19.7%
|
| |
27.7%
|
(1)
|
The loss ratio is the ratio, expressed as a percentage, of losses and loss adjustment expenses to net earned premiums.
|
(2)
|
The expense ratio is the ratio, expressed as a percentage, of general and administrative expenses to net earned premiums.
|
(3)
|
The combined ratio is the sum of the loss ratio and the expense ratio. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss.
|
(4)
|
Return on equity represents net income expressed on an annualized basis as a percentage of average beginning and ending members’ equity during the period.
|
(5)
|
Adjusted return on equity is a non-GAAP financial measure defined as adjusted net income expressed on an annualized basis as a percentage of average beginning and ending stockholders’/members’ equity during the period. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Reconciliation of non-GAAP financial measures” in our Annual Report on Form 10-K for the year ended December 31, 2020 for a reconciliation of adjusted return on equity to return on equity in accordance with GAAP.
|
(6)
|
Return on tangible equity is a non-GAAP financial measure defined as net income expressed on an annualized basis as a percentage of average beginning and ending tangible stockholders’/members’ equity during the period. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Reconciliation of non-GAAP financial measures” in our Annual Report on Form 10-K for the year ended December 31, 2020 for a reconciliation of return on tangible equity to return on equity in accordance with GAAP.
|
(7)
|
Adjusted return on tangible equity is a non-GAAP financial measure defined as adjusted net income expressed on an annualized basis as a percentage of average beginning and ending tangible stockholders’/members’ equity during the period. See “Reconciliation of non-GAAP financial measures” for a reconciliation of return on tangible equity to return on equity in accordance with GAAP.
|
•
|
Legislative or regulatory action seeking to retroactively mandate coverage for losses, which our policies would not otherwise cover or have been priced to cover;
|
•
|
Regulatory actions relaxing reporting requirements for claims, which may affect coverage under our claims made and reported policies;
|
•
|
Legislative actions prohibiting us from canceling policies in accordance with our policy terms or non-renewing policies at their expiration date;
|
•
|
Legislative orders to provide premium refunds, extend premium payment grace periods and allow time extensions for past due premium payments;
|
•
|
We may have increased workers’ compensation loss expense and claims frequency if policyholder employees in high risk roles with essential businesses contract COVID-19 in the workplace;
|
•
|
We may have increased workers’ compensation loss expense and claims frequency if policyholder employees experience an adverse reaction to COVID-19 vaccines due to the employer requiring or strongly encouraging vaccination for employees—a majority of case law thus far has determined adverse reactions in these situations are compensable under workers’ compensation laws;
|
•
|
While to date we have not seen a significant increase in incurred losses due to the COVID-19 pandemic, high unemployment and low interest rates could adversely affect our profitability and declining payrolls could adversely affect our workers' compensation written premiums;
|
•
|
Travel restrictions and quarantines leading to a lack of in-person meetings, which would hinder our ability to establish relationships or originate new business;
|
•
|
Alternative working arrangements, including employees working remotely, which could negatively impact our business should such arrangements remain for an extended period of time;
|
•
|
We may experience elevated frequency and severity in our workers’ compensation lines as a result of legislative or regulatory action to effectively expand workers’ compensation coverage for certain types of workers; and
|
•
|
We may experience delayed reporting of losses, settlement negotiations and disputed claims resolution above our normal claims resolution trends.
|
•
|
our operating and financial performance and prospects;
|
•
|
our announcements or our competitors’ announcements regarding new products or services, enhancements, significant contracts, acquisitions or strategic investments;
|
•
|
changes in earnings estimates or recommendations by securities analysts who cover our common stock;
|
•
|
fluctuations in our quarterly financial results or earnings guidance or the quarterly financial results or earnings guidance of companies perceived to be similar to us;
|
•
|
changes in our capital structure, such as future issuances of securities, sales of large blocks of common stock by our stockholders, including our principal stockholders, or the incurrence of additional debt;
|
•
|
departure of key personnel;
|
•
|
reputational issues;
|
•
|
changes in general economic and market conditions;
|
•
|
changes in industry conditions or perceptions or changes in the market outlook for the insurance industry;
|
•
|
changes in applicable laws, rules or regulations, regulatory actions affecting us and other dynamics; and
|
•
|
The loss of our “controlled company” exemptions under Nasdaq listing standards and applicable phase-in periods with respect thereto
|
•
|
the ability of our board of directors to issue one or more series of preferred stock;
|
•
|
the filling of any vacancies on our board of directors by the affirmative vote of a majority of the remaining directors, even if less than a quorum, or by a sole remaining director or by the stockholders; provided, however, that after the first time when the principal stockholders cease to beneficially own, in the aggregate, at least 50% of our outstanding common stock, any vacancy occurring in our board of directors may only be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director (and not by the stockholders);
|
•
|
certain limitations on convening special stockholder meetings;
|
•
|
advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; and
|
•
|
stockholder action by written consent only until the first time when our principal stockholders cease to beneficially own, in the aggregate, 50% or greater of our outstanding common stock.
|
|
| |
Three Months
Ended
March 31,
2021
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
Income before taxes
|
| |
$8,691
|
| |
$95,261
|
| |
$34,801
|
| |
$26,150
|
| |
$24,331
|
| |
$17,241
|
Provision for income taxes
|
| |
1,900
|
| |
6,825
|
| |
7,074
|
| |
5,546
|
| |
7,623
|
| |
5,169
|
|
| |
22%
|
| |
7%
|
| |
20%
|
| |
21%
|
| |
31%
|
| |
30%
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net income
|
| |
$6,791
|
| |
$90,769
|
| |
$31,285
|
| |
$19,522
|
| |
$16,408
|
| |
$12,071
|
Intangible asset amortization
|
| |
1,414
|
| |
2,573
|
| |
46
|
| |
27
|
| |
28
|
| |
6
|
Noncash stock compensation
|
| |
211
|
| |
506
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Expenses associated with Altaris management fee, including cash bonuses paid to unitholders
|
| |
—
|
| |
883
|
| |
1,765
|
| |
1,765
|
| |
1,600
|
| |
800
|
Expenses associated with IPO and other one-time legal and consulting expenses
|
| |
—
|
| |
1,845
|
| |
1,292
|
| |
785
|
| |
—
|
| |
—
|
Expenses related to debt issuance costs, including OID amortization
|
| |
|
| |
135
|
| |
101
|
| |
75
|
| |
—
|
| |
—
|
FMV adjustment of remaining investment in subsidiary
|
| |
—
|
| |
(71,846)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Net gain on purchase & disposal of subsidiaries
|
| |
—
|
| |
(3,115)
|
| |
(600)
|
| |
—
|
| |
—
|
| |
—
|
Expenses associated with purchase of outstanding voting shares of ALIC
|
| |
—
|
| |
—
|
| |
—
|
| |
770
|
| |
385
|
| |
—
|
Other expenses
|
| |
—
|
| |
13,427
|
| |
—
|
| |
—
|
| |
—
|
| |
|
Total adjustments
|
| |
1,625
|
| |
(55,592)
|
| |
2,604
|
| |
3,422
|
| |
2,013
|
| |
806
|
Tax impact of adjustments
|
| |
(374)
|
| |
(2,398)
|
| |
(658)
|
| |
(726)
|
| |
(631)
|
| |
(242)
|
Adjusted net income
|
| |
$8,042
|
| |
$32,779
|
| |
$33,231
|
| |
$22,218
|
| |
$17,790
|
| |
$12,635
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| ||
Numerator: adjusted net income
|
| |
$8,042
|
| |
$32,779
|
| |
$33,231
|
| |
$22,218
|
| |
$17,790
|
| |
$12,635
|
Denominator: average tangible stockholders' equity
|
| |
196,291
|
| |
166,395
|
| |
119,874
|
| |
94,708
|
| |
80,141
|
| |
67,079
|
Adjusted return on tangible equity
|
| |
16.4%
|
| |
19.7%
|
| |
27.7%
|
| |
23.4%
|
| |
22.2%
|
| |
18.8%
|
5 Year Average
|
| |
|
| |
22.4%
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Return on tangible equity
|
| |
13.8%
|
| |
54.6%
|
| |
26.1%
|
| |
20.6%
|
| |
20.5%
|
| |
18.0%
|
|
| |
|
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Select balance sheet data:
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Total shareholder's equity (excluding Preferred Shares)
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| |
412,975
|
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410,107
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141,615
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104,131
|
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89,165
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72,014
|
Goodwill & intangibles
|
| |
214,543
|
| |
215,956
|
| |
2,976
|
| |
3,023
|
| |
856
|
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42
|
Total tangible shareholder's equity
|
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198,432
|
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194,151
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138,639
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101,108
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88,309
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71,972
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Average tangible stockholders’ equity
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196,291
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166,395
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119,874
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94,708
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80,141
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67,079
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Adjusted return on tangible equity
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16.4%
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19.7%
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27.7%
|
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23.4%
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22.2%
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18.8%
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Name and Address of Beneficial Owner
|
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Shares
Beneficially
Owned Before this
Offering
|
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Shares of
Common
Stock
Offered
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Shares
Beneficially
Owned After
this Offering
|
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Shares
to be Sold
Assuming
Full Exercise of
Over-allotment
Option
|
| |
Shares
Beneficially
Owned After this
Offering
Assuming
Full Exercise of
Over-allotment
Option
|
|||||||||
|
Shares
|
| |
Percentage
|
| |
Shares
|
| |
Percentage
|
| |
Shares
|
| |
Percentage
|
||||||||
Greater than 5% and Selling Stockholders:
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Altaris Funds(1)
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28,274,417
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55.3%
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3,696,085
|
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24,578,332
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48%
|
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4,250,498
|
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24,023,919
|
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47%
|
Blake Enterprises entities(2)
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5,109,171
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10.0%
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665,879
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4,441,290
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8.7%
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768,063
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4,341,108
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8.5%
|
Named executive officers and directors:
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Andrew M. O’Brien(3)
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4,100,558
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8.0%
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667,881
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3,564,525
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7.0%
|
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616,438
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3,484,120
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6.8%
|
Julie A. Baron
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—
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—
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—
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—
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—
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—
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—
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—
|
David G. Ellison
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—
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—
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—
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—
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—
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—
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—
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—
|
Randall D. Jones
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130,192
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*
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—
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130,192
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*
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—
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130,192
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*
|
Steven B. Lee(4)
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1,151,035
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2.3%
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100,001
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958,951
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1.9%
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115,001
|
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943,951
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1.9%
|
Daniel G. Tully(1)
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28,274,417
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55.3%
|
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3,696,085
|
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24,578,332
|
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48%
|
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4,250,498
|
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24,023,919
|
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47%
|
Mary Chaput
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—
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—
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—
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—
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—
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—
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—
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—
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Terry P. Mayotte
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—
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—
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—
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—
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—
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—
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—
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—
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All executive officers and directors as a group (13 persons)(5)
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38,765,373
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75.6%
|
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5,000,000
|
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33,765,373
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65.6%
|
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5,750,000
|
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33,015,373
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64.2%
|
*
|
Less than 1%
|
(1)
|
Prior to this offering, consists of (i) 23,003,209 shares of our common stock held by AHP-BHC LLC and 317 shares of our common stock held by AHP-TH LLC and (ii) 5,270,818 shares of our common stock held by ACP-BHC LLC and 73 shares of our common stock held by ACP-TH LLC (collectively, the “Altaris Funds”). After this offering, consists of (i) 19,996,186 shares of our common stock held by AHP-BHC LLC and 276 shares of our common stock held by AHP-TH LLC and (ii) 4,581,807 shares of our common stock held by ACP-BHC LLC and 63 shares of our common stock held by ACP-TH LLC. Daniel G. Tully and George E. Aitken-Davies are members of the board of managers of Altaris Partners, LLC, which has investment and voting control over the shares held by the Altaris Funds. The address of the Altaris Funds is 10 East 53rd Street, 31st floor, New York, NY 10022.
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(2)
|
Prior to this offering, consists of (i) 3,251,291 shares of our common stock held by Blake Baker Enterprises I, Inc., (ii) 928,940 shares of our common stock held by Blake Baker Enterprises II, Inc. and (iii) 928,940 shares of our common stock held by Blake Baker Enterprises III, Inc. After this offering, consists of (i) 2,826,276 shares of our common stock held by Blake Baker Enterprises I, Inc., (ii) 807,507 shares of our common stock held by Blake Baker Enterprises II, Inc. and (iii) 807,507.00 shares of our common stock held by Blake Baker Enterprises III, Inc. The Blake Enterprises entities are owned by The Baker Family Trust, dated July 8, 2019, of which Blake Baker is the sole settlor and trustee. The address of the Blake Enterprises entities is 26650 The Old Road, Suite 110, Valencia, CA 91381.
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(3)
|
Prior to this offering, consists of 4,100,558 shares of our common stock held by the Andrew M. O’Brien Premarital Trust, of which Mr. O’Brien is the trustee. After this offering, consists of 3,564,525 shares of our common stock held by the Andrew M. O’Brien Premarital Trust, of which Mr. O’Brien is the trustee.
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(4)
|
Prior to this offering, consists of (i) 805,724 shares owned by the Lee 2020 GST Dynasty Trust, of which Steven B. Lee is investment trustee, (ii) 253,228 shares by the Steven B. Lee 2020 GRAT, of which Mr. Lee is trustee, and (iii) 92,083 shares owned by Mr. Lee. After this offering consists of (i) 723,369 shares by the Lee 2020 GST Dynasty Trust, (ii) 235,582 shares by the Steven B. Lee 2020 GRAT and (iii) 92,083 shares owned by Mr. Lee.
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(5)
|
Numbers in the columns include shares beneficially owned by the Blake Enterprises entities.
|
•
|
dividend rates;
|
•
|
conversion rights;
|
•
|
voting rights;
|
•
|
terms of redemption and liquidation preferences; and
|
•
|
the number of shares constituting each series.
|
•
|
before the stockholder became interested, the board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
|
•
|
upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and officers; or
|
•
|
at or after the time the stockholder became interested, the business combination was approved by the board of directors of the corporation and authorized at an annual or special meeting of the stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.
|
•
|
a citizen or individual resident of the United States;
|
•
|
a corporation, or other entity taxable as a corporation for U.S. federal tax purposes, created or organized in the United States or under the laws of the United States, any state thereof or the District of Columbia;
|
•
|
an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source;
|
•
|
a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person for U.S. federal income tax purposes; or
|
•
|
an entity or arrangement treated as a partnership for U.S. federal tax purposes.
|
•
|
the gain is effectively connected with a trade or business carried on by the non-U.S. holder within the United States and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment of the non-U.S. holder;
|
•
|
the non-U.S. holder is an individual and is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are satisfied; or
|
•
|
we are or have been a U.S. real property holding corporation for U.S. federal income tax purposes at any time within the shorter of the five-year period ending on the date of the disposition and the non-U.S. holder’s holding period and certain other conditions are satisfied.
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Name
|
| |
Number of
Shares
|
J.P. Morgan Securities LLC
|
| |
1,775,000
|
Evercore Group L.L.C.
|
| |
1,775,000
|
William Blair & Company, L.L.C.
|
| |
1,200,000
|
JMP Securities LLC
|
| |
250,000
|
Total
|
| |
5,000,000
|
|
| |
Without
option to
purchase
additional
shares
exercise
|
| |
With full
option to
purchase
additional
shares
exercise
|
Per Share
|
| |
$0.70
|
| |
$0.70
|
Total
|
| |
$3,500,000
|
| |
$4,025,000
|
(A)
|
transfers pursuant to the terms of this offering;
|
(B)
|
transfers of shares of common stock:
|
(i)
|
as a bona fide gift or gifts,
|
(ii)
|
by will, testamentary document or intestate succession,
|
(iii)
|
to any trust, family limited partnership or other entity for the direct or indirect benefit of the lock-up party or the immediate family of the lock-up party (for purposes of the lock-up agreements, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin),
|
(iv)
|
to partners, members, stockholders, trust beneficiaries or other equity owners of the lock-up party (including any subsequent in-kind distributions to or by the lock-up party’s transferees),
|
(v)
|
if the lock-up party is a corporation, partnership, limited liability company, trust or other entity, to any direct or indirect affiliate (as defined in Rule 405 under the Securities Act of 1933) of such party or to any investment fund or other entity controlled or managed by such party or by the management company or investment adviser that controls or manages such party (or an affiliate of such management company or investment adviser),
|
(vi)
|
solely by operation of law, pursuant to a qualified domestic order or in connection with a divorce settlement, and
|
(vii)
|
pursuant to a bona fide third-party tender offer, merger, consolidation or other similar transaction approved by the Company’s board of directors and made to all holders of the Company’s securities involving a Change of Control of the Company, provided that in the event that such tender offer, merger, consolidation or other such transaction is not completed, the common stock owned by the lock-up party shall remain subject to the lock-up restrictions, provided, further, that for purposes of this clause (vii), “Change of Control” shall mean the transfer (whether by tender offer, merger, consolidation, spin-off or other such transaction), in one transaction or a series of related transactions, to a person or group of affiliated persons (other than an Underwriter pursuant to this offering), of the Company’s voting securities if, after such transfer, such person or group of affiliated persons would hold more than 50% of the outstanding voting securities of the Company (or the surviving entity), and provided, further, that any common stock transferred in connection with the tender offer, merger, consolidation or other such transaction shall remain subject to the lock-up restrictions;
|
(C)
|
transfers of common stock or any security convertible into or exercisable or exchangeable for common stock in connection with any of the reorganization transactions as described in this prospectus;
|
(D)
|
common stock acquired by the lock-up party in this offering or in open market transactions subsequent to the closing of this offering, provided that no filing under the Exchange Act or other public announcement shall be required or voluntarily made by the lock-up party regarding such acquisition of common stock;
|
(E)
|
the establishment of a written plan for trading securities pursuant to and in accordance with Rule 10b5-1(c) (a “Rule 10b5-1 Plan”) under the Exchange Act, provided that (i) such Rule 10b5-1 Plan does not provide for the transfer of common stock (and no sales of common stock pursuant to such Rule 10b5-1 Plan shall be made) during the Restricted Period and (ii) no filing under the Exchange Act, or other public announcement shall be required or voluntarily made by the Company regarding the establishment of such Rule 10b5-1 Plan during the lock-up period;
|
(F)
|
transfers of common stock to the Company (or the withholding of common stock by the Company) (i) as payment for the exercise price of any options granted in the ordinary course pursuant to any of the Company’s current or future stock option, equity incentive or benefit plans described in this prospectus or (ii) to satisfy any tax withholding obligations upon the exercise of any such option or the vesting of any restricted common stock or other equity awards granted under any such plan, with any common stock received as contemplated by any transaction described in this clause (E) remaining subject to the lock-up restrictions; provided that any shares of common stock received upon such exercise shall be subject to the restrictions set forth in the lock-up agreements; and provided, further, that any filing required under Section 16(a) of the Exchange Act shall clearly indicate in the footnotes thereto and the transaction codes that any such disposition was made in connection with a “cashless” exercise solely to the Company; and
|
(G)
|
any demands or requests for, exercise any right with respect to, or take any action in preparation of, the registration by the Company under the Securities Act of 1933 of the lock-up party’s shares
|
(a)
|
to any legal entity which is a qualified investor as defined under the Prospectus Regulation;
|
(b)
|
to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the underwriters; or
|
(c)
|
in any other circumstances falling within Article 1(4) of the Prospectus Regulation,
|
(a)
|
to any legal entity which is a qualified investor as defined under Article 2 of the U.K. Prospectus Regulation;
|
(b)
|
to fewer than 150 natural or legal persons (other than qualified investors as defined under Article 2 of the U.K. Prospectus Regulation), subject to obtaining the prior consent of the Representatives for any such offer; or
|
(c)
|
in any other circumstances falling within Section 86 of the FSMA;
|
(a)
|
to an institutional investor (as defined in Section 4A of the Securities and Futures Act (Chapter 289) of Singapore, as modified or amended from time to time (the “SFA”)) pursuant to Section 274 of the SFA;
|
(b)
|
to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA; or
|
(c)
|
otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
|
(a)
|
a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
|
(b)
|
a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares of common stock pursuant to an offer made under Section 275 of the SFA except:
|
(i)
|
to an institutional investor or to a relevant person, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
|
(ii)
|
where no consideration is or will be given for the transfer;
|
(iii)
|
where the transfer is by operation of law;
|
(iv)
|
as specified in Section 276(7) of the SFA; or
|
(v)
|
as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018.
|
•
|
our Annual Report on Form 10-K for the year ended December 31, 2020 that we filed with the SEC on March 26, 2021 (including portions of our Definitive Proxy Statement on Schedule 14A filed on April 6, 2021 that are incorporated by reference into Part III of such Annual Report on Form 10-K),
|
•
|
our Quarterly Report on Form 10-Q for the three months ended March 31, 2021 that we filed with the SEC on May 13, 2021,
|
•
|
our Current Report on Form 8-K that we filed with the SEC on May 19, 2021, and
|
•
|
the description of our common stock in our Registration Statement on Form 8-A filed on July 16, 2020, and any amendment or report filed for the purpose of updating that description.
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