Each one in plain English, with the numbers worked through for a shareholder.
1 Nov 2013business combination● Neutral
The company filed a registration statement for the warrant exchange offer promised at the merger: holders get 1 common share for every 10 warrants tendered, for up to 1,500,000 shares in total (690,000 for the 6,900,000 public warrants, 710,000 for the 7,100,000 private warrants, 100,000 for warrants from Rosenfeld and Sgro's $500,000 notes). Private warrant holders have agreed to exchange all of theirs, and Rosenfeld and Sgro have said they intend to convert their notes and exchange. The offer cannot proceed until the SEC declares the registration effective; the expiry date is blank.
Less than two months after the merger, the company said on 19 August 2013 that its first-quarter 2013 results should no longer be relied on, because of errors in accounting for Papua New Guinea liabilities. The adjustments were then believed to lower first-quarter operating expenses by up to $1.3M, and the June-quarter 10-Q could not be filed on time. This is the first of the restatements that recur through the company's history. The filing also says internal controls were under review and a material weakness might be found.
28 Aug 2013asset acquisition disposition● NeutralMajor
This amendment restates the merger-completion report of 24 June 2013 with corrected first-quarter 2013 figures, after errors in accounting for Papua New Guinea liabilities. It confirms the deal terms: SAExploration holders got 6,448,443 shares, $7.5M cash and a $17.5M note, with up to 992,108 more shares tied to 2013 and 2014 earnings targets, and $5M was paid for the preferred stock. Holders of 987,634 public shares took cash at about $10.08 (about $9.96M), leaving 13,402,664 shares outstanding. The trust held $61,680,970 before closing, and about $35.2M was released to the company.
The restatement made the second-quarter report late, and NASDAQ issued its first compliance notice against the company - a week after the restatement was announced.
On 19 August 2013, about two months after the merger, the company decided to restate its first-quarter 2013 accounts and said they should no longer be relied on. The errors were in how Papua New Guinea expenses were allocated, and the June-quarter 10-Q would be filed late.
After the merger, the company replaced its auditor Marcum, LLP with Grant Thornton LLP, SAExploration's own auditor, effective 24 June 2013, because SAExploration's historical financials became the company's. This amendment only adds the interim dates (1 January to 24 June 2013) to the earlier disclosure. Marcum reported no disagreements, though its reports on 2012 and 2011 carried a going-concern paragraph, which belonged to the former shell.
The merger closed on 24 June 2013 and the blank-cheque company became SAExploration Holdings. Holders of 987,634 public shares took their cash back at about $10.08 instead of staying in; the sellers - Jeff Hastings, Brian Beatty and Brent Whiteley - ended up with 38.4% outright and voting control of 50.5%, making this a controlled company from day one. They also received a $17.5 million ten-year note at 10% on top of the shares, and the new group joined an existing 2012 credit agreement.
The final proxy set the vote on the SAExploration merger for 21 June 2013, with a record date of 31 May 2013, and the board unanimously recommended voting for it. It follows the March preliminary version, adds a separate name-change proposal, and says the merger agreement had since been amended. Shareholders who wanted cash instead had to vote and demand conversion before the vote.
The merger agreement was amended to change how consideration would be split among SAExploration's option and restricted-stock holders, putting those shares in escrow with the controlling shareholder voting them.
Trio Merger Corp. filed a preliminary proxy asking its shareholders to approve buying SAExploration Holdings (the private seismic contractor agreed in December 2012), with the deal valued at up to $104,404,770 ($30,000,000 in cash and promissory notes plus up to $74,404,770 in stock). Shareholders would also vote on renaming the company SAExploration Holdings, a 2013 incentive plan and eight directors, and warrant holders were told that majority consent had already raised the warrant exercise price from $7.50 to $12.00. The meeting date was still blank.
Trio found its target: SAExploration Holdings, a seismic data acquisition business working on land, in transition zones and shallow water across North America, South America and southeast Asia. Trio would take the SAExploration name; the private company's majority holder CLCH would come across as a controlling shareholder.
With the trust money untouchable until a deal closed, chairman Eric Rosenfeld funded day-to-day costs himself, lending $200,000 across April and September on interest-free notes convertible into warrants at $0.50.
Trio raised $60 million selling 6 million units at $10, each unit a share plus a warrant at $7.50, alongside $3.55 million of warrants bought privately by the founders and the underwriter. The clock now started on finding an acquisition.
The company begins as Trio Merger Corp, a blank-cheque vehicle: its listing prospectus went effective and the offering was immediately increased by a fifth. Nothing was owned yet - the plan was to raise cash and find a business to buy.
