Sunday News Article about the Jamba Juice merger
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Merger News on the Jamba Juice web site.
On March 10, 2006, Services Acquisition Corp. International ("SVI") issued a press release with respect to the execution of an Agreement and Plan of Merger ("Merger Agreement") with JJC Acquisition Company, a wholly-owned subsidiary of SVI and a California corporation, and Jamba Juice Company, a California corporation ("Jamba Juice") in connection with SVI's acquisition of Jamba Juice. In connection with the acquisition of Jamba Juice, SVI also entered into a Securities Purchase Agreement ("Purchase Agreement") and a Registration Rights Agreement ("Registration Agreement") with certain investors for a private placement financing in order to raise the proceeds necessary to provide a portion of the funds necessary to acquire Jamba Juice.
SVI is a company that was formed for the specific purpose of consummating a business combination. SVI raised net proceeds of approximately $127 million through its initial public offering consummated in July 2005 and has dedicated its time since the offering to seeking and evaluating business combination opportunities. The management of SVI includes former executives from organizations such as Blockbuster Entertainment Group, AutoNation and Boca Resorts.
Special purpose acquisition vehicles, known as SPACs, have started popping up as alternative financing vehicles in the public sector. SPACs are companies that have no operations but that go public with the intention of acquiring a company with the proceeds of an initial public offering. Large institutional investors, such as hedge funds, usually buy shares of SPACs.
The IPO market has been up and down and has not been very robust, so SPACs become a fairly safe haven in which institutional investors can invest and enjoy the liquidity of the public markets, which is what hedge funds like to do.
Of the funds raised by SVI in early July 2005, $7.35 per share was put into a trust account and filings specify that if they don't buy a company then the money is returned in 2007.
So, there sits $127,000,000 in trust.
The $127,000,000 + $231,000,000 raised in a private placement with institutional investors is what they will have at the close of the Jamba Juice merger.
The balance of money not used in the merger will remain in the company.
Before the merger can go through SVI must file a proxy with the SEC.
SVI cannot have more than 20% of their shareholders reject the merger by proxy vote and they will also need 51% of their shareholders to accept the merger.
As for the warrants. They are exerciseable into the common for 1 share of common stock of SVI at $6.00 and expire on 6/28/09.
The warrants can be called for conversion if the stock trades at $11.50 or higher for 20 out of 30 days. You will have a choice at that point in exercising the warrants to buy the stock at $6.00 or sell the warrants in the open market at the trading price and let someone else convert the warrants for shares. At parity, if the stock is at $11.50 then the warrants should trade at ($11.50 - $6.00) or $5.50 per warrant. If the stock is at $15.00 the warrants would be valued at $9.00 per warrant.
The warrants would raise and additional $103,000,000 in cash for SVI.
As for the private placement as found in the 8-K paragraph 4.9 exhibit 10.2...no one has shares and will not get shares until 60 days after "the closing" of the merger. Therefore, selling is not permitted period by PP shareholders until they receive their shares.
The Merger Agreement also provides that if Jamba Juice terminates the Merger Agreement either because the board of directors of Jamba Juice recommends a superior Acquisition Proposal (as such term is defined in the Merger Agreement), the stockholders of Jamba Juice vote against the merger or the stockholders of Jamba Juice do not approve the merger by April 30, 2006, and within six months after the date of such termination, Jamba Juice either enters into a definitive agreement to consummate, or consummates any of the following transactions (whether in a single transaction or series of transactions) (i) a sale by Jamba Juice of all or substantially all of its assets or (ii) a sale of stock, merger, reorganization or other transaction that results in transfer of ownership of more than fifty percent of the capital stock of Jamba Juice outstanding on the date of termination of the merger agreement, then Jamba Juice shall promptly pay to SVI a fee in the amount of $10,000,000.
