Combination Positions BRCC to Accelerate
Growth, Deepen Customer Engagement, and Drive Greater Impact for
all Stakeholders
- Mission-Driven Consumer Brand with Loyal Customer Base.
BRCC, which is founded and led by Veterans of America’s armed
services, is a rapidly growing coffee company with an incredibly
loyal and expanding community of more than 1.9 million lifetime
consumers, 270,000+ active coffee club subscribers, and a large and
growing social media following.
- Strong Financial Profile and Growth Trajectory. BRCC is
a highly scalable platform that is gaining market share and
delivering strong financial results – 2021 revenue is estimated to
grow approximately 40% to $230 million, with projected gross
margins of approximately 40%.
- Proven Omnichannel Growth Strategy. BRCC is achieving
multi-channel expansion through direct-to-consumer subscriptions,
branded coffee shops, ready-to-drink products at major national
outlets, and increased wholesale distribution.
- New Capital to Fuel Further Growth. The proposed
combination would place up to $225 million of additional cash on
BRCC’s balance sheet to further accelerate growth.
- Alignment of Interests with Shareholders. BRCC’s
founders, management and existing equity holders will maintain
substantial interests in the Company, with shares subject to
forfeiture based on performance. SilverBox-Engaged has also tied
sponsor interests to BRCC’s growth and returns.
- Significant Capital Commitments and Certainty of
Closing. Fully financed transaction, with $300 million in
common equity commitments at $10.00 per share with an innovative
backstop feature, including $100 million committed from Engaged
Capital.
- BRCC’s Mission and Reorganization as a Public Benefit
Corporation. BRCC and SilverBox-Engaged together will donate
more than 530,000 shares, which would be valued at approximately
$5.3 million at $10 per share to the BRCC Fund– the Company’s
Foundation that supports its mission of bettering the lives of
Veterans. BRCC will also reorganize as a Public Benefit
Corporation.
- Investor Conference Call and Presentation. A webcast of
a conference call with BRCC and SBEA leadership, as well as an
associated investor presentation, is accessible at
www.blackriflecoffee.com/investor-relations and at
www.sbcap.com/silverbox-engaged-merger-corp-i
Black Rifle Coffee Company (“Black Rifle Coffee,” “BRCC” or the
“Company”), a rapidly growing and mission-driven premium coffee
company founded to support Veterans, active-duty military, first
responders and serve a broad customer base by connecting consumers
with great coffee and a unique brand experience, today announced
its plan to go public via a business combination with SilverBox
Engaged Merger Corp I (NASDAQ: SBEA) (“SBEA” or
“SilverBox-Engaged”), which is sponsored by SilverBox Capital LLC
(“SilverBox Capital”) and Engaged Capital LLC (“Engaged Capital”),
who have collaborated to create an alternative asset management
platform. Once the proposed transaction is closed, the combined
company will be named BRC Inc.
The proposed business combination will place up to $225 million
in cash on BRCC’s balance sheet to accelerate the implementation of
its digital-first, omnichannel strategy and support continued rapid
growth. At $10 per share, the transaction values Black Rifle Coffee
at a pro forma enterprise value of approximately $1.7 billion –
representing approximately four times projected 2023 revenues – an
extremely compelling valuation and discount for a company that
benchmarks favorably to its growth peers.
Evan Hafer, Chief Executive Officer and Founder of Black Rifle
Coffee Company, said, “From the time I was a one-man operation in
my garage with nothing more than a 1-pound roaster, I wanted to use
coffee as a means of bringing people together around the common
idea of honoring those who serve this great nation. We founded
Black Rifle Coffee to serve the highest quality coffee while
supporting Veterans and their families. As a company founded and
led by Veterans, serving these communities drives everything we do.
I’m so proud to join with the SBEA team and have the confidence of
investors such as Engaged Capital. They’re completely in support of
our mission and they’ve aligned their financial interests with our
Company’s performance. This combination will provide the capital
BRCC needs to grow, serve great coffee, and move us closer to our
goal of hiring 10,000 Veterans as we open more stores
nationwide.”
Joe Reece, Executive Chairman of SBEA, added, “When SBEA went
public earlier this year, we made a commitment to our investors and
partners to identify a fundamentally sound business with
high-integrity leadership and a strong growth trajectory. We have
made good on that commitment by entering into this merger agreement
with BRCC. Evan and the rest of the BRCC team have built a powerful
consumer brand that is achieving impressive revenue growth and
gross margins while catalyzing positive impact across the
long-underserved Veteran and first responder communities. We have
aligned our sponsor interests to BRCC’s performance because we are
such strong believers in the Company’s future as it gains the
capital necessary to accelerate its growth, expand its offerings,
consistently delight customers and give back to the communities in
which it operates. The entire SilverBox-Engaged team is proud to
partner with BRCC.”
ADDITIONAL HIGHLIGHTS:
BRCC is a Rapidly Growing Lifestyle Consumer Brand with a
Deeply Passionate and Loyal Customer Base. Consumers today are
increasingly choosing companies that align with their values. Black
Rifle Coffee is a rapidly growing, Veteran founded coffee company
with an incredibly loyal and quickly expanding community of more
than 1.9 million lifetime consumers, 270,000+ active coffee club
subscribers, and a large and growing social media following. Since
its founding in 2014, BRCC has held an unwavering commitment to
supporting active military, Veterans, first responders, and those
who love America. BRCC does this through coffee donations to active
duty servicemembers, philanthropic donations to community
organizations, and employment, educational, and training support
for Veterans. Additionally, a portion of BRCC’s profits on select
products are donated to law enforcement, firefighter, and first
responder causes directly.
Strong Financial Growth Trajectory. BRCC’s authentic
brand and enthusiastic customer base have driven impressive
financial results. Total revenue increased from $82 million in 2019
to $164 million in 2020, representing growth of 100%. The
direct-to-consumer business grew from $66 million in 2019 to $126
million in 2020, representing growth of 92%, and the wholesale
business has grown from $9 million in 2019 to $24 million in 2020,
representing growth of 182%. The retail coffee shop ‘Outpost’
business started in 2020 for company owned stores and since then
have contributed $3 million to top-line growth. In addition, BRCC
is growing profitably with attractive gross margins, increasing
gross profit from $36 million in 2019 to $69 million in 2020 –
representing a 94% increase.
Digitally Native Omnichannel Growth Strategy. Black Rifle
Coffee reaches its customers across several channels – including a
direct-to-consumer business, on-the-go through its ready-to-drink
business, within their community at the company’s retail “Outpost”
stores, and at their favorite national retailers through a robust
and growing wholesale business.
- Direct-to-Consumer: The
direct-to-consumer business includes subscription and
non-subscription sales via BRCC’s website, as well as sales through
third party digital marketplaces. The subscription business has
grown at a 218% CAGR since inception and includes 270,000+ active
coffee club subscribers as of June 30, 2021. The subscription
business provides a recurring revenue stream with strong customer
retention, as evidenced through a monthly subscriber churn rate of
approximately 3.5% which is well below the industry average of
approximately 10%.
- Outposts: BRCC’s Outpost
business includes sales through both company-operated and
franchised retail coffee shops. As of June 30, 2021, the Company
has seven Outposts, including three Company-operated and four
franchised locations, with nine additional locations expected by
fiscal year end 2021. Outposts provide an immersive retail
experience to BRCC customers, including showcasing its brand and
premium products and building a community around the commitment to
the active military, Veterans, first responders and those who love
America.
- Wholesale: BRCC’s wholesale
business includes sales of coffee products, including the rapidly
growing ready-to-drink coffee beverage product, available through
major national outlets including Speedway, 7-Eleven, Sam’s Club,
Walmart, H-E-B, Sheetz, EG Group and Kum & Go; and sales of
coffee, merchandise, and gear through lifestyle retail outlets,
including Bass Pro Shops, Cabela’s, Scheels and 5.11 Tactical,
often as the exclusive provider of coffee. BRCC’s ready-to-drink
coffee beverage product has grown to be a top 4 brand in its $4
billion category since its launch approximately 18 months ago.
New Capital to Fuel Growth. This transaction is expected
to provide up to $225 million in cash to support BRCC’s continued
growth, including: driving brand awareness to grow the
direct-to-consumer business; expanding the ready-to-drink product
line and broadening distribution; extending the Outpost footprint
from the seven current locations as of June 30, 2021, to a target
of 78 in 2023; investing to enhance the Company’s technology
infrastructure, including its e-commerce platform and mobile app
capabilities; and helping support the continued hiring of
Veterans.
Strong Alignment of Interests with Shareholders. This
transaction aligns the interests of existing shareholders and
investors. BRCC founders, management, and existing BRCC
equityholders will continue to own a substantial percentage of the
combined company. BRCC’s founders, management team and existing
equityholders have agreed to further align interests by subjecting
20 million shares to forfeiture, with 10 million shares to be
forfeited if the combined company’s stock price does not appreciate
at least 50%, and an additional 10 million shares to be forfeited
if the stock price does not appreciate at least 100%.
SilverBox-Engaged’s founders share the same belief in partnership,
and therefore are subjecting approximately 1.2 million founder
shares to forfeiture based on the same return thresholds. Lastly,
SilverBox-Engaged’s founders will donate more than 430,000 shares,
or approximately $4.3 million at $10 per share to the BRCC Fund,
which reflects their support for BRCC’s mission to hire and support
veterans and first responders.
Certainty of Closing and Innovative Backstop Financing
Structure. This is a fully financed transaction, with $300
million in common equity commitments from a group of investors led
by a $100 million commitment from Engaged Capital, that will
satisfy the minimum cash condition in the business combination
agreement. These commitments include a unique backstop feature
whereby this group of investors have provided flexibility in the
total amount of capital to be funded, with the actual amount funded
at closing between $200 million and $300 million.
The BRCC Mission – Public Benefit Corporation. BRCC plans
to reorganize as a public benefit corporation, to reinforce and
help drive its mission of serving Veterans, active-duty military,
and first responders, with a majority of directors to be Veterans.
Further reflecting the alignment of their vision for the Company,
Black Rifle Coffee and SBEA jointly will donate 530,000 shares to
the BRCC Fund to help further the Company’s mission.
Hafer also noted Black Rifle Coffee’s pending reorganization as
a public benefit corporation, saying, “Veterans account for about
7% of the U.S. population, but their underemployment rate is much
higher. They suffer from more mental health issues, with
approximately 20 veterans committing suicide every day. There are
also around 50,000 homeless Veterans. As a company and
individually, we’ve been working with a number of Veterans
organizations who are providing help but now going public as a
public benefit corporation will allow us to do so much more. I am
grateful for SBEA’s partnership and shared vision because together
we will increase our philanthropic efforts, create more jobs for
Veterans, and help them become business owners. This is why we
started Black Rifle Coffee.”
Transaction Overview
The transaction has been approved unanimously by the Board of
Directors of both SBEA and Authentic Brands, LLC. It is expected to
close during the first quarter of 2022, subject to customary
closing conditions being satisfied.
The transaction values the combined company, to be renamed BRC
Inc. upon closing, at a pro forma enterprise value of approximately
$1.7 billion at $10 per share, representing approximately four
times the Company’s projected 2023 revenues. The transaction is
expected to place up to $225 million on Black Rifle Coffee’s
balance sheet to accelerate the Company’s growth and will be funded
by a combination of up to $345 million of cash held in the trust
account of SBEA (assuming no redemptions of SBEA’s Class A common
stock), and equity commitments totaling $300 million (the “Equity
Commitments”) at $10 per common share from various accredited
investors, including a $100 million commitment from Engaged
Capital. The actual amount funded at closing from the investor
group will be between $200 million and $300 million based on the
amount of cash retained from SBEA’s trust account such that the
total amount of capital available from SBEA at closing will be up
to $545 million but no less than $300 million, which will satisfy
the minimum cash condition in the business combination
agreement.
Black Rifle Coffee’s founders, management team and existing
equityholders have agreed to align their interests with new
shareholders, including by subjecting 20 million shares to
forfeiture with 10 million shares to be forfeited if the combined
company’s stock price performance does not appreciate at least 50%
within five years and an additional 10 million shares to be
forfeited if the stock price does not appreciate at least 100%
within seven years. SBEA’s sponsor has also agreed to forfeit
approximately 1.2 million founder shares, subject approximately 1.2
million founder shares to forfeiture based on the aforementioned
stock performance hurdles, and additionally subject approximately
2.1 million founder shares to a downward adjustment in the event
that the gross proceeds available at closing, including cash
retained from SBEA’s trust account, and proceeds from the Equity
Commitments (before deductions) is less than $445 million.
Further information related to the proposed combination,
including a copy of the business combination agreement and other
important materials, will be filed by SilverBox-Engaged on Form 8-K
with the U.S. Securities and Exchange Commission.
Investor Call and
Presentation
A webcast of a conference call with BRCC and SBEA leadership, as
well as an associated investor presentation, is accessible at
www.blackriflecoffee.com/investor-relations and
www.sbcap.com/silverbox-engaged-merger-corp-i. Interested parties
may also listen to the prepared remarks call via telephone by
dialing (844) 512-2921, or for international callers, (412)
317-6671 and entering pin number: 147469. The replay of the
conference call will be available via telephone through 11:59 pm ET
on November 16, 2021.
Advisors
William Blair is serving as Lead Financial Advisor, and BDT
& Company, LLC is serving as Financial Advisor to Black Rifle
Coffee Company.
Citigroup and Deutsche Bank Securities Inc. are serving as Lead
Capital Markets Advisors, and Guggenheim Securities, LLC, Raymond
James & Associates, Inc., Truist Securities, Inc., D.A.
Davidson & Co. and Telsey Advisory Group are serving as Capital
Markets Advisors to SBEA.
Kirkland and Ellis LLP is serving as legal counsel to Black
Rifle Coffee Company. Paul Hastings is serving as legal counsel to
SBEA.
About Black Rifle Coffee
Company
Black Rifle Coffee Company (BRCC) is a Veteran-founded coffee
company serving premium coffee to people who love America. Founded
in 2014 by Green Beret Evan Hafer, Black Rifle develops their
explosive roast profiles with the same mission focus they learned
while serving in the military. BRCC is committed to supporting
Veterans, active-duty military, first responders and the American
way of life. With every purchase made, they give back.
To learn more about BRCC, visit www.blackriflecoffee.com, follow
BRCC on social media, or subscribe to Coffee or Die Magazine's
daily newsletter at https://coffeeordie.com/presscheck-signup.
About SilverBox Engaged Merger Corp I
and SilverBox Capital
SilverBox Engaged Merger Corp I (“SBEA” or “SilverBox-Engaged”)
is a special purpose acquisition company (“SPAC”) formed as a part
of a long-term vision shared by SilverBox Capital LLC and Engaged
Capital LLC to create an institutional platform intended to sponsor
a series of SPACs. SBEA completed its $345 million initial public
offering in March 2021 and its stock currently trades on NASDAQ
under the ticker “SBEA.” The SilverBox-Engaged team, together with
a robust advisory group of well-known seasoned operating executives
from varied industries, provides collective multi-faceted
expertise, investing and operating experience, and a broad network
of relationships to source, evaluate, and execute potential
transactions. Learn more at www.sbcap.com.
About Engaged Capital
Engaged Capital, LLC (“Engaged Capital”) is an investment
advisor with a private equity-like investing style in the U.S.
public equity markets. Engaged Capital seeks to help build
sustainable businesses that create long-term shareholder value by
engaging with and bringing an owner’s perspective to the
managements and boards of undervalued public companies and working
with them to unlock the embedded value within their businesses.
Engaged Capital manages approximately $1.5 billion of institutional
capital with a focus on delivering superior, long-term,
risk-adjusted returns for our limited partners. Engaged Capital was
established in 2012 and is based in Newport Beach, California.
Learn more at www.engagedcapital.com.
Forward-Looking
Statements
Certain statements in this communication are forward-looking
statements. Forward-looking statements generally relate to future
events including future financial or operating performance of
Authentic Brands, LLC (the “Company”) or SBEA. Forward-looking
statements generally relate to future events or SBEA’s or the
Company’s future financial or operating performance. For example,
projections of future revenue and other metrics are forward-looking
statements. In some cases, you can identify forward-looking
statements by terminology such as “may”, “should”, “expect”,
“intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”,
“potential” or “continue”, or the negatives of these terms or
variations of them or similar terminology. Such forward-looking
statements are subject to risks, uncertainties, and other factors
that could cause actual results to differ materially from those
expressed or implied by such forward-looking statements.
These forward-looking statements are based upon estimates and
assumptions that, while considered reasonable by SBEA and its
management, and the Company and its management, as the case may be,
are inherently uncertain and are inherently subject to risks,
variability and contingencies, many of which are beyond the
Company’s control. Factors that may cause actual results to differ
materially from current expectations include, but are not limited
to: (1) SBEA’s ability to complete the business combination; (2)
the outcome of any legal proceedings that may be instituted against
SBEA, the combined company or others following the announcement of
the business combination and any definitive agreements with respect
thereto; (3) the inability to complete the business combination due
to the failure to obtain approval of the stockholders of SBEA, to
obtain financing to complete the business combination or to satisfy
other conditions to closing; (4) changes to the proposed structure
of the business combination that may be required or appropriate as
a result of applicable laws or regulations or as a condition to
obtaining regulatory approval of the business combination; (5) the
ability to meet stock exchange listing standards following the
consummation of the business combination; (6) the risk that the
business combination disrupts current plans and operations of the
Company as a result of the announcement and consummation of the
business combination; (7) the ability to recognize the anticipated
benefits of the business combination, which may be affected by,
among other things, competition, the ability of the combined
company to grow and manage growth profitably, maintain key
relationships and retain its management and key employees; (8)
costs related to the business combination; (9) changes in
applicable laws or regulations; (10) the possibility that the
Company or the combined company may be adversely affected by other
economic, business, and/or competitive factors; (11) the Company’s
estimates of expenses and profitability; (12) the failure to
realize anticipated pro forma results or projections and underlying
assumptions, including with respect to estimated stockholder
redemptions, purchase price and other adjustments; and (13) other
risks and uncertainties set forth in the section entitled “Risk
Factors” and “Cautionary Note Regarding Forward-Looking Statements”
in SBEA’s final prospectus relating to its initial public offering
dated February 25, 2021, in the registration statement on Form S-4
(the “Form S-4”) relating to the business combination to be filed
with the Securities and Exchange Commission (the “SEC”), and in
subsequent filings with the SEC, including the final
prospectus/proxy statement relating to the business combination.
There may be additional risks that neither SBEA nor the Company
presently know or that SBEA and the Company currently believe are
immaterial that could also cause actual results to differ from
those contained in the forward-looking statements.
Nothing in this communication should be regarded as a
representation by any person that the forward-looking statements
set forth herein will be achieved or that any of the contemplated
results of such forward-looking statements will be achieved. You
should not place undue reliance on forward-looking statements,
which speak only as of the date they are made. Neither SBEA nor the
Company undertakes any duty to update these forward-looking
statements or to inform the recipient of any matters of which any
of them becomes aware of which may affect any matter referred to in
this communication.
Additional Information about the
Proposed Business Combination and Where to Find It
This communication is being made in respect of the proposed
transaction involving SBEA and the Company. In connection with the
proposed business combination, the Form S-4 is expected to be filed
by a newly-formed holding company (“PubCo”) with the SEC that will
include a proxy statement of SBEA and that will also include a
prospectus of PubCo. SBEA’S STOCKHOLDERS AND OTHER INTERESTED
PERSONS ARE ADVISED TO READ, WHEN AVAILABLE, THE FORM S-4,
INCLUDING THE PRELIMINARY PROXY STATEMENT/PROSPECTUS AND THE
AMENDMENTS THERETO AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS
AND OTHER DOCUMENTS FILED IN CONNECTION WITH THE PROPOSED BUSINESS
COMBINATION, AS THESE MATERIALS WILL CONTAIN IMPORTANT INFORMATION
ABOUT SBEA, PUBCO, THE COMPANY AND THE PROPOSED BUSINESS
COMBINATION. This communication does not contain all the
information that should be considered concerning the proposed
business combination and is not intended to form the basis of any
investment decision or any other decision in respect of the
business combination. When available, the definitive proxy
statement/prospectus and other relevant materials for the proposed
business combination will be mailed to stockholders of SBEA as of a
record date to be established for voting on the proposed business
combination. Stockholders will also be able to obtain copies of the
preliminary proxy statement/prospectus, the definitive proxy
statement/prospectus and other documents filed with the SEC,
without charge, once available, at the SEC’s website at
www.sec.gov.
Participants in the
Solicitation
SBEA, PubCo and their respective directors and executive
officers may be deemed participants in the solicitation of proxies
from SBEA’s stockholders with respect to the proposed business
combination. A list of the names of those directors and executive
officers and a description of their interests in SBEA is contained
in SBEA’s final prospectus related to its initial public offering
dated February 25, 2021, which was filed with the SEC and is
available free of charge at the SEC’s website at www.sec.gov.
Additional information regarding the interests of such participants
will be contained in the proxy statement/prospectus for the
proposed business combination when available.
The Company and its directors and executive officers may also be
deemed to be participants in the solicitation of proxies from the
stockholders of SBEA in connection with the proposed business
combination. A list of the names of such directors and executive
officers and information regarding their interests in the proposed
business combination will be included in the proxy
statement/prospectus for the proposed business combination that
will be filed on Form S-4 when available.
No Offer or Solicitation
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities, or a solicitation
of any vote or approval, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of section 10 of the Securities Act, or an exemption
therefrom.
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version on businesswire.com: https://www.businesswire.com/news/home/20211102005678/en/
For inquiries regarding Black Rifle Coffee Company, please
contact:
Media For Black Rifle Coffee Company, please contact
TrailRunner International: Pat Shortridge, (651) 491-6764;
pats@trailrunnerint.com For SilverBox Engaged Merger Corp I,
SilverBox Capital LLC and Engaged Capital LLC please contact MKA;
Greg Marose / Charlotte Kiaie, (646) 386-0091; gmarose@mkacomms.com
/ ckiaie@mkacomms.com
Investors For investor inquiries regarding Black Rifle
Coffee Company please contact: ICR for BRCC:
BlackrifleIR@icrinc.com
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