Vivint Smart Home, Inc. ("Vivint") and Mosaic Acquisition Corp. (NYSE: MOSC) announced that they have entered into an amendment to their definitive agreement to merge Vivint with a subsidiary of Mosaic (the "Amendment"). The Amendment reduces the initial enterprise value of Vivint to approximately $4.1 billion, implying an estimated 2020 Adjusted EBITDA multiple of approximately 7.75x.
In connection with the Amendment:
Affiliates of Fortress Investment Group LLC ("Fortress") have agreed to invest up to an additional $50 million in Vivint through an investment in the common stock of Mosaic, through open market purchases or directly from Mosaic, prior to the closing of the merger. This investment is in addition to the previously announced $125 million investment in Vivint by Fortress affiliates and to the pre-existing investments in Mosaic held by Fortress affiliates.
An investor who is investing in Vivint pursuant to forward purchase commitments obtained in connection with Mosaic's IPO has agreed to invest an additional $50 million in Vivint through an investment in the common stock of Mosaic prior to the closing of the merger.
Pro forma net leverage reduced from 5.2x to 3.9x LTM 9/30/2019 Covenant Adjusted EBITDA, with substantially all net proceeds expected to be used to repay debt, assuming no redemptions by Mosaic's public stockholders.
Blackstone and other existing investors of Vivint are expected to own approximately 55% percent of the outstanding shares of Vivint immediately following the merger and Blackstone's previously announced investment, assuming no redemptions by Mosaic's public stockholders and that Fortress affiliate's additional $50 million investment will be consummated through a private placement of newly-issued shares of Mosaic common stock. Based on those assumptions, in total, there will be approximately $790 million of net cash proceeds at closing, including (i) the $150 million of forward purchase commitments obtained in connection with Mosaic's IPO (including a Fortress affiliate), (ii) the previously announced $125 million investment in Vivint by Fortress affiliates, (iii) the previously announced $100 million investment in Vivint by Blackstone, (iv) the additional investment of up to $50 million by Fortress affiliates and (v) the additional $50 million investment from a forward purchaser. The net cash proceeds from these transactions, including Mosaic's cash on hand, are expected to be used to pay down a portion of the existing Vivint debt and for working capital and general corporate purposes.
Mosaic Acquisition Corp. also announced that it intends to convene and then adjourn, without conducting any other business, the adjourned special meeting of stockholders scheduled to be held on Friday, December 20, 2019, until Tuesday, January 14, 2020, at 9:00 a.m. Eastern Time, at the offices of Paul, Weiss, Rifkind, Wharton & Garrison LLP at 1285 Avenue of the Americas, New York, New York 10019.
In connection with the adjournment, Mosaic is extending the deadline for holders of its Class A common stock to submit their shares for redemption to 5:00 p.m. Eastern Time on Friday, January 10, 2020. Stockholders who wish to withdraw their redemption request may do so by requesting that the transfer agent return such shares.
Mosaic Acquisition Corp. is a special purpose acquisition company formed by Mosaic Sponsor, LLC and Fortress Mosaic Sponsor LLC for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.