UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12 |
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| BOULEVARD ACQUISITION CORP. II | ||||
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| (1) | Title of each class of securities to which transaction applies: |
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Prospectus Supplement to Prospectus dated December 8, 2017
SUPPLEMENT
TO
PROXY STATEMENT/PROSPECTUS
This proxy statement/prospectus supplement, dated December 15, 2017, supplements the proxy statement of Boulevard Acquisition Corp. II ("Boulevard") and the prospectus of Boulevard Acquisition Corp II Cayman Holding Company, which is expected to change its name to Estre Ambiental, Inc. upon the closing of the proposed transaction described therein ("ESTR"), dated December 8, 2017 (the "Proxy Statement/Prospectus"), relating to a proposed reorganization and recapitalization transaction between Boulevard, Estre Ambiental S.A. ("Estre"), ESTR and BII Merger Sub Corp. ("Merger Sub"), pursuant to which Estre will become an indirect subsidiary of ESTR (the "Transaction"). This supplement to the Proxy Statement/Prospectus (this "Supplement") should be read in conjunction with the Proxy Statement/Prospectus, which was previously mailed to Boulevard's stockholders on or about December 8, 2017. The information in this Supplement is qualified by reference to the Proxy Statement/Prospectus, except to the extent information in this Supplement updates or supersedes the information contained in the Proxy Statement/Prospectus.
The purpose of this Supplement is to provide information regarding a number of developments in connection with the Transaction. The Transaction is currently expected to close shortly after Boulevard's special meeting of stockholders to approve the Transaction on December 21, 2017.
The special meeting of Boulevard's stockholders will be held on December 21, 2017, at 8:00 a.m., Eastern time, at the offices of Greenberg Traurig, LLP, located at the MetLife Building, 200 Park Avenue, New York, NY 10166. In order to exercise your redemption rights, you must, prior to 4:30 p.m. Eastern time on December 19, 2017 (two business days before the special meeting), (i) submit a written request to Boulevard's transfer agent that Boulevard redeem your shares for cash, and (ii) deliver your stock to Boulevard's transfer agent physically or electronically through Depository Trust Company as described in the Proxy Statement/Prospectus.
See "Risk Factors" beginning on page 77 of the Proxy Statement/Prospectus for factors you should consider in connection with the Transaction.
A number of unrelated institutional investors have agreed to purchase, in private placements (the "Private Placements"), ordinary shares, par value $0.0001 per share, of ESTR (the "Ordinary Shares") for an aggregate purchase price of approximately US$130 million, resulting in total potential gross proceeds to Estre in the Transaction of between $130 million and $500 million, depending on the level of redemptions by Boulevard's public stockholders.
The Ordinary Shares to be purchased in the Private Placements will be identical to the Ordinary Shares to be issued to Boulevard's existing stockholders and Estre's existing shareholders in the Transaction.
While the per share sale price of the Ordinary Shares in the Private Placements is $10.00 per share, the purchasers in the Private Placements will receive from ESTR at closing an additional two Ordinary Shares for each 10 Ordinary Shares purchased. Accordingly, 15,438,000 Ordinary Shares will be issued in the Private Placements. The issuance of the approximately 2.6 million incremental shares will be neutral to Boulevard's stockholders because of the forfeiture of 3.7 million shares of Class B common stock, par value $0.0001 per share, of Boulevard by Boulevard's sponsor, Boulevard Acquisition Sponsor II, LLC (the "Sponsor") pursuant to Amendment No. 1 to the Forfeiture and Waiver Agreement, dated December 7, 2017, by and among Boulevard, Estre and the Sponsor (as disclosed in the Proxy Statement/Prospectus).
In addition, 3,748,600 warrants to purchase Ordinary Shares at $11.50 per share will be issued as further consideration to the institutional investor that has agreed to purchase the greatest number of
Ordinary Shares in the Private Placements. The issuance of warrants is neutral to Boulevard's stockholders due to the Warrant Forfeiture Agreement among the Sponsor, Boulevard and Estre, pursuant to which the Sponsor will forfeit an equal number of warrants to purchase shares of Boulevard common stock that it currently holds.
It is expected that a registration statement of ESTR with respect to the resale of all Ordinary Shares issued in connection with the Private Placements will be filed with the Securities and Exchange Commission within 15 business days following the closing of the Transaction.
This Supplement updates the disclosure in the sections entitled "Certain Agreements Related to the Transaction" beginning on page 159 and "Description of ESTR Share Capital" beginning on page 328 of the Proxy Statement/Prospectus and any other applicable section of the Proxy Statement/Prospectus.
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As disclosed in the Proxy Statement/Prospectus, Estre has previously entered into a binding facility commitment letter dated August 10, 2071 with BTG Pactual, Itaü BBA and Santander, the holders of its debentures, which provided for the restructuring of Estre's existing debentures through a prepayment of U.S. $200 million, a partial debt write down and the refinancing of the balance of the debentures through the issuance of new debentures with new terms. The debt restructuring is conditional upon closing of the Transaction and will be effected on the closing date of the Transaction. For further information, see "Debt Restructuring" in the Proxy Statement/Prospectus.
On December 7, 2017, Estre amended the binding facility commitment letter, pursuant to which the holders of Estre's existing debentures have agreed to amend the required prepayment in connection with the Transaction to a defined range of the repayment of a minimum debt prepayment of $100 million and a maximum debt prepayment of $200 million. For purposes of the required repayment to the holders of Estre's existing debentures, the proceeds available to Estre as a result of the Transaction will consist of cash received from the sale of Ordinary Shares in the Private Placements, plus cash remaining in Boulevard after the making of all payments required to be made in respect of redeemed shares of Class A common stock, par value $0.0001 per share, of Boulevard (the "Public Shares"), and reduced by the amount of fees and expenses payable in connection with the Transaction.
All repayments within the debt prepayment range referred to above, either in connection with consummation of the Transaction, or in the future in connection with any proceeds from equity issuances by ESTR, will be at the same discount as had originally been agreed to by the debt holders in connection with the Transaction.
Estre and Boulevard have agreed to reduce the minimum cash amount required to be available at closing of the Transaction to $130 million pursuant to Amendment No. 2 to the Business Combination Agreement, dated as of December 13, 2017, by and among Estre, ESTR, Boulevard and Merger Sub. Assuming satisfaction of all other closing conditions as described in the Proxy Statement/Prospectus, this change in the minimum cash condition assures that the Transaction will close, notwithstanding the extent to which the holders of Public Shares choose to redeem their Public Shares.
This Supplement updates the disclosure in the sections entitled "The Transaction Agreement—Consideration to be Received in the Transaction" beginning on page 145 of the Proxy Statement/Prospectus and "The Transaction Agreement—Conditions to Complete the Transaction" beginning on page 154 of the Proxy Statement/Prospectus as well as any other applicable section of the Proxy Statement/Prospectus.
In addition, the risk factor headed "Risk Factors—Risks Related to Estre—Risks Related to Estre's Business—Estre's auditors have issued a "going concern" audit opinion, and its ability to continue as a going concern is dependent on its ability to successfully implement its restructuring plan" in the Proxy Statement/Prospectus should be read in light of the information set forth in this Supplement. As described above, the minimum required debt prepayment is lower than as described in the Proxy Statement/Prospectus. As described in that risk factor, among other things, as of June 30, 2017, Estre recorded negative working capital (defined as total current assets minus total current liabilities) of R$1,288.7 million and a capital deficiency of R$483.6 million. No assurance can be given that the Transaction will be effective in resolving Estre's negative working capital and capital deficiency. See also, "Unaudited Condensed Combined Pro Forma Financial Information" below.
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The following table sets forth the per share data of Boulevard and Estre on a stand-alone basis and the unaudited pro forma condensed combined per share data for the year ended December 31, 2016 and the six months ended June 30, 2017 after giving effect to the Transaction, (i) assuming no Boulevard stockholders exercise redemption rights with respect to their public shares upon the consummation of the Transaction, and (ii) assuming that Boulevard's Public Stockholders exercise their redemption rights with respect to a maximum of 14 million Public Shares upon consummation of the Transaction, and in each case assuming that (i) 15,438,00 million Ordinary Shares will be issued to institutional investors pursuant to the private placement subscription agreements that have been entered into with such institutional investors, (ii) 1,783,381 Ordinary Shares are issued to the Employee Compensation Entity referred to herein, and (iii) no additional no additional shares of Boulevard Common Stock are issued.
You should read the information in the following table in conjunction with the selected historical financial information summary included in the proxy statement/prospectus, and the historical financial statements of Boulevard and Estre and related notes that are included in the proxy statement/prospectus. The unaudited Boulevard and Estre pro forma combined per share information is derived from, and should be read in conjunction with, the unaudited condensed combined pro forma financial statements and related notes included in the proxy statement/prospectus.
The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma
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combined book value per share information below does not purport to represent what the value of Boulevard and Estre would have been had the companies been combined during the period presented.
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Estre | Boulevard | Pro Forma Combined Assuming No Redemptions Scenario 1 |
Pro Forma Combined Assuming Maximum Redemptions Scenario 2 |
Equivalent Pro Forma Scenario 1 |
Equivalent Pro Forma Scenario 2 |
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(in thousands of reais except number of shares and per share amounts) |
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Six Months Ended June 30, 2017 |
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Profit for the period from continuing operations |
132,605 | 274 | 193,614 | 155,799 | 193,614 | 155,799 | |||||||||||||
Cash dividends declared |
— | — | — | — | — | — | |||||||||||||
Stockholders' (deficit) equity at June 30, 2017 |
(479,578 | ) | 16,540 | 1,245,510 | (64,610 | ) | 1,245,510 | (64,610 | ) | ||||||||||
Number of weighted average shares outstanding—basic and diluted (in thousands) |
108,104 | 10,920 | 89,156 | 52,156 | 309,232 | 180,900 | |||||||||||||
Basic and diluted net profit per share (in reais) |
1.227 | 0.025 | 2.172 | 2.987 | 0.626 | 0.861 | |||||||||||||
Cash dividends declared per share |
— | — | — | — | |||||||||||||||
Book value per share—basic and diluted—at June 30, 2017 (in reais) |
(4.436 | ) | 1.515 | 13.970 | (1.239 | ) | 4.028 | (0.357 | ) | ||||||||||
Year Ended December 31, 2016 |
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(Loss) profit for the year/period from continuing operations |
(338,513 | ) | (859 | ) | (184,828 | ) | (245,431 | ) | (184,828 | ) | (245,431 | ) | |||||||
Stockholders equity (deficit) at December 31, 2016 |
(621,236 | ) | 16,296 | n/a | n/a | n/a | n/a | ||||||||||||
Cash dividends declared |
— | — | — | — | — | — | |||||||||||||
Number of weighted average shares outstanding—basic and diluted (in thousands) |
108,104 | 10,895 | 89,156 | 52,156 | 309,232 | 180,900 | |||||||||||||
Basic and diluted net loss per share (in reais) |
(3.131 | ) | (0.079 | ) | (2.073 | ) | (4.706 | ) | (0.598 | ) | (1.357 | ) | |||||||
Cash dividends declared per share |
— | — | — | — | — | — | |||||||||||||
Book value per share—basic and diluted—at December 31, 2017 (in reais) |
5.746 | 1.492 | n/a | n/a | n/a | n/a | |||||||||||||
This Supplement updates the disclosure in the section entitled "Comparative Per Share Data" beginning on page 71 of the Proxy Statement/Prospectus as well as any other applicable section of the Proxy Statement/Prospectus.
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UNAUDITED CONDENSED COMBINED PRO FORMA FINANCIAL INFORMATION
On September 11, 2017, Boulevard, a company organized for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar transaction with one or more businesses, which is sponsored by a subsidiary of the Avenue Capital Group, and Estre, the largest waste management company in Brazil and Latin America, entered into the Transaction Agreement in which Boulevard will enter into a business combination with Estre. As a result of the Transaction (as defined below), Estre will become a wholly-owned indirect subsidiary of ESTR (as defined below).
Under the terms of the Transaction, all or almost all of Estre's shareholders will contribute their Estre Shares to a holding company in the Cayman Islands (which is referred to herein as ESTR) and receive Ordinary Shares of ESTR. Therefore, Estre will become a wholly-owned indirect subsidiary of ESTR. On closing of the Transaction, Boulevard will also become a partially-owned subsidiary of ESTR, which will be a publicly-held company with NASDAQ-listed shares, and Boulevard's outstanding Public Shares will be converted into one-for-one Ordinary Shares of ESTR. The existing Boulevard warrants to subscribe for Boulevard shares will become ESTR warrants to subscribe for Ordinary Shares of ESTR, with an exercise price of US$11.50 per share. The Ordinary Shares issuable upon the exercise of the ESTR warrants have not been included in the calculation of ESTR's pro forma capital stock and pro forma diluted earnings per share, as such warrants are estimated to be out of the money. In addition, in relation to Estre's stock option plan, upon consummation of the Transaction, the 142,698 options outstanding will not be exchanged for options in ESTR's shares and their original terms will not be amended. When the options are exercised, Estre will issue shares or cash for an amount of approximately R$ 0.9 million. As such, the potential exercise of the Estre stock options has not been considered in the unaudited condensed combined pro forma financial information. See "Personnel and Human Resources Policy—Stock Option Plans".
The shareholders of Estre will not receive any cash as a result of the Transaction, and the only consideration they receive will be the Ordinary Shares of ESTR under Scenario No. 1. Immediately following closing of the Transaction and assuming that (i) there will be no redemptions of Public Shares by Boulevard's Public Shareholders, (ii) 15,438,000 Ordinary Shares will be issued to institutional investors pursuant to the private placement subscription agreements that have been entered into with such institutional investors, (iii) Boulevard's sponsor forfeits 3.7 million shares of Boulevard Common Stock that are currently owned by it, and (iv) 1,783,381 Ordinary Shares are issued to the Employee Compensation Entity referred to below, the shareholders of Estre immediately prior to closing of the Transaction (when taken together with the Ordinary Shares to be held by the Employee Compensation Entity immediately prior to the closing of the Transaction) will hold approximately 35.0% of the outstanding shares of ESTR and the shareholders of Boulevard immediately prior to consummation of the Transaction will hold approximately 47.7% of the outstanding shares of ESTR.
Under Scenario No. 2, immediately following closing of the Transaction and assuming that (i) all 37,000,000 Public Shares will be redeemed by Boulevard's Public Shareholders, (ii) 15,438,000 Ordinary Shares will be issued to institutional investors pursuant to the private placement subscription agreements that have been entered into with such institutional investors, (iii) Boulevard's sponsor forfeits 3.7 million shares of Boulevard Common Stock that are currently owned by it, and (iv) 1,783,381 Ordinary Shares are issued to the Employee Compensation Entity referred to below, the shareholders of Estre immediately prior to closing of the Transaction (when taken together with the Ordinary Shares to be held by the Employee Compensation Entity immediately prior to the closing of the Transaction) will hold approximately 59.8% of the outstanding shares of ESTR and the shareholders of Boulevard immediately prior to consummation of the Transaction will hold approximately 10.6% of the outstanding shares of ESTR.
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The transaction, which was approved by the Board of Directors of Boulevard and Estre, is expected to be completed on December 21, 2017. Closing of the Transaction is subject to the approval of Boulevard's shareholders (which meeting is to be held on December 21, 2017) and is subject to the satisfaction of other customary conditions for closing of the Transaction.
The unaudited pro forma condensed combined financial information combines the historical financial statements of Boulevard and Estre to illustrate the effect of the transactions referred to herein.
The assumptions and estimates underlying the unaudited pro forma adjustments established in unaudited condensed combined pro forma financial information are described in the notes and are summarized below. The unaudited condensed combined pro forma financial information is stated for illustrative purposes only and is not necessarily indicative of the results of operation or financial position that would have been had the Transaction occurred on the dates indicated. In addition, unaudited condensed combined pro forma financial information is not intended to project ESTR's future results of operation or financial position. Unaudited pro forma adjustments represent management's estimates based on the information made available as of the date of such information and are subject to change as additional information becomes available and additional analyses are performed.
The unaudited condensed combined pro forma financial information presents two scenarios as follows:
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write-off, taking into account the partial repayment of R$661,600 of outstanding debt, the resulting debt balance as of January 1, 2016 is R$597,662, all classified as noncurrent due to a three-year grace period on payments of principal agreed with Estre's creditors in connection with the Transaction. Interest expense as from January 1, 2016 was recalculated taking into consideration the partial debt repayment, consequently, the unaudited pro forma statements of profit or loss for the six-month period ended June 30, 2017 and for the year ended December 31, 2016, reflect a reduction of interest charges on the debentures of R$63,712 and R$156,835, respectively. Prior to consummation of the Transaction, an entity will be established (referred to herein as the Employee Compensation Entity) and it is assumed that ESTR will issue to the Employee Compensation Entity 1,783,381 Ordinary Shares. Employees of ESTR or its subsidiaries and members of the board of directors of ESTR may receive equity in the Employee Compensation Entity that, subject to any vesting and other conditions that may be imposed, will entitle such employees and directors to receive a portion of the Ordinary Shares held by the Employee Compensation Entity. However, the pro forma statements of profit or loss for the six-month period ended June 30, 2017 and for the year ended December 31, 2016 do not reflect any adjustment in respect of the executive compensation because no equity interests in the Employee Compensation Entity will be granted at consummation of the Transaction and, as of the date hereof, there has been no determination as to the terms and conditions of any such awards.
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due to a three-year grace period on payments of principal agreed with Estre's creditors in connection with the Transaction. Interest expense as from January 1, 2016 was recalculated taking into consideration the partial debt repayment, consequently, the unaudited pro forma statements of profit or loss for the six-month period ended June 30, 2017 and for the year ended December 31, 2016, reflect a reduction of interest charges on the debentures of R$25,897 and R$96,232, respectively. Scenario No. 2, assumes the cash is fully used for partial repayment of debentures and to pay the costs of the Transaction. Prior to consummation of the Transaction, an entity will be established (referred to herein as the Employee Compensation Entity) and ESTR will issue to the Employee Compensation Entity 1,783,381 Ordinary Shares. Employees of ESTR or its subsidiaries and members of the board of directors of ESTR may receive equity in the Employee Compensation Entity that, subject to any vesting and other conditions that may be imposed, will entitle such employees and directors to receive a portion of the Ordinary Shares held by the Employee Compensation Entity. However, the pro forma statements of profit or loss for the six-month period ended June 30, 2017 and for the year ended December 31, 2016 do not reflect any adjustment in respect of the executive compensation because no equity interests in the Employee Compensation Entity will be granted at consummation of the Transaction and, as of the date hereof, there has been no determination as to the terms and conditions of any such awards.
The unaudited condensed combined pro forma financial information should be read in conjunction with the accompanying notes. In addition, the unaudited condensed combined pro forma financial information was based on and should be read in conjunction with the following historical financial statements and the accompanying notes, which are included in the proxy statement/prospectus:
The historical financial statements of Estre have been prepared in accordance with IFRS as issued by the IASB and in its functional and presentation currency of the reais. The historical financial statements of Boulevard have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") in its functional and presentation of United States dollars.
The financial statements of Boulevard have been translated into reais for the purposes of presentation in the unaudited pro forma condensed combined financial information using the following exchange rates:
Unless otherwise indicated, amounts in this section are presented in thousands of reais or thousands of U.S. dollars (as indicated).
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No adjustments were required in Boulevards financial statements to convert from U.S. GAAP to IFRS for purposes of this combined unaudited pro forma financial information, except to classify Boulevard's common stock subject to redemption as non-current liabilities under IFRS.
Unless otherwise indicated, amounts are presented in this section are presented in thousands of reais or thousands of U.S. dollars (as indicated).
Accounting Treatment
Pursuant to the terms of the Transaction Agreement, upon closing of the transaction, the shareholders of ESTR shall comprise the former shareholders of Estre and certain of the former shareholders of Boulevard (including the holders of the Public Shares of Boulevard which are currently publicly traded). Upon closing of the Transaction, assuming that none of Boulevard's existing Public Stockholders exercise their redemption rights and upon the other assumptions set forth in this supplemental proxy statement/prospectus, under Scenario No. 1, Boulevard's existing stockholders are expected to own approximately 47.7% of the outstanding share capital of ESTR, and the former shareholders of Estre (when taken together with the Ordinary Shares to be held by the Employee Compensation Entity immediately prior to the closing of the Transaction) are expected to own approximately 35.0% of the outstanding share capital of ESTR and control ESTR, as the ongoing operations of ESTR will be those of Estre, managed by Estre's senior management. 17.3% of the Ordinary Shares of ESTR will be held by new investors as a result of the private placements. Under Scenario No. 2, upon closing of the Transaction, assuming that all of Boulevard's existing Public Stockholders exercise their redemption rights and upon the other assumptions set forth in this supplemental proxy statement/prospectus, Boulevard's existing Class B stockholders are expected to own approximately 10.6% of the outstanding share capital of ESTR, and the former shareholders of Estre (when taken together with the Ordinary Shares to be held by the Employee Compensation Entity immediately prior to the closing of the Transaction) are expected to own approximately 59.8% of the outstanding share capital of ESTR and control ESTR, as the ongoing operations of ESTR will be those of Estre, managed by Estre's senior management. 29.6% of the Ordinary Shares of ESTR will be held by new investors as a result of the private placements. Accordingly, the transaction will be accounted for as a reorganization and recapitalization transaction whereby ESTR is created as a holding company of Estre and will concurrently issue new Ordinary shares to the former holders of Boulevard Shares in exchange for the funds held in the Trust Account of Boulevard (a recapitalization). As a result, the assets and liabilities of Estre will be carried at historical cost and there will be no step-up in basis or goodwill or other intangible assets recorded as a result of the Transaction. All direct costs of the Transaction will be accounted for as a charge to additional paid-in capital.
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Unaudited Condensed Combined Pro Forma Statement of Financial Position
as of June 30, 2017
(In thousands of reais)
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Scenario No. 1 | Scenario No. 2 | |||||||||||||||||||||||||||||
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Historical Estre |
Historical Boulevard |
Pro forma adjustments assuming no redemptions |
Note | Partial Debt Repayment and Write-off |
Note | Pro forma Combined |
Pro forma adjustments assuming full redemption |
Note | Partial Debt Repayment and Write-off |
Note | Pro forma Combined |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
29,536 | 2,405 | 1,558,735 | (A)/(B)/(D)/(E) | (661,600 | ) | (C)/(E) | 929,076 | 331,315 | (A) | (330,800 | ) | (C)/(E) | 32,456 | |||||||||||||||||||
Marketable securities |
27 | — | — | — | 27 | — | — | 27 | |||||||||||||||||||||||||
Trade accounts receivable |
798,761 | — | — | — | 798,761 | — | — | 798,761 | |||||||||||||||||||||||||
Inventories |
8,843 | — | — | — | 8,843 | — | — | 8,843 | |||||||||||||||||||||||||
Taxes recoverable |
134,703 | — | — | — | 134,703 | — | — | 134,703 | |||||||||||||||||||||||||
Other current assets |
35,803 | 192 | — | — | 35,995 | — | — | 35,995 | |||||||||||||||||||||||||
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Total current assets |
1,007,673 | 2,597 | 1,558,735 | (661,600 | ) | 1,907,405 | 331,315 | (330,800 | ) | 1,010,785 | |||||||||||||||||||||||
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Noncurrent assets |
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Marketable securities |
3 | 1,227,420 | (1,227,420 | ) | (A) | — | 3 | (1,227,420 | ) | (A) | — | 3 | |||||||||||||||||||||
Related parties |
12,060 | — | — | — | 12,060 | — | — | 12,060 | |||||||||||||||||||||||||
Trade accounts receivable |
19,975 | — | — | — | 19,975 | — | — | 19,975 | |||||||||||||||||||||||||
Taxes recoverable |
4,341 | — | — | — | 4,341 | — | — | 4,341 | |||||||||||||||||||||||||
Prepaid expenses |
2,491 | — | — | — | 2,491 | — | — | 2,491 | |||||||||||||||||||||||||
Deferred taxes |
37,652 | — | — | — | 37,652 | — | — | 37,652 | |||||||||||||||||||||||||
Other receivables |
14,406 | — | — | — | 14,406 | — | — | 14,406 | |||||||||||||||||||||||||
Investments |
102,608 | — | — | — | 102,608 | — | — | 102,608 | |||||||||||||||||||||||||
Property, plant and equipment |
689,825 | — | — | — | 689,825 | — | — | 689,825 | |||||||||||||||||||||||||
Intangible assets |
554,876 | — | — | — | 554,876 | — | — | 554,876 | |||||||||||||||||||||||||
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Total non-current assets |
1,438,237 | 1,227,420 | (1,227,420 | ) | — | 1,438,237 | (1,227,420 | ) | — | 1,438,237 | |||||||||||||||||||||||
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Total assets |
2,445,910 | 1,230,017 | 331,315 | (661,600 | ) | 3,345,642 | (896,105 | ) | (330,800 | ) | 2,449,022 | ||||||||||||||||||||||
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of the unaudited pro forma combined financial information.
S-11
Unaudited Condensed Combined Pro Forma Statement of Financial Position
as of June 30, 2017
(In thousands of reais)
| |
|
|
Scenario No. 1 | Scenario No. 2 | |||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
Historical Estre |
Historical Boulevard |
Pro forma adjustments assuming no redemptions |
Note | Partial Debt Repayment and Write-off |
Note | Pro forma Combined |
Pro forma adjustments assuming full redemption |
Note | Partial Debt Repayment and Write-off |
Note | Pro forma Combined |
|||||||||||||||||||||
LIABILITIES AND EQUITY |
|||||||||||||||||||||||||||||||||
Current liabilities |
|||||||||||||||||||||||||||||||||
Loans and financing |
9,884 | — | — | — | 9,884 | — | — | 9,884 | |||||||||||||||||||||||||
Debentures |
1,785,712 | — | — | (1,785,712 | ) | (C) | — | — | (1,785,712 | ) | (C) | — | |||||||||||||||||||||
Provision for landfill closure |
7,820 | — | — | — | 7,820 | — | — | 7,820 | |||||||||||||||||||||||||
Trade accounts payable |
106,547 | — | — | — | 106,547 | — | — | 106,547 | |||||||||||||||||||||||||
Labor payable |
102,636 | — | — | — | 102,636 | — | — | 102,636 | |||||||||||||||||||||||||
Tax liabilities |
226,410 | 685 | — | — | 227,095 | — | — | 227,095 | |||||||||||||||||||||||||
Accounts payable from acquisition of investments |
6,816 | — | — | — | 6,816 | — | — | 6,816 | |||||||||||||||||||||||||
Loans from related parties |
3,054 | 182 | — | — | 3,236 | — | — | 3,236 | |||||||||||||||||||||||||
Advances from customers |
3,584 | — | — | — | 3,584 | — | — | 3,584 | |||||||||||||||||||||||||
Accounts payable from land acquisition |
6,336 | — | — | — | 6,336 | — | — | 6,336 | |||||||||||||||||||||||||
Other liabilities |
15,288 | 777 | — | — | 16,065 | — | — | 16,065 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
2,274,087 | 1,644 | — | (1,785,712 | ) | 490,019 | — | (1,785,712 | ) | 490,019 | |||||||||||||||||||||||
Obligations relating to discontinued operation |
22,289 | — | — | — | 22,289 | — | — | 22,289 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total current liabilities |
2,296,376 | 1,644 | — | (1,785,712 | ) | 512,308 | — | (1,785,712 | ) | 512,308 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Noncurrent liabilities |
— | ||||||||||||||||||||||||||||||||
Loans and financing |
6,051 | — | — | — | 6,051 | — | — | 6,051 | |||||||||||||||||||||||||
Debentures |
— | — | — | 958,712 | (C) | 958,712 | — | 1,372,212 | (C) | 1,372,212 | |||||||||||||||||||||||
Provision for landfill closure |
90,395 | — | — | — | 90,395 | — | — | 90,395 | |||||||||||||||||||||||||
Provision for legal proceedings |
167,841 | — | — | — | 167,841 | — | — | 167,841 | |||||||||||||||||||||||||
Provision for investments losses |
185 | — | — | — | 185 | — | — | 185 | |||||||||||||||||||||||||
Tax liabilities |
170,715 | — | — | — | 170,715 | — | — | 170,715 | |||||||||||||||||||||||||
Deferred taxes |
162,867 | — | — | — | 162,867 | — | — | 162,867 | |||||||||||||||||||||||||
Accounts payable from land acquisition |
5,109 | — | — | — | 5,109 | — | — | 5,109 | |||||||||||||||||||||||||
Other liabilities |
25,949 | — | — | — | 25,949 | — | — | 25,949 | |||||||||||||||||||||||||
Transaction costs payable |
— | 42,839 | (42,839 | ) | (D) | — | — | (42,839 | ) | (D | — | — | |||||||||||||||||||||
Common shares subject to redemption |
— | 1,168,994 | (1,168,994 | ) | (A) | — | — | (1,168,994 | ) | (A) | — | — | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total non-current liabilities |
629,112 | 1,211,833 | (1,211,833 | ) | 958,712 | 1,587,824 | (1,211,833 | ) | 1,372,212 | 2,001,324 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EQUITY |
— | ||||||||||||||||||||||||||||||||
Capital |
108,104 | 17,774 | 1,543,148 | (B) | — | 1,669,026 | 315,728 | — | 441,606 | ||||||||||||||||||||||||
Capital reserve |
750,025 | — | — | — | 750,025 | — | — | 750,025 | |||||||||||||||||||||||||
Other comprehensive income |
1,667 | 7 | — | — | 1,674 | — | — | 1,674 | |||||||||||||||||||||||||
Treasury shares |
(37,403 | ) | — | — | — | (37,403 | ) | — | — | (37,403 | ) | ||||||||||||||||||||||
Accumulated losses |
(1,314,466 | ) | (1,241 | ) | — | 165,400 | (C) | (1,150,307 | ) | — | 82,700 | (C) | (1,233,007 | ) | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
(492,073 | ) | 16,540 | 1,543,148 | 165,400 | 1,233,015 | 315,728 | 82,700 | (77,105 | ) | |||||||||||||||||||||||
Non-controlling interest |
12,495 | — | — | — | 12,495 | — | — | 12,495 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total equity |
(479,578 | ) | 16,540 | 1,543,148 | 165,400 | 1,245,510 | 315,728 | 82,700 | (64,610 | ) | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities and equity |
2,445,910 | 1,230,017 | 331,315 | (661,600 | ) | 3,345,642 | (896,105 | ) | (330,800 | ) | 2,449,022 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of the unaudited pro forma combined financial information.
S-12
Unaudited Condensed Combined Pro Forma Statement of Profit or Loss
for the Six-Month Period Ended June 30, 2017
(In thousands of reais, except for loss per share)
| |
|
|
Scenario 1 | Scenario 2 | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
Historical Estre |
Historical Boulevard |
Partial reversal of interest on debentures and finance income |
Note | Pro forma | Partial reversal of interest on debentures and finance income |
Note | Pro forma | |||||||||||||||
Revenue from services rendered |
671,405 | — | — | 671,405 | — | 671,405 | |||||||||||||||||
Costs of services |
(477,597 | ) | — | — | (477,597 | ) | — | (477,597 | ) | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross profit |
193,808 | — | — | 193,808 | — | 193,808 | |||||||||||||||||
Operating income (expenses) |
|||||||||||||||||||||||
General and administrative expenses |
(154,896 | ) | (1,787 | ) | — | (156,683 | ) | — | (156,683 | ) | |||||||||||||
Selling expenses |
6,336 | — | — | 6,336 | — | 6,336 | |||||||||||||||||
Share of profit of an associate |
2,338 | — | — | 2,338 | — | 2,338 | |||||||||||||||||
Other operating income (expenses), net |
17,994 | — | — | 17,994 | — | 17,994 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
Profit before finance income and expenses |
65,580 | (1,787 | ) | — | 63,793 | — | 63,793 | ||||||||||||||||
Finance expenses |
(316,024 | ) | — | 63,712 | (AA) | (252,312 | ) | 25,897 | (AA) | (290,127 | ) | ||||||||||||
Finance income |
5,770 | 2,977 | (2,977 | ) | (E) | 5,770 | (2,977 | ) | 5,770 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
(Loss) income before income and social contribution taxes |
(244,674 | ) | 1,190 | 60,735 | (182,749 | ) | 22,920 | (220,564 | ) | ||||||||||||||
Current income and social contribution taxes. |
(4,279 | ) | (916 | ) | — | (BB) | (5,195 | ) | — | (5,195 | ) | ||||||||||||
Deferred income and social contribution taxes |
381,558 | — | — | (BB) | 381,558 | — | 381,558 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
Profit for the period from continuing operations |
132,605 | 274 | 60,735 | 193,614 | 22,920 | 155,799 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average number of shares (in thousands) |
108,104 | 10,920 | (29,868 | ) | 89,156 | (1)(3) | (66,868 | ) | 52,156 | (2)(3) | |||||||||||||
Basic and diluted profit from continuing operations for the period attributable to ordinary equity holders of the parent (in reais) |
R$ | 1.227 | R$ | 0.025 | R$ | 2.172 | (3) | R$ | 2.987 | (3) | |||||||||||||
The accompanying notes are an integral part of the unaudited pro forma combined financial information.
S-13
Unaudited Condensed Combined Pro Forma Statement of Profit or Loss
for the Year Ended December 31, 2016
(In thousands of reais, except for loss per share)
| |
|
|
Scenario 1 | Scenario 2 | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
Historical Estre |
Historical Boulevard |
Partial reversal of interest on debentures and finance income |
Ref. | Pro forma | Partial reversal of interest on debentures and finance income |
Ref. | Pro forma | |||||||||||||||
| |
(BB) |
(DD) |
|
|
|
|
|
|
|||||||||||||||
Revenue from services rendered |
1,393,033 | — | — | 1,393,033 | 1,393,033 | ||||||||||||||||||
Cost of services |
(1,015,824 | ) | — | — | (1,015,824 | ) | (1,015,824 | ) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross profit |
377,209 | — | — | 377,209 | 377,209 | ||||||||||||||||||
Operating income (expenses) |
|||||||||||||||||||||||
General and administrative expenses |
(231,932 | ) | (2,677 | ) | — | (234,609 | ) | (234,609 | ) | ||||||||||||||
Selling expenses |
10,495 | — | — | 10,495 | 10,495 | ||||||||||||||||||
Share of profit an associate |
10,152 | — | — | 10,152 | 10,152 | ||||||||||||||||||
Other operating (expenses) income, net |
(69,219 | ) | — | — | (69,219 | ) | (69,219 | ) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
Profit before finance income and expenses |
96,705 | (2,677 | ) | — | 94,028 | 94,028 | |||||||||||||||||
Finance expenses |
(383,650 | ) | — | 156,835 | (AA) | (226,815 | ) | 96,232 | (AA) | (287,418 | ) | ||||||||||||
Finance income |
53,622 | 2,291 | (2,291 | ) | (E) | 53,622 | (2,291 | ) | 53,622 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
(Loss) Profit before income and social contribution taxes |
(233,323 | ) | (386 | ) | 154,544 | (79,165 | ) | 93,941 | (139,768 | ) | |||||||||||||
Current income and social contribution taxes |
(55,435 | ) | (473 | ) | — | (BB) | (55,908 | ) | (55,908 | ) | |||||||||||||
Deferred income and social contribution taxes |
(49,755 | ) | — | — | (BB) | (49,755 | ) | (49,755 | ) | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
Loss for the year from continuing operations. |
(338,513 | ) | (859 | ) | 154,544 | (184,828 | ) | 93,941 | (245,431 | ) | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average number of shares (in thousands) |
108,104 | 10,895 | (29,843 | ) | 89,156 | (1)(3) | (66,843 | ) | 52,156 | (2)(3) | |||||||||||||
Basic and diluted loss from continuing operations for the period attributable to ordinary equity holders of the parent (in reais) |
R$ | (3.131 | ) | R$ | (0.079 | ) | R$ | (2.073) | (3) | R$ | (4,706) | (3) | |||||||||||
The accompanying notes are an integral part of the unaudited pro forma combined financial information.
S-14
Notes to the Unaudited Condensed Combined Pro Forma Financial Information
1. Basis of Pro Forma Presentation
The unaudited condensed combined pro forma statement of financial position as of June 30, 2017, is based on the unaudited condensed consolidated historical statement of financial position of Estre and the unaudited condensed historical balance sheet of Boulevard of June 30, 2017, included in the proxy statement/prospectus, and gives effect on a pro forma basis to the Transaction as if it has been closed on June 30, 2017.
The unaudited condensed combined pro forma statements of profit and loss for the six-month period ended June 30, 2017 and for the year ended December 31, 2016, are based on the historical consolidated statement of profit or loss of Estre and the historical statements of operations of Boulevard, included in the proxy statement/prospectus, and combine the results of operations of Estre and Boulevard, giving effect to the transactions described in "The Transaction Agreement" and "Certain Agreements Related to the Transaction", as if the closing of the Transaction had occurred on January 1, 2016.
Under IFRS the Transaction will be recorded as a recapitalization in substance. This determination was primarily based on Estre comprising the ongoing operations of ESTR and Estre's senior management comprising the senior management of ESTR. Accordingly, for accounting purposes, the Transaction will be treated as the equivalent of Estre issuing shares for the net assets of Boulevard, accompanied by a recapitalization. The net assets of Boulevard will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Transaction will be those of Estre. See "Accounting Treatment." The consolidated historical financial statements have been adjusted in the unaudited condensed combined pro forma financial information to give pro forma effect to events which are: (1) directly related to the transactions carried out; (2) factually supportable; and (3) with regard to the income statement which should have a continuous impact on the condensed income statement. The unaudited condensed combined pro forma financial information does not reflect the impact of any possible revenue improvements or cost reduction initiatives that may be carried out after the completion of the Transaction.
2. Adjustments to the Unaudited Combined Pro Forma Statement of Financial Position
(A) Capital structure adjustment—Under Scenario No. 1, all of the outstanding shares of Boulevard will automatically convert into shares of ESTR. In addition, 15,438,000 Ordinary Shares will be issued to institutional investors pursuant to the private placement subscription agreements that have been entered into with such institutional investors for an aggregate purchase price of US$130,000,000. Furthermore, 3,700,000 shares of Boulevard Class B Common Stock are forfeited. This will result in the issuance of 73,718,235 shares (31,168,235 Ordinary Shares to Estre shareholders and 42,550,000 shares to Boulevard shareholders, of which 37,000,000 are Ordinary Shares and 5,550,000 shares are Class B Shares, as 3,700,000 Boulevard Class B shares are forfeited) for a net amount of R$1,128,695 (US$341,180 at a rate of R$3.308 per US$1.00), representing gross proceeds of R$1,227,420 (US$371,024 at a rate of R$3.308 per US$1.00), less estimated transaction costs of R$98,725. Subsequently, such amount will be contributed into Estre.
Under Scenario No. 2, all of Boulevard's 37,000,000 Public Shares are redeemed in connection with the consummation of the Transaction. In addition, 15,438,000 Ordinary Shares will be issued to institutional investors pursuant to the private placement subscription agreements that have been entered into with such institutional investors for an aggregate purchase price of US$130,000,000. Furthermore, and 3,700,000 shares of Boulevard Class B Common Stock are forfeited, providing the
S-15
minimum net proceeds of US$100 million plus the amount of Estimated Closing Transaction Expenses required for the closing of the Transaction Agreement.
| |
Scenario No. 1 | Scenario No. 2 | |||||
|---|---|---|---|---|---|---|---|
Number of ESTR Ordinary Shares issued to Boulevard shareholders in exchange of 35,338,417 shares of Class A redeemable stock and 1,661,583 shares of Class A Common Stock |
37,000,000 | — | |||||
Number of ESTR Ordinary Shares issued in in the private placements |
15,438,000 | 15,438,000 | |||||
Number of ESTR Class B Shares issued to the Sponsor in exchange of 9,250,000 shares of Class B Common Stock |
5,550,000 | 5,550,000 | |||||
Number of ESTR Ordinary Shares issued to Estre shareholders in exchange of 108,104,368 common shares(1) |
31,168,235 | 31,168,235 | |||||
| | | | | | | | |
Total number of shares issued by ESTR |
89,156,235 | (2) | 52,156,235 | (3) | |||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Gross proceeds (US$ thousand) |
US$ | 501,024 | US$ | 130,000 | |||
Less estimated transaction costs (US$ thousand) |
(29,844 | ) | (29,844 | ) | |||
| | | | | | | | |
Net proceeds (US$ thousand) |
US$ | 471,180 | US$ | 100,156 | |||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Gross proceeds (R$ thousand, converted at R$3.308 per US$1.00) |
R$ | 1,657,460 | R$ | 430,040 | |||
Less estimated transaction costs (R$ thousand) |
(98,725 | ) | (98,725 | ) | |||
| | | | | | | | |
Net proceeds (R$ thousand) |
R$ | 1,558,735 | R$ | 331,315 | |||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
S-16
(B) Release of Boulevard's Restricted Cash and Proceeds from Private Placements—Applicable to Scenario No. 1, after the closing of the Transaction pursuant to the Transaction Agreement and assuming that no additional Boulevard public share holder elects to redeem its Public Shares with regard to the shareholder vote to approve the Transaction with Estre, this adjustment reflects the release of restricted cash and cash equivalents of R$1,227,420 held by Boulevard as of June 30, 2017, less cash disbursements for the payment of transactions costs. Consequently, such funds are transferred to ESTR's unrestricted cash.
Description
|
Adjustments | (in thousands of reais) |
||||
|---|---|---|---|---|---|---|
Release of Boulevard's restricted cash |
A | 1,227,420 | ||||
Proceeds from Private Placements |
A | 430,040 | ||||
Payment of Boulevard's liabilities for transaction costs |
D | (42,839 | ) | |||
Payment of Estre transaction costs |
D | (55,886 | ) | |||
| | | | | | | |
(=) Subtotal of payments with transaction costs |
D | (98,725 | ) | |||
| | | | | | | |
Balance of cash in ESTR |
1,558,735 | |||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
As a result of Boulevard's Public Shareholders approving the Transaction, R$1,168,994 relating to 35,338,417 Boulevard Class A common shares subject to redemption are reclassified from non-current liabilities to shareholders' equity, adjusted for the capitalization of Estre's transaction costs that had not already been recorded as a liability.
Description
|
Adjustments | (in thousands of reais) |
||||
|---|---|---|---|---|---|---|
Issuance of Ordinary Shares in the private placements |
A | 430,040 | ||||
Reclassification of Boulevard Class A common stock to equity |
A | 1,168,994 | ||||
Capital issuance costs |
D | (55,886 | ) | |||
| | | | | | | |
Capital increase in ESTR |
1,543,148 | |||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Under Scenario No. 2, all of Boulevard's public shareholders are assumed to exercise their redemption rights in respect of 37,000,000 Public Shares and the capital increase in ESTR is substantially related to the issuance of ordinary shares in the private placements.
(C) Partial debt prepayment with debenture holders—to reflect the partial debt prepayment of Estre's debentures with a carrying value of R$1,786,454 as of June 30, 2017, for an amount of R$330,800 (US$100,000 at a rate of R$3.308 per US$1.00), in cash. In addition, a partial debt write-off of amounting to R$165,400 and R$ 82,700 under Scenario No.1 and Scenario No.2, respectively, of the principal amount of the debentures, as agreed between Estre and the Creditors on December 7, 2017 in connection with the Transaction, was reduced from the balance of the debentures. This results in a pro forma debenture balance under Scenario No.1 and Scenario No.2 of R$958,712 and R$13,712,312 respectively as of June 30, 2017, which has been classified as non-current. See "Debt Restructuring—Debt Restructuring and New Debt" in the proxy statement/prospectus for further information.
S-17
Set forth below is a summary of the pro forma impact to the statement of financial position as of June 30, 2017, taking into consideration the partial debt prepayment, under Scenarios No. 1 and No. 2, respectively.
Description
|
Historical balance as of June 30, 2017 |
Deduction—partial debt write-off |
Partial debt prepayment |
Pro forma— Scenario 1 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Banco BTG Pactual S.A. |
892,857 | (82,700 | ) | (330,800 | ) | 479,357 | |||||||
Banco Itaú S.A. |
446,427 | (41,350 | ) | (165,400 | ) | 239,677 | |||||||
Banco Santander (Brasil) |
446,428 | (41,350 | ) | (165,400 | ) | 239,678 | |||||||
| | | | | | | | | | | | | | |
Total (principal and interest) |
1,785,712 | (165,400 | ) | (661,600 | ) | 958,712 | |||||||
Description
|
Historical balance as of June 30, 2017 |
Deduction—partial debt write-off |
Partial debt prepayment |
Pro forma— Scenario 2 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Banco BTG Pactual S.A. |
892,857 | (41,350 | ) | (165,400 | ) | 686,107 | |||||||
Banco Itaú S.A. |
446,427 | (20,675 | ) | (82,700 | ) | 343,052 | |||||||
Banco Santander (Brasil) |
446,428 | (20,675 | ) | (82,700 | ) | 343,053 | |||||||
| | | | | | | | | | | | | | |
Total (principal and interest) |
1,785,712 | (82,700 | ) | (330,800 | ) | 1,372,212 | |||||||
(D) Payment of Transaction Costs—to reflect the estimated cash payment of transaction costs of R$98,725 in connection with the Transaction. R$42,839 were paid to settle Transaction costs payable by Boulevard and the remaining balance of R$55,886 capital issuance costs were adjusted in the capital account. A breakdown of such costs is set forth below:
Description
|
(in thousands of reais) |
|||
|---|---|---|---|---|
Deferred underwriting fees |
42,839 | |||
Investment banking and financial advisory services |
10,089 | |||
Legal agreements, due diligence and issuance record |
22,661 | |||
Accounting, financial reporting, printing and other |
23,136 | |||
| | | | | |
Total |
98,725 | |||
| | | | | |
| | | | | |
| | | | | |
Transaction costs related to the EcoPower Solutions agreement as described on page 161 of the proxy statement/prospectus have not been reflected in the condensed combined pro forma statement of financial position or condensed combined statement of profit or loss. The substance of the transaction is of a contingent fee (akin to a finder fee) to be paid to EcoPower Solutions, LLC in the form of the transfer to EcoPower Solutions, LLC of a portion of the shares of Boulevard's Class B common stock held by Boulevard's Sponsor. Although the payment is to be made by the Sponsor, it is expected that this fee will be recorded at the Boulevard level as a closing cost when the transaction closes, and measured at the excess of the fair value of the shares at closing over their purchase price. Accordingly, no adjustment has been recorded in the combined pro forma statement of financial position as the entry to record this transaction would be both a debit and credit to Boulevard's equity, and no adjustment would be reflected in the combined pro forma statement of profit or loss as the transaction results in a nonrecurring charge directly related to the Transaction.
(E) Cash balance—reflects the pro forma cash balance, after giving effect to the cash contribution to ESTR by Boulevard, the payment of the purchase price for the issuance of the Ordinary Shares in the private placements and partial debt prepayment of debentures net of transaction costs. It is assumed that the cash balance was deposited in a non-interest bearing bank account and accordingly no
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interest income is reflected in the unaudited condensed combined pro forma statements of profit or loss.
Details in the pro forma cash balance as of June 30, 2017 are as follows:
Cash and cash equivalents
|
Scenario No. 1 | Scenario No. 2 | |||||
|---|---|---|---|---|---|---|---|
Historical balance as of June 30, 2017 |
31,941 | 31,941 | |||||
Pro forma adjustments |
|||||||
Issuance of Ordinary Shares in the private placements(A) |
430,040 | 430,040 | |||||
Restricted cash contributed by Boulevard(B) |
1,227,420 | — | |||||
Partial prepayment of debentures(C) |
(661,600 | ) | (330,800 | ) | |||
Payment of transaction costs(D) |
(98,725 | ) | (98,725 | ) | |||
| | | | | | | | |
Total pro forma adjustments |
897,135 | 515 | |||||
| | | | | | | | |
Pro forma cash and cash equivalents balance as of June 30, 2017 |
929,076 | 32,456 | |||||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
(F) Angra Put Option—The unaudited interim combined pro forma statement of financial position and the unaudited combined pro forma statements of profit or loss have not been adjusted to reflect the impact of the exercise of Angra's put option as it is uncertain if the put option will be exercisable upon the consummation of the Transaction and if exercisable, whether Angra will actually exercise.
The aggregate put option price at which the put option is exercisable by Angra, whether exercisable with respect to its Estre Shares or the Ordinary Shares into which its Estre Shares have been exchanged, in either case ranges between R$66.5 million and R$79.4 million (US$21.0 million and US$24.0 million), with the exact aggregate put option price dependent on the amount of cash available at Boulevard at the closing of the Transaction.
The Angra Put Option is not accounted for as a liability in Estre's historical financial statements as it only becomes exercisable in the event Angra is diluted to a holding of less than 5% of Estre's shares, an event which is under Estre's control.
Had the Angra put option been reflected in the unaudited interim combined pro forma statement of financial position and the unaudited combined pro forma statements of profit or loss, this would result in the recognition of liability for approximately the amounts mentioned above and a loss for the difference between the amounts above and the carrying amount of Angra shares in Estre.
See "Certain Agreements Related to the Transaction—Angra Put Option Rights" in the proxy statement/prospectus for further information).
3. Adjustments to the Unaudited Combined Pro Forma Statements of Profit or Loss
(AA) Reduction of finance expenses—to reflect the pro forma reduction in finance expenses as a result of the prepayment of debentures.
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The pro forma reduction in finance expenses was calculated assuming that the debenture balance was prepaid on January 1, 2016, as follows:
Description
|
Debenture balance Scenario 1 |
Debenture balance Scenario 2 |
|||||
|---|---|---|---|---|---|---|---|
Historical balance as of January 1, 2016 |
1,424,662 | 1,424,662 | |||||
Partial debt write off |
(165,400 | ) | (82,700 | ) | |||
Partial debt prepayment |
(661,600 | ) | (330,800 | ) | |||
| | | | | | | | |
Total pro forma debenture balance (principal and interest) as of January 1, 2016 |
597,662 | 1,011,162 | |||||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Pro forma interest for the year ended December 31, 2016 |
100,108 | 169,370 | |||||
| | | | | | | | |
Total pro forma debenture balance (principal and interest) as of January 1, 2017 |
697,770 | 1,180,532 | |||||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
The pro forma interest expense recalculated on the debt balance as of January 1, 2016, of R$597,662 under Scenario No. 1, and of R$1,011,162 under Scenario No. 2, was at the interest rate of CDI plus a spread of 2.00% per annum, which for the year ended December 31, 2016 was an average rate of 16.75% p.a. and for the six month period ended June 30, 2017 was an average rate of 14.18% p.a. Under Scenario No. 1, the effect of a 1/8 increase or decrease in the interest rate of CDI plus 2.00% per annum applied to the balance of Estre's adjusted indebtedness as from January 1, 2016 of R$597,662 has the effect of increasing or decreasing pro forma finance expense by R$5,186 for the six month period ended June 30, 2017 or by R$12,514 for the year ended December 31, 2016. Under Scenario No. 2, the effect of a 1/8 increase or decrease in the interest rate of CDI plus 2.00% per annum applied to the balance of Estre's adjusted indebtedness as from January 1, 2016 of R$1,011,162 has the effect of increasing or decreasing pro forma finance expense by R$8,774 for the six month period ended June 30, 2017 or by R$21,171 for the year ended December 31, 2016.
Set forth below is a detail of the calculation of the pro forma finance expense for the six-month period ended June 30, 2017 and for the year ended December 31, 2016.
For the six-month period ended June 30, 2017
Profit and loss account
|
Historical consolidated statement of profit or loss |
Pro forma adjustment |
Pro forma— Scenarios 1 |
Pro forma adjustment |
Pro forma— Scenarios 2 |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Interest on loans/debentures |
(118,370 | ) | 63,712 | (54,658 | ) | 25,897 | (92,473 | ) | ||||||||
Other financial expenses |
(197,654 | ) | — | (197,654 | ) | — | (197,654 | ) | ||||||||
| | | | | | | | | | | | | | | | | |
Total |
(316,024 | ) | 63,712 | (252,312 | ) | 25,897 | (290,127 | ) | ||||||||
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
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For the year ended December 31, 2016
Profit and loss account
|
Historical consolidated statement of profit or loss |
Pro forma adjustment |
Pro forma— Scenarios 1 |
Pro forma adjustment |
Pro forma— Scenarios 2 |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Interest on loans/debentures |
(244,430 | ) | 156,835 | (87,595 | ) | 96,232 | (148,198 | ) | ||||||||
Other financial expenses |
(139,220 | ) | — | (139,220 | ) | — | (139,220 | ) | ||||||||
| | | | | | | | | | | | | | | | | |
Total |
(383,650 | ) | 156,835 | (226,815 | ) | 96,232 | (287,418 | ) | ||||||||
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
(BB) Pro forma current and deferred income and social contribution taxes—Estre's indebtedness which will be partially repaid in connection with the Transaction is held in Estre Ambiental S.A., the parent company of the operating companies consolidated by Estre Ambiental S.A., which reported tax losses and no current income and social contribution tax expense for the year ended December 31, 2016 and the six month period ended June 30, 2017. The amounts recorded as an expense for current income and social contribution taxes in Estre's consolidated statement of profit and loss relate entirely to other subsidiaries of Estre, and not to Estre Ambiental S.A. Therefore, the current income tax effect on the pro forma adjustment (AA), above, has not been calculated as Estre Ambiental S.A. will continue reporting tax losses on a pro forma basis for the periods presented, even after giving effect to the Debt Restructuring and reduction of financial expenses.
This Supplement updates the disclosure in the sections entitled "Selected Unaudited Condensed Combined Pro Forma Information" beginning on page 65 of the Proxy Statement/Prospectus and "Unaudited Condensed Combined Pro Forma Information" beginning on page 165 of the Proxy Statement/Prospectus as well as any other applicable section of the Proxy Statement/Prospectus.
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WHERE YOU CAN FIND MORE INFORMATION
Boulevard files reports, proxy statements/prospectuses and other information with the SEC as required by the Exchange Act. You can read Boulevard's SEC filings, including the Proxy Statement/Prospectus, over the Internet at the SEC's website at http://www.sec.gov. You may also read and copy any document Boulevard files with the SEC at the SEC public reference room located at 100 F Street, N.E., Room 1580 Washington, D.C., 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You may also obtain copies of the materials described above at prescribed rates by writing to the SEC, Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.
If you would like additional copies of the Proxy Statement/Prospectus or this Supplement or if you have questions about the Transaction or the proposals to be presented at the special meeting, you should contact us by telephone or in writing:
Stephen
S. Trevor
Boulevard Acquisition Corp. II
399 Park Avenue, 6th Floor New York, NY 10022
Tel: (212) 905-2888
Email: info@boulevardacq.com
You may also obtain these documents by requesting them in writing or by telephone from Boulevard's proxy solicitation agent at the following address and telephone number:
Morrow
Sodali LLC
470 West Avenue—3rd Floor
Stamford, CT 06902
Toll free: (800) 662-5200
Email: blvd.info@morrowco.com
All information contained or incorporated by reference in the Proxy Statement/Prospectus or this Supplement relating to Boulevard has been supplied by Boulevard, and all such information relating to Estre has been supplied by Estre. Information provided by either Boulevard or Estre does not constitute any representation, estimate or projection of any other party.
None of Boulevard, ESTR or Estre has authorized anyone to give any information or make any representation about the Transaction or their companies that is different from, or in addition to, that contained in this Supplement or the Proxy Statement/Prospectus or in any of the materials that have been incorporated in this Supplement or the Proxy Statement/Prospectus. Therefore, if anyone does give you information of this sort, you should not rely on it. If you are in a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by the Proxy Statement/Prospectus or the solicitation of proxies is unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in the Proxy Statement/Prospectus does not extend to you. The information contained in the Proxy Statement/Prospectus or this Supplement speaks only as of the date of the Proxy Statement/Prospectus, or this Supplement, as applicable, unless the information specifically indicates that another date applies.
Please refer to the section entitled "Cautionary Statement Regarding Forward-Looking Statement" beginning on page 75 of the Proxy Statement/Prospectus.
* * *
If you have already returned a validly executed proxy card, your votes will be recorded unless you submit a subsequent proxy or otherwise revoke your prior proxy prior to the special meeting. If your
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shares are held in "street name" you may revoke any prior vote or proxy by following the procedures provided to you by your bank or broker until 11:59 P.M. Eastern Daylight Time on December 20, 2017.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED PURSUANT TO THE PROXY STATEMENT/PROSPECTUS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THE PROXY STATEMENT/PROSPECTUS OR THIS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Supplement is dated December 15, 2017 and is first being mailed on or about December 15, 2017.
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