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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

CURRENT REPORT

 

 

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): June 1, 2020

 

 

 

WILLSCOT CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware 001-37552 82-3430194
(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer Identification No.)

 

901 S. Bond Street, #600

Baltimore, Maryland 21231

(Address, including zip code, of principal executive offices)

(410) 931-6000

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which registered
Class A common stock, par value $0.0001 per share WSC The Nasdaq Capital Market
Warrants to purchase Class A common stock(1) WSCWW OTC Markets Group Inc.
Warrants to purchase Class A common stock(2) WSCTW OTC Markets Group Inc.

 

(1) Issued in connection with the initial public offering of Double Eagle Acquisition Corp., the registrant’s legal predecessor company, in September 2015, which are exercisable for one-half of one share of the registrant’s Class A common stock for an exercise price of $5.75.

(2) Issued in connection with the registrant’s acquisition of Modular Space Holdings, Inc. in August 2018, which are exercisable for one share of the registrant’s Class A common stock at an exercise price of $15.50 per share.

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

Item 8.01 Other Events

 

Regulatory Update

As previously disclosed, on March 1, 2020, WillScot Corporation, a Delaware corporation (the "Company"), Mobile Mini, Inc., a Delaware corporation ("Mobile Mini"), and Picasso Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company ("Merger Sub"), entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which, subject to the satisfaction or waiver of certain customary closing conditions, Merger Sub will be merged with and into Mobile Mini, with Mobile Mini surviving as a wholly-owned subsidiary of the Company (the "Merger" or the "Proposed Transaction").

 

On May 21, 2020, the Company received notice from the United States Federal Trade Commission of early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in connection with the Merger.

 

Note Offering

In connection with the Company's pending Merger, Picasso Finance Sub. Inc., a newly-formed finance subsidiary of the Company (the “Escrow Issuer”), plans to offer to potential investors $500 million in aggregate principal amount of senior secured notes due 2025 (the “Notes”). If the offering is consummated, the gross proceeds thereof will be deposited by the initial purchasers into a segregated escrow account pursuant to an escrow and security agreement. Concurrently with the closing of the Merger and the satisfaction of certain other escrow conditions, the escrowed proceeds will be released to fund, together with funds from the Company's fully committed $2.4 billion ABL credit facility, which is expected to be entered into at the closing of the Merger, the repayment of all outstanding indebtedness under each of the Company's existing ABL credit facility and Mobile Mini's existing ABL credit facility, the repayment of all of Mobile Mini's outstanding senior notes, the repayment of all of Williams Scotsman International Inc.'s ("WSII") senior secured notes due 2022 (collectively, the "Refinancing Transactions") and to pay fees and expenses related to the Refinancing Transactions and the Merger. Upon consummation of the Merger, the Escrow Issuer will merge with and into WSII, with WSII continuing as the surviving corporation, and WSII will assume the obligations of the Escrow Issuer under the Notes and the indenture governing the Notes.

 

 

 

Additional Information

 In connection with the Merger and the planned offering of the Notes, the Company is hereby providing certain historical financial information of Mobile Mini for the quarter ended March 31, 2020 and certain pro forma information.

 

Included in this filing as Exhibit 99.1 are the historical unaudited consolidated financial statements of Mobile Mini. For additional information about Mobile Mini, see Mobile Mini's quarterly report on Form 10-Q, filed with the Securities and Exchange Commission on May 6, 2020 (the "Mobile Mini 10-Q"). Except as expressly provided herein, the information included in the Mobile Mini 10-Q shall not be deemed included or incorporated by reference in this Current Report on Form 8-K.

 

Included in this filing as Exhibit 99.2 is the pro forma financial information described in Item 9.01(b) below, giving effect to the proposed offering of the Notes, the Refinancing Transactions, and the Merger.

 

This Current Report on Form 8-K does not constitute an offer to sell or a solicitation of an offer to buy the Notes. The Notes have not been registered under Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

 

Forward-Looking Statements

 

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties and are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “estimates,” “expects,” “anticipates,” “believes,” “forecasts,” “projects,” “plans,” “intends,” “may,” “will,” “should,” “could,” “shall,” “continue,” “outlook” and variations of these words and similar expressions (or the negative thereof) identify forward looking statements, which are generally not historical in nature. Certain of these forward-looking statements relate to the proposed business combination (the “Proposed Transaction”) involving WillScot and Mobile Mini, including: expected scale; operating efficiency; stockholder, employee and customer benefits; key assumptions; timing of closing; the amount and timing of revenue and expense synergies; future financial benefits and operating results; and integration spend, which reflects management’s beliefs, expectations and objectives as of the date hereof. Achievement of the expressed beliefs, expectations and objectives is subject to risks and uncertainties that could cause actual results to differ materially from those beliefs, expectations or objectives. These forward-looking statements are only estimates, assumptions and projections, and involve known and unknown risks and uncertainties, many of which are beyond the control of WillScot and Mobile Mini.

 

Important Proposed Transaction-related factors that may cause such differences include, but are not limited to: the risk that expected revenue, expense and other synergies from the Proposed Transaction may not be fully realized or may take longer to realize than expected; the parties are unable to successfully implement their integration strategies; the inherent uncertainty associated with financial or other projections; failure of the parties to satisfy the closing conditions in the merger agreement in a timely manner or at all, including stockholder and regulatory approvals; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the possibility that the Proposed Transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; and disruptions to the parties’ businesses and financial condition as a result of the announcement and pendency of the Proposed Transaction. Other important factors include: the parties’ ability to manage growth and execute their business plan; their estimates of the size of the markets for their products; the rate and degree of market acceptance of their products; the success of other competing modular space and portable storage solutions that exist or may become available; rising costs adversely affecting their profitability (including cost increases resulting from tariffs); general economic and market conditions impacting demand for their products and services; the value of WillScot shares to be issued in the Proposed Transaction; the parties’ capital structure, levels of indebtedness and availability of credit; expected financing transactions undertaken in connection with the Proposed Transaction; third party contracts containing consent and/or other provisions that may be triggered by the Proposed Transaction; the ability to retain and hire key personnel and uncertainties arising from leadership changes; the response of business partners as a result of the announcement and pendency of the Proposed Transaction; the diversion of management attention from business operations to the Proposed Transaction; the ability to implement and maintain an effective system of internal controls; potential litigation and regulatory matters involving the Combined Company; implementation of tax reform; the intended qualification of the Proposed Transaction as a tax-free reorganization; the changes in political conditions in the U.S. and other countries in which the parties operate, including U.S. trade policies or the U.K.’s withdrawal from the European Union; and such other risks and uncertainties described in the periodic reports WillScot and Mobile Mini file with the SEC from time to time including WillScot’s Annual Report on Form10-K for the fiscal year ended December 31, 2019, which was filed with the SEC on March 2, 2020, WillScot’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, which was filed with the SEC on May 6, 2020, Mobile Mini’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed with the SEC on February 3, 2020, and Mobile Mini’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, which was filed with the SEC on May 6, 2020, each of which are or will be available through the SEC’s EDGAR system at www.sec.gov.

 

 

 

 

Investors are cautioned not to place undue reliance on these forward-looking statements as the information in this report speaks only as of the date hereof or such earlier date as specified herein. WillScot and Mobile Mini disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Investors should not assume that any lack of update to a previously issued “forward-looking statement” constitutes a reaffirmation of that statement. All subsequent written and oral forward-looking statements attributable to WillScot, Mobile Mini or any person acting on behalf of either party are expressly qualified in their entirety by the cautionary statements referenced above.

 

Important Information About the Proposed Transaction

 

In connection with the Proposed Transaction, the Company filed a registration statement on Form S-4 (No. 333-237746), originally filed on April 17, 2020, which includes a prospectus of the Company and a joint proxy statement of the Company and Mobile Mini (the “joint proxy statement/prospectus”). The registration statement was declared effective by the SEC on May 5, 2020, and the Company and Mobile Mini commenced mailing the joint proxy statement/prospectus on or about May 8, 2020. Each party will file other documents regarding the Proposed Transaction with the SEC. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY, IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT STOCKHOLDERS SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain these documents (if and when available) free of charge from the SEC's website at www.sec.gov. The documents filed by the Company with the SEC may also be obtained free of charge from the Company by requesting them by mail at WillScot Corporation, 901 S. Bond Street, Suite 600, Baltimore, Maryland 21231. The documents filed by Mobile Mini may also be obtained free of charge from Mobile Mini by requesting them by mail at Mobile Mini, Inc. 4646 E. Van Buren Street, Suite 400, Phoenix, Arizona 85008.

 

Participants in the Solicitation

 

The Company, Mobile Mini, their respective directors and executive officers and other members of management and employees and certain of their respective significant stockholders may be deemed to be participants in the solicitation of proxies in respect of the Proposed Transaction. Information about the Company’s directors and executive officers is available in the Company's proxy statement, dated March 20, 2020, as supplemented by the supplement dated April 13, 2020, for the 2020 Annual Meeting and the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed with the SEC on March 2, 2020. Information about Mobile Mini’s directors and executive officers is available in Mobile Mini’s proxy statement, dated March 16, 2020 as supplemented by the supplement dated April 10, 2020, for its 2020 Annual Meeting of Stockholders and Mobile Mini’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed with the SEC on February 3, 2020. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the proxy solicitation and a description of their direct and indirect interests, by security holding or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the Proposed Transaction when they become available. Investors should read the joint proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from the SEC, the Company or Mobile Mini as indicated above.

 

No Offer or Solicitation

 

This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy any securities, 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 of 1933, as amended.

 

 

Item 9.01 Financial Statements and Exhibits.

 

(a) Financial statements of the businesses acquired

 

The historical unaudited condensed consolidated financial statements of Mobile Mini as of March 31, 2020, and for the three months ended March 31, 2020 and March 31, 2019, and management's evaluation of disclosure controls and procedures as of March 31, 2020, included in the Mobile Mini 10-Q, are incorporated herein by reference from Exhibit 99.1 to this Current Report on Form 8-K.

 

 

 

 

(b) Pro forma financial information

The following unaudited pro forma financial information, giving effect to the proposed offering of the Notes and the Merger, is filed as Exhibit 99.2 hereto and is incorporated herein by reference.

 

· Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2020;
     
· Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2019;
     
· Unaudited Pro Forma Condensed Combined Statement of Operations for the three months ended March 31, 2020;
     
  · Unaudited Pro Forma Condensed Combined Statement of Operations for the three months ended March 31, 2019; and
     
· Notes to the Unaudited Pro Forma Condensed Combined Financial Information.
(d) Exhibits

 

Exhibit No.   Exhibit Description
99.1   Historical Unaudited Condensed Combined Financial Statements of Mobile Mini, as of March 31, 2020, and for the three months ended March 31, 2020 and March 31, 2019 and management's evaluation of disclosure controls and procedures as of March 31, 2020 (incorporated by reference to Item 1 "Financial Statements" and Item 4 "Controls and Procedures," respectively, in Mobile Mini's Quarterly Report on Form 10-Q, filed May 6, 2020)
     
99.2   Unaudited Pro Forma Condensed Combined Financial Information  
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)  

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

  WillScot Corporation
   
Dated: June 1, 2020 By: /s/ HEZRON TIMOTHY LOPEZ
    Name: Hezron Timothy Lopez
    Title: Vice President, General Counsel & Corporate Secretary

 

 

 

 

Exhibit 99.2

  

Unaudited pro forma condensed combined financial information

 

On March 1, 2020, WillScot Corporation (the “Company,” “WillScot” or “we,” “us” or “our”), and our newly-formed indirect subsidiary Picasso Merger Sub, Inc. (“Merger Sub”) entered into an Agreement and Plan of Merger (as may be amended from time to time, the “Merger Agreement”) with Mobile Mini Inc., a Delaware corporation (“Mobile Mini”) pursuant to which Merger Sub agreed to merge with and into Mobile Mini (the “Merger”), with Mobile Mini as the surviving entity (the “Surviving Entity”). At the effective time of the Merger (the “Effective Time”), WillScot will be renamed WillScot Mobile Mini Holdings Corp. (“WillScot Mini Holdings”). Immediately following the Effective Time, the shares of the Surviving Entity will be contributed to Williams Scotsman International, Inc., a Delaware corporation (“WSII”), with the Surviving Entity continuing as a wholly owned subsidiary of WSII.

 

The following unaudited pro forma condensed combined financial information has been prepared to reflect adjustments to the financial condition and results of operations of WillScot to give effect to the Merger and (i) the repayment of all outstanding indebtedness under the ABL Credit Agreement, dated November 29, 2017 by and among WSII and the other parties thereto, as amended on July 9, 2018, July 24, 2018 and August 15, 2018 (the “WillScot ABL Facility”) and the Second Amended and Restated ABL Credit Agreement, dated March 22, 2019 by and among Mobile Mini and the other parties thereto (the “Mobile Mini ABL Facility”), (ii) the redemption of all of Mobile Mini’s outstanding senior notes due 2024 (the “Mobile Mini Notes”) and (iii) the repayment of all of WSII’s outstanding senior secured notes due 2022 (the “2022 Notes,” collectively, items (i) through (iii) above, the “Refinancing Transactions” and together with the Merger, the “Transactions”).

 

The unaudited pro forma condensed combined financial information set forth below gives effect to the Transactions, as follows:

 

i.       the estimated effects of the Merger, inclusive of the estimated effects of the repayment of the Mobile Mini ABL Facility, which is part of purchase consideration and the repayment of the Mobile Mini Notes, which is debt being assumed;

 

ii.      the estimated prepayment and termination of the WillScot ABL Facility and the entry, contemporaneous with the closing of the Merger, by WSII and the guarantors named therein, in to a senior secured asset-based revolving credit facility (the “New ABL Facility”), with an increased commitment; and

 

iii.     the issuance of an estimated $500 million of Senior Secured Notes due 2025 (the “Notes”) to qualified institutional buyers in a private placement transaction and the redemption of the 2022 Notes.

 

The following unaudited pro forma condensed combined financial information is based on the historical financial statements of WillScot and Mobile Mini described below. In preparing the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2019, three months ended March 31, 2019, and three months ended March 31, 2020, certain reclassifications were made to the reported financial information of Mobile Mini to conform to the reporting classifications of WillScot.

 

  P-1  

 

 

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2019, is based on, derived from, and should be read in conjunction with, WillScot’s historical audited financial statements as set forth in WillScot’s Annual Report on Form 10-K. These pro forma financial statements are also based on, derived from, and they should be read in conjunction with Mobile Mini’s historical audited financial statements for the year ended December 31, 2019.

 

The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2019, for the three months ended March 31, 2020, as well as the unaudited pro forma condensed balance sheet as of March 31, 2020, are based on, derived from, and should be read in conjunction with, WillScot’s historical unaudited financial statements as set forth in WillScot’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020. These pro forma financial statements are also based on, derived from, and should be read in conjunction with Mobile Mini’s historical unaudited financial statements for the quarterly period ended March 31, 2020.

 

The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2019 and the three months ended March 31, 2019 and the three months ended March 31, 2020, assume that the Transactions occurred on January 1, 2019. The unaudited pro forma condensed combined balance sheet as of March 31, 2020 assumes that the Transactions occurred on March 31, 2020. The unaudited pro forma condensed combined financial information has been prepared by WillScot and Mobile Mini management for illustrative purposes only and is not necessarily indicative of the combined financial position or results of operations that would have been realized had the Transactions occurred as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations of WillScot Mini Holdings. In addition, the accompanying unaudited pro forma condensed combined statements of operations do not include any expected cost savings or restructuring actions which may be achievable or which may occur subsequent to the Transactions. Furthermore, the accompanying unaudited pro forma condensed combined statements of operations also do not include the impact of any non-recurring activity and one-time transaction related costs. The historical combined financial information has been adjusted in the accompanying unaudited pro forma condensed combined financial statements to give effect to pro forma events that are (1) directly attributable to the Transactions related thereto, (2) factually supportable and (3) with respect to the unaudited pro forma condensed combined statements of operations, are expected to have a continuing impact on the combined results.

 

  P-2  

 

 

The Merger has been accounted for as a business combination using the acquisition method of accounting under the provisions of Accounting Standard Codification No. 805, “Business Combinations,” (“ASC 805”) and applying the pro forma assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements. Under ASC 805, WillScot values assets acquired and liabilities assumed in a business combination at their fair values as of the acquisition date. Fair value measurements can be highly subjective and the reasonable application of measurement principles may result in a range of alternative estimates using the same facts and circumstances. The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions by management, including estimating future cash flows, and developing appropriate discount rates. Under ASC 805, transaction costs are not included as a component of consideration transferred, and are expensed as incurred. The final valuation is expected to be completed as soon as practicable but no later than one year after the consummation of the Merger. The assignment of purchase price to assets acquired and liabilities assumed is subject to completion of the final analysis of the fair value of the assets and liabilities of Mobile Mini as of the effective date of the Merger. Accordingly, the assignment of purchase price in the unaudited pro forma condensed combined financial statements is preliminary and adjustments could be material. The fair values assigned to the assets to be acquired and liabilities to be assumed are based on reasonable estimates and assumptions developed using currently available data.

 

The unaudited pro forma condensed combined financial information is presented for informational purposes only and does not purport to represent what our results of operations would actually have been if the Transactions had occurred on the dates indicated nor do they purport to project our results of operations for any future period.

 

  P-3  

 

 

WILLSCOT CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF MARCH 31, 2020

(In thousands)

 

    Historical
WillScot as
of March 31,
2020 		    Historical
Mobile Mini
(as reclassified)
as of
March 31,
2020 		    Combined
Historical
Financial
Statements
as of
March 31,
2020 		    Debt
Adjustments
(see Note 3) 		        Merger
Adjustments
(see Note 4) 		        Pro Forma
Combined 		 
Assets                                                        
Cash and cash equivalents   $ 4,642     $ 10,795     $ 15,437     $ 900,300   (3 a)   $ (900,300 ) (4 a)   $ 15,437  
Trade receivables, net of allowance for doubtful accounts     241,142       98,470       339,612       —           —           339,612  
Inventories     15,006       9,540       24,546       —           —           24,546  
Prepaid expenses and other current assets     20,580       10,552       31,132       —           (1,448 ) (4 b)     29,684  
Assets held for sale     8,543       —       8,543       —           —           8,543  
Total current assets     289,913       129,357       419,270       900,300           (901,748 )         417,822  
Rental equipment, net     1,912,995       960,177       2,873,172       —           185,784   (4 c)     3,058,956  
Property, plant and equipment, net     143,864       153,824       297,688       —           2,191   (4 d)     299,879  
Operating lease assets     148,152       91,521       239,673       —           —           239,673  
Goodwill     232,796       710,053       942,849       —           7,922   (4 e)     950,771  
Intangible assets, net     126,375       50,629       177,004       —           544,371   (4 f)     721,375  
Other non-current assets     3,642       —       3,642       (1,757 ) (3 b)     —           1,885  
Total long-term assets     2,567,824       1,966,204       4,534,028       (1,757 )         740,268           5,272,539  
Total assets   $ 2,857,737     $ 2,095,561     $ 4,953,298     $ 898,543         $ (161,480 )       $ 5,690,361  
Liabilities                                                        
Accounts payable   $ 102,570     $ 39,521     $ 142,091     $ —         $ —         $ 142,091  
Accrued liabilities     82,853       20,758       103,611       —           (25,768 ) (4 g)     77,843  
Accrued interest     12,479       4,235       16,714       (8,175 ) (3 c)     (4,235 ) (4 h)     4,304  
Deferred revenue and customer deposits     85,936       39,190       125,126       —           —           125,126  
Operating lease liabilities-current     29,446       16,504       45,950       —           —           45,950  
Finance lease liabilities-current     —       14,601       14,601       —           —           14,601  
Current portion of long-term debt     —       —       —       —           —           —  
Total current liabilities     313,284       134,809       448,093       (8,175 )         (30,003 )         409,915  
Long-term debt     1,625,772       800,098       2,425,870       940,036   (3 d)     (800,098 ) (4 h)     2,565,808  
Deferred tax liabilities     67,017       198,420       265,437       (5,785 ) (3 e)     93,975   (4 i)     353,627  
Deferred revenue and customer deposits     12,666       —       12,666       —           —           12,666  
Operating lease liabilities-non-current     119,322       76,932       196,254       —           —           196,254  
Finance lease liabilities-non-current     —       60,932       60,932       —           —           60,932  
Other non-current liabilities     38,603       —       38,603       —           —           38,603  
Long-term liabilities     1,863,380       1,136,382       2,999,762       934,251           (706,123 )         3,227,890  
Total liabilities     2,176,664       1,271,191       3,447,855       926,076           (736,126 )         3,637,805  
Commitments and Contingencies                                                        
Class A common stock     11       506       517       —           (494 ) (4 j)     23  
Class B common stock     1       —       1       —           (1 ) (4 j)     —  
Additional paid-in-capital     2,402,195       641,515       3,043,710       —           821,742   (4 j)     3,865,452  
Accumulated other comprehensive (loss) / income     (89,974 )     (79,478 )     (169,452 )     —           79,478   (4 j)     (89,974 )
Retained earnings / (accumulated deficit)     (1,692,917 )     440,144       (1,252,773 )     (27,533 ) (3 f)     (442,639 ) (4 j)     (1,722,945 )
Treasury stock     —       (178,317 )     (178,317 )     —           178,317   (4 j)     —  
Total shareholders’ equity     619,316       824,370       1,443,686       (27,533 )         636,403           2,052,556  
Non-controlling interest     61,757       —       61,757       —           (61,757 ) (4 j)     —  
Total equity     681,073       824,370       1,505,443       (27,533 )         574,646           2,052,556  
Total liabilities and invested equity   $ 2,857,737     $ 2,095,561     $ 4,953,298     $ 898,543         $ (161,480 )       $ 5,690,361  

 

See notes to unaudited pro forma condensed combined financial statements

 

  P-4  

 

 

Willscot corporation

unaudited pro forma condensed combined statement of operations

for year ended December 31, 2019

(In thousands, except earnings per share data)

 

    Historical
WillScot for the
twelve months
ended
December 31,
2019 		    Historical
MobileMini (as
reclassified) for
the twelve months
ended
December 31, 2019 		    Debt
Adjustments
(see Note 3) 		        Merger
Adjustments
(see Note 5) 		        Pro Forma
Combined 		 
Revenues:                                                
Leasing and service revenue:                                                                                
Modular leasing   $ 744,185     $ 440,242     $ —         $ —         $ 1,184,427  
Modular delivery and installation     220,057       141,415       —           —           361,472  
Sales:                                                
New units     59,085       17,255       —           —           76,340  
Rental units     40,338       13,713       —           —           54,051  
Total revenues     1,063,665       612,625       —           —           1,676,290  
Costs:                                                
Cost of leasing and services:                                                
Modular leasing     213,151       60,003       —           —           273,154  
Modular delivery and installation     194,107       99,634       —           —           293,741  
Cost of sales:                     —           —              
New units     42,160       10,885       —           —           53,045  
Rental units     26,255       9,480       —           —           35,735  
Depreciation of rental equipment     174,679       31,784       —           4,918   (5 a)     211,381  
Gross profit     413,313       400,839       —           (4,918 )         809,234  
Expenses:                                                
Selling, general and administrative     271,004       208,098       —           1,553   (5 b)     480,655  
Other depreciation and amortization     12,395       38,799       —           15,659   (5 c)     66,853  
Impairment losses on long-lived assets     2,848       —       —           —           2,848  
Lease impairment expense and other related charges     8,674       —       —           —           8,674  
Restructuring costs     3,755       —       —           —           3,755  
Currency (gains) losses, net     (688 )     274       —           —           (414 )
Other (income) expense, net     (2,200 )     100       —           —           (2,100 )
Operating income (loss)     117,525       153,568       —           (22,130 )         248,963  
Interest expense     122,504       41,366       2,161   (3 g)     (39,672 ) (5 d)     126,359  
Loss on extinguishment of debt     8,755       123       —           —           8,878  
Income / (loss) before income tax     (13,734 )     112,079       (2,161 )         17,542           113,726  
Income tax expense (benefit)     (2,191 )     28,345       (551 ) (3 h)     4,473   (5 e)     30,076  
Net income / (loss)     (11,543 )     83,734       (1,610 )         13,069           83,650  
Net loss attributable to non-controlling interest, net of tax     (421 )     —       —           421   (5 f)     —  
Total income / (loss) attributable to WSC   $ (11,122 )   $ 83,734     $ (1,610 )       $ 12,648         $ 83,650  
Net (loss) income per share attributable to WSC—basic and diluted                                                
Basic   $ (0.10 )                                   $ 0.37  
Diluted   $ (0.10 )                                   $ 0.36  
Weighted Average Shares                                                
Basic     108,683,820                           117,385,312   (5 g)     226,069,132  
Diluted     108,683,820                           121,665,049   (5 g)     230,348,869  

 

See notes to unaudited pro forma condensed combined financial statements

 

  P-5  

 

 

Willscot corporation

unaudited pro forma condensed combined statement of operations

for three months ended March 31, 2020

(In thousands, except earnings per share data)

 

    Historical
WillScot for the
three months
ended March 31,
2020 		    Historical
MobileMini (as
reclassified) for
the three months
ended
March 31, 2020 		    Debt
Adjustments
(see Note 3) 		        Merger
Adjustments
(see Note 5) 		        Pro Forma
Combined 		 
Revenues:                                                
Leasing and service revenue:                                                
Modular leasing   $ 188,352     $ 106,525     $ —         $ —         $ 294,877  
Modular delivery and installation     51,070       34,131       —           —           85,201  
Sales:                                                
New units     9,613       4,877       —           —           14,490  
Rental units     6,786       3,507       —           —           10,293  
Total revenues     255,821       149,040       —           —           404,861  
Costs:                                                
Cost of leasing and services:                                                
Modular leasing     49,809       14,175       —           —           63,984  
Modular delivery and installation     43,865       24,689       —           —           68,554  
Cost of sales:                                                
New units     6,203       3,064       —           —           9,267  
Rental units     3,806       2,137       —           —           5,943  
Depreciation of rental equipment     45,948       7,751       —           1,229   (5 a)     54,928  
Gross profit     106,190       97,224       —           (1,229 )         202,185  
Expenses:                                                
Selling, general and administrative     74,968       63,269       —           (25,380 ) (5 b)     112,857  
Other depreciation and amortization     3,074       9,741       —           3,965   (5 c)     16,780  
Impairment losses on long-lived assets     —       —       —           —           —  
Lease impairment expense and other related charges     1,661       —       —           —           1,661  
Restructuring costs     (60 )     —       —           —           (60 )
Currency (gains) losses, net     898       3       —           —           901  
Other (income) expense, net     276       26       —           —           302  
Operating income (loss)     25,373       24,185       —           20,186           69,744  
Interest expense     28,257       9,245       2,087   (3 g)     (8,712 ) (5 d)     30,877  
Loss on extinguishment of debt     —       —       —           —           —  
Income / (loss) before income tax     (2,884 )     14,940       (2,087 )         28,898           38,867  
Income tax expense (benefit)     790       6,639       (532 ) (3 h)     7,370   (5 e)     14,267  
Net income / (loss)     (3,674 )     8,301       (1,555 )         21,528           24,600  
Net loss attributable to non-controlling interest, net of tax     (130 )     —       —           130   (5 f)     —  
Total income / (loss) attributable to WSC   $ (3,544 )   $ 8,301     $ (1,555 )       $ 21,398         $ 24,600  
Net (loss) income per share attributable to WSC—basic and diluted                                                
Basic   $ (0.03 )                                   $ 0.11  
Diluted   $ (0.03 )                                   $ 0.11  
Weighted Average Shares                                                
Basic     109,656,646                           117,385,312   (5 g)     227,041,958  
Diluted     109,656,646                           121,909,085   (5 g)     231,565,731  

 

See notes to unaudited pro forma condensed combined financial statements

 

  P-6  

 

 

Willscot corporation

unaudited pro forma condensed combined statement of operations

for three months ended March 31, 2019

(In thousands, except earnings per share data)

 

    Historical
WillScot for the
three months
ended
March 31,
2019 		    Historical
MobileMini (as
reclassified) for
the three months
ended
March 31,
2019 		    Debt
Adjustments 		        Merger
Adjustments 		        Pro Forma
Combined 		 
Revenues:                                                
Leasing and service revenue:                                                
Modular leasing   $ 177,292     $ 106,760     $ —         $ —         $ 284,052  
Modular delivery and installation     50,000       35,412       —           —           85,412  
Sales:                                                
New units     14,841       4,169       —           —           19,010  
Rental units     11,552       3,320       —           —           14,872  
Total revenues     253,685       149,661       —           —           403,346  
Costs:                                                
Cost of leasing and services:                                                
Modular leasing     47,235       15,195       —           —           62,430  
Modular delivery and installation     43,343       24,850       —           —           68,193  
Cost of sales:                                                
New units     10,878       2,706       —           —           13,584  
Rental units     7,795       2,351       —           —           10,146  
Depreciation of rental equipment     41,103       7,692       —           1,229   (5 a)     50,024  
Gross profit     103,331       96,867       —           (1,229 )         198,969  
Expenses:                                                
Selling, general and administrative     73,319       51,717       —           388   (5 b)     125,424  
Other depreciation and amortization     2,784       9,642       —           3,998   (5 c)     16,424  
Impairment losses on long-lived assets     2,290       —       —           —           2,290  
Lease impairment expense and other related charges     3,085       —       —           —           3,085  
Restructuring costs     1,656       —       —           —           1,656  
Currency (gains) losses, net     (316 )     (1 )     —           —           (317 )
Other (income) expense, net     (951 )     18       —           —           (933 )
Operating income (loss)     21,464       35,491       —           (5,615 )         51,340  
Interest expense     31,115       10,760       (232 ) (3 g)     (10,351 ) (5 d)     31,292  
Loss on extinguishment of debt     —       123       —           —           123  
Income / (loss) before income tax     (9,651 )     24,608       232           4,736           19,925  
Income tax expense (benefit)     378       6,523       60   (3 h)     1,209   (5 e)     8,170  
Net income / (loss)     (10,029 )     18,085       172           3,527           11,755  
Net loss attributable to non-controlling interest, net of tax     (758 )     —       —           758   (5 f)     —  
Total income / (loss) attributable to WSC   $ (9,271 )   $ 18,085     $ 172         $ 2,769         $ 11,755  
Net (loss) income per share attributable to WSC—basic and diluted                                                
Basic   $ (0.09 )                                   $ 0.05  
Diluted   $ (0.09 )                                   $ 0.05  
Weighted Average Shares                                                
Basic     108,523,269                           117,385,312   (5 g)     225,908,581  
Diluted     108,523,269                           124,594,014   (5 g)     233,117,283  

 

See notes to unaudited pro forma condensed combined financial statements

 

  P-7  

 

 

 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

(in thousands, except per share data)

 

1. Mobile Mini Merger

 

On March 1, 2020, WillScot, Mobile Mini and Merger Sub, entered into the Merger Agreement, pursuant to which, subject to the satisfaction or waiver of certain customary closing conditions, Merger Sub will be merged with and into Mobile Mini, with Mobile Mini surviving as a wholly-owned subsidiary of WillScot. In connection with the Merger, each share of Mobile Mini’s common stock, par value $0.01 per share (the “Mobile Mini Common Stock”), issued and outstanding immediately prior to the Effective Time (other than shares held by Mobile Mini as treasury shares or owned by a subsidiary of Mobile Mini), will be converted into the right to receive 2.4050 shares of WillScot’s Class A common stock, par value $0.0001 per share (the “WillScot Class A Common Stock”) (the “Merger Consideration”). Immediately following Mobile Mini stockholders’ receipt of the Merger Consideration and upon the filing of the amended and restated certificate of incorporation of WillScot at the Effective Time, which will be the certificate of incorporation of WillScot Mini Holdings (the “A&R Charter”), all issued and outstanding shares of WillScot Class A Common Stock will be reclassified as and converted into shares of WillScot Mini Holdings’ common stock, par value $0.0001 per share (the “WillScot Mini Holdings Common Stock”).

 

Furthermore, each outstanding and unexercised option to purchase shares of Mobile Mini Common Stock will be assumed by WillScot Mini Holdings and become an option to purchase shares of WillScot Mini Holdings Common Stock on the same terms and conditions as applied to each such option immediately prior to the Effective Time, except that (A) the number of shares of WillScot Mini Holdings Common Stock subject to such option will equal the product of (i) the number of shares of Mobile Mini Common Stock that were subject to such option immediately prior to the Effective Time multiplied by (ii) 2.4050, rounded down to the nearest whole share, and (B) the per-share exercise price will equal the quotient of (i) the exercise price per share of Mobile Mini Common Stock at which such option was exercisable immediately prior to the Effective Time, divided by (ii) 2.4050, rounded up to the nearest whole cent.

 

In connection with the Merger, on March 1, 2020, WillScot also entered into a commitment letter (as amended and restated on March 24, 2020, May 5, 2020, May 11, 2020, May 16, 2020, May 19, 2020 and May 26, 2020 and as may be further amended from time to time, in each case for the purpose of joining an additional financial institution, the “Commitment Letter”) pursuant to which certain financial institutions committed to provide the New ABL Facility in an aggregate principal amount of $2.4 billion. The proceeds of the New ABL Facility will be available to fund the Refinancing Transactions.

 

Furthermore, in anticipation of the Merger, Picasso Finance Sub, Inc. a newly-formed Delaware corporation and a wholly -owned subsidiary of WSII will issue the Notes with estimated principal value of $500 million. The proceeds from the Notes and proceeds from the New ABL Facility will be used to fund the Refinancing Transactions and to pay fees and expenses related to the Merger and the Refinancing Transactions. The newly issued Notes will mature 5 years after the date of issuance.

 

P-8

 

 

The following table summarizes the components of the estimated total purchase price included in the pro forma condensed combined financial statements as if the Merger had been completed on March 31, 2020:

 

In thousands, except share and per share amounts      
Mobile Mini Common Stock outstanding     44,384,402  
Share conversion ratio (per share of Mobile Mini Common Stock)     2.4050  
Estimated total WillScot Class A Common Stock to be issued     106,744,487  
WillScot Class A Common Stock per share price as of May 22, 2020   $ 12.92  
Fair value of shares of WillScot Class A Common Stock issued   $ 1,379,139  
Fair value of Mobile Mini Options converted to WillScot Options     24,447  
Mobile Mini ABL Facility borrowings repaid     557,500  
Mobile Mini ABL Facility interest repaid     563  
Total consideration attributable to Mobile Mini debt repayment     558,063  
Estimated total purchase price   $ 1,961,649  

 

Estimated total purchase price at closing may change materially from the amount shown above as a result of (1) changes in the WillScot Class A Common Stock share price, (2) changes in fair value measurement of the Mobile Mini stock options and (3) changes in the fair value measurement of the debt assumed by WillScot. A $1.00 change in the price per share of WillScot Class A Common Stock would increase or decrease the pro forma estimated total purchase price by approximately $107 million. The change in purchase consideration would be expected to be assigned primarily to goodwill.

 

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting under the provisions of ASC 805 and was based on the historical financial information of WillScot and Mobile Mini. Under the acquisition method of accounting, the total estimated purchase price of an acquisition is assigned to the net tangible and intangible assets to be acquired based on their estimated fair values as of the date the acquisition is consummated. Such fair values are based on available information and certain assumptions that we believe are reasonable. Management has made a preliminary assignment of the estimated purchase price to the tangible (including rental equipment) and intangible assets to be acquired and liabilities to be assumed based on various preliminary assumptions and estimates. The final determination of these estimated fair values, the assets’ useful lives and the amortization methods are subject to completion of an ongoing assessment and will be available as soon as practicable but no later than one year after the consummation of the Merger. Fair value measurements can be highly subjective and the reasonable application of measurement principles may result in a range of alternative estimates using the same facts and circumstances. The results of the final assignment could be materially different from the preliminary assignment set forth in these unaudited pro forma condensed combined financial statements, including but not limited to, the assignment related to identifiable intangible assets, rental equipment, property, plant and equipment, operating lease assets, inventories, deferred taxes, goodwill, operating lease liabilities, finance lease liabilities, debt, and the resulting impacts on, among others, depreciation and amortization, interest expense and income taxes.

 

P-9

 

 

The following table summarizes the preliminary purchase price assignment, as if the Merger had been completed on March 31, 2020:

 

In thousands      
Purchase Price   $ 1,961,649  
Cash and cash equivalents     10,795  
Trade receivables, net     98,470  
Inventories     9,540  
Prepaid expenses and other current assets     10,552  
Rental equipment     1,145,961  
Property, plant and equipment, net     156,015  
Operating lease assets     91,521  
Intangible assets     595,000  
Total identifiable assets acquired     2,117,854  
Accounts payable     (39,521 )
Accrued liabilities     (20,758 )
Accrued interest     (3,672 )
Deferred revenue and customer deposits     (39,190 )
Operating lease liabilities     (93,436 )
Finance lease liabilities     (75,533 )
Long-term debt     (250,000 )
Deferred tax liabilities     (352,070 )
Total identifiable liabilities assumed     (874,180 )
Goodwill Identified   $ 717,975  

 

2.

Accounting Policies and Reclassifications

 

During the preparation of these unaudited pro forma condensed combined financial statements, WillScot made a preliminary assessment as to any material differences between accounting policies of the two companies. These unaudited pro forma condensed combined financial statements do not present any material differences in accounting policies between the two companies based on the preliminary assessment, which will be subject to further review subsequent to the close of the Merger.

 

Following the Merger, WillScot Mini Holdings will finalize the review of Mobile Mini’s accounting policies in an effort to determine if differences in accounting policies require adjustment or reclassification between the accounting policies of the two companies that when conformed, could be materially different from the amounts set forth in these unaudited pro forma condensed combined financial statements.

 

Financial information presented in the “Historical Mobile Mini” column in the unaudited pro forma condensed combined balance sheet and statement of operations has been reclassified to conform to the historical presentation of WillScot as follows (primarily related to classification of current and non-current amounts):

 

P-10

 

 

Historical Mobile Mini Balance Sheet as of March 31, 2020

 

    As of
March 31, 2020
(in 000’s) 		    (As reclassified)
As of
March 31, 2020
(in 000s) 		 
Assets                
Cash and cash equivalents   $ 10,795     $ 10,795  
Trade receivables, net     99,259       98,470  
Inventories     9,540       9,540  
Prepaid expenses and other current assets     —       10,552  
Total current assets             129,357  
Rental equipment, net     960,177       960,177  
Property, plant and equipment, net     153,824       153,824  
Operating lease assets     91,521       91,521  
Other assets     14,453       —  
Goodwill     710,053       710,053  
Intangible assets, net     50,629       50,629  
Total long-term assets             1,966,204  
Total assets   $ 2,100,251     $ 2,095,561  
Liabilities                
Accounts payable   $ 40,299     $ 39,521  
Accrued liabilities     63,405       20,758  
Accrued interest     —       4,235  
Deferred revenue and customer deposits     —       39,190  
Operating lease liabilities-current     93,437       16,504  
Finance lease liabilities-current     75,533       14,601  
Total current liabilities             134,809  
Lines of credit   $ 557,500     $ —  
Long-term debt     247,287       800,098  
Deferred tax liabilities     198,420       198,420  
Operating lease liabilities-non-current     —       76,932  
Finance lease liabilities-non-current     —       60,932  
Long-term liabilities             1,136,382  
Total liabilities     1,275,881       1,271,191  
Commitments and contingencies                
Common stock   $ 506     $ 506  
Additional paid-in capital     641,515       641,515  
Accumulated other comprehensive (loss)     (79,478 )     (79,478 )
Retained earnings     440,144       440,144  
Treasury stock     (178,317 )     (178,317 )
Total equity     824,370       824,370  
Total liabilities and equity   $ 2,100,251     $ 2,095,561  

 

P-11

 

 

Historical Mobile Mini Statement of Operations for the Year Ended December 31, 2019

 

    Historical MobileMini for the
twelve months ended
December 31, 2019
(in 000’s) 		    (As reclassified) for the
twelve months ended
December 31, 2019
(in 000’s) 		 
Revenues                
Rental revenue   $ 581,657     $ —  
Modular leasing     —       440,242  
Modular delivery and installation     —       141,415  
Sales revenue     30,394       —  
New units     —       17,255  
Rental units     —       13,713  
Other revenue     574       —  
Total revenues     612,625       612,625  
Costs                
Cost of leasing and services—Modular leasing     —       60,003  
Cost of leasing and services—Modular delivery and installation     —       99,634  
Cost of sales     18,675       —  
Cost of sales—New units     —       10,885  
Cost of sales—Rental units     —       9,480  
Depreciation of rental equipment     —       31,784  
Gross profit             400,839  
Expenses                
Selling, general and administrative     —       208,098  
Rental, selling and general expenses     369,525       —  
Depreciation and amortization     70,583       —  
Other depreciation and amortization     —       38,799  
Currency (gains) losses, net     274       274  
Other (income) expense, net     —       100  
Operating income (loss)     153,568       153,568  
Interest expense     41,378       41,366  
Interest income     (12 )     —  
Deferred financing costs write-off     123       —  
Loss on extinguishment of debt     —       123  
Income before income tax     112,079       112,079  
Income tax provision     28,345       28,345  
Net income   $ 83,734     $ 83,734  

 

P-12

 

 

Historical Mobile Mini Statement of Operations for the Three Months Ended March 31, 2020

 

    Historical MobileMini for the
three months ended
March 31, 2020
(in 000’s) 		    (As reclassified) for the
three months ended
March 31, 2020
(in 000’s) 		 
Revenues                
Rental revenue   $ 140,656     $ —  
Modular leasing     —       106,525  
Modular delivery and installation     —       34,131  
Sales revenue     8,316       —  
New units     —       4,877  
Rental units     —       3,507  
Other revenue     68       —  
Total revenues     149,040       149,040  
Costs                
Cost of leasing and services—Modular leasing     —       14,175  
Cost of leasing and services—Modular delivery and installation     —       24,689  
Cost of sales     5,102       —  
Cost of sales—New units     —       3,064  
Cost of sales—Rental units     —       2,137  
Depreciation of rental equipment     —       7,751  
Gross profit             97,224  
Expenses                
Selling, general and administrative     —       63,269  
Rental, selling and general expenses     102,258       —  
Depreciation and amortization     17,492       —  
Other depreciation and amortization     —       9,741  
Currency (gains) losses, net     3       3  
Other (income) expense, net     —       26  
Operating income (loss)     24,185       24,185  
Interest expense     9,257       9,245  
Interest income     (12 )     —  
Deferred financing costs write-off     —       —  
Loss on extinguishment of debt     —       —  
Income before income tax     14,940       14,940  
Income tax provision     6,639       6,639  
Net income   $ 8,301     $ 8,301  

 

P-13

 

 

Historical Mobile Mini Statement of Operations for the Three Months Ended March 31, 2019

 

    Historical MobileMini for the
three months ended
March 31, 2019
(in 000’s) 		    (As reclassified) for the
three months ended
March 31, 2019
(in 000’s) 		 
Revenues                
Rental revenue   $ 142,172     $ —  
Modular leasing     —       106,760  
Modular delivery and installation     —       35,412  
Sales revenue     7,223       —  
New units     —       4,169  
Rental units     —       3,320  
Other revenue     266       —  
Total revenues     149,661       149,661  
Costs                
Cost of leasing and services—Modular leasing     —       15,195  
Cost of leasing and services—Modular delivery and installation     —       24,850  
Cost of sales     4,602       —  
Cost of sales—New units     —       2,706  
Cost of sales—Rental units     —       2,351  
Depreciation of rental equipment     —       7,692  
Gross profit             96,867  
Expenses                
Selling, general and administrative     —       51,717  
Rental, selling and general expenses     92,234       —  
Depreciation and amortization     17,335       —  
Other depreciation and amortization     —       9,642  
Currency (gains) losses, net     (1 )     (1 )
Other (income) expense, net     —       18  
Operating income (loss)     35,491       35,491  
Interest expense     10,760       10,760  
Interest income     —       —  
Deferred financing costs write-off     123       —  
Loss on extinguishment of debt     —       123  
Income before income tax     24,608       24,608  
Income tax provision     6,523       6,523  
Net income   $ 18,085     $ 18,085  

 

P-14

 

 

3. Debt Related Pro Forma Adjustments

 

The following summarizes the pro forma adjustments related to WillScot’s borrowings under the New ABL Facility entered into in connection with the Merger as well as the issuance of the Notes. At the Effective Time, proceeds from the New ABL Facility borrowings and the issuance of the Notes will be used to (1) repay the WillScot ABL Facility, (2) repay the Mobile Mini ABL Facility, (3) redeem the Mobile Mini Notes and (4) redeem the 2022 Notes, in each case, outstanding as of the Effective Time. Pursuant to the redemption notice (the “Mobile Mini Redemption Notice”) to be delivered at or prior to the Effective Time, certain proceeds from the Transactions will be paid to the trustee of the Mobile Mini Notes for payment to bond holders upon completion of the 30 day redemption period. Repayment of Mobile Mini’s current borrowings under the Mobile Mini ABL Facility and the redemption of the Mobile Mini Notes are presented in note 4. (Merger Related Pro Forma Condensed Combined Balance Sheet Adjustments).

 

The Transactions are presented assuming an issuance of $500 million of new Notes and extinguishment of the i) WillScot ABL Facility, ii) existing Mobile Mini ABL Facility and iii) the 2022 Notes. This presentation is preliminary and subject to change as additional information, including information about the final amounts of debt incurred and repaid, becomes available to finalize the accounting treatment.

 

a)       Adjustment to cash consists of the following:

 

In thousands   As of
March 31, 2020 		 
Amount borrowed under the New ABL Facility   $ 1,632,952  
Amount borrowed under the Notes     500,000  
Cash paid to redeem the WillScot ABL Facility     (893,500 )
Cash paid to redeem the 2022 Notes     (270,000 )
Cash paid for accrued interest associated with the WillScot ABL Facility     (1,914 )
Cash paid for accrued interest associated with the 2022 Notes     (6,261 )
Cash paid for deferred financing costs associated with the New ABL Facility     (42,844 )
Cash paid for deferred financing costs associated with the Notes     (7,500 )
Cash paid for redemption premium associated with the 2022 Notes     (10,633 )
Net adjustment to cash   $ 900,300  

 

b)       Adjustment to other non-current assets represents the elimination of deferred financing costs associated with the WillScot ABL Facility, specifically related to the Canadian portion of the WillScot ABL Facility which had no borrowings at March 31, 2020.

 

c)       Adjustment to accrued interest represents accrued interest that is repaid in connection with the repayment of the 2022 Notes and repayment of the WillScot ABL Facility.

 

P-15

 

 

d)            Adjustment to long-term debt represents the following:

 

In thousands   As of
March 31,2020 		 
Amount borrowed under the New ABL Facility   $ 1,632,952  
Amount borrowed under the Notes     500,000  
Outstanding borrowings on the WillScot ABL Facility repaid     (893,500 )
Outstanding borrowings of the 2022 Notes repaid     (270,000 )
Elimination of deferred financing costs associated with the WillScot ABL Facility     15,911  
Elimination of deferred financing costs associated with the 2022 Notes     5,017  
Cash paid for deferred financing costs associated with the New ABL Facility     (42,844 )
Cash paid for deferred financing costs associated with the Notes     (7,500 )
Net adjustment to long-term debt   $ 940,036  

 

e)            Adjustment represents the tax effect on the elimination of deferred financing costs associated with i) the 2022 Notes and ii) existing WillScot ABL Facility.

 

f)             Adjustment to accumulated deficit represents the following:

 

In thousands   As of
March 31,2020 		 
Elimination of deferred financing costs associated with the WillScot ABL Facility   $ (17,668 )
Elimination of deferred financing costs associated with the 2022 Notes     (5,017 )
Redemption premium associated with the 2022 Notes     (10,633 )
Tax impact associated with elimination of deferred financing costs associated with the WillScot ABL Facility     4,505  
Tax impact associated with elimination of deferred financing costs associated with the 2022 Notes     1,280  
Net adjustment to accumulated deficit   $ (27,533 )

 

g)            Adjustment to interest expense represents the following:

 

In thousands   For the three
months ended
March 31, 2019 		    For the twelve
months ended
December 31, 2019 		    For the three
months ended
March 31, 2020 		 
Interest expense related to the New ABL Facility   $ 8,364     $ 33,455     $ 8,364  
Interest expense related to the Notes     8,438       33,750       8,438  
Amortization of deferred financing costs for the New ABL Facility     2,142       8,569       2,141  
Amortization of deferred financing costs for the Notes     375       1,500       376  
Interest expense on the WillScot ABL Facility     (11,180 )     (43,781 )     (9,461 )
Interest expense on the 2022 Notes     (5,906 )     (21,656 )     (5,316 )
Amortization of deferred financing costs on the WillScot ABL Facility     (2,050 )     (8,203 )     (2,048 )
Amortization of deferred financing costs on the 2022 Notes     (415 )     (1,473 )     (407 )
Net adjustment to interest expense   $ (232 )   $ 2,161     $ 2,087  

 

Interest on outstanding borrowings of the New ABL Facility are based off the London Interbank Offered Rate (LIBOR). The 2.05% per annum rate used in the above calculation assumes the one month USD LIBOR interest rate as of May 22, 2020 of 0.17%, and a 1.88% spread as specified by the New ABL Facility commitments. A 1/8% change in interest rate to the drawn portion of the New ABL Facility which is subject to a variable interest rate would increase or decrease the pro forma cash interest expense on the $1.63 billion New ABL Facility borrowings by approximately $2,041 annually. A 1/8% change in interest rate to the Notes which are subject to a fixed interest rate would increase or decrease the pro forma cash interest expense on the $500 million New Bond Facility borrowings by approximately $625 annually. An increase or decrease in the offering size of the Notes and a corresponding decrease or increase in other indebtedness set forth above could increase or decrease aggregate interest expense.

 

P-16

 

 

h)            Adjustment to recognize the income tax impacts of the pro forma adjustments for which a tax expense is recognized using a U.S. federal and state statutory tax rate of 25.5%. This rate may vary from the effective tax rates of the historical and combined businesses.

 

4) Merger Related Pro Forma Condensed Combined Balance Sheet Adjustments

 

The following summarizes the pro forma adjustments in connection with the Merger to give effect as if it had been completed on March 31, 2020 for the purposes of pro forma condensed combined balance sheet:

 

a)             Adjustment to cash consists of the following:

 

In thousands   As of
March 31, 2020 		 
Repayment of the Mobile Mini ABL Facility   $ (557,500 )
Repayment of the Mobile Mini Notes assumed     (250,000 )
Repayment of Mobile Mini’s accrued interest associated with the Mobile Mini ABL Facility     (563 )
Repayment of Mobile Mini’s accrued interest associated with the Mobile Mini Notes     (3,672 )
Redemption premium on repayment of the Mobile Mini Notes     (7,345 )
Estimated non-recurring transaction costs to be paid with proceeds from the New ABL Facility borrowings     (81,220 )
Net adjustment to cash   $ (900,300 )

 

b)            Adjustment to prepaid expenses and other current assets represents the reclassification of certain transaction costs previously capitalized, to deferred financing costs.

 

c)             Adjustment to recognize the estimated step-up in fair value of rental equipment acquired. We have preliminarily assigned the purchase price to the net tangible and intangible assets based upon their estimated fair values at the closing date of the Merger. The calculated value is preliminary and subject to change and could vary materially from the final purchase price assignment.

 

d)            Adjustment to recognize the estimated step-up in fair value of property, plant and equipment acquired, net of $5.4 million of previously capitalized assets reclassified and recognized as an intangible asset in the Pro Forma Condensed Combined Balance Sheet of WillScot Mini Holdings. We have preliminarily assigned the purchase price to the net tangible and intangible assets based upon their estimated fair values at the closing date of the Merger. The calculated value is preliminary and subject to change and could vary materially from the final purchase price assignment.

 

P-17

 

 

e)            Represents an adjustment to goodwill to reflect the balance that would have been recorded if the Merger occurred on March 31, 2020. We have preliminarily assigned the purchase price to the net tangible and intangible assets based upon their estimated fair values at the closing date of the Merger. The excess of the purchase price over the estimated fair values of the net tangible and intangible assets acquired has been recorded as goodwill as of March 31, 2020. The calculated value is preliminary and subject to change and could vary materially from the final purchase price assignment.

 

f)             Adjustment to recognize the estimated step-up in fair value of intangible assets acquired consisting of a trade name, acquired technology, and customer relationships. The fair value of the intangible assets acquired is as follows:

 

In thousands   As of
March 31, 2020 		 
Trade name   $ 301,000  
Customer relationships     263,000  
Technology     31,000  
Fair value of intangible assets acquired     595,000  
Mobile Mini historical carrying value of intangible assets     (50,629 )
Total adjustment to intangible assets, net   $ 544,371  

 

The ranges of calculated values for the trade name and developed technology were determined using the relief-from-royalty method of the income approach. The principle behind this method is that the value of the intangible asset is equal to the present value of the after-tax royalty savings attributable to owning the intangible asset. In estimating ranges of calculated values, Management utilized various assumptions in order to assess the reasonableness of the selection of a royalty rate and life of the intangible asset. The selected calculated value for the trade name intangible asset reflects the calculated value under an indefinite-life assumption, which is subject to change based on a final determination grounded in both the terms of the merger agreement and assumed market participant treatment of the acquired trade name.

 

The range of calculated values for the customer relationships intangible asset was determined using the multi-period excess earnings method of the income approach. The principle behind this method is that the value of the intangible asset is equal to the present value of the after-tax cash flows solely attributable to the intangible asset, following the application of post-tax contributory asset charges that reflect the return on other assets that contribute to the generation of the forecasted cash flows. The above calculated values are preliminary and subject to change and could vary materially from the final purchase price assignment.

 

g)            Represents an adjustment to reflect the accrual of certain transaction costs incurred as of March 31, 2020.

 

P-18

 

 

h)            Represents the repayment of Mobile Mini’s long-term debt, elimination of deferred financing costs and repayment of accrued interest in connection with the Merger. The Mobile Mini ABL Facility’s outstanding balance of $557,500 will be repaid at the Merger close and the redemption of the Mobile Mini Notes of $250,000, is expected to occur upon completion of the 30 day redemption period. These actions are specifically contemplated within the Merger Agreement. The related deferred financing costs of $7,402 will be eliminated at close. In addition, accrued interest of $4,235 will be repaid in connection with the Mobile Mini ABL Facility and Mobile Mini Notes.

 

i)             The identified basis differences between both (a) the fair value and historic carrying value and (b) as a result of recordation of non-recurring transaction costs, have been tax effected at the appropriate jurisdictional statutory tax rates, primarily, 25.5% for U.S. Federal and state rate and the removal of the historical WillScot valuation allowance (see 4j (viii) below for additional details). These rates may vary from the effective tax rates of the historical and combined businesses. The estimate of deferred tax balances is preliminary and is subject to change based upon certain factors including tax attribute limitation analysis and final determination of the fair value of assets acquired and liabilities assumed by taxing jurisdiction. In addition, deferred taxes associated with deductible non-recurring items as described in note 4g are included in the balance sheet at the statutory tax rates of the applicable jurisdictions.

 

WillScot’s results for income taxes presented herein are WillScot’s best estimate based on the factors described herewith. The tax results may differ from the actual tax balances and effective tax rates of WillScot Mini Holdings and is dependent on several factors including fair value adjustments and post-combination restructuring actions.

 

j)             The changes to equity as of March 31, 2020 are as follows:

 

    Class A
common
stock 		    Class B
common
stock 		    Additional
paid-in
capital 		    Accumulated
other
comprehensive
income (loss) 		    Accumulated
earnings /
(deficit) 		    Treasury
stock 		    Non-controlling
interest 		    Total
stockholders
equity 		 
(i) Elimination of Mobile Mini’s equity   $ (506 )   $ —     $ (641,515 )   $ 79,478     $ (440,144 )   $ 178,317     $ —     $ (824,370 )
(ii) Issuance of WillScot Class A Common Stock, par value $0.0001 per share     11               1,379,128                                       1,379,139  
(iii) Non recurring transaction costs estimate                                     (45,543 )                     (45,543 )
(iv) Fair value of Mobile Mini Options exchanged for WillScot Options                     24,447                                       24,447  
(v) Non-recurring equity issuance costs estimate                     (2,075 )                                     (2,075 )
(vi) Class B extinguishment and issuance of new Class A shares in exchange for shares of WSHC Common Stock     1       (1 )     61,757                               (61,757 )     —  
(vii) Mobile Mini 2024 Notes redemption premium                                     (7,345 )                     (7,345 )
(viii) Federal valuation allowance                                     50,393                       50,393  
    $ (494 )   $ (1 )   $ 821,742     $ 79,478     $ (442,639 )   $ 178,317     $ (61,757 )   $ 574,646  

 

i)             Represents the adjustment to eliminate Mobile Mini’s historical stockholder’s equity.

 

ii)            Represents the adjustment to reflect the issuance of 106,744,487 shares of WillScot Class A Common Stock based on the closing price of $12.92 per share on Nasdaq on May 22, 2020.

 

P-19

 

 

iii)           Represents an adjustment to accumulated deficit of $45,543 for non-recurring transaction costs, as adjusted for the impact of the associated deferred tax asset (presented as a component of the deferred tax liabilities).

 

iv)          Represents the exchange of all Mobile Mini vested options outstanding for 2.4050 stock options reflecting the right to acquire shares of WillScot Mini Holdings Common Stock. Note that the adjusted exercise price is equal to the exercise price at which such stock option was exercisable immediately prior to the Merger, divided by 2.4050 (subject to rounding).

 

v)           Represents an adjustment to additional paid-in capital to record non-recurring equity issuance costs of $2,075, incurred in connection with the Merger.

 

vi)          Represents an adjustment to reflect the exchange of all shares of common stock of Williams Scotsman Holdings Corp., par value $0.0001 per share (“WSHC Common Stock”), held by Sapphire Holding, immediately prior to the Effective Time, for newly-issued shares of WillScot Class A Common Stock, at an exchange ratio of 1.3261 times, resulting in the extinguishment of all issued and outstanding shares of WillScot’s Class B common stock, par value $0.0001 per share (the “WillScot Class B Common Stock”), and the related elimination of the associated non-controlling interest, which is stipulated by the Merger Agreement and the Voting Agreement.

 

vii)         Represents an adjustment to Accumulated Deficit associated with redemption premium paid in connection with repayment of the Mobile Mini Notes outstanding.

 

viii)         WillScot’s historical Federal valuation allowance on net operating losses (“NOLs”) and business interest limitation was provisionally removed for pro forma purposes based on the combined tax attributes of the merged companies which is subject to final determinations of fair value of assets and liabilities and completion of certain tax attribute calculations.

 

5. Merger Related Pro Forma Combined Condensed Statement of Operations Adjustments

 

a)            Adjustment to recognize depreciation expense associated with the estimated step-up in fair value of rental equipment acquired. The average remaining useful lives of the rental equipment acquired ranges from 12 to 19 years.

 

b)           Adjustment to selling, general and administrative expense represents the estimated equity based compensation expense associated with the executive retention agreements entered into in connection with the Merger for the year ended December 31, 2020, for the three months ended March 31, 2020 and for the three months ended March 31, 2019. The underlying executive employment agreements have terms of 24 to 36 months, and the respective equity based awards vest over 36 to 48 months. For the three months ended March 31, 2020, the adjustment also includes the elimination of non-recurring transaction costs incurred by WillScot Mini Holdings as shown in the table below.

 

P-20

 

 

In thousands   For the three
months ended
March 31, 2020 		 
Equity based compensation expense associated with executive retention agreements   $ 388  
Non-recurring transaction costs expensed for the three months ending March 31, 2020     (25,768 )
Net adjustment to Selling, general and administrative expense   $ (25,380 )

 

c)            Adjustment to recognize depreciation expense on property, plant and equipment and amortization expense on intangible assets, relating to the fair value purchase accounting adjustments, as shown below. Estimated Fair Value of the Property, plant and equipment is net of $5.4 million of previously capitalized assets eliminated and recognized as an intangible asset in the Pro Forma Condensed Combined Balance Sheet of WillScot Mini Holdings.

 

In thousands   Estimated
Useful Life 		  Estimated
Fair Value 		    Depreciation and
Amortization
expense for the
three months
ended March 31,
2019 		    Depreciation and
Amortization
expense for the
twelve months
ended
December 31,
2019 		    Depreciation and
Amortization
expense for the
three months
ended March 31,
2020 		 
Trade name   Indefinite   $ 301,000     $ —     $ —     $ —  
Customer relationships   13 years   $ 31,000       5,058       20,231       5,058  
Technology   15 years   $ 263,000       517       2,067       517  
Mobile Mini historical amortization expense                 (1,589 )     (6,574 )     (1,545 )
Pro forma adjustment for amortization                 3,986       15,724       4,030  
Property, plant and equipment   Various   $ 156,015       8,065       32,160       8,131  
Mobile Mini historical depreciation expense                 (8,053 )     (32,225 )     (8,196 )
Pro forma adjustment for depreciation                 12       (65 )     (65 )
Net adjustment to other depreciation and amortization               $ 3,998     $ 15,659     $ 3,965  

 

d)           Represents the elimination of Mobile Mini’s interest expense associated with its historical ABL Facility and the Mobile Mini Notes repaid in connection with the Merger.

 

P-21

 

 

e)            Adjustment to record the income tax impacts of the pro forma adjustments using a statutory tax rate of 25.5% for the year ended December 31, 2019 and three months ended March 31, 2020. These rates do not reflect WillScot Mini Holdings’ effective tax rate, which includes foreign taxes and other items and may differ from the rates assumed for purposes of preparing these statements. Because the tax rates used for these unaudited pro forma condensed combined financial statements are an estimate, the blended rate will likely vary from the actual effective rate in periods subsequent to completion of the Merger. Further, WillScot Mini Holdings’ ability to use NOL carryforwards to offset future taxable income for U.S. federal income tax purposes is subject to limitations. In general, under Section 382 of Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. Based on the information available WillScot Mini Holdings provisionally expects the ability to utilize all tax attributes, subject to a formal Section 382 analysis upon closing.

 

f)            Reflects the pro forma adjustment for the extinguishment of non-controlling interest as a result of the exchange of all issued and outstanding shares of WSHC Common Stock held by Sapphire Holding for newly-issued shares of WillScot Class A Common Stock at an exchange ratio of 1.3261 times and the resulting cancellation of all issued and outstanding shares of WillScot Class B Common Stock, immediately prior to the Merger, as provided by the Merger Agreement and the Voting Agreement.

 

g)           Pro forma earnings per common share for the year ended December 31, 2019, the three months ended March 31, 2019 and the three months ended March 31, 2020, have been calculated based on the estimated weighted average number of common shares outstanding on a pro forma basis, as described below. The pro forma weighted average number of common shares outstanding has been calculated as if the Merger shares had been issued and outstanding on January 1, 2019.

 

The following table sets forth the computation of pro forma weighted average common and diluted shares outstanding as of December 31, 2019:

 

    As of
December 31,
2019 		 
Historical WillScot weighted average shares     108,683,820  
Shares of WillScot Class A common stock issued as Merger Consideration     106,744,487  
WillScot Class A shares issued in exchange for shares of WSHC Common Stock     10,640,825  
Pro forma weighted-average shares used in computing net earnings per share—basic     226,069,132  
Dilutive Securities—WillScot Dilution(i)     3,551,053  
Dilutive Securities—Mobile Mini Stock options(ii)     728,684  
Pro forma weighted-average shares used in computing net earnings per share—diluted     230,348,869  

 

P-22

 

 

The following table sets forth the computation of pro forma weighted average common and diluted shares outstanding as of March 31, 2019:

 

    As of
March 31, 2019 		 
Historical WillScot weighted average shares     108,523,269  
Shares of WillScot Class A common stock issued as Merger Consideration     106,744,487  
WillScot Class A shares issued in exchange for shares of WSHC Common Stock     10,640,825  
Pro forma weighted-average shares used in computing net earnings per share—basic     225,908,581  
Dilutive Securities—WillScot Dilution(i)     6,395,372  
Dilutive Securities—Mobile Mini Stock options(ii)     813,330  
Pro forma weighted-average shares used in computing net earnings per share—diluted     233,117,283  

 

The following table sets forth the computation of pro forma weighted average common and diluted shares outstanding as of March 31, 2020:

 

    As of
March 31, 2020 		 
Historical WillScot weighted average shares     109,656,646  
Shares of WillScot Class A common stock issued as Merger Consideration     106,744,487  
WillScot Class A shares issued in exchange for shares of WSHC Common Stock     10,640,825  
Pro forma weighted-average shares used in computing net earnings per share—basic     227,041,958  
Dilutive Securities—WillScot Dilution(i)     3,570,684  
Dilutive Securities—Mobile Mini Stock options(ii)     953,089  
Pro forma weighted-average shares used in computing net earnings per share—diluted     231,565,731  

 

i. WillScot’s Historical Consolidated Statement of Operations for the year ended December 31, 2019, for the three months ended March 31, 2019, and for the three months ended march 31, 2020, was in a net loss position, thus WillScot’s stock options and stock awards were excluded from the computation of diluted EPS because their effect would have been anti-dilutive. This adjustment represents the dilutive impact of WillScot’s securities which are no longer anti-dilutive, as the pro forma condensed combined statement of operations has net income attributable to WillScot Mini Holdings for the year ended December 31, 2019, the three months ended March 31, 2019 and the three months ended March 31, 2020. The impact of dilutive shares was calculated based on average share price for the respective periods and may not reflect dilution under current market conditions.

 

ii. Represents the dilutive impact of Mobile Mini’s stock options on Mobile Mini’s Consolidated Statement of Operations for the year ended December 31, 2019, the three months ended March 31, 2019 and the three months ended March 31, 2020, multiplied by the 2.4050 Merger exchange ratio. Each stock option of Mobile Mini will be exchanged into 2.4050 stock options reflecting the right to acquire shares of WillScot Mini Holdings Common Stock, with the adjusted exercise price equal to the exercise price at which such stock option was exercisable immediately prior to the Merger, divided by 2.4050 (subject to rounding). The impact of dilutive shares was calculated based on average share price for the respective periods and may not reflect dilution under current market conditions.

 

P-23