NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
1. Description of Organization and Business
Operations
Organization and General
Tortoise Acquisition
Corp. (the “
Company
”) was incorporated in Delaware on November 7, 2018. The Company was formed for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination
with one or more businesses (the “
Initial Business Combination
”). The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act of 1933, as amended (the “
Securities Act
”), as modified by
the Jumpstart Our Business Startups Act of 2012 (the “
JOBS Act
”).
As of June 30, 2019,
the Company had not commenced any operations. All activity for the period from November 7, 2018 (date of inception) to June
30, 2019 relates to the Company’s formation and the initial public offering (the “
Initial Public Offering
”)
described below, and since the closing of the Initial Public Offering, the identification and evaluation of prospective acquisition
targets for an Initial Business Combination and ongoing administrative and compliance matters. The Company will not generate any
operating revenues until after completion of its Initial Business Combination, at the earliest. The Company generates non-operating
income in the form of interest income earned on investments from the net proceeds derived from the Initial Public Offering. The
Company has selected December 31st as its fiscal year end.
Sponsor and Initial Public Offering
The Company’s
sponsor is Tortoise Sponsor LLC, a Delaware limited liability company (the “
Sponsor
”). As described in Note
3, on March 4, 2019, the Company consummated the Initial Public Offering of 23,300,917 of its units (the “
Units
”),
including 800,917 Units that were issued pursuant to the underwriters’ partial exercise of their over-allotment option, generating
gross proceeds of approximately $233.0 million. As described in Note 4, on March 4, 2019, simultaneously with the closing of the
Initial Public Offering, Tortoise Borrower LLC, a Delaware limited liability company and an affiliate of the Sponsor (“
Tortoise
Borrower
”), purchased an aggregate of 6,660,183 warrants (the “
Private Placement Warrants
”) at a purchase
price of $1.00 per warrant, generating gross proceeds to the Company of approximately $6.66 million (the “
Private Placement
”).
The Company intends
to finance its Initial Business Combination with proceeds from the Initial Public Offering, the Private Placement, the private
placement of forward purchase securities (described in Note 5), and from additional issuances, if any, of the Company’s capital
stock, debt or a combination of the foregoing.
Trust Account
Upon the closing of
the Initial Public Offering and the Private Placement, approximately $233.0 million was placed in a trust account (the “
Trust
Account
”), with Continental Stock Transfer & Trust Company acting as trustee. The proceeds held in the Trust Account
are invested only in U.S. government securities with a maturity of 180 days or less or in money market funds that meet certain
conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, which invest only in direct U.S. government
treasury obligations. Funds will remain in the Trust Account until the earlier of (i) the consummation of the Initial Business
Combination or (ii) the distribution of the Trust Account proceeds as described below. The remaining proceeds outside the Trust
Account may be used to pay for business, legal and accounting due diligence on prospective acquisitions and general and administrative
expenses.
The Company’s
amended and restated certificate of incorporation provides that, except for the withdrawal of interest to pay franchise and income
taxes, none of the funds held in the Trust Account (including the interest earned on the funds in the Trust Account) will be released
from the Trust Account until the earlier of: (i) the completion of the Initial Business Combination; (ii) the redemption of any
shares of Class A common stock included in the Units sold in the Initial Public Offering (the “
Public Shares
”)
that have been properly tendered in connection with a stockholder vote seeking to amend the Company’s amended and restated
certificate of incorporation to affect the substance or timing of its obligation to redeem 100% of such Public Shares if it has
not consummated an Initial Business Combination within 24 months from the closing of the Initial Public Offering (the “
Combination
Period
”); or (iii) the redemption of 100% of the Public Shares if the Company is unable to complete an Initial Business
Combination within the Combination Period. The proceeds deposited in the Trust Account could become subject to the claims of the
Company’s creditors, if any, which could have priority over the claims of the Company’s public stockholders.
Initial Business Combination
The Company’s
management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering, although
substantially all of the net proceeds of the Initial Public Offering are intended to be generally applied toward consummating an
Initial Business Combination. The New York Stock Exchange (the “
NYSE
”) rules require that the Initial Business
Combination occur with one or more target businesses that together have a fair market value of at least 80% of the assets held
in the Trust Account (excluding the deferred underwriting discounts and commissions and taxes payable on the interest earned on
the Trust Account) at the time of the agreement to enter into the Initial Business Combination. There is no assurance that the
Company will be able to successfully effect an Initial Business Combination.
The Company, after
signing a definitive agreement for an Initial Business Combination, will either (i) seek stockholder approval of the Initial Business
Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their Public Shares,
regardless of whether they vote for or against the Initial Business Combination, for cash equal to their pro rata share of the
aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination,
including interest not previously released to the Company to pay its franchise and income taxes, or (ii) provide stockholders the
opportunity to sell their Public Shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder
vote) for an amount in cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account as of two business
days prior to the consummation of the Initial Business Combination, including interest not previously released to the Company to
pay its franchise and income taxes. The decision as to whether the Company will seek stockholder approval of the Initial Business
Combination or allow stockholders to sell their Public Shares in a tender offer will be made by the Company, solely in its discretion,
and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would
otherwise require the Company to seek stockholder approval, unless a vote is required by law or under NYSE rules. If the Company
seeks stockholder approval, it will complete its Initial Business Combination only if a majority of the outstanding shares of common
stock voted are voted in favor of the Initial Business Combination. However, in no event will the Company redeem its Public Shares
in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with
the redemption of its Public Shares and the related Initial Business Combination, and instead would search for an alternate Initial
Business Combination.
If the Company holds
a stockholder vote or there is a tender offer for shares in connection with an Initial Business Combination, a stockholder will
have the right to redeem such holder’s Public Shares for an amount in cash equal to such holder’s pro rata share of
the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business
Combination, including interest not previously released to the Company to pay its franchise and income taxes. As a result, such
Public Shares are recorded as temporary equity upon the completion of the Initial Public Offering, in accordance with the Financial
Accounting Standards Board (“
FASB
”) Accounting Standards Codification (“
ASC
”) 480, “
Distinguishing
Liabilities from Equity
.”
Notwithstanding the
foregoing, the Company’s amended and restated certificate of incorporation provides that a public stockholder, together with
any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”)), will
be restricted from redeeming their shares with respect to more than an aggregate of 20% or more of the shares of Class A common
stock sold in the Initial Public Offering, without the prior consent of the Company.
The Sponsor, Tortoise
Borrower, the Company’s officers and directors and Atlas Point Energy Infrastructure Fund, LLC (“
Atlas Point Fund
”)
(collectively, the “
Initial Stockholders
”) agreed not to propose an amendment to the amended and restated certificate
of incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of the Public Shares
if the Company does not complete an Initial Business Combination, unless the Company provides the public stockholders the opportunity
to redeem their shares of Class A common stock in conjunction with any such amendment.
Pursuant to the Company’s
amended and restated certificate of incorporation, if the Company is unable to complete an Initial Business Combination within
the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but no more than 10 business days thereafter subject to lawfully available funds therefor, redeem the Public Shares, at
a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned
on the funds held in the Trust Account and not previously released to the Company to pay the Company’s franchise and income
taxes (less up to $100,000 of such net interest to pay dissolution expenses), divided by the number of then-outstanding Public
Shares, which redemption will completely extinguish the public stockholders’ rights as stockholders (including the right
to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board
of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for
claims of creditors and the requirements of other applicable law. The Initial Stockholders have entered into a letter agreement
with the Company, pursuant to which they agreed to waive their rights to liquidating distributions from the Trust Account with
respect to any Founder Shares (as defined below) held by them if the Company fails to complete the Initial Business Combination
within the Combination Period. However, if any of the Initial Stockholders acquire shares of Class A common stock in or after the
Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such shares
if the Company fails to complete the Initial Business Combination within the Combination Period.
In the event of a
liquidation, dissolution or winding up of the Company after an Initial Business Combination, the Company’s stockholders are
entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision
is made for each class of stock, if any, having preference over the common stock. The Company’s stockholders have no preemptive
or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that the Company will
provide its stockholders with the opportunity to redeem their Public Shares for cash equal to their pro rata share of the aggregate
amount then on deposit in the Trust Account and not previously released to the Company to pay the Company’s franchise and
income taxes, upon the completion of the Initial Business Combination, subject to the limitations described herein.
Commencing April 22,
2019, holders of the Units were permitted to elect to separately trade the shares of Class A common stock and Warrants (as defined
below) included in the Units. No fractional shares will be issued upon separation of the Units and only whole Warrants will trade.
Liquidity
As of June 30, 2019,
the Company had approximately $1.3 million in cash in its operating account and approximately $1.4 million of investment income
in the Trust Account available to pay franchise and income taxes (less up to $100,000 of such net interest to pay dissolution expenses).
Through June 30, 2019,
the Company’s liquidity needs have been satisfied through a $25,000 capital contribution from the Sponsor in exchange for
the issuance of the Founder Shares (as defined below and described in Note 4) to the Sponsor, an approximately $580,000 loan from
the Sponsor pursuant to an unsecured promissory note (the “
Note
”), the net proceeds from the consummation of
the Private Placement not held in the Trust Account and an aggregate of $306,000 of interest income released from the Trust Account
since inception to fund tax obligations. The Company repaid the Note to the Sponsor in full on March 29, 2019.
Based on the foregoing,
management believes that the Company will have sufficient working capital and borrowing capacity to meet the Company’s needs
through the earlier of the consummation of an Initial Business Combination or one year from this filing. Over this time period,
the Company will use these funds for payment of general and administrative expenses as well as expenses associated with identifying
and evaluating prospective Initial Business Combination candidates, performing due diligence on prospective target businesses and
structuring, negotiating and consummating the Initial Business Combination.
2. Summary of Significant Accounting
Policies
Basis of Presentation
The accompanying unaudited
condensed financial statements of the Company have been prepared in accordance with United States generally accepted accounting
principles (“
GAAP
”) for interim financial information and Article 8 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by GAAP. In the opinion of management, all adjustments (consisting of
normal accruals) considered for a fair presentation have been included. Operating results for the three and six months ended June
30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.
The accompanying unaudited
condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in
the prospectus filed by the Company with the U.S. Securities and Exchange Commission (the “
SEC
”) on March 1,
2019 and the audited balance sheet filed as an exhibit to the Company’s Current Report on
Form 8-K
filed with the SEC on
March 8, 2019.
Emerging Growth Company
Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not
have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies, but any such election to opt out is irrevocable. The Company has elected not
to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application
dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the
time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements
with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using
the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Net Income (Loss) Per Share of Common
Stock
The Company’s
unaudited condensed statement of operations includes a presentation of income per share for common stock subject to
redemption in a manner similar to the two-class method of income per share. Basic and diluted net income per share of
Class A common stock for the three and six months ended June 30, 2019 is calculated by dividing the investment income
earned on the investments held in the Trust Account (approximately $1.3 million and $1.7 million, respectively, net of funds
available to be withdrawn from the Trust Account for payment of taxes, resulting in a total of approximately $809,000 and
$1.0 million, respectively), by the weighted average shares of Class A common stock outstanding for the periods. Basic and
diluted net income per share of Class B common stock for the three and six months ended June 30, 2019 is calculated by
dividing the net income, less income attributable to Class A common stock, by the weighted average number of shares of Class
B common stock outstanding for the period.
The Company complies
with accounting and disclosure requirements of FASB ASC 260, “
Earnings Per Share.
” Net loss per share of common
stock is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock
outstanding for the period. The Company has not considered the effect of the Warrants sold in the Initial Public Offering and the
Private Placement Warrants to purchase an aggregate 18,310,641 shares of Class A common stock in the calculation of diluted
loss per share, since inclusion would be anti-dilutive under the treasury stock method as of June 30, 2019.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to credit risk consist principally of cash
and investments held in the Trust Account. Cash is maintained in accounts with financial institutions, which, at times may exceed
the federal depository insurance coverage of $250,000. The Company has not experienced losses on its cash accounts and management
believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.
The Company’s investments held in the Trust Account consist entirely of U.S. government securities with an original maturity
of 180 days or less.
Financial Instruments
The fair value of
the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “
Fair Value
Measurements and Disclosures
,” approximates the carrying amounts represented in the condensed balance sheets.
Fair Value Measurements
FASB ASC 820, “
Fair
Value Measurements and Disclosures
,” defines fair value and requires disclosures on fair value measurements. Fair value
is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the
inputs used in measuring fair value.
The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
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Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
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Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
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Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
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In some circumstances,
the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances,
the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant
to the fair value measurement.
FASB ASC 825, “
Financial
Instruments
,” requires all entities to disclose the fair value of financial instruments, both assets and liabilities
for which it is practicable to estimate fair value. As of June 30, 2019 and December 31, 2018, the recorded values of cash, prepaid
expenses, accounts payable and accrued expenses approximate the fair values due to the short-term nature of the instruments.
Use of Estimates
The preparation of
the financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance
sheet and the reported amounts of expenses during the reporting period. It is at least reasonably possible that the estimate of
the effect of a condition, situation or set of circumstances that existed at the date of the balance sheet, which management considered
in formulating its estimate, could change due to one or more future confirming events. Actual results could differ from estimates.
Offering Costs
The Company complies
with the requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — “
Expenses of Offering
.”
Offering costs consist of expenses incurred in connection with preparation of the Initial Public Offering. These expenses, together
with the underwriting discounts and commissions, were charged to equity upon completion of the Initial Public Offering.
Class A Common Stock Subject
to Possible Redemption
The Company accounts
for its Class A common stock subject to possible redemption in accordance with FASB ASC 480, “
Distinguishing Liabilities
from Equity
.” Shares of Class A common stock subject to mandatory redemption (if any) are classified as a liability
and measured at fair value. Shares of conditionally redeemable Class A common stock (including shares of Class A common
stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence
of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, shares
of Class A common stock are classified as stockholders’ equity. The Company’s Class A common stock features
certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain
future events. The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value
of the security at the end of each reporting period. Increases or decreases in the carrying value amount of redeemable shares of
Class A common stock shall be affected by charges against additional paid-in capital. Accordingly, as of June 30, 2019, 22,234,021
shares of Class A common stock subject to conditional redemption are presented as temporary equity, outside of the stockholders’
equity section of the Company’s unaudited condensed balance sheet.
Income Taxes
The Company follows
the asset and liability method of accounting for income taxes under FASB ASC 740, “
Income Taxes
.” Deferred
tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the condensed
balance sheets carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income during the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred
tax assets to the amount expected to be realized.
FASB ASC 740, “
Income
Taxes
,” prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more
likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of June 30,
2019 and December 31, 2018. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income
tax expense. No amounts were accrued for the payment of interest and penalties as of June 30, 2019 and December 31, 2018. The Company
is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from
its position. The Company is subject to income tax examinations by major taxing authorities since inception.
As of June 30, 2019
and December 31, 2018, the Company had gross deferred tax assets related to federal and state net operating loss carryforwards
for income tax purposes of approximately $46,000 and $120, respectively. The Company has not performed a detailed analysis to determine
whether an ownership change under Section 382 of the Internal Revenue Code has occurred. The effect of an ownership change would
be the imposition of an annual limitation on the use of net operating loss carryforwards attributable to periods before the change.
Any limitation may result in expiration of a portion of the net operating loss before utilization.
In assessing the realization
of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets
will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during
the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income and taxing strategies in making this assessment. In case the deferred tax assets will
not be realized in future periods, the Company has provided a valuation allowance for the full amount of the deferred tax assets
as of June 30, 2019 and December 31, 2018.
Recent Accounting Pronouncements
Management does not
believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material
impact on the Company’s unaudited condensed financial statements.
3. Initial Public Offering
The Company sold 23,300,917
Units in the Initial Public Offering, including 800,917 Units that were issued pursuant to the underwriters’ partial exercise
of their over-allotment option, at a price of $10.00 per Unit, generating gross proceeds of approximately $233.0 million,
and incurring offering costs of approximately $13.36 million, inclusive of approximately $8.13 million in deferred underwriting
commissions.
Each Unit consists
of one share of the Company’s Class A common stock, par value $0.0001 per share, and one-half of one redeemable warrant (each,
a “
Warrant
” and, collectively, the “
Warrants
”). Each whole Warrant entitles the holder to
purchase one share of Class A common stock at an exercise price of $11.50 per share. No fractional shares will be issued upon separation
of the Units and only whole Warrants will trade. Each Warrant will become exercisable on the later of 30 days after the completion
of the Company’s Initial Business Combination and 12 months from the closing of the Initial Public Offering and will
expire five years after the completion of the Company’s Initial Business Combination or earlier upon redemption or liquidation.
Once the Warrants become exercisable, the Company may redeem the outstanding Warrants in whole, but not in part, at a price of
$0.01 per Warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if the last reported sale price
of the Company’s Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day
period ending on the third business day prior to the date on which the Company sent the notice of redemption to the warrantholders.
Of the Units sold
in the Initial Public Offering, an aggregate of 77,750 Units (the “
Affiliated Units
”) were purchased by certain
employees of affiliates of the Company.
4. Related Party Transactions
Founder Shares
In November 2018,
the Sponsor paid $25,000 in offering expenses on behalf of the Company in exchange for the issuance of 5,750,000 shares of the
Company’s Class B common stock (the “
Founder Shares
”), or approximately $0.004 per share. In February
2019, the Company effected a stock dividend of 718,750 shares of Class B common stock, resulting in the Sponsor holding an aggregate
of 6,468,750 Founder Shares (up to 843,750 shares of which were subject to forfeiture to the extent the underwriters did not exercise
their over-allotment option). On March 4, 2019, the underwriters partially exercised their over-allotment option and on March 7,
2019, the underwriters waived the remainder of their over-allotment option. In connection therewith, the Sponsor forfeited 643,520
Founder Shares for cancellation by the Company. As used herein, unless the context otherwise requires, “Founder Shares”
shall be deemed to include the shares of Class A common stock issuable upon conversion thereof. The Founder Shares are identical
to the shares of Class A common stock included in the Units sold in the Initial Public Offering except that the Founder Shares
are shares of Class B common stock which automatically convert into shares of Class A common stock at the time of the Initial Business
Combination and are subject to certain transfer restrictions, as described in more detail below.
The holders of the
Founder Shares have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the
earlier to occur of: (i) one year after the completion of the Initial Business Combination and (ii) subsequent to the Initial Business
Combination, (a) if the last reported sale price of the Company’s Class A common stock equals or exceeds $12.00 per share
(as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within
any 30-trading day period commencing at least 150 days after the consummation of the Initial Business Combination, or (b)
the date on which the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all
of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Private Placement Warrants
Concurrently with
the closing of the Initial Public Offering, Tortoise Borrower purchased an aggregate of 6,660,183 Private Placement Warrants at
a price of $1.00 per warrant, generating gross proceeds of approximately $6.66 million, in the Private Placement. Each Private
Placement Warrant is exercisable for one share of the Company’s Class A common stock at an exercise price of $11.50 per share.
A portion of the purchase price of the Private Placement Warrants was added to the proceeds from the Initial Public Offering held
in the Trust Account. If the Initial Business Combination is not completed within the Combination Period, the proceeds from the
sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject
to the requirements of applicable law) and the Private Placement Warrants will expire worthless. The Private Placement Warrants
will be non-redeemable for cash and exercisable on a cashless basis so long as they are held by Tortoise Borrower or its permitted
transferees.
Tortoise Borrower
agreed, subject to limited exceptions, not to transfer, assign or sell any of its Private Placement Warrants until 30 days after
the completion of the Initial Business Combination.
Note Payable to Sponsor
On November 7,
2018, the Sponsor agreed to loan the Company funds to cover expenses related to the Initial Public Offering pursuant to the Note.
This Note was non-interest bearing and payable on the earlier of 180 days and the closing of the Initial Public Offering.
The Company borrowed approximately $580,000 under the Note, and repaid the Note in full on March 29, 2019.
Administrative Services Agreement
Pursuant to an
Administrative Services Agreement between the Company and the Sponsor, dated February 27, 2019 (the “
Administrative
Services Agreement
”), the Company agreed to pay the Sponsor a total of $10,000 per month for office space,
utilities and administrative support. Upon completion of the Initial Business Combination or the Company’s liquidation,
the agreement will terminate. The Company incurred $30,000 and $40,000 for expenses in connection with the Administrative
Services Agreement for the three and six months ended June 30, 2019, respectively, which is reflected in the accompanying
unaudited condensed statements of operations. On March 29, 2019, the Sponsor assigned all of its rights, interests and
obligations under the Administrative Services Agreement to Tortoise Capital Advisors, L.L.C.
5. Commitments & Contingencies
Forward Purchase Agreement
The Company entered
into an amended and restated forward purchase agreement (the “
Forward Purchase Agreement
”) with Atlas Point
Fund, pursuant to which Atlas Point Fund, which is a fund managed by CIBC National Trust but is not affiliated with the Company
or the Sponsor, agreed to purchase up to an aggregate maximum amount of $150,000,000 of either (i) a number of units (the “
Forward
Purchase Units
”), consisting of one share of Class A common stock (the “
Forward Purchase Shares
”)
and one-half of one redeemable warrant (the “
Forward Purchase Warrants
”), for $10.00 per unit or (ii) a
number of Forward Purchase Shares for $9.67 per share (such Forward Purchase Shares valued at $9.67 per share or the Forward Purchase
Units, as the case may be, the “
Forward Purchase Securities
”), in a private placement that will close simultaneously
with the closing of the Initial Business Combination. The Forward Purchase Warrants will have the same terms as the Warrants and
the Forward Purchase Shares will be identical to the shares of Class A common stock included in the Units sold in the Initial Public
Offering, except the Forward Purchase Shares and the Forward Purchase Warrants will be subject to transfer restrictions and certain
registration rights. The proceeds from the sale of the Forward Purchase Securities may be used as part of the consideration to
the sellers in the Initial Business Combination, and any excess funds may be used for the working capital needs of the post-transaction
company. This agreement is independent of the percentage of stockholders electing to redeem their Public Shares and may provide
the Company with an increased minimum funding level for the Initial Business Combination. The Forward Purchase Agreement is subject
to conditions, including Atlas Point Fund giving the Company its irrevocable written consent to purchase the Forward Purchase Securities
no later than five days after the Company notifies it of the Company’s intention to meet to consider entering into a definitive
agreement for a proposed Initial Business Combination. Atlas Point Fund may grant or withhold its consent to the purchase entirely
within its sole discretion. Accordingly, if Atlas Point Fund does not consent to the purchase, it will not be obligated to purchase
the Forward Purchase Securities.
Registration Rights
The holders of the
Founder Shares, the Private Placement Warrants and Warrants that may be issued upon conversion of working capital loans, if any,
(and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and Warrants that may be issued
upon conversion of working capital loans) will be entitled to registration rights pursuant to a registration rights agreement entered
into on February 27, 2019 (the “
Registration Rights Agreement
”). The holders of these securities are entitled
to make up to three demands, excluding short-form demands, that the Company register such securities. In addition, the holders
have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation
of an Initial Business Combination. However, the Registration Rights Agreement provides that the Company will not permit any registration
statement filed under the Securities Act to become effective until termination of the applicable lock-up period. The Company
will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted
the underwriters a 45-day option to purchase up to 3,375,000 additional Units to cover any over-allotments at the Initial
Public Offering price of $10.00 per Unit, less the underwriting discounts and commissions. On March 4, 2019, the underwriters partially
exercised their over-allotment option to purchase 800,917 additional Units, and on March 7, 2019, the underwriters notified the
Company of their intent to waive the remainder of their over-allotment option.
The underwriters were
entitled to an underwriting discount for each Unit sold in the Initial Public Offering, except for the Affiliated Units. An aggregate
of approximately $4.64 million (or $0.20 per Unit), was paid to the underwriters upon the closing of the Initial Public Offering.
An additional fee of approximately $8.13 million (or $0.35 per Unit), will be payable to the underwriters for deferred underwriting
commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the
event that the Company completes an Initial Business Combination, subject to the terms of the underwriting agreement.
Deferred Legal Fees Associated with
the Initial Public Offering
The Company
entered into an engagement letter to obtain legal advisory services, pursuant to which the Company’s legal counsel
agreed to defer half of their fees until the closing of the Initial Business Combination. As of June 30, 2019, the Company
recorded an aggregate of $150,000 in connection with such arrangement as deferred legal fees in the accompanying unaudited
condensed balance sheets.
6. Stockholders’ Equity
Class A Common Stock
The Company is authorized
to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. No Class A common stock was issued
or outstanding as of December 31, 2018. As of June 30, 2019, there were 23,300,917 shares of Class A common stock issued
and outstanding, of which 22,234,021 shares of Class A common stock were classified outside of permanent equity.
Class B Common Stock
The Company is authorized
to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock
are entitled to one vote per share of Class B common stock. In November 2018, the Company issued 5,750,000 shares of Class B common
stock. In February 2019, the Company effected a stock dividend of 718,750 shares of Class B common stock. As of March 4, 2019,
there were 6,468,750 shares of Class B common stock outstanding (up to 843,750 shares of which were subject to forfeiture
to the extent the underwriters did not exercise their over-allotment option). On March 4, 2019, the underwriters partially exercised
their over-allotment option to purchase 800,917 additional Units. On March 7, 2019, the underwriters waived the remainder of their
over-allotment option and in connection therewith, the Sponsor forfeited 643,520 shares of Class B common stock for cancellation
by the Company. As of June 30, 2019 and December 31, 2018, there were 5,825,230 and 6,468,750 shares of Class B common stock outstanding,
respectively.
Holders of Class A
common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of the
Company’s stockholders, except as required by law or stock exchange rule; provided that only holders of Class B common stock
have the right to vote on the election of the Company’s directors prior to the Initial Business Combination.
The shares of Class
B common stock will automatically convert into shares of Class A common stock at the time of the Initial Business Combination on
a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities,
are issued or deemed issued in excess of the amounts sold in the Initial Public Offering and related to the closing of the Initial
Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will
be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment
with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion
of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total
number of all shares of common stock outstanding upon the completion of the Initial Public Offering plus all shares of Class A
common stock and equity-linked securities issued or deemed issued in connection with the Initial Business Combination (excluding
the Forward Purchase Securities and any shares or equity-linked securities issued, or to be issued, to any seller in the Initial
Business Combination).
Preferred Stock
The Company is authorized
to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined
from time to time by the Company’s board of directors. As of June 30, 2019 and December 31, 2018, there were no shares of
preferred stock issued or outstanding.
Warrants
The Warrants will
become exercisable on the later of (i) 30 days after the completion of the Initial Business Combination or (ii) 12 months
from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement
under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Warrants and a current prospectus
relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue
sky, laws of the state of residence of the holder (or the Company permits holders to exercise their Warrants on a cashless basis
under the circumstances specified in the warrant agreement). The Company has agreed that as soon as practicable, but in no event
later than 15 business days, after the closing of the Initial Business Combination, the Company will use its best efforts to file
with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable
upon exercise of the Warrants. The Company will use its best efforts to cause the same to become effective, but in no event later
than 60 business days after the closing of the Initial Business Combination, and to maintain the effectiveness of such registration
statement, and a current prospectus relating thereto, until the expiration of the Warrants in accordance with the provisions of
the warrant agreement. Notwithstanding the above, if the Company’s Class A common stock is at the time of any exercise of
a Warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security”
under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Warrants who exercise their Warrants
to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. The Warrants
will expire five years after the completion of the Initial Business Combination or earlier upon redemption or liquidation.
The Private Placement
Warrants are identical to the Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable
upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion
of the Initial Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be
non-redeemable for cash and exercisable on a cashless basis so long as they are held by Tortoise Borrower or Tortoise Borrower’s
permitted transferees. If the Private Placement Warrants are held by someone other than Tortoise Borrower or its permitted transferees,
the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Warrants.
The exercise price
and number of shares of Class A common stock issuable upon exercise of the Warrants may be adjusted in certain circumstances including
in the event of a share capitalization, or recapitalization, reorganization, merger or consolidation. In addition, if the Company
issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with
the closing of the Initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class
A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors,
and in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the
Sponsor or such affiliates, as applicable, prior to such issuance) (the “
Newly Issued Price
”), the exercise
price of the Warrants will be adjusted (to the nearest cent) to be equal to 115% of the Newly Issued Price.
The Company may call
the Warrants for redemption for cash (except with respect to the Private Placement Warrants):
|
●
|
in whole and not in part;
|
|
|
|
|
●
|
at a price of $0.01 per Warrant;
|
|
|
|
|
●
|
upon a minimum of 30 days’ prior written notice of redemption; and
|
|
|
|
|
●
|
if, and only if, the last reported sale price of the Company’s Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third business day prior to the date on which the Company sends the notice of redemption to the warrantholders.
|
Commencing 90 days
after the Warrants become exercisable, the Company may redeem the outstanding Warrants (including both the Warrants and the Private
Placement Warrants) in whole and not in part, at a price equal to a number of shares of Class A common stock to be determined by
reference to the table set forth in the Company’s prospectus relating to the Initial Public Offering based on the redemption
date and the “fair market value” of the Company’s Class A common stock, upon a minimum of 30 days’ prior
written notice of redemption and if, and only if, the last reported sale price of the Company’s Class A common stock equals
or exceeds $10.00 per share (as adjusted per share splits, share dividends, reorganizations, recapitalizations and the like) on
the trading day prior to the date on which the Company sends the notice of redemption to the warrantholders. The “fair market
value” of the Company’s Class A common stock is the average last reported sale price of the Company’s Class A
common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent
to the holders of Warrants.
If the Company calls
the Warrants for redemption for cash, management will have the option to require all holders that wish to exercise the Warrants
to do so on a “cashless basis,” as described in the warrant agreement. Additionally, in no event will the Company be
required to net cash settle any Warrants. If the Company is unable to complete the Initial Business Combination within the Combination
Period and the Company liquidates the funds held in the Trust Account, holders of Warrants will not receive any of such funds with
respect to their Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account
with the respect to such Warrants. Accordingly, the Warrants may expire worthless.
7. Fair Value Measurements
The following table
presents information about the Company’s assets that are measured on a recurring basis as of June 30, 2019 and indicates
the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active
markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable,
such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for
the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.
June 30, 2019
|
Description
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Other
Unobservable
Inputs
(Level 3)
|
|
Investments held in Trust Account
|
|
$
|
234,399,695
|
|
|
$
|
-
|
|
|
$
|
-
|
|
As of June 30, 2019,
the investments held in the Trust Account were held in marketable securities.