Item 1.01. Entry Into a Material Definitive Agreement
On December 21, 2020, Nesco Holdings, Inc. ("Nesco") entered into Subscription
Agreements (the "Subscription Agreements") with certain investors (the "PIPE
Investors") to finance in part the previously announced acquisition of Custom
Truck One Source ("CTOS"). Pursuant to the Subscription Agreements, concurrently
with the closing of the transactions contemplated by the Common Stock Purchase
Agreement, dated December 3, 2020 (the "Investment Agreement"), between the
Company and PE One Source Holdings, LLC, the PIPE Investors will purchase an
aggregate of 28,000,000 shares of Nesco common stock at $5.00 per share for an
aggregate purchase price of $140,000,000 (the "Private Placement").
The Subscription Agreements will be terminated, and be of no further force and
effect, upon the earlier to occur of (i) such date and time as the Investment
Agreement is terminated in accordance with its terms, (ii) upon the mutual
written agreement of Nesco and the applicable PIPE Investor, or (iii) July 1,
2021.
As part of the transactions contemplated by the Subscription Agreements, the
Company and the PIPE Investors will enter into a Registration Rights Agreement
whereby the PIPE Investors will be entitled to certain demand and piggyback
registration rights in respect of the shares of Nesco common stock issued in the
Private Placement.
The form of Subscription Agreement (which includes as an exhibit a copy of the
Registration Rights Agreement) is filed as Exhibit 10.1 to this Current Report,
and the foregoing description of the Subscription Agreement and the Registration
Rights Agreement is qualified in its entirety by reference to the full text of
the form of Subscription Agreement and Registration Rights Agreement.
Item 3.02. Unregistered Sales of Equity Securities
The information contained in Item 1.01 is incorporated herein by reference.
As described in Item 1.01, under the terms of the Subscription Agreements, Nesco
has agreed to issue shares of common stock to the PIPE Investors. The issuance
and sale will be exempt from registration under the Securities Act, pursuant to
Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act")
and/or Rule 506(c) of Regulation D of the Securities Act . Each PIPE Investor
represented to Nesco that it is an "accredited investor" as defined in Rule 501
of the Securities Act and that the common stock is being acquired for investment
purposes and not with a view to, or for sale in connection with any distribution
thereof, and appropriate legends will be affixed to any certificates evidencing
the shares of common stock.
Item 8.01. Other Events.
On December 21, 2020, Nesco issued a press release announcing the execution of
the Subscription Agreements. The full text of the Press Release is attached as
Exhibit 99.1 to this Current Report and is incorporated by reference herein. As
a result of the Private Placement and expected indebtedness upon closing of the
CTOS acquisition, based on adjusted EBITDA for the twelve months ended September
30, 2020, net leverage for the combined business after giving effect to cost
synergies would have been 4.1x. Additionally, attached as Exhibit 99.2 to this
Current Report is an investor presentation used in connection with the Private
Placement.
Additional Information About the Acquisition and Where to Find It
This communication is being made in respect of the proposed acquisition of
Custom Truck by Nesco. A special meeting of the stockholders of Nesco will be
announced as promptly as practicable to seek stockholder approval in connection
with the proposed acquisition. Nesco expects to file with the Securities and
Exchange Commission ("SEC") a proxy statement and other relevant documents in
connection with the proposed acquisition. The definitive proxy statement will be
sent or given to the stockholders of Nesco and will contain important
information about the proposed transaction and related matters. INVESTORS AND
STOCKHOLDERS OF NESCO ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER
RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT NESCO, CUSTOM TRUCK AND
THE ACQUISITION. Investors may obtain a free copy of these materials (when they
are available) and other documents filed by Nesco with the SEC at the SEC's
website at www.sec.gov, at Nesco's website at www.nescospecialty.com or by
sending a written request to Nesco Holdings, Inc., 6714 Pointe Inverness Way,
Suite 220, Fort Wayne, Indiana 46804, Attention: Chief Financial Officer and
Secretary.
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Participants in the Solicitation
Nesco and its directors, executive officers and certain other members of
management and employees may be deemed to be participants in soliciting proxies
from its stockholders in connection with the acquisition. Information regarding
the persons who may, under the rules of the SEC, be considered to be
participants in the solicitation of Nesco's stockholders in connection with the
acquisition will be set forth in Nesco's definitive proxy statement for its
special stockholder meeting. Additional information regarding these individuals
and any direct or indirect interests they may have in the acquisition will be
set forth in the definitive proxy statement when it is filed with the SEC in
connection with the Merger. You can find information about Nesco's directors and
executive officers in Nesco's filings with the SEC, including Nesco's definitive
proxy statement for its 2020 Annual Meeting of Stockholders, which was filed
with the SEC on May 1, 2020.
Forward Looking Statements
Certain statements contained in this current report may be considered
forward-looking statements within the meaning of U.S. securities laws, including
section 21E of the Securities Exchange Act of 1934, as amended, including
statements regarding the proposed transaction and the ability to consummate the
proposed transaction. When used in this current report, the words "potential,"
"estimates," "projected," "expects," "anticipates," "forecasts," "plans,"
"intends," "believes," "seeks," "may," "will," "should," "future," "propose" and
variations of these words or similar expressions (or the negative versions of
such words or expressions) are intended to identify forward-looking statements.
these forward-looking statements are not guarantees of future performance,
conditions or results, and involve a number of known and unknown risks,
uncertainties, assumptions and other important factors, many of which are
outside Nesco's control, that could cause actual results or outcomes to differ
materially from those discussed in the forward-looking statements. important
factors, among others, that may affect actual results or outcomes include: the
ability to consummate the acquisition of CTOS and to integrate the acquisition
into the Nesco business; the ability to consummate the private placement;
failure to obtain necessary stockholder and regulatory approvals or to satisfy
any of the other conditions related to the acquisition of CTOS; the ability to
realize expected synergies and the timing for any such realization; projected
financial results for Nesco and CTOS, including on a combined basis; potential
litigation associated with the acquisition of CTOS; the potential impact of the
announcement of the acquisition of CTOS on Nesco's or CTOS's relationships,
including with suppliers, customers, employees and regulators; the impact of the
COVID-19 pandemic on Nesco's or CTOS's business operations, as well as the
overall economy; Nesco's ability to execute on its plans to develop and market
new products and the timing of these development programs; Nesco's estimates of
the size of the markets for its solutions; the rate and degree of market
acceptance of Nesco's solutions; the success of other competing technologies
that may become available; Nesco's ability to identify and integrate
acquisitions, including the acquisition of Truck Utilities; the performance and
security of Nesco's services; potential litigation involving Nesco; and general
economic and market conditions impacting demand for Nesco's services. For a more
complete description of these and other possible risks and uncertainties, please
refer to Nesco's annual report on form 10-K filed with the securities and
exchange commission on March 13, 2020 and quarterly report on form 10-Q filed
with the securities and exchange commission on May 7, 2020, as well as to
Nesco's subsequent filings with the SEC. Should one or more of these material
risks occur, or should the underlying assumptions change or prove incorrect,
Nesco's actual results, performance, achievements or plans could differ
materially from those expressed or implied in any forward-looking statement. The
forward-looking statements contained herein speak only as of the date hereof,
and Nesco undertakes no 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.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1† Form of Subscription Agreement
Press Release Issued by Nesco Holdings, Inc., dated December 21,
99.1 2020
99.2 Investor Presentation
104 Cover Page Interactive Data File (the cover page XBRL tags are embedded
within the Inline XBRL document)
† Schedules and similar attachments have been omitted pursuant to Item 601(b)(2)
of Regulation S-K. Nesco agrees to furnish a supplemental copy of any omitted
schedule or attachment to the SEC upon request.
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