[sheet: Cover]
Field | Value
Document Title | Estimated Closing Statement
Prepared By | Cloudium Technologies plc (Sienna Whitfield, CFO)
Delivered To | Solara Digital Infrastructure Fund VI LP
Delivery Date | July 8, 2024
Reference | Section 2.7 of the Agreement and Plan of Merger dated January 22, 2024
Parties to Merger Agreement | Cloudium Technologies plc / Stratos Merger Sub Inc. / Solara Digital Infrastructure Fund VI LP
Closing Date | July 9, 2024
Effective Time | 11:59 PM ET, July 9, 2024
Deal Value | $6,800,000,000
Per-Share Merger Consideration | $36.92
Shares Outstanding | 184,200,000
Reviewed By | Calderwood & Harkness LLP — Matter No. 1041-00003
Reviewer (Lead) | Tiffany Rosenthal, Lead Associate, M&A
Reviewer (Partner) | Harrison Wexford, Responsible Partner, M&A
Review Date | July 8, 2024
Status | DRAFT — Subject to C&H Review Comments (see markup throughout)
[sheet: Sources and Uses Summary]
Line Item | Amount ($) | Notes / C&H Comments
SOURCES OF FUNDS
Term Loan B (Meridian Atlantic Bank, N.A. / Ironclad Capital Markets LLC) | $3,740,000,000 | Per Debt Commitment Letter dated January 22, 2024; SOFR + 325 bps; 7-year maturity (July 9, 2031)
Revolving Credit Facility (drawn at close) | $0 | $500,000,000 capacity; SOFR + 275 bps; 5-year maturity (July 9, 2029); $0 drawn at closing
Equity Contribution — Solara Digital Infrastructure Fund VI LP | $2,832,888,096 | Per Equity Commitment Letter dated January 22, 2024; includes Co-Invest VI-A LP allocation of $425,000,000
Rollover Equity — Jonathan Hargrove | $142,814,544 | 50% of 7,736,400 shares × $36.92/share; per Rollover Agreement dated January 22, 2024
Rollover Equity — Pinnacle Growth Ventures LLC | $473,241,408 | 60% of 21,367,200 shares × $36.92/share; per Rollover Agreement dated January 22, 2024
Total Sources | $7,188,944,048 | Must equal Total Uses
USES OF FUNDS
Cash Merger Consideration to Non-Rolling Shareholders | $6,183,944,048 | Total deal value less rollover equity: $6,800,000,000 − $616,055,952
Repayment of Existing Cloudium Indebtedness — Atlas Commercial Lending Corp. | $820,000,000 | Per Payoff Letter dated July 5, 2024; $620,000,000 Term Loan + $200,000,000 Revolver drawn; credit agreement dated March 15, 2021
Estimated Transaction Expenses | $185,000,000 | See Transaction Expenses Detail tab; C&H Comment: Request breakdown by category for verification
Total Uses | $7,188,944,048 | Balances to Total Sources
Variance (Sources minus Uses) | $0 | Confirmed balanced
[sheet: Merger Consideration]
Line Item | Shares | Per-Share Price ($) | Amount ($) | Notes / C&H Comments
Total Shares Outstanding (as of Closing) | 184,200,000 | $36.92 | $6,800,136,000 | Headline deal value rounded to $6,800,000,000 with minor treasury-share adjustment
Headline Deal Value (Aggregate Equity Value) | $6,800,000,000 | Per Section 2.2 of Merger Agreement
ROLLOVER EQUITY DEDUCTIONS
Jonathan Hargrove — Total Shares Held | 7,736,400 | 4.2% of outstanding shares
Jonathan Hargrove — Shares Rolled Over (50%) | 3,868,200 | $36.92 | $142,814,544 | Per Rollover Agreement; balance (3,868,200 shares) cashed out
Jonathan Hargrove — Shares Cashed Out (50%) | 3,868,200 | $36.92 | $142,814,544
Pinnacle Growth Ventures LLC — Total Shares Held | 21,367,200 | 11.6% of outstanding shares; Managing Member: Evelyn Carmichael
Pinnacle Growth Ventures LLC — Shares Rolled Over (60%) | 12,820,320 | $36.92 | $473,438,214 | Per Rollover Agreement; balance (8,546,880 shares) cashed out
Pinnacle Growth Ventures LLC — Shares Cashed Out (40%) | 8,546,880 | $36.92 | $315,590,880 | Pinnacle cash-out portion = 40% × 21,367,200 × $36.92
Total Rollover Equity | 16,688,520 | $616,055,952 | Hargrove ($142,814,544) + Pinnacle ($473,241,408)
NET CASH MERGER CONSIDERATION
Cash to Non-Rolling Shareholders | 167,511,480 | $36.92 | $6,183,944,048 | 184,200,000 − 16,688,520 rollover shares = 167,511,480 shares × $36.92
Escrow Holdback (funded to Cobalt Trust Company) | $544,000,000 | 8% of $6,800,000,000; per Escrow Agreement; escrow agent: Cobalt Trust Company (Laura Ng, VP)
Net Cash Distributed to Non-Rolling Shareholders at Closing | $5,639,944,048 | C&H Comment: Confirm this equals cash consideration minus escrow; $6,183,944,048 − $544,000,000 = $5,639,944,048
VERIFICATION
Total Rollover + Cash Consideration | $6,800,000,000 | $616,055,952 + $6,183,944,048 = $6,800,000,000 — Confirmed
[sheet: Working Capital]
Line Item | Reference | Cloudium Estimate ($) | C&H Proposed Adjustment ($) | Adjusted Amount ($) | C&H Comments
CURRENT ASSETS
Cash and Cash Equivalents | Balance Sheet | $180,000,000 | $0 | $180,000,000 | Projected closing-date cash; confirm actual bank statements on closing date
Accounts Receivable, Net | Balance Sheet | $312,500,000 | $0 | $312,500,000 | C&H Comment: Confirm allowance for doubtful accounts is consistent with Harwell & Dobson LLP audit methodology
Unbilled Revenue / Contract Assets | ASC 606 | $87,200,000 | ($4,300,000) | $82,900,000 | C&H Comment: Request detail on $4.3M of contract assets that appear to relate to Q3 FY2024 contracts not yet meeting performance obligation criteria; flagged in due diligence
Prepaid Expenses | Balance Sheet | $41,600,000 | $0 | $41,600,000 | Includes prepaid hosting, insurance, and software licenses
Other Current Assets | Balance Sheet | $18,700,000 | $0 | $18,700,000
Total Current Assets | $640,000,000 | ($4,300,000) | $635,700,000
CURRENT LIABILITIES
Accounts Payable | Balance Sheet | $98,400,000 | $0 | $98,400,000
Accrued Compensation and Benefits | Balance Sheet | $124,500,000 | $6,800,000 | $131,300,000 | C&H Comment: Verify that change-of-control acceleration payments for equity awards triggered by the merger are fully accrued; estimate additional $6.8M based on diligence findings
Deferred Revenue (Current Portion) | ASC 606 | $285,000,000 | $0 | $285,000,000 | Represents prepaid annual SaaS subscriptions; ARR as of Dec 31, 2023 was $1,740,000,000
Accrued Transaction Expenses (Target-Side) | Closing estimate | $52,000,000 | $3,200,000 | $55,200,000 | C&H Comment: Confirm Ridgeway Phelps & Sato LLP fees, Veridian Partners LLC advisory fee (Monica Pressler), Blackthorn Proxy Advisors LLC fees, and Harwell & Dobson LLP audit costs are fully reflected; propose $3.2M upward adjustment
Current Portion of Operating Leases | ASC 842 | $22,800,000 | $0 | $22,800,000 | London (45 Broadwick Street), San Francisco (600 Townsend Street), Bangalore, Berlin offices
Other Current Liabilities | Balance Sheet | $31,500,000 | $0 | $31,500,000
Total Current Liabilities | $614,200,000 | $10,000,000 | $624,200,000
ESTIMATED CLOSING WORKING CAPITAL | $25,800,000 | ($14,300,000) | $11,500,000 | Total Current Assets − Total Current Liabilities
Target Working Capital (per Merger Agreement) | $20,000,000 | $20,000,000 | Per Section 2.7; agreed target working capital peg
Working Capital Surplus / (Deficit) | $5,800,000 | ($8,500,000) | Estimated WC minus Target WC; C&H Comment: If adjustments are accepted, results in a $8.5M deficit payable by Stockholder Representative to Buyer post-closing per Section 2.7(d)
MEMO: Net Impact of C&H Proposed Adjustments | ($14,300,000) | Current Asset adjustments: ($4,300,000); Current Liability adjustments: $10,000,000; Net reduction to Working Capital: ($14,300,000)
[sheet: Closing Indebtedness]
Instrument | Lender / Agent | Original Date | Outstanding Principal ($) | Accrued Interest / Fees ($) | Total Payoff Amount ($) | C&H Comments
Existing Term Loan | Atlas Commercial Lending Corp. (Administrative Agent) | March 15, 2021 | $620,000,000 | $2,150,000 | $622,150,000 | Per Payoff Letter dated July 5, 2024; SOFR + 250 bps; originally maturing March 2028; change of control provision requires mandatory prepayment
Existing Revolving Credit Facility (drawn portion) | Atlas Commercial Lending Corp. (Administrative Agent) | March 15, 2021 | $200,000,000 | $485,000 | $200,485,000 | Drawn amount of $400,000,000 total capacity; per Payoff Letter dated July 5, 2024
Breakage / Prepayment Premium | Atlas Commercial Lending Corp. | $1,200,000 | $1,200,000 | C&H Comment: Confirm breakage cost calculation with Atlas; verify no additional make-whole premium applies
Subtotal — Atlas Commercial Lending Corp. | $820,000,000 | $3,835,000 | $823,835,000 | C&H Comment: Confirm wire instructions per Payoff Letter; UCC-3 termination statements and lien releases to be filed simultaneously
Finance Leases (if any) | Various | Various | $0 | $0 | $0 | C&H Comment: Confirmed — no finance leases constitute Indebtedness under Merger Agreement definition
Capital Leases | N/A | $0 | $0 | $0 | Reclassified under ASC 842 as operating leases
Other Indebtedness | N/A | $0 | $0 | $0 | C&H Comment: Confirm no intercompany loans from Cloudium UK (Co. No. 11287456), Cloudium India, or Cloudium Solutions GmbH constitute third-party indebtedness
TOTAL CLOSING INDEBTEDNESS | $820,000,000 | $3,835,000 | $823,835,000 | C&H Comment: Note Cloudium estimate uses $820,000,000 flat for payoff; actual payoff per letter is $823,835,000 including accrued interest and breakage — request Cloudium update estimate to reflect per diem interest through July 9 closing
Cloudium Estimated Indebtedness (per Sources & Uses) | $820,000,000 | $820,000,000 | Variance of $3,835,000 vs. Payoff Letter amount
[sheet: Closing Cash]
Entity | Bank / Account | Currency | Local Amount | USD Equivalent ($) | C&H Comments
Cloudium Technologies plc | Operating Account — US (San Francisco) | USD | $92,400,000 | $92,400,000 | Primary US operating account
Cloudium Technologies plc | Treasury Account — US | USD | $35,000,000 | $35,000,000 | Money market / short-term investments
Cloudium Technologies UK Ltd. | Operating Account — UK (London) | GBP | £22,500,000 | $28,125,000 | Converted at $1.25/£; C&H Comment: Confirm FX rate convention per Section 2.7 — should this be closing-date spot rate?
Cloudium Technologies UK Ltd. | Payroll Account — UK | GBP | £4,200,000 | $5,250,000 | Manchester payroll account for ~1,200 UK employees
Cloudium Technologies India Pvt. Ltd. | Operating Account — India (Bangalore) | INR | ₹620,000,000 | $7,440,000 | ~2,400 employees; R&D and support operations
Cloudium Solutions GmbH | Operating Account — Germany (Berlin) | EUR | €5,800,000 | $6,380,000 | ~400 employees; DACH sales and customer success; converted at $1.10/€
Other / Petty Cash | Various | Various | $5,405,000 | Includes miscellaneous subsidiary accounts
TOTAL ESTIMATED CLOSING CASH | $180,000,000 | C&H Comment: Matches projected closing-date cash used in leverage calculations; confirm actual cash sweep and any restricted cash exclusions on July 9
Less: Restricted Cash (if any) | $0 | C&H Comment: Confirm no deposits, letters of credit, or restricted accounts excluded from freely available cash
NET UNRESTRICTED CLOSING CASH | $180,000,000 | Used for net leverage calculation: ($3,740,000,000 TLB − $180,000,000 cash) ÷ $405,000,000 EBITDA = ~8.79x net leverage
MEMO: Pro Forma Net Leverage | Gross Leverage: $3,740,000,000 ÷ $405,000,000 = 9.23x; Net Leverage: $3,560,000,000 ÷ $405,000,000 = 8.79x