UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ___)
The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
Check the appropriate box to designate the rule pursuant to which this Schedule is filed:
Rule 13d-1(a)
Rule 13d-1(b)
Rule 13d-1(c)
Rule 13d-1(d)
Check box if the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g):
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.
The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
SCHEDULE 13D
CUSIP No.: 18975L109
SCHEDULE 13D
Cloudium Technologies plc
Ordinary Shares (Common Stock)
CUSIP No. 18975L109
This Schedule 13D (this "Statement") is being filed jointly by the Reporting Persons identified herein pursuant to Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with respect to the ordinary shares (common stock), par value $0.001 per share (the "Common Stock" or the "Shares"), of Cloudium Technologies plc, a public limited company incorporated under the laws of England and Wales ("Cloudium" or the "Issuer"). This Statement relates to the acquisition of beneficial ownership of all of the outstanding Common Stock of Cloudium in connection with the consummation, on July 9, 2024, of the merger (the "Merger") described herein.
The Reporting Persons have entered into a Joint Filing Agreement, dated July 19, 2024 (the "Joint Filing Agreement"), a copy of which is filed as Exhibit I hereto, pursuant to which the Reporting Persons have agreed to file this Statement jointly in accordance with the provisions of Rule 13d-1(k)(1) under the Exchange Act. The filing of this Statement shall not be construed as an admission that any Reporting Person is, for the purposes of Section 13(d) or Section 13(g) of the Exchange Act, the beneficial owner of any securities covered by this Statement other than to the extent of such person's pecuniary interest therein.
ITEM 1 — SECURITY AND ISSUER
This Statement relates to the ordinary shares (common stock), par value $0.001 per share, of Cloudium Technologies plc. The address of the principal executive offices of the Issuer is 600 Townsend Street, Suite 800, San Francisco, California 94103, which serves as the Issuer's United States headquarters. The Issuer's registered office is located at 45 Broadwick Street, London W1F 0DB, United Kingdom. The Issuer is incorporated under the laws of England and Wales with company number 09734521 and has a United States employer identification number (EIN) of 83-2196754.
Prior to the consummation of the Merger described in Item 4 below, the Common Stock traded on the Nasdaq Global Select Market under the ticker symbol "CLDM." Following the consummation of the Merger, the Common Stock was delisted from the Nasdaq Global Select Market effective July 10, 2024, and a Form 25 (Notification of Removal from Listing and/or Registration under Section 12(b) of the Exchange Act) was filed with the Securities and Exchange Commission (the "SEC") on that date. On July 30, 2024, a Form 15 (Certification and Notice of Termination of Registration under Section 12(g) of the Exchange Act or of the Duty to File Reports under Section 13 and 15(d) of the Exchange Act) was filed with the SEC, suspending the Issuer's reporting obligations under Sections 13 and 15(d) of the Exchange Act.
ITEM 2 — IDENTITY AND BACKGROUND
(a) Reporting Persons
This Statement is filed jointly by the following persons (collectively, the "Reporting Persons"):
1. Solara Digital Infrastructure Fund VI LP ("Fund VI")
Fund VI is a Delaware limited partnership. The principal business address of Fund VI is 1200 Market Street, Suite 3400, Wilmington, Delaware 19801. The employer identification number of Fund VI is 87-4523190. The principal business of Fund VI is serving as a private equity fund focused on digital infrastructure and enterprise software investments. Fund VI is a vintage 2022 fund with approximately $12.4 billion in aggregate committed capital from its limited partners. The general partner of Fund VI is Solara Fund VI GP LLC.
2. Solara Fund VI GP LLC ("Fund VI GP")
Fund VI GP is a Delaware limited liability company. The principal business address of Fund VI GP is 1200 Market Street, Suite 3400, Wilmington, Delaware 19801. The principal business of Fund VI GP is serving as the general partner of Fund VI, and in such capacity, Fund VI GP exercises investment discretion and management control over the assets and operations of Fund VI, including the voting and disposition of securities held by Fund VI. Fund VI GP is a wholly owned subsidiary of Solara Digital Infrastructure LP.
3. Solara Digital GP LLC ("Solara GP")
Solara GP is a Delaware limited liability company. The principal business address of Solara GP is 1200 Market Street, Suite 3400, Wilmington, Delaware 19801. The principal business of Solara GP is serving as the general partner of Solara Digital Infrastructure LP. In such capacity, Solara GP exercises management control over Solara Digital Infrastructure LP, which in turn controls Fund VI GP and, thereby, Fund VI.
4. Solara Digital Infrastructure LP ("Solara" or "SDILP")
SDILP is a Delaware limited partnership. The principal business address of SDILP is 1200 Market Street, Suite 3400, Wilmington, Delaware 19801. The principal business of SDILP is serving as a private equity sponsor focused on digital infrastructure and enterprise software assets, with assets under management of approximately $38 billion across six flagship funds and related co-investment vehicles. The general partner of SDILP is Solara Digital GP LLC.
5. Marcus Elliston
Marcus Elliston is a citizen of the United States. His business address is 1200 Market Street, Suite 3400, Wilmington, Delaware 19801. Mr. Elliston's principal occupation is serving as the Founder and Managing Partner of Solara Digital Infrastructure LP. In such capacity, Mr. Elliston, together with Ms. Narasimhan, exercises ultimate investment and voting authority over the Reporting Persons described above.
6. Priya Narasimhan
Priya Narasimhan is a citizen of the United States. Her business address is 1200 Market Street, Suite 3400, Wilmington, Delaware 19801. Ms. Narasimhan's principal occupation is serving as the Co-Managing Partner and Chief Investment Officer of Solara Digital Infrastructure LP. In such capacity, Ms. Narasimhan, together with Mr. Elliston, exercises ultimate investment and voting authority over the Reporting Persons described above.
The name, business address, present principal occupation or employment, and citizenship of each executive officer and director of Fund VI GP and Solara GP are set forth on Annex A hereto and are incorporated herein by reference.
(b)–(c) Business Address and Principal Occupation
The business address and principal occupation or employment of each Reporting Person are set forth in paragraph (a) above.
(d) Criminal Convictions
During the last five years, none of the Reporting Persons, and no executive officer or director of any entity Reporting Person identified in paragraph (a) above or on Annex A hereto, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) Civil Proceedings
During the last five years, none of the Reporting Persons, and no executive officer or director of any entity Reporting Person identified in paragraph (a) above or on Annex A hereto, has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree, or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
(f) Citizenship or Place of Organization
The citizenship or place of organization of each Reporting Person is as follows:
• Solara Digital Infrastructure Fund VI LP: Delaware limited partnership
• Solara Fund VI GP LLC: Delaware limited liability company
• Solara Digital GP LLC: Delaware limited liability company
• Solara Digital Infrastructure LP: Delaware limited partnership
• Marcus Elliston: Citizen of the United States
• Priya Narasimhan: Citizen of the United States
ITEM 3 — SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The total enterprise value of the transaction (the "Transaction") was approximately $6,800,000,000, reflecting a per-share merger consideration of approximately $36.92 per share, based on 184,200,000 shares of Common Stock outstanding as of January 22, 2024, the date of execution of the Merger Agreement (as defined below).
The aggregate sources of funds used to consummate the Transaction, including the payment of merger consideration to the Issuer's stockholders, the repayment of the Issuer's existing indebtedness, and the payment of estimated transaction fees and expenses, are described below:
Debt Commitment Letter. On January 22, 2024, Meridian Atlantic Bank, N.A. and Ironclad Capital Markets LLC executed a debt commitment letter (the "Debt Commitment Letter") in favor of Stratos Merger Sub Inc. (as defined below), committing an aggregate of $4,240,000,000 in senior secured credit facilities, consisting of (i) a $3,740,000,000 Term Loan B facility and (ii) a $500,000,000 Revolving Credit Facility. The Revolving Credit Facility was not drawn at the closing of the Merger.
Credit Agreement. On July 9, 2024, concurrently with the closing of the Merger, Cloudium Technologies plc (as the surviving corporation and borrower), Meridian Atlantic Bank, N.A. (as Administrative Agent), and the lenders party thereto entered into a Credit Agreement (the "Credit Agreement") providing for the credit facilities described in the Debt Commitment Letter. Counsel to the lenders in connection with the Credit Agreement was Winthrop & Hale LLP (Christine Novak, partner). The terms of the Credit Agreement are described in greater detail in Item 6 below.
Equity Commitment Letter. On January 22, 2024, Fund VI executed an equity commitment letter (the "Equity Commitment Letter") in favor of Stratos Merger Sub Inc., committing to fund an aggregate equity contribution of $2,832,888,096 to Merger Sub (or to one or more intermediate holding entities, at Fund VI's election) to finance a portion of the Merger consideration, repay existing indebtedness, and pay related fees and expenses.
Repayment of Existing Indebtedness. At the closing of the Merger, $820,000,000 of existing Cloudium indebtedness was repaid in full, consisting of $620,000,000 outstanding under a term loan facility and $200,000,000 outstanding under a drawn revolving credit facility, in each case under a credit agreement dated March 15, 2021, by and among Cloudium, Atlas Commercial Lending Corp. (as administrative agent), and the lenders party thereto. A payoff letter was executed on July 5, 2024, by Atlas Commercial Lending Corp. All liens securing such indebtedness were released at closing.
Escrow. Pursuant to the Escrow Agreement described in Item 6 below, an aggregate of $544,000,000 (representing 8% of the total deal value) was deposited with Cobalt Trust Company at the closing to secure the Issuer's indemnification obligations under the Merger Agreement. The escrow deposit will be released in two tranches: (i) 50% ($272,000,000) will be released on July 9, 2025 (12 months after closing), and (ii) the remaining 50% ($272,000,000) will be released on January 9, 2026 (18 months after closing), in each case subject to any pending or unsatisfied indemnification claims.
ITEM 4 — PURPOSE OF TRANSACTION
(a)–(j) Description of the Transaction and Its Purpose
The Merger
On July 9, 2024, Stratos Merger Sub Inc. ("Merger Sub"), a Delaware corporation and wholly owned subsidiary of Fund VI formed solely for the purpose of effecting the Merger, merged with and into Cloudium Technologies plc pursuant to the Agreement and Plan of Merger, dated as of January 22, 2024 (the "Merger Agreement"), by and among Cloudium, Merger Sub, and Fund VI. The Merger was effected as a reverse triangular merger under the Delaware General Corporation Law (the "DGCL"). At the effective time of the Merger (11:59 PM Eastern Time on July 9, 2024) (the "Effective Time"), Merger Sub merged with and into Cloudium, with Cloudium continuing as the surviving corporation and a wholly owned subsidiary of Fund VI.
Merger Sub
Merger Sub was incorporated on January 8, 2024, in the State of Delaware (Delaware Division of Corporations File No. 7923841). The registered office of Merger Sub was located at 1209 Orange Street, Wilmington, Delaware 19801. Merger Sub was formed solely for the purpose of facilitating the Merger, had no prior operations or assets other than those incident to its formation and the transactions contemplated by the Merger Agreement, and had no liabilities other than those arising under the Merger Agreement and the related transaction documents. The sole stockholder of Merger Sub immediately prior to the Effective Time was Fund VI.
Merger Consideration
At the Effective Time, each outstanding share of Common Stock of Cloudium (other than (i) shares subject to rollover elections pursuant to the Rollover Agreements described below, (ii) shares held in the treasury of Cloudium or owned by any direct or indirect wholly owned subsidiary of Cloudium, and (iii) shares held by stockholders who properly exercised and perfected, and did not withdraw or otherwise lose, their rights to appraisal under Section 262 of the DGCL ("Dissenting Shares")) was automatically cancelled and converted into the right to receive $36.92 per share in cash (the "Merger Consideration"), without interest and subject to applicable withholding taxes.
Treatment of Equity Awards
At the Effective Time, each unvested stock option, restricted stock unit ("RSU"), and performance-based restricted stock unit ("PSU") outstanding under the Cloudium Technologies plc 2018 Equity Incentive Plan and the Cloudium Technologies plc 2021 Equity Incentive Plan was treated in accordance with the terms of the Merger Agreement. Each vested in-the-money stock option was cancelled and converted into the right to receive an amount in cash equal to the product of (x) the excess, if any, of $36.92 over the exercise price of such stock option, multiplied by (y) the number of shares subject to such stock option, without interest and subject to applicable withholding taxes. Each unvested RSU was cancelled and converted into the right to receive the Merger Consideration with respect to each share underlying such RSU, subject to the same time-based vesting conditions as were applicable prior to the Merger. Each PSU was deemed earned at the greater of target performance and actual performance as of the closing date and was treated in the same manner as RSUs.
Rollover Equity
Pursuant to the terms of individual Rollover Agreements, each dated as of January 22, 2024, certain equity holders of Cloudium elected to contribute (or "roll over") a portion of their Common Stock in exchange for equity interests in the surviving corporation. Specifically:
(i) Jonathan Hargrove, the Chief Executive Officer of Cloudium, who held 7,736,400 shares (representing approximately 4.2% of the outstanding Common Stock), elected to roll over 50% of his shares (3,868,200 shares), representing a rollover value of approximately $142,814,544 based on the per-share Merger Consideration of $36.92; and
(ii) Pinnacle Growth Ventures LLC, which held 21,367,200 shares (representing approximately 11.6% of the outstanding Common Stock), elected to roll over 60% of its shares (12,820,320 shares), representing a rollover value of approximately $473,241,408 based on the per-share Merger Consideration of $36.92.
The aggregate value of rollover equity was approximately $616,055,952. The shares subject to rollover were not cancelled for cash at the Effective Time but were instead exchanged for equity interests in the surviving corporation.
Stockholder Approval
The Merger was approved at a special meeting of stockholders of Cloudium held on May 20, 2024 (the "Special Meeting"), at which the holders of approximately 82.4% of the shares of Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting voted in favor of the proposal to adopt the Merger Agreement. Blackthorn Proxy Advisors LLC served as the proxy solicitor for the Special Meeting.
In connection with the execution of the Merger Agreement, the board of directors of Cloudium (the "Board") received a written opinion from Veridian Partners LLC (Monica Pressler, Managing Director), dated January 21, 2024, to the effect that, as of such date and based upon and subject to the various qualifications, assumptions, and limitations set forth therein, the Merger Consideration to be received by the holders of Common Stock (other than shares subject to rollover elections, treasury shares, and Dissenting Shares) was fair, from a financial point of view, to such holders. The fairness opinion was made available to stockholders through the filing of the definitive proxy statement on Schedule 14A with the SEC on April 5, 2024.
Regulatory Approvals
The following regulatory approvals and clearances were obtained in connection with the Merger:
Hart-Scott-Rodino Antitrust Improvements Act of 1976. Fund VI and Cloudium each filed the requisite pre-merger notification and report forms under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with the Federal Trade Commission (the "FTC") and the Antitrust Division of the United States Department of Justice (the "DOJ") on February 9, 2024. The initial 30-day waiting period under the HSR Act expired on March 11, 2024, without the issuance of a request for additional information or documentary material (a "Second Request"). No further antitrust review was required in the United States.
United Kingdom Competition and Markets Authority. A Merger Notice Form was submitted to the United Kingdom Competition and Markets Authority (the "CMA") on February 12, 2024, with respect to the Transaction (CMA Case No. ME/7184/24). The CMA granted unconditional Phase 1 clearance on April 3, 2024, concluding that the Transaction did not give rise to a realistic prospect of a substantial lessening of competition in any market in the United Kingdom.
Committee on Foreign Investment in the United States. The parties did not submit a voluntary notice to the Committee on Foreign Investment in the United States ("CFIUS") with respect to the Transaction. Following an assessment by outside counsel, the parties determined that the Transaction did not involve a "TID U.S. business" (as defined in the regulations promulgated under Section 721 of the Defense Production Act of 1950, as amended) or "covered real estate" and accordingly was not subject to a mandatory filing obligation or expected to raise national security concerns warranting a voluntary filing.
European Union. No filing with the European Commission under the EU Merger Regulation (Council Regulation (EC) No. 139/2004) was required, as the applicable turnover thresholds were not met.
Change of Control Consents
The consummation of the Merger constituted a "change of control" (or similar triggering event) under certain of Cloudium's material agreements. The following change of control consents were required and were obtained prior to the closing:
(i) the consent of the requisite lenders under Cloudium's existing credit agreement dated March 15, 2021 (which consent was effectively mooted by the repayment of all outstanding indebtedness thereunder at closing);
(ii) the consent of Aegis Federal Solutions Inc. under the Master SaaS Agreement between Cloudium and Aegis Federal Solutions Inc. (representing approximately $84,000,000 in annual recurring revenue ("ARR")); and
(iii) the consent of Helix Data Systems GmbH under the Technology License Agreement between Cloudium and Helix Data Systems GmbH.
All required consents were obtained in form and substance reasonably satisfactory to Fund VI prior to the closing of the Merger.
Delisting and Deregistration
Following the consummation of the Merger, the Common Stock of Cloudium (Nasdaq ticker symbol "CLDM") was delisted from the Nasdaq Global Select Market effective as of July 10, 2024. A Form 25 (Notification of Removal from Listing and/or Registration under Section 12(b) of the Exchange Act) was filed with the SEC on July 10, 2024. On July 30, 2024, a Form 15 (Certification and Notice of Termination of Registration under Section 12(g) of the Exchange Act or of the Duty to File Reports under Section 13 and 15(d) of the Exchange Act) was filed with the SEC on behalf of the Issuer, suspending the Issuer's reporting obligations under Sections 13 and 15(d) of the Exchange Act. The duty to file reports under Section 15(d) of the Exchange Act with respect to the fiscal year in which the Form 15 was filed will be deemed suspended in accordance with the applicable rules of the SEC.
Post-Merger Corporate Governance
Following the consummation of the Merger, Cloudium survives as a wholly owned subsidiary of Fund VI. At the Effective Time, the certificate of incorporation and bylaws of Merger Sub became the certificate of incorporation and bylaws of the surviving corporation (subject to certain amendments specified in the Merger Agreement, including to reflect the name "Cloudium Technologies plc" as the name of the surviving corporation). The initial directors and officers of the surviving corporation were appointed by written consent of the board of directors of the surviving corporation on July 9, 2024, as contemplated by the Merger Agreement.
Purposes of the Acquisition
The Reporting Persons acquired beneficial ownership of all of the outstanding Common Stock of Cloudium in connection with the consummation of the Merger. Following the Merger, Cloudium became a privately held company. The Reporting Persons intend to cause Cloudium to continue operating its cloud-native enterprise resource planning ("ERP"), customer-relationship management ("CRM"), and business-intelligence ("BI") software-as-a-service ("SaaS") business substantially as currently conducted, while pursuing operational and strategic improvements designed to enhance the value of the investment. Such operational and strategic improvements may include, without limitation:
(i) the re-domestication of Cloudium from a public limited company incorporated under the laws of England and Wales ("plc") to a corporation incorporated under the laws of the State of Delaware ("Inc.") or another United States jurisdiction;
(ii) the reorganization of Cloudium's subsidiary structure to improve tax efficiency and simplify corporate governance;
(iii) the migration of certain intellectual property rights to newly formed or existing subsidiaries in tax-efficient jurisdictions; and
(iv) intercompany restructuring to align the Issuer's legal entity structure with its operational footprint and commercial arrangements.
Except as described in this Item 4, the Reporting Persons have no present plans or proposals that relate to or would result in any of the following: (a) the acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) an extraordinary corporate transaction, such as a merger, reorganization, or liquidation, involving the Issuer or any of its subsidiaries (other than the potential restructuring transactions described above); (c) a sale or transfer of a material amount of assets of the Issuer or of any of its subsidiaries; (d) any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board (other than changes effected at the Effective Time as described above); (e) any material change in the present capitalization or dividend policy of the Issuer; (f) any other material change in the Issuer's business or corporate structure; (g) changes in the Issuer's charter, bylaws, or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person; (h) causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association (the delisting having already been effected as described above); (i) a class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act (the Form 15 having already been filed as described above); or (j) any action similar to any of those enumerated above.
ITEM 5 — INTEREST IN SECURITIES OF THE ISSUER
(a) Aggregate Amount and Percentage of Class
As of the Effective Time, Fund VI is the sole stockholder of the surviving corporation. Each Reporting Person may be deemed to beneficially own 184,200,000 shares of Common Stock, representing 100% of the outstanding shares of Common Stock. This calculation is based on 184,200,000 shares of Common Stock outstanding as of the closing date of the Merger.
At the Effective Time, all shares of Common Stock (other than rollover shares and Dissenting Shares) were automatically cancelled and converted into the right to receive $36.92 in cash per share, without interest. All rollover shares held by Jonathan Hargrove and Pinnacle Growth Ventures LLC were exchanged for equity interests in the surviving corporation. As of the Effective Time, Fund VI is the registered holder and sole stockholder of record of all outstanding shares of common stock of the surviving corporation.
Each of Fund VI GP, Solara GP, SDILP, Marcus Elliston, and Priya Narasimhan may be deemed to beneficially own 100% of the outstanding equity of the surviving corporation by virtue of the chain of control relationships described in Item 2 above. Fund VI GP, as the general partner of Fund VI, may be deemed to share beneficial ownership of the securities held directly by Fund VI. SDILP, as the controlling entity of Fund VI GP, may be deemed to share beneficial ownership of such securities. Solara GP, as the general partner of SDILP, may be deemed to share beneficial ownership of such securities. Each of Marcus Elliston and Priya Narasimhan, as the managing partners and controlling persons of Solara GP and SDILP, may be deemed to share beneficial ownership of such securities.
(b) Power to Vote or Direct the Vote / Power to Dispose or Direct the Disposition
The voting and dispositive power of each Reporting Person with respect to the Common Stock is set forth below:
Sole Voting Power:
Fund VI: 184,200,000 shares (100%)
Fund VI GP: 0 shares
Solara GP: 0 shares
SDILP: 0 shares
Marcus Elliston: 0 shares
Priya Narasimhan: 0 shares
Shared Voting Power:
Fund VI: 0 shares
Fund VI GP: 184,200,000 shares (by virtue of its role as the general partner of Fund VI)
Solara GP: 184,200,000 shares (by virtue of its role as the general partner of SDILP, which controls Fund VI GP)
SDILP: 184,200,000 shares (by virtue of its control over Fund VI GP)
Marcus Elliston: 184,200,000 shares (by virtue of his role as Founder and Managing Partner of SDILP and controlling person of Solara GP)
Priya Narasimhan: 184,200,000 shares (by virtue of her role as Co-Managing Partner and Chief Investment Officer of SDILP and controlling person of Solara GP)
Sole Dispositive Power:
Fund VI: 184,200,000 shares (100%)
Fund VI GP: 0 shares
Solara GP: 0 shares
SDILP: 0 shares
Marcus Elliston: 0 shares
Priya Narasimhan: 0 shares
Shared Dispositive Power:
Fund VI: 0 shares
Fund VI GP: 184,200,000 shares (by virtue of its role as the general partner of Fund VI)
Solara GP: 184,200,000 shares (by virtue of its role as the general partner of SDILP, which controls Fund VI GP)
SDILP: 184,200,000 shares (by virtue of its control over Fund VI GP)
Marcus Elliston: 184,200,000 shares (by virtue of his role as Founder and Managing Partner of SDILP and controlling person of Solara GP)
Priya Narasimhan: 184,200,000 shares (by virtue of her role as Co-Managing Partner and Chief Investment Officer of SDILP and controlling person of Solara GP)
(c) Transactions Effected in the Past 60 Days
On July 9, 2024, all 184,200,000 shares of Common Stock of Cloudium were acquired by Fund VI through the consummation of the Merger described in Item 4 above. The aggregate consideration paid to the stockholders of Cloudium (inclusive of cash merger consideration and the deemed value of the rollover equity) was approximately $6,800,000,000.
Other than the Merger, none of the Reporting Persons has effected any transaction in the Common Stock during the 60-day period prior to the filing date of this Statement.
(d) Right of Any Other Person to Receive Dividends or Proceeds of Sale
Following the closing of the Merger, the rollover participants — Jonathan Hargrove and Pinnacle Growth Ventures LLC — hold equity interests in the surviving corporation alongside Fund VI. As equity holders in the surviving entity, such persons may have rights to receive distributions (including dividends or proceeds from the sale of securities) in respect of their equity interests, subject to the terms and conditions of the governing documents of the surviving corporation and any applicable stockholders' agreement.
Other than as described in the preceding paragraph, no other person is known to the Reporting Persons to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities of the Issuer.
(e) Date Beneficial Ownership Ceased to Exceed 5%
Not applicable. The beneficial ownership of each Reporting Person exceeds 5% of the outstanding Common Stock.
ITEM 6 — CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS, OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER
The following is a description of all contracts, arrangements, understandings, and relationships (legal or otherwise) between the Reporting Persons and any other person with respect to any securities of the Issuer, including, but not limited to, transfer or voting of any of the securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. The following descriptions are summaries only and are qualified in their entirety by reference to the full text of the agreements described below, copies of which are filed as exhibits hereto or will be filed by amendment.
Merger Agreement. Fund VI, Merger Sub, and Cloudium entered into the Agreement and Plan of Merger, dated as of January 22, 2024 (the "Merger Agreement"). The Merger Agreement is governed by the laws of the State of Delaware. The material terms of the Merger Agreement include the following:
Merger Consideration. Each outstanding share of Common Stock of Cloudium (other than rollover shares, treasury shares, and Dissenting Shares) was converted at the Effective Time into the right to receive $36.92 per share in cash, without interest and subject to applicable withholding taxes.
Structure. The Merger was effected as a reverse triangular merger under the DGCL, with Merger Sub merging with and into Cloudium and Cloudium surviving as a wholly owned subsidiary of Fund VI.
Indemnification. The Merger Agreement provides for post-closing indemnification of Fund VI and its affiliates (as indemnified parties) by the former stockholders of Cloudium (through the Stockholder Representative), subject to the following limitations: (i) a general indemnification cap of 15% of the deal value ($1,020,000,000); (ii) a survival period of 18 months following the closing date (expiring January 9, 2026); (iii) a deductible basket of 0.75% of the deal value ($51,000,000), structured on a tipping basis (meaning that once the aggregate amount of indemnifiable losses exceeds the basket amount, the indemnified parties may recover from the first dollar of losses); and (iv) a de minimis threshold of $500,000 per individual claim. Certain special indemnities — including those relating to fraud, willful breach, tax matters, and specified litigation — are not subject to the general cap and survive indefinitely (or, in the case of tax matters, until 60 days following the expiration of the applicable statute of limitations).
Exclusivity / No-Shop. The Merger Agreement contains a customary "no-shop" provision that became effective upon signing and restricted Cloudium and its representatives from soliciting, initiating, or encouraging competing acquisition proposals. The no-shop provision was subject to a customary "fiduciary-out" exception, which permitted the Board to respond to unsolicited superior proposals and to terminate the Merger Agreement in order to accept a superior proposal, in each case subject to compliance with specified notice and matching-rights procedures and the payment of the termination fee described below.
Termination Fees. The Merger Agreement provides for a termination fee of 3.25% of the deal value ($221,000,000) payable by Cloudium to Fund VI in the event the Merger Agreement is terminated by Cloudium in connection with the acceptance of a superior proposal or under certain other specified circumstances. The Merger Agreement also provides for a reverse termination fee of 5.5% of the deal value ($374,000,000) payable by Fund VI (or, pursuant to the Limited Guarantee described below, by Fund VI GP) to Cloudium in the event the Merger Agreement is terminated due to a failure of Fund VI to consummate the Merger in breach of its obligations thereunder.
Material Adverse Effect. The definition of "Material Adverse Effect" in the Merger Agreement includes customary carveouts for, among other things, the effects of pandemics, epidemics, and public health emergencies, acts of war, armed hostilities, sabotage, or terrorism, and changes in applicable law, regulation, or interpretation thereof.
Legal Counsel. The Issuer was represented in connection with the Transaction by Ridgeway Phelps & Sato LLP (Catherine Answorth, lead M&A partner, New York; Alistair Fenn, corporate partner, London). Fund VI and the Reporting Persons were represented by Calderwood & Harkness LLP (Harrison Wexford, responsible partner; Beatrice Holloway, billing partner; Tiffany Rosenthal, lead associate; Andrew Fitzpatrick, working associate).
A copy of the Merger Agreement (including all exhibits and schedules thereto) is filed as Exhibit A hereto and is incorporated herein by reference.
Equity Commitment Letter
On January 22, 2024, Fund VI executed the Equity Commitment Letter in favor of Merger Sub, pursuant to which Fund VI committed to contribute an aggregate of $2,832,888,096 in cash to Merger Sub (or one or more intermediate holding entities, at Fund VI's election) to fund a portion of the aggregate Merger Consideration, to repay existing indebtedness of Cloudium, and to pay related fees, costs, and expenses in connection with the Merger.
A copy of the Equity Commitment Letter is filed as Exhibit B hereto and is incorporated herein by reference.
Limited Guarantee. On January 22, 2024, Fund VI GP executed a limited guarantee (the "Limited Guarantee") in favor of Cloudium, pursuant to which Fund VI GP guaranteed the payment of (i) the reverse termination fee ($221,000,000) payable by Fund VI under the Merger Agreement and (ii) up to $25,000,000 in enforcement costs, for an aggregate guaranteed amount not to exceed $246,000,000. The obligations of Fund VI GP under the Limited Guarantee terminated upon the consummation of the Merger.
A copy of the Limited Guarantee is filed as Exhibit C hereto and is incorporated herein by reference.
Rollover Agreements. On January 22, 2024, Fund VI entered into separate Rollover Agreements with each of the following persons:
(i) Jonathan Hargrove Rollover Agreement. Mr. Hargrove agreed to contribute 50% of his 7,736,400 shares of Common Stock (i.e., 3,868,200 shares) to the surviving corporation in exchange for equity interests in the surviving corporation with a deemed value equal to approximately $142,814,544 (based on the per-share Merger Consideration of $36.92).
(ii) Pinnacle Growth Ventures LLC Rollover Agreement. Pinnacle Growth Ventures LLC agreed to contribute 60% of its 21,367,200 shares of Common Stock (i.e., 12,820,320 shares) to the surviving corporation in exchange for equity interests in the surviving corporation with a deemed value equal to approximately $473,241,408 (based on the per-share Merger Consideration of $36.92).
The aggregate rollover equity was approximately $616,055,952. The shares subject to the Rollover Agreements were not cancelled for cash at the Effective Time but were instead exchanged for equity interests in the surviving corporation.
Copies of the Rollover Agreements are filed as Exhibits D and E hereto and are incorporated herein by reference.
Voting and Support Agreements
On January 22, 2024, each of Jonathan Hargrove and Pinnacle Growth Ventures LLC entered into separate Voting and Support Agreements with Fund VI, pursuant to which each such person agreed, among other things, to:
(i) vote (or cause to be voted) all shares of Common Stock beneficially owned by such person in favor of the adoption of the Merger Agreement and the approval of the Merger at any meeting of stockholders of Cloudium (and at any adjournment or postponement thereof) at which such matters are submitted for the vote or consent of the stockholders;
(ii) vote (or cause to be voted) all such shares against any competing acquisition proposal or any action, proposal, transaction, or agreement that would reasonably be expected to impede, interfere with, delay, postpone, or materially and adversely affect the Merger or the other transactions contemplated by the Merger Agreement; and
(iii) refrain from transferring, encumbering, or otherwise disposing of any such shares (subject to certain customary exceptions) during the term of the Voting and Support Agreement.
Jonathan Hargrove's Voting and Support Agreement covered 7,736,400 shares, representing approximately 4.2% of the outstanding Common Stock. Pinnacle Growth Ventures LLC's Voting and Support Agreement covered 21,367,200 shares, representing approximately 11.6% of the outstanding Common Stock. Together, the Voting and Support Agreements covered shares representing approximately 15.8% of the outstanding Common Stock. The Voting and Support Agreements terminated upon the consummation of the Merger.
Copies of the Voting and Support Agreements are filed as Exhibits F and G hereto and are incorporated herein by reference.
Escrow Agreement. On January 22, 2024 (effective as of the closing of the Merger on July 9, 2024), Fund VI, Cobalt Trust Company (Laura Ng, Vice President, Escrow Services, 100 Wall Street, New York, New York 10005) (the "Escrow Agent"), and Douglas Pemberton (in his capacity as the Stockholder Representative) entered into an Escrow Agreement (the "Escrow Agreement"). Pursuant to the Escrow Agreement, an aggregate of $544,000,000 (representing 8% of the total deal value) was deposited with the Escrow Agent at the closing to secure the indemnification obligations of the former stockholders of Cloudium under the Merger Agreement.
The escrow funds are to be released as follows: (i) 50% of the escrow amount ($272,000,000) will be released to the Stockholder Representative (for the benefit of the former stockholders) on July 9, 2025 (12 months following the closing date), and (ii) the remaining 50% ($272,000,000) will be released on January 9, 2026 (18 months following the closing date), in each case less any amounts subject to pending or unsatisfied indemnification claims. The Escrow Agent will hold and disburse the escrow funds in accordance with the terms of the Escrow Agreement and joint written instructions from Fund VI and the Stockholder Representative (or, in the absence of joint instructions, pursuant to a final, non-appealable order of a court of competent jurisdiction).
A copy of the Escrow Agreement is filed as Exhibit H hereto and is incorporated herein by reference.
Stockholder Representative Agreement
On January 22, 2024, Douglas Pemberton, the former Independent Chairman of the Board of Directors of Cloudium, was appointed as the Stockholder Representative pursuant to a Stockholder Representative Agreement among Mr. Pemberton and the former stockholders of Cloudium (acting through the Merger Agreement's deemed-consent mechanism). As Stockholder Representative, Mr. Pemberton has the authority to act on behalf of the former stockholders in all matters relating to post-closing indemnification claims, escrow matters, purchase price adjustments, and other matters arising under the Merger Agreement following the closing. Mr. Pemberton is entitled to indemnification and expense reimbursement from the escrow funds in connection with the performance of his duties.
Credit Agreement and Related Debt Documents
On July 9, 2024, concurrently with the closing of the Merger, the following debt documents were executed and delivered:
Credit Agreement. Cloudium Technologies plc (as the surviving corporation and borrower), Meridian Atlantic Bank, N.A. (as Administrative Agent), Ironclad Capital Markets LLC (as co-arranger), and the lenders party thereto entered into a Credit Agreement (the "Credit Agreement") providing for (i) a $3,740,000,000 Term Loan B facility, bearing interest at SOFR plus 325 basis points per annum, maturing July 9, 2031, and (ii) a $500,000,000 Revolving Credit Facility, bearing interest at SOFR plus 275 basis points per annum, maturing July 9, 2029. The Revolving Credit Facility was not drawn at the closing. The Credit Agreement contains customary representations and warranties, affirmative and negative covenants, and events of default for leveraged acquisition financings. The Credit Agreement includes a total net leverage covenant requiring the borrower to maintain a total net leverage ratio of not greater than 6.50:1.00, stepping down over a three-year period to 5.00:1.00. As of the closing date, Cloudium's total leverage was approximately 9.24x (calculated as $3,740,000,000 of funded term loan debt divided by $405,000,000 of last-twelve-months ("LTM") EBITDA) on an unadjusted basis, and approximately 6.91x on a pro forma adjusted EBITDA basis (including $110,000,000 in estimated run-rate synergies and other adjustments permitted under the Credit Agreement).
Guarantee and Collateral Agreement. On July 9, 2024, the surviving corporation and its material domestic subsidiaries entered into a Guarantee and Collateral Agreement in favor of the Administrative Agent (for the benefit of the secured parties), pursuant to which such subsidiaries jointly and severally guaranteed the obligations under the Credit Agreement and pledged substantially all of their assets and equity interests as collateral.
Intercreditor Agreement. On July 9, 2024, the Administrative Agent and certain other creditors entered into an Intercreditor Agreement establishing the relative priority and enforcement rights of the parties with respect to the collateral securing the obligations under the Credit Agreement and any permitted junior lien or unsecured debt.
Co-Investment Agreement. On January 22, 2024, Fund VI and Solara Digital Co-Invest VI-A LP, a Delaware limited partnership (the "Co-Investor"), entered into a Co-Investment Agreement pursuant to which the Co-Investor agreed to co-invest $425,000,000 alongside Fund VI in connection with the Merger. The Co-Investor's commitment was funded at closing and constituted a portion of the aggregate equity contribution described in Item 3 above. The Co-Investor holds its interest through a co-investment vehicle managed by affiliates of Solara.
Representation and Warranty Insurance Policy
In connection with the Merger, a buyer-side representation and warranty insurance policy (the "R&W Policy") was issued by Northfield Assurance Ltd. (Patrick Graves, Senior Vice President, Transactional Risk, 30 St Mary Axe, London EC3A 8BF, United Kingdom). The material terms of the R&W Policy are as follows:
Policy Number: NFA-TRI-2024-00487
Binding Date: January 19, 2024
Effective Date: July 9, 2024 (the closing date of the Merger)
Policy Limit: $680,000,000, representing 10% of the total deal value
Retention: $544,000,000 (equal to the escrow amount), with a 50% retention drop-down to $272,000,000 after 12 months following the closing, contingent upon the absence of pending claims at such time
Premium: $13,600,000 (calculated at a rate of 2.0% on the policy limit), paid by Solara
Broker: Peregrine Advisory Group LLC (Timothy Gallagher, Managing Director); broker fee of $680,000
Subrogation: Northfield Assurance Ltd. has waived subrogation rights against Cloudium and its current and former officers and directors, except in cases of actual fraud
Non-Competition Agreements. In connection with the Merger, the following non-competition and non-solicitation agreements were executed on January 22, 2024:
(i) Jonathan Hargrove Non-Competition and Non-Solicitation Agreement. Mr. Hargrove, the Chief Executive Officer of Cloudium, agreed to certain non-competition and non-solicitation restrictions for a period following the closing, the terms and conditions of which are set forth in the agreement.
(ii) Sienna Whitfield Non-Competition and Non-Solicitation Agreement. Ms. Whitfield, a senior officer of Cloudium, agreed to certain non-competition and non-solicitation restrictions for a period following the closing, the terms and conditions of which are set forth in the agreement.