Santa Barbara-based Select Staffing, the largest private company in the Tri-Counties, plans to go public in an $840 million merger with a Florida-based company.
The deal, announced on Dec. 11, will see Select, which pulled in $1.4 billion in revenue last year, join with Atlas Acquisition Holding Corp, a publicly traded “blank check” firm that exists to buy into an operating company.
Select said in a release that it hopes to retire at least $200 million total debt, including a significant amount of cash-consuming senior debt, as a result of the merger and public offering.
Select’s current shareholders and some of its creditors stand to control the resulting company. Select’s current leaders — Chief Executive Officer Stephen Sorensen, President Paul Sorensen and Chief Financial Officer Jeff Mitchell — will remain in place.
Select shareholders will receive about 24.7 million shares of Atlas — or at least 42.5 percent of the combined company. Some of the company’s second-in-line creditors will get securities convertible into 13.4 percent of the resulting company’s stock.
The deal would also retire at least $92 million of $100 million second-lien debt with $25 million in and 7.8 million shares of stock.
“This is the next chapter in Select Staffing’s growth story,” Stephen Sorensen, Select Staffing chairman and CEO, said in a release.
The combined company trade on the NYSE Amex, where Atlas now trades, but intends to transfer to the NYSE. After closing, the new company is expected to have approximately 58.2 million shares outstanding.
Select has grown through acquisition in recent years, acquiring dozens of companies. It employs approximately 750 people in the region and a total 1,500 internationally.
“This transformative transaction strengthens our balance sheet, reinforces our business model, and raises our stature as a leading industry consolidator,” Select CEO Sorensen said in a release.
Atlas Acquisition Corp. is a special-purpose acquisition company founded last year. It went public in June 2008. Atlas had approximately $200 million in assets in trust as of Sept. 30, the company reported.
As part of the merger, Atlas’ founders will retire 1 million shares for no consideration. All outstanding Atlas warrants will be converted to 1.7 million shares of common stock at closing. Atlas common shares will remain outstanding.
“We believe this transaction represents a great investment opportunity for Atlas shareholders at a very attractive valuation and at an optimal time in the recovering business cycle,” James N. Hauslein, Atlas chairman and CEO, said in a release.