DiamondHead Holdings in a preliminary proxy filing offered additional details regarding its proposed merger with Great Southern Homes (GSH), a residential construction company.
As a condition to the business combination, the DHHC stockholders are also being asked to approve a dual-class stock structure for the combined company, comprised of UHG Class A common stock, which will carry one vote per share, and UHG Class B common stock, and together with the UHG Class A Common Shares, which will carry two votes per share.
If approved, upon closing the company will be renamed United Homes Group and list on the Nasdaq under new ticker symbol UHG. Announced last month, the transaction values the combined company at a pro forma enterprise value of approximately $572 million.
As part of the transaction, existing GSH shareholders will roll 100% of their equity into shares of the combined company and, assuming no redemptions from DHHC public shareholders, will hold approximately 51% of the combined company at closing.
Assuming no redemptions, the transaction will deliver approximately $320 million in cash proceeds, net of transaction costs, as well as a $25 million commitment to purchase and not redeem DHHC public shares from the DHHC sponsor group, including Antara Capital.
The transaction includes an earn-out provision in which GSH stockholders are entitled to receive up to an aggregate maximum of 20 million additional shares over a five year period, if the share price of the combined company reaches certain thresholds. In addition, approximately 2.1 million shares owned by the sponsor currently will be subject to the earn-out. The transaction also provides that additional sponsor shares will become subject to the earn-out to the extent there is not $100 million of common stock at closing (including shares of common stock not redeemed, newly issued common stock and common stock subject to any convertible securities issued by DHHC prior to the closing). Read more.
