Quinpario Acquisition Corp. 2 Annual Report 2016 Form 10-K (NASDAQ:QPAC) Published: March 28th, 2016 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission File Number 001-367881 QUINPARIO ACQUISITION CORP. 2 (Exact Name of Registrant as Specified in Its Charter) Delaware 47-1347291 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) c/o Quinpario Partners 2, LLC 12935 N. Forty Drive Suite 201 St. Louis, Missouri 63141 (Address of Principal Executive Offices) (Zip Code) (314) 548-6200 (Registrant’s Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, par value $0.0001 per share The NASDAQ Stock Market LLC Warrants, each to purchase one-half of one Share of The NASDAQ Stock Market LLC Common Stock Units, each consisting of one Share of Common Stock and The NASDAQ Stock Market LLC one Warrant Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒ Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☒ No ☐ As of June 30, 2015 (the Registrant’s most recently completed second fiscal quarter), the aggregate market value of the shares of common stock held by non-affiliates was approximately $347,900,000 (based on a closing price of $9.94 per share). As of March 28, 2016, there were 43,750,000 shares of common stock, $.0001 par value per share, outstanding. Documents Incorporated by Reference: None. PART I ITEM 1. BUSINESS Quinpario Acquisition Corp. 2 (the “Company” or “we”) is a blank check company formed on July 15, 2014 for the purpose of entering into a merger, stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. The Company’s efforts in identifying a prospective target business is not limited to a particular industry or geographic region, although we are currently focusing our search for target businesses that operate in the specialty chemicals and performance materials industries. On January 22, 2015, we closed our initial public offering of 35,000,000 units, with each unit consisting of one share of common stock, par value $.0001 per share (“Common Stock”), and one warrant (“Warrant”) entitling the holder to purchase one-half of one share of common stock at a price of $5.75 per half share commencing 30 days after the completion of an initial business combination. Simultaneous with the consummation of the initial public offering, we consummated the private placement of 18,000,000 warrants (“Private Placement Warrants”) at a price of $0.50 per Private Placement Warrant, generating total proceeds of $9,000,000. The Private Placement Warrants were purchased by our sponsor, Quinpario Partners 2, LLC. Business Strategy Our management team is focusing on acquiring companies that will increase stockholder value by growing revenue (through organic growth and acquisitions) and improving the efficiency of business operations of the acquired company. We are currently focusing primarily on acquiring companies valued between $700 million and $2 billion of enterprise value. We believe that the acquisition and operation of an established business will provide a foundation from which to build a diversified business platform. Consistent with this strategy, we believe the following general criteria and guidelines are important in evaluating prospective target businesses. We use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into a business combination with a target business that does not meet these criteria and guidelines. ● Opportunities for Platform Growth: We intend to acquire one or more businesses or assets that we can grow both organically and through acquisitions. Particularly in regard to the specialty chemicals and performance materials industries, we may consider those sectors that complement our management team’s background, such as composites and carbon fibers, filtration and biomaterials, alternative energy and storage, specialty films and packaging, ceramics and inorganics, plastics and compounds, electronic chemicals and materials, specialty resins and plastics, chemicals and additives, and specialty fluids and lubricants. ● History of and Potential for Strong Free Cash Flow Generation : We intend to acquire one or more businesses that have the potential to generate strong free cash flow (i.e., companies that typically generate cash in excess of that required to maintain or expand the business’ asset base). We are focusing on businesses that have recurring revenue streams and low working capital and capital expenditure requirements. We may also seek to prudently leverage this cash flow in order to enhance stockholder value. ● Established Companies with Proven Track Records: We are seeking to acquire established companies, particularly those focused on industries connected to the specialty chemicals and performance materials industries with sound historical financial performance. We typically focus on companies with a history of strong operating and financial results. Although we are not restricted from doing so, we do not currently intend to acquire start-up companies. ● Experienced and Motivated Management Teams : We are seeking to acquire businesses that have strong, experienced management teams with a substantial personal economic stake in the performance of the acquired business. We are currently focusing on management teams with a proven track record of driving revenue growth, enhancing profitability and generating strong free cash flow. We also intend to focus on companies where we expect that the operating expertise of our officers and directors will complement the target’s management team. 2 ● Strong Competitive Industry Position: We are seeking to acquire businesses focused on the specialty chemicals and performance materials industries that have strong fundamentals, although we may acquire businesses in other industries. The factors we may consider include growth prospects, competitive dynamics and position, level of consolidation, need for capital investment, potential for improvement and barriers to entry. We focus on companies that have a leading or niche market position. We will likely analyze the strengths and weaknesses of target businesses relative to their competitors, focusing on technology, global positioning, product quality and services, customer loyalty, cost impediments associated with customers switching to competitors, intellectual property protection and brand positioning. We also intend seek to acquire one or more businesses that demonstrate advantages or have the potential to become advantaged when compared to their competitors, which may help to protect their market position and profitability. These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. Competitive Advantages We believe our competitive strengths to be the following: Status as a Public Company We believe our structure will make us an attractive business combination partner to