MNG Havayollari ve Tasimacilik, or MNG Airlines, a global logistics provider and e-commerce enabler, has entered into a definitive agreement to become publicly traded via a business combination with Golden Falcon Acquisition (GFX), a special purpose acquisition company. The transaction is expected to close in the first half of 2023, after which MNGA will be listed on the New York Stock Exchange under the new ticker symbol (MNGA). As a public company, MNGA is expected to gain increased financial flexibility, and to be well positioned to unlock new growth avenues and maximize value creation. For the three months ended September 30, the company’s revenue grew by 47% year-on-year to $90M, net income of $26M and adjusted EBITDA of $27M. Last twelve months revenue grew by 39% year-on-year to $353M, net income of $61 million and Adjusted EBITDA of $116M. Adjusted EBITDA margin for the last twelve months has improved by 400 basis points as compared with 2019, and revenue has grown at a 37% compound annual growth rate during this period. The company’s business model has four segments: Scheduled & Block Space, Charter, ACMI7, and Warehouse & Handling. The company’s cost base is mostly variable, with cost of goods sold representing 95% of its overall cost base in 2021. Company contracts have limited exposure to fuel costs, which are either 100% pass-through to the end customer or updated every two weeks. Revenues are generated in USD, EUR and GBP, collectively accounting for 98% of the total. The company has been net income-positive for the last 10 years. The company has net debt of $25M as of September 30. The transaction is expected to have a pro-forma enterprise value of $676M, assuming minimum gross transaction proceeds of $30M, implying a 5.8x multiple on LTM Adjusted EBITDA as of September 30. All references to available cash from the trust account and retained transaction proceeds are subject to any redemptions by the public stockholders of Golden Falcon. The company benefits from significant positive cash flow generation and a capex-light business model, being able to organically fund its growth plans. Its current business plan is fully funded regardless of transaction proceeds. Net proceeds from the transaction will therefore be distributed to the company’s existing shareholders, who are expected to continue to retain a significant stake in the company. The Golden Falcon management team screened over 500 potential targets since its IPO in December 2020. Prior to executing the business combination agreement with MNGA, the Golden Falcon team conducted extensive due diligence throughout the course of the past ten months, supported by its advisor UBS Investment Bank. In order to closely align incentives with the company and existing shareholders, the Golden Falcon team has agreed to subject over 90% of sponsor shares received as merger consideration to a vesting schedule. The proposed business combination, which has been unanimously approved by both the board of directors of Golden Falcon and the board of directors of MNGA, is expected to close in the first half of 2023, subject to approval by Golden Falcon’s stockholders and other customary closing conditions. Subject to agreement on terms that are satisfactory to the company and Golden Falcon, in order to provide certain redemption alternatives in connection with Golden Falcon’s stockholder vote to approve the business combination, the company and Golden Falcon intend to make available to Golden Falcon stockholders some or all of the following options: continue to hold their shares of Golden Falcon Class A Common Stock, elect to redeem their shares of common stock in accordance with the Golden Falcon Certificate of Incorporation or convert their shares of common stock into a newly issued security to be comprised of a combination of shares of common stock and convertible notes. The company and Golden Falcon intend for the newly issued security referred to in above to entitle such Golden Falcon stockholder to receive a portion of the value of its shares in the form of shares of Common Stock and a portion in the form of registered convertible notes, with both a cash coupon, a conversion premium, and other material terms that are expected to be mutually agreed by the company and Golden Falcon.
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