WELCOME MESSAGE
APFII and its member organisations, represented by APFII in this action, are offering to the Public, shares in the Special Purpose Asset Corporation, Hudson 800 Acquisitions Limited (Link to the SEC Filing here), of 99 Hudson Avenue, New York, NY 10001, USA.
Shares (are intended) to be traded on the US New York Stock Exchange (NYSE) under the ticker symbol HDSN.
APFII is seeking commitments of approximately USD 300m in this action - but has scope for in excess of an order of magnitude more - should the conditions of acquisition be deliver sufficient increasing returns to scale, to incentivise or justify an offering expansion.
As allowed by the SEC - APFII has pre-identified a number of potential targets, but have not - as per compliance with SEC rules - initiated material discussions or due diligence - and cannot yet confirm whether an acquisition will go ahead with one or more or any of these targets, or not.
On this basis - the SPAC format is well suited to the goals: It affords investors considerable protection, while offering significant upside potential should an acquisition follow on - and growth plans materialise.
More information about SPAC’s in general, is available from the SEC, and FINRA, including this SEC bulletin, and in the below video.
——— WELCOME VIDEO ————
APFII INTRODUCTION
In 2017, APFII announced an investment strategy for the Pacific Region, focussed on Financial Inclusion and Financial Infrastructure, resulting in multiple projects designed to deliver specific capital and economic outcomes for stakeholders.
This program brought together regulators, fintechs, established businesses, and investors, and has resulted in a network of National Payment System, Central Banking Services, Card and ID infrastructure, Payments and AML/Compliance Services, Cross border Mobile Money Systems, and Regional ultra-low cost FX markets, Trade Services, Pension Systems, and Lending.
APFII Achievements and benefits to the region (selected highlights):
Purchasing power parity in Tonga lifted 9% in 11 months
GDP has increased 70% (Tonga)
Remittances costs have fallen by almost 50%
De-risking has been solved in Australia and New Zealand for APFII members
Financial inclusion has lifted to almost 90% in active countries - a 600% increase, including broad access to insurance, micro savings, unsecured and collateralised lending and micro-lending (and associated credit bureau services), and pension systems.
APFII believes that this kind of infrastructure, developed and hardened in the Pacific, has the capacity to be replicated by existing financial services, technology, and emerging technology firms in other, much more heavily populated, and equally under-served markets. APFII seeks growth by acquisition in certain very specific circumstances (as detailed below) to assist with governance and technology, existing businesses that fit our criterion.
APFII has a membership of more than 22 regionally significant financial and related businesses, and an investor owned, APFII guided portfolio has proven to date to be highly resilient, effective and innovative combination, delivering excellent social and financial returns.
The returns on invested capital are approximately 40x (capital value), while cash-flow ROI is approximately 36% over 5 years.
PROPOSED SPAC - HUDSON 800 ACQUISITIONS INC.
SPAC rules offer to investors, the benefits APFII seeks to deliver.
In early 2020, APFII recognised that the SPAC mechanisms are closely congruent to the previous Holding Company structures used by APFII in the Pacific.
AFII has been bringing together investors and the means to deliver significant social financial and ecological goals in the Pacific with a series of programs (above) - backed by SPAC-style investor protecting Special Purpose Vehicles, and similarly deferred triggers.
A SPAC is a trust fund, usually listed on a formal stock exchange, whose purpose is to acquire a business, businesses, or assets that investors must first approve, before converting the trust fund into publicly traded equity (the equity ownership of a pro-rata share of the businesses present and future value). Once set up, a SPAC has typically two years to complete a ‘transaction’ - or up to three years according to the SEC, if the resulting company will be trading on a public market.
APFII seeks to secure funding commitments into the SPAC from public investors. If successful, this will place into trust sufficient capital to enable capital-backed exploration and discussions with companies, assets owners, or businesses that fit within a strict acquisition criterion (below). These criteria are established with the sole purpose of enabling management to identify acquisition targets with the greatest identifiable likelihood to generate superior long term cash flow and capital appreciation based stakeholder returns, while concurrently meeting market, stakeholder, and stock-holder needs, as defined within our SEC filing.
Sectors assessed will include financial services, and linked industries, where such acquisitions maximise HDSN’s capacity to deliver the highest possible probability of outstanding positive stockholder returns, while meeting a fundamentally broad-spectrum program of social benefit, at minimal cost (and long term tangible benefit) to investors.
HUDSON 800 Inc, has not begun due diligence on any party, in-keeping with SEC requirements for an SPAC IPO.
————— VIDEO ABOUT OUR PROPOSAL —————-
PROPOSITION SUMMARY
APFII seeks to invest approximately 300m US Dollars to acquire High Potential assets and “strategic capability” acquisitions that can generate significant social and financial return on an immediate and sustained basis.
SPAC co-investors (public “investors”) gain pro-rata co-ownership, and preferential returns to APFII staff management (the “sponsors”).
APFII seeks specifically:
Banking, Financial Services, Digital Infrastructure, or related assets, new or established, with low risk, very high-upside and sustained long-term present and potential benefits with very durable strategic advantage(s), and a strong capital base.
Assets and/or Operations that can reasonably be expected to generate a minimum of 10x return on capital over 10 years (or approximately 25% CAGR sustained), that are (relative to cash-flow or expenditure) capital non-intensive to “rapidly expand”.
Acquisitions that are considered Low Risk in the opinion of the Sponsors, and able to shield investors from excessive negative volatility or risk weighted downside exposure, better than most.
That presently deliver at least 15% ROI (historical EBITDA basis) and looking forward, the capacity to increase this by 100% of base, every year, for 5-10 years, at minimal cost comparative (to net revenue).
Deals that stand the best chance for Hudson 800 to secure a sustained AAA credit rating within 2-5 years, in the opinion of the sponsors.
Opportunities that do not waste the time (or capital) of the Sponsors, or The Investors.
High Growth programs that do not require additional external capital after acquisition.
To remain involved via HDSN, in the acquired assets/combination for an indefinite or perpetual time-frame.
FEES AND CHARGES - WHAT INVESTORS PAY
Introduction
Typical upfront fees imposed on investors for SPAC businesses, can equate to 20-30% of the share of invested capital, which is allocated the Sponsor (as a dilution - usually about 20%), and also to Investment Bank underwriters as cash fees, sometimes paid by the Sponsors. This can leave investors with approximately 72% or less of the share in the total value invested at the beginning of the investment program.
This can be fair - as the Sponsor may provide up to 7% of the capital to cover Investment Banking charges, as well as due diligence and establishment fees and costs to set up the SPAC, and find a target, comply with regulatory requirements, and effect an effective ongoing organisation.
However - sponsors are at risk of non completion of a deal, if investors do not approve their proposal, or the time limit expires. Investors have ultimate control of whether or not they approve of the work done by the sponsors - and this could leave the sponsor out of pocket for the costs, but with a rejected deal and refunded trust account.
Sponsors are potentially incentivised to find a deal that is primarily unlikely to be rejected - rather than focus on a deal that is going to give the best chance of add decades of value.
To rectify this incentive, our SPAC structure attempts to avoid all forms of lucrative costs.
APFII is a long term investor.
As such, APFII does not propose a fee structure that allows APFII (the sponsors) to benefit in the short term. APFII believes it can deliver low risk, high value long term outcomes that do not warrant high levels of up-front compensation (or options to liquidate long shares that may have been established for a nominal value) to mitigate the risk of the Sponsor.
For the comfort of investors in this Company, APFII places its interest into a voting trust that may not redeem or re-sell its shares for less than any value over time compounding at less than 26% CARG, or until all initial investors have exited or declined an exit at this price.
Details
APFII proposes a founders sponsor contribution compensation of 5% of equity (one quarter of typical founder stakes).
Plus 1% of profit - but not less than one quarter of on percent of acquisition date profit level.
APFII proposes conditions or exit fees, should shareholders, following the completion of a ‘combination transaction’, vote for a change of control that eliminates APFII from the management structure. Exit fees are designed to be nominal, and symbolic of an agreement to part ways, rather than any punitive form of disincentive, and are linked to the quality of the assets acquired.
Summary
APFII will spend its own money to run the acquisition and due-diligence (this is similar to many SPAC Sponsor contracts).
Investors will purchase common stock at $10.00 per share - and each have one vote, and one tenth of one warrant. Each warrant shall be priced at USD 11.50 per share, and is the right to buy a share from the company, at $11.50 at a time following the combination transaction, as specified in the SEC documents. Investors retain their warrant rights, even if they decline to approve the combination transaction. If less than 80% of the investors approve the combination transaction - all warrants will be worthless - and all investments will be returned pro-rata from the trust fund.
By in large - the funds in trust will be placed in low risk investments to preserve capital. Some of the trust fund investment instruments may be invested in instruments that hedge risk to certain proposed investments. There is a chance that the instruments will expire out of the money, and that the cost of these instruments may be lost from the value of the trust fund. SPAC’s are competing for investments - and we believe it prudent to include in the rules, some form of hedge against price escalation, if it can be acquired cost satisfactorily.
Important fine-print and rights of Investors compared to Sponsors
APFII Voting stock (Sponsor Shares) shall be of Class S, and will have 11 votes per stock, except in a vote of no confidence in the conduct of APFII or HDSN management, following the acquisition, where the vote pertains to the individual owner.
S-Class shares will be 5% of the initial capital. I-Class (Investor Class) will be 95%.
PIPE Contributions may be allowed in certain circumstances, and will have characteristics close to I Class. PIPE contributions may be made, but not necessarily must be made, in kind (such as by pledge of existing shares of any listed potential targets) and will be pro-rata by value.
S-Class shares shall have no special preference on dividend or capital preferences or grounds, beyond the below:
Class S voting stock comes with the following allowances, restrictions, and conditions:
Sponsor Shares must not be sold or liquidated at any price under $10.00 + 26% of CAGR, “the target price’. Class I shares (common investor stock) do not have this restriction.
If sponsor shares change control, or ownership, they revert to Common Stock (Class I) Investor shares.
Sponsor Shares cannot be liquidated at any price, unless Investor Shareholders have first declined a first right of refusal at that price, or the window given of 15 business days, following an appropriate notification of such an event that has been duly given for Class I shareholders, to accept or decline the proposed Class S price for Class I shares, via the Right of Refusal, to accept or decline the offer, has expired. Class I shareholders can request a tag-along at the proposed price - without restriction - however - if insufficient liquidity is available at that time, the S-Class stockholder may execute a purchase of any such I-Class shares so nominated, at the nominated price, but not for arbitrage purposes (being for resale in under 90 days).
Should a vote of no confidence be called on any (or all) management officer or officers, or any holder(s) of any Class S shares, such holders, and any Class S shareholders, including APFII, has the right to convert its Sponsor Shares, to Ordinary shares, or, to convert the ordinary shares to a Perpetual Bond, at the option and election of the shareholder. This option shall not expire, and can be executed subsequently at any time. Whereby the bond shall have an annual coupon of 5% of the profit rate, at the combination event, or the vote of no confidence, whichever is higher, and the yield shall be 0.1%.
The perpetual bond shall have no voting rights, and shall be inalienable from the value of the company, its IP, or any other income base or asset set, and shall be presented on a physical certificate signed by the chairman, with a nominal par value indicated. The value of the bond shall be the market value of the yield, at no less than a BBB rating.
Additional terms as listed in the SEC filing document.
APFII seeks from HUDSON 800, a fee, in lieu of a 75% reduction in capital - a fee of 1% of net profit - and no fee linked to any gross profit or net revenue basis. This fee is to run APFII and engage and employ the APFII management office, and to be clear about the incentives to maintain high levels of net operating profit at all times, and will be pro-rata up to the point at which its zero rating applies, and thereafter.
The Zero Rating applies for any level of profit that would elicit a fee above $9,999,999 USD, plus $1.00.
As above, a vote of no confidence to remove APFII from its role as sponsor or management, or any other chance of control affecting APFII and/or its fee, shall give APFII the right to convert its fee to equity, or a bond, or a cash value as above, and as stipulated in the SEC filing.
Were any variation exists - the SEC document shall prevail.
WHAT DOES APFII SEEK FROM THIS IPO?
APFII seeks the capital and investor contributions to continue its journey to grow large scale, profitable, socially responsible financial services and related infrastructure businesses.
APFII intends that any successful future acquisition(s) will be retained as subsidiaries of Hudson 800 Acquisitions Inc (which may be rebranded at a future date), and Hudson 800 (the SPAC) will seek rights to place at least two directors on the board of any acquired firm upon acquisition - and to exercise influence over the strategy and operations, where permitted by law and regulatory considerations, to enable co-operation and eventual maximum unification of all acquisitions, where desirable.
Existing acquired corporate management and governance structures will likely remain in place - but succession will, where legally permitted, be directed to Hudson 800 to appoint or approve senior executive or director succession, in its capacity as the shareholder. It is anticipated that this will give Hudson 800 three to five years to fully replace any board members, and or manage any appropriate transitions. Hudson 800 will act as an activist (100%) shareholder in the interests of the business, and its shareholders, and will make ad-hoc appointments as and where circumstances direct.
Hudson 800, staffed and managed primarily by APFII appointments initially, with future HDSN appointments or succession approved by HDSN shareholders appropriately, will control primarily the group re-investment strategy, using these funds to re-invest in the subsidiaries or new ventures, or acquisitions that in its judgement, best serves the HDSN shareholders. It is not foreseen that dividends will be paid for at least 10 years.
Hudson 800’s board will decide, if at all, what the share repurchase program will be, if it decides to undertake one. If it does - specific rules will apply giving preference to SPAC Investors, over the exit opportunity of SPAC Sponsor equity holders. Such decisions will be made according to shareholder votes - and shareholders will not be compelled to sell - unless the majority approve an action requiring it, and equally applying to all shares by class.
Goals
It is APFII’s intention to grow its network of highly profitable global service organisations that meet investors and community needs via superior, highly scalable, product and service offerings. APFII’s work in the Pacific is a template for systems at scale achieving national scale success.
This SPAC, the offering of shares to the public of the Special Purpose Acquisition Company called HUDSON 800 ACQUISITIONS INC., offers investors the benefit of a clean, safe launch platform into profitable, asset rich businesses at a good value, with partners and managers well known for their work in Financial Infrastructure, growth, profiatibility, deep technical innovation, and strategic foresight. APFII will hold a minority position in any successful combined transaction, but the team dedicated to Hudson 800 are market leaders and globally sourced experts in their fields.
While past performance is not an indicator of future success, APFII has the confidence to pursue an IPO with the intent to generate more than USD 1.5 billion dollars in profit, within three years of formation, and an upside congruent to the successes of its prior work in the Pacific markets, where its products lead the world on per capita scale, usage, and cash-flow across digital infrastructure.
HUDSON 800 - The Team
Hudson will draw on a team of 21 internal staff seconded from APFII for up to three years, as well as external experts, and APFII consultants to filter and compete selection and Due Diligence on behalf of APFII and our HUDSON 800 investors. These costs will be paid for by APFII - unless certain conditions permitted in the SEC filing documents arise, in the final stages of acquisition.
