DEFM14A: Thunder Bridge Capital Partners IV, Inc. Stockholders to Vote on Business Combination with Coincheck Group N.V.

Thunder Bridge Capital Partners IV, Inc. is seeking stockholder approval for a business combination with Coincheck Group N.V., a Dutch public limited liability company, at a special meeting on December 5, 2024.

Summary

• Thunder Bridge Capital Partners IV, Inc. is holding a special meeting for stockholders to vote on a proposed business combination with Coincheck Group N.V.
• The meeting will take place on December 5, 2024, at 10:00 a.m. Eastern Time in Washington, DC.
• The business combination involves a merger of Thunder Bridge with a subsidiary of PubCo, with Coincheck becoming a wholly-owned subsidiary of PubCo.
• Thunder Bridge stockholders will exchange their shares for PubCo Ordinary Shares.
• The document also includes proposals for advisory governance changes, an omnibus incentive plan, and a potential adjournment of the meeting.
• The document outlines the terms of the Business Combination Agreement, including the share exchange, merger, and warrant conversion.
• The document provides details on the ownership structure of PubCo after the business combination, with varying scenarios based on redemption rates.
• The document also details the redemption rights of Thunder Bridge stockholders, allowing them to redeem their shares for cash.
• The document includes a summary of the historical financial information of both Thunder Bridge and Coincheck.
• The document includes a summary of the unaudited pro forma condensed combined financial information of the combined company.
• The document includes a detailed discussion of the risks associated with the business combination and the operations of Coincheck.

Sentiment

Score: 5

Explanation: The document presents a balanced view of the business combination, highlighting both the potential benefits and risks. While the language is professional, the presence of numerous risk factors and the mention of potential dilution and conflicts of interest temper the overall sentiment.

Positives

• The business combination provides an opportunity for Thunder Bridge stockholders to participate in the growth of a leading Japanese crypto exchange.
• The document provides a detailed overview of the business combination, including the terms of the agreement and the financial information of both companies.
• The document outlines the redemption rights of Thunder Bridge stockholders, allowing them to redeem their shares for cash if they do not wish to participate in the business combination.
• The document includes a summary of the unaudited pro forma condensed combined financial information of the combined company.

Negatives

• The document highlights the risks associated with the business combination, including the volatility of the crypto market and the regulatory environment.
• The document notes that the business combination may result in dilution for Thunder Bridge stockholders who do not redeem their shares.
• The document notes that the Post-Combination Company will be a controlled company, which may limit the influence of minority shareholders.
• The document notes that the Post-Combination Company will be a Dutch public company, and its shareholders may have rights different to those of shareholders of companies organized in the United States.

Risks

• The document highlights the risks associated with the business combination, including the volatility of the crypto market and the regulatory environment.
• The document notes that the business combination may result in dilution for Thunder Bridge stockholders who do not redeem their shares.
• The document notes that the Post-Combination Company will be a controlled company, which may limit the influence of minority shareholders.
• The document notes that the Post-Combination Company will be a Dutch public company, and its shareholders may have rights different to those of shareholders of companies organized in the United States.
• The document notes that the Post-Combination Company may be required to take write-downs or write-offs, or the Post-Combination Company may be subject to restructuring, impairment or other charges that could have a significant negative effect on the Post-Combination Companys financial condition, results of operations and the price of the Post-Combination Companys securities, which could cause you to lose some or all of your investment.
• The document notes that if the Business Combinations benefits do not meet the expectations of investors or securities analysts, the market price of Thunder Bridges securities or, following the Closing, PubCos securities, may decline.
• The document notes that Thunder Bridge has identified a material weakness in its internal controls over financial reporting as of December 31, 2023 relating to an ineffective control environment surrounding the lack of effectively designed controls to properly evaluate and assess certain period end expense accruals.
• The document notes that the unaudited pro forma financial information included herein may not be indicative of what the Post-Combination Companys actual financial position or results of operations would have been.
• The document notes that the Sponsor and Thunder Bridges executive officers and directors have agreed to vote in favor of the Business Combination, regardless of how the Public Stockholders vote.
• The document notes that Thunder Bridge may not be able to consummate an initial business combination within the required time period, in which case it would cease all operations except for the purpose of winding up and it would redeem the Public Shares and liquidate.
• The document notes that the Sponsor or Thunder Bridges directors, executive officers or advisors or their respective affiliates may elect to purchase shares from Public Stockholders, which may influence the vote on the Business Combination and reduce the public float of Thunder Bridge Common Stock.
• The document notes that the nominal purchase price paid by the Sponsor for the Founder Shares may significantly dilute the implied value of the Public Shares in the event we complete an initial business combination.
• The document notes that Public Stockholders who redeem their shares of Thunder Bridge Common Stock may continue to hold any Public Warrants they own, which results in additional dilution to non-redeeming holders upon exercise of the Public Warrants.
• The document notes that Thunder Bridges Sponsor, executive officers and directors have potential conflicts of interest in recommending that stockholders vote in favor of approval of the Business Combination Proposal and approval of the other proposals described in this proxy statement/prospectus.
• The document notes that there are risks to our stockholders who are not affiliates of the Sponsor of becoming stockholders of the Post-Combination Company through the Business Combination rather than acquiring securities of Coincheck directly in an underwritten public offering, including no independent due diligence review by an underwriter and conflicts of interest of the Sponsor.
• The document notes that the resignation of Goldman Sachs as financial advisor to Thunder Bridge in connection with the Business Combination may indicate that Goldman Sachs is unwilling to be associated with the disclosure in this proxy statement/prospectus or the underlying business or financial analysis related to the Business Combination, and no shareholder or investor should place any reliance on the fact that Goldman Sachs was involved with any aspect of the Business Combination.
• The document notes that certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be presented.
• The document notes that Thunder Bridge stockholders who do not redeem their shares of Thunder Bridge Common Stock will have reduced ownership and voting interest after the Business Combination and will exercise less influence over management.
• The document notes that Thunder Bridges ability to successfully effect the Business Combination and the Post-Combination Companys ability to successfully operate the business thereafter will be largely dependent upon the efforts of certain key personnel of Coincheck, all of whom we expect to stay with the Post-Combination Company following the Business Combination.
• The document notes that Thunder Bridges board of directors did not obtain a fairness opinion in determining whether to proceed with the Business Combination and, as a result, the terms may not be fair from a financial point of view to the Public Stockholders.
• The document notes that unlike many blank check companies, Thunder Bridge does not have a specified maximum redemption threshold, except that in no event will Thunder Bridge redeem Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001.
• The document notes that Public Stockholders will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances.
• The document notes that if third parties bring claims against Thunder Bridge, the proceeds held in the Trust Account could be reduced and the per share redemption amount received by stockholders may be less than $10.00 per share.
• The document notes that Thunder Bridges directors may decide not to enforce indemnification obligations against the Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to the Public Stockholders.
• The document notes that Thunder Bridges stockholders may be held liable for claims by third parties against Thunder Bridge to the extent of distributions received by them.
• The document notes that we may amend the terms of the Thunder Bridge Warrants in a manner that may be adverse to holders with the approval by the holders of at least a majority of the then outstanding Public Warrants.
• The document notes that PubCo may redeem your unexpired Public Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Public Warrants worthless.
• The document notes that Thunder Bridge will require Public Stockholders who wish to redeem their shares of Thunder Bridge Common Stock in connection with the Business Combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their rights.
• The document notes that we may be the target of securities class action and derivative lawsuits which could result in substantial costs and may delay or prevent the Business Combination from being completed.
• The document notes that the Thunder Bridge Warrants are accounted for as liabilities and the changes in value of the Thunder Bridge Warrants could have a material effect on Thunder Bridges financial results.
• The document notes that certain agreements relating to the Business Combination include a jury trial waiver that may limit the ability of the respective signatories thereto, some of whom may be shareholders of the Post-Combination Company, to bring or demand a jury trial in any litigation for claims based upon, arising out of or related to such agreement or the transactions contemplated thereby, which may discourage lawsuits with respect to such claims.
• The document notes that adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults or non-performance by financial institutions, could adversely affect our business, financial condition or results of operations, or our prospects.
• The document notes that market conditions, economic uncertainty or downturns could adversely affect our business, financial condition, operating results and our ability to consummate a Business Combination.
• The document notes that if Thunder Bridge is deemed to be an investment company for purposes of the Investment Company Act, Thunder Bridge would be required to institute burdensome compliance requirements and our activities would be severely restricted.
• The document notes that Thunder Bridge has received a notice from the staff of the Listing Qualifications Department of The Nasdaq Stock Market LLC advising that we have fallen below the 400 total holders minimum to be compliant with the Total Stockholders Rule for continued listing on the Nasdaq Global Market.
• The document notes that there is substantial doubt about Thunder Bridges ability to continue as a going concern.
• The document notes that a 1% U.S. federal excise tax may be imposed on us with respect to our redemptions of Public Shares.
• The document notes that the imposition of additional or higher taxes, whether resulting from a change of tax laws or a different interpretation or application of tax laws, could affect demand for our exchange services and/or may otherwise have a material adverse effect on our business, results from operations and/or financial condition.
• The document notes that if PubCo ceases to be a Dutch tax resident for the purposes of a tax treaty concluded by the Netherlands and in certain other events, we could potentially be subject to a proposed Dutch dividend withholding tax in respect of a deemed distribution up to our entire market value less paid-up capital insofar as it exceeds EUR 50 million.
• The document notes that we may not be eligible for withholding tax relief benefits in respect of income received by us under relevant treaties for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital and may be required to adopt additional measures to claim such benefits under the relevant tax treaties.
• The document notes that PubCo operates so as to be treated exclusively as a resident of the Netherlands for tax purposes, but other jurisdictions may also claim taxation rights over PubCo.
• The document notes that the Post-Combination Company may issue additional ordinary shares or other equity securities, which would dilute your ownership interests and may depress the market price of the Post-Combination Companys ordinary shares.
• The document notes that following the consummation of the Business Combination, the Post-Combination Company will incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on its business, financial condition and results of operations.
• The document notes that PubCo will qualify as a foreign private issuer within the meaning of the rules under the Exchange Act, and as such PubCo is exempt from certain provisions applicable to United States domestic public companies.
• The document notes that the Post-Combination Company will be a Dutch public company with limited liability, and its shareholders may have rights different to those of shareholders of companies organized in the United States.
• The document notes that our largest shareholder, Monex, will continue to exercise control over us after the Business Combination and may have interests that differ from or conflict with ours and exert influence over our management policies.

Future Outlook

PubCo intends to apply to have the PubCo Ordinary Shares and PubCo Warrants listed on Nasdaq under the ticker symbols CNCK and CNCKW, respectively. While trading on Nasdaq is expected to begin on the first business day following the Closing Date, there can be no assurance that the PubCo Ordinary Shares or PubCo Warrants will be listed on Nasdaq or that a viable and active trading market will develop.

Management Comments

• After careful consideration, the Thunder Bridge Board has unanimously approved the BCA and the transactions contemplated thereby, including the Business Combination, and recommends that Thunder Bridge stockholders vote FOR adoption of the BCA and FOR the other matters to be considered at the Stockholders Meeting.
• The board of directors of PubCo (the PubCo Board) and the board of directors of Merger Sub have unanimously approved the BCA and the transactions contemplated thereby, including the Business Combination.
• Monex, as the sole shareholder of PubCo entitled to vote at the general meeting of PubCo, has approved the BCA and the transactions contemplated thereby, including the Business Combination, and PubCo, as the sole shareholder of Merger Sub, has consented to the adoption of the BCA and approval of the Business Combination and the other transactions contemplated thereby.

Industry Context

The crypto exchange industry, in Japan and globally, is characterized by a rapid pace of change, volatility in the value of crypto assets, and an evolving regulatory environment. Marketplaces for NFTs, which Coincheck also operates, are also subject to an uncertain and evolving regulatory environment.

Comparison to Industry Standards

• The Thunder Bridge Board compared Coincheck to Coinbase Global Inc. (COIN), a leading U.S.-based cryptocurrency exchange listed via direct listing in April 2021. The Thunder Bridge Board determined that Coinbase was valued at approximately 6.2x revenue and 11.1x EBITDA for the year ended December 31, 2021.
• The Thunder Bridge Board also compared Coincheck to a group of publicly traded companies with significant exposure to cryptocurrency. The peer companies with significant exposure to cryptocurrency were Galaxy Digital Holdings Ltd (BRPHF), Voyager Digital Ltd (VYGVF), BC Group (0863.HK), and Eqonex Limited (EQOX).
• These peer companies had observed revenue and EBITDA financials for the year ended December 31, 2021. The Thunder Bridge Board determined that the peer companies with significant cryptocurrency exposure, for which multiples were calculable, were valued at range of 2.5x to 3.7x observed revenue for the year ended December 31, 2021 (Voyager and Galaxy, respectively) and approximately 6.4x EBITDA for the year ended December 31, 2021 (Galaxy).

Corporate Governance

Legal Proceedings

• The document notes that on June 5, 2023, the SEC filed a civil complaint in the U.S. District Court for the District of Columbia against Binance and other related entities, as well as Changpeng Zhao, Binances co-founder and CEO.
• The document notes that on June 6, 2023, the SEC filed a complaint in the U.S. District Court for the Southern District of New York against Coinbase for operating as an unregistered securities exchange, broker and clearing agency, and for the unregistered offer and sale of securities in connection with its staking-as-a-service program.
• The document notes that on July 1, 2024, the SEC filed suit against Silvergate Capital Corporation (Silvergate), the parent company of a bank which allegedly helped to facilitate fraud at FTX before its collapse, former CEO Alan Lane and former Chief Risk Officer Kathleen Fraher, claiming that they misled investors regarding the strength of Silvergates Bank Secrecy Act/Anti-Money Laundering compliance program and the monitoring of crypto customers, including FTX, by Silvergates wholly owned subsidiary, Silvergate Bank.
• The document notes that on July 2, 2024, in relation to the civil complaint filed by the SEC against Binance and other related entities, a U.S. federal court dismissed several claims, including that Binances fiat-backed stablecoin, BUSD, qualifies as an investment contract, although certain other claims by the SEC were allowed to proceed.
• The document notes that on August 7, 2024, Ripple Labs was fined $125 million in relation to the complaint initially filed by the SEC in December 2020 with respect to the institutional sales of the XRP token, which a Manhattan court judge ruled were unregistered securities offerings; the SEC has since filed an appeal.

Related Party Transactions

• The document notes that Thunder Bridge has entered into an Administrative Services Agreement with First Capital Group, LLC, an affiliate of the Sponsor, pursuant to which Thunder Bridge pays a total of $10,000 per month for office space, administrative and support services to such affiliate.
• The document notes that Thunder Bridge has entered into an Advisory Agreement with an affiliate of its Chief Executive Officer, pursuant to which Thunder Bridge pays a total of $20,000 per month for advisory services relating to its search for and consummation of an initial business combination.
• The document notes that Coincheck has entered into an agreement with its parent company, Monex Group, Inc., for the provision of business management services, for which Coincheck pays an annual business management service fee.

Stakeholder Impact

• Thunder Bridge stockholders will have the opportunity to vote on the proposed business combination and redeem their shares for cash if they do not wish to participate.
• Coincheck shareholders will receive PubCo Ordinary Shares in exchange for their existing equity interests in Coincheck.
• Employees of both Thunder Bridge and Coincheck may be affected by the business combination, including potential changes in compensation and benefits.
• Customers of Coincheck may experience changes in the products and services offered by the company after the business combination.
• Creditors of Thunder Bridge may be affected by the business combination, including the potential for changes in the terms of their agreements.

Next Steps

• Thunder Bridge stockholders are being asked to vote on the Business Combination Proposal, the Advisory Governance Proposals, the Omnibus Incentive Plan Proposal, and the Stockholder Adjournment Proposal at the special meeting on December 5, 2024.
• If the Business Combination Proposal is approved, the merger will be consummated, and PubCo Ordinary Shares and PubCo Warrants will be listed on Nasdaq.
• If the Business Combination Proposal is not approved, Thunder Bridge may seek an alternative business combination or liquidate.

Key Dates

Keywords

Coincheck, business combination, crypto exchange, merger, PubCo, Thunder Bridge, stockholders meeting, redemption rights, warrants, financial metrics, Japanese market, cryptocurrency, blockchain, NFT, digital assets