Composecure, Inc. (NASDAQ: CMPO) has announced its plan to spin-off a newly formed subsidiary called Resolute Holdings Management, Inc. The strategic move is intended to accelerate value-enhancing acquisitions for Composecure. As part of the spin-off, a wholly owned subsidiary of Composecure, Composecure Holdings, L.L.C., will enter into a management agreement with Resolute Holdings.
Under this agreement, Composecure Holdings, L.L.C. will pay Resolute Holdings a quarterly management fee in cash equal to 2.5% of Composecure’s latest twelve months’ adjusted EBITDA. Resolute Holdings will be responsible for providing oversight of Composecure’s capital allocation strategy, operational practices, as well as M&A sourcing and execution.
The spin-off of Resolute Holdings will be on a pro rata basis to all existing shareholders of Composecure. This means each existing shareholder will receive an allocation of shares in Resolute Holdings proportional to their current ownership in Composecure.
Resolute Holdings is expected to have limited profitability in fiscal year 2025 as it establishes operations and builds out infrastructure, including adding to its investment and operating team. These investments are designed to facilitate the acceleration of organic and value-enhancing inorganic growth at Composecure.
David Cote will serve as the executive chairman of the board of directors of Resolute Holdings, and Tom Knott will be the chief executive officer. The board of directors will also include John Cote, Joseph DeAngelo, Roger Fradin, Paul Galant, Brian Hughes, Mark James, Krishna Mikkilineni, and Jane Thompson.
Following the completion of the spin-off, Resolute Holdings is expected to trade under the ticker “RHLD” on NASDAQ. Goldman Sachs & Co. LLC is serving as financial advisor to Composecure, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal advisor.
The spin-off is subject to customary conditions, including the effectiveness of Form 10 registration with the Securities and Exchange Commission and final approval by Composecure’s board of directors. It is currently expected to be completed during the first quarter of 2025.
Composecure, founded in 2000, is a technology partner to market leaders, fintech's, and consumers, enabling trust for millions of people around the globe. The company's innovative payment card technology and metal cards with Arculus security and authentication capabilities deliver unique, premium branded experiences, enabling people to access and use their financial and digital assets.
Resolute Holdings Management, Inc. is a newly formed subsidiary of Composecure that is expected to be spun-off into a separate publicly traded company. It is an alternative asset management platform led by David Cote and Tom Knott, providing operating management services including oversight of capital allocation strategy, operational practices, and M&A sourcing and execution at Composecure and other managed businesses in the future. As a result of these announcements, the company's shares have moved -1.3% on the market, and are now trading at a price of $15.65. If you want to know more, read the company's complete 8-K report here.
