Amendment No. 1 to Form S-4
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As filed with the Securities and Exchange Commission on January 20, 2017

Registration No. 333-215162

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

AMENDMENT NO. 1

TO

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Porto Holdco B.V.

(Exact Name of Registrant as Specified in its Articles of Association)

 

 

 

The Netherlands   7011   Not Applicable

(State or Other Jurisdiction of

Incorporation or Organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(IRS Employer

Identification Number)

Strawinskylaan 1209

1077 XX Amsterdam, the Netherlands

Tel: +31 20 808108

(Address, including Zip Code, and Telephone Number, including Area Code, of Principal Executive Offices)

 

 

Pedro Gouveia Fernandes das Neves

Managing Director

Porto Holdco B.V.

Strawinskylaan 1209

1077 XX Amsterdam, the Netherlands

Tel: +31 20 808108

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

 

 

Copies to:

 

Clive D. Bode, Esq.

General Counsel

Pace Holdings Corp.

301 Commerce Street

Suite 3300

Fort Worth, TX 76102

(212) 405-8458

 

Kyle C. Krpata, Esq.

James R. Griffin, Esq.

Weil, Gotshal & Manges LLP

201 Redwood Shores Parkway

Redwood Shores, CA 94065

(650) 802-3000

 

Christopher R. Machera, Esq.

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

(212) 310-8000

 

Bruce W. Gilchrist, Esq.

Michael E. McTiernan, Esq.

Hogan Lovells US LLP

Columbia Square

555 Thirteenth Street, NW

Washington, DC 20004

(202) 637-5600

 

David Camhi, Esq.

General Counsel

Playa Hotels & Resorts

1560 Sawgrass Corporate Parkway, Suite 310

Fort Lauderdale, FL, 33323

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effectiveness of this registration statement.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

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 the 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   ☒  (Do not check if a smaller reporting company)    Smaller reporting company  

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross Border Third-Party Tender Offer)  ☐

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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EXPLANATORY NOTE

This proxy statement/prospectus relates to a Transaction Agreement, dated as of December 13, 2016 (as it may be amended from time to time, the “Transaction Agreement”), by and among Pace Holdings Corp., a Cayman Islands exempted company (“Pace”), Playa Hotels & Resorts B.V., a Dutch private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) (“Playa”), Porto Holdco B.V., a Dutch private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) (“Holdco”) and New PACE Holdings Corp., a Cayman Islands exempted company (“New Pace”). The corporate form of Holdco will be converted to a Dutch public limited liability company (naamloze vennootschap) prior to consummation of the Business Combination described below. Upon the terms and subject to the conditions of the Transaction Agreement, Pace and Playa have agreed to effect a transaction that would replicate the economics of a merger of Pace and Playa. Pursuant to and in connection with the Transaction Agreement, among other things and subject to the terms and conditions contained therein:

 

    Pace will enter into a warrant agreement with TPACE Sponsor Corp., a Cayman Islands exempted company and the sponsor of Pace (“Pace Sponsor”), pursuant to which it will issue warrants (a “Pace Earnout Warrant”) to acquire Class A ordinary shares, par value $0.0001 per share, of Pace (each, a “Class A Share”), which warrants will, pursuant to the Pace Merger (defined below), be exchanged for warrants (a “Holdco Earnout Warrant”) to acquire ordinary shares, par value € 0.10 per share, of Holdco (each, a “Holdco Share”), in each case, upon the occurrence of certain events;

 

    Pace will enter into certain securities purchase agreements (the “Securities Purchase Agreements”) with the holders of Playa’s preferred shares (the “Playa Preferred Shareholders”) to acquire all of the preferred shares, par value $0.01 per share, of Playa (the “Playa Preferred Shares”) for an aggregate consideration value of approximately $346,000,000 (which includes accrued but unpaid dividends on the Playa Preferred Shares through December 31, 2016) plus additional arrearages and any accrued but unpaid dividends after December 31, 2016 through the closing of the Business Combination, subject to, in the case of the acquisition of Playa Preferred Shares from HI Holdings Playa, adjustment if any of the Playa Preferred Shares are converted into Playa Common Shares following the date of the Transaction Agreement pursuant to the Securities Purchase Agreement entered into with HI Holdings Playa which, following the Playa Preferred Share Acquisition, will be held by Holdco as Pace’s successor in interest under the Securities Purchase Agreements;

 

    Pace Sponsor will surrender for no consideration (i) 3,750,000 Class F ordinary shares, par value $0.0001 per share, of Pace issued to it prior to Pace’s initial public offering (the “Founder Shares”) and (ii) 7,333,333 of the warrants issued to it at the time of Pace’s initial public offering, each of which is exercisable for one-third of one Class A Share (the “Private Placement Warrants”);

 

    Pace will merge with and into New Pace, with New Pace being the surviving company in such merger (the “Pace Merger”);

 

    Following the consummation of the Pace Merger, Holdco, as Pace’s successor in interest by means of assignment under the Securities Purchase Agreements with the Playa Preferred Shareholders, will acquire all of the Playa Preferred Shares from the Playa Preferred Shareholders; and

 

    Playa will merge with and into Holdco, with Holdco being the surviving company in such merger (the “Playa Merger” and, collectively with the Pace Merger and the other transactions contemplated by the Transaction Agreement, the “Business Combination”).

As a result of the Business Combination, among other things,

 

    Holdco will be the ultimate parent company of New Pace (following the Pace Merger) and Playa’s direct and indirect subsidiaries;

 

   

At the effective time of the Pace Merger, (i) each Pace unit will be cancelled in exchange for consideration consisting of (A) the right to receive one validly issued, fully paid and non-assessable


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Class A ordinary share, par value $0.0001 per share, of New Pace (each, a “New Pace Class A Share”), which will be issued to the exchange agent and, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one validly issued, fully paid and non-assessable Holdco Share to be issued to the exchange agent against a contribution in kind to Holdco, and (B) on substantially equivalent terms and conditions as the Pace public warrant, one public warrant of New Pace (each, a “New Pace Public Warrant”), which warrant will be, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one public warrant of Holdco on substantially equivalent terms and conditions as the New Pace Public Warrant (each, a “Holdco Public Warrant”); (ii) each Class A Share will be converted into the right to receive one validly issued, fully paid and non-assessable New Pace Class A Share, which will be issued to the exchange agent and, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one validly issued, fully paid and non-assessable Holdco Share to be issued to the exchange agent against a contribution in kind to Holdco; (iii) each Founder Share will be converted into the right to receive one validly issued, fully paid and non-assessable Class F ordinary share, par value $0.0001 per share, of New Pace (each, a “New Pace Class F Share”), which will be issued to the exchange agent and, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one validly issued, fully paid and non-assessable Holdco Share to be issued to the exchange agent against a contribution in kind to Holdco; (iv) each Pace public warrant will be cancelled in exchange for consideration consisting of the issuance of, on substantially equivalent terms and conditions as the Pace public warrants, one New Pace Public Warrant, which warrant will be, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one Holdco Public Warrant on substantially equivalent terms and conditions as the New Pace Public Warrants; (v) each Private Placement Warrant will be cancelled in exchange for consideration consisting of the issuance of, on substantially equivalent terms and conditions as the Private Placement Warrants, one private placement warrant of New Pace (each, a “New Pace Private Placement Warrant”), which warrant will be, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one private placement warrant of Holdco (each, a “Holdco Private Placement Warrant”) on substantially equivalent terms and conditions as the New Pace Private Placement Warrants; and (vi) each Pace Earnout Warrant will be cancelled in exchange for consideration consisting of the issuance of, on substantially equivalent terms and conditions as the Pace Earnout Warrants, one Holdco Earnout Warrant.

 

    At the effective time of the Playa Merger, (i) each Playa ordinary share held by the Playa common shareholders will be exchanged for (A) the number of validly issued, fully paid and non-assessable Holdco Shares calculated in accordance with the principles set forth in the Transaction Agreement, (B) the number of Holdco Private Placement Warrants calculated in accordance with the principles set forth in the Transaction Agreement and (C) a number of warrants (each, a “Playa Earnout Warrant”) to acquire Holdco Shares, calculated in accordance with the principles set forth in the warrant agreements to be executed by Holdco and the holders of Playa Common Shares as of immediately prior to the closing of the Business Combination, upon the occurrence of certain events, and (ii) the consideration to be paid to the Playa Preferred Shareholders in connection with the Playa Preferred Share acquisition will be calculated based on an aggregate amount equal to $8.40 for each outstanding Playa Preferred Share (plus any arrearages and accrued and unpaid dividends thereon through December 31, 2016), for an aggregate consideration value of approximately $346,000,000 (which includes accrued but unpaid dividends on the Playa Preferred Shares through December 31, 2016), plus any additional arrearages and additional accrued but unpaid dividends thereon after December 31, 2016 through the closing of the Business Combination, subject to adjustment, in the case of the acquisition of Playa Preferred Shares from HI Holdings Playa, if any of the Playa Preferred Shares are converted into Playa Common Shares following the date of the Transaction Agreement pursuant to the Securities Purchase Agreement entered into with HI Holdings Playa which, following the Playa Preferred Share Acquisition, will be held by Holdco as Pace’s successor in interest under the Securities Purchase Agreements.

In connection with the foregoing and concurrently with the execution of the Transaction Agreement, Pace entered into subscription agreements with certain investors, including certain members of Pace management and


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affiliates, pursuant to which such investors agreed to subscribe for and purchase, and Pace agreed to issue and sell to such investors, newly issued Class A Shares for gross proceeds of approximately $50,000,000 (the “Private Placement”). At the effective time of the Pace Merger, each Class A Share purchased in the Private Placement will be exchanged for an equivalent number of New Pace Class A Shares upon consummation of the Pace Merger, which such shares will be issued to the exchange agent and, immediately after the Pace Merger and prior to the consummation of the Playa Merger, will be exchanged for an equivalent number of Holdco Shares. The Class A Shares to be issued pursuant to the subscription agreements have not been registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. The Private Placement is contingent upon, among other things, the closing of the Business Combination.

In addition, prior to the consummation of the Business Combination, Holdco intends to offer up to $1,000,000 of Holdco Shares to Playa employees, their family members and persons with business relationships with Playa. The offer price will equal the effective price per Class A Share paid by investors unaffiliated with Pace in the Private Placement. This offering and any sales of Holdco Shares made pursuant to this offering will not be registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. The closing of this offering is contingent upon, among other things, the closing of the Business Combination and is expected to occur after the closing of the Business Combination. The number of shares sold pursuant to this offering will reduce by an equivalent number of Holdco Shares the commitment of certain members of Pace management and affiliates to purchase Class A Shares in the Private Placement.

With respect to Pace and the holders of its ordinary shares, this proxy statement/prospectus serves as:

 

    A proxy statement for the extraordinary general meeting of Pace shareholders being held on [●], 2017, where Pace shareholders will vote on, among other things, a proposal to approve the Pace Merger and a proposal to adopt and approve the Transaction Agreement and the Business Combination; and

 

    A prospectus for the Holdco Shares and Holdco Public Warrants that Pace shareholders and warrant holders (in each case, other than Pace Sponsor) will receive in the Business Combination.

This proxy statement/prospectus does not serve as a prospectus for the Holdco Shares that Playa shareholders, Pace Sponsor and Pace’s independent directors will receive in the Business Combination, as such shares will be offered to such holders in a private offering. In addition, this proxy statement/prospectus does not serve as a prospectus for (i) the Holdco Private Placement Warrants or Holdco Earnout Warrants that Pace Sponsor will receive in the Business Combination, as such warrants will also be offered to Pace Sponsor in a private offering, and (ii) the Holdco Private Placement Warrants or Playa Earnout Warrants that Playa shareholders will receive in the Business Combination, as such warrants will be offered to Playa shareholders in a private offering.


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The information contained in this document is subject to completion or amendment. A registration statement relating to these securities has been filed with the United States Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document is not an offer to sell these securities and it is not soliciting an offer to buy these securities, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale is not permitted or would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

PRELIMINARY – SUBJECT TO COMPLETION, DATED JANUARY 20, 2017

LETTER TO SHAREHOLDERS OF PACE HOLDINGS CORP.

Pace Holdings Corp.

301 Commerce Street, Suite 3300

Fort Worth, Texas 76102

Dear Pace Holdings Corp. Shareholder:

You are cordially invited to attend an extraordinary general meeting of the shareholders of Pace Holdings Corp., a Cayman Islands exempted company (“Pace”), which will be held on [●] at [●] local time at [●] (the “Extraordinary General Meeting”).

On December 13, 2016, Pace, Playa Hotels & Resorts B.V., a Dutch private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) (“Playa”), Porto Holdco B.V., a Dutch private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) which prior to consummation of the Business Combination, will be converted to a Dutch public limited liability company (naamloze vennootschap) and will change its name to Playa Hotels & Resorts N.V. (“Holdco”), and New PACE Holdings Corp., a Cayman Islands exempted company (“New Pace”), entered into a Transaction Agreement (as it may be amended from time to time, the “Transaction Agreement”), pursuant to which, and in connection therewith, among other things, (i) Pace will issue to TPACE Sponsor Corp., a Cayman Islands exempted company and the sponsor of Pace (“Pace Sponsor”), warrants (a “Pace Earnout Warrant”) to acquire Class A ordinary shares, par value $0.0001 per share, of Pace (each, a “Class A Share”), which warrants will, pursuant to the Pace Merger (as defined below), be exchanged for warrants (each, a “Holdco Earnout Warrant”) to acquire ordinary shares, par value € 0.10 per share, of Holdco (each, a “Holdco Share”), in each case, upon the occurrence of certain events; (ii) Pace will enter into certain securities purchase agreements (the “Securities Purchase Agreements”) with the holders of Playa’s preferred shares (the “Playa Preferred Shareholders”) to acquire all of the preferred shares, par value $0.01 per share, of Playa (the “Playa Preferred Shares”); (iii) Pace Sponsor will surrender for no consideration (a) 3,750,000 Class F ordinary shares, par value $0.0001 per share, of Pace issued to it prior to Pace’s initial public offering (the “Founder Shares”) and (b) 7,333,333 of the warrants issued to it at the time of Pace’s initial public offering, each of which is exercisable for one-third of one Class A Share (the “Private Placement Warrants”); (iv) Pace will merge with and into New Pace, with New Pace being the surviving company in such merger (the “Pace Merger”); (v) Holdco, as Pace’s successor in interest under the Securities Purchase Agreements with the Playa Preferred Shareholders following the consummation of the Pace Merger, will acquire all of the Playa Preferred Shares from the Playa Preferred Shareholders; and (vi) Playa will merge with and into Holdco, with Holdco being the surviving company in such merger (the “Playa Merger” and, collectively with the Pace Merger and the other transactions contemplated by the Transaction Agreement, the “Business Combination”). The effect of the foregoing would replicate the economics of a merger of Pace and Playa.

At the Extraordinary General Meeting, Pace shareholders will be asked to consider and vote upon a proposal (the “Business Combination Proposal” or “Proposal No. 1”) to adopt the Transaction Agreement, a copy of which is attached to the accompanying proxy statement/prospectus as Annex A, and approve the transactions contemplated thereby, including the Business Combination.

 

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As further described in the accompanying proxy statement/prospectus, upon consummation of the Business Combination, among other things:

 

    Holdco will be the surviving company in the Playa Merger and will be the ultimate parent company of New Pace (following the Pace Merger) and Playa’s direct and indirect subsidiaries;

 

    At the effective time of the Pace Merger, (i) each Pace unit will be cancelled in exchange for consideration consisting of (A) the right to receive one validly issued, fully paid and non-assessable Class A ordinary share, par value $0.0001 per share, of New Pace (each, a “New Pace Class A Share”), which will be issued to the exchange agent and, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one validly issued, fully paid and non-assessable Holdco Share to be issued to the exchange agent against a contribution in kind to Holdco, and (B) on substantially equivalent terms and conditions as the Pace public warrants, one public warrant of New Pace (each, a “New Pace Public Warrant”), which warrant will be, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one public warrant of Holdco on substantially equivalent terms and conditions as the New Pace Public Warrants (each, a “Holdco Public Warrant”); (ii) each Class A Share will be converted into the right to receive one validly issued, fully paid and non-assessable New Pace Class A Share, which will be issued to the exchange agent and, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one validly issued, fully paid and non-assessable Holdco Share to be issued to the exchange agent against a contribution in kind to Holdco; (iii) each Founder Share will be converted into the right to receive one validly issued, fully paid and non-assessable Class F ordinary share, par value $0.0001 per share, of New Pace (each, a “New Pace Class F Share”), which will be issued to the exchange agent and, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one validly issued, fully paid and non-assessable Holdco Share to be issued to the exchange agent against a contribution in kind to Holdco; (iv) each Pace public warrant will be cancelled in exchange for consideration consisting of the issuance of, on substantially equivalent terms and conditions as the Pace public warrants, one New Pace Public Warrant, which warrant will be, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one Holdco Public Warrant on substantially equivalent terms and conditions as the New Pace Public Warrants; (v) each Private Placement Warrant will be cancelled in exchange for consideration consisting of the issuance of, on substantially equivalent terms and conditions as the Private Placement Warrants, one private placement warrant of New Pace (each, a “New Pace Private Placement Warrant”), which warrant will be, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one private placement warrant of Holdco (each, a “Holdco Private Placement Warrant”) on substantially equivalent terms and conditions as the New Pace Private Placement Warrants; and (vi) each Pace Earnout Warrant will be cancelled in exchange for consideration consisting of the issuance of, on substantially equivalent terms and conditions as the Pace Earnout Warrants, one Holdco Earnout Warrant; and

 

   

At the effective time of the Playa Merger, (i) each Playa ordinary share held by the Playa common shareholders will be exchanged for (A) the number of validly issued, fully paid and non-assessable Holdco Shares calculated in accordance with the principles set forth in the Transaction Agreement, (B) the number of Holdco Private Placement Warrants calculated in accordance with the principles set forth in the Transaction Agreement and (C) a number of warrants (each, a “Playa Earnout Warrant”) to acquire Holdco Shares, calculated in accordance with the principles set forth in the warrant agreements to be executed by Holdco and the holders of Playa Common Shares as of immediately prior to the closing of the Business Combination, upon the occurrence of certain events, and (ii) the consideration to be paid to the Playa Preferred Shareholders in connection with the Playa Preferred Share acquisition will be calculated based on an aggregate amount equal to $8.40 for each outstanding Playa Preferred Share, for an aggregate consideration value of approximately $346,000,000 (which includes accrued but unpaid dividends on the Playa Preferred Shares through December 31, 2016), plus any additional arrearages and additional accrued but unpaid dividends thereon after December 31, 2016 through the closing of the Business Combination, subject to, in the case of the acquisition of Playa Preferred Shares

 

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from HI Holdings Playa, adjustment if any of the Playa Preferred Shares are converted into Playa Common Shares following the date of the Transaction Agreement pursuant to the Securities Purchase Agreement entered into with HI Holdings Playa which, following the Playa Preferred Share Acquisition, will be held by Holdco as Pace’s successor in interest under the Securities Purchase Agreements.

In connection with the foregoing and concurrently with the execution of the Transaction Agreement, Pace entered into subscription agreements with certain investors, including certain members of Pace management and affiliates, pursuant to which such investors agreed to subscribe for and purchase, and Pace agreed to issue and sell to such investors, newly issued Class A Shares for gross proceeds of approximately $50,000,000 (the “Private Placement”). At the effective time of the Pace Merger, each Class A Share purchased in the Private Placement will be exchanged for an equivalent number of New Pace Class A Shares upon consummation of the Pace Merger, which such shares will be issued to the exchange agent and, immediately after the Pace Merger and prior to the consummation of the Playa Merger, will be exchanged for an equivalent number of Holdco Shares. The Class A Shares to be issued pursuant to the subscription agreements have not been registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. The Private Placement is contingent upon, among other things, the closing of the Business Combination.

In addition, prior to the consummation of the Business Combination, Holdco intends to offer up to $1,000,000 of Holdco Shares to Playa employees, their family members and persons with business relationships with Playa. The offer price will equal the effective price per Class A Share paid by investors unaffiliated with Pace in the Private Placement. This offering and any sales of Holdco Shares made pursuant to this offering will not be registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. The closing of this offering is contingent upon, among other things, the closing of the Business Combination and is expected to occur after the closing of the Business Combination. The number of Holdco Shares sold pursuant to this offering will reduce by an equivalent number of shares the commitment of certain members of Pace management and affiliates to purchase Class A Shares in the Private Placement.

In connection with the foregoing and concurrently with the execution of the Transaction Agreement, Pace, Playa and certain shareholders of Playa entered into a Voting Agreement dated as of December 13, 2016, whereby such shareholders have agreed to vote their shares in favor of the transactions contemplated by the Transaction Agreement, including the proposed Business Combination, at any meeting of Playa’s shareholders or action by written consent in lieu thereof, subject to certain limitations.

In addition to the Business Combination Proposal, Pace shareholders are being asked to (i) consider and vote upon a proposal to approve the Pace Merger and authorize, approve and confirm the Plan of Merger, independently of the proposal to approve the Business Combination (the “Pace Merger Proposal”) (“Proposal No. 2”); (ii) consider and vote upon, on a non-binding advisory basis, a proposal to approve certain governance provisions in the Holdco Articles of Association (the “Holdco Articles of Association Proposal”) (“Proposal No. 3”); and (iii) to consider and vote upon a proposal to adjourn the Extraordinary General Meeting to a later date or dates (A) to the extent necessary to ensure that any required supplement or amendment to this proxy statement/prospectus is provided to Pace shareholders or, if as of the time for which the Extraordinary General Meeting is scheduled, there are insufficient Pace Ordinary Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the Extraordinary General Meeting, (B) in order to solicit additional proxies from Pace shareholders in favor of the Business Combination Proposal or the Pace Merger Proposal, or (C) if Pace shareholders redeem an amount of Class A Shares such that the minimum proceeds condition to each party’s obligation to consummate the Business Combination would not be satisfied (the “Adjournment Proposal” or “Proposal No. 4”). The Adjournment Proposal will only be presented to Pace shareholders in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal and the Pace Merger Proposal, or in the event that Pace shareholders redeem an

 

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amount of Class A Shares such that the minimum proceeds condition to each party’s obligation to consummate the Business Combination would not be satisfied.

Each of these proposals is more fully described in this proxy statement/prospectus, which each shareholder is encouraged to read carefully.

Pace’s publicly-traded ordinary shares, units and warrants are currently listed on the NASDAQ Capital Market under the symbols “PACE,” “PACEU” and “PACEW,” respectively. Upon the closing of the Business Combination, the Pace securities will be delisted from NASDAQ. The Holdco Shares and Holdco Public Warrants will trade under the symbols “PLYA” and “PLYAW,” respectively, following the consummation of the Business Combination.

Pursuant to its amended and restated memorandum and articles of association, Pace is providing its public shareholders with the opportunity to redeem, upon the closing of the Business Combination, Class A Shares then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the closing of the Business Combination) in the Trust Account that holds the proceeds (including interest, which shall be net of taxes payable) of the Pace IPO. Redemptions referred to herein shall take effect as repurchases under Pace’s amended and restated memorandum and articles of association. The per-share amount Pace will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commission totaling $15,750,000 that Pace will pay to the underwriters of the Pace IPO or transaction expenses incurred in connection with the Business Combination. For illustrative purposes, based on the fair value of marketable securities held in the Trust Account of approximately $450,783,729 as of December 31, 2016, the estimated per share redemption price would have been approximately $10.01. Public shareholders may elect to redeem their shares even if they vote for the Business Combination. A public shareholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 15% of the Class A Shares included in the units sold in the Pace IPO (i.e., in excess of 6,750,000 Class A Shares). Pace has no specified maximum redemption threshold under its amended and restated memorandum and articles of association, other than the aforementioned 15% threshold. Each redemption of Class A Shares by Pace’s public shareholders will reduce the amount in the Trust Account, which held marketable securities with a fair value of approximately $450,783,729 as of December 31, 2016. The Transaction Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the amount in the Trust Account (net of the amount of any Pace shareholder redemptions) and the proceeds from the Private Placement, equaling or exceeding $375,000,000 (subject to a reduction to an amount no less than $325,000,000 in connection with any Hyatt Preferred Share Adjustment (as defined below)). The conditions to closing in the Transaction Agreement are for the sole benefit of the parties thereto and may be waived by such parties. If, as a result of redemptions of Class A Shares by Pace’s public shareholders, this condition is not met or is not waived, then each of Pace and Playa may elect not to consummate the Business Combination. In addition, in no event will Pace redeem its Class A Shares in an amount that would cause its net tangible assets to be less than $5,000,001, as provided in Pace’s amended and restated memorandum and articles of association and as required as a closing condition to each party’s obligation to consummate the Business Combination under the terms of the Transaction Agreement. Holders of outstanding Pace public warrants do not have redemption rights in connection with the Business Combination. Unless otherwise specified, the information in the accompanying proxy statement/prospectus assumes that none of Pace’s public shareholders exercise their redemption rights with respect to their Class A Shares.

Pace Sponsor and the current independent directors of Pace (the “Pace Initial Shareholders”), as well as Pace’s officers and other current directors, have agreed to waive their redemption rights with respect to any of Pace’s ordinary shares they may hold in connection with the consummation of the Business Combination, and the Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Currently, the Pace Initial Shareholders own 20% of Pace’s issued and outstanding ordinary shares, including all

 

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of the Founder Shares. The Pace Initial Shareholders, and the other directors and officers of Pace have agreed to vote any of Pace’s ordinary shares owned by them in favor of the Business Combination. The Founder Shares are subject to transfer restrictions. The amended and restated memorandum and articles of association of Pace includes a conversion adjustment which provides that the Founder Shares will automatically convert at the time of the Business Combination into a number of Class A Shares one day after the closing of the transactions contemplated by the Transaction Agreement, at a conversion rate that entitles the holders of such Founder Shares to continue to own, in the aggregate, 20% of Pace’s issued and outstanding ordinary shares after giving effect to the Private Placement. However, the Pace Initial Shareholders have agreed to waive such conversion adjustment. As a result, each remaining Founder Share will be exchanged for one New Pace Class F Share, which will be exchanged for one Holdco Share at the closing of the Business Combination, such that, the Pace Initial Shareholders will hold, after giving effect to the surrender for no consideration of 3,750,000 Founder Shares held by Pace Sponsor, approximately 7% of the total number of Holdco Shares outstanding after the consummation of the Business Combination.

Pace is providing the accompanying proxy statement/prospectus and accompanying proxy card to its shareholders in connection with the solicitation of proxies to be voted at the Extraordinary General Meeting and at any adjournments or postponements of the Extraordinary General Meeting. Information about the Extraordinary General Meeting, the Business Combination and other related business to be considered by Pace’s shareholders at the Extraordinary General Meeting is included in this proxy statement/prospectus. Whether or not you plan to attend the Extraordinary General Meeting, all Pace shareholders are urged to read carefully this proxy statement/prospectus, including the Annexes and the accompanying financial statements of Holdco, Pace and Playa carefully and in their entirety. In particular, you are urged to read carefully the section entitled “Risk Factors” beginning on page 51 of this proxy statement/prospectus.

After careful consideration, the Pace Board has unanimously approved the Transaction Agreement and the transactions contemplated therein, and unanimously recommends that Pace shareholders vote “FOR” adoption of the Transaction Agreement and approval of the transactions contemplated thereby, including the Business Combination, and “FOR” all other proposals presented to Pace shareholders in the accompanying proxy statement/prospectus. When you consider the Pace Board’s recommendation of these proposals, you should keep in mind that certain Pace directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. Please see the section entitled “The Business Combination — Interests of Certain Persons in the Business Combination” for additional information.

Approval of the Business Combination Proposal requires the affirmative vote of holders of a majority of the ordinary shares of Pace that are entitled to vote and are voted at the Extraordinary General Meeting. Approval of the Pace Merger Proposal requires the affirmative vote of holders of at least two-thirds of the ordinary shares of Pace that are entitled to vote and are voted at the Extraordinary General Meeting. Approval of the Holdco Articles of Association Proposal requires the affirmative vote of holders of a majority of the ordinary shares of Pace that are entitled to vote and are voted at the Extraordinary General Meeting. Approval of the Adjournment Proposal requires the affirmative vote of holders of a majority of the ordinary shares of Pace that are entitled to vote and are voted at the Extraordinary General Meeting.

Your vote is very important. Whether or not you plan to attend the Extraordinary General Meeting, please vote as soon as possible by following the instructions in this proxy statement/prospectus to ensure that your shares are represented at the Extraordinary General Meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the Extraordinary General Meeting. The transactions contemplated by the Transaction Agreement will be consummated only if the Business Combination Proposal and the Pace Merger Proposal are approved at the Extraordinary General Meeting. The closing of the Business Combination is conditioned upon the approval of the Business Combination Proposal and the Pace Merger Proposal. The Holdco Articles of

 

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Association Proposal is non-binding and is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the proposals presented at the Extraordinary General Meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the Extraordinary General Meeting in person, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the Extraordinary General Meeting. If you are a shareholder of record and you attend the Extraordinary General Meeting and wish to vote in person, you may withdraw your proxy and vote in person.

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND THAT PACE REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO THE TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE EXTRAORDINARY GENERAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.

On behalf of the Pace Board, I would like to thank you for your support of Pace Holdings Corp. and look forward to a successful completion of the Business Combination.

 

    Sincerely,
[●], 2017     LOGO
    David Bonderman
    Chairman of the Board of Directors

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

This proxy statement/prospectus is dated [●], 2017, and is expected to be first mailed or otherwise delivered to Pace shareholders on or about [●], 2017.

 

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ADDITIONAL INFORMATION

No person is authorized to give any information or to make any representation with respect to the matters that this proxy statement/prospectus describes other than those contained in this proxy statement/prospectus, and, if given or made, the information or representation must not be relied upon as having been authorized by Holdco, Pace or Playa. This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy securities or a solicitation of a proxy in any jurisdiction where, or to any person to whom, it is unlawful to make such an offer or a solicitation. Neither the delivery of this proxy statement/prospectus nor any distribution of securities made under this proxy statement/prospectus will, under any circumstances, create an implication that there has been no change in the affairs of Holdco, Pace or Playa since the date of this proxy statement/prospectus or that any information contained herein is correct as of any time subsequent to such date.


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NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS

OF PACE HOLDINGS CORP.

TO BE HELD [], 2017

To the Shareholders of Pace Holdings Corp.:

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of the shareholders of Pace Holdings Corp., a Cayman Islands exempted company (“Pace”), will be held on [●] at [●] at [●] (the “Extraordinary General Meeting”). You are cordially invited to attend the Extraordinary General Meeting to conduct the following items of business:

 

1. Business Combination Proposal — To consider and vote upon a proposal to adopt the Transaction Agreement, dated as of December 13, 2016 (as it may be amended from time to time, the “Transaction Agreement”), by and among Pace, Playa Hotels & Resorts B.V., a Dutch private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) (“Playa”), Porto Holdco B.V., a Dutch private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) which, at or prior to consummation of the Business Combination, will be converted to a Dutch public limited liability company (naamloze vennootschap) and will change its name to Playa Hotels & Resorts N.V. (“Holdco”) and New PACE Holdings Corp., a Cayman Islands exempted company (“New Pace”), a copy of which is attached to this proxy statement/prospectus as Annex A, and approve the transactions contemplated thereby, including, among other things: (i) the issuance by Pace to TPACE Sponsor Corp., a Cayman Islands exempted company and the sponsor of Pace (“Pace Sponsor”), of warrants (each, a “Pace Earnout Warrant”) to acquire Class A ordinary shares, par value $0.0001 per share, of Pace (each, a “Class A Share”), which warrants will, pursuant to the Pace Merger (defined below) be exchanged for certain warrants (each, a “Holdco Earnout Warrant”) to acquire ordinary shares, par value € 0.10 per share, of Holdco (each, a “Holdco Share”), in each case, upon the occurrence of certain events; (ii) the entry by Pace into certain securities purchase agreements (the “Securities Purchase Agreements”) with the holders of Playa’s preferred shares (the “Playa Preferred Shareholders”); (iii) the surrender for no consideration by Pace Sponsor of (i) 3,750,000 Class F shares issued to it prior to Pace’s initial public offering (the “Founder Shares”) and (ii) 7,333,333 of the warrants issued to it at the time of Pace’s initial public offering, each of which is exercisable for one-third of one Class A Share (the “Private Placement Warrants”); (iv) the merger of Pace with and into New Pace, with New Pace being the surviving company in such merger (the “Pace Merger”); (v) following the consummation of the Pace Merger, the acquisition by Holdco, as Pace’s successor in interest under the Securities Purchase Agreements with the Playa Preferred Shareholders, of the preferred shares, par value $0.01 per share, of Playa (the “Playa Preferred Shares”) from the Playa Preferred Shareholders; and (vi) the merger of Playa with and into Holdco, with Holdco being the surviving company in such merger (the “Playa Merger” and, collectively with the Pace Merger and the other transactions contemplated by the Transaction Agreement, the “Business Combination”) (Proposal No. 1);

 

2. Pace Merger Proposal — To consider and vote upon a proposal to (i) approve the Pace Merger, whereby Pace will be authorized to merge with New Pace, so that Pace be the merging company and all the undertaking, property and liabilities of Pace vest in New Pace by virtue of such merger pursuant to the provisions of Part XVI of the Companies Law (2016 Revision) (the “Pace Merger”) and (ii) authorize, approve and confirm, in all respects, the Plan of Merger, in the form attached hereto as Annex K (the “Plan of Merger”), to effect the Pace Merger (the Pace Merger and the Plan of Merger being collectively referred to herein as the “Pace Merger Proposal”) (Proposal No. 2);

 

3. Holdco Articles of Association Proposal — To consider and vote upon, on a non-binding advisory basis, a proposal to approve certain governance provisions contained in the Holdco Articles of Association that are not required by Dutch law and materially affect shareholder rights (Proposal No. 3); and

 

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4. Adjournment Proposal — To consider and vote upon a proposal to approve the adjournment of the Extraordinary General Meeting to a later date or dates (i) to the extent necessary to ensure that any required supplement or amendment to this proxy statement/prospectus is provided to Pace shareholders or, if as of the time for which the Extraordinary General Meeting is scheduled, there are insufficient Pace Ordinary Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the Extraordinary General Meeting, (ii) in order to solicit additional proxies from Pace shareholders in favor of the Business Combination Proposal and the Pace Merger Proposal, or (iii) if Pace shareholders redeem an amount of Class A Shares such that the minimum proceeds condition to each party’s obligation to consummate the Business Combination would not be satisfied. The Adjournment Proposal will only be presented to Pace shareholders in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal and the Pace Merger Proposal, or in the event that Pace shareholders redeem an amount of Class A Shares such that the minimum proceeds condition to each party’s obligation to consummate the Business Combination would not be satisfied (Proposal No. 4).

The above matters are more fully described in this proxy statement/prospectus, which also includes, as Annex A, a copy of the Transaction Agreement. You are urged to read carefully this proxy statement/prospectus in its entirety, including the Annexes and accompanying financial statements of Holdco, Pace and Playa.

The record date for the Extraordinary General Meeting is [●]. Only Pace shareholders of record at the close of business on that date may vote at the Extraordinary General Meeting or any adjournment thereof.

Pace Sponsor and the current independent directors of Pace (the “Pace Initial Shareholders”) and the officers and other current directors of Pace have agreed to vote any Founder Shares held by them and any public shares purchased during or after Pace’s initial public offering (the “Pace IPO”) in favor of the Business Combination. Currently, the Pace Initial Shareholders own 20% of Pace’s issued and outstanding ordinary shares, including all of the Founder Shares.

Pursuant to its amended and restated memorandum and articles of association, Pace is providing its public shareholders with the opportunity to redeem, upon the closing of the Business Combination, Class A Shares then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the closing of the Business Combination) in the Trust Account that holds the proceeds (including interest, which shall be net of taxes payable) of the Pace IPO. Redemptions referred to herein shall take effect as repurchases under Pace’s amended and restated memorandum and articles of association. The per-share amount Pace will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commission totaling $15,750,000 that Pace will pay to the underwriters of the Pace IPO or transaction expenses incurred in connection with the Business Combination. For illustrative purposes, based on the fair value of marketable securities held in the Trust Account of approximately $450,783,729 as of December 31, 2016, the estimated per share redemption price would have been approximately $10.01. Public shareholders may elect to redeem their shares even if they vote for the Business Combination. A public shareholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 15% of the Class A Shares included in the units sold in the Pace IPO (i.e., in excess of 6,750,000 Class A Shares). Pace has no specified maximum redemption threshold under its amended and restated memorandum and articles of association, other than the aforementioned 15% threshold. Each redemption of Class A Shares by Pace’s public shareholders will reduce the amount in the Trust Account, which held marketable securities with a fair value of approximately $450,783,729 as of December 31, 2016. The Transaction Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the amount in the Trust Account (net of the amount of any Pace shareholder redemptions) and the proceeds from the Private Placement, equaling or exceeding $375,000,000 (subject to a reduction to an amount no less than $325,000,000 in connection with any Hyatt Preferred Share Adjustment). The conditions to closing in the Transaction Agreement are for the sole benefit of the parties thereto and may be waived by such parties. If, as a result of redemptions of

 

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Class A Shares by Pace’s public shareholders, this condition is not met or is not waived, then each of Pace and Playa may elect not to consummate the Business Combination. In addition, in no event will Pace redeem its Class A Shares in an amount that would cause its net tangible assets to be less than $5,000,001, as provided in Pace’s amended and restated memorandum and articles of association and as required as a closing condition to each party’s obligation to consummate the Business Combination under the terms of the Transaction Agreement. Holders of outstanding Pace public warrants do not have redemption rights in connection with the Business Combination. Unless otherwise specified, the information in the accompanying proxy statement/prospectus assumes that none of Pace’s public shareholders exercise their redemption rights with respect to their Class A Shares.

The Pace Initial Shareholders, as well as Pace’s officers and other current directors, have agreed to waive their redemption rights with respect to any of Pace’s ordinary shares they may hold in connection with the consummation of the Business Combination, and the Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Currently, the Pace Initial Shareholders own 20% of Pace’s issued and outstanding ordinary shares, including all of the Founder Shares. The Pace Initial Shareholders, and the other directors and officers of Pace have agreed to vote any of Pace’s ordinary shares owned by them in favor of the Business Combination. The Founder Shares are subject to transfer restrictions. The amended and restated memorandum and articles of association of Pace includes a conversion adjustment which provides that the Founder Shares will automatically convert at the time of the Business Combination into a number of Class A Shares one day after the closing of the transactions contemplated by the Transaction Agreement, at a conversion rate that entitles the holders of such Founder Shares to continue to own, in the aggregate, 20% of Pace’s issued and outstanding ordinary shares after giving effect to the Private Placement. However, the Pace Initial Shareholders have agreed to waive such conversion adjustment. As a result, each Founder Share other than those cancelled pursuant to the letter agreement entered by Pace Sponsor, will be exchanged for one New Pace Class F Share, which will be exchanged for one Holdco Share at the closing of the Business Combination, such that the Pace Initial Shareholders will hold, after giving effect to the surrender for no consideration of 3,750,000 Founder Shares held by Pace Sponsor, approximately 7% of the total number of Holdco Shares outstanding after the consummation of the Business Combination. Pace Sponsor has also agreed to the surrender for no consideration of 7,333,333 of the warrants issued to it at the time of the Pace IPO.

In connection with the foregoing and concurrently with the execution of the Transaction Agreement, Pace entered into subscription agreements with certain investors, including certain members of Pace management and affiliates, pursuant to which such investors agreed to subscribe for and purchase, and Pace agreed to issue and sell to such investors, newly issued Class A Shares for gross proceeds of approximately $50,000,000 (the “Private Placement”). At the effective time of the Pace Merger, each Class A Share purchased in the Private Placement will be exchanged for an equivalent number of New Pace Class A Shares upon consummation of the Pace Merger, which such shares shall be issued to the exchange agent and, immediately after the Pace Merger and prior to the consummation of the Playa Merger, will be exchanged for an equivalent number of Holdco Shares. The Class A Shares to be issued pursuant to the subscription agreements have not been registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. The Private Placement is contingent upon, among other things, the closing of the Business Combination.

In addition, prior to the consummation of the Business Combination, Holdco intends to offer up to $1,000,000 of Holdco Shares to Playa employees. The offer price will equal the effective price per Class A Share paid by investors unaffiliated with Pace in the Private Placement. This offering and any sales of Holdco Shares made pursuant to this offering will not be registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. The closing of this offering is contingent upon, among other things, the closing of the Business Combination and is expected to occur after the closing of the Business Combination. The number of Holdco Shares sold pursuant to this offering will reduce by an equivalent number of shares the commitment of certain members of Pace management and affiliates to purchase Class A Shares in the Private Placement.

 

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The Business Combination is conditioned on the approval of the Business Combination Proposal and the Pace Merger Proposal. The Holdco Articles of Association Proposal is non-binding and is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus.

The approval of the proposal to adopt the Transaction Agreement and approve the transactions contemplated thereunder, including the Business Combination, requires the affirmative vote of holders of a majority of the ordinary shares of Pace that are entitled to vote and are voted at the Extraordinary General Meeting. The approval of the Pace Merger Proposal requires the affirmative vote of holders of at least two-thirds of the ordinary shares of Pace that are entitled to vote and are voted at the Extraordinary General Meeting. The approval of the Holdco Articles of Association Proposal requires the affirmative vote of holders of a majority of the ordinary shares of Pace that are entitled to vote and are voted at the Extraordinary General Meeting. The approval of the Adjournment Proposal requires the affirmative vote of holders of a majority of the ordinary shares of Pace that are entitled to vote and are voted at the Extraordinary General Meeting. The Pace Board unanimously recommends that you vote “FOR” each of these proposals.

 

By Order of the Board of Directors

LOGO

David Bonderman

Chairman of the Board of Directors

Fort Worth, Texas

[●], 2017

 

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TABLE OF CONTENTS

 

     Page  

FREQUENTLY USED TERMS

     iii   

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE EXTRAORDINARY GENERAL MEETING

     1   

SUMMARY

     18   

RISK FACTORS

     51   

GENERAL INFORMATION

     97   

EXTRAORDINARY GENERAL MEETING OF PACE SHAREHOLDERS

     100   

THE BUSINESS COMBINATION

     109   

MATERIAL TAX CONSIDERATIONS

     132   

THE TRANSACTION AGREEMENT AND RELATED AGREEMENTS

     148   

REGULATORY APPROVALS RELATED TO THE BUSINESS COMBINATION

     167   

SELECTED HISTORICAL FINANCIAL DATA OF HOLDCO

     169   

SELECTED HISTORICAL FINANCIAL DATA OF PACE

     170   

SELECTED HISTORICAL FINANCIAL DATA OF PLAYA

     172   

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     175   

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

     184   

BUSINESS OF HOLDCO BEFORE THE BUSINESS COMBINATION

     186   

BUSINESS OF PACE AND CERTAIN INFORMATION ABOUT PACE

     189   

PACE MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     209   

BUSINESS OF PLAYA AND CERTAIN INFORMATION ABOUT PLAYA

     214   

PLAYA MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     236   

MANAGEMENT OF HOLDCO AFTER THE BUSINESS COMBINATION

     280   

REGULATORY AND LEGAL ENVIRONMENT

     301   

DESCRIPTION OF HOLDCO SECURITIES

     303   

COMPARISON OF SHAREHOLDER RIGHTS

     314   

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     332   

BENEFICIAL OWNERSHIP OF HOLDCO SECURITIES

     341   

PRICE RANGE OF SECURITIES AND DIVIDENDS

     344   

PROPOSAL NO. 1 — THE BUSINESS COMBINATION PROPOSAL

     346   

PROPOSAL NO. 2 — THE PACE MERGER PROPOSAL

     347   

PROPOSAL NO. 3 — HOLDCO ARTICLES OF ASSOCIATION PROPOSAL

     348   

PROPOSAL NO. 4 — THE ADJOURNMENT PROPOSAL

     350   

LEGAL MATTERS

     351   

EXPERTS

     351   

ENFORCEMENT OF CIVIL LIABILITIES

     351   

APPRAISAL RIGHTS

     352   

 

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HOUSEHOLDING INFORMATION

     352   

TRANSFER AGENT AND REGISTRAR

     354   

FUTURE SHAREHOLDER PROPOSALS

     354   

WHERE YOU CAN FIND MORE INFORMATION

     354   

INDEX TO CONSOLIDATED FINANCIAL INFORMATION

     F-1   

ANNEX A — TRANSACTION AGREEMENT

     A-1   

ANNEX B — HOLDCO ARTICLES OF ASSOCIATION

     B-1   

ANNEX C — HOLDCO BOARD RULES

     C-1   

ANNEX D — SHAREHOLDER AGREEMENT

     D-1   

ANNEX E — REGISTRATION RIGHTS AGREEMENT

     E-1   

ANNEX F-1 — FORM OF INVESTOR SUBSCRIPTION AGREEMENT

     F-1-1   

ANNEX F-2 — FORM OF PHC INVESTOR SUBSCRIPTION AGREEMENT

     F-2-1   

ANNEX G — FORM OF PARENT SPONSOR LETTER AGREEMENT

     G-1   

ANNEX H — FORM OF WAIVER AGREEMENT

     H-1   

ANNEX I — FORM OF PARENT PACE EARNOUT WARRANT AGREEMENT

     I-1   

ANNEX J — FORM OF PARENT MERGER AGREEMENT

     J-1   

ANNEX K — FORM OF COMPANY MERGER PROPOSAL

     K-1   

ANNEX L — FORM OF COMPANY EARNOUT WARRANT AGREEMENT

     L-1   

 

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FREQUENTLY USED TERMS

In this proxy statement/prospectus:

amended and restated memorandum and articles of association” means the amended and restated memorandum and articles of association of Pace, effective September 10, 2015.

Business Combination” means all of the transactions contemplated by the Transaction Agreement, including (i) the issuance of Pace Earnout Warrants by Pace to Pace Sponsor; (ii) Pace entering into the Securities Purchase Agreements with the Playa Preferred Shareholders; (iii) Pace Sponsor canceling a portion of its Founder Shares and Private Placement Warrants; (iv) Pace Sponsor and the other holders of the Founder Shares waiving certain adjustments to the conversion ratio of such securities set forth in Pace’s Articles of Association resulting from the Private Placement; (v) the Pace Merger; (vi) Holdco acquiring the Playa Preferred Shares from the Playa Preferred Shareholders; and (vii) the Playa Merger.

Cabana” means, collectively, Cabana Investors B.V., a Dutch private limited liability company, and Playa Four Pack, L.L.C., a Delaware limited liability company.

Class A Shares” means the Class A ordinary shares, par value $0.0001 per share, of Pace.

Class F Shares” means the Class F ordinary shares, par value $0.0001 per share, of Pace.

DCGC” means the Dutch Corporate Governance Code, as of 1 January 2009 and as amended from time to time.

Distribution” means the distribution by New Pace to Holdco of an amount equal to the sum of (i) the aggregate amount of cash held by New Pace immediately following the consummation of the Playa Merger (including funds from the Trust Account, net of redemptions and the payment of the deferred underwriting commissions to the underwriters in the Pace IPO) and (ii) the aggregate amount paid by the Private Placement Investors pursuant to and in accordance with the Subscription Agreements.

Earnout Warrants” means, collectively, the Pace Earnout Warrants and the Playa Earnout Warrants.

Exchange Act” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

Extraordinary General Meeting” means the extraordinary general meeting of the shareholders of Pace that is the subject of this proxy statement/prospectus.

FCM” means Farallon Capital Management, L.L.C.

Founder Shares” means the 11,250,000 Class F Shares that are currently owned by the Pace Initial Shareholders, of which 11,090,000 shares are held by Pace Sponsor and 40,000 shares are held by each of Mr. Chad Leat, Mr. Robert Suss, Mr. Paul Walsh and Mr. Kneeland Youngblood.

HI Holdings Playa” means HI Holdings Playa B.V.

Holdco” means Porto Holdco B.V., a Dutch private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) that will, at or prior to consummation of the Business Combination, be converted into a Dutch public limited liability company (naamloze vennootschap) and will change its name to Playa Hotels & Resorts N.V., and, unless the context otherwise requires, includes its consolidated subsidiaries for periods following the Business Combination.

 

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Holdco Articles of Association” means the articles of association of Holdco, effective as of the closing of the Business Combination, which are attached hereto as Annex B.

Holdco Board” means the board of directors of Holdco.

Holdco Board Rules” means the board rules of Holdco, effective as of the closing of the Business Combination, which are attached hereto as Annex C.

Holdco Special Warrants” means warrants to acquire Holdco Shares.

Holdco Private Placement Warrants” means warrants to acquire Holdco Shares on substantially equivalent terms and conditions as set forth in the New Pace Private Placement Warrants.

Holdco Public Warrants” means warrants to acquire Holdco Shares on substantially equivalent terms and conditions as set forth in the New Pace Public Warrants.

Holdco Shares” means the ordinary shares, par value EUR 0.10 per share, of Holdco.

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Hyatt” means Hyatt Hotels Corporation and its affiliates.

Hyatt Preferred Share Adjustment” means an adjustment to the condition that the Trust Account (net of the amount of any Pace shareholder redemptions) and the proceeds from the Private Placement, equal or exceed $375,000,000. As provided for under the terms of the Securities Purchase Agreement with HI Holdings Playa, in the event Pace shareholder redemptions exceed $125,000,000, HI Holdings Playa will convert into Playa Common Shares an amount of Playa Preferred Shares equal to the amount of such excess up to $50,000,000. The number of Playa Common Shares to be issued upon such conversion will be equal to the quotient of (A) the amount by which Pace shareholder redemptions exceed $125,000,000, up to $50,000,000, divided by (B) the sum of (i) $8.40 and, (ii) any accumulated and unpaid dividends on each of the Playa Preferred Shares to be converted (on a per-share basis), subject to certain adjustments to the treatment of the Playa Preferred Shares owned by HI Holdings Playa. Accordingly, as a result of this adjustment, the $375,000,000 requirement may be reduced to an amount no less than $325,000,000.

Indenture” means that certain indenture, dated as of August 9, 2013, among Playa Resorts Holding B.V., the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee, governing Playa’s Senior Notes due 2020, as amended through the date hereof.

Investment Company Act” means the Investment Company Act of 1940, as amended.

Investor Subscription Agreements” means those certain subscription agreements entered into on December 13, 2016, among Pace, Holdco and the Investors named therein relating to a portion of the Private Placement.

Investors” means the investors named in the Investor Subscription Agreements.

IRS” means the U.S. Internal Revenue Service.

KPMG” means KPMG LLP, an independent registered public accounting firm.

Morrow” means Morrow Sodali, proxy solicitor to Pace.

NASDAQ” means the National Association of Securities Dealers Automated Quotations Capital Market.

 

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New Pace” means New PACE Holdings Corp., a Cayman Islands exempted company and a wholly-owned subsidiary of Holdco.

New Pace Class A Shares” means the Class A ordinary shares, par value $0.0001 per share, of New Pace.

New Pace Class F Shares” means the Class F ordinary shares, par value $0.0001 per share, of New Pace.

New Pace Private Placement Warrants” means warrants to acquire New Pace Class A Shares on substantially equivalent terms and conditions as set forth in the Private Placement Warrants.

New Pace Public Warrants” means warrants to acquire New Pace Class A Shares on substantially equivalent terms and conditions as set forth in the public warrants.

Pace” means Pace Holdings Corp. (f/k/a Paceline Holdings Corp.), a Cayman Islands exempted company.

Pace Board” means the board of directors of Pace.

Pace Earnout Warrants” means warrants to acquire 2,000,000 Class A Shares or common shares of Pace, or its successor or assign, upon the occurrence of a Trigger Event.

Pace Initial Shareholders” means Pace Sponsor and Mr. Chad Leat, Mr. Robert Suss, Mr. Paul Walsh and Mr. Kneeland Youngblood, Pace’s independent directors.

Pace IPO” means Pace’s initial public offering, consummated on September 16, 2015, through the sale of 45,000,000 public units (including 5,000,000 units sold pursuant to the underwriters’ partial exercise of their over-allotment option) at $10.00 per unit.

Pace Merger” means the merger of Pace with and into New Pace, with New Pace being the surviving company in such merger.

Pace Ordinary Shares” means the Class A Shares and the Class F Shares.

Pace Sponsor” means TPACE Sponsor Corp., a Cayman Islands exempted company and an affiliate of TPG.

PHC Investors” means certain members of Pace management and affiliates.

PHC Subscription Agreements” means those certain subscription agreements entered into on December 13, 2016, among Pace, Holdco and the PHC Investors relating to a portion of the Private Placement.

Playa” means Playa Hotels & Resorts B.V., a Dutch private limited liability company, and, unless the context otherwise requires, its consolidated subsidiaries.

Playa Common Shares” means the ordinary shares, par value $0.01 per share, of Playa.

Playa Common Shareholders” means the holders of Playa Common Shares as of immediately prior to the consummation of the transactions contemplated by the Transaction Agreement.

Playa Earnout Warrants” means warrants to acquire 1,000,000 Holdco Shares upon the occurrence of a Trigger Event.

Playa Employee Offering” means the private offering of up to $1,000,000 of Holdco Shares that Holdco intends to make to certain Playa employees, their family members and persons with business relationships with

 

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Playa prior to the consummation of the Business Combination, the closing of which is contingent upon, among other things, the closing of the Business Combination and is expected to occur after the closing of the Business Combination.

Playa Shareholders” means the Playa Common Shareholders and the Playa Preferred Shareholders.

Playa Merger” means the merger of Playa with and into Holdco, with Holdco being the surviving company in such merger.

Playa Preferred Shareholders” means the holders of Playa Preferred Shares as of immediately prior to the consummation of the transactions contemplated by the Transaction Agreement.

Playa Preferred Shares” means the preferred shares, par value $0.01 per share, of Playa.

Playa Preferred Share Acquisition” means the acquisition of the Playa Preferred Shares from the Playa Preferred Shareholders.

Private Placement” means the private placement of 5,144,654 Class A Shares with a limited number of accredited investors (as defined by Rule 501 of Regulation D) pursuant to Section 4(a)(2) of the Securities Act, for gross proceeds to Pace in an aggregate amount of approximately $50,000,000.

Private Placement Investors” means the PHC Investors and the Investors in the Private Placement pursuant to the Subscription Agreements.

Private Placement Shares” means the Class A Shares subscribed for by the Private Placement Investors pursuant to the Subscription Agreements.

Private Placement Warrants” means the warrants held by Pace Sponsor that were issued to Pace Sponsor at the time of the Pace IPO, each of which is exercisable for one-third of one Class A Share, in accordance with its terms.

public shares” means Class A Shares included in the units issued in the Pace IPO.

public shareholders” means holders of public shares, including the Pace Initial Shareholders and the Pace officers and directors to the extent they hold public shares, provided, that the Pace Initial Shareholders and the Pace officers and directors will be considered a “public shareholder” only with respect to any public shares held by them.

public units” or “units” means one Class A Share and one public warrant of Pace, whereby each public warrant entitles the holder thereof to purchase one-third of one Class A Share at an exercise price of $11.50 per Class A Share, sold in the Pace IPO.

public warrants” means the warrants included in the units issued in the Pace IPO, each of which is exercisable for one-third of one Class A Share, in accordance with its terms.

Registration Rights Agreement” means that certain Registration Rights Agreement to be entered into by and among Holdco, Pace Sponsor, Cabana, HI Holdings Playa and the other holders named therein, which shall be effective as of the closing of the Business Combination and which shall be in substantially the form attached hereto as Annex E.

Related Agreements” means, collectively, the Registration Rights Agreement, Shareholder Agreement, Subscription Agreements and the Voting Agreement.

 

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Restricted Shareholders” means Pace Sponsor, the Pace Initial Shareholders and all holders of Playa Common Shares immediately prior to the consummation of the Playa Merger.

Revolving Credit Facility” means the revolving credit facility of Playa and Playa Resorts Holding B.V., initially entered into on August 9, 2013, with the lenders and agents party thereto and the guarantors named therein, as amended through the date hereof, permitting borrowings by Playa of up to $50.0 million and which matures on August 9, 2018, which Playa expects to increase from $50.0 million to $125.0 million and extend the maturity of the Revolving Credit Facility to August 9, 2021 in connection with the closing of the Business Combination.

SEC” means the United States Securities and Exchange Commission.

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

Securities Purchase Agreements” means the securities purchase agreements to be entered into by Pace with each of the Playa Preferred Shareholders, pursuant to which Pace will agree that Pace or its successor or assign will acquire from the Playa Preferred Shareholders all of the Playa Preferred Shares.

Senior Secured Credit Facility” means the Term Loan and the Revolving Credit Facility.

Senior Notes due 2020” means the senior unsecured notes issued by Playa under the Indenture, which mature on August 15, 2020.

Shareholder Agreement” means that certain Shareholder Agreement to be entered into by and among Holdco, Pace, Cabana and HI Holdings Playa, which shall be effective as of the closing of the Business Combination and which shall be substantially the form attached hereto as Annex D.

Sponsor Letter Agreement” means the letter agreement, dated as of December 13, 2016, by and between Pace Sponsor and Pace.

Subscription Agreements” means the PHC Subscription Agreements and the Investor Subscription Agreements.

Term Loan” means Playa’s $375.0 million term loan facility of Playa and Playa Resorts Holding B.V., entered into on August 9, 2013, with the lenders and agents party thereto and the guarantors named therein, as amended through the date hereof, which matures on August 9, 2019.

TPG” means TPG Global, LLC and its affiliates.

Transaction Agreement” means that certain Transaction Agreement, dated as of December 13, 2016, by and among Pace, Playa, Holdco and New Pace, which is attached hereto as Annex A.

Transfer Agent” means Continental Stock Transfer & Trust Company.

Trigger Event” means the price per share of ordinary shares of the issuer of the Pace Earnout Warrants or Playa Earnout Warrants, as applicable, on the NASDAQ (as reported by Bloomberg L.P., or, if not reported therein, in another authoritative source manually selected by the parties) as of 4:00 p.m., New York, New York time, being greater than $13.00 (as adjusted for stock splits and reverse stock splits) for a period of more than twenty days out of thirty consecutive trading days after the closing date but within five years after the closing date.

Trust Account” means the trust account of Pace that holds the proceeds from the Pace IPO.

 

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Trustee” means Continental Stock Transfer & Trust Company.

U.S. Tax Code” means the U.S. Internal Revenue Code of 1986, as amended.

Voting Agreement” means that certain Voting Agreement dated as of December 13, 2016, by and among Pace, Playa, HI Holdings Playa and Cabana.

Weil” means Weil, Gotshal & Manges LLP, counsel to Pace.

 

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QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE EXTRAORDINARY GENERAL MEETING

The questions and answers below highlight only selected information from this proxy statement/prospectus and only briefly address some commonly asked questions about the Extraordinary General Meeting and the proposals to be presented at the Extraordinary General Meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that is important to Pace shareholders. Shareholders are urged to read carefully this entire proxy statement/prospectus, including the Annexes and the other documents referred to herein, to fully understand the proposed Business Combination and the voting procedures for the Extraordinary General Meeting, which will be held on [], 2017 at [] local time at [].

 

Q: Why am I receiving this proxy statement/prospectus?

 

A: Pace shareholders are being asked to consider and vote upon a proposal to adopt the Transaction Agreement and approve the transactions contemplated thereby, among other proposals. Pace has entered into the Transaction Agreement, providing for, among other things: (i) the issuance by Pace of the Pace Earnout Warrants to Pace Sponsor; (ii) the entry by Pace into the Securities Purchase Agreements with the Playa Preferred Shareholders; (iii) the Pace Merger; (iv) the Distribution; (v) the Playa Preferred Share Acquisition; and (vi) the Playa Merger, which is referred to herein as the “Business Combination.” You are being asked to vote on the Business Combination involving Pace and Playa. A copy of the Transaction Agreement is attached to this proxy statement/prospectus as Annex A.

This proxy statement/prospectus and its Annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the Extraordinary General Meeting. You should read this proxy statement/prospectus and its Annexes carefully and in their entirety.

Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement/prospectus and its Annexes.

 

Q: When and where is the Extraordinary General Meeting?

 

A: The Extraordinary General Meeting will be held on [●], 2017 at [●] local time at [●].

 

Q: What are the specific proposals on which I am being asked to vote at the Extraordinary General Meeting?

 

A: Pace shareholders are being asked to approve the following proposals:

 

  1. Business Combination Proposal — To adopt the Transaction Agreement and approve the transactions contemplated thereby, including the Business Combination (Proposal No. 1);

 

  2. Pace Merger Proposal — To consider and vote upon a proposal to approve the Pace Merger and authorize, approve and confirm the Plan of Merger (the “Pace Merger Proposal”) (Proposal No. 2);

 

  3. Holdco Articles of Association Proposal — To consider and vote upon, on a non-binding advisory basis, a proposal to approve certain governance provisions contained in the Holdco Articles of Association that are not required by Dutch law and materially affect shareholder rights (the “Holdco Articles of Association Proposal”) (Proposal No. 3); and

 

  4.

Adjournment Proposal — To approve the adjournment of the Extraordinary General Meeting to a later date or dates (i) to the extent necessary to ensure that any required supplement or amendment to this

 

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  proxy statement/prospectus is provided to Pace shareholders or, if as of the time for which the Extraordinary General Meeting is scheduled, there are insufficient Pace Ordinary Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the Extraordinary General Meeting, (ii) in order to solicit additional proxies from Pace shareholders in favor of the Business Combination Proposal and the Pace Merger Proposal, or (iii) if Pace shareholders redeem an amount of Class A Shares such that the minimum proceeds condition to each party’s obligation to consummate the Business Combination would not be satisfied. The Adjournment Proposal will only be presented to Pace shareholders in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal and the Pace Merger Proposal, or in the event that Pace shareholders redeem an amount of Class A Shares such that the minimum proceeds condition to each party’s obligation to consummate the Business Combination would not be satisfied. (Proposal No. 4).

 

Q: Are the proposals conditioned on one another?

 

A: The Business Combination is conditioned on the approval of the Business Combination Proposal and the Pace Merger Proposal. The Holdco Articles of Association Proposal is non-binding and is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. It is important for you to note that in the event that the Business Combination Proposal and the Pace Merger Proposal do not receive the requisite vote for approval, then Pace will not consummate the Business Combination. If Pace does not consummate the Business Combination and fails to complete an initial business combination by September 16, 2017, Pace will be required to dissolve and liquidate the Trust Account by returning the then remaining funds in such Trust Account to its public shareholders.

 

Q: Why is Pace proposing the Business Combination?

 

A: Pace is a blank check company incorporated as a Cayman Islands exempted company on June 3, 2015 and formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more target businesses. Pace’s acquisition plan is not limited to a particular industry, geographic region or minimum transaction value for purposes of consummating an initial business combination, except that it is not, under its amended and restated memorandum and articles of association, permitted to effect a business combination with a blank check company or a similar type of company with nominal operations.

Pace has identified several criteria and guidelines it believes are important for evaluating acquisition opportunities. These criteria and guidelines include, among others: attractive risk-adjusted equity returns for Pace shareholders; significant embedded and/or underexploited expansion opportunities; unrecognized value or other characteristics that Pace believes have been misevaluated by the marketplace; and being at an inflection point, such as requiring additional management expertise, innovation and development of new products or services or where Pace believes it can drive improved financial performance and where an acquisition may help facilitate growth. Based on its due diligence investigations of Playa and the industry in which it operates, including the financial and other information provided by Playa in the course of negotiations, Pace believes that Playa meets the criteria and guidelines listed above. Please see the section entitled “The Business Combination — The Pace Board’s Reasons for the Business Combination” for additional information.

 

Q: Why is Pace providing shareholders with the opportunity to vote on the Business Combination?

 

A:

Under its amended and restated memorandum and articles of association, Pace must provide all holders of public shares with the opportunity to have their public shares redeemed upon the consummation of its initial business combination either in conjunction with a tender offer or in conjunction with a shareholder vote. For

 

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  business and other reasons, Pace has elected to provide its shareholders with the opportunity to have their public shares redeemed in connection with a shareholder vote rather than a tender offer. Therefore, Pace is seeking to obtain the approval of its shareholders of the Business Combination Proposal in order to allow its public shareholders to effectuate redemptions of their public shares in connection with the closing of the Business Combination. The approval of the Business Combination is required under Pace’s amended and restated memorandum and articles of association, and the Pace Merger requires the approval of Pace shareholders under Cayman Islands law. In addition, such approvals are also conditions to the closing of the Business Combination under the Transaction Agreement.

 

Q: What revenues and profits/losses has Playa generated in the last two years?

 

A: For the fiscal years ended December 31, 2015 and December 31, 2014, Playa had total net revenue of $408,345,000 and $367,237,000, and net income (loss) of $9,711,000 and ($38,216,000), respectively. At the end of fiscal year 2015, Playa’s total assets were $1,644,024,000 and its total liabilities were $1,098,034,000. For additional information, please see the sections entitled “Selected Historical Financial Data of Playa” and “Playa Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

Q: What will happen in the Business Combination?

 

A: Pursuant to the Transaction Agreement, and upon the terms and subject to the conditions set forth therein, Pace and Playa will effect a transaction that would replicate the economics of a merger of Pace and Playa through a series of mergers, distributions and equity purchases, which is collectively referred to as the “Business Combination.” To effect the Business Combination, among other things, (i) Pace will issue the Pace Earnout Warrants to Pace Sponsor; (ii) Pace will enter into the Securities Purchase Agreements with the Playa Preferred Shareholders; (iii) the Pace Merger will be effected; (iv) the Distribution will be effected; (v) the Playa Preferred Share Acquisition will be effected; and (vi) the Playa Merger will be effected. As a result of the Business Combination, Holdco will be the ultimate parent company of New Pace (following the Pace Merger) and Playa’s direct and indirect subsidiaries. Please see the section entitled “The Business Combination” for additional information.

 

Q: How has the announcement of the Business Combination affected the trading price of Pace’s Class A Shares?

 

A: On December 12, 2016, the last trading date before the public announcement of the Business Combination, Pace’s public units, Class A Shares and warrants closed at $10.30, $9.95 and $0.4985, respectively. On [●], 2017, the trading date immediately prior to the date of this proxy statement/prospectus, Pace’s public units, Class A Shares and warrants closed at $[●], $[●] and $[●], respectively.

 

Q: Following the Business Combination, will Pace’s securities continue to trade on a stock exchange?

 

A: No. Pace anticipates that, following consummation of the Business Combination, Pace Ordinary Shares, public units and public warrants will be delisted from NASDAQ and Pace will be deregistered under the Exchange Act. However, the Holdco Shares and Holdco Public Warrants will be listed on the NASDAQ under the symbols “PLYA” and “PLYAW,” respectively, following the consummation of the Business Combination.

 

Q: Is the Business Combination the first step in a “going private” transaction?

 

A: No. Pace does not intend for the Business Combination to be the first step in a “going private” transaction. One of the primary purposes of the Business Combination is to provide a platform for Playa to access the U.S. public markets.

 

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Q: Will the management of Playa change in the Business Combination?

 

A: The current executive officers of Playa, including Mr. Bruce D. Wardinski, the Chairman and Chief Executive Officer, Mr. Alexander Stadlin, the Chief Operating Officer, Mr. Larry Harvey, the Chief Financial Officer, and Mr. Kevin Froemming, the Chief Marketing Officer, will serve as Holdco’s executive officers upon consummation of the Business Combination. The Holdco Board will initially consist of ten directors, including four directors identified by Playa, two directors identified by Farallon, one director identified by Hyatt and three directors identified by Pace Sponsor.

Please see the section entitled “Management of Holdco After the Business Combination” for additional information.

 

Q: What will Pace shareholders receive in the Business Combination?

 

A: At the Pace Merger Effective Time, each (i) Class A Share will be converted into the right to receive one New Pace Class A Share, and (ii) Class F Share will be converted into the right to receive one New Pace Class F Share. Immediately following the Pace Merger Effective Time, each New Pace Class A Share and New Pace Class F Share will be exchanged for an equivalent number of Holdco Shares.

 

Q: What will Pace warrant holders receive in the Business Combination?

 

A: At the Pace Merger Effective Time, each Pace public warrant will be cancelled in exchange for one New Pace Public Warrant. Immediately following the Pace Merger Effective Time, each New Pace Public Warrant will be cancelled and an equivalent number of Holdco Public Warrants will be issued to Pace’s public shareholders.

At the Pace Merger Effective Time, each Private Placement Warrant held by Pace Sponsor will be cancelled in exchange for one New Pace Private Placement Warrant. Immediately following the Pace Merger Effective Time, each New Pace Private Placement Warrant will be cancelled and an equivalent number of Holdco Private Placement Warrants will be issued to Pace Sponsor.

 

Q: What will Pace unitholders receive in the Business Combination?

 

A: Each Pace unit will be cancelled in exchange for consideration consisting of (i) the right to receive one validly issued, fully paid and non-assessable New Pace Class A Share, which will immediately be exchanged for one validly issued, fully paid and non-assessable Holdco Share, and (ii) on substantially equivalent terms and conditions as the Pace public warrants, one New Pace Public Warrant, which warrant will immediately be exchanged for one Holdco Public Warrant on substantially equivalent terms and conditions as the New Pace Public Warrants.

 

Q: What will Playa shareholders receive in the Business Combination?

 

A:

At the effective time of the Playa Merger, the (i) Playa Common Shares held by the Playa Common Shareholders will lapse and will be exchanged for (A) Holdco Shares, (B) Holdco Special Warrants and (C) Playa Earnout Warrants, and (ii) consideration to be paid to the Playa Preferred Shareholders in connection with the Playa Preferred Share Acquisition will be calculated based on an aggregate amount equal to $8.40 for each outstanding Playa Preferred Share (plus any arrearages and accrued and unpaid dividends thereon through December 31, 2016), for an aggregate consideration value of approximately $346,000,000 (which includes accrued but unpaid dividends on the Playa Preferred Shares through December 31, 2016), plus any additional arrearages and additional accrued but unpaid dividends thereon after December 31, 2016 through the closing of the Business Combination, subject to adjustment, in the case of the acquisition of Playa Preferred Shares from HI Holdings Playa, if any of the Playa Preferred Shares are converted into Playa Common Shares following the date of the Transaction Agreement pursuant to the

 

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  Securities Purchase Agreement entered into with HI Holdings Playa which, following the Playa Preferred Share Acquisition, will be held by Holdco as Pace’s successor in interest under the Securities Purchase Agreements.

 

Q: What is the Private Placement?

 

A: In connection with the Business Combination and concurrently with the execution of the Transaction Agreement, Pace and Holdco entered into the Subscription Agreements with the Private Placement Investors for gross proceeds of approximately $50,000,000. Pursuant to the PHC Subscription Agreements, the PHC Investors agreed to purchase from Pace an aggregate of 1,015,000 Class A Shares at a purchase price of $10.00 per share, and, pursuant to the Investor Subscription Agreements, the Investors agreed to purchase from Pace an aggregate of 3,985,000 Class A Shares at a purchase price of $10.00 per share, and an additional 144,654 Class A Shares in the aggregate in consideration of the payment of the purchase price and the other agreements of the Investors contained therein. As part of the Business Combination, the Class A Shares issued to the Private Placement Investors in the Private Placement will be exchanged for an equivalent number of New Pace Class A Shares, which will immediately be exchanged for an equivalent number of Holdco Shares in the Business Combination. In this proxy statement/prospectus, it is assumed that the proceeds from the Private Placement will be used to fund a portion of the cash consideration payable to purchase the Playa Preferred Shares outstanding at the closing of the Business Combination and the payment of certain transaction expenses. The number of Class A Shares the PHC Investors are committed to purchase in the Private Placement will be reduced by the number of Holdco Shares sold by Holdco in the Playa Employee Offering.

 

Q: What equity stake will the current shareholders of Pace, the Private Placement Investors and the current shareholders of Playa hold in Holdco after the closing of the Business Combination?

 

A: It is anticipated that, upon completion of the Business Combination: (i) Pace’s public shareholders (other than the Private Placement Investors) will own approximately 41.9% of Holdco; (ii) the Investors will own approximately 3.8% of Holdco; (iii) the PHC Investors will own approximately 1.0% of Holdco (such that public shareholders, including the Private Placement Investors, will own approximately 46.7% of Holdco); (iv) the Pace Initial Shareholders (including Pace Sponsor) will own approximately 7.0% of Holdco, after giving effect to the surrender for no consideration of approximately 3,750,000 Founder Shares held by Pace Sponsor; and (v) Playa Common Shareholders will own approximately 46.3% of Holdco. These levels of ownership interests assume that no Class A Shares are elected to be redeemed by Pace’s public shareholders.

The ownership percentages with respect to Holdco following the Business Combination do not take into account the warrants to purchase Holdco Shares that will remain outstanding immediately following the Business Combination, but do include Founder Shares, which will immediately be exchanged for an equivalent number of New Pace Class F Shares, which will be exchanged for an equivalent number of Holdco Shares at the closing of the Business Combination (after giving effect to the surrender for no consideration of approximately 3,750,000 of such shares and even though such Holdco Shares will be subject to transfer restrictions). If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by Pace’s existing shareholders in Holdco will be different. For more information, please see the sections entitled “The Business Combination — Impact of the Business Combination on Holdco’s Public Float,” “Unaudited Pro Forma Condensed Combined Financial Statements” for further information.

 

Q: Will Pace obtain new financing in connection with the Business Combination?

 

A:

Yes. Pace will obtain new equity financing through a private placement of Class A Shares in the Private Placement. The Class A Shares issued to the Private Placement Investors will be exchanged for an equivalent number of New Pace Class A Shares upon consummation of the Pace Merger, which such shares shall be

 

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  issued to the exchange agent and, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for an equivalent number of Holdco Shares. Pace will use the proceeds from the Private Placement, together with a portion of the funds in the Trust Account, to fund the cash consideration payable to purchase all Playa Preferred Shares outstanding at the closing of the Business Combination and the payment of certain transaction expenses. The Private Placement is contingent upon, among other things, the closing of the Business Combination.

 

Q: Are there any arrangements to help ensure that Pace will satisfy the condition in the Transaction Agreement relating to the availability of sufficient funds?

 

A: Unless waived by Pace or Playa, the Transaction Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the amount in the Trust Account and the proceeds from the Private Placement equaling or exceeding $375,000,000 (net of the aggregate amount of cash required to satisfy any exercise by Pace shareholders of their right to have Pace redeem their Class A Shares in connection with a Business Combination (as such term is defined in Pace’s articles of association) and subject to a reduction to an amount no less than $325,000,000 in connection with any Hyatt Preferred Share Adjustment).

 

Q: Why is Pace proposing the Pace Merger Proposal?

 

A: As part of the Business Combination, Pace will merge with and into New Pace, with New Pace continuing as the surviving company in such merger. Under its amended and restated memorandum and articles of association, Pace must obtain the affirmative vote of holders of at least two-thirds of the Pace Ordinary Shares that are entitled to vote and are voted on such merger to effect the Pace Merger. Therefore, Pace is seeking to obtain the approval of its shareholders of the Pace Merger Proposal. The approval of the Pace Merger Proposal is also a condition to the closing of the Business Combination under the Transaction Agreement. For additional information, please see the section entitled “Proposal No. 2 — The Pace Merger Proposal” for more information.

 

Q: Why is Pace proposing the Holdco Articles of Association Proposal?

 

A: As required by applicable SEC rules, Pace is requesting that its shareholders vote upon, on a non-binding advisory basis, a proposal to approve certain governance provisions contained in the Holdco Articles of Association that are not required by Dutch law and materially affect shareholder rights. Pursuant to SEC guidance, Pace is required to submit the Holdco Articles of Association Proposal to its shareholders for approval. However, the shareholder vote regarding this proposal is an advisory vote, and is not binding on Holdco, Pace, Playa or their respective board of directors. Furthermore, the Business Combination is not conditioned on the approval of the Holdco Articles of Association Proposal. For additional information, please see the sections entitled “Proposal No. 3 — Holdco Articles of Association Proposal.”

 

Q: Why is Pace proposing the Adjournment Proposal?

 

A:

Pace is proposing the Adjournment Proposal to allow the Pace Board to adjourn the Extraordinary General Meeting to a later date or dates (i) to the extent necessary to ensure that any required supplement or amendment to this proxy statement/prospectus is provided to Pace shareholders or, if as of the time for which the Extraordinary General Meeting is scheduled, there are insufficient Pace Ordinary Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the Extraordinary General Meeting, (ii) in order to solicit additional proxies from Pace shareholders in favor of the Business Combination Proposal and the Pace Merger Proposal, or (iii) if Pace shareholders redeem an amount of Class A Shares such that the minimum proceeds condition to each party’s obligation to consummate the Business Combination would not be satisfied. The Adjournment Proposal will only be presented to Pace shareholders in the event that there are insufficient votes for, or otherwise in connection

 

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  with, the approval of the Business Combination Proposal and the Pace Merger Proposal, or in the event that Pace shareholders redeem an amount of Class A Shares such that the minimum proceeds condition to each party’s obligation to consummate the Business Combination would not be satisfied. Please see the section entitled “Proposal No. 4 — The Adjournment Proposal” for additional information.

 

Q: What happens if I sell my Class A Shares before the Extraordinary General Meeting?

 

A: The record date for the Extraordinary General Meeting is earlier than the date that the Business Combination is expected to be completed. If you transfer your Class A Shares after the record date, but before the Extraordinary General Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Extraordinary General Meeting. However, you will not be able to seek redemption of your Class A Shares because you will no longer be able to deliver them for cancellation upon consummation of the Business Combination. If you transfer your Class A Shares prior to the record date, you will have no right to vote those shares at the Extraordinary General Meeting or redeem those shares for a pro rata portion of the proceeds held in the Trust Account.

 

Q: What vote is required to approve the proposals presented at the Extraordinary General Meeting?

 

A: The approval of the Business Combination Proposal requires the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Business Combination Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Business Combination Proposal. The Pace Initial Shareholders have agreed to vote their Founder Shares and any public shares purchased by them during or after the Pace IPO in favor of the Business Combination Proposal.

The approval of the Pace Merger Proposal requires the affirmative vote of holders of at least two-thirds of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Pace Merger Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Pace Merger Proposal.

The approval of the Holdco Articles of Association Proposal requires the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Holdco Articles of Association Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Holdco Articles of Association Proposal.

The approval of the Adjournment Proposal requires the affirmative vote of holders of a majority of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on

 

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the Adjournment Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Adjournment Proposal.

 

Q: What happens if the Business Combination Proposal is not approved?

 

A: If the Business Combination Proposal is not approved and Pace does not consummate a business combination by September 16, 2017, Pace will be required to dissolve and liquidate the Trust Account.

 

Q: How many votes do I have at the Extraordinary General Meeting?

 

A: Pace shareholders are entitled to one vote on each proposal presented at the Extraordinary General Meeting for each Pace Ordinary Share held of record as of [●], the record date for the Extraordinary General Meeting. As of the close of business on the record date, there were 56,250,000 outstanding Pace Ordinary Shares.

 

Q: What constitutes a quorum at the Extraordinary General Meeting?

 

A: A majority of the issued and outstanding Pace Ordinary Shares entitled to vote as of the record date at the Extraordinary General Meeting must be present, in person or represented by proxy, at the Extraordinary General Meeting to constitute a quorum and in order to conduct business at the Extraordinary General Meeting. Broker non-votes and abstentions will be counted as present for the purpose of determining a quorum. The Pace Initial Shareholders, who currently own 20% of the issued and outstanding Pace Ordinary Shares, will count towards this quorum. In the absence of a quorum, the chairman of the Extraordinary General Meeting has power to adjourn the Extraordinary General Meeting. As of the record date for the Extraordinary General Meeting, [●] Pace Ordinary Shares would be required to achieve a quorum.

 

Q: How will the Pace Initial Shareholders and Pace’s other current directors and officers vote?

 

A: Prior to the Pace IPO, Pace entered into agreements with the Pace Initial Shareholders and each of its other directors and officers, pursuant to which each agreed to vote any Pace Ordinary Shares owned by them in favor of the Business Combination Proposal. None of the Pace Initial Shareholders nor any of Pace’s other current directors or officers has purchased any Pace Ordinary Shares during or after the Pace IPO and, as of the date of this proxy statement/prospectus, neither Pace nor the Pace Initial Shareholders or any of Pace’s other directors or officers have entered into agreements and are not currently in negotiations to purchase Pace Ordinary Shares prior to the consummation of the Business Combination. Currently, the Pace Initial Shareholders own 20% of the issued and outstanding Pace Ordinary Shares, including all of the Founder Shares, and will be able to vote all of such shares at the Extraordinary General Meeting.

 

Q: What interests do the Pace Initial Shareholders and Pace’s other current officers and directors have in the Business Combination?

 

A: The Pace Initial Shareholders and certain members of the Pace Board and officers have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests. You should take these interests into account in deciding whether to approve the Business Combination. These interests include:

 

    the fact that the Pace Initial Shareholders and Pace directors and officers have agreed not to redeem any Pace Ordinary Shares held by them in connection with a shareholder vote to approve a proposed initial business combination;

 

    the fact that Pace Sponsor paid an aggregate of $25,000 for the Founder Shares and such securities will have a significantly higher value at the time of the Business Combination which, if unrestricted and freely tradable, would be valued at approximately $75,748,800 after giving effect to the cancellations, but, given the restrictions on such shares, Pace believes such shares have less value;

 

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    the fact that the Pace Initial Shareholders and Pace directors and officers have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them if Pace fails to complete an initial business combination by September 16, 2017;

 

    the fact that Pace Sponsor paid an aggregate of $11,000,000 for its 22,000,000 Private Placement Warrants to purchase Class A Shares and that such Private Placement Warrants will expire worthless if a business combination is not consummated by September 16, 2017;

 

    the fact that, at the option of Pace Sponsor, any amounts outstanding under any loan made by Pace Sponsor or any of its affiliates to Pace in an aggregate amount up to $1,500,000 may be converted into warrants to purchase Class A Shares;

 

    the right of the Pace Initial Shareholders to hold Holdco Shares and the Holdco Shares to be issued to the Pace Sponsor upon exercise and exchange of its Private Placement Warrants following the Business Combination, subject to certain lock-up periods;

 

    the fact that Pace Sponsor agreed to loan Pace up to $1,250,000 to fund its operating costs, which will only be repaid upon the earlier of (i) consummation of the Business Combination or (ii) September 15, 2017;

 

    the anticipated designation of Mr. Karl Peterson, Pace’s President and Chief Executive Officer, as a director of Holdco following the Business Combination;

 

    the continued indemnification of Pace existing directors and officers and the continuation of Pace’s directors’ and officers’ liability insurance after the Business Combination;

 

    the fact that Pace Sponsor and Pace’s officers and directors may not participate in the formation of, or become directors or officers of, any other blank check company until Pace (i) has entered into a definitive agreement regarding an initial business combination or (ii) fails to complete an initial business combination by September 16, 2017;

 

    the fact that Pace Sponsor and Pace’s officers and directors will lose their entire investment in Pace and will not be reimbursed for any out-of-pocket expenses (of which approximately $300 is owed as of the date hereof) if an initial business combination is not consummated by September 16, 2017;

 

    if the Trust Account is liquidated, including in the event Pace is unable to complete an initial business combination within the required time period, Pace Sponsor has agreed to indemnify Pace to ensure that the proceeds in the Trust Account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which Pace has entered into an acquisition agreement or claims of any third party for services rendered or products sold to Pace, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account; and

 

    the fact that the PHC Investors have entered into the PHC Subscription Agreements with Pace and Holdco, pursuant to which the PHC Investors are entitled to purchase 1,015,000 Class A Shares for a purchase price of $10.00 per share.

These interests may influence the Pace Board in making their recommendation that you vote in favor of the approval of the Business Combination.

 

Q: Did the Pace Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

 

A:

No. The Pace Board did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Business Combination. Pace’s officers and directors have substantial

 

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  experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of Pace’s advisors, enabled them to make the necessary analyses and determinations regarding the Business Combination. In addition, Pace’s officers and directors and its advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of the Pace Board in valuing Playa’s business and assuming the risk that the Pace Board may not have properly valued such business.

 

Q: What happens if I vote against the Business Combination Proposal?

 

A: If you vote against the Business Combination Proposal but the Business Combination Proposal still obtains the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting, then the Business Combination Proposal will be approved and, assuming the approval of the Pace Merger Proposal and the satisfaction or waiver of the other conditions to closing, the Business Combination will be consummated in accordance with the terms of the Transaction Agreement.

If you vote against the Business Combination Proposal and the Business Combination Proposal does not obtain the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting, then the Business Combination Proposal will fail and Pace will not consummate the Business Combination. If Pace does not consummate the Business Combination, it may continue to try to complete a business combination with a different target business until September 16, 2017. If Pace fails to complete an initial business combination by September 16, 2017, then it will be required to dissolve and liquidate the Trust Account by returning the then-remaining funds in such account to its public shareholders.

 

Q: Do I have redemption rights?

 

A: If you are a holder of Pace public shares, you may redeem your public shares for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest (which interest shall be net of taxes payable), by (ii) the total number of then-outstanding public shares; provided that Pace will not redeem any Class A Shares issued in the Pace IPO to the extent that such redemption would result in Pace having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) of less than $5,000,001. A public shareholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 15% of the Class A Shares included in the units sold in the Pace IPO. Holders of outstanding Pace public warrants do not have redemption rights in connection with the Business Combination. The Pace Initial Shareholders, officers and directors have agreed to waive their redemption rights with respect to any Pace Ordinary Shares they may hold in connection with the consummation of the Business Combination, and the Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price. For illustrative purposes, based on the fair value of marketable securities held in the Trust Account of approximately $450,783,729 as of December 31, 2016, the estimated per share redemption price would have been approximately $10.01. Additionally, Class A Shares properly tendered for redemption will only be redeemed if the Business Combination is consummated; otherwise holders of such shares will only be entitled to a pro rata portion of the Trust Account (including interest but net of franchise and income taxes payable) in connection with the liquidation of the Trust Account, unless Pace completes an alternative business combination prior to September 16, 2017.

 

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Q: Can the Pace Initial Shareholders redeem their Founder Shares in connection with consummation of the Business Combination?

 

A: No. The Pace Initial Shareholders, officers and directors have agreed to waive their redemption rights with respect to their Founder Shares and any public shares they may hold in connection with the consummation of the Business Combination.

 

Q: Is there a limit on the number of shares I may redeem?

 

A: Yes. A public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), is restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in the Pace IPO. Accordingly, all shares in excess of 15% owned by a holder will not be redeemed for cash. On the other hand, a public shareholder who holds less than 15% of the public shares may redeem all of the public shares held by such shareholder for cash.

In no event is your ability to vote all of your shares (including those shares held by you in excess of 15% of the shares sold in the Pace IPO) for or against the Business Combination restricted.

Pace has no specified maximum redemption threshold under its amended and restated memorandum and articles of association, other than the aforementioned 15% threshold. Each redemption of Class A Shares by Pace public shareholders will reduce the amount in the Trust Account, which held marketable securities with a fair value of approximately $450,783,729 as of December 31, 2016. The Transaction Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the amount in the Trust Account (net of the amount of any Pace shareholder redemptions) and the proceeds from the Private Placement, equaling or exceeding $375,000,000 (net of the aggregate amount of cash required to satisfy any exercise by Pace shareholders of their right to have Pace redeem their Class A Shares in connection with a Business Combination (as such term is defined in Pace’s articles of association) and subject to a reduction to an amount no less than $325,000,000 in connection with any Hyatt Preferred Share Adjustment). The conditions to closing in the Transaction Agreement are for the sole benefit of the parties thereto and may be waived by such parties. If, as a result of redemptions of Class A Shares by Pace’s public shareholders, this condition is not met or is not waived, then each of Pace and Playa may elect not to consummate the Business Combination. In addition, in no event will Pace redeem its Class A Shares in an amount that would cause its net tangible assets to be less than $5,000,001, as provided in Pace’s amended and restated memorandum and articles of association and as required as a closing condition to each party’s obligation to consummate the Business Combination under the terms of the Transaction Agreement.

 

Q: Is there a limit on the total number of Pace public shares that may be redeemed?

 

A:

Yes. The amended and restated memorandum and articles of association of Pace provides that it may not redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001 (such that Pace is not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the Transaction Agreement. Other than this limitation, the amended and restated memorandum and articles of association of Pace does not provide a specified maximum redemption threshold. The Transaction Agreement provides that, as a condition to each party’s obligation to consummate the Business Combination, Pace may not have net tangible assets less than $5,000,001 at the closing date of the transactions contemplated by the Transaction Agreement. In addition, the Transaction Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the amount in the Trust Account and the proceeds from the Private Placement equaling or exceeding $375,000,000 (net of the aggregate amount of cash required to satisfy any exercise by Pace shareholders of their right to have Pace redeem their Class A Shares in connection with a Business Combination (as such term is defined in Pace’s articles of association) and subject to a reduction to an amount no less than

 

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  $325,000,000 in connection with any Hyatt Preferred Share Adjustment). In the event the aggregate cash consideration Pace would be required to pay for all Class A Shares that are validly submitted for redemption plus the amounts required to satisfy closing cash conditions pursuant to the terms of the Transaction Agreement exceeds the aggregate amount of cash available to Pace, it may not complete the Business Combination or redeem any shares, all Class A Shares submitted for redemption will be returned to the holders thereof, and Pace instead may search for an alternate business combination.

 

Q: Will how I vote affect my ability to exercise redemption rights?

 

A: No. You may exercise your redemption rights whether you vote your Class A Shares for or against, or whether you abstain from voting on, the Business Combination Proposal, the Pace Merger Proposal, the Holdco Articles of Association Proposal or any other proposal described by this proxy statement/prospectus. As a result, the Transaction Agreement can be approved by shareholders who will redeem their shares and no longer remain shareholders, leaving shareholders who choose not to redeem their shares holding shares in a company with a potentially less-liquid trading market, fewer shareholders, potentially less cash and the potential inability to meet the listing standards of NASDAQ.

 

Q: How do I exercise my redemption rights?

 

A: In order to exercise your redemption rights, you must (i) check the box on the enclosed proxy card to elect redemption, (ii) check the box on the enclosed proxy card marked “Shareholder Certification,” (iii) if you hold public units, separate the underlying public shares and public warrants, and (iv) prior to [●] on [●] (two business days before the Extraordinary General Meeting), tender your shares physically or electronically and submit a request in writing that Pace redeem your public shares for cash to Continental Stock Transfer & Trust Company, the Transfer Agent, at the following address:

Continental Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attention: Mark Zimkind

Email: mzimkind@continentalstock.com

Please check the box on the enclosed proxy card marked “Shareholder Certification” if you are not acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) with any other shareholder with respect to the Class A Shares. Notwithstanding the foregoing, a holder of the public shares, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) will be restricted from seeking redemption rights with respect to more than 15% of the Class A Shares included in the units sold in the Pace IPO, which is referred to herein as the “15% threshold.” Accordingly, all public shares in excess of the 15% threshold beneficially owned by a Pace public shareholder or group will not be redeemed for cash.

Pace shareholders seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the Transfer Agent and time to effect delivery. It is Pace’s understanding that Pace shareholders should generally allot at least two weeks to obtain physical certificates from the Transfer Agent. However, Pace does not have any control over this process and it may take longer than two weeks. Pace shareholders who hold their shares in street name will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically.

Pace shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name” are required to either tender their certificates to the Transfer Agent prior to the date set forth in this proxy statement/prospectus, or up to two business days prior to the vote on the proposal to

 

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approve the Business Combination at the Extraordinary General Meeting, or to deliver their shares to the Transfer Agent electronically using Depository Trust Company’s (DTC) Deposit/Withdrawal At Custodian (DWAC) system, at such shareholder’s option. The requirement for physical or electronic delivery prior to the Extraordinary General Meeting ensures that a redeeming shareholder’s election to redeem is irrevocable once the Business Combination is approved.

There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC system. The Transfer Agent will typically charge a tendering broker a fee and it is in the broker’s discretion whether or not to pass this cost on to the redeeming shareholder. However, this fee would be incurred regardless of whether or not shareholders seeking to exercise redemption rights are required to tender their shares, as the need to deliver shares is a requirement to exercising redemption rights, regardless of the timing of when such delivery must be effectuated.

 

Q: What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A: The receipt of cash by a U.S. holder of Class A Shares in redemption of such shares will be a taxable transaction for U.S. federal income tax purposes. Please see the section entitled “Material Tax Considerations — Material U.S. Federal Income Tax Considerations” for additional information. You are urged to consult your tax advisors regarding the tax consequences of exercising your redemption rights.

 

Q: If I am a Pace warrant holder, can I exercise redemption rights with respect to my public warrants?

 

A: No. The holders of Pace public warrants have no redemption rights with respect to such public warrants.

 

Q: Do I have appraisal rights or dissenters’ rights if I object to the proposed Business Combination?

 

A: With respect to the Pace Merger, the Cayman Islands Companies Law provides for a right of dissenting Pace shareholders, in certain situations, to be paid the fair value of their shares upon their dissenting to the merger if they follow a prescribed procedure set out in such law. However, because Pace shareholders currently hold Pace Ordinary Shares that are listed on NASDAQ and will receive Holdco Shares that will be listed on NASDAQ, Pace does not believe that dissenters’ rights are available to Pace shareholders in connection with the Business Combination.

 

Q: What happens to the funds held in the Trust Account upon consummation of the Business Combination?

 

A: If the Business Combination is consummated, the funds held in the Trust Account (together with the proceeds from the Private Placement) will be used to: (i) pay the cash consideration payable to purchase Playa Preferred Shares outstanding upon the closing of the Business Combination; (ii) pay Pace public shareholders who properly exercise their redemption rights; (iii) pay $15,750,000 in deferred underwriting commissions to the underwriters of the Pace IPO, in connection with the Business Combination; and (iv) pay certain other fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees and other professional fees) that were incurred by Pace and other parties to the Transaction Agreement in connection with the transactions contemplated by the Transaction Agreement, including the Business Combination, and pursuant to the terms of the Transaction Agreement. Any remaining funds will be used by Holdco for general corporate purposes.

 

Q: What conditions must be satisfied to complete the Business Combination?

 

A: There are a number of closing conditions in the Transaction Agreement, including the approval by Pace shareholders of the Business Combination Proposal and the Pace Merger Proposal. For a summary of the conditions that must be satisfied or waived prior to completion of the Business Combination, please see the section entitled “The Transaction Agreement and Related Agreements.”

 

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Q: What happens if the Business Combination is not consummated?

 

A: There are certain circumstances under which the Transaction Agreement may be terminated. Please see the section entitled “The Transaction Agreement and Related Agreements” for information regarding the parties’ specific termination rights.

If Pace does not consummate the Business Combination, it may continue to try to complete a business combination with a different target business until September 16, 2017. If Pace fails to complete an initial business combination by September 16, 2017, then Pace will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem Pace public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable, and less up to $50,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will completely extinguish Pace public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of Pace’s remaining shareholders and the Pace Board, dissolve and liquidate, subject in each case to Pace’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per unit in the Pace IPO. Please see the section entitled “Risk Factors — Risks Related to Pace” for additional information.

Holders of Founder Shares have waived any right to any liquidation distribution with respect to such shares. In addition, there will be no redemption rights or liquidating distributions with respect to the Pace public warrants and Private Placement Warrants, which will expire worthless if Pace fails to complete an initial business combination by September 16, 2017.

 

Q: When is the Business Combination expected to be completed?

 

A: The closing of the Business Combination is expected to take place on or prior to the third business day following the satisfaction or waiver of the conditions described below in the subsection entitled “The Transaction Agreement and Related Agreements — Conditions to Closing of the Business Combination.” The closing is expected to occur in the first quarter of 2017. The Transaction Agreement may be terminated by Pace or Playa if the closing of the Business Combination has not occurred by March 31, 2017 (the “Outside Date”) (unless mutually extended), provided that if this registration/proxy statement has been declared effective by the SEC by March 31, 2017, the Outside Date will be extended to April 21, 2017.

For a description of the conditions to the completion of the Business Combination, see the section entitled “The Transaction Agreement and Related Agreements — Conditions to Closing of the Business Combination.”

 

Q: What do I need to do now?

 

A: You are urged to read carefully and consider the information contained in this proxy statement/prospectus, including the Annexes, and to consider how the Business Combination will affect you as a shareholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

 

Q: How do I vote?

 

A: If you were a holder of record of Pace Ordinary Shares on [●], the record date for the Extraordinary General Meeting, you may vote with respect to the proposals in person at the Extraordinary General Meeting, or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

 

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Voting by Mail. By signing the proxy card and returning it in the enclosed prepaid and addressed envelope, you are authorizing the individuals named on the proxy card to vote your shares at the Extraordinary General Meeting in the manner you indicate. You are encouraged to sign and return the proxy card even if you plan to attend the Extraordinary General Meeting so that your shares will be voted if you are unable to attend the Extraordinary General Meeting. If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted. Votes submitted by mail must be received by [●] on [●], 2017.

Voting in Person at the Meeting. If you attend the Extraordinary General Meeting and plan to vote in person, you will be provided with a ballot at the Extraordinary General Meeting. If your shares are registered directly in your name, you are considered the shareholder of record and you have the right to vote in person at the Extraordinary General Meeting. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should follow the instructions provided by your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the Extraordinary General Meeting and vote in person, you will need to bring to the Extraordinary General Meeting a legal proxy from your broker, bank or nominee authorizing you to vote these shares. For additional information, please see the section entitled “Extraordinary General Meeting of Pace Shareholders” beginning on page 100 of this proxy statement/prospectus.

 

Q: What will happen if I abstain from voting or fail to vote at the Extraordinary General Meeting?

 

A: At the Extraordinary General Meeting, a properly executed proxy marked “ABSTAIN” with respect to a particular proposal will be counted as present for purposes of determining whether a quorum is present. For purposes of approval, an abstention will have no effect on the Business Combination Proposal, the Pace Merger Proposal, the Holdco Articles of Association Proposal and the Adjournment Proposal.

 

Q: What will happen if I sign and return my proxy card without indicating how I wish to vote?

 

A: Signed and dated proxies received by Pace without an indication of how the shareholder intends to vote on a proposal will be voted “FOR” each proposal presented to the shareholders. The proxyholders may use their discretion to vote on any other matters which properly come before the Extraordinary General Meeting.

 

Q: If I am not going to attend the Extraordinary General Meeting in person, should I return my proxy card instead?

 

A: Yes. Whether you plan to attend the Extraordinary General Meeting or not, please read the enclosed proxy statement/prospectus carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

 

Q: If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

 

A:

No. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. Pace believes that all of the proposals presented to the shareholders at this Extraordinary General Meeting will be considered non-discretionary and, therefore, your broker, bank, or nominee cannot vote your shares without your instruction on any of the proposals presented at the Extraordinary General Meeting. If you do not provide instructions with your proxy card, your broker, bank, or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares. This indication that a broker, bank, or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will not be counted for the

 

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  purposes of determining the existence of a quorum or for purposes of determining the number of votes cast at the Extraordinary General Meeting. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.

 

Q: May I change my vote after I have mailed my signed proxy card?

 

A: Yes. You may change your vote by sending a later-dated, signed proxy card to Pace’s Secretary at the address listed below so that it is received by Pace’s Secretary prior to the Extraordinary General Meeting or attend the Extraordinary General Meeting in person and vote. You also may revoke your proxy by sending a notice of revocation to Pace’s Secretary, which must be received by Pace’s Secretary prior to the Extraordinary General Meeting.

 

Q: What should I do if I receive more than one set of voting materials?

 

A: You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

 

Q: Who will solicit and pay the cost of soliciting proxies for the Extraordinary General Meeting?

 

A: Pace will pay the cost of soliciting proxies for the Extraordinary General Meeting. Pace has engaged Morrow to assist in the solicitation of proxies for the Extraordinary General Meeting. Pace has agreed to pay Morrow a fee of $25,000, plus disbursements, and will reimburse Morrow for its reasonable out-of-pocket expenses and indemnify Morrow and its affiliates against certain claims, liabilities, losses, damages and expenses. Pace will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of Pace Ordinary Shares for their expenses in forwarding soliciting materials to beneficial owners of Pace Ordinary Shares and in obtaining voting instructions from those owners. The directors, officers and employees of Pace may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

Q: Who can help answer my questions?

 

A: If you have questions about the proposals or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card you should contact:

Pace Holdings Corp.

301 Commerce Street, Suite 3300

Fort Worth, Texas 76102

(212) 405-8458

Attention: Clive D. Bode

Email: Pace@tpg.com

 

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You may also contact the proxy solicitor for Pace at:

Morrow Sodali

470 West Avenue

Stamford, Connecticut 06902

Individuals, please call toll-free: (800) 662-5200

Banks and brokerage, please call: (203) 658-9400

Email: PACE.info@morrowsodali.com

To obtain timely delivery, Pace shareholders must request the materials no later than [●], 2017, or five business days prior to the Extraordinary General Meeting.

You may also obtain additional information about Pace from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”

If you intend to seek redemption of your public shares, you will need to send a letter demanding redemption and deliver your public shares (either physically or electronically) to the Transfer Agent prior to the Extraordinary General Meeting in accordance with the procedures detailed under the question “How do I exercise my redemption rights?” If you have questions regarding the certification of your position or delivery of your public shares, please contact the Transfer Agent:

Continental Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attention: Mark Zimkind

Email: mzimkind@continentalstock.com

 

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SUMMARY

This summary highlights selected information contained in this proxy statement/prospectus and does not contain all of the information that is important to you. You should read carefully this entire proxy statement/prospectus, including the Annexes and accompanying financial statements of Holdco, Pace and Playa, to fully understand the proposed Business Combination (as described below) before voting on the proposals to be considered at the Extraordinary General Meeting (as described below). Please see the section entitled “Where You Can Find More Information” beginning on page 354 of this proxy statement/prospectus.

Unless otherwise specified, all share calculations assume (i) no exercise of redemption rights by Pace’s public shareholders; (ii) no inclusion of any Class A Shares issuable upon the exercise of Pace’s warrants; and (iii) an equity raise of approximately $50,000,000 of gross proceeds from the Private Placement will fund a portion of the cash consideration payable to the holders of Playa Preferred Shares pursuant to the Transaction Agreement for the Business Combination and related transactions.

Parties to the Business Combination

Holdco

Holdco is a Dutch private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) and a direct wholly-owned subsidiary of Pace that was incorporated on December 9, 2016. To date, Holdco has not conducted any material activities other than those incident to its formation and the Business Combination. Prior to consummation of the Business Combination, Holdco’s corporate form will be converted to a Dutch public limited liability company (naamloze vennootschap) and its name will be changed to Playa Hotels & Resorts N.V. Upon the closing of the Business Combination, the Holdco Shares and Holdco Public Warrants will be registered under the Exchange Act and listed on NASDAQ under the symbols “PLYA” and “PLYAW,” respectively.

The mailing address of Holdco’s principal executive office prior to the closing of the Business Combination is at WTC, Tower A, 12th Floor, Strawinskylaan 1209, 1077 XX Amsterdam, the Netherlands. The mailing address of Holdco’s principal executive office after the closing of the Business Combination will be at Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands.

Pace

Pace is a blank check company incorporated as a Cayman Islands exempted company on June 3, 2015 and formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more target businesses. Pace consummated the Pace IPO on September 16, 2015, generating gross proceeds of approximately $461,000,000, which includes proceeds from the private placement of the Private Placement Warrants to Pace Sponsor.

Pace’s securities are traded on NASDAQ under the ticker symbols “PACE,” “PACEU” and “PACEW.” Upon the closing of the Business Combination, the Pace securities will be delisted from NASDAQ.

The mailing address of Pace’s principal executive office is 301 Commerce Street, Suite 3300, Fort Worth, Texas 76102.

Playa

Playa was incorporated on March 28, 2013 as a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) under Dutch law. Playa is a leading owner, operator and

 



 

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developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations in Mexico and the Caribbean. Playa owns a portfolio consisting of 13 resorts (6,142 rooms) located in Mexico, the Dominican Republic and Jamaica. All-inclusive resorts provide guests with an integrated experience through prepaid packages of room accommodations, food and beverage services and entertainment activities. Playa believes that its properties are among the finest all-inclusive resorts in the markets they serve. All of Playa’s resorts offer guests luxury accommodations, noteworthy architecture, extensive on-site activities and multiple food and beverage options. Playa believes that its resorts have a competitive advantage due to their location, extensive amenities, scale and guest-friendly design. Playa’s portfolio is comprised of all-inclusive resorts that share the following characteristics: (i) prime beachfront locations; (ii) convenient air access from a number of North American and other international gateway markets; (iii) strategic locations in popular vacation destinations in countries with strong government commitments to tourism; (iv) high quality physical condition; and (v) capacity for further revenues and earnings growth through incremental renovation or repositioning opportunities.

Playa focuses on the all-inclusive resort business because Playa believes it is a rapidly growing segment of the lodging industry that provides its guests and it with compelling opportunities. Playa’s all-inclusive resorts provide guests with an attractive vacation experience that offers value and a high degree of cost certainty, as compared to traditional resorts, where the costs of discretionary food and beverage services and other amenities can be unpredictable and significant. Playa believes that the all-inclusive model provides it with more predictable revenue, expenses and occupancy rates as compared to other lodging industry business models because, among other reasons, guests at all-inclusive resorts often book and pay for their stays further in advance than guests at traditional resorts. Since stays are generally booked and paid for in advance, customers are less likely to cancel, which allows Playa to manage on-site expenses and protect operating margins accordingly. These characteristics of the all-inclusive model allow Playa to more accurately adjust certain operating costs in light of expected demand, as compared to other lodging industry business models. Playa also has the opportunity to generate incremental revenue by offering upgrades, premium services and amenities not included in the all-inclusive package.

Playa’s portfolio consists of resorts marketed under a number of different all-inclusive brands. Hyatt Ziva, Gran and Dreams are all-ages brands. Hyatt Zilara, THE Royal and Secrets are adults-only brands. Playa has also entered into an exclusive agreement with Panama Jack that provides Playa with the right to develop and own, and/or manage all-inclusive resorts under the Panama Jack brand in certain regions. Playa has agreed to rebrand two of its resorts under the Panama Jack brand. Playa believes that these brands enable it to differentiate its resorts and attract a loyal guest base.

Playa has a strategic relationship with Hyatt, a global lodging company with widely recognized brands, pursuant to which Playa jointly developed the standards for the operation of the all-ages Hyatt Ziva and adults-only Hyatt Zilara brands (together, the “Hyatt All-Inclusive Resort Brands”). Playa currently is the only Hyatt-approved operator of the Hyatt All-Inclusive Resort Brands and Playa has rebranded five of its resorts under the Hyatt All-Inclusive Resort Brands since 2013. In addition to creating potential future opportunities to expand Playa’s business, Playa believes that its strategic relationship with Hyatt will further establish Playa as a leader in the all-inclusive resort business by providing its Hyatt All-Inclusive Resort Brand resorts access to Hyatt’s distribution channels and guest base that includes leisure travelers. Playa believes that its strategic relationship with Hyatt and the increasing awareness of Playa’s all-inclusive resort brands among potential guests will enable Playa to increase the number of bookings made through lower cost sales channels, such as direct bookings through Hyatt, with respect to Playa’s Hyatt All-Inclusive Resort Brand resorts, and Playa’s company and resort websites.

The mailing address of Playa’s principal executive office is at Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands.

 



 

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New Pace

New Pace is a Cayman Islands exempted company and a direct wholly-owned subsidiary of Holdco that was incorporated on December 7, 2016 to consummate the Business Combination. In the Business Combination, Pace will merge with and into New Pace, with New Pace continuing as the surviving entity.

The mailing address of New Pace’s principal executive office is c/o Pace Holdings Corp., 301 Commerce Street, Suite 3300, Fort Worth, Texas 76102.

The Business Combination

General

On December 13, 2016, Pace, Playa, Holdco and New Pace entered into a Transaction Agreement (as it may be amended from time to time, the “Transaction Agreement”), which provides for, among other things: (i) the issuance by Pace of the Pace Earnout Warrants to Pace Sponsor; (ii) the entry by Pace into the Securities Purchase Agreements with the Playa Preferred Shareholders; (iii) the Pace Merger; (iv) the Distribution; (v) the Playa Preferred Share Acquisition; and (vi) the Playa Merger. For more information about the transactions contemplated in the Transaction Agreement, please see the sections entitled “The Business Combination” and “The Transaction Agreement and Related Agreements.” A copy of the Transaction Agreement is attached to this proxy statement/prospectus as Annex A.

Structure of the Business Combination

In connection with the closing of the Business Combination contemplated by the Transaction Agreement, the parties will undertake the following transactions:

 

    the issuance by Pace of the Pace Earnout Warrants to Pace Sponsor;

 

    the conversion of Holdco into a Dutch public limited liability company (naamloze vennootschap) and the amendment of the articles of association of Holdco;

 

    the Pace Merger;

 

    the distribution by New Pace to Holdco of an amount equal to the sum of (x) the aggregate amount of cash held by New Pace at such time and (y) the aggregate amount paid by the Private Placement Investors pursuant to and in accordance with the Subscription Agreements (the “Distribution”); and

 

    the acquisition of all of the Playa Preferred Shares from the Playa Preferred Shareholders by Holdco, as Pace’s successor in interest under the Securities Purchase Agreements, in consideration for an aggregate amount equal to $8.40 for each outstanding Playa Preferred Share plus the amount of any accrued but unpaid dividends thereon, subject to adjustment, in the case of the acquisition of Playa Preferred Shares from HI Holdings Playa, if any of the Playa Preferred Shares are converted into Playa Common Shares following the date of the Transaction Agreement pursuant to the Securities Purchase Agreement entered into with HI Holdings Playa.

The Playa Merger will become effective at midnight (24:00 hours) CET on the date of execution of the notarial deed of merger effecting the Playa Merger (the “Playa Merger Effective Time”). At the Playa Merger Effective Time, (i) each Playa Common Share issued and outstanding immediately prior to the Playa Merger Effective Time will (A) be exchanged for the number of validly issued, fully paid and non-assessable Holdco

 



 

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Shares calculated in accordance with the principles set forth in the Transaction Agreement, (B) entitle the holder thereof to receive the number of Holdco Private Placement Warrants calculated in accordance with the principles set forth in the Transaction Agreement and (C) entitle the holder thereof to receive the number of Playa Earnout Warrants calculated in accordance with the principles set forth in the warrant agreements to be executed by Holdco and the holders of Playa Common Shares as of immediately prior to closing; and (ii) the consideration to be paid to the Playa Preferred Shareholders in connection with the Playa Preferred Share Acquisition will be calculated based on an aggregate amount equal to $8.40 for each Playa Preferred Share, for an aggregate consideration value of approximately $346,000,000 (which includes accrued but unpaid dividends on the Playa Preferred Shares through December 31, 2016), plus any additional arrearages and additional accrued but unpaid dividends thereon after December 31, 2016 through the closing of the Business Combination, subject to adjustment, in the case of the acquisition of Playa Preferred Shares from HI Holdings Playa, if any of the Playa Preferred Shares are converted into Playa Common Shares following the date of the Transaction Agreement pursuant to the Securities Purchase Agreement entered into with HI Holdings Playa which, following the Playa Preferred Share Acquisition, will be held by Holdco as Pace’s successor in interest under the Securities Purchase Agreements.

Organizational Structure

The following diagram illustrates the organizational structure of Pace, Playa and Holdco immediately prior to the Business Combination:

 

LOGO

 



 

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The following diagram illustrates the structure of Holdco immediately following the Business Combination. This diagram assumes that the Business Combination is consummated on [●], 2017 and further assumes that no Pace shareholders exercise their redemption rights. If these assumptions are not correct, then the shareholdings set forth in the diagram below would change.

 

LOGO

Consideration in the Business Combination

Consideration to Pace Shareholders and Pace Warrant Holders in the Business Combination

Subject to the terms and conditions of the Transaction Agreement, the consideration to be paid to the Pace shareholders in connection with the Pace Merger shall consist of: (i) Holdco Shares, (ii) Holdco Private Placement Warrants, (iii) Holdco Public Warrants and (iv) Holdco Earnout Warrants. The number of Holdco Shares, Holdco Private Placement Warrants, Holdco Public Warrants and Holdco Earnout Warrants to be received by the Pace shareholders will be determined as follows:

 

    each Pace unit will be cancelled in exchange for consideration consisting of (A) the right to receive one validly issued, fully paid and non-assessable New Pace Class A Share, which will be issued to the exchange agent and, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one validly issued, fully paid and non-assessable Holdco Share to be issued to the exchange agent against a contribution in kind to Holdco, and (B) on substantially equivalent terms and conditions as the public warrants, one New Pace Public Warrant, which warrant will be, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one Holdco Public Warrant on substantially equivalent terms and conditions as the New Pace Public Warrants;

 

   

each Class A Share will be converted into the right to receive one validly issued, fully paid and non-assessable New Pace Class A Share, which will be issued to the exchange agent and, immediately

 



 

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after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one validly issued, fully paid and non-assessable Holdco Share to be issued to the exchange agent against a contribution in kind to Holdco;

 

    each Founder Share will be converted into the right to receive one validly issued, fully paid and non-assessable New Pace Class F Share, which will be issued to the exchange agent and, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one validly issued, fully paid and non-assessable Holdco Share to be issued to the exchange agent against a contribution in kind to Holdco;

 

    each Pace public warrant will be cancelled in exchange for consideration consisting of the issuance of, on substantially equivalent terms and conditions as the public warrants, one New Pace Public Warrant, which warrant will be, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one Holdco Public Warrant on substantially the terms and conditions as the New Place Public Warrants;

 

    each Private Placement Warrant will be cancelled in exchange for consideration consisting of the issuance of, on substantially equivalent terms and conditions as the Private Placement Warrants, one New Pace Private Placement Warrant, which warrant will be, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one Holdco Private Placement Warrant on substantially equivalent terms and conditions as the New Pace Private Placement Warrants; and

 

    each Pace Earnout Warrant will, immediately after the Pace Merger and prior to consummation of the Playa Merger, be cancelled in exchange for consideration consisting of the issuance of, on substantially equivalent terms and conditions as the Pace Earnout Warrants, one Holdco Earnout Warrant.

Immediately following the Pace Merger Effective Time, the exchange agent, acting as exchange agent and solely for the account and benefit of the former holders of Class A Shares and Founder Shares, will contribute to Holdco, for the account and benefit of the former holders of Class A Shares and Founder Shares, all of the issued and outstanding New Pace Class A Shares and New Pace Class F Shares that were issued to the exchange agent, as a contribution in kind and, in consideration of these contributions in kind, Holdco will issue and deliver to the exchange agent an equivalent number of Holdco Shares for the account and benefit of the former holders of Class A Shares and Founder Shares.

Consideration Payable to Playa Shareholders in the Business Combination

Subject to the terms and conditions of the Transaction Agreement, the consideration to be paid to the Playa Preferred Shareholders in connection with the Playa Preferred Share Acquisition will be calculated based on an aggregate amount equal to $8.40 for each outstanding Playa Preferred Share (plus any arrearages and accrued and unpaid dividends thereon through December 31, 2016), for an aggregate consideration value of approximately $346,000,000 (which includes accrued but unpaid dividends on the Playa Preferred Shares through December 31, 2016), plus any additional arrearages and accrued but unpaid dividends thereon after December 31, 2016 through the closing of the Business Combination, subject to adjustment, in the case of the acquisition of Playa Preferred Shares from HI Holdings Playa, if any of the Playa Preferred Shares are converted into Playa Common Shares following the date of the Transaction Agreement pursuant to the Securities Purchase Agreement entered into with HI Holdings Playa which, following the Playa Preferred Share Acquisition, will be held by Holdco as Pace’s successor in interest under the Securities Purchase Agreements.

Subject to the terms and conditions of the Transaction Agreement, certain adjustments pursuant to and in accordance with the terms of the Transaction Agreement and the ancillary agreements and assuming none of Pace’s public shareholders exercise their redemption rights, the consideration to be paid to the Playa Common

 



 

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Shareholders in connection with the Playa Merger shall consist of: (i) 49,731,029 Holdco Shares valued at approximately $497,310,290 based on a $10.00 share price, (ii) 7,333,333 Holdco Private Placement Warrants and (iii) 1,000,000 Playa Earnout Warrants.

Conditions to Closing of the Business Combination

The respective obligations of Playa, Pace, Holdco and New Pace to consummate the transactions contemplated by the Transaction Agreement, including the Business Combination, are subject to the satisfaction, or written waiver by both Playa and Pace, of each of the following conditions:

 

    there must not be in effect any order, decree, ruling, injunction or other action (whether temporary, preliminary or permanent) by a governmental entity of competent jurisdiction enjoining, restraining or otherwise prohibiting the consummation of the Business Combination, any creditor opposition proceedings that have been timely initiated in relation to the Business Combination which have subsequently not been revoked or dismissed, or any law or regulations that make the consummation of the Business Combination illegal or otherwise prohibited;

 

    the waiting period for approval under the HSR Act shall have expired or such approval shall have otherwise been obtained;

 

    approval from the Mexican Antitrust Commission (Comisión Federal de Competencia Económica) must have been obtained;

 

    the required vote of Pace’s shareholders to approve the Business Combination Proposal and the Pace Merger Proposal must have been obtained, the shareholders of Playa must have adopted and approved the Transaction Agreement and both Pace’s shareholders and Playa’s shareholders must have approved any other proposals reasonably agreed upon to complete the Business Combination;

 

    this proxy statement/prospectus must have become effective in accordance with the Securities Act and no stop order issued by the SEC may be in effect or threatened;

 

    the amount in the Trust Account and the proceeds from the Private Placement must equal or exceed $375,000,000 (subject to reduction to an amount no less than $325,000,000 in connection with any Hyatt Preferred Share Adjustment); and

 

    Pace must have at least $5,000,001 of net tangible assets remaining.

The obligations of Pace, Holdco and New Pace to effect the Business Combination are subject to fulfillment, on or prior to the closing date, of certain conditions (any or all of which may be waived in writing by Pace), including that, among others, Playa must have performed and complied in all material respects with all obligations required to be performed or complied with by Playa under the Transaction Agreement at or prior to closing.

The obligations of Playa to effect the Business Combination are subject to fulfillment, on or prior to the closing date, of certain conditions (any or all of which may be waived in writing by Playa), including, among others:

 

    Pace, Holdco and New Pace must have performed and complied in all material respects with all obligations required to be performed or complied with by it under the Transaction Agreement at or prior to closing; and

 



 

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    the Holdco Shares to be issued pursuant to the Transaction Agreement shall have been approved for listing on NASDAQ.

Related Agreements

Shareholder Agreement

Pursuant to the Transaction Agreement and at or prior to the closing of the Business Combination, Holdco, Pace Sponsor, HI Holdings Playa and Cabana will enter into a Shareholder Agreement that will be effective as of the closing of the Business Combination. The Shareholder Agreement provides that the Holdco Board, as of the closing of the Business Combination, will be comprised of ten directors, consisting of nine non-executive directors and Bruce W. Wardinski, as the initial CEO Director. As of the closing of the Business Combination, three of the non-executive directors will be designated by Pace Sponsor (at least one of whom will not be employed by, or have any other material financial relationship with, the Pace Sponsor or any of its affiliates) (each, a “Pace Director”), two of the non-executive directors will be designated by Cabana (each, a “Cabana Director”), and one non-executive director will be designated by HI Holdings Playa (as defined below) (the “Hyatt Director”). The Shareholder Agreement will further provide that each of the directors, other than the CEO Director, will be an “Independent Director” within the meaning of the listing rules of NASDAQ. The initial composition of the Holdco Board will be as set forth in “Management of Holdco After the Business Combination–Directors and Executive Officers.

Under the Shareholder Agreement, after the expiration of the initial one-year term, Pace Sponsor, HI Holdings Playa and Cabana will have certain rights to designate directors to the Holdco Board.

 

    Pace Directors: Pace Sponsor will have the right to designate (i) three directors to the Holdco Board for as long as Pace Sponsor holds more than 7,500,000 Holdco Shares, (ii) two directors to the Holdco Board for as long as Pace Sponsor holds 7,500,000 or fewer but more than 5,625,000 Holdco Shares, and (iii) one director to the Holdco Board for as long as Pace Sponsor holds 5,625,000 or fewer but more than 3,750,000 Holdco Shares.

 

    Hyatt Director: HI Holdings Playa will have the right to designate one director to the Holdco Board for as long as HI Holdings Playa holds more than 7,500,000 Holdco Shares.

 

    Cabana Directors: Cabana will have the right to designate (i) two directors to the Holdco Board for so long as Cabana holds more than 15,000,000 Holdco Shares and (ii) one director to the Holdco Board for so long as Cabana holds 15,000,000 or fewer but more than 7,500,000 Holdco Shares.

The three remaining directors will be designated by the Holdco Board in accordance with the Holdco Articles of Association.

The Shareholder Agreement provides that Holdco will, subject to certain conditions, nominate the respective director designees as provided for above. In addition, each of Pace Sponsor, HI Holdings Playa and Cabana (the “Designating Shareholders”) have agreed to vote to elect the designees of the other shareholder signatories designated in accordance with the Shareholder Agreement to the Holdco Board for the term of the Shareholder Agreement, unless such shareholder ceases to hold the minimum number of Holdco Shares needed for such person to be entitled to designate at least one such director.

The Shareholder Agreement also provides that the Holdco Board shall at all times maintain a Capital Allocation Committee consisting of one Pace Director, one Cabana Director and the CEO Director. For as long as Pace Sponsor or Farallon is entitled to appoint any director to the Holdco Board, any vacancy on the Capital

 



 

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Allocation Committee resulting from the resignation, removal, or death of the applicable Pace Director or Cabana Director, as applicable, must be promptly filled by the Holdco Board following prompt nomination of such replacement director by Pace Sponsor or Cabana. Any action by the Capital Allocation Committee will require the affirmative vote of two committee members. See “Management of Holdco After the Business Combination — Holdco Board — Board Committees — Capital Allocation Committee” for more information on the purpose, duties and authority of the Capital Allocation Committee.

Registration Rights Agreement

Certain persons who will be holders of the Holdco Shares immediately after the Playa Merger, including HI Holdings Playa, Cabana, the other shareholders of Playa immediately prior to consummation of the Business Combination, Pace Sponsor, Chad Leat, Robert Suss, Paul Walsh and Kneeland Youngblood (the “Holders”), will be entitled to registration rights pursuant to the Registration Rights Agreement effective as of the closing of the Business Combination. At any time, and from time to time, after the six month anniversary of the closing of the Business Combination, HI Holdings Playa, Cabana or Pace Sponsor may demand that Holdco register for resale some or all of their Holdco Shares for so long as they continue to meet certain ownership thresholds.

Subscription Agreements

Concurrently with the execution of the Transaction Agreement, Pace and Holdco entered into the Subscription Agreements, providing an aggregate commitment amount of approximately $50,000,000.

Pursuant to the PHC Subscription Agreements, the PHC Investors agreed to purchase from Pace an aggregate of 1,015,000 Class A Shares at a purchase price of $10.00 per share, or an aggregate of $10,150,000. The PHC Investors may assign their rights under the PHC Subscription Agreements to one or more parties, subject to compliance with the securities laws.

Pursuant to the Investor Subscription Agreements, the Investors agreed to purchase from Pace an aggregate of 3,985,000 Class A Shares at a purchase price of $10.00 per share, and an additional 144,654 Class A Shares in the aggregate in consideration of the payment of the purchase price and the other agreements of the Investors contained therein.

The Class A Shares issued pursuant to the Subscription Agreements will be exchanged for an equivalent number of New Pace Class A Shares, which will immediately be exchanged for an equivalent number of Holdco Shares in the Business Combination (the “Exchange Shares”). Holdco has agreed to register the resale of such Holdco Shares issued to the Investors pursuant to a registration statement that must be filed within 30 calendar days after the consummation of the Business Combination. The Subscription Agreements also contain other customary representations, warranties, covenants and agreements of the parties thereto.

The closings under the Subscription Agreements will occur substantially concurrently with the closing of the Business Combination and are conditioned on such closing and on other customary closing conditions. The Subscription Agreements will be terminated, and be of no further force and effect, upon the earlier to occur of (i) the termination of the Transaction Agreement in accordance with its terms, (ii) the mutual written agreement of the parties thereto and (iii) if any of the conditions to the closing are not satisfied on or prior to the closing date.

The Class A Shares to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act, and will be issued in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

 



 

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In addition, prior to the consummation of the Business Combination, Holdco intends to offer in the Playa Employee Offering up to $1,000,000 of Holdco Shares to Playa employees, their family members and persons with business relationships with Playa. The offer price in the Playa Employee Offering will equal the effective price per Class A Share paid by investors unaffiliated with Pace in the Private Placement. The Playa Employee Offering and any sales of Holdco Shares made pursuant to this offering will not be registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. The closing of the Playa Employee Offering is contingent upon, among other things, the closing of the Business Combination and is expected to occur after the closing of the Business Combination. The number of Holdco Shares sold pursuant to the Playa Employee Offering will reduce by an equivalent number of shares the commitment of the PHC Investors to purchase Class A Shares in the Private Placement.

Voting Agreement

Substantially concurrently with the execution of the Transaction Agreement, Playa and Pace entered into a Voting Agreement with Cabana and HI Holdings Playa, pursuant to which, subject to certain limitations, each of Cabana and HI Holdings Playa agreed to exercise all of their rights as shareholders of Playa, including the voting rights attached to all of the shares that they hold in Playa, to approve and support the Business Combination, and take all such actions reasonably requested by Playa and Pace in connection therewith, including by voting their shares in favor the proposed Business Combination at any meeting of Playa’s shareholders or by action by written consent in lieu thereof.

Impact of the Business Combination on Holdco’s Public Float

It is anticipated that, upon completion of the Business Combination: (i) Pace’s public shareholders (other than the Private Placement Investors) will own approximately 41.9% of Holdco; (ii) the Investors will own approximately 3.8% of Holdco; (iii) the PHC Investors will own approximately 1.0% (such that public shareholders, including the Private Placement Investors, will own approximately 46.7% of Holdco); (iv) the Pace Initial Shareholders (including Pace Sponsor) will own approximately 7.0% of Holdco, after giving effect to the surrender for no consideration of approximately 3,750,000 Founder Shares held by Pace Sponsor; and (v) Playa Common Shareholders will own approximately 46.3% of Holdco. These levels of ownership interests assume that no Class A Shares are elected to be redeemed by Pace’s public shareholders and that none of the Private Placement Warrants are exercised.

The ownership percentages with respect to Holdco following the Business Combination do not take into account the warrants to purchase Holdco Shares that will remain outstanding immediately following the Business Combination, but do include Founder Shares, which will be exchanged for Holdco Shares at the closing of the Business Combination on a one-for-one basis (after giving effect to the surrender for no consideration of approximately 3,750,000 of such shares and even though such Holdco Shares will be subject to transfer restrictions). If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by Pace’s existing shareholders in Holdco will be different.

Pace Board’s Reasons for Approval of the Business Combination

Pace was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The Pace Board sought to do this by utilizing the networks and industry experience of both the Pace Sponsor and the Pace Board to identify, acquire and operate one or more businesses.

 



 

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In particular, the Pace Board considered the following positive factors, although not weighted or in any order of significance, in deciding to approve the Business Combination:

 

    Premier Collection of Resorts. Playa’s portfolio of owned resorts represents a premier collection of all-inclusive resorts located in prime beachfront locations in popular vacation destinations throughout Mexico and the Caribbean.

 

    Business and Financial Condition and Prospects. The knowledge and familiarity of the Pace Board with Playa’s business, financial condition, results of operations and future growth prospects. The Pace Board discussed Playa’s current prospects for growth in executing upon and achieving Playa’s business plans, and noted that Playa achieved significant revenue growth following the rebranding and renovation of several resorts. The Pace Board also noted that the all-inclusive resort segment of the lodging industry is highly fragmented and presents a significant opportunity for further consolidation. In addition, the Pace Board believed that there is expected market growth overall in the lodging industry and that Playa is in a premium position to capitalize on such growth with its brand power and market position.

 

    Integrated and Scalable Operating Platform. The Pace Board noted that Playa has developed a scalable resort management platform designed to improve operating efficiency and enable Playa to own and manage additional resorts in Playa’s portfolio. The integrated platform allows managers to analyze and share trends throughout Playa’s portfolio.

 

    Profit Improvement Opportunities. The Pace Board considered the opportunities to expand Playa’s operating margins as its newly redeveloped assets stabilize, and the possibility to assume management of its externally managed resorts. Additionally, the Pace Board noted that the constraints imposed on Playa management from Playa’s highly leveraged capital structure restricted Playa’s ability to pursue attractive investment opportunities and the Pace Board believed that providing excess cash should enable Playa management to accelerate the deployment of capital into high return projects.

 

    Sales Channels Optimization Opportunity. The Pace Board noted that for the nine months ended September 30, 2016, approximately 67% of Playa’s bookings were through wholesale channels, compared to 68% for the nine months ended September 30, 2015. The costs of wholesale bookings are typically higher than those of direct guest bookings. Given Pace management’s experience in travel distribution, the Pace Board believes there is a significant opportunity to improve Playa’s operating margins by increasing the number of direct bookings through Playa’s resort websites and through Hyatt.

 

    Playa’s Strategic Relationship with Hyatt. Playa maintains a strategic relationship with Hyatt which provides a range of benefits, including the right to operate certain resorts under the Hyatt All-Inclusive Resort Brands in certain countries and, through 2018, certain rights with respect to the development and management of future Hyatt All-Inclusive Resort Brands in Mexico, Costa Rica, the Dominican Republic, Jamaica and Panama.

 

    Exclusive Focus on All-Inclusive. Playa’s focus on an all-inclusive model provides advantages over other lodging business models through relatively higher occupancy predictability and stability, and the ability to more accurately forecast resort utilization levels, which allows Playa to adjust certain operating costs in pursuit of guest satisfaction and more efficient operations.

 

   

Experienced and Proven Management Team. The Pace Board considered the fact that the post-Business Combination company will be led by the senior management team of Playa which,

 



 

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with an average of 28 years of industry experience, has successfully led the business and delivered industry leading profitability margins. In addition, the Pace Board considered the fact that Mr. Wardinski, who has extensive leadership experience at lodging companies and upscale properties, would continue as the Chief Executive Officer of the post-Business Combination company.

 

    Other Alternatives. The Pace Board’s belief, after a thorough review of other business combination opportunities reasonably available to Pace, that the proposed Business Combination represents the best potential business combination for Pace and the most attractive opportunity for Pace management to accelerate its business plan based upon the process utilized to evaluate and assess other potential acquisition targets, and the Pace Board’s belief that such processes had not presented a better alternative.

 

    Terms of the Transaction Agreement. The Pace Board considered the terms and conditions of the Transaction Agreement and the transactions contemplated thereby, including the Business Combination.

 

    Independent Director Role. The Pace Board is comprised of a majority of independent directors who are not affiliated with Pace Sponsor and its affiliates, including TPG. In connection with the Business Combination, Pace’s independent directors, Messrs. Chad Leat, Robert Suss, Paul Walsh and Kneeland Youngblood, took an active role in evaluating and guiding Pace management on the proposed terms of the Business Combination, including the Transaction Agreement, the related agreements and governance of Holdco following the Business Combination. Pace’s independent directors evaluated and unanimously approved, as members of the Pace Board, the Transaction Agreement and the transactions contemplated therein, including the Business Combination.

For more information about the Pace Board’s decision-making process concerning the Business Combination, please see the section entitled “The Business Combination — The Pace Board’s Reasons for the Business Combination.

Independent Director Oversight

The Pace Board is comprised of a majority of independent directors who are not affiliated with Pace Sponsor and its affiliates, including TPG. In connection with the Business Combination, Pace’s independent directors, Messrs. Chad Leat, Robert Suss, Paul Walsh and Kneeland Youngblood, took an active role in evaluating and negotiating the proposed terms of the Business Combination, including the Transaction Agreement, the Related Agreements and the governance of Holdco post-Business Combination, including the Holdco Articles of Association. As part of their evaluation of the Business Combination, Pace’s independent directors were aware of the potential conflicts of interest with Pace Sponsor and its affiliates, including TPG, that could arise with regard to the proposed terms of the Transaction Agreement, the Private Placement and Holdco Articles of Association and the governance of Holdco following the Business Combination. The independent directors of Pace reviewed and considered these interests during the negotiation of the Business Combination and in evaluating and unanimously approving, as members of the Pace Board, the Transaction Agreement and the transactions contemplated therein, including the Business Combination.

Satisfaction of 80% Test

It is a requirement under Pace’s amended and restated memorandum and articles of association and NASDAQ listing requirements that the business or assets acquired in Pace’s initial business combination have a fair market value equal to at least 80% of the balance of the funds in the Trust Account (excluding the deferred

 



 

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underwriting commissions and taxes payable on the income earned on the Trust Account) at the time of the execution of a definitive agreement for such initial business combination. As of December 13, 2016, the date of the execution of the Transaction Agreement, the fair value of marketable securities held in the Trust Account was approximately $435,000,000 (excluding $15,750,000 of deferred underwriting commissions and taxes payable on the income earned on the Trust Account) and 80% thereof represents approximately $348,000,000. In reaching its conclusion that the Business Combination meets the 80% asset test, the Pace Board reviewed the enterprise value of Playa of approximately $1.75 billion that was negotiated and agreed to by the parties to the Transaction Agreement. The parties to the Transaction Agreement considered factors such as Playa’s historical financial results, 2017 outlook, financial plan, debt structure and owned asset base, as well as valuations and trading of publicly traded companies and valuations of precedent merger and acquisition targets in similar and adjacent sectors. The enterprise value consists of a common equity value of approximately $1,074,000,000 and $679,000,000 of net debt. In determining whether the enterprise value described above represents the fair market value of Playa, the Pace Board considered all of the factors described in this section and the section of this proxy statement/prospectus entitled “The Transaction Agreement and Related Agreements” and the fact that the purchase price for Playa was the result of an arm’s length negotiation. As a result, the Pace Board concluded that the fair market value of the business acquired was significantly in excess of 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account).

The Extraordinary General Meeting of Pace Shareholders

Date, Time and Place of Extraordinary General Meeting

The Extraordinary General Meeting of Pace shareholders will be held on [●], 2017, at [●] local time at [●].

Proposals

At the Extraordinary General Meeting, Pace shareholders will be asked to consider and vote on:

 

  1. Business Combination Proposal — To consider and vote upon a proposal to adopt the Transaction Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A, and approve the transactions contemplated thereby, including the Business Combination (Proposal No. 1);

 

  2. Pace Merger Proposal — To consider and vote upon a proposal to approve the Pace Merger and authorize, approve and confirm the Plan of Merger (Proposal No. 2);

 

  3. Holdco Articles of Association Proposal — To consider and vote upon, on a non-binding advisory basis, a proposal to approve certain governance provisions contained in the Holdco Articles of Association that are not required by Dutch law and materially affect shareholder rights (Proposal No. 3) (the “Holdco Articles of Association Proposal”); and

 

  4.

Adjournment Proposal — To consider and vote upon a proposal to approve the adjournment of the Extraordinary General Meeting to a later date or dates (i) to the extent necessary to ensure that any required supplement or amendment to this proxy statement/prospectus is provided to Pace shareholders or, if as of the time for which the Extraordinary General Meeting is scheduled, there are insufficient Pace Ordinary Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the Extraordinary General Meeting, (ii) in order to solicit additional proxies from Pace shareholders in favor of the Business Combination Proposal and the Pace Merger

 



 

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  Proposal, or (iii) if Pace shareholders redeem an amount of Class A Shares such that the minimum proceeds condition to each party’s obligation to consummate the Business Combination would not be satisfied. The Adjournment Proposal will only be presented to Pace shareholders in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal and the Pace Merger Proposal, or in the event that Pace shareholders redeem an amount of Class A Shares such that the minimum proceeds condition to each party’s obligation to consummate the Business Combination would not be satisfied (Proposal No. 4).

Please see the sections entitled “Proposal No. 1 — The Business Combination Proposal,” “Proposal No. 2 — The Pace Merger Proposal,” “Proposal No. 3 — The Holdco Articles of Association Proposal” and “Proposal No. 4 — The Adjournment Proposal.”

Voting Power; Record Date

Only Pace shareholders of record at the close of business on [●], 2017, the record date for the Extraordinary General Meeting, will be entitled to vote at the Extraordinary General Meeting. Each Pace shareholder is entitled to one vote for each Pace Ordinary Share that such shareholder owned as of the close of business on the record date. If a Pace shareholder’s shares are held in “street name” or are in a margin or similar account, such shareholder should contact its broker, bank or other nominee to ensure that votes related to the shares beneficially owned by such shareholder are properly counted. On the record date, there were 56,250,000 Pace Ordinary Shares outstanding, of which 45,000,000 are public shares and 11,250,000 are Founder Shares held by the Pace Initial Shareholders.

Vote of the Pace Initial Shareholders and Pace’s Other Directors and Officers

Prior to the Pace IPO, Pace entered into agreements with the Pace Initial Shareholders and the other current directors and officers of Pace, pursuant to which each agreed to vote any Pace Ordinary Shares owned by them in favor of an initial business combination. These agreements apply to the Pace Initial Shareholders, including the Pace Sponsor, as it relates to the Founder Shares and the requirement to vote all of the Founder Shares in favor of the Business Combination Proposal and for all other proposals presented to Pace shareholders in this proxy statement/prospectus. As of the record date, the Pace Initial Shareholders and the other current directors and officers own 11,250,000 Founder Shares, representing 20% of the Pace Ordinary Shares then outstanding and entitled to vote at the Extraordinary General Meeting.

The Pace Initial Shareholders and the other current directors and officers of Pace have waived any redemption rights, including with respect to Class A Shares purchased in the Pace IPO or in the aftermarket, in connection with Business Combination. The Founder Shares held by the Pace Initial Shareholders have no redemption rights upon the liquidation of Pace and will be worthless if no business combination is effected by Pace by September 16, 2017. However, the Pace Initial Shareholders, officers and directors are entitled to redemption rights upon the liquidation of Pace with respect to any public shares they may own.

Quorum and Required Vote for Proposals at the Extraordinary General Meeting

The approval of the Business Combination Proposal requires the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Business Combination Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Business Combination Proposal. The Pace

 



 

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Initial Shareholders have agreed to vote their Founder Shares and any public shares purchased by them during or after the Pace IPO in favor of the Business Combination Proposal.

The approval of the Pace Merger Proposal requires the affirmative vote of holders of at least two-thirds of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Pace Merger Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Pace Merger Proposal.

The approval of the Holdco Articles of Association Proposal requires the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Holdco Articles of Association Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Holdco Articles of Association Proposal.

The approval of the Adjournment Proposal requires the affirmative vote of holders of a majority of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Adjournment Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Adjournment Proposal.

The Business Combination is conditioned on the approval of the Business Combination Proposal and the Pace Merger Proposal at the Extraordinary General Meeting. The Holdco Articles of Association Proposal is non-binding and is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus.

It is important for you to note that, in the event that the Business Combination Proposal and the Pace Merger Proposal do not receive the requisite vote for approval, Pace will not consummate the Business Combination. If Pace does not consummate the Business Combination and fails to complete an initial business combination by September 16, 2017, Pace will be required to dissolve and liquidate the Trust Account by returning the then remaining funds in such account to the public shareholders.

Recommendation to Pace Shareholders

The Pace Board believes that each of the Business Combination Proposal, the Pace Merger Proposal, the Holdco Articles of Association Proposal and the Adjournment Proposal to be presented at the Extraordinary General Meeting is in the best interests of Pace and its shareholders and unanimously recommends that its shareholders vote “FOR” each of the proposals.

 



 

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Interests of Certain Persons in the Business Combination

Interests of the Pace Initial Shareholders and Pace’s Other Current Officers and Directors

In considering the recommendation of the Pace Board to vote in favor of the Business Combination, Pace shareholders should be aware that aside from their interests as shareholders, the Pace Initial Shareholders and certain members of the Pace Board and officers have interests in the Business Combination that are different from, or in addition to, those of other Pace shareholders generally. The Pace Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Business Combination, and in recommending to Pace shareholders that they approve the Business Combination. Pace shareholders should take these interests into account in deciding whether to approve the Business Combination.

These interests include, among other things:

 

    the fact that the Pace Initial Shareholders and Pace directors and officers have agreed not to redeem any Pace Ordinary Shares held by them in connection with a shareholder vote to approve a proposed initial business combination;

 

    the fact that Pace Sponsor paid an aggregate of $25,000 for the Founder Shares and such securities will have a significantly higher value at the time of the Business Combination which, if unrestricted and freely tradable, would be valued at approximately $75,748,800 after giving effect to the cancellations, but given the restrictions on such shares, Pace believes such shares have less value;

 

    the fact that the Pace Initial Shareholders and Pace directors and officers have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them if Pace fails to complete an initial business combination by September 16, 2017;

 

    the fact that Pace Sponsor paid an aggregate of $11,000,000 for its 22,000,000 Private Placement Warrants to purchase Class A Shares and that such Private Placement Warrants will expire worthless if a business combination is not consummated by September 16, 2017;

 

    the fact that, at the option of Pace Sponsor, any amounts outstanding under any loan made by Pace Sponsor or any of its affiliates to Pace in an aggregate amount up to $1,500,000 may be converted into warrants to purchase Class A Shares;

 

    the right of the Pace Initial Shareholders to hold Holdco Shares and the Holdco Shares to be issued to the Pace Sponsor upon exercise and exchange of its Private Placement Warrants following the Business Combination, subject to certain lock-up periods;

 

    the fact that Pace Sponsor agreed to loan Pace up to $1,250,000 to fund its operating costs, which will only be repaid upon consummation of the Business Combination;

 

    the anticipated designation of Mr. Karl Peterson, Pace’s President and Chief Executive Officer, as a director of Holdco following the Business Combination;

 

    the continued indemnification of Pace existing directors and officers and the continuation of Pace’s directors’ and officers’ liability insurance after the Business Combination;

 



 

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    the fact that Pace Sponsor and Pace’s officers and directors may not participate in the formation of, or become directors or officers of, any other blank check company until Pace (i) has entered into a definitive agreement regarding an initial business combination or (ii) fails to complete an initial business combination by September 16, 2017;

 

    the fact that Pace Sponsor and Pace’s officers and directors will lose their entire investment in Pace and will not be reimbursed for any out-of-pocket expenses (of which approximately $300 is owed as of the date hereof) if an initial business combination is not consummated by September 16, 2017;

 

    if the Trust Account is liquidated, including in the event Pace is unable to complete an initial business combination within the required time period, Pace Sponsor has agreed to indemnify Pace to ensure that the proceeds in the Trust Account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which Pace has entered into an acquisition agreement or claims of any third party for services rendered or products sold to Pace, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account; and

 

    the fact that the PHC Investors have entered into the PHC Subscription Agreements with Pace and Holdco, pursuant to which the PHC Investors are entitled to purchase 1,015,000 Class A Shares for a purchase price of $10.00 per share.

Redemption Rights

Pursuant to Pace’s amended and restated memorandum and articles of association, holders of Pace public shares may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with Pace’s amended and restated memorandum and articles of association. As of December 13, 2016, this would have amounted to approximately $10.01 per share. If a holder of Pace public shares exercises its redemption rights, then such holder will be exchanging its Class A Shares for cash and will not own shares of Holdco following the closing of the Business Combination. Such a holder will be entitled to receive cash for its public shares only if it properly demands redemption and delivers its shares (either physically or electronically) to the Transfer Agent in accordance with the procedures described herein. Notwithstanding the foregoing, a holder of the public shares, together with any affiliate of his or her or any other person with whom he or she is acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) will be restricted from seeking redemption rights with respect to more than fifteen percent (15%) of the Class A Shares included in the public units sold in the Pace IPO. Accordingly, all public shares in excess of the 15% threshold beneficially owned by a public shareholder or group will not be redeemed for cash.

Pace has no specified maximum redemption threshold under its amended and restated memorandum and articles of association, other than the aforementioned 15% threshold. Each redemption of Class A Shares by Pace public shareholders will reduce the amount in the Trust Account, which held marketable securities with a fair value of approximately $450,783,729 as of December 31, 2016. The Transaction Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the amount in the Trust Account (net of the amount of any Pace shareholder redemptions) and the proceeds from the Private Placement, equaling or exceeding $375,000,000 (net of the aggregate amount of cash required to satisfy any exercise by Pace shareholders of their right to have Pace redeem their Class A Shares in connection with a Business Combination (as such term is defined in Pace’s articles of association) and subject to a reduction to an amount no less than $325,000,000 in connection with any Hyatt Preferred Share Adjustment). The conditions to closing in the Transaction Agreement are for the sole benefit of the parties thereto and may be waived by such parties. If, as a result of redemptions of Class A Shares by Pace’s public shareholders, this condition is not met or is not waived,

 



 

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then each of Pace and Playa may elect not to consummate the Business Combination. In addition, in no event will Pace redeem its Class A Shares in an amount that would cause its net tangible assets to be less than $5,000,001, as provided in Pace’s amended and restated memorandum and articles of association and as required as a closing condition to each party’s obligation to consummate the Business Combination under the terms of the Transaction Agreement. Pace shareholders who wish to redeem their public shares for cash must refer to and follow the procedures set forth in the section entitled “Extraordinary General Meeting of Pace Shareholders — Redemption Rights” in order to properly redeem their public shares.

Certain Information Relating to Holdco

Holdco Board and Executive Officers Before the Business Combination

Prior to the Business Combination, the following individuals serve as directors or executive officers of Holdco:

 

Name

  

Age

  

Position

Jan Hendrik Siemssen    54    Director
Pedro Emanuel Gouveia Fernandes Das Neves    42    Director
Karl Peterson    45    Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer

Holdco Board and Executive Officers Following the Business Combination

Pursuant to the Shareholder Agreement, as of the closing of the Business Combination, the board will consist of ten directors, including Bruce W. Wardinski, as the initial CEO Director, three Pace Directors, two Cabana Directors and one Hyatt Director. Following the expiration of the initial one-year term, Pace Sponsor, Hyatt and Cabana will continue to have certain rights to designate directors based on their respective ownership of outstanding Holdco Shares.

Holdco’s directors and executive officers upon consummation of the Business Combination will be as follows:

 

Name

  

Age

  

Position

Bruce D. Wardinski    56    Director, Chairman and Chief Executive Officer
Paul Hackwell    36    Director
Stephen G. Haggerty    49    Director
Daniel J. Hirsch    43    Director
Hal Stanley Jones    64    Director
Thomas Klein    53    Director
Elizabeth Lieberman    66    Director
Stephen L. Millham    48    Director
Karl Peterson    45    Director
Arturo Sarukhan    53    Director
Alexander Stadlin    63    Chief Operating Officer
Larry K. Harvey    52    Chief Financial Officer
Kevin Froemming    54    Chief Marketing Officer
David Camhi    44    General Counsel

Each of the Holdco directors, other than Mr. Wardinski, the Chairman and Chief Executive Officer, will serve as non-executive directors of the Holdco Board. In addition, Ms. Elizabeth Lieberman will serve as the Lead Independent Director of the Holdco Board. Each of the Holdco directors will serve until his or her successor is appointed or, if earlier, upon such director’s resignation, removal or death.

 



 

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For more information on the directors and management of Holdco, please see the section entitled “Management of Holdco After the Business Combination.

Listing of Holdco Shares and Holdco Public Warrants on NASDAQ

Holdco Shares and Holdco Public Warrants currently are not traded on a stock exchange. It is anticipated that the Holdco Shares and the Holdco Public Warrants will be listed on the NASDAQ upon the closing of the Business Combination under the symbols “PLYA” and “PLYAW,” respectively.

Delisting of Pace Ordinary Shares and Deregistration of Pace

Pace and Playa anticipate that, following consummation of the Business Combination, Pace Ordinary Shares, Pace public units and Pace public warrants will be delisted from NASDAQ, and Pace will be deregistered under the Exchange Act.

Comparison of Shareholder Rights

Until consummation of the Pace Merger, Cayman Islands law and the amended and restated memorandum and articles of association of Pace will continue to govern the rights of Pace shareholders. After consummation of the Pace share exchange following the Pace Merger, Dutch law and the Holdco Articles of Association will govern the rights of Holdco shareholders.

There are certain differences in the rights of Pace shareholders prior to the Business Combination and the rights of Holdco shareholders after the Business Combination. Please see the section entitled “Comparison of Shareholder Rights” beginning on page 314 of this proxy statement/prospectus for additional information.

Regulatory Matters

The approval of the Business Combination by the Mexican Commission of Economic Competition (“COFECE”) under Mexican Federal Law of Economic Competition and its Regulations (“Mexican Antitrust Law”) is a required condition to consummation of the Business Combination. Under Mexican Antitrust Law, transactions exceeding certain monetary thresholds cannot be completed until they are reviewed and approved by COFECE.

Material U.S. Tax Consequences

The Business Combination is intended to be tax-free to U.S. holders of Pace Class A Shares and public warrants for U.S. federal income tax purposes, except to the extent that the holders of Pace Class A Shares receive cash pursuant to the exercise of redemption rights.

Holders of Pace Class A Shares and public warrants should read carefully the information included under the section entitled “Material Tax Considerations — Material U.S. Federal IncomeTax Considerations” beginning on page 132 of this document for a more detailed discussion of material U.S. federal tax consequences of the Business Combination. Holders of Pace Class A Shares and public warrants should consult their tax advisors to determine the tax consequences to them (including the application and effect of any state, local or other income and other tax laws) of the Business Combination.

Material Dutch Tax Consequences

Holders and prospective holders of Holdco Shares and Holdco Public Warrants should read carefully the information included under the section entitled “Material Tax Considerations — Material Dutch Tax

 



 

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Considerations — Holdco Shares and Holdco Public Warrants” beginning on page 142 of this document for a more detailed discussion of the principal Dutch tax consequences of the acquisition, holding, redemption and disposal of the Holdco Shares and the acquisition, holding, exercise, and disposal of the Holdco Public Warrants. Holders and prospective holders of Holdco Shares and Holdco Public Warrants should consult their tax advisors to determine the tax consequences to them regarding the tax consequences of any acquisition, holding, redemption and disposal of Holdco Shares or acquisition, holding, exercise, or disposal of Holdco Public Warrants.

Accounting Treatment of the Business Combination

The Business Combination is made up of the series of transactions within the Transaction Agreement as defined elsewhere within this prospectus. For accounting and financial reporting purposes, this series of transactions will be accounted for as a recapitalization. No step-up in basis of intangible assets or goodwill will be recorded in this transaction. Subsequent to the completion of these series of transactions, the existing Playa shareholders will hold approximately 46.3% equity interest in the combined company, Playa will be designated with the majority of the Holdco board of directors, Playa will be designated with all of the senior executive positions of Holdco and Playa will be the reporting entity with its historical and future financial information being the financial information of the public registrant.

Appraisal Rights

With respect to the Pace Merger, the Cayman Islands Companies Law provides for a right of dissenting Pace shareholders, in certain situations, to be paid the fair value of their shares upon their dissenting to the merger if they follow a prescribed procedure set out in such law. However, because Pace shareholders currently hold Pace Ordinary Shares that are listed on NASDAQ and will receive Holdco Shares that will be listed on NASDAQ, Pace does not believe that dissenters’ rights are available to Pace shareholders in connection with the Business Combination.

Appraisal rights are not available to holders of Playa Common Shares in connection with the Business Combination.

Proxy Solicitation

Proxies may be solicited by mail, via telephone or via e-mail or other electronic correspondence. Pace has engaged Morrow to assist in the solicitation of proxies.

If a Pace shareholder grants a proxy, such shareholder may still vote its shares in person if it revokes its proxy before the Extraordinary General Meeting. A Pace shareholder may also change its vote by submitting a later-dated proxy, as described in the section entitled “Extraordinary General Meeting of Pace Shareholders — Revoking Your Proxy.”

Risk Factor Summary

In evaluating the Business Combination and the proposals to be considered and voted on at the Extraordinary General Meeting, you should carefully review and consider the risk factors set forth under “Risk Factors” beginning on page 51 of this proxy statement/prospectus. The occurrence of one or more of the events or circumstances described in that section, alone or in combination with other events or circumstances, may have a material adverse effect on (i) the ability of Holdco, Pace and Playa to complete the Business Combination, and (ii) the business, cash flows, financial condition and results of operations of Holdco following consummation of the Business Combination.

 



 

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Summary Financial Data

Porto Holdco B.V.

(a wholly owned subsidiary of Pace Holdings Corp.)

Consolidated Balance Sheet

 

     December 9, 2016  

Assets

  

Total assets

   $ —     
  

 

 

 

Liabilities and Shareholder’s Equity

  

Total liabilities

     —     

Commitments and contingencies

  

Shareholder’s equity:

  

Ordinary shares, $0.11 par value; 100 shares issued and outstanding

   $ 11   

Additional paid-in capital

     47,689   

Due from shareholder

     (11

Accumulated deficit

     (47,689
  

 

 

 

Total shareholder’s equity

     —     

Total liabilities and shareholder’s equity

   $ —     
  

 

 

 

Note: Porto Holdco B.V. was formed on December 9, 2016 as a wholly owned subsidiary of Pace Holdings Corp., a Cayman Islands exempted company. Porto Holdco B.V. was formed in contemplation of the Transaction Agreement, dated as of December 13, 2016, by and among Pace Holdings Corp., Playa Hotels & Resorts B.V., Porto Holdco B.V. and New PACE Holdings Corp. Thus, Porto Holdco B.V. does not have Statement of Operations Data.

 



 

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Summary Historical Financial Data of Pace

The following table contains summary historical financial data for Pace as of and for the nine months ended September 30, 2016, for the period from June 3, 2015 (inception) through September 30, 2015, and as of and for the period from June 3, 2015 (inception) through December 31, 2015. Such data for the period from June 3, 2015 (inception) through December 31, 2015 and as of December 31, 2015 have been derived from the audited financial statements of Pace included elsewhere in this proxy statement/prospectus. Such data as of and for the nine months ended September 30, 2016, and for the period from June 3, 2015 (inception) through September 30, 2015 have been derived from the unaudited financial statements of Pace included elsewhere in this proxy statement/prospectus. The data derived from the unaudited interim financial statements of Pace for the nine month period ended September 30, 2016 has been prepared assuming that Pace will continue as a going concern. As discussed in the notes to those unaudited interim financial statements, Pace has no shareholder’s equity and has not yet effected a business combination, the purpose for which Pace was established, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in the notes to the unaudited interim financial statements. The data derived from the unaudited interim financial statements does not include any adjustments that might result from the outcome of this uncertainty. Results from interim periods are not necessarily indicative of results that may be expected for the entire year. The information below is only a summary and should be read in conjunction with the sections entitled “Pace Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Pace’s financial statements, and the notes and schedules related thereto, which are included elsewhere in this proxy statement/prospectus.

Statement of Operations Data:

 

           For the Period        
    

For the Nine

    from June 3, 2015    

For the Period

 
     Months Ended
September 30,
2016
(unaudited)
    (inception) to
September 30,
2015
(unaudited)
    from June 3, 2015
(inception) to
December 31,
2015
 

Revenue

   $ —        $ —          —     

Professional fees and other expenses

     1,151,600        81,341        192,622   

Organizational costs

     —          59,789        66,105   
  

 

 

   

 

 

   

 

 

 

Loss from operations

     (1,151,600     (141,130     (258,727

Interest income

     628,095        —          —     
  

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to ordinary shares

   $ (523,505   $ (141,130     (258,727
  

 

 

   

 

 

   

 

 

 

Net income (loss) per ordinary share:

      

Basic and diluted

   $ (0.04   $ (0.02     (0.04
  

 

 

   

 

 

   

 

 

 

Weighted average ordinary shares outstanding (excluding shares subject to possible redemption):

      

Basic and diluted

     13,330,922        8,187,268        6,228,213   
  

 

 

   

 

 

   

 

 

 

 



 

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Condensed Balance Sheet Data:

 

     As of
September 30, 2016
(unaudited)
    As of
December 31, 2015
(audited)
 

Assets

    

Current assets:

    

Cash

   $ 83,714      $ 1,117,746   

Prepaid expenses

     40,215        152,339   
  

 

 

   

 

 

 

Total current assets

     123,929        1,270,085   

Investments held in Trust Account

     450,628,095        450,000,000   
  

 

 

   

 

 

 

Total assets

   $ 450,752,024      $ 451,270,085   
  

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

    

Current liabilities:

    

Accrued professional fees and other expenses

   $ 598,328      $ 52,010   

Accrued offering costs

     24,930        565,804   
  

 

 

   

 

 

 

Total current liabilities(1)

     623,258        617,814   

Deferred underwriting compensation

     15,750,000        15,750,000   
  

 

 

   

 

 

 

Total liabilities

     16,373,258        16,367,814   

Commitments and contingencies

    

Class A ordinary shares subject to possible redemption; 42,937,876 and 42,990,227 shares at September 30, 2016 and December 31, 2015, respectively, at a redemption value of $10.00 per share

     429,378,760        429,902,270   

Shareholders’ equity:

    

Preferred shares, $0.0001 par value; 1,000,000 shares authorized, none issued or outstanding

     —          —     

Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 2,062,124 shares issued and outstanding (excluding 42,937,876 shares subject to possible redemption) at September 30, 2016, and 2,009,773 shares issued and outstanding (excluding 42,990,227 shares subject to possible redemption) at December 31, 2015

     206        201   

Class F ordinary shares, $0.0001 par value; 20,000,000 shares authorized, 11,250,000 shares issued and outstanding

     1,125        1,125   

Additional paid-in capital

     5,780,907        5,257,402   

Accumulated deficit

     (782,232     (258,727
  

 

 

   

 

 

 

Total shareholders’ equity

     5,000,006        5,000,001   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 450,752,024      $ 451,270,085   
  

 

 

   

 

 

 

 

(1) Subsequent to September 30, 2016, Pace issued a non-interest bearing unsecured promissory note to Pace Sponsor that provides for Pace Sponsor to advance to Pace up to $1,250,000.

 



 

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Summary Historical Financial Data of Playa

The following tables set forth summary historical financial information and operating data for Playa as of and for the nine months ended September 30, 2016 and for the nine months ended September 30, 2015, and as of and for years ended December 31, 2015 and 2014 and for the year ended December 31, 2013. You should read the following summary historical financial information and operating data in conjunction with the sections entitled “Playa Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Playa’s consolidated financial statements and related notes, all included elsewhere in this proxy statement/prospectus. Playa derived the summary statements of operations data and other financial data for the years ended December 31, 2015, 2014 and 2013, and the summary balance sheet data as of December 31, 2015 and 2014 from Playa’s audited consolidated financial statements included elsewhere in this proxy statement/prospectus. Playa derived the summary statements of operations data and other financial data for the nine months ended September 30, 2016 and 2015, and the summary balance sheet data as of September 30, 2016 from Playa’s unaudited consolidated financial statements included elsewhere in this proxy statement/prospectus. The unaudited consolidated financial statements have been prepared on the same basis as Playa’s audited consolidated financial statements included elsewhere in this prospectus and, in Playa’s opinion, reflect certain adjustments, which include normal recurring adjustments, necessary to present fairly the financial information in those statements. Playa’s historical results may not be indicative of the results that may be achieved in the future.

Statement of Operations Data:

($ in thousands, except share and per share data)

 

     Nine Months Ended September 30,      Year Ended December 31,  
     2016      2015      2015     2014     2013  

Revenue:

            

Package

   $ 348,808       $ 260,756       $ 352,820      $ 312,130      $ 234,212   

Non-package

     52,562         40,500         55,525        55,107        45,624   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total revenue

     401,370         301,256         408,345        367,237        279,936   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Direct and selling, general and administrative expenses:

            

Direct

     214,039         179,463         247,080        233,841        198,513   

Selling, general and administrative

     66,237         48,298         70,461        62,176        49,571   

Pre-opening

     —           10,962         12,440        16,327        2,638   

Depreciation and amortization

     38,809         33,915         46,098        65,873        31,295   

Impairment loss

     —           —           —          7,285        —     

Insurance proceeds

     (309      (27,005      (27,654     (3,000     —     
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Direct and selling, general and administrative expenses

     318,776         245,633         348,425        382,502        282,017   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Operating income (loss)

     82,594         55,623         59,920        (15,265     (2,081
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Interest expense

     (40,619      (37,233      (49,836     (41,210     (29,864

Loss on extinguishment of debt

     —           —           —          —          (5,101

Other (expense) income, net

     (2,414      (775      (2,128     (10,777     3,732   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net income (loss) before tax

     39,561         17,615         7,956        (67,252     (33,314
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Income tax benefit

     5,270         5,239         1,755        29,036        (5,194
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net income (loss)

     44,831         22,854         9,711        (38,216     (38,508
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 



 

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     Nine Months Ended September 30,      Year Ended December 31,  
     2016      2015      2015     2014     2013  

Other comprehensive (loss) income, net of taxes:

            

Cash flow hedges

     —           —           —          —          1,922   

Benefit obligation gain (loss)

     44         (613      (484     630        178   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss)

     44         (613      (484     630        2,100   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss)

   $ 44,875       $ 22,241       $ 9,227      $ (37,586   $ (36,408
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Accretion and dividends of cumulative redeemable preferred shares

     (33,164      (29,175      (39,657     (35,991     (13,380
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net income (loss) available to ordinary shareholders

   $ 11,667       $ (6,321    $ (29,946   $ (74,207   $ (51,888
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Earnings (losses) per share — Basic

   $ 0.11       $ (0.10    $ (0.50   $ (1.18   $ (0.83
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Earnings (losses) per share — Diluted

   $ 0.11       $ (0.10    $ (0.50   $ (1.18   $ (0.83
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Weighted average number of shares outstanding during the period — Basic

     60,249,330         60,249,330         60,249,330        62,791,324        62,809,833   

Weighted average number of shares outstanding during the period — Diluted

     60,249,330         60,249,330         60,249,330        62,791,324        62,809,833   

 



 

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The following is a reconciliation of our net income (loss) to EBITDA and Adjusted EBITDA and Comparable Adjusted EBITDA for the nine months ended September 30, 2016 and 2015 and the years ended December 31, 2015, 2014, and 2013 (for discussions of Adjusted EBITDA and Comparable Adjusted EBITDA, see “Playa Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Indicators of Financial and Operating Performance”):

 

     Nine Months Ended September 30,      Year Ended December 31,  
     2016      2015      2015      2014      2013  

Net income (loss)

   $ 44,831       $ 22,854       $ 9,711       $ (38,216    $ (38,508
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Interest expense

     40,619         37,233         49,836         41,210         29,864   

Income tax benefit (provision)

     (5,270      (5,239      (1,755      (29,036      5,194   

Depreciation and amortization

     38,809         33,915         46,098         65,873         31,295   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

   $ 118,989       $ 88,763       $ 103,890       $ 39,381       $ 27,845   

Other expense (income), net (a)

     2,414         775         2,128         10,777         (3,732

Impairment loss (b)

     —           —           —           7,285         —     

Management termination fees (c)

     —           —           —           340         12,843   

Pre-opening expense (d)

     —           2,627         4,105         12,880         2,638   

Transaction expense (e)

     3,874         5,139         5,353         12,347         7,271   

Severance expense (f)

     —           —           —           2,914         —     

Other tax expense (g)

     971         1,599         1,949         1,190         2,466   

Jamaica delayed opening
accrual (h)

     —           (48      (1,458      2,269         —     

Insurance proceeds (i)

     (309      (14,286      (14,286      —           —     

Loss on extinguishment of debt (j)

     —           —           —           —           5,101   

Brand conversion expenses (k)

     —           —           —           —           455   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 125,939       $ 84,569       $ 101,681       $ 89,833       $ 54,887   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Less: non-comparable Adjusted EBITDA

     (26,932      (5,401      (9,607      (13,807      (31,492
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Comparable Adjusted
EBITDA (l)

   $ 99,007       $ 79,168       $ 92,074       $ 76,026       $ 23,395   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) Represents changes in foreign exchange and other miscellaneous expenses or income.
(b) Impairment loss attributable to Hyatt Ziva Los Cabos following Hurricane Odile.
(c) Represents expenses incurred in connection with terminating the third-party management contracts pursuant to which Playa’s resorts located in Los Cabos, Cancún and Puerto Vallarta were previously managed.
(d) Represents pre-opening expenses incurred in connection with the expansion, renovation, repositioning and rebranding of Hyatt Ziva Cancún, Hyatt Ziva Puerto Vallarta, and Hyatt Ziva and Hyatt Zilara Rose Hall. Excludes pre-opening expenses incurred at Hyatt Ziva Los Cabos following Hurricane Odile, as those expenses were offset with proceeds from business interruption insurance.
(e) Represents expenses incurred in connection with the Business Combination, including corporate initiatives, such as: the redesign and build-out of Playa’s internal controls; other capital raising efforts; and strategic initiatives, such as possible expansion into new markets. Playa eliminates these expenses from Adjusted EBITDA because they are not attributable to its core operating performance. Certain of these expenses are infrequent and unusual and are not expected to recur in future years.
(f) Represents expenses incurred in connection with the termination of employees at Dreams Cancún (now Hyatt Ziva Cancún) and Dreams Puerto Vallarta (now Hyatt Ziva Puerto Vallarta) in connection with the closure of these resorts for renovations in May 2014.
(g) Relates primarily to a Dominican Republic asset tax, which is an alternative tax to income tax in the Dominican Republic. Playa eliminates this expense from Adjusted EBITDA because it is substantially similar to the income tax expense we eliminate from our calculation of EBITDA.
(h) Represents an expense accrual recorded in 2014 related to Playa’s future stay obligations provided to guests affected by the delayed reopening of Hyatt Ziva and Hyatt Zilara Rose Hall. The reversal of this accrual occurred throughout 2015.
(i) Represents a portion of the insurance proceeds related to property insurance, including proceeds received in connection with Hurricane Odile in 2015, and not business interruption insurance proceeds. The business interruption insurance proceeds associated with Hurricane Odile were offset by the expenses incurred while Hyatt Ziva Los Cabos was closed and are included in net income (loss).

 



 

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(j) Represents loss recorded for the extinguishment of a loan that was repaid in connection with Playa’s formation transactions.
(k) Represents expenses associated with the conversion to the Hyatt All-Inclusive Resort Brands.
(l)  Excludes Adjusted EBITDA contribution from Hyatt Ziva Los Cabos and Hyatt Ziva Cancún for the nine months ended September 30, 2016 and 2015. Excludes Adjusted EBITDA contribution from Hyatt Ziva Puerto Vallarta, Hyatt Ziva and Hyatt Zilara Rose Hall, Hyatt Ziva Los Cabos and Hyatt Ziva Cancún for the years ended December 31, 2015 and 2014. Excludes Adjusted EBITDA contribution from Hyatt Ziva Puerto Vallarta, Hyatt Ziva and Hyatt Zilara Rose Hall, Hyatt Ziva Los Cabos, Hyatt Ziva Cancún, Hyatt Zilara Cancún, THE Royal Playa del Carmen, Gran Caribe Resort, and Gran Porto Resort for the year ended December 31, 2013.

 



 

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Condensed Balance Sheet Data:

 

($ in thousands, except share and per share data)                   
     As of September 30,     As of December 31,  
     2016     2015     2014  
                    

ASSETS

      

Cash and cash equivalents

   $ 35,120      $ 35,460      $ 39,146   

Restricted cash

     6,383        6,383        6,383   

Trade and other receivables, net

     31,497        43,349        32,014   

Accounts receivable from related parties

     2,562        3,457        3,009   

Insurance recoverable

     —          —          1,244   

Inventories

     10,759        10,062        8,648   

Prepayments and other assets

     56,919        52,675        53,254   

Property, plant and equipment, net

     1,406,192        1,432,855        1,338,997   

Investments

     860        844        689   

Goodwill

     51,731        51,731        51,731   

Other intangible assets

     2,055        2,505        2,833   

Deferred tax assets

     4,703        4,703        7,193   
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 1,608,781      $ 1,644,024      $ 1,545,121   
  

 

 

   

 

 

   

 

 

 

LIABILITIES, CUMULATIVE REDEEMABLE PREFERRED SHARES AND SHAREHOLDERS’ EQUITY

      

Trade and other payables

   $ 110,033      $ 152,035      $ 125,885   

Payables to related parties

     7,968        5,930        6,344   

Income tax payable

     79        4,510        1,300   

Debt

     747,409        780,646        705,120   

Debt to related party

     47,565        47,792        47,985   

Deferred consideration

     2,491        4,145        6,127   

Other liabilities

     9,445        10,050        7,628   

Deferred tax liabilities

     92,926        92,926        107,969   
  

 

 

   

 

 

   

 

 

 

Total liabilities

     1,017,916        1,098,034        1,008,358   
  

 

 

   

 

 

   

 

 

 

Commitments and contingencies

      

Cumulative redeemable preferred shares (par value $0.01; 32,738,094 shares authorized, issued and outstanding as of September 30, 2016 and December 31, 2015; aggregate liquidation preference of $385,439 and $352,275 as of September 30, 2016 and December 31, 2015, respectively)

     385,439        352,275        312,618   

Shareholders’ equity

      

Ordinary shares (par value $0.01; 65,623,214 shares authorized and issued and 60,249,330 shares outstanding as of September 30, 2016 and December 31, 2015)

     656        656        656   

Treasury shares (at cost; 5,373,884 shares as of September 30, 2016 and December 31, 2015)

     (23,108     (23,108     (23,108

Paid-in capital

     387,708        420,872        460,529   

Accumulated other comprehensive loss

     (4,023     (4,067     (3,583

Accumulated deficit

     (155,807     (200,638     (210,349
  

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     205,426        193,715        224,145   
  

 

 

   

 

 

   

 

 

 

Total liabilities, cumulative redeemable preferred shares and shareholders’ equity

   $ 1,608,781      $ 1,644,024      $ 1,545,121   
  

 

 

   

 

 

   

 

 

 

 



 

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Summary Financial Data of Holdco on a Pro Forma Basis

The summary unaudited pro forma condensed combined financial information for the year ended December 31, 2015 and the nine months ended September 30, 2016 combines the historical consolidated statement of operations of Pace and Playa, giving effect to the transactions in the Transaction Agreement as if they had been completed on January 1, 2015. The summary unaudited pro forma condensed combined balance sheet as of September 30, 2016 combines the historical unaudited consolidated balance sheets of Pace and Playa, giving effect to the transactions in the Transaction Agreement as if they had been completed on September 30, 2016. The summary unaudited pro forma condensed combined financial information has been derived from and should be read in conjunction with the unaudited pro forma condensed combined financial information, including the notes thereto, which is included in this joint proxy statement/prospectus under “Unaudited Pro Forma Condensed Combined Financial Statements.

The summary unaudited pro forma condensed combined financial information is presented for informational purposes only. The summary unaudited pro forma condensed combined financial information does not purport to represent what the combined company’s results of operations or financial condition would have been had the transactions in the Transaction Agreement actually occurred on the dates indicated, and does not purport to project the combined company’s results of operations or financial condition for any future period or as of any future date. The summary unaudited pro forma condensed combined financial information does not reflect any cost savings that may be realized as a result of the transactions in the Transaction Agreement or any potential changes in compensation plans. Additionally, the unaudited pro forma adjustments made in the summary unaudited pro forma condensed combined financial information, which are described in those notes, are preliminary and may be revised.

 

    Pro Forma
Assuming None of
the Outstanding
Pace Common
Stock is Redeemed
    Pro Forma
Assuming
17.5 million shares
of the Outstanding
Pace Common
Stock is Redeemed
    Pro Forma
Assuming None of
the Outstanding
Pace Common
Stock is Redeemed
    Pro Forma
Assuming
17.5 million shares
of the Outstanding
Pace Common
Stock is Redeemed
 
    Year Ended December 31, 2015     Nine Months Ended September 30, 2016  

($ in thousands)

                       

Condensed Combined Statement of Operations Data:

       

Total revenue

  $             408,345      $             408,345      $             401,370      $             401,370   

Operating income

  $ 59,661      $ 59,661      $ 81,442      $ 81,442   

Net income available to ordinary shareholders

  $ 9,452      $ 9,452      $ 44,307      $ 44,307   

Earnings per share — Basic and diluted

  $ 0.09      $ 0.10      $ 0.41      $ 0.46   

Weighted average number of shares outstanding during the period — Basic and diluted

    108,028,300        95,510,800        108,028,300        95,510,800   

 



 

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     Pro Forma Assuming None
of the Outstanding Pace
Common Stock is Redeemed
     Pro Forma Assuming
17.5 million shares of
the Outstanding Pace
Common Stock is
Redeemed
 
     As of September 30, 2016  

($ in thousands)

             

Condensed Combined Balance Sheet Data:

     

Cash and cash equivalents

   $ 122,257       $ —     

Property, plant and equipment

   $ 1,406,192       $ 1,406,192   

Total assets

   $ 1,693,994       $ 1,571,737   

Total debt

   $ 794,974       $ 797,892   

Total liabilities

   $ 1,018,539       $ 1,021,457   

Total stockholders’ equity

   $ 675,455       $ 550,280   

Selected Comparative Per Share Information and Exchange Rates

Comparative Per Share Data of Pace

The following table sets forth the closing market prices per share of Pace’s public units, Class A Shares and public warrants as reported by NASDAQ on December 12, 2016, the last trading day before the Business Combination was publicly announced, and on [●], 2017, the last practicable trading day before the date of this proxy statement/prospectus.

 

Trading Date

   Units
(PACEU)
     Class A
Shares
(PACEU)
     Warrants
(PACEW)
 

December 12, 2016

   $ 10.30       $ 9.95       $ 0.4985   

[●], 2017

   $ [●]       $ [●]       $ [●]   

The market prices of Pace securities could change significantly and may not be indicative of the market prices of Holdco Shares once they start trading. Because the Pace conversion / exchange ratio will not be adjusted for changes in the market prices of the Class A Shares, the value of the Holdco Shares that Pace shareholders will receive in the Business Combination may vary significantly from the value implied by the market prices of shares of Class A Shares on the date of the Transaction Agreement, the date of this proxy statement/prospectus, and the date on which Pace shareholders vote on adoption of the Transaction Agreement. Pace shareholders are urged to obtain current market quotations for Pace securities before making their decision with respect to the adoption of the Transaction Agreement.

Comparative Per Share Data of Playa

Historical market price information regarding Playa is not provided because there is no public market for Playa’s securities. For information about distributions paid by Playa to its equityholders, please see the sections entitled “Playa Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

Comparative Historical and Pro Forma Per Share Data

The following table sets forth:

 

    historical per share information of Pace for the year ended December 31, 2015;

 



 

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    historical per share information of Playa for the year ended December 31, 2015; and

 

    unaudited pro forma per share information of Holdco for the fiscal year ended December 31, 2015, after giving effect to the Business Combination, assuming two redemption scenarios as follows:

 

    Assuming No Redemptions: This scenario assumes that no Class A Shares are redeemed; and

 

    Assuming Maximum Redemptions: This scenario assumes that 17,500,000 Class A Shares, or 39% of the outstanding Class A Shares, are redeemed, resulting in an aggregate payment of $175,200,000 out of the Trust Account, and that the fair value of the marketable securities held in the Trust Account following such redemption along with the proceeds from the Private Placement are sufficient to satisfy closing cash condition pursuant to the terms of the Transaction Agreement. If, as a result of redemptions of Class A Shares by Pace public shareholders, this closing cash condition is not met or is not waived, then Pace may elect not to consummate the Business Combination or redeem any shares and all Class A Shares submitted for redemption will be returned to the holders thereof.

The pro forma net income (loss) and cash dividends per share information reflect the Business Combination contemplated by the Transaction Agreement as if it had occurred on January 1, 2015.

This information is based on, and should be read together with, the selected historical consolidated financial information, the unaudited pro forma condensed combined financial information and the historical consolidated financial information of Holdco, Pace and Playa, and the accompanying notes to such financial statements, that has been presented in Pace’s filings with the SEC that are included in this proxy statement/prospectus. The unaudited pro forma condensed combined per share data are presented for illustrative purposes only and are not necessarily indicative of actual or future financial position or results of operations that would have been realized if the Business Combination had been completed as of the dates indicated or will be realized upon the completion of the Business Combination. Please see the section entitled “Where You Can Find More Information” beginning on page 354 of this proxy statement/prospectus. Uncertainties that could impact Holdco’s financial condition include risks that effect Playa’s operations and outlook such as economic recessions, inflation, fluctuations in interest and currency exchange rates, and changes in the fiscal or monetary policies of the United States government. For more information on the risks, please see the section entitled “Risk Factors.” You are also urged to read the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements ” beginning on page 175 of this proxy statement/prospectus.

 

     Historical                

(in thousands, except per share amounts)

   Pace
12 Months
Ended
12/31/15
     Playa
12 Months
Ended
12/31/15
     Holdco
Pro Forma
Combined
(Assuming
No
Redemptions)
     Holdco
Pro Forma
Combined
(Assuming
Max
Redemptions)
 

Book value per share(1)

   $ 0.09       $ 3.22       $ 6.25       $ 5.76   

Basic net income (loss) per common share

   $ (0.04    $ (0.50    $ 0.09       $ 0.10   

Diluted net income (loss) per common share

   $ (0.04    $ (0.50    $ 0.09       $ 0.10   

Cash dividends per share

   $ —         $ —         $ —         $ —     

 

(1)  Book value per share = (Total equity)/shares outstanding as of December 31, 2015 for the historical information and as of September 30, 2016 for the pro forma.

Exchange Rates

Playa’s reporting currency is the U.S. dollar. Playa has determined that the U.S. dollar is the functional currency of all of its international operations. Following consummation of the Business Combination, with

 



 

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respect to financial reporting of Holdco’s financial statements, foreign currency denominated monetary asset and liability amounts will be re-measured into U.S. dollars at end-of-period exchange rates. Foreign currency non-monetary assets, such as inventories, prepaid expenses, fixed assets and intangible assets, will be recorded in U.S. dollars at historical exchange rates. Foreign currency denominated income and expense items will be recorded in U.S. dollars at the applicable daily exchange rates in effect during the relevant period. For purposes of calculating tax liability in certain foreign jurisdictions, Holdco will index its depreciable tax bases in certain assets for the effects of inflation based upon statutory inflation factors. The effects of these indexation adjustments will be reflected in the income tax benefit line of Holdco’s Consolidated Statements of Operations and Comprehensive Income (Loss). The re-measurement of gains and losses related to deferred tax assets and liabilities will be reported in the income tax provision. Foreign exchange gains and losses will be presented in Holdco’s Consolidated Statements of Operations and Comprehensive Income (Loss) within other (expense) income, net.

Market Prices and Dividends

Holdco

Historical market price information regarding Holdco is not provided because, as of the date of this proxy statement/prospectus, there is no public market for the Holdco Shares or Holdco Public Warrants.

Holdco has not paid any cash dividends on the Holdco Shares to date and does not intend to pay cash dividends prior to the completion of the Business Combination. The payment of cash dividends in the future will be dependent upon Holdco’s revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the Business Combination. The payment of any cash dividends subsequent to the Business Combination will be within the discretion of the Holdco Board.

Pace

Pace’s public units, Class A Shares and public warrants trade on NASDAQ, under the symbols “PACEU,” “PACE” and “PACEW,” respectively. Each of Pace’s public units consist of one Class A Share and one warrant to purchase one-third of one Class A Share. Pace’s public units commenced trading on September 11, 2015, and the Class A Shares and public warrants began trading on October 28, 2015.

The following table sets forth, for the calendar quarter indicated, the high and low sales prices per Pace public unit, Class A Share and Pace public warrant as reported on the NASDAQ for the periods presented:

 

    Units (PACEU)      Class A Shares (PACE)     Warrants (PACEW)  
    High     Low      High      Low     High     Low  

Fiscal Year 2017:

             

Quarter ended March 31, 2017(1)

  $ [●]      $ [●]       $ [●]       $ [●]      $ [●]      $ [●]   

Fiscal Year 2016:

             

Quarter ended March 31, 2016

  $ 10.17      $ 9.20       $ 9.90       $ 9.50      $ 0.50      $ 0.11   

Quarter ended June 30, 2016

  $ 10.05      $ 9.80       $ 9.88       $ 9.50      $ 0.50      $ 0.18   

Quarter ended September 30, 2016

  $ 10.50      $ 9.94       $ 9.93       $ 9.75      $ 0.50      $ 0.21   

Quarter ended December 31, 2016

  $ 10.75      $ 10.70       $ 10.16       $ 9.97      $ 0.64      $ 0.59   

Fiscal Year 2015:

             

Quarter ended March 31, 2015

    N/A        N/A         N/A         N/A        N/A        N/A   

Quarter ended June 30, 2015

    N/A        N/A         N/A         N/A        N/A        N/A   

Quarter ended September 30, 2015 (2)

  $ 10.30      $ 10.03         N/A         N/A        N/A        N/A   

Quarter ended December 31, 2015 (3)

  $ 10.90      $ 9.90       $ 10.25       $ 9.60      $ 0.60      $ 0.45   

 

(1)  Through [●], 2017.

 



 

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(2)  Beginning on September 11, 2015 with respect to PACEU.
(3)  Beginning on October 28, 2015 with respect to PACE and PACEW.

On December 12, 2016, the last trading date before the public announcement of the Business Combination, Pace’s public units, Class A Shares and Pace public warrants closed at $10.30, $9.95 and $0.4985, respectively.

Pace has not paid any cash dividends on its Class A Shares to date and does not intend to pay cash dividends prior to the completion of the Business Combination.

Playa

There is no established public trading market for Playa’s ordinary shares. Playa has not paid any cash dividends on its ordinary shares to date and does not intend to pay cash dividends prior to the completion of the Business Combination.

 



 

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RISK FACTORS

You should carefully review and consider the following risk factors and the other information contained in this proxy statement/prospectus, including the financial statements and notes to the financial statements included herein, in evaluating the Business Combination and the proposals to be voted on at the Extraordinary General Meeting. Certain of the following risk factors apply to the business and operations of Playa and will also apply to the business and operations of Holdco following the completion of the Business Combination. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to complete or realize the anticipated benefits of the Business Combination, and may have a material adverse effect on the business, cash flows, financial condition and results of operations of Holdco following the Business Combination. You should carefully consider the following risk factors in addition to the other information included in this proxy statement/prospectus, including matters addressed in the section entitled “General Information.” The risks discussed below may not prove to be exhaustive and are based on certain assumptions made by Holdco, Pace and Playa which later may prove to be incorrect or incomplete. Holdco, Pace and Playa may face additional risks and uncertainties that are not presently known to such entity, or that are currently deemed immaterial, which may also impair its business or financial condition. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein.

Risks Related to the Business Combination

Holdco has no operating or financial history and its results of operations may differ significantly from the unaudited pro forma financial data included in this document.

Holdco has been recently incorporated and has no operating history and no revenues. This document includes unaudited pro forma condensed combined financial statements for Holdco. The unaudited pro forma condensed combined statement of operations of Holdco combines the historical audited results of operations of Pace for the year ended December 31, 2015 and unaudited results of Pace for the nine months ended September 30, 2016 with the historical audited results of operations of Playa for the year ended December 31, 2015 and the unaudited results of Playa for the nine months ended September 30, 2016, respectively, and gives pro forma effect to the Business Combination as if it had been consummated as of January 1, 2015. The unaudited pro forma condensed combined balance sheet of Holdco combines the historical balance sheets of Pace and Playa as of September 30, 2016 and gives pro forma effect to the Business Combination as if it had been consummated on such date.

The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only, are based on certain assumptions, address a hypothetical situation and reflect limited historical financial data. Therefore, the unaudited pro forma condensed combined financial statements are not necessarily indicative of the results of operations and financial position that would have been achieved had the Business Combination been consummated on the dates indicated above, or the future consolidated results of operations or financial position of Holdco. Accordingly, Holdco’s business, assets, cash flows, results of operations and financial condition may differ significantly from those indicated by the unaudited pro forma condensed combined financial statements included in this document.

During the pre-closing period, Pace and Playa are prohibited from entering into certain transactions that might otherwise be beneficial to Pace, Playa or their respective stockholders.

Until the earlier of consummation of the Business Combination or termination of the Transaction Agreement, Pace and Playa are subject to certain limitations on the operations of their businesses, each as summarized under the “The Transaction Agreement and Related Agreements — Covenants of the Parties,” including, subject to specified exceptions, limitations on:

 

    soliciting, negotiating or entering into transactions alternative to the Business Combination;

 

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    acquiring other entities and assets (whether by merger, asset purchase or other methods) or, in the case of Playa, disposing of any assets by any means (including through licenses) that would result in costs in excess of certain thresholds or that would be outside the ordinary course of business;

 

    operating outside the ordinary course of business;

 

    paying dividends (other than, in the case of Playa, any dividends accrued or accruing on the Playa Preferred Shares, including any arrearages);

 

    reclassifying, repurchasing and, in the case of Pace, issuing any of its securities; and

 

    certain other business activities.

The limitations on Pace’s and Playa’s conduct of their businesses during this period could have the effect of delaying or preventing other strategic transactions and may, in some cases, make it impossible to pursue business opportunities that are available only for a limited time.

The need to obtain required regulatory approvals may delay or prevent consummation of the Business Combination or reduce the estimated benefits of the Business Combination.

Consummation of the Business Combination is conditioned upon, among other things, the receipt of any material governmental authorizations, consents, orders and approvals, as further described under “Regulatory Approvals Related to the Business Combination.” These regulatory conditions may not be satisfied for an extended period of time after the Extraordinary General Meeting, which may delay or prevent consummation of the Business Combination. If governmental bodies seek to impose conditions, lengthy negotiations may ensue among such governmental bodies, Pace and Playa. Such negotiations may delay or prevent consummation of the Business Combination and could result in additional costs.

Uncertainties about the Business Combination during the pre-closing period may cause a loss of key management personnel and other key employees.

Playa is dependent on the experience and industry knowledge of its key management personnel and other key employees to operate their businesses and execute their business plans. Holdco’s success following the Business Combination will depend in part upon its ability to retain Playa’s existing key management personnel and other key employees and attract new management personnel and other key employees. During the pre-closing period, current and prospective employees of Playa may experience uncertainty about their roles with Holdco after the Business Combination, which may adversely affect the ability of Holdco to retain or attract management personnel and other key employees.

Uncertainties about the Business Combination during the pre-closing period may cause suppliers to delay or defer decisions concerning Playa or seek to change existing arrangements.

There may be uncertainty regarding whether the Business Combination will occur. This uncertainty may cause suppliers to delay or defer decisions concerning Playa, which could negatively affect Playa’s business. Suppliers may seek to change existing agreements with Playa as a result of the Business Combination for these or other reasons.

Holdco may be a passive foreign investment company (“PFIC”), which could result in adverse U.S. federal income tax consequences to U.S. investors.

If Holdco is a PFIC for any taxable year, or portion thereof, that is included in the holding period of a beneficial owner of the Holdco Shares or Holdco Public Warrants who or that is for U.S. federal income tax purposes (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity

 

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taxable as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States, any state thereof or the District of Columbia or (iii) an estate or trust the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source (a “U.S. holder”), such U.S. holder may be subject to certain adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. Due to the Pace Merger’s qualification as an F Reorganization (See “Material Income Tax Considerations—U.S. Holders”), Holdco should be treated as the same corporation as Pace for purposes of the PFIC provisions. Accordingly, Holdco’s PFIC status may depend on whether Pace has qualified for the PFIC start-up exception which generally provides that a corporation will not be a PFIC for the first taxable year the corporation has gross income (the “Start-Up Year”), if (i) no predecessor of the corporation was a PFIC, (ii) the corporation satisfies the U.S. IRS that it will not be a PFIC for either of the first two taxable years following the Start-Up Year and (iii) the corporation is not in fact a PFIC for either of those years. Depending on the particular circumstances the application of the start-up exception may be subject to uncertainty, and there cannot be any assurance that Pace has qualified for the start-up exception. Accordingly, there can be no assurances with respect to Holdco’s status as a PFIC. Moreover, Pace did not provide a PFIC annual information statement for 2015 and does not expect to provide such statement for 2016. Holdco does not expect to provide such statement for 2017 or going forward. Please see the section entitled “Material Income Tax Considerations—U.S. Holders” for a more detailed discussion with respect to Holdco’s PFIC status. U.S. holders are urged to consult their tax advisors regarding the possible application of the PFIC rules to holders of the Holdco Shares and Holdco Public Warrants.

Risks Related to Ownership of Holdco Shares

The rights of Holdco’s shareholders and the duties of Holdco’s directors are governed by (i) Dutch law, (ii) the Holdco Articles of Association and (iii) internal rules and policies adopted by the Holdco Board, and differ in some important respects from the rights of shareholders and the duties of members of a board of directors of a Cayman Islands exempted company.

Holdco’s corporate affairs, as a Dutch private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) or a Dutch public limited liability company (naamloze vennootschap), are governed by (i) the Holdco Articles of Association, (ii) internal rules and policies adopted by the Holdco Board and (iii) the laws governing companies incorporated in the Netherlands. The rights of Holdco shareholders and the duties of Holdco directors under Dutch law are different from the rights of shareholders and/or the duties of directors of a corporation organized under the laws of the Cayman Islands. In the performance of its duties, the Holdco Board is required by Dutch law to consider Holdco’s interests and the interests of Holdco’s shareholders, its employees and other stakeholders (e.g., Holdco’s creditors, guests and suppliers) as a whole and not only those of Holdco’s shareholders, which may negatively affect the value of your investment. For more information, see the section entitled “Comparison of Shareholder Rights.”

In addition, the rights of Holdco’s shareholders, including the rights of shareholders as they relate to the exercise of shareholder rights, are governed by Dutch law and Holdco’s articles of association and such rights differ from the rights of shareholders under Cayman Island law. See “Comparison of Shareholder Rights.”

Holdco is organized and existing under the laws of the Netherlands, and, as such, the rights of Holdco shareholders and the civil liability of Holdco directors and executive officers will be governed in certain respects by the laws of the Netherlands.

Holdco is organized and existing under the laws of the Netherlands, and, as such, the rights of Holdco’s shareholders and the civil liability of Holdco’s directors and executive officers will be governed in certain respects by the laws of the Netherlands. The ability of Holdco’s shareholders in certain countries other than the Netherlands to bring an action against Holdco, its directors and executive officers may be limited under applicable law. In addition, substantially all of Holdco’s assets are located outside the United States. As a result, it may not be possible for shareholders to effect service of process within the United States upon Holdco or its

 

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directors and executive officers or to enforce judgments against Holdco or them in U.S. courts, including judgments predicated upon the civil liability provisions of the federal securities laws of the United States. In addition, it is not clear whether a Dutch court would impose civil liability on Holdco or any of its directors and executive officers in an original action based solely upon the federal securities laws of the United States brought in a court of competent jurisdiction in the Netherlands.

As of the date of this proxy statement/prospectus, the United States and the Netherlands do not have a treaty providing for the reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters. Accordingly, a judgment rendered by a court in the United States, whether or not predicated solely upon U.S. securities laws, would not automatically be recognized and enforced by the competent Dutch courts. However, if a person has obtained a final and conclusive judgment for the payment of money rendered by a court in the United States that is enforceable in the United States and files a claim with the competent Dutch court, the Dutch court will generally give binding effect to such foreign judgment insofar as it finds that (i) the jurisdiction of the U.S. court has been based on a ground of jurisdiction that is generally acceptable according to international standards, (ii) the judgment by the U.S. court was rendered in legal proceedings that comply with the Dutch standards of proper administration of justice including sufficient safeguards (behoorlijke rechtspleging) and (iii) the judgment by the U.S. court is not incompatible with a decision rendered between the same parties by a Dutch court, or with a previous decision rendered between the same parties by a foreign court in a dispute that concerns the same subject and is based on the same cause, provided that the previous decision qualifies for acknowledgment in the Netherlands and except to the extent that the foreign judgment contravenes Dutch public policy (openbare orde).

Based on the lack of a treaty as described above, U.S. investors may not be able to enforce against Holdco or its directors, representatives or certain experts named herein who are residents of the Netherlands or countries other than the United States any judgments obtained in U.S. courts in civil and commercial matters, including judgments under the U.S. federal securities laws.

Under the Holdco Articles of Association, and certain other contractual arrangements between Holdco and its directors, Holdco indemnifies and holds its directors harmless against all claims and suits brought against them, subject to limited exceptions. There is doubt, however, as to whether U.S. courts would enforce such indemnity provisions in an action brought against one of Holdco’s directors in the United States under U.S. securities laws.

Holdco does not anticipate paying dividends on Holdco Shares.

Holdco’s articles of association prescribe that some or all of Holdco’s profits or reserves appearing from its annual accounts adopted by the General Meeting may be distributed as dividends to the holders of Holdco Shares, subject to the appropriate record date, by the General Meeting at the proposal of the Holdco Board or with at least two-thirds of the votes cast. Holdco will have power to make distributions to shareholders only to the extent that its equity exceeds the sum of the paid and called-up portion of its share capital and the reserves that must be maintained in accordance with provisions of Dutch law or its articles of association. Holdco may not make any distribution of profits on shares held by Holdco as treasury shares and such treasury shares will not be taken into account when determining the profit entitlement of Holdco’s shareholders. The Holdco Board determines whether and how much of the profit shown in the adopted annual accounts it will reserve and the manner and date of any dividend. All calculations to determine the amounts available for dividends will be based on Holdco’s company-only annual accounts, which may be different from its consolidated financial statements, such as those included in this proxy statement/prospectus. In addition, the Holdco Board is permitted, subject to certain requirements, to declare interim dividends without the approval of the shareholders. Holdco may reclaim any distributions, whether interim or not interim, made in contravention of certain restrictions of Dutch law from shareholders that knew or should have known that such distribution was not permissible. In addition, on the basis of Dutch case law, if after a distribution Holdco is not able to pay its due and collectable debts, then its shareholders or directors who at the time of the distribution knew or reasonably should have foreseen that result

 

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may be liable to Holdco’s creditors. Holdco has never declared or paid any cash dividends and Holdco has no plan to declare or pay any dividends in the foreseeable future on Holdco Shares. Holdco currently intends to retain any earnings for future operations and expansion.

Since Holdco is a holding company, its ability to pay dividends will be dependent upon the financial condition, liquidity and results of operations of, and Holdco’s receipt of dividends, loans or other funds from, its subsidiaries. Holdco’s subsidiaries are separate and distinct legal entities and have no obligation to make funds available to Holdco. In addition, there are various statutory, regulatory and contractual limitations and business considerations on the extent, if any, to which Holdco’s subsidiaries may pay dividends, make loans or otherwise provide funds to Holdco.

Each of Pace Sponsor, Farallon and HI Holdings Playa will own a significant portion of Holdco Shares and will have representation on the Holdco Board. Pace Sponsor, Farallon and Hyatt may have interests that differ from those of other shareholders.

Upon the completion of the Business Combination, approximately 7% of Holdco Shares will be beneficially owned by Pace Sponsor. In addition, three of Holdco’s director nominees were designated by Pace Sponsor. As a result, Pace Sponsor may be able to significantly influence the outcome of matters submitted for director action, subject to Holdco’s directors’ obligation to act in the interest of all of Holdco’s stakeholders, and for shareholder action, including the designation and appointment of the Holdco Board (and committees thereof) and approval of significant corporate transactions, including business combinations, consolidations and mergers. Following the Business Combination, so long as Pace Sponsor continues to directly or indirectly own a significant amount of Holdco’s outstanding equity interests and one or more individuals affiliated with Pace Sponsor are members of the Holdco Board and/or one or more committees thereof, Pace Sponsor may be able to exert substantial influence on Holdco and may be able to exercise its influence in a manner that is not in the interests of Holdco’s other stakeholders. Pace Sponsor’s influence over Holdco’s management could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of Holdco, which could cause the market price of Holdco Shares to decline or prevent Holdco’s shareholders from realizing a premium over the market price for Holdco Shares. Additionally, Pace Sponsor is in the business of making investments in companies and owning real estate, and Pace Sponsor may from time to time acquire and hold interests in businesses that compete directly or indirectly with Holdco or that supply Holdco with goods and services. Pace Sponsor may also pursue acquisition opportunities that may be complementary to (or competitive with) Holdco’s business, and as a result those acquisition opportunities may not be available to Holdco. Prospective investors in Holdco Shares should consider that the interests of Pace Sponsor may differ from their interests in material respects.

Upon the completion of the Business Combination, approximately 28% of Holdco Shares will be beneficially owned by Cabana. In addition, two of Holdco’s director nominees were designated by Cabana and one of these directors is currently a managing member of FCM. As a result, Cabana may be able to significantly influence the outcome of matters submitted for director action, subject to Holdco’s directors’ obligation to act in the interest of all of Holdco’s stakeholders, and for shareholder action, including the designation and appointment of the Holdco Board (and committees thereof) and approval of significant corporate transactions, including business combinations, consolidations and mergers. Following the Business Combination, so long as Cabana and/or its affiliates continues to directly or indirectly own a significant amount of Holdco’s outstanding equity interests and one or more individuals affiliated with Farallon are members of the Holdco Board and/or one or more committees thereof, Farallon may be able to exert substantial influence on Holdco and may be able to exercise its influence in a manner that is not in the interests of Holdco’s other stakeholders. Farallon’s concentration of ownership could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of Holdco, which could cause the market price of Holdco Shares to decline or prevent Holdco’s shareholders from realizing a premium over the market price for Holdco Shares. Additionally, Farallon is in the business of making investments in companies and owning other hotels, and Farallon may from time to time acquire and hold interests in businesses that compete

 

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directly or indirectly with Holdco or that supply Holdco with goods and services. Farallon may also pursue acquisition opportunities that may be complementary to (or competitive with) Holdco’s business, and as a result those acquisition opportunities may not be available to Holdco. Prospective investors in Holdco Shares should consider that the interests of Farallon may differ from their interests in material respects.

Upon the completion of the Business Combination, approximately 11% of Holdco Shares will be beneficially owned by HI Holdings Playa. In addition, one of Holdco’s director nominees was designated by HI Holdings Playa and is currently an employee of Hyatt. As a result, HI Holdings Playa may be able to influence the outcome of matters submitted for director action, subject to Holdco’s directors’ obligation to act in the interest of all of Holdco’s stakeholders, and for shareholder action, including the designation of the Holdco Board (and committees thereof) and approval of significant corporate transactions, including business combinations, consolidations and mergers. HI Holdings Playa’s concentration of ownership could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of Playa, which could cause the market price of Holdco Shares to decline or prevent Holdco’s shareholders from realizing a premium over the market price for Holdco Shares. Additionally, Hyatt owns and franchises other hotels, and Hyatt may from time to time acquire and hold interests in, subject to the Hyatt Strategic Alliance Agreement, businesses that compete directly or indirectly with Holdco or that supply Holdco and/or its subsidiaries with goods and services. Hyatt may also pursue acquisition opportunities that may be complementary to or competitive with Holdco’s business, and as a result those acquisition opportunities may not be available to Holdco. Also, the loss of any Hyatt Resort Agreement or the Hyatt Strategic Alliance Agreement is likely to have a material adverse effect on Holdco. Prospective investors in Holdco Shares should consider that the interests of Hyatt may differ from their interests in material respects. See For more information, see “The Transaction Agreement and Related AgreementsRelated Agreements–Shareholder Agreement” and “Certain Relationships and Related Transactions — Playa Relationships and Related Party Transactions — Hyatt Agreements.”

Provisions of the Holdco Articles of Association or Dutch corporate law might deter acquisition bids for Holdco that shareholders might consider to be favorable and prevent or frustrate any attempt to replace or remove the Holdco Board at the time of such acquisition bid.

Certain provisions of Holdco’s articles of association may make it more difficult for a third party to acquire control of Holdco or effect a change in the Holdco Board. These provisions include:

 

    A provision that Holdco directors are appointed by Holdco’s General Meeting at the binding nomination of the Holdco Board. Such binding nomination may only be overruled by the General Meeting by a resolution adopted by at least a majority of the votes cast, if such votes represent more than 50% of Holdco’s issued share capital. If all directors are no longer in office or unable to act, the General Meeting can appoint one or more directors without a binding nomination by the Holdco Board with a majority of the votes cast if such votes represent more than 50% of Holdco’s issued share capital.

 

    A provision that Holdco’s shareholders at a General Meeting may suspend or remove directors at any time. A resolution of Holdco’s General Meeting to suspend or remove a director may be passed by a majority of the votes cast, provided that the resolution is based on a proposal by the Holdco Board. In the absence of a proposal by the Holdco Board, a resolution of Holdco’s General Meeting to suspend or remove a director shall require a vote of at least a majority of the votes cast, if such votes represent more than 50% of Holdco’s issued share capital.

 

   

A requirement that certain actions can only be taken by the General Meeting with at least two-thirds of the votes cast, unless such resolution is passed at the proposal by the Holdco Board, including an amendment of Holdco’s articles of association, the issuance of shares or the granting of rights to subscribe for shares, the limitation or exclusion of preemptive rights, the reduction of Holdco’s issued

 

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share capital, the application for bankruptcy, the making of a distribution from Holdco’s profits or reserves on Holdco’s ordinary shares, the making of a distribution in the form of shares in Holdco’s capital or in the form of assets, instead of cash, the entering into of a merger or demerger, Holdco’s dissolution and the designation or granting of authorizations such as the authorization to issue shares and to limit or exclude preemptive rights. Holdco’s General Meeting adopted a resolution to grant such authorizations to the Holdco Board. See “Description of Holdco Securities.”

 

    A provision prohibiting (a) a “Brand Owner” (which generally means a franchisor, licensor or owner of a hotel concept or brand that has at least 12 all-inclusive resorts and that competes with any Hyatt All-Inclusive Resort Brand resort) from acquiring Holdco Shares such that the Brand Owner (together with its affiliates) acquires beneficial ownership in excess of 15% of Holdco’s outstanding shares, or (b) a “Restricted Brand Company” (defined as each of Marriott International, Hilton Worldwide Inc., Starwood Hotels & Resorts Worldwide, Inc., InterContinental Hotels Group, Accor Hotels Worldwide or any of their respective affiliates or successors) from acquiring Holdco’s shares such that the Restricted Brand Company (together with its affiliates) acquires beneficial ownership in excess of 5% of Holdco’s outstanding shares. Upon becoming aware of either share cap being exceeded, Holdco will send a notice to such shareholder informing such shareholder of a violation of this provision and granting the shareholder two weeks to dispose of such excess ordinary shares to an unaffiliated third party. Such notice will immediately trigger the transfer obligation and suspend the right to attend Holdco’s General Meeting and voting rights (together, “Shareholder Rights”) of the shares exceeding the cap. If such excess shares are not disposed by such time, (i) the Shareholder Rights on all shares held by the shareholder exceeding the share cap will be suspended until the transfer obligations have been complied with and (ii) Holdco will be irrevocably authorized under its articles of association to transfer the excess shares to a foundation until sold to an unaffiliated third party.

Such provisions could discourage a takeover attempt and impair the ability of shareholders to benefit from a change in control and realize any potential change of control premium. This may adversely affect the market price of the ordinary shares.

Prior to and subject to the consummation of the Business Combination, Holdco’s General Meeting will authorize its Board to issue and grant rights to subscribe for Holdco Shares, up to the amount of the authorized share capital (from time to time) and limit or exclude preemptive rights on those shares, in each case for a period of five years from the date of the resolution. Accordingly, an issue of Holdco Shares may make it more difficult for a shareholder or potential acquirer to obtain control over Holdco’s General Meeting or Holdco.

Provisions of Playa’s franchise agreements with Hyatt, which Holdco will assume in connection with the Playa Merger, might deter acquisition bids for Holdco that shareholders might consider to be favorable and/or give Hyatt the right to terminate such agreements if certain persons obtain and retain more than a specified percentage of Holdco’s shares.

Certain provisions of Playa’s franchise agreements with Hyatt, which Holdco will assume in connection with the Playa Merger, may make it more difficult for certain third parties to acquire more than a specified percentage of issued Holdco Shares. Playa’s franchise agreements with Hyatt and the Holdco Articles of Association both contain a provision prohibiting (a) a Brand Owner from acquiring issued Holdco Shares such that the Brand Owner (together with its affiliates) acquires beneficial ownership in excess of 15% of issued and outstanding Holdco Shares, and (b) a Restricted Brand Company from acquiring issued Holdco Shares such that the Restricted Brand Company (together with its affiliates) acquires beneficial ownership in excess of 5% of issued and outstanding Holdco Shares. Upon becoming aware of either share cap being exceeded, Holdco must send a notice to such shareholder informing such shareholder of a violation of this provision and granting the shareholder two weeks to dispose of such excess Holdco Shares to an unaffiliated third party. Such notice will immediately trigger the transfer obligation and suspend the Shareholder Rights of Holdco Shares exceeding the share cap. If such excess Holdco Shares are not disposed by such time, (i) the Shareholder Rights on all Holdco

 

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Shares held by the shareholder exceeding the share cap will be suspended until the transfer obligations have been complied with and (ii) Holdco will be irrevocably authorized under Holdco Articles of Association to transfer the excess Holdco Shares to a foundation until sold to an unaffiliated third party. Playa’s franchise agreements provide that, if the excess Holdco Shares are not transferred to a foundation or an unaffiliated third party within 30 days following the earlier of the date on which a public filing is made with respect to either share cap being exceeded and the date Playa becomes aware of either share cap being exceeded, Hyatt will have the right to terminate all (but not less than all) of its franchise agreements with Playa by providing the notice specified in the franchise agreement to Playa and Playa will be subject to liquidated damage payments to Hyatt. In the event that any Brand Owner or Restricted Brand Company acquires any ownership interest in Holdco, Holdco will be required to establish and maintain controls to protect the confidentiality of certain Hyatt information and will provide Hyatt with a detailed description and evidence of such controls. See “Certain Relationships and Related Transactions — Playa Relationships and Related Party Transactions — Hyatt Agreements — Hyatt Resort Agreements.”

If Holdco fails to maintain an effective system of internal control over financial reporting, Holdco may not be able to accurately report its financial results or prevent fraud. As a result, shareholders could lose confidence in Holdco’s financial and other public reporting, which is likely to negatively affect Holdco’s business and the market price of Holdco Shares.

Effective internal control over financial reporting is necessary for Holdco to provide reliable financial reports and prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in Holdco’s implementation could cause Holdco to fail to meet its reporting obligations. In addition, any testing conducted by Holdco, or any testing conducted by Holdco’s independent registered public accounting firm, may reveal deficiencies in Holdco’s internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to Holdco’s financial statements or identify other areas for further attention or improvement. In fact, such testing has revealed deficiencies in Playa’s internal control over financial reporting that are deemed to be material weaknesses. Inferior internal controls could also cause investors to lose confidence in Holdco’s reported financial information, which is likely to negatively affect Holdco’s business and the market price of Holdco Shares.

Holdco will be required to disclose changes made in its internal controls and procedures on a quarterly basis and its management will be required to assess the effectiveness of these controls annually. However, for as long as Holdco is an “emerging growth company” under the JOBS Act, its independent registered public accounting firm will not be required to attest to the effectiveness of Holdco’s internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. Holdco could be an “emerging growth company” for up to five years. An independent assessment of the effectiveness of Holdco’s internal controls could detect problems that Holdco’s management’s assessment might not. Undetected material weaknesses in Holdco’s internal controls could lead to financial statement restatements and require Holdco to incur the expense of remediation.

The market price and trading volume of Holdco Shares may be volatile and could decline significantly following the Business Combination.

The stock markets, including the NASDAQ on which Holdco intends to list the Holdco Shares under the symbol “PLYA” have from time to time experienced significant price and volume fluctuations. Even if an active, liquid and orderly trading market develops and is sustained for Holdco Shares following the Business Combination, the market price of Holdco Shares may be volatile and could decline significantly. In addition, the trading volume in Holdco Shares may fluctuate and cause significant price variations to occur. If the market price of Holdco Shares declines significantly, you may be unable to resell your shares at or above the market price of Holdco Shares as of the date of the consummation of the Business Combination. Holdco cannot assure you that the market price Holdco Shares will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following:

 

    the realization of any of the risk factors presented in this proxy statement/prospectus;

 

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    actual or anticipated differences in Holdco’s estimates, or in the estimates of analysts, for Holdco’s revenues, Adjusted EBITDA, results of operations, level of indebtedness, liquidity or financial condition;

 

    additions and departures of key personnel;

 

    failure to comply with the requirements of the NASDAQ;

 

    failure to comply with the Sarbanes-Oxley Act or other laws or regulations;

 

    future issuances, sales or resales, or anticipated issuances, sales or resales, of Holdco Shares;

 

    publication of research reports about Holdco, its resorts, the all-inclusive segment of the lodging industry or the lodging industry generally;

 

    the performance and market valuations of other similar companies;

 

    broad disruptions in the financial markets, including sudden disruptions in the credit markets;

 

    speculation in the press or investment community;

 

    actual, potential or perceived control, accounting or reporting problems; and

 

    changes in accounting principles, policies and guidelines.

In the past, securities class-action litigation has often been instituted against companies following periods of volatility in the market price of their shares. This type of litigation could result in substantial costs and divert Holdco’s management’s attention and resources, which could have a material adverse effect on Holdco.

If securities or industry analysts do not publish research, publish inaccurate or unfavorable research or cease publishing research about Holdco, its share price and trading volume could decline significantly.

The market for Holdco Shares will depend in part on the research and reports that securities or industry analysts publish about Holdco or its business. Securities and industry analysts do not currently, and may never, publish research on Holdco. If no securities or industry analysts commence coverage of Holdco, the market price and liquidity for Holdco Shares could be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover Holdco downgrade their opinions about Holdco Shares, publish inaccurate or unfavorable research about Holdco, or cease publishing about Holdco regularly, demand for Holdco Shares could decrease, which might cause its share price and trading volume to decline significantly.

Future issuances of debt securities and equity securities may adversely affect Holdco, including the market price of Holdco Shares and may be dilutive to existing shareholders.

In the future, Holdco may incur debt or issue equity ranking senior to Holdco Shares. Those securities will generally have priority upon liquidation. Such securities also may be governed by an indenture or other instrument containing covenants restricting its operating flexibility. Additionally, any convertible or exchangeable securities that Holdco issues in the future may have rights, preferences and privileges more favorable than those of Holdco Shares. Because Holdco’s decision to issue debt or equity in the future will depend on market conditions and other factors beyond Holdco’s control, it cannot predict or estimate the amount, timing, nature or success of Holdco’s future capital raising efforts. As a result, future capital raising efforts may reduce the market price of Holdco Shares and be dilutive to existing shareholders.

 

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Holdco’s shareholders may not have any preemptive rights in respect of future issuances of Holdco Shares.

In the event of an increase in Holdco’s share capital, Holdco’s ordinary shareholders are generally entitled under Dutch law to full preemptive rights, unless these rights are limited or excluded either by a resolution of the General Meeting or by a resolution of the Holdco Board (if the Holdco Board has been authorized by the General Meeting for this purpose), or where shares are issued to Holdco’s employees or a group company (i.e., certain affiliates, subsidiaries or related companies) or where shares are issued against a non-cash contribution, or in case of an exercise of a previously acquired right to subscribe for shares. The same preemptive rights apply when rights to subscribe for shares are granted.

Preemptive rights may be excluded by the Holdco Board on the basis of the irrevocable authorization of the General Meeting to the Holdco Board for a period of five years from the date of this authorization with respect to the issue of Holdco Shares up to the amount of the authorized share capital (from time to time). The General Meeting has delegated the authority to issue Holdco Shares and grant rights to subscribe for Holdco Shares up to the amount of Holdco’s authorized share capital (from time to time) to the Holdco Board for that same period.

Accordingly, holders of Holdco Shares may not have any preemptive rights in connection with, and may be diluted by an issue of Holdco Shares and it may be more difficult for a shareholder to obtain control over Holdco’s General Meeting. See “Description of Holdco Securities — Share Capital,” “— Issuance of Shares” and “— Preemptive Rights.” Certain of Holdco’s shareholders outside the Netherlands, in particular, U.S. shareholders, may not be allowed to exercise preemptive rights to which they are entitled, if any, unless a registration statement under the Securities Act is declared effective with respect to Holdco Shares issuable upon exercise of such rights or an exemption from the registration requirements is available.

Holdco is not obligated to and does not comply with all the best practice provisions of the DCGC. This could adversely affect your rights as a shareholder.

As Holdco has its registered office in the Netherlands and will have its Holdco Shares listed on an equivalent third (non-EU) country market to a regulated market (e.g., the NASDAQ), Holdco is subject to the DCGC. The DCGC contains both principles and best practice provisions for the Holdco Board, shareholders and the General Meeting, financial reporting, auditors, disclosure compliance and enforcement standards.

The DCGC is based on a “comply or explain” principle. Accordingly, Holdco is required to disclose in its management report publicly filed in the Netherlands, whether or not it is complying with the various provisions of the DCGC. If Holdco does not comply with one or more of those provisions (e.g., because of a conflicting NASDAQ requirement or U.S. market practice), Holdco is required to explain the reasons for such non-compliance in its management report.

Holdco acknowledges the importance of good corporate governance. However, Holdco does not comply with all the provisions of the DCGC, to a large extent because such provisions conflict with or are inconsistent with the corporate governance rules of the NASDAQ and U.S. securities laws that will apply to Holdco upon the completion of the Business Combination, or because Holdco believes such provisions do not reflect customary practices of global companies listed on the NASDAQ. This could adversely affect your rights as a shareholder and you may not have the same level of protection as a shareholder in a Dutch company that fully complies with the DCGC.

Holdco is an “emerging growth company,” and it cannot be certain if the reduced SEC reporting requirements applicable to emerging growth companies will make Holdco Shares less attractive to investors, which could have a material and adverse effect on Holdco, including its growth prospects.

Holdco is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). Holdco will remain an “emerging growth company” until the earliest to occur of (i) the last day of

 

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the fiscal year (a) following September 16, 2020, the fifth anniversary of our IPO, (b) in which we have total annual gross revenue of at least $1.0 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Holdco Shares that is held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. Holdco intends to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, whether or not they are classified as “emerging growth companies,” including, but not limited to, an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requiring that Holdco’s independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting and reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. The JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in the Securities Act for complying with new or revised accounting standards. However, Holdco has chosen to “opt out” of this extended transition period and, as a result, Holdco will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for all public companies that are not emerging growth companies. Holdco’s decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. Holdco cannot predict if investors will find Holdco Shares less attractive because Holdco intends to rely on certain of these exemptions and benefits under the JOBS Act. If some investors find Holdco Shares less attractive as a result, there may be a less active, liquid and/or orderly trading market for Holdco Shares and the market price and trading volume of Holdco Shares may be more volatile and decline significantly.

If, based on Mexican law, the accounting value of Holdco Shares is derived more than 50% from property in Mexico, it could result in the imposition of tax on a selling shareholder who is not eligible to claim benefits under the income tax treaty between Mexico and the United States or under any other favorable income tax treaty with Mexico.

According to article 161 of the Income Tax Law of Mexico, the transfer by a nonresident of Mexico of shares in an entity where the accounting value of the transferred shares is derived, directly or indirectly, from more than 50% from immovable property located in Mexico could be subject to Mexican income tax. The applicable Mexican law does not provide for the method to be followed in making this calculation. The income tax rate in Mexico for the disposal of shares by nonresidents is currently either 25% of the gross sale proceeds or, if certain conditions are met, 35% of the net gain. Withholding of 25% of gross sale proceeds is required of the buyer only if the latter is a Mexican resident. A nonresident subject to tax under article 161 may be eligible to claim exemption from taxation or a reduced tax rate under an applicable income tax treaty with Mexico, such as the income tax treaty between Mexico and the United States. A determination of whether the accounting value of Holdco Shares is derived, directly or indirectly, more than 50% from immovable property located in Mexico is subject to interpretations of the applicable law and will be affected by various factors with regard to Holdco that may change over time. If, at the time of a transfer of Holdco Shares, the accounting value of Holdco Shares is derived, directly or indirectly, from more than 50% from immovable property located in Mexico and article 161 were applied to such transfer, it could result in the imposition of the above mentioned tax on a selling shareholder who is not eligible to claim benefits under the income tax treaty between Mexico and the United States or under any other favorable income tax treaty with Mexico.

 

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Risks Related to Holdco’s Business following the Business Combination

Unless the context requires otherwise, references to “Holdco” in this section are to Holdco as directly or indirectly affected by, acting through, or having attributes of Playa and its direct and indirect subsidiaries by virtue of Holdco’s direct or indirect ownership of Playa and its direct and indirect subsidiaries following the Business Combination.

General economic uncertainty and weak demand in the lodging industry could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Holdco’s business strategy depends significantly on demand for vacations generally and, more specifically, on demand for all-inclusive vacation packages. Weak economic conditions in the United States, elsewhere in North America, Europe and much of the rest of the world, and the uncertainty over the duration of these conditions, have had and could continue to have a negative impact on the lodging industry. Holdco cannot provide any assurances that demand for all-inclusive vacation packages will remain consistent with or increase from current levels. If demand weakens, Holdco’s operating results and growth prospects could be adversely affected. As a result, any delay in, or a weaker than anticipated, economic recovery will adversely affect Holdco’s future results of operations and cash flows, potentially materially. Furthermore, a significant percentage of Holdco’s guests originate in the United States and elsewhere in North America and, if travel from the United States or elsewhere in North America was disrupted and Holdco was not able to replace those guests with guests from other geographic areas, it could have a material adverse effect on its business, financial condition, liquidity, results of operations and prospects. Additionally, most of Holdco’s resorts are located in Mexico and a portion of its guests originate from Mexico and, as a result, its business is exposed to economic conditions in Mexico. If the economy of Mexico weakens or experiences a downturn, it could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Adverse changes in the economic climate, such as high levels of unemployment and underemployment, fuel price increases, declines in the securities and real estate markets, and perceptions of these conditions decrease the level of disposable income of consumers or consumer confidence and could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

The demand for vacation packages is dependent upon prospective travelers having access to, and believing they will continue to have access to, disposable income, and is therefore affected by international, national and local economic conditions. Adverse changes in the actual or perceived economic climate, such as high levels of unemployment and underemployment, higher interest rates, stock and real estate market declines and/or volatility, more restrictive credit markets, higher taxes, and changes in governmental policies could reduce the level of discretionary income or consumer confidence in the countries from which Holdco sources its guests. For example, the United Kingdom’s vote to leave the European Union (“EU”) in its “Brexit” referendum on June 23, 2016 has created global economic uncertainty, which may cause Holdco’s customers to curtail their vacation spending. Further, the recent worldwide economic downturn had an adverse effect on consumer confidence and discretionary income, resulting in decreased demand and price discounting in the resort sector, including in the markets Holdco services. Holdco cannot predict whether the recent economic recession will return or when, and the extent to which, economic conditions in the future will be favorable. As a result of the foregoing, Holdco could experience a prolonged period of decreased demand and price discounting in its markets, which would negatively affect its revenues and could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

 

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Terrorist acts, armed conflict, civil unrest, criminal activity and threats thereof, and other international events impacting the security of travel or the perception of security of travel could adversely affect the demand for travel generally and demand for vacation packages at Holdco’s resorts, which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Past acts of terrorism have had an adverse effect on tourism, travel and the availability of air service and other forms of transportation. The threat or possibility of future terrorist acts, an outbreak, escalation and/or continuation of hostilities or armed conflict abroad, civil unrest or the possibility thereof, the issuance of travel advisories by sovereign governments, and other geo-political uncertainties have had and may have an adverse impact on the demand for vacation packages and consequently the pricing for vacation packages. Decreases in demand and reduced pricing in response to such decreased demand would adversely affect Holdco’s business by reducing its profitability.

Nine of the thirteen resorts in Holdco’s portfolio are located in Mexico, and Mexico has experienced criminal violence for years, primarily due to the activities of drug cartels and related organized crime. These activities and the possible escalation of violence associated with them in regions where Holdco’s resorts are located, or an increase in the perception among Holdco’s prospective guests of an escalation of such violence, could instill and perpetuate fear among prospective guests and may lead to a loss in business at its resorts in Mexico because these guests may choose to vacation elsewhere or not at all. In addition, increases in violence, crime or civil unrest in the Dominican Republic, Jamaica, or any other location where Holdco may own a resort in the future, may also lead to decreased demand for its resorts and negatively affect its business, financial condition, liquidity, results of operations and prospects.

Holdco is exposed to significant risks related to the geographic concentration of its resorts, including weather-related emergencies such as hurricanes, which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Holdco’s resorts located in Mexico accounted for 57.8% of its revenue for the year ended December 31, 2015 and 63.2% of its revenue for the nine months ended September 30, 2016. In addition to the matters referred to in the preceding risk factor, damage to these resorts or a disruption of their operations or a reduction of travel to them due to a hurricane or other weather-related or other emergency could reduce its revenue, which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects. Holdco cannot assure you that any property or business interruption insurance will adequately address all losses, liabilities and damages. In addition, all of its resorts are located on beach front properties in Mexico and the Caribbean and are susceptible to weather-related emergencies, such as hurricanes. For example, Holdco’s Hyatt Ziva Los Cabos resort, located in Los Cabos, Mexico was closed until September 2015 in order to repair damage caused by Hurricane Odile in September 2014.

The all-inclusive model may not be desirable to prospective guests in the luxury segment of the resort market, which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Holdco’s portfolio is composed predominantly of luxury all-inclusive resorts. The all-inclusive resort market has not traditionally been associated with the high-end and luxury segments of the lodging industry and there is a risk that Holdco’s target guests, many of whom have not experienced an all-inclusive model, will not find the all-inclusive model appealing. A failure to attract Holdco’s target guests could result in decreased revenue from its portfolio and could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

 

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Holdco’s relationship with Hyatt may deteriorate and disputes between Hyatt and Holdco may arise. The Hyatt relationship is important to Holdco’s business and, if it deteriorates, the value of Holdco’s portfolio could decline significantly, and it could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Holdco will be the only operator of resorts operating under the Hyatt All-Inclusive Resort Brands when the Business Combination occurs. However, except for the Hyatt franchise agreements, Holdco will have no contractual right to operate any resort in its current or future portfolio under the Hyatt All-Inclusive Resort Brands or any other Hyatt-sponsored brands. In addition, in the future, Hyatt, in its sole discretion and subject to its obligations under the Hyatt Strategic Alliance Agreement in the Market Area, may designate other third parties as authorized operators of resorts, or Hyatt may decide to directly operate resorts, under the Hyatt All-Inclusive Resort Brands or any other Hyatt brand, whether owned by third parties or Hyatt itself.

Also, and as described in the section entitled “Certain Relationships and Related Transactions — Playa Relationships and Related Party Transactions — Hyatt Agreements — Hyatt Resort Agreements,” subject to its obligations under the Hyatt Strategic Alliance Agreement, Hyatt is free to develop or license other all-inclusive resorts in the Market Area, even under the Hyatt All-Inclusive Resort Brands. Additionally, outside of the Market Area, Hyatt is free to develop or license other all-inclusive resorts under the Hyatt All-Inclusive Resort Brands and other Hyatt brands at any time.

Under the terms of Holdco’s Hyatt Resort Agreements, Holdco will be required to meet specified operating standards and other terms and conditions. Holdco expects that Hyatt will periodically inspect its resorts that carry a Hyatt All-Inclusive Resort Brand to ensure that Holdco follows Hyatt’s standards. If Holdco fails to maintain brand standards at one or more of its Hyatt All-Inclusive Resort Brand resorts, or otherwise fails to comply with the terms and conditions of the Hyatt Resort Agreements, then Hyatt could terminate the agreements related to those resorts and potentially all of Holdco’s Hyatt resorts. Under the terms of the Hyatt franchise agreements, if, among other triggers, (i) the Hyatt franchise agreements for a certain number of Hyatt All-Inclusive Resort Brand resorts are terminated or (ii) certain persons acquire Holdco Shares in excess of specified percentage of Holdco Shares and certain mechanisms in Holdco’s articles of association fail to operate to reduce such percentage within 30 days, Hyatt has the right to terminate the Hyatt franchise agreements for all (but not less than all) of Holdco’s resorts by providing the notice specified in the franchise agreement to Holdco and Holdco will be subject to liquidated damage payments to Hyatt, even for those resorts that are in compliance with their Hyatt franchise agreements. For details regarding the calculation of liquidated damage payments under the Hyatt franchise agreements, please see the section entitled “Certain Relationships and Related Transactions — Playa Relationships and Related Party Transactions — Hyatt Agreements — Hyatt Resort Agreements.” If one or more Hyatt franchise agreements are terminated, the underlying value and performance of Holdco’s related resort(s) could decline significantly from the loss of associated name recognition, participation in the Hyatt Gold Passport® guest loyalty program, Hyatt’s reservation system and website, and access to Hyatt group sales business, as well as from the costs of “rebranding” such resorts and the payment of liquidated damages to Hyatt.

Hyatt may, in its discretion and subject to its obligations under the Hyatt Strategic Alliance Agreement, decline to enter into Hyatt franchise agreements for other all-inclusive resort opportunities that Holdco brings to Hyatt, whether Holdco owns the properties or manage them for third-party owners.

If any of the foregoing were to occur, it could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects and the market price of Holdco Shares, and could divert the attention of its senior management from other important activities. For more detailed information regarding the Hyatt Resort Agreements, please see the section entitled “Certain Relationships and Related Transactions — Playa Relationships and Related Party Transactions — Hyatt Agreements — Hyatt Resort Agreements.”

 

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Holdco’s right of first offer in the Hyatt Strategic Alliance Agreement will expire on December 31, 2018 and certain provisions of its Hyatt franchise agreements will impose certain restrictions on Holdco, and such agreements are terminable under certain circumstances, any of which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Pursuant to the Hyatt Strategic Alliance Agreement, which will expire on December 31, 2018, Holdco and Hyatt will provide each other the right of first offer with respect to any proposed offer or arrangement to acquire a property on which a resort under the Hyatt All-Inclusive Resort Brands would operate (a “Development Opportunity”) in Mexico, Costa Rica, the Dominican Republic, Jamaica and Panama (together, the “Market Area”) and the right to receive an introduction to any third party with respect to any management or franchising opportunity in the Market Area. Please see the section entitled “Certain Relationships and Related Transactions — Playa Relationships and Related Party Transactions — Hyatt Agreements — The Hyatt Strategic Alliance Agreement.”

Subject to its obligations under the Hyatt Strategic Alliance Agreement, Hyatt is free to develop or license other all-inclusive resorts in the Market Area, even under the Hyatt All-Inclusive Resort Brands. Additionally, outside of the Market Area, Hyatt is free to develop or license other all-inclusive resorts under the Hyatt All-Inclusive Resort Brands and other Hyatt brands at any time. Similarly, subject to Holdco’s obligations under the Hyatt Strategic Alliance Agreement and Hyatt franchise agreements, Holdco will be allowed to operate any all-inclusive resort under a Playa-Developed Brand (as defined in “Certain Relationships and Related Transactions — Playa Relationships and Related Party Transactions — Hyatt Agreements — Hyatt Resort Agreements”), such as the Panama Jack brand developed with Panama Jack International, Inc., a consumer products company that focuses on resort clothes and furnishings and sun care products (“Panama Jack”), provided that Holdco implements strict informational and operational barriers between its operations with respect to the Playa-Developed Brand and its operations with respect to the Hyatt All-Inclusive Resort Brands.

In addition, subject to certain exceptions, under the Hyatt franchise agreements, Holdco will be generally prohibited from owning, investing in, acquiring, developing, managing, leasing or operating, or becoming a licensee or franchisee with respect to, any all-inclusive resort anywhere in the world under any hotel concept or brand for all-inclusive hotels or resorts that is owned by or exclusively licensed to a Restricted Brand Company, until Holdco has less than three franchise agreements in effect for the operation of Hyatt All-Inclusive Resort Brand resorts and Hyatt owns less than 15% (on a fully-diluted, as-converted basis) of Holdco Shares. If any such Restricted Brand Company acquires any ownership interest in Holdco, Holdco is required to implement strict informational and operational barriers between Holdco’s operations with respect to such brand and Holdco’s operations with respect to the Hyatt All-Inclusive Resort Brands.

If Holdco violates the aforementioned prohibitions and restrictions under the Hyatt franchise agreements, Hyatt may terminate all (but not less than all) of its franchise agreements with Holdco by providing the notice specified in the franchise agreement to Holdco and Holdco will be subject to liquidated damage payments to Hyatt. These prohibitions and restrictions limit Holdco’s ability to expand its business through the use of a Playa-Developed Brand, such as the Panama Jack brand, or hotel concepts and brands owned by or licensed to the Restricted Brand Companies now or in the future. As a result, such prohibitions or violations could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

 

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The success of five of Holdco’s resorts will depend substantially on the success of the recently developed Hyatt All-Inclusive Resort Brands, which exposes Holdco to risks associated with concentrating a significant portion of its portfolio in a family of two recently developed related brands. There is a risk that Holdco and Hyatt may not succeed in marketing the Hyatt All-Inclusive Resort Brands and that Holdco may not receive the anticipated return on the investment incurred in connection with rebranding the five resorts under the Hyatt All-Inclusive Resort Brands, which could have a material adverse effect on Holdco.

Five of the resorts in Holdco’s portfolio will bear the name of one or both of the Hyatt All-Inclusive Resort Brands. As a result of this concentration, Holdco’s success will depend, in part, on the continued success of these recently developed brands. Holdco believes that building brand value is critical to increase demand and build guest loyalty. Consequently, if market recognition or the positive perception of Hyatt and its brands is reduced or compromised, the goodwill associated with Hyatt All-Inclusive Resort Brand resorts in Holdco’s portfolio would likely be adversely affected. Under the Hyatt Resort Agreements, Hyatt provides (or causes to be provided) various marketing services to the relevant resorts, and Holdco may conduct local and regional marketing, advertising and promotional programs, subject to compliance with Hyatt’s requirements. Holdco cannot assure you that Hyatt and Holdco will be successful in Holdco’s marketing efforts to grow either Hyatt All-Inclusive Resort Brand. Additionally, Holdco is not permitted under the Hyatt franchise agreements to change the brands of Holdco’s resorts operating under the Hyatt All-Inclusive Resort Brands for fifteen years (plus any additional years pursuant to Hyatt’s renewal options) after the opening of the relevant resorts as Hyatt All-Inclusive Resort Brand resorts, even if the brands are not successful. As a result, Holdco could be materially and adversely affected if these brands do not succeed. Please see the section entitled “Certain Relationships and Related Transactions — Playa Relationships and Related Party Transactions — Hyatt Agreements — Hyatt Resort Agreements.”

Holdco will agree to indemnify Hyatt for losses related to a broad range of matters and if Holdco is required to make payments to Hyatt pursuant to these obligations, its business, financial condition, liquidity, results of operations and prospects may be materially and adversely affected.

Pursuant to the subscription agreement entered into between Playa and Hyatt in connection with Playa’s formation transactions, Playa has agreed to indemnify, and after the Business Combination Holdco will agree to indemnify, Hyatt for any breaches of its representations, warranties and agreements in the subscription agreement, generally subject to (i) a deductible of $10 million and (ii) a cap of $50 million (other than for breaches of certain representations, for which indemnification is capped at $325 million). In addition, Playa has agreed to indemnify, and after the Business Combination Holdco will agree to indemnify, Hyatt for certain potential losses relating to the lack of operating licenses, noncompliance with certain environmental regulations, tax deficiencies, any material misstatements or omissions in the offering documentation relating to Playa’s Senior Notes due 2020 and certain indemnity obligations to Playa’s prior parent. The representations and warranties Playa made and its related indemnification obligations survive for varying periods of time from the closing date of Playa’s formation transactions in 2013 (some of which have already elapsed) and some survive indefinitely. If Holdco is required to make future payments to Hyatt pursuant to these obligations, however, Holdco’s business, financial condition, liquidity, results of operations and prospects could be materially and adversely affected. Please see the section entitled “Certain Relationships and Related Transactions — Playa Relationships and Related Party Transactions — Hyatt Agreements — Hyatt Resort Agreements.”

In addition to the Hyatt All-Inclusive Resort Brands, deterioration of Holdco’s other resort brands’ strengths could have a material adverse effect on Holdco.

In addition to the Hyatt All-Inclusive Resort Brands, maintaining and enhancing Holdco’s other resort brands is critical to increasing demand, building guest loyalty and expanding its customer base. Holdco cannot assure you that Holdco will continue to be successful in marketing such brands. If the reputation or perceived quality of such brands declines, Holdco could be materially and adversely affected.

 

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New brands, such as the Panama Jack resort brand, or services that Holdco launches in the future may not be successful, which could have a material adverse effect on its business, financial condition, liquidity and results of operations.

Holdco cannot assure you that any new brands, such as the Panama Jack brand, amenities or services Holdco launches will be successful, or that Holdco will recover the costs Playa or Holdco incurred in developing the brands, amenities and services. If new brands, amenities and services are not as successful as Holdco anticipates, it could have a material adverse effect on its business, financial condition, liquidity and results of operations.

Holdco will be exposed to fluctuations in currency exchange rates, including fluctuations in (a) the value of the local currencies, in which Holdco incurs its costs at each resort, relative to the U.S. dollar, in which the revenue from each of its resorts is generally denominated, (b) the currency of its prospective guests, who may have a reduced ability to pay for travel to its resorts, relative to their ability to pay to travel to destinations with more attractive exchange rates, and (c) the value of local currencies relative to the U.S. dollar, which could impact its ability to meet its U.S. dollar-denominated obligations, including its debt service payments, any of which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

The majority of Holdco’s operating expenses will be incurred locally at its resorts and are denominated in Mexican Pesos, the Dominican Peso or the Jamaican dollar. The net proceeds from Playa’s outstanding debt borrowings were received and after the Business Combination will be payable by Holdco’s subsidiary Playa Resorts Holding B.V., in U.S. dollars and Holdco’s functional reporting currency will be U.S. dollars. An increase in the relative value of the local currencies, in which Holdco incurs its costs at each resort, relative to the U.S. dollar, in which its revenue from each resort is denominated, would adversely affect its results of operations for those resorts. Playa’s current policy is not to hedge against changes in foreign exchange rates and Holdco therefore may be adversely affected by appreciation in the value of other currencies against the U.S. dollar, or to prolonged periods of exchange rate volatility. These fluctuations may negatively impact Holdco’s financial condition, liquidity and results of operations to the extent Holdco is unable to adjust its pricing accordingly.

Additionally, in the event that the U.S. dollar increases in value relative to the currency of the prospective guests living outside the United States, Holdco’s prospective guests may have a reduced ability to pay for travel to Holdco’s resorts and this may lead to lower occupancy rates and revenue, which could have a material adverse effect on Holdco, including its financial results. An increase in the value of the Mexican Peso, the Dominican Peso or the Jamaican dollar compared to the currencies of other potential destinations may disadvantage the tourism industry in Mexico, the Dominican Republic or Jamaica, respectively, and result in a corresponding decrease in the occupancy rates and revenue of Holdco’s resorts as consumers may choose destinations in countries with more attractive exchange rates. In the event that this appreciation occurs, it could lead to an increase in the rates Holdco charges for rooms in Holdco’s resorts, which could result in a decrease in occupancy rates and revenue and, therefore, negatively impact Holdco’s business, financial condition, liquidity, results of operations and prospects.

Furthermore, appreciation of local currencies relative to the U.S. dollar could make fulfillment of Holdco’s (and its subsidiaries after the Business Combination) U.S. dollar denominated obligations, including Playa Resorts Holding B.V.’s debt service payments, more challenging and could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

The departure of any of Holdco’s key personnel, including Bruce D. Wardinski, Alexander Stadlin, Larry Harvey and Kevin Froemming, who have significant experience and relationships in the lodging industry, could have a material adverse effect on Holdco.

Holdco will depend on the experience and relationships of its senior management team, especially Bruce D. Wardinski, the Chairman and Chief Executive Officer, Alexander Stadlin, the Chief Operating Officer, Larry

 

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Harvey, the Chief Financial Officer, and Kevin Froemming, the Chief Marketing Officer, to manage Holdco’s strategic business direction. The members of Holdco’s senior management team will have an average of 28 years of experience owning, operating, acquiring, repositioning, rebranding, renovating and financing hotel, resort and all-inclusive properties. In addition, Holdco’s senior management team after the Business Combination has developed an extensive network of industry, corporate and institutional relationships. Other than the Chairman and Chief Executive Officer, Bruce D. Wardinski, the Chief Financial Officer, Larry Harvey, the Chief Operating Officer, Alexander Stadlin, and the Chief Marketing Officer, Kevin Froemming (see the section entitled “Management of Holdco After the Business Combination — Holdco Executive Compensation After the Business Combination”), Holdco’s senior management team will not have employment agreements with Holdco or its subsidiaries and Holdco can provide no assurances that any of Holdco’s key personnel identified above will continue their employment with Holdco. The loss of services of any of Mr. Wardinski, Mr. Stadlin, Mr. Harvey, Mr. Froemming or another member of Holdco’s senior management team after the Business Combination, or any difficulty attracting and retaining other talented and experienced personnel, could have a material adverse effect on Holdco, including, among others, Holdco’s ability to source potential investment opportunities, Holdco’s relationship with global and national industry brands and other industry participants or the execution of Holdco’s business strategy.

Holdco will rely on a third party, AMResorts, to manage five of its resorts and Holdco can provide no assurance that AMResorts will manage these resorts successfully or that AMResorts will not be subject to conflicts harmful to its interests.

Pursuant to management agreements with AMResorts, five of Holdco’s 13 resorts will continue to be managed by AMResorts until the earlier of the sale of each such resort or the expiration date of each agreement. Other than the agreement for Dreams La Romana, which may be terminated at any time (and without termination fees after December 2017), these agreements do not expire until 2022. Therefore, absent payment by Holdco of significant termination fees, until the expiration of the management agreements, Holdco will not be able to terminate AMResorts and self-manage these resorts. Holdco can provide no assurance that AMResorts will manage these resorts successfully. Failure by AMResorts to fully perform the duties agreed to in the management agreements or the failure of AMResorts to adequately manage the risks associated with resort operations could materially and adversely affect Holdco. Holdco may have differences with AMResorts and other third-party service providers over their performance and compliance with the terms of the management agreements and other service agreements. In these cases, if Holdco is unable to reach satisfactory results through discussions and negotiations, Holdco may choose to litigate the dispute or submit the matter to third-party dispute resolution. In addition, AMResorts currently owns and/or manages and may in the future own and/or manage other resorts, including all-inclusive resorts in Holdco’s markets that may compete with Holdco’s resorts. AMResorts and its affiliates may have interests that conflict with Holdco’s interests, such as incentives to favor these other resorts over Holdco’s resorts as a result of more favorable compensation arrangements or by ownership interests in these resorts.

Holdco may not execute its business and growth strategy successfully which could have a material adverse effect on Holdco, including its financial results.

Holdco’s ability to grow its business depends upon the business contacts of Holdco’s senior management team and their ability to successfully hire, train, supervise and manage additional personnel. Holdco may not be able to hire and train sufficient personnel or develop management, information and operating systems suitable for Holdco’s expected growth. If Holdco is unable to execute its business and growth strategy successfully, Holdco could be materially and adversely affected, including its financial results.

 

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Holdco’s strategy to opportunistically acquire, develop and operate in new geographic markets may not be successful, which could have a material adverse effect on Holdco, including its financial condition, liquidity, results of operations and prospects.

In the future, Holdco may acquire or develop and operate resorts in geographic markets in which its management has little or no operating experience and in which potential guests are not familiar with a particular brand with which the resort is affiliated or do not associate the geographic market as an all-inclusive resort destination. As a result, Holdco may incur costs relating to the opening, operation and promotion of such resorts that are substantially greater than those incurred in other geographic areas, and such resorts may attract fewer guests than other resorts Holdco may acquire. Consequently, demand at any resorts that Holdco may acquire in unfamiliar markets may be lower than those at resorts that Playa currently operates or that Holdco may acquire in its existing markets. Unanticipated expenses at and insufficient demand for resorts that Holdco acquires in new geographic markets, therefore, could materially and adversely affect Holdco, including its financial condition, liquidity, results of operations and prospects.

Holdco’s resort development, acquisition, expansion, repositioning and rebranding projects will be subject to timing, budgeting and other risks, which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Holdco may develop, acquire, expand, reposition or rebrand resorts (such as the two resorts Playa has agreed to rebrand under the Panama Jack brand) from time to time as suitable opportunities arise, taking into consideration general economic conditions. To the extent that Holdco determines to develop, acquire, expand, reposition or rebrand resorts, Holdco could be subject to risks associated with, among others:

 

    construction delays or cost overruns that may increase project costs;

 

    receipt of zoning, occupancy and other required governmental permits and authorizations;

 

    strikes or other labor issues;

 

    development costs incurred for projects that are not pursued to completion;

 

    investment of substantial capital without, in the case of developed or repositioned resorts, immediate corresponding income;

 

    results that may not achieve Holdco’s desired revenue or profit goals;

 

    acts of nature such as earthquakes, hurricanes, floods or fires that could adversely impact a resort;

 

    ability to raise capital, including construction or acquisition financing; and

 

    governmental restrictions on the nature or size of a project.

As a result of the foregoing, Holdco cannot assure you that any development, acquisition, expansion, repositioning and rebranding project will be completed on time or within budget. If Holdco is unable to complete a project on time or within budget, the resort’s projected operating results may be adversely affected, which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Holdco’s insurance may not be adequate to cover Holdco potential losses, liabilities and damages and Holdco may not be able to secure insurance to cover all of its risks, which could have a material adverse effect on Holdco, including its financial results.

The business of owning and managing resorts is subject to a number of risks, hazards, adverse environmental conditions, labor disputes, changes in the regulatory environment and natural phenomena such as

 

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floods, hurricanes, earthquakes and earth movements. Such occurrences could result in damage or impairment to, or destruction of, Holdco’s resorts, personal injury or death, environmental damage, business interruption, monetary losses and legal liability.

While insurance is not commonly available for all these risks, Holdco will maintain customary insurance against risks that Holdco believes are typical and reasonably insurable in the lodging industry and in amounts that Holdco believes to be reasonable but that contain limits, deductibles, exclusions and endorsements. However, Holdco may decide not to insure against certain risks because of high premiums compared to the benefit offered by such insurance or for other reasons. In the event that costs or losses exceed Holdco’s available insurance or additional liability is imposed on Holdco for which Holdco is not insured or are otherwise unable to seek reimbursement, Holdco could be materially and adversely affected, including its financial results. Holdco may not be able to continue to procure adequate insurance coverage at commercially reasonable rates in the future or at all, and some claims may not be paid. There can be no assurance that the coverage and amounts of Holdco’s insurance will be sufficient for Holdco’s needs.

Labor shortages could restrict Holdco’s ability to operate Holdco’s properties or grow Holdco’s business or result in increased labor costs that could adversely affect Holdco’s results of operations.

Holdco’s success depends in large part on Holdco’s ability to attract, retain, train, manage, and engage skilled employees. As of September 30, 2016, Playa directly and indirectly employed approximately 9,523 employees worldwide at both its corporate offices and on-site at its resorts. If Holdco is unable to attract, retain, train, manage, and engage skilled employees, its ability to manage and staff its resorts could be impaired, which could reduce guest satisfaction. Staffing shortages in places where Holdco’s resorts are located also could hinder Holdco’s ability to grow and expand Holdco’s businesses. Because payroll costs will be a major component of the operating expenses at Holdco’s resorts, a shortage of skilled labor could also require higher wages that would increase labor costs, which could adversely affect Holdco’s results of operations.

A significant number of Holdco’s employees are unionized, and if labor negotiations or work stoppages were to disrupt Holdco’s operations, it could have a material adverse effect on Holdco, including its results of operations.

In excess of half of Holdco’s full-time equivalent work force will be unionized. As a result, Holdco will be required to negotiate the wages, salaries, benefits, staffing levels and other terms with many of its employees collectively and Holdco will be exposed to the risk of disruptions to its operations. Holdco’s results could be adversely affected if future labor negotiations were to disrupt Holdco’s operations. If Holdco was to experience labor unrest, strikes or other business interruptions in connection with labor negotiations or otherwise, or if Holdco was unable to negotiate labor contracts on reasonable terms, Holdco could be materially and adversely affected, including Holdco’s results of operations. In addition, Holdco’s ability to make adjustments to control compensation and benefits costs, rebalance Holdco’s portfolio or otherwise adapt to changing business needs may be limited by the terms and duration of Holdco’s collective bargaining agreements.

Many of Holdco’s guests will rely on a combination of scheduled commercial airline services and tour operator services for passenger connections, and price increases or service changes by airlines or tour operators could have a material adverse effect on Holdco, including reducing its occupancy rates and revenue and, therefore, its liquidity and results of operations.

Many of Holdco’s guests will depend on a combination of scheduled commercial airline services and tour operator services to transport them to airports near Holdco’s resorts. Increases in the price of airfare, due to increases in fuel prices or other factors, would increase the overall vacation cost to Holdco’s guests and may adversely affect demand for Holdco’s vacation packages. Changes in commercial airline services or tour operator services as a result of strikes, weather or other events, or the lack of availability due to schedule changes or a high level of airline bookings, could have a material adverse effect on Holdco, including its occupancy rates and revenue and, therefore, its liquidity and results of operations.

 

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Holdco’s industry will be highly competitive, which may impact Holdco’s ability to compete successfully with other hotel and resort brands and operators for guests, which could have a material adverse effect on Holdco, including its operating margins, market share and financial results.

Holdco will generally operate in markets that contain numerous competitors. Each of its resort brands competes with major chains in national and international venues and with independent companies in regional markets, including with recent entrants into the all-inclusive segment of the lodging industry in the regions in which Holdco will operate. Holdco’s ability to remain competitive and to attract and retain guests will depend on Holdco’s success in establishing and distinguishing the recognition and reputation of Holdco’s brands, Holdco’s locations, Holdco’s guest satisfaction, Holdco’s room rates, quality of service, amenities and quality of accommodations and Holdco’s overall value from offerings by others. If Holdco is unable to compete successfully in these countries, it could have a material adverse effect on Holdco, including its operating margins, market share and financial results.

Any joint venture investments that Holdco makes in the future could be adversely affected by Holdco’s lack of sole decision-making authority, Holdco’s reliance on co-venturers’ financial condition and liquidity and disputes between Holdco and Holdco’s co-venturers.

Holdco may co-invest in resorts in the future with third parties through partnerships or other joint ventures, acquiring non-controlling interests in or sharing responsibility for any such ventures. In this event, Holdco would not be in a position to exercise sole decision-making authority regarding the joint venture and, in certain cases, may have little or no decision-making authority. Investments through partnerships or other joint ventures may, under certain circumstances, involve risks not present were a third party not involved, including the possibility that partners or co-venturers might become bankrupt, fail to fund their share of required capital contributions, make dubious business decisions or block or delay necessary decisions. Partners or co-venturers may have economic or other business interests or goals which are inconsistent with Holdco’s business interests or goals, and may be in a position to take actions contrary to Holdco’s policies or objectives. Such investments may also have the potential risk of impasses on decisions, such as a sale, because neither Holdco nor the partner or co-venturer would have full control over the partnership or joint venture. Disputes between Holdco and partners or co-venturers may result in litigation or arbitration that would increase Holdco’s expenses and prevent Holdco’s executive officers, senior management and/or directors from focusing their time and effort on Holdco’s business. Consequently, action by, or disputes with, partners or co-venturers might result in subjecting properties owned by the partnership or joint venture to additional risk. In addition, Holdco may in certain circumstances be liable for the actions of Holdco’s third-party partners or co-venturers.

Holdco’s concentration in a particular segment of a single industry limits its ability to offset the risks of a downturn in that segment, which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

All of Holdco’s assets will be resorts and resort-related assets and Holdco expects that all of its business will be resort-related. Furthermore, Holdco’s business will be focused primarily on, and its acquisition strategy will target the acquisition of resorts in, the all-inclusive segment of the lodging industry (and properties that Holdco believes can be converted into all-inclusive resorts in a manner consistent with its business strategy). This concentration will expose Holdco to the risk of economic downturns in the lodging industry and in the all-inclusive segment of the lodging industry to a greater extent than if its portfolio also included assets from other segments of the real estate industry or other sectors of the lodging industry. As a result, Holdco will be susceptible to a downturn in the lodging industry and, in particular, to a downturn affecting the all-inclusive segment thereof. If market conditions adversely affect the lodging industry, in general, and the all-inclusive segment thereof, in particular, it could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

 

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The ongoing need for capital expenditures at Holdco’s resorts could have a material adverse effect on Holdco, including its financial condition, liquidity and results of operations.

Holdco’s resorts will have an ongoing need for renovations and other capital improvements, including replacements, from time to time, of furniture, fixtures and equipment. In addition, Hyatt also will require periodic capital improvements by Holdco as a condition of maintaining the two Hyatt All-Inclusive Resort Brands. These capital improvements may give rise to the following risks:

 

    possible environmental liabilities;

 

    construction cost overruns and delays;

 

    the decline in revenues while rooms or restaurants are out of service due to capital improvement projects;

 

    a possible shortage of available cash to fund capital improvements and the related possibility that financing for these capital improvements may not be available to Holdco on favorable terms, or at all;

 

    uncertainties as to market demand or a loss of market demand after capital improvements have begun;

 

    disputes with Hyatt regarding compliance with the Hyatt Resort Agreements or the Hyatt Strategic Alliance Agreement; and

 

    bankruptcy or insolvency of a contracted party during a capital improvement project or other situation that renders them unable to complete their work.

The costs of all these capital improvements or any of the above noted factors could have a material adverse effect on Holdco, including its financial condition, liquidity and results of operations.

Holdco has substantial indebtedness and may incur additional debt in the future. The principal, premium, if any, and interest payment obligations of such debt may restrict Holdco’s future operations and impair Holdco’s ability to invest in its business.

As of September 30, 2016, on a pro forma basis assuming consummation of the Business Combination, Holdco would have had approximately $805,800,000 aggregate principal amount of outstanding debt obligations on a consolidated basis (which represents the principal amounts outstanding under the Senior Secured Credit Facility and the Senior Notes due 2020, and excludes a $900,000 issuance discount on the Term Loan, a $3,900,000 issuance premium on the Senior Notes due 2020 and $13,800,000 of unamortized debt issuance costs). In connection with the closing of the Business Combination, Holdco expects to increase the size of the revolver element of the Senior Secured Credit Facility from $50,000,000 to $125,000,000. In addition, the terms of the Senior Secured Credit Facility and the Indenture governing the Senior Notes due 2020 will permit Holdco to incur additional indebtedness, subject to Holdco’s ability to meet certain borrowing conditions.

Holdco’s substantial debt may have important consequences to you. For instance, it could:

 

    make it more difficult for Holdco to satisfy its financial obligations;

 

    require Holdco to dedicate a substantial portion of any cash flow from operations to the payment of interest and principal due under its debt, which would reduce funds available for other business purposes, including capital expenditures and acquisitions;

 

    place Holdco at a competitive disadvantage compared to some of its competitors that may have less debt and better access to capital resources;

 

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    limit Holdco’s ability to respond to changing business, industry and economic conditions and to withstand competitive pressures, which may adversely affect its operations;

 

    cause Holdco to incur higher interest expense in the event of increases in interest rates on Holdco’s borrowings that have variable interest rates or in the event of refinancing existing debt at higher interest rates;

 

    limit Holdco’s ability to make investments or acquisitions, dispose of assets, pay cash dividends or redeem or repurchase shares; and/or

 

    limit Holdco’s ability to obtain additional financing required to fund working capital and capital expenditures and for other business purposes.

Holdco’s ability to service its significant financial obligations will depend on its ability to generate significant cash flow, which is partially subject to general economic, financial, competitive, legislative, regulatory, and other factors beyond its control, and Holdco cannot assure you that its business will generate cash flow from operations, that future borrowings will be available to Holdco under the Revolving Credit Facility, or that Holdco will be able to complete any necessary financings, in amounts sufficient to enable Holdco to fund its operations, engage in acquisitions, capital improvements or other development activities, pay its debts and other obligations and fund its other liquidity needs. If Holdco is not able to generate sufficient cash flow, it may need to refinance or restructure its debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. Additional debt or equity financing may not be available in sufficient amounts, at times or on terms acceptable to Holdco, or at all, and any additional debt financing Holdco does obtain may significantly increase its leverage on unfavorable terms. If Holdco is unable to implement one or more of these alternatives, it may not be able to service its debt or other obligations, which could result in Holdco being in default thereon, in which circumstances Holdco’s lenders could cease making loans to it, lenders or other holders of Holdco’s debt could accelerate and declare due all outstanding obligations due under the respective agreements and secured lenders could foreclose on their collateral, any of which could have a material adverse effect on Holdco. In addition, the current volatility in the capital markets may also impact Holdco’s ability to obtain additional financing, or to refinance its existing debt, on terms or at times favorable to it.

The agreements which govern Holdco’s various debt obligations impose restrictions on its business and limit its ability to undertake certain actions.

The agreements which govern Holdco’s various debt obligations, including the Indenture and the Senior Secured Credit Facility, include covenants imposing significant restrictions on Holdco’s business. These restrictions may affect Holdco’s ability to operate its business and may limit its ability to take advantage of potential business opportunities as they arise. These covenants place restrictions on Holdco’s ability to, among other things:

 

    incur additional debt;

 

    pay dividends, redeem or repurchase shares or make other distributions to shareholders;

 

    make investments or acquisitions;

 

    create liens or use assets as security in other transactions;

 

    issue guarantees;

 

    merge or consolidate, or sell, transfer, lease or dispose of substantially all of its assets;

 

    amend its articles of association or bylaws;

 

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    engage in transactions with affiliates; and

 

    purchase, sell or transfer certain assets.

The Indenture and the Senior Secured Credit Facility also require Holdco to comply with a number of financial ratios and/or covenants. Holdco’s ability to comply with these agreements may be affected by events beyond Holdco’s control, including prevailing economic, financial and industry conditions. These covenants could have an adverse effect on Holdco’s business by limiting its ability to take advantage of financing, merger and acquisition or other corporate opportunities. The breach of any of these covenants could result in a default under the Indenture and/or the Senior Secured Credit Facility. An event of default under any of Holdco’s debt agreements could permit such lenders to declare all amounts borrowed from them, together with accrued and unpaid interest, to be immediately due and payable, which could, in turn, trigger defaults under other debt obligations and could result in the termination of commitments of the lenders to make further extensions of credit under the Revolving Credit Facility. If Holdco is unable to repay debt to its lenders, or is otherwise in default under any provision governing any secured debt obligations, Holdco’s secured lenders could proceed against Holdco and against any collateral securing that debt.

Holdco’s variable rate indebtedness subjects it to interest rate risk, which could cause its annual debt service obligations to increase significantly.

Borrowings under the Senior Secured Credit Facility are at variable rates of interest and expose Holdco to interest rate risk. If interest rates increase, Holdco’s debt service obligations on its existing and any future variable rate indebtedness would also increase and its cash available to service its other obligations and invest in its business would decrease. Furthermore, rising interest rates would likely increase Holdco’s interest obligations on future fixed or variable rate indebtedness, which could materially and adversely affect its financial condition and liquidity.

Any mortgage debt obligations Holdco incur will expose it to increased risk of property losses due to foreclosure, which could have a material adverse effect on Holdco, including its financial condition, liquidity and results of operations.

Incurring mortgage debt increases Holdco’s risk of property losses because any defaults on indebtedness secured by Holdco’s resorts may result in foreclosure actions initiated by lenders and ultimately Holdco’s loss of the property securing the loan for which it is in default. For tax purposes, a foreclosure of any nonrecourse mortgage on any of Playa’s resorts may be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. In certain of the jurisdictions in which Holdco will operate, if any such foreclosure is treated as a sale of the property and the outstanding balance of the debt secured by the mortgage exceeds Holdco’s tax basis in the property, Holdco could recognize taxable income upon foreclosure but may not receive any cash proceeds.

In addition, any default under Holdco’s mortgage debt obligations may increase the risk of its default on its other indebtedness, including other mortgage debt. If this occurs, Holdco may not be able to satisfy its obligations under its indebtedness, which could have a material adverse effect on Holdco, including its financial condition, liquidity (including Holdco’s future access to borrowing) and results of operations.

Holdco may become subject to disputes or legal, regulatory or other proceedings that could involve significant expenditures by Holdco, which could have a material adverse effect on Holdco, including its financial results.

The nature of Holdco’s business after the Business Combination will expose Holdco to the potential for disputes or legal, regulatory or other proceedings from time to time relating to tax matters, environmental matters, government regulations, including licensing and permitting requirements, personal injury, labor and employment matters, contract disputes and other issues. For example, the Mexican tax authorities have issued an

 

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assessment to one of Playa’s Mexican subsidiaries for approximately $8.7 million. Please see the section entitled “Business of Playa and Certain Information about Playa — Legal Proceedings.” In addition, amenities at Holdco’s resorts, including restaurants, bars and swimming pools, will be subject to significant regulations, and government authorities may disagree with Holdco’s interpretations of these regulations, or may enforce regulations that historically have not been enforced. Such disputes, individually or collectively, could adversely affect Holdco’s business by distracting Holdco’s management from the operation of Holdco’s business or impacting Holdco’s market reputation with Holdco’s guests. If these disputes develop into proceedings or judgments, these proceedings or judgments, individually or collectively, could distract Holdco’s senior management, disrupt Holdco’s business or involve significant expenditures and Holdco’s reserves relating to ongoing proceedings, if any, may ultimately prove to be inadequate, any of which could have a material adverse effect on Holdco, including its financial results.

Some of the resorts which will be in Holdco’s portfolio located in Mexico were constructed and renovated without certain approvals. The authority granted to the Mexican government is plenary and Holdco can give no assurance it will not exercise its authority to impose fines, remediation measures or close part or all of the related resort(s), which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Some of the resorts which will be in Holdco’s portfolio were constructed and renovated without certain approvals at the time the construction and renovation work was carried out, as the prior owners of such resorts determined that such approvals were not required under the Mexican law. Holdco can give no assurance that the Mexican authorities will have the same interpretation of Mexican law as the prior owners. The authority granted to the Mexican government in this regard is plenary and Holdco can give no assurance the Mexican government will not exercise its authority to impose fines, to require Holdco to perform remediation/restoration activities and/or to contribute to environmental trusts, and/or to close part or all of the related resort(s), which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

As of 1988, Mexican environmental laws were amended in order to establish that, among other things, any new hotel construction and certain renovations require the preparation of an environmental impact statement (“MIA”) in order to obtain an Environmental Impact Authorization (Resolutivo de Impacto Ambiental). Furthermore, since 2003 depending on each specific project, a supporting technical report (“ETJ”) is required to obtain an Authorization to Change the Use of Soil of Forestal Land (Autorización de Cambio de Uso de Suelo en Terrenos Forestales).

With respect to Real Resorts:

 

    Two of the acquired resorts, Gran Caribe Resort and Hyatt Zilara Cancún, were built prior to implementation of the MIA in 1988 and, therefore, required no such authorization. However, certain renovations to these resorts were carried out after 1988 without an MIA because the prior owner determined that no authorization was needed pursuant to an exception in the Mexican law. Holdco can give no assurance that the Mexican authorities will have the same interpretation of the applicability of the exception as the prior owner.

 

    The remaining two resorts, Royal Playa del Carmen and Gran Porto Resort, were constructed after 1988 without the required MIA and ETJ authorizations. Notwithstanding the foregoing, those resorts were operated by the prior owner, and since Playa’s acquisition have been operated by Playa, with no interference in the normal course of business.

The consequences of failing to obtain the MIA and/or ETJ, as applicable, could result in fines of up to approximately $300,000, obligations to perform remediation/restoration activities and/or contribute to environmental trusts, and, in the case of a severe violation, a partial or total closing or a demolition of the

 

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relevant resort(s). Although Holdco is not aware of closings or demolitions due to the failure to obtain the MIA and/or ETJ, no assurance can be given that such action will not be taken in the future.

After the Business Combination Holdco will wholly-own Playa Resorts Holding B.V. which may be required to obtain a banking license and/or an exemption from the prohibition to attract repayable funds as a result of issuing Playa’s Senior Notes due 2020 and borrowing under Playa’s Senior Secured Credit Facility, which could have a material adverse effect on Holdco.

Under the Regulation (EU) No 575/2013 of the European Parliament and of the Council of June 26, 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (the “CRR”), which took effect on January 1, 2014, there is uncertainty regarding how certain key terms in the CRR are to be interpreted.

If such terms are not interpreted in a manner that is consistent with current Dutch national guidance on which Playa Resorts Holding B.V. (Holdco’s wholly-owned subsidiary after the Business Combination) relies, Playa Resorts Holding B.V. could be categorized as a “credit institution” as a consequence of issuing Playa’s Senior Notes due 2020 and borrowing under Playa’s Senior Secured Credit Facility if it is deemed to be “an undertaking the business of which is to receive deposits or other repayable funds from the public and to grant credits for its own account.” This would require it to obtain a banking license and it could be deemed to be in violation of the prohibition on conducting the business of a bank without such a license. With respect to the borrowing under Playa’s Senior Secured Credit Facility, Playa Resorts Holding B.V. could also be deemed to be in violation of the prohibition on attracting repayable funds from the public. In each such case, it could, as a result, be subject to certain enforcement measures such as a warning and/or instructions by the regulator, incremental penalty payments (last onder dwangsom) and administrative fines (bestuurlijke boete), which all may be disclosed publicly by the regulator.

There is limited official guidance at the EU level as to the key elements of the definition of “credit institution,” such as the terms “repayable funds” and “the public.” The Netherlands legislature has indicated that, as long as there is no clear guidance at the EU level, it is to be expected that the current Dutch national interpretation of these terms will continue to be taken into account for the use and interpretation thereof. Playa Resorts Holding B.V. relies on this national interpretation to reach the conclusion that a requirement to obtain a banking license is not triggered, and that the prohibitions on conducting the business of a bank without such a license and on attracting repayable funds from the public have not been violated, on the basis that (i) each lender under Playa’s Senior Secured Credit Facility has extended loans to Playa Resorts Holding B.V. for an initial amount of at least the U.S. dollar equivalent of €100,000 or has assumed rights and/or obligations vis-à-vis Playa Resorts Holding B.V. the value of which is at least the U.S. dollar equivalent of €100,000 and (ii) all Senior Notes due 2020 issued by Playa Resorts Holding B.V. were in denominations which equal or are greater than the U.S. dollar equivalent of €100,000.

If European guidance is published on what constitutes “the public” as referred to in the CRR, and such guidance does not provide that the holder of a note of $150,000 or more, such as is the case with Playa’s Senior Notes due 2020, or the lenders under Playa’s Senior Secured Credit Facility, each providing a loan the initial amount of which exceeds the U.S. dollar equivalent of €100,000, are excluded from being considered part of “the public” and the current Dutch national interpretation of these terms is not considered to be “grandfathered,” then Playa Resorts Holding B.V. may be required to obtain a banking license, and/or may be deemed to be in violation of the prohibition on conducting the business of a bank without such a license and, with respect to Playa’s Senior Secured Credit Facility, the prohibition on attracting repayable funds from the public and, as a result may, in each case, be subject to certain enforcement measures as described above. If Playa Resorts Holding B.V. is required to obtain a banking license or becomes subject to such enforcement measures, Holdco could be materially adversely affected.

 

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Playa has identified, and its independent registered public accounting firm has communicated, four material weaknesses in Playa’s internal control over financial reporting as of December 31, 2015. Accordingly, Playa’s internal control over financial reporting and its monitoring controls and processes were not effective as of such date. These material weaknesses have not been remediated, and it will take time for Holdco to develop, implement and test additional financial processes and controls. Accordingly, Holdco may not be able to accurately report its financial results or prevent fraud, which may cause investors to lose confidence in Holdco’s reported financial information and may lead to a decline in Holdco’s market price of Holdco Shares.

Playa has identified, and Deloitte & Touche LLP, the independent registered public accounting firm that audited Playa’s combined and consolidated financial statements as of December 31, 2015 and 2014, and for each of the three years in the period ended December 31, 2015 included in this proxy statement/prospectus, has communicated material weaknesses in Playa’s internal control over financial reporting as of December 31, 2015. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement in Playa’s annual or interim financial statements will not be prevented or detected on a timely basis. The four material weaknesses Playa identified relate to: (1) the operating effectiveness of Playa’s internal controls relating to Playa’s review of its consolidated financial statements and the underlying accounting analyses and journal entries, due to the fact that Playa does not have formalized accounting policies and procedures, segregation of duties, and sufficient resources with the requisite level of experience and technical expertise for the timely preparation and review of the financial information required for accurate financial reporting in accordance with U.S. GAAP; (2) insufficient design and implementation of Playa’s information technology controls, including system access, change management, segregation of duties, backups and disaster recovery plans, which are insufficient to address certain information technology risks and, as a result, could expose Playa’s systems and data to unauthorized use, alteration or destruction; (3) the design and operating effectiveness of management’s reviews of Playa’s current and deferred tax provision workbooks to verify that all calculations are complete, accurate and in accordance with U.S. GAAP, and Playa’s lack of the technical competence, as well as systems and processes, to ensure Playa’s compliance with Accounting Standards Codification 740 “Income Taxes” (“ASC 740 “Income Taxes”); and (4) Playa’s lack of monitoring processes to ensure that internal controls are designed and implemented appropriately and are operating effectively, which applies to both Playa’s internal controls and the internal controls of third-party service providers, such as AMResorts (which manages five of Playa’s resorts). These material weaknesses increase the risk of a material misstatement in Holdco’s financial statements after the Business Combination.

Although Playa has taken steps to improve its internal control over financial reporting since the identification of these material weaknesses, including hiring an experienced Director of Financial Reporting and developing plans to implement improved processes and internal controls, Playa is still in the process of developing and implementing additional process and other controls. Moreover, once additional processes and other controls have been developed and implemented, they will need to be monitored and their effectiveness will need to be successfully tested over several quarters before Holdco can conclude that the material weaknesses have been remediated. There can be no assurance that Playa or Holdco will be successful in making these improvements in a timely manner, or at all, and in remediating Playa’s material weaknesses. If Playa and Holdco are not successful in making these improvements, Holdco may not be able to accurately report its financial results in accordance with U.S. GAAP or prevent fraud, which may expose Holdco to legal and regulatory liabilities and may cause investors to lose confidence in its reported financial information and may lead to a decline in the market price of Holdco Shares. In addition, implementing changes to Holdco’s internal controls may distract its executive officers and employees, entail substantial costs to evaluate and modify its existing processes and implement new processes, and take significant time to complete, monitor and test. For additional information, please see the section entitled “Playa’s Management’s Discussion and Analysis of Financial Condition and Results of Operations — Internal Control over Financial Reporting.

 

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The results of operations of Holdco’s resorts may be adversely affected by various operating risks common to the lodging industry, including competition, over-supply and dependence on tourism, which could have a material adverse effect on Holdco, including Holdco’s business, financial condition, liquidity, results of operations and prospects.

Holdco’s resorts will be subject to various operating risks common to the lodging industry, many of which are beyond Holdco’s control, including, among others, the following:

 

    the availability of and demand for hotel and resort rooms;

 

    over-building of hotels and resorts in the markets in which Holdco operates, which results in increased supply and may adversely affect occupancy and revenues at Holdco’s resorts;

 

    pricing strategies of Holdco’s competitors;

 

    increases in operating costs due to inflation and other factors that may not be offset by increased room rates or other income;

 

    international, national, and regional economic and geopolitical conditions;

 

    the impact of war, crime, actual or threatened terrorist activity and heightened travel security measures instituted in response to war, terrorist activity or threats (including Travel Advisories issued by the U.S. Department of State) and civil unrest;

 

    the impact of any economic or political instability in Mexico due to unsettled political conditions, including civil unrest, widespread criminal activity, acts of terrorism, force majeure, war or other armed conflict, strikes and governmental actions;

 

    the desirability of particular locations and changes in travel patterns;

 

    the occurrence of natural or man-made disasters, such as earthquakes, tsunamis, hurricanes, and oil spills;

 

    events that may be beyond Holdco s control that could adversely affect the reputation of one or more of Holdco’s resorts or that may disproportionately and adversely impact the reputation of Holdco’s brands or resorts;

 

    taxes and government regulations that influence or determine wages, prices, interest rates, construction procedures, and costs;

 

    adverse effects of a downturn in the lodging industry, especially leisure travel and tourism spending;

 

    changes in interest rates and in the availability, cost and terms of debt financing;

 

    necessity for periodic capital reinvestment to maintain, repair, expand, renovate and reposition Holdco’s resorts;

 

    the costs and administrative burdens associated with compliance with applicable laws and regulations, including, among others, those associated with privacy, marketing and sales, licensing, labor, employment, the environment, and the U.S. Department of the Treasury’s Office of Foreign Asset Control and the U.S. Foreign Corrupt Practices Act (“FCPA”);

 

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    the availability, cost and other terms of capital to allow Holdco to fund investments in its portfolio and the acquisition of new resorts;

 

    regional, national and international development of competing resorts;

 

    increases in wages and other labor costs, energy, healthcare, insurance, transportation and fuel, and other expenses central to the conduct of Holdco’s business or the cost of travel for Holdco’s guests, including recent increases in energy costs and any resulting increase in travel costs or decrease in airline capacity;

 

    availability, cost and other terms of insurance;

 

    organized labor activities, which could cause the diversion of business from resorts involved in labor negotiations, loss of group business, and/or increased labor costs;

 

    currency exchange fluctuations;

 

    trademark or intellectual property infringement; and

 

    risks generally associated with the ownership of hotels, resorts and real estate, as Holdco discusses in detail below.

Any one or more of these factors could limit or reduce the demand for Holdco’s resorts or the prices Holdco’s resorts are able to obtain or could increase Holdco’s costs and therefore reduce the operating results of Holdco’s resorts. Even where such factors do not reduce demand, resort-level profit margins may suffer if Holdco is unable to fully recover increased operating costs from its guests. These factors could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

The seasonality of the lodging industry could have a material adverse effect on Holdco, including its revenues.

The lodging industry is seasonal in nature, which can be expected to cause quarterly fluctuations in Holdco’s revenues. The seasonality of the lodging industry and the location of Holdco’s resorts in Mexico and the Caribbean will generally result in the greatest demand for Holdco’s resorts between mid-December and April of each year, yielding higher occupancy levels and package rates during this period. This seasonality in demand has resulted in predictable fluctuations in revenue, results of operations and liquidity, which are consistently higher during the first quarter of each year than in successive quarters. Holdco can provide no assurances that these seasonal fluctuations will, in the future, be consistent with its historical experience or whether any shortfalls that occur as a result of these fluctuations will not have a material adverse effect on Holdco.

The cyclical nature of the lodging industry may cause fluctuations in Holdco’s operating performance, which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

The lodging industry is highly cyclical in nature. Fluctuations in operating performance are caused largely by general economic and local market conditions, which subsequently affect levels of business and leisure travel. In addition to general economic conditions, new hotel and resort room supply is an important factor that can affect the lodging industry’s performance, and over-building has the potential to further exacerbate the negative impact of an economic recession. Room rates and occupancy, and thus Net Package RevPAR, tend to increase when demand growth exceeds supply growth. A decline in lodging demand, or increase in lodging supply, could result in returns that are substantially below expectations, or result in losses, which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects. Further, the costs of running a resort tend to be more fixed than variable. As a result, in an environment of declining revenue, the rate of decline in earnings is likely to be higher than the rate of decline in revenue.

 

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The increasing use of Internet travel intermediaries by consumers could have a material adverse effect on Holdco, including its financial results.

Some of Holdco’s vacation packages will be booked through Internet travel intermediaries, including, but not limited to, Travelocity.com, Expedia.com and Priceline.com. As these Internet bookings increase, these intermediaries may be able to obtain higher commissions, reduced room rates or other significant contract concessions from Holdco. Moreover, some of these Internet travel intermediaries are attempting to offer lodging as a commodity, by increasing the importance of price and general indicators of quality, such as “three-star downtown hotel,” at the expense of brand identification or quality of product or service. If consumers develop brand loyalties to Internet reservations systems rather than to the Hyatt All-Inclusive Resort Brands and the other brands under which Holdco’s resorts are operated, the value of Holdco’s resorts could deteriorate and Holdco could be materially and adversely affected, including its financial results.

Cyber risk and the failure to maintain the integrity of internal or guest data could harm Holdco’s reputation and result in a loss of business and/or subject Holdco to costs, fines, investigations, enforcement actions or lawsuits.

Holdco, Hyatt and Holdco’s third-party resort manager will collect, use and retain large volumes of guest data, including credit card numbers and other personally identifiable information, for business, marketing, and other purposes in Holdco’s, Hyatt’s and Holdco’s third-party resort manager’s various information technology systems, which enter, process, summarize and report such data. Holdco will also maintain personally identifiable information about its employees. Holdco, Hyatt and Holdco’s third-party resort manager will store and process such internal and guest data both at on-site facilities and at third-party owned facilities including, for example, in a third-party hosted cloud environment. The integrity and protection of Holdco’s guest, employee and company data, as well as the continuous operation of Holdco’s, Hyatt’s and Holdco’s third-party resort manager’s systems, will be critical to Holdco’s business. Holdco’s guests and employees will expect that Holdco will adequately protect their personal information. The regulations and contractual obligations applicable to security and privacy are increasingly demanding, both in the United States and in other jurisdictions where Holdco will operate, and cyber-criminals have been recently targeting the lodging industry. Holdco will develop and enhance controls and security measures to protect against the risk of theft, loss or fraudulent or unlawful use of guest, employee or company data, and Holdco will maintain an ongoing process to re-evaluate the adequacy of its controls and measures. Notwithstanding Holdco’s efforts, because of the scope and complexity of their information technology structure, its reliance on third parties to support and protect its structure and data, and the constantly evolving cyber-threat landscape, Holdco’s systems may be vulnerable to disruptions, failures, unauthorized access, cyber-terrorism, employee error, negligence, fraud or other misuse. These or similar occurrences, whether accidental or intentional, could result in theft, unauthorized access or disclosure, loss, fraudulent or unlawful use of guest, employee or company data which could harm Holdco’s reputation or result in a loss of business, as well as remedial and other costs, fines, investigations, enforcement actions, or lawsuits. As a result, future incidents could have a material impact on Holdco’s business and adversely affect Holdco’s financial condition, liquidity and results of operations.

Holdco will face risks related to pandemic diseases, including avian flu, H1N1 flu, H7N9 flu, Ebola virus and Zika virus, which could materially and adversely affect travel and result in reduced demand for its resorts and could have a material adverse effect on Holdco.

Holdco’s business could be materially and adversely affected by the effect of, or the public perception or a risk of, a pandemic disease on the travel industry. For example, the outbreaks of severe acute respiratory syndrome (“SARS”) and avian flu in 2003 had a severe impact on the travel industry, and the outbreaks of H1N1 flu in 2009 threatened to have a similar impact. Recently, cases of the Zika virus have been reported in regions in which Holdco’s resorts are located. Additionally, the public perception of a risk of a pandemic or media coverage of these diseases, particularly if focused on regions in which Holdco’s resorts are located, may adversely affect Holdco by reducing demand for its resorts. A prolonged occurrence of SARS, avian flu, H1N1 flu, H7N9 flu,

 

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Ebola virus, Zika virus or another pandemic disease also may result in health or other government authorities imposing restrictions on travel. Any of these events could result in a significant drop in demand for Holdco’s resorts and could have a material adverse effect on Holdco.

Holdco may be subject to unknown or contingent liabilities related to its existing resorts or resorts that Holdco acquires, which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

After the Business Combination Holdco’s resorts or resorts that Holdco may in the future acquire may be subject to unknown or contingent liabilities for which Holdco may have no recourse, or only limited recourse, against the sellers. In general, the representations and warranties provided under the transaction agreements related to Playa’s existing resorts and any future acquisitions of resorts by Holdco may not survive the closing of the transactions. Furthermore, indemnification under such agreements may not exist or be limited and subject to various exceptions or materiality thresholds, a significant deductible or an aggregate cap on losses. As a result, there is no guarantee that Holdco will recover any amounts with respect to losses due to breaches by the transferors or sellers of their representations and warranties or other prior actions by the sellers. In addition, the total amount of costs and expenses that may be incurred with respect to liabilities associated with these resorts may exceed Holdco’s expectations, and Holdco may experience other unanticipated adverse effects, all of which may materially and adversely affect Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Conducting business internationally may result in increased risks and any such risks could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Holdco will operate its business internationally and plans to continue to develop an international presence. Operating internationally will expose Holdco to a number of risks, including political risks, risks of increase in duties and taxes, risks relating to anti-bribery laws, such as the FCPA, as well as changes in laws and policies affecting vacation businesses, or governing the operations of foreign-based companies. Because some of Holdco’s expenses will be incurred in foreign currencies, Holdco will be exposed to exchange rate risks. Additional risks include interest rate movements, imposition of trade barriers and restrictions on repatriation of earnings. Any of these risks could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Holdco could be exposed to liabilities under the FCPA and other anti-corruption laws and regulations, including non-U.S. laws, any of which could have a material adverse impact on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Holdco will have international operations, and as a result will be subject to compliance with various laws and regulations, including the FCPA and other anti-corruption laws in the jurisdictions in which Holdco will do business, which generally prohibit companies and their intermediaries or agents from engaging in bribery or making improper payments to foreign officials or their agents or other entities. The FCPA also requires companies to make and keep books and records and accounts which, in reasonable detail, reflect their transactions, including the disposition of their assets. Playa has implemented, and Holdco will continue to evaluate and improve, safeguards and policies designed to prevent violations of various anti-corruption laws that prohibit improper payments or offers of payments to foreign officials or their agents or other entities for the purpose of conducting business, and Playa is in the process of expanding its training program which Holdco will continue. The countries in which Holdco will own resorts have experienced governmental corruption to some degree and, in certain circumstances, compliance with anti-corruption laws may conflict with local customs and practices. Despite existing safeguards and any future improvements to its policies and training, Holdco will be exposed to risks from deliberate, reckless or negligent acts committed by Holdco’s employees or agents for which Holdco might be held responsible. Failure to comply with these laws or Holdco’s internal policies could

 

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lead to criminal and civil penalties and other legal and regulatory liabilities and require Holdco to undertake remedial measures, any of which could have a material adverse impact on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

After the Business Combination Holdco’s resorts or resorts that Holdco may acquire may contain or develop harmful mold that could lead to liability for adverse health effects and costs of remediating the problem, either of which could have a material adverse effect on Holdco, including its results of operations.

When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. Some of the resorts which will be in Holdco’s portfolio or resorts that Holdco may acquire may contain microbial matter, such as mold and mildew, which could require Holdco to undertake a costly remediation program to contain or remove the mold from the affected resort. Furthermore, Holdco can provide no assurances that Holdco will be successful in identifying harmful mold and mildew at resorts that Holdco seeks to acquire, which could require Holdco to take remedial action at acquired resorts. The presence of significant mold could expose Holdco to liability from guests, employees and others if property damage or health concerns arise, which could have a material adverse effect on Holdco, including its results of operations.

Climate change may adversely affect Holdco’s business, which could materially and adversely affect Holdco, including its financial condition, liquidity and results of operations.

To the extent that climate change does occur, Holdco may experience changes in the frequency, duration and severity of extreme weather events and changes in precipitation and temperature, which may result in physical damage or a decrease in demand for its properties, all of which are located in coastal beachfront locations that are vulnerable to significant property damage from severe weather events, including hurricanes. Should the impact of climate change be material in nature, Holdco could be materially and adversely affected, including its financial condition, liquidity and results of operations. In addition, changes in applicable legislation and regulation on climate change could result in increased capital expenditures to improve the energy efficiency of the properties in order to comply with such regulations. Actual or anticipated losses resulting from the consequences of climate change could also impact the cost or availability of insurance.

Illiquidity of real estate investments could significantly impede Holdco’s ability to sell resorts or otherwise respond to adverse changes in the performance of Holdco’s resorts, which could have a material adverse effect on Holdco, including its financial results.

Because real estate investments are relatively illiquid, Holdco’s ability to sell one or more resorts promptly for reasonable prices in response to changing economic, financial and investment conditions will be limited. The real estate market is affected by many factors beyond Holdco’s control, including:

 

    adverse changes in international, national, regional and local economic and market conditions;

 

    changes in interest and tax rates and in the availability and cost and other terms of debt financing;

 

    changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances;

 

    the ongoing need for capital improvements, particularly in older structures;

 

    changes in operating expenses; and

 

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    civil unrest, widespread criminal activity, and acts of nature, including hurricanes, earthquakes, floods and other natural disasters, which may result in uninsured losses, and acts of war or terrorism.

Holdco may decide to sell resorts in the future. Holdco cannot predict whether Holdco will be able to sell any resort for the price or on the terms set by Holdco, or whether any price or other terms offered by a prospective purchaser would be acceptable to Holdco. Holdco also cannot predict the length of time needed to find a willing purchaser and to close the sale of a resort.

During the recent economic recession, the availability of credit to purchasers of hotels and resorts and financing structures, such as commercial mortgage-backed securities, which had been used to finance many hotel and resort acquisitions in prior years, was reduced. Subsequent to such economic recession, such credit availability and financing structures have been inconsistent from time to time. If financing for hotels and resorts is not available on attractive terms or at all, it will adversely impact the ability of third parties to buy Holdco’s resorts. As a result, Holdco may hold its resorts for a longer period than Holdco would otherwise desire and may sell resorts at a loss.

In addition, Holdco may be required to expend funds to correct defects or to make improvements before a resort can be sold. Holdco can provide no assurances that Holdco will have funds available, or access to such funds, to correct those defects or to make those improvements. In acquiring a resort, Holdco may agree to lock-out provisions or tax protection agreements that materially restrict Holdco from selling that property for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on that property. These factors and any others that would impede Holdco’s ability to respond to adverse changes in the performance of Holdco’s resorts or a need for liquidity could materially and adversely affect Holdco, including its financial results.

Holdco could incur significant costs related to government regulation and litigation with respect to environmental matters, which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Holdco’s resorts will be subject to various international, national, regional and local environmental laws that impose liability for contamination. Under these laws, governmental entities will have the authority to require Holdco, as the then-current owner of property, to perform or pay for the clean-up of contamination (including hazardous substances, waste, or petroleum products) at, on, under or emanating from Holdco’s property and to pay for natural resource damages arising from such contamination. Such laws often impose liability without regard to whether the owner or operator or other responsible party knew of, or caused, such contamination, and the liability may be joint and several. Because these laws also impose liability on persons who owned a property at the time it was or became contaminated, it is possible Holdco could incur cleanup costs or other environmental liabilities even after Holdco sells resorts. Contamination at, on, under or emanating from Holdco’s resorts also may expose Holdco to liability to private parties for costs of remediation and/or personal injury or property damage. In addition, environmental laws may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination. If contamination is discovered on Holdco’s resorts, environmental laws also may impose restrictions on the manner in which Holdco’s property may be used or Holdco’s business may be operated, and these restrictions may require substantial expenditures. Moreover, environmental contamination can affect the value of a property and, therefore, an owner’s ability to borrow funds using the property as collateral or to sell the property on favorable terms or at all. Furthermore, persons who sent waste to a waste disposal facility, such as a landfill or an incinerator, may be liable for costs associated with cleanup of that facility.

In addition, Holdco’s resorts will be subject to various international, national, regional and local environmental, health and safety regulatory requirements that address a wide variety of issues. Some of Holdco’s resorts will routinely handle and use hazardous or regulated substances and wastes as part of their operations, which are subject to regulation (e.g., swimming pool chemicals). Holdco’s resorts will incur costs to comply with

 

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these environmental, health and safety laws and regulations and could be subject to fines and penalties for non-compliance with applicable laws.

Liabilities and costs associated with contamination at, on, under or emanating from Holdco’s properties, defending against claims, or complying with environmental, health and safety laws could be significant and could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects. Holdco can provide no assurances that (i) changes in current laws or regulations or future laws or regulations will not impose additional or new material environmental liabilities or (ii) the current environmental condition of its resorts will not be affected by its operations, by the condition of the resorts in the vicinity of its resorts, or by third parties unrelated to Holdco. The discovery of material environmental liabilities at Holdco’s resorts could subject Holdco to unanticipated significant costs, which could result in significant losses. Please see “Risk Factors — Risks Related to Holdco’s Business following the Business Combination — Holdco may become subject to disputes or legal, regulatory or other proceedings that could involve significant expenditures by Holdco, which could have a material adverse effect on Holdco, including its financial results” as to the possibility of disputes or legal, regulatory or other proceedings that could adversely affect Holdco.

The tax laws, rules and regulations (or interpretations thereof) in the jurisdictions in which Holdco will operate may change, which could have a material adverse effect on Holdco, including its financial results.

Holdco will generally seek to structure its business activities in the jurisdictions in which it will operate in a manner that is tax-efficient, taking into account the relevant tax laws, rules and regulations. However, tax laws, rules and regulations in these jurisdictions are complex and are subject to change as well as subject to interpretation by local tax authorities and courts. There can be no assurance that these tax laws, rules and regulations (or interpretations thereof) will not change, possibly with retroactive effect, or that local tax authorities may not otherwise successfully assert positions contrary to those taken by Holdco. In any such case, Holdco may be required to operate in a less tax-efficient manner, incur costs and expenses to restructure its operations and/or it owe past taxes (and potentially interest and penalties), which in each case could negatively impact Holdco’s operations. For example, an increase in the value-added tax (“VAT”) rate in certain regions of Mexico at the end of 2013 negatively impacted Playa’s financial results, and Playa is currently appealing an $8,700,000 tax assessment in Mexico. Please see the section entitled “Business of Playa and Certain Information About Playa — Legal Proceedings.” Moreover, there can be no assurance that any reserves Holdco may establish in the future for any potential liabilities related to Holdco’s tax positions will be sufficient.

Increases in property taxes would increase Holdco’s operating costs, which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Each of Holdco’s resorts will be, and have historically been, subject to real and personal property taxes. These taxes may increase as tax rates change and as Holdco’s resorts are assessed or reassessed by taxing authorities. If property taxes increase, Holdco would incur a corresponding increase in its operating expenses, which could have a material adverse effect on Holdco, including its business, financial condition, liquidity, results of operations and prospects.

Risks Related to Pace

The Pace Initial Shareholders and other officers and directors of Pace have agreed to vote in favor of the Business Combination, regardless of how Pace’s public shareholders vote.

Unlike many other blank check companies in which the founders agree to vote their Founder Shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business combination, the Pace Initial Shareholders and the other officers and directors of Pace have agreed, and their permitted transferees will agree, pursuant to the terms of a letter agreement entered into with Pace, to vote any Founder Shares held by them, as well as any public shares owned by them, in favor the Business Combination. As of the date hereof,

 

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the Pace Initial Shareholders and their permitted transferees own shares equal to 20% of the issued and outstanding Pace Ordinary Shares. Accordingly, it is more likely that the necessary shareholder approval will be received for the Business Combination than would be the case if the Pace Initial Shareholders agreed to vote any Pace Ordinary Shares owned by them in accordance with the majority of the votes cast by Pace’s public shareholders.

The Pace Initial Shareholders, certain other members of the Pace Board and Pace’s officers have interests in the Business Combination that are different from or are in addition to other Pace shareholders in recommending that Pace shareholders vote in favor of approval of the Business Combination Proposal and approval of the other proposals described in this proxy statement/prospectus.

When considering the Pace Board’s recommendation that Pace shareholders vote in favor of the approval of the Business Combination Proposal, Pace shareholders should be aware that aside from their interests as shareholders, the Pace Initial Shareholders and certain members of the Pace Board and officers have interests in the Business Combination that are different from, or in addition to, those of other Pace shareholders generally. These interests include:

 

    the fact that the Pace Initial Shareholders and Pace directors and officers have agreed not to redeem any Pace Ordinary Shares held by them in connection with a shareholder vote to approve a proposed initial business combination;

 

    the fact that Pace Sponsor paid an aggregate of $25,000 for the Founder Shares and such securities will have a significantly higher value at the time of the Business Combination which, if unrestricted and freely tradable, would be valued at approximately $75,748,800 after giving effect to the cancellations, but, given the restrictions on such shares, Pace believes such shares have less value;

 

    the fact that the Pace Initial Shareholders and Pace directors and officers have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them if Pace fails to complete an initial business combination by September 16, 2017;

 

    the fact that Pace Sponsor paid an aggregate of $11,000,000 for its 22,000,000 Private Placement Warrants to purchase Class A Shares and that such Private Placement Warrants will expire worthless if a business combination is not consummated by September 16, 2017;

 

    the fact that, at the option of Pace Sponsor, any amounts outstanding under any loan made by Pace Sponsor or any of its affiliates to Pace in an aggregate amount up to $1,500,000 may be converted into warrants to purchase Class A Shares;

 

    the right of the Pace Initial Shareholders to hold Holdco Shares and the Holdco Shares to be issued to the Pace Sponsor upon exercise and exchange of its Private Placement Warrants following the Business Combination, subject to certain lock-up periods;

 

    the fact that Pace Sponsor agreed to loan Pace up to $1,250,000 to fund its operating costs, which will only be repaid upon the earlier of (i) consummation of the Business Combination or (ii) September 15, 2017;

 

    the anticipated designation of Mr. Karl Peterson, Pace’s President and Chief Executive Officer, as a director of Holdco following the Business Combination;

 

    the continued indemnification of Pace existing directors and officers and the continuation of Pace’s directors’ and officers’ liability insurance after the Business Combination;

 

   

the fact that Pace Sponsor and Pace’s officers and directors may not participate in the formation of, or become directors or officers of, any other blank check company until Pace (i) has entered into a

 

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definitive agreement regarding an initial business combination or (ii) fails to complete an initial business combination by September 16, 2017;

 

    the fact that Pace Sponsor and Pace’s officers and directors will lose their entire investment in Pace and will not be reimbursed for any out-of-pocket expenses (of which approximately $300 is owed as of the date hereof) if an initial business combination is not consummated by September 16, 2017;

 

    if the Trust Account is liquidated, including in the event Pace is unable to complete an initial business combination within the required time period, Pace Sponsor has agreed to indemnify Pace to ensure that the proceeds in the Trust Account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which Pace has entered into an acquisition agreement or claims of any third party for services rendered or products sold to Pace, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account; and

 

    the fact that the PHC Investors have entered into the PHC Subscription Agreements with Pace and Holdco, pursuant to which the PHC Investors are entitled to purchase 1,015,000 Class A Shares for a purchase price of $10.00 per share.

The Pace Initial Shareholders, including Pace Sponsor and Pace’s independent directors, hold a significant number of Pace Ordinary Shares. They will lose their entire investment in Pace if a business combination is not completed.

The Pace Initial Shareholders hold in the aggregate 11,250,000 Founder Shares, representing 20% of the total outstanding Pace Ordinary Shares upon completion of the Pace IPO. The Founder Shares will be worthless if Pace does not complete a business combination by September 16, 2017. In addition, Pace Sponsor holds an aggregate of 22,000,000 Private Placement Warrants that will also be worthless if Pace does not complete a business combination by September 16, 2017.

The Founder Shares are identical to the Class A Shares included in the public units, except that (i) holders of the Founder Shares have the exclusive right to vote on the election of Pace directors prior to an initial business combination, (ii) the Founder Shares are subject to certain transfer restrictions, and (iii) the Pace Initial Shareholders, officers and directors have entered into a letter agreement with Pace, pursuant to which they have agreed (A) to waive their redemption rights with respect to their Founder Shares and any public shares owned in connection with the completion of a business combination and (B) to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if Pace fails to complete a business combination by September 16, 2017 (although they will be entitled to liquidating distributions from the Trust Account with respect to any public shares they hold if Pace fails to complete an initial business combination by September 16, 2017), and (iv) the Founder Shares are automatically convertible into Class A Shares at the time of a business combination, as described herein.

The personal and financial interests of Pace’s officers and directors may have influenced their motivation in identifying and selecting Playa, completing a business combination with Playa and may influence their operation of Holdco following the Business Combination.

Since Pace Sponsor and Pace’s executive officers and directors will not be eligible to be reimbursed for their out-of-pocket expenses if a business combination is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for a business combination.

At the closing of Pace’s initial business combination, Pace Sponsor and Pace’s executive officers and directors, and any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on Pace’s behalf, such as identifying potential target businesses and performing due

 

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diligence on suitable business combinations. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred in connection with activities on Pace’s behalf. These financial interests of Pace Sponsor and Pace’s executive officers and directors may influence their motivation in identifying and selecting a target business combination and completing the Business Combination.

Pace is not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and consequently, you may have no assurance from an independent source that the price Pace is paying for the business is fair to Pace from a financial point of view.

Pace is not required to, and did not, obtain an opinion from an independent investment banking firm that is a member of FINRA, or from an independent accounting firm, that the price Pace is paying under the Transaction Agreement is fair to Pace from a financial point of view. Pace’s public shareholders are therefore relying on the judgment of the Pace Board, who determined fair market value based generally accepted by the financial community. The Pace Initial Shareholders and certain members of the Pace Board and officers have interests in the Business Combination that are different from, or in addition to, those of other Pace shareholders generally. The Pace Board was aware of and considered those interests, among other matters, in evaluating and negotiating the Business Combination and in recommending to Pace shareholders that they approve the Business Combination. Please see the section entitled “The Business Combination — Interests of Certain Persons in the Business Combination” for more information.

Pace may not hold an annual meeting of shareholders until after the consummation of the Business Combination. Pace’s public shareholders will not have the right to elect directors prior to the consummation of the Business Combination.

In accordance with NASDAQ corporate governance requirements, Pace is not required to hold an annual meeting until no later than December 31, 2016. There is no requirement under the Companies Law of the Cayman Islands for Pace to hold annual or general meetings or elect directors. Until Pace holds an annual meeting of shareholders, public shareholders may not be afforded the opportunity to discuss company affairs with management. In addition, the holders of Class F Shares have the exclusive right prior to Pace’s initial business combination to elect Pace’s directors. Accordingly, as holders of the Class A Shares, Pace public shareholders will not have the right to vote on the election of directors prior to consummation of the Business Combination.

In light of the announcement of the proposed Business Combination and the limited availability of shareholders at the end of the year, Pace intends to defer compliance with the annual meeting requirement until 2017 when management believes it can communicate more effectively with shareholders regarding the proposed Business Combination. As a result, Pace expects to receive a notice of deficiency from NASDAQ with respect to its noncompliance. Pace also expects that NASDAQ will provide Pace with an opportunity to submit a plan of compliance for staff review. Pace intends to submit such a plan to NASDAQ promptly following receipt of the deficiency notice and to regain compliance with the listing rules within the time frame allotted by NASDAQ.

The Pace Initial Shareholders will control the election of the Pace Board until consummation of a business combination and hold a substantial interest in Pace. As a result, they will elect all of Pace’s directors and may exert a substantial influence on actions requiring shareholder vote, potentially in a manner that you do not support.

The Pace Initial Shareholders own 20% of the issued and outstanding Pace Ordinary Shares. In addition, the Founder Shares, all of which are held by the Pace Initial Shareholders, entitle the holders thereof to elect all of Pace’s directors prior to the initial business combination. Holders of Pace public shares will have no right to vote on the election of directors during such time. These provisions of Pace’s amended and restated memorandum and articles of association may only be amended by a special resolution passed by a majority of at least 90% of the issued and outstanding Pace Ordinary Shares voting in a general meeting. As a result, holders of Pace public shares will not have any influence over the election of directors of Pace prior to an initial business combination.

 

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In addition, as a result of their substantial ownership in Pace, the Pace Initial Shareholders may exert a substantial influence on other actions requiring a shareholder vote, potentially in a manner that Pace shareholders do not support, including amendments to Pace’s amended and restated memorandum and articles of association and approval of major corporate transactions, including the Business Combination. If the Pace Initial Shareholders purchase any additional Class A Shares in the aftermarket or in privately negotiated transactions, this would increase their influence over these actions. Accordingly, the Pace Initial Shareholders will exert significant influence over actions requiring a shareholder vote at least until the completion of a business combination.

Pace Sponsor and Pace’s other directors, executive officers, advisors and their affiliates may elect to purchase shares from Pace public shareholders, which may influence a vote on the Business Combination.

Pace Sponsor or Pace’s other directors, executive officers, advisors or their affiliates may purchase Class A Shares in privately negotiated transactions or in the open market either prior to or following the completion of the Business Combination, although they are under no obligation to do so. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of the Class A Shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that Pace Sponsor or Pace’s other directors, executive officers, advisors or their affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of such purchases would be to vote such shares in favor of the Business Combination and thereby increase the likelihood of obtaining shareholder approval of the Business Combination or to satisfy a closing condition in the Transaction Agreement regarding amounts in the Trust Account and the proceeds from the Private Placement equaling or exceeding a certain threshold or requiring Pace to have a minimum net worth at the closing of the Business Combination, where it appears that such requirement would otherwise not be met. This may result in the completion of the Business Combination that may not otherwise have been possible.

Pace will issue additional Class A Shares to complete the Business Combination. Such issuance will dilute the interest of Pace’s public shareholders and likely present other risks.

The issuance of the Class A Shares in the Private Placement will dilute the equity interest of existing Pace shareholders and may adversely affect prevailing market prices for the Pace public units, Pace Ordinary Shares and/or public warrants.

You will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares or public warrants, potentially at a loss.

Pace’s public shareholders will be entitled to receive funds from the Trust Account only upon the earlier to occur of: (i) the completion of an initial business combination; (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend the amended and restated memorandum and articles of association to modify the substance or timing of Pace’s obligation to redeem 100% of the public shares if Pace does not complete a business combination by September 16, 2017; and (iii) the redemption of all of the public shares if Pace is unable to complete a business combination by September 16, 2017, subject to applicable law and as further described herein. In no other circumstances will a public shareholder have any right or interest of any kind in the Trust Account. Accordingly, to liquidate your investment, you may be forced to sell your public shares or public warrants, potentially at a loss.

If Pace is unable to complete a business combination by September 16, 2017, Pace will cease all operations except for the purpose of winding up and Pace will redeem the public shares and liquidate.

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period, it will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest, net of tax (less up to $50,000 of such net interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of Pace’s remaining shareholders and the Pace Board, dissolve and liquidate, subject in each case to Pace’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per public unit in the Pace IPO. In addition, if Pace fails to complete an initial business combination by September 16, 2017, there will be no redemption rights on liquidating distributions with respect to Pace public warrants or the Private Placement Warrants, which will expire worthless.

If the Business Combination is not completed, potential target businesses may have leverage over Pace in negotiating a business combination and Pace’s ability to conduct due diligence on a business combination as it approaches its dissolution deadline may decrease, which could undermine Pace’s ability to complete a business combination on terms that would produce value for Pace’s shareholders.

Any potential target business with which Pace enters into negotiations concerning a business combination will be aware that Pace must complete an initial business combination by September 16, 2017. Consequently, if Pace is unable to complete this Business Combination, a potential target may obtain leverage over Pace in negotiating a business combination, knowing that Pace may be unable to complete a business combination with another target business by September 16, 2017. This risk will increase as Pace gets closer to the timeframe described above. In addition, Pace may have limited time to conduct due diligence and may enter into a business combination on terms that Pace would have rejected upon a more comprehensive investigation.

Because of Pace’s limited resources and the significant competition for business combination opportunities, if this Business Combination is not completed, it may be more difficult for Pace to complete an initial business combination. In addition, resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If Pace is unable to complete an initial business combination by September 16, 2017, Pace’s public shareholders may receive only approximately $10.00 per share, on the liquidation of the Trust Account (or less than $10.00 per share in certain circumstances where a third party brings a claim against Pace that Pace Sponsor is unable to indemnify), and Pace’s public warrants will expire worthless.

If Pace is unable to complete this Business Combination, Pace would expect to encounter intense competition from other entities having a business objective similar to its business objective, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses Pace could acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than Pace does and Pace’s financial resources will be relatively limited when contrasted with those of many of these competitors. While Pace believes there are numerous target businesses Pace could potentially acquire with the net proceeds of the Pace IPO and the sale of the Private Placement Warrants, Pace’s ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by Pace’s available financial resources. This inherent competitive limitation may give others an advantage in pursuing the acquisition of certain target businesses. Furthermore, if Pace is obligated to pay cash for the public shares redeemed and, in the event Pace seeks shareholder approval of a business combination, Pace makes purchases of its public shares, potentially reducing the resources available to Pace for a business combination. Any of these obligations may place Pace at a competitive disadvantage in successfully negotiating a business combination.

 

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Pace anticipates that, if Pace is unable to complete this Business Combination, the investigation of other specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If Pace decides not to complete a specific business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if Pace reaches an agreement relating to a specific target business, Pace may fail to complete such business combination (including the Business Combination described in this proxy statement/prospectus) for any number of reasons including those beyond Pace’s control. Any such event will result in a loss to Pace of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.

If Pace does not complete this Business Combination and is unable to complete an initial business combination by September 16, 2017, Pace’s public shareholders may receive only approximately $10.00 per share on the liquidation of the Trust Account (or less than $10.00 per share in certain circumstances where a third party brings a claim against Pace that Pace Sponsor is unable to indemnify) and Pace’s public warrants will expire worthless.

Pace may waive one or more of the conditions to the Business Combination.

Pace may agree to waive, in whole or in part, one or more of the conditions to Pace’s obligations to complete the Business Combination, to the extent permitted by its amended and restated memorandum and articles of association and applicable laws. For example, it is a condition to each party’s obligations to close the Business Combination that there be an amount from the Trust Account and the proceeds of the Private Placement that exceeds $375,000,000 (net of the aggregate amount of cash required to satisfy any exercise by Pace shareholders of their right to have Pace redeem their Class A Shares in connection with a Business Combination (as such term is defined in Pace’s articles of association) and subject to a reduction to an amount no less than $325,000,000 in connection with any Hyatt Preferred Share Adjustment). However, if Pace determines that a breach of this obligation is not material, then Pace may elect to waive that condition and close the Business Combination. Pace may not waive the condition that Pace public shareholders approve the Business Combination. Please see the section entitled “The Transaction Agreement and Related Agreements — Conditions to Closing of the Business Combination” for additional information.

The exercise of discretion by Pace’s directors and officers in agreeing to changes to the terms of or waivers of closing conditions in the Transaction Agreement may result in a conflict of interest when determining whether such changes to the terms of the Transaction Agreement or waivers of conditions are appropriate and in the best interests of the public shareholders of Pace.

In the period leading up to the closing of the Business Combination, other events may occur that, pursuant to the Transaction Agreement, would require Pace to agree to amend the Transaction Agreement, to consent to certain actions or to waive rights that Pace is entitled to under those agreements. Such events could arise because of changes in the course of Playa’s business, a request by the Playa shareholders or Playa to undertake actions that would otherwise be prohibited by the terms of the Transaction Agreement or the occurrence of other events that would have a material adverse effect on Playa’s business and would entitle Pace to terminate the Transaction Agreement. In any of such circumstances, it would be in the discretion of Pace, acting through the Pace Board, to grant its consent or waive its rights. The existence of the financial and personal interests of Pace’s directors described elsewhere in this proxy statement/prospectus may result in a conflict of interest on the part of one or more of the directors between what he or she may believe is best for Pace and the public shareholders of Pace and what he or she may believe is best for himself or herself or his or her affiliates in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, Pace does not believe there will be any changes or waivers that Pace’s directors and officers would be likely to make after shareholder approval of the Business Combination has been obtained. While certain changes could be made without further shareholder approval, if there is a change to the terms of the Business Combination that would have a material impact on the

 

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shareholders, Pace will be required to circulate a new or amended proxy statement/prospectus or supplement thereto and resolicit the vote of the Pace public shareholders with respect to the Business Combination Proposal.

Pace will incur significant transaction and transition costs in connection with the Business Combination.

Pace has incurred and expects to incur significant, non-recurring costs in connection with consummating the Business Combination. All expenses incurred in connection with the Transaction Agreement and the transactions contemplated thereby (including the Business Combination), including all legal, accounting, consulting, investment banking and other fees, expenses and costs, will be for the account of the party incurring such fees, expenses and costs.

Pace’s transaction expenses as a result of the Business Combination are currently estimated at approximately $20,000,000, including $15,750,000 in deferred underwriting commissions to the underwriters of the Pace IPO.

If third parties bring claims against Pace, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.00 per share.

Pace’s placing of funds in the Trust Account may not protect those funds from third-party claims against Pace. Although Pace will seek to have all vendors, service providers (other than Pace’s independent auditors), prospective target businesses or other entities with which Pace does business execute agreements with Pace waiving any right, title, interest or claim of any kind in or to any funds held in the Trust Account for the benefit of Pace’s public shareholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against Pace’s assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the funds held in the Trust Account, Pace’s management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to Pace than any alternative.

Examples of possible instances where Pace may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with Pace and will not seek recourse against the Trust Account for any reason. Upon redemption of Pace’s public shares, if Pace is unable to complete the Business Combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with the Business Combination, Pace will be required to provide for payment of claims of creditors that were not waived that may be brought against Pace within the ten years following redemption. Accordingly, the per-share redemption amount received by Pace’s public shareholders could be less than the $10.00 per share initially held in the Trust Account, due to claims of such creditors.

Pace Sponsor has agreed that it will be liable to Pace if and to the extent any claims by a vendor for services rendered or products sold to Pace, or a prospective target business with which Pace has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under Pace’s indemnity of the underwriters of the

 

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Pace IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, Pace Sponsor will not be responsible to the extent of any liability for such third-party claims. Pace has not independently verified whether Pace Sponsor has sufficient funds to satisfy its indemnity obligations and believes that Pace Sponsor’s only assets are securities of Pace. Pace Sponsor may not have sufficient funds available to satisfy those obligations. Pace has not asked Pace Sponsor to reserve for such eventuality, and therefore, no funds are currently set aside to cover any such obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for a business combination and redemptions could be reduced to less than $10.00 per public share. In such event, Pace may not be able to complete a business combination, and Pace shareholders would receive such lesser amount per share in connection with any redemption of public shares.

Pace’s directors may decide not to enforce the indemnification obligations of Pace Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to Pace’s public shareholders.

In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.00 per share or (ii) other than due to the failure to obtain such waiver, such lesser amount per share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and Pace Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, Pace’s independent directors would determine whether to take legal action against Pace Sponsor to enforce its indemnification obligations. While Pace currently expects that its independent directors would take legal action on its behalf against Pace Sponsor to enforce its indemnification obligations to Pace, it is possible that Pace’s independent directors in exercising their business judgment may choose not to do so in any particular instance. If Pace’s independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to Pace’s public shareholders may be reduced below $10.00 per share.

If, before distributing the proceeds in the Trust Account to Pace public shareholders, Pace files a bankruptcy petition or an involuntary bankruptcy petition is filed against Pace that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of Pace’s shareholders and the per-share amount that would otherwise be received by Pace’s shareholders in connection with Pace’s liquidation may be reduced.

If, before distributing the proceeds in the Trust Account to Pace public shareholders, Pace files a bankruptcy petition or an involuntary bankruptcy petition is filed against Pace that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in Pace’s bankruptcy estate and subject to the claims of third parties with priority over the claims of Pace’s shareholders. To the extent any bankruptcy claims deplete the Trust Account, the per-share amount that would otherwise be received by Pace’s shareholders in connection with its liquidation may be reduced.

Pace’s public shareholders may be held liable for claims by third parties against Pace to the extent of distributions received by them upon redemption of their public shares.

If Pace is forced to enter into an insolvent liquidation, any distributions received by public shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, Pace was unable to pay its debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by Pace’s shareholders. Furthermore, Pace’s directors may be viewed as having breached their fiduciary duties to Pace or its creditors and/or may have acted in bad faith, and thereby exposing themselves and Pace to claims, by paying public shareholders from the Trust Account prior to addressing the claims of creditors. Pace cannot assure you that claims will not be brought against it for these reasons. Pace and its directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of Pace’s share premium account while it was unable to pay its debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable to a fine of $15,000 and to imprisonment for five years in the Cayman Islands.

 

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If, after Pace distributes the proceeds in the Trust Account to its public shareholders, Pace files a bankruptcy petition or an involuntary bankruptcy petition is filed against Pace that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of the Pace Board may be viewed as having breached their fiduciary duties to Pace’s creditors, thereby exposing the members of the Pace Board and Pace to claims of punitive damages.

If, after Pace distributes the proceeds in the Trust Account to its public shareholders, Pace files a bankruptcy petition or an involuntary bankruptcy petition is filed against Pace that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by Pace’s shareholders. In addition, the Pace Board may be viewed as having breached its fiduciary duty to Pace’s creditors and/or having acted in bad faith, thereby exposing itself and Pace to claims of punitive damages, by paying public shareholders from the Trust Account prior to addressing the claims of creditors.

Because Pace is incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.

Pace is an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for Pace public shareholders to effect service of process within the United States upon Pace’s directors or executive officers, or enforce judgments obtained in the United States courts against Pace’s directors or officers.

Pace’s corporate affairs will be governed by its amended and restated memorandum and articles of association, the Companies Law of the Cayman Islands (as may be supplemented or amended from time to time) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of Pace’s directors to Pace under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of Pace’s shareholders and the fiduciary responsibilities of Pace’s directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, shareholders of Cayman Islands companies may not have standing to initiate a shareholders derivative action in a federal court of the United States.

The courts of the Cayman Islands are unlikely (i) to recognize or enforce against Pace judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state, and (ii) in original actions brought in the Cayman Islands, to impose liabilities against Pace predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

 

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As a result of all of the above, Pace public shareholders may have more difficulty in protecting their interests in the face of actions taken by Pace management, members of the Pace Board or controlling shareholders of Pace than they would as public shareholders of a United States company.

Pace shareholders may have limited remedies if their shares suffer a reduction in value following the Business Combination.

Any shareholders who choose to remain shareholders following a business combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by Pace’s officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy statement relating to a business combination contained an actionable material misstatement or material omission.

Risks Related to the Redemption

Pace does not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for Pace to complete a business combination with which a substantial majority of its shareholders do not agree.

Pace’s amended and restated memorandum and articles of association does not provide a specified maximum redemption threshold, except that in no event will Pace redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001, such that Pace is not subject to the SEC’s “penny stock” rules. This minimum net tangible asset amount is also required as an obligation to each party’s obligation to consummate the Business Combination under the Transaction Agreement. In addition, the Transaction Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the amount in the Trust Account (net of the amount of any Pace shareholder redemptions) and the proceeds from the Private Placement, equaling or exceeding $375,000,000 (net of the aggregate amount of cash required to satisfy any exercise by Pace shareholders of their right to have Pace redeem their Class A Shares in connection with a Business Combination (as such term is defined in Pace’s articles of association) and subject to a reduction to an amount no less than $325,000,000 in connection with any Hyatt Preferred Share Adjustment). As a result, Pace may be able to complete the Business Combination even though a substantial portion of its public shareholders do not agree with the transaction and have redeemed their shares or have entered into privately negotiated agreements to sell their shares to Pace Sponsor or Pace’s officers, directors, advisors or their affiliates.

In the event the aggregate cash consideration Pace would be required to pay for all Class A Shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the Transaction Agreement exceed the aggregate amount of cash available to Pace, Pace will not complete the Business Combination or redeem any shares, all Class A Shares submitted for redemption will be returned to the holders thereof, and Pace instead may search for an alternate business combination.

If you or a “group” of shareholders of which you are a part are deemed to hold an aggregate of more than fifteen percent (15%) of the Class A Shares issued in the Pace IPO, you (or, if a member of such a group, all of the members of such group in the aggregate) will lose the ability to redeem all such shares in excess of 15% of the Class A Shares issued in the Pace IPO.

A public shareholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 15% of the Class A Shares included in the units sold in the Pace IPO. In order to determine whether a shareholder is acting in concert or as a group with another shareholder, Pace will require each public shareholder seeking to exercise redemption rights to certify to Pace whether such shareholder is acting in concert or as a group with any other

 

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shareholder. Such certifications, together with other public information relating to share ownership available to Pace at that time, such as Section 13D, Section 13G and Section 16 filings under the Exchange Act, will be the sole basis on which Pace makes the above-referenced determination. Your inability to redeem any such excess shares will reduce your influence over Pace’s ability to consummate the Business Combination and you could suffer a material loss on your investment in Pace if you sell such excess shares in open market transactions. Additionally, you will not receive redemption distributions with respect to such excess shares if Pace consummates the Business Combination. As a result, you will continue to hold that number of shares aggregating to more than 15% of the shares sold in the Pace IPO and, in order to dispose of such excess shares, would be required to sell your Class A Shares in open market transactions, potentially at a loss. There is no assurance that the value of such excess shares will appreciate over time following the Business Combination or that the market price of the Class A Shares will exceed the per-share redemption price. Notwithstanding the foregoing, shareholders may challenge Pace’s determination as to whether a shareholder is acting in concert or as a group with another shareholder in a court of competent jurisdiction.

However, Pace’s shareholders’ ability to vote all of their shares (including such excess shares) for or against the Business Combination is not restricted by this limitation on redemption.

There is no guarantee that a shareholder’s decision whether to redeem its shares for a pro rata portion of the Trust Account will put the shareholder in a better future economic position.

There is no assurance as to the price at which a Pace shareholder may be able to sell its public shares in the future following the completion of the Business Combination or any alternative business combination. Certain events following the consummation of any initial business combination, including the Business Combination, may cause an increase in the share price, and may result in a lower value realized now than a shareholder of Pace might realize in the future had the shareholder not redeemed its shares. Similarly, if a shareholder does not redeem its shares, the shareholder will bear the risk of ownership of the public shares after the consummation of any initial business combination, and there can be no assurance that a shareholder can sell its shares in the future for a greater amount than the redemption price set forth in this proxy statement/prospectus. A shareholder should consult the shareholder’s tax and/or financial advisor for assistance on how this may affect his, her or its individual situation.

Shareholders of Pace who wish to redeem their shares for a pro rata portion of the Trust Account must comply with specific requirements for redemption, which may make it difficult for them to exercise their redemption rights prior to the deadline. If shareholders fail to comply with the redemption requirements specified in this proxy statement/prospectus, they will not be entitled to redeem their Class A Shares for a pro rata portion of the funds held in the Trust Account.

Pace public shareholders who wish to redeem their shares for a pro rata portion of the Trust Account must, among other things (i) submit a request in writing and (ii) tender their certificates to the Transfer Agent or deliver their shares to the Transfer Agent electronically through the DWAC system at least two business days prior to the Extraordinary General Meeting. In order to obtain a physical stock certificate, a shareholder’s broker and/or clearing broker, DTC and the Transfer Agent will need to act to facilitate this request. Shareholders should generally allot at least two weeks to obtain physical certificates from the Transfer Agent. However, because Pace does not have any control over this process or over the brokers, which is referred to herein as “DTC,” it may take significantly longer than two weeks to obtain a physical stock certificate. If it takes longer than anticipated to obtain a physical certificate, shareholders who wish to redeem their shares may be unable to obtain physical certificates by the deadline for exercising their redemption rights and thus will be unable to redeem their shares.

Shareholders electing to redeem their shares will receive their pro rata portion of the Trust Account less franchise and income taxes payable, calculated as of two business days prior to the anticipated consummation of the Business Combination. Please see the section entitled “Extraordinary General Meeting of Pace Shareholders — Redemption Rights” for additional information on how to exercise your redemption rights.

 

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If a public shareholder fails to receive notice of Pace’s offer to redeem its public shares in connection with the Business Combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.

Pace will comply with the proxy rules when conducting redemptions in connection with the Business Combination. Despite Pace’s compliance with these rules, if a public shareholder fails to receive Pace’s tender offer or proxy materials, as applicable, such shareholder may not become aware of the opportunity to redeem its shares. In addition, the proxy materials, as applicable, that Pace will furnish to holders of its public shares in connection with the Business Combination will describe the various procedures that must be complied with in order to validly redeem public shares. In the event that a shareholder fails to comply with these procedures, its shares may not be redeemed.

The ability of Pace’s public shareholders to exercise redemption rights with respect to a large number of Pace’s shares could increase the probability that the Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.

Each party’s obligation to consummate the Business Combination is conditioned on the amount in the Trust Account (net of the amount of any Pace shareholder redemptions) and the proceeds from the Private Placement equaling or exceeding $375,000,000 (net of the aggregate amount of cash required to satisfy any exercise by Pace shareholders of their right to have Pace redeem their Class A Shares in connection with a Business Combination (as such term is defined in Pace’s articles of association) and subject to a reduction to an amount no less than $325,000,000 in connection with any Hyatt Preferred Share Adjustment). In the event that Pace’s public shareholders exercise redemption rights with respect to a number of Pace’s public shares such that this minimum cash condition is not met, the Business Combination is not likely to be successful. If the Business Combination is not completed in the required time set forth in the Transaction Agreement and Pace is unable to complete an initial business combination by September 16, 2017, you would not receive your pro rata portion of the Trust Account until the Trust Account is liquidated. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time Pace shares may trade at a discount to the pro rata amount per share in the Trust Account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with the redemption until Pace liquidates or you are able to sell your shares in the open market.

If Pace is unable to consummate a business combination by September 16, 2017, the public shareholders may be forced to wait beyond such date before redemption from the Trust Account.

If Pace is unable to consummate a business combination by September 16, 2017, Pace will distribute the aggregate amount then on deposit in the Trust Account (less up to $50,000 of the earned interest, net of taxes, thereon to pay dissolution expenses), pro rata to the public shareholders by way of redemption and cease all operations except for the purposes of winding up of Pace’s affairs, as further described herein. Any redemption of public shareholders from the Trust Account shall be effected automatically by function of the amended and restated memorandum and articles of association prior to any voluntary winding up. If Pace is required to windup, liquidate the Trust Account and distribute such amount therein, pro rata, to the public shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of the Companies Law of the Cayman Islands. In that case, Pace shareholders may be forced to wait beyond the initial 24 months before the redemption proceeds of the Trust Account become available to them and they receive the return of their pro rata portion of the proceeds from the Trust Account. Pace has no obligation to return funds to shareholders prior to the date of the redemption or liquidation unless it consummates a business combination prior thereto and only then in cases where shareholders have sought to redeem their Class A Shares. Only upon the redemption or any liquidation will public shareholders be entitled to distributions if Pace is unable to complete a business combination.

 

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GENERAL INFORMATION

Presentation of Financial Information

This proxy statement/prospectus contains:

 

    the audited balance sheet of Holdco as of December 9, 2016 prepared in accordance with U.S. GAAP;

 

    the unaudited pro forma condensed combined financial statements of Holdco for the year ended December 31, 2015 and as of and for the nine months ended September 30, 2016, prepared in accordance with U.S. GAAP;

 

    the audited consolidated financial statements of Pace as of and for the period from June 3, 2015 (inception) to December 31, 2015, prepared in accordance with U.S. GAAP;

 

    the unaudited condensed consolidated financial statements of Pace as of and for the nine months ended September 30, 2016 and for the period from June 3, 2015 (inception) to September 30, 2015, prepared in accordance with U.S. GAAP;

 

    the unaudited condensed consolidated financial statements of Playa as of and for the nine months ended September 30, 2016 and for the nine months ended September 30, 2015, prepared in accordance with U.S. GAAP; and

 

    the audited consolidated financial statements of Playa as of and for the fiscal years ended December 31, 2015 and December 31, 2014 and for the fiscal year ended December 31, 2013, prepared in accordance with U.S. GAAP.

Unless indicated otherwise, financial data presented in this document has been taken from the audited and unaudited consolidated financial statements of Pace included in this document, and the audited and unaudited consolidated financial statements of Playa included in this document. Where information is identified as “unaudited,” it has not been subject to an audit.

Cautionary Note Regarding Forward-Looking Statements

Some of the statements contained in this proxy statement/prospectus constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Forward-looking statements reflect Holdco’s current views with respect to, among other things, Holdco’s capital resources, portfolio performance and results of operations. Likewise, Holdco’s consolidated financial statements and all of Holdco’s statements regarding anticipated growth in its operations, anticipated market conditions, demographics and results of operations are forward-looking statements. In some cases, you can identify these forward-looking statements by the use of terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words or phrases.

The forward-looking statements contained in this proxy statement/prospectus reflect Holdco’s current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause its actual results to differ significantly from those expressed in any forward-looking statement. Holdco does not guarantee that the transactions and events described will happen as

 

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described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

 

    possible delays in closing the Business Combination, whether due to the inability to obtain Pace shareholder or regulatory approval, Pace not having at least $375,000,000 of cash from the proceeds from the Private Placement and the Trust Account (net of the aggregate amount of cash required to satisfy any exercise by Pace shareholders of their right to have Pace redeem their Class A Shares in connection with a Business Combination (as such term is defined in Pace’s articles of association) and subject to a reduction to an amount no less than $325,000,000 in connection with any Hyatt Preferred Share Adjustment), or failure to satisfy any of the other conditions to closing the Business Combination, as set forth in the Transaction Agreement;

 

    any waivers of the conditions to closing the Business Combination as may be permitted in the Transaction Agreement;

 

    general economic uncertainty and the effect of general economic conditions on the lodging industry in particular;

 

    the popularity of the all-inclusive resort model, particularly in the luxury segment of the resort market;

 

    the success and continuation of Holdco’s relationship with Hyatt;

 

    the volatility of currency exchange rates;

 

    the success of Holdco’s branding or rebranding initiatives with its current portfolio and resorts that may be acquired in the future, including the rebranding of two Playa resorts under the new all-inclusive “Panama Jack” brand;

 

    Holdco’s failure to successfully complete its expansion, repair and renovation projects in the timeframes and at the costs anticipated;

 

    significant increases in construction and development costs;

 

    Holdco’s ability to obtain and maintain financing arrangements on attractive terms;

 

    the impact of and changes in governmental regulations or the enforcement thereof, tax laws and rates, accounting guidance and similar matters in regions in which Holdco operates;

 

    the effectiveness of Holdco’s internal controls and its corporate policies and procedures and the success and timing of the remediation efforts for the material weaknesses Playa identified in its internal control over financial reporting;

 

    changes in personnel and availability of qualified personnel;

 

    environmental uncertainties and risks related to adverse weather conditions and natural disasters;

 

    dependence on third parties to provide Internet, telecommunications and network connectivity to Holdco data centers;

 

    the volatility of the market price and liquidity of Holdco Shares and other securities of Holdco; and

 

    the increasingly competitive environment in which Holdco will operate.

 

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While forward-looking statements reflect Holdco’s good faith beliefs, they are not guarantees of future performance. Holdco disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this proxy statement/prospectus, except as required by applicable law. For a further discussion of these and other factors that could cause Holdco’s future results, performance or transactions to differ significantly from those expressed in any forward-looking statement, please see the section entitled “Risk Factors.” You should not place undue reliance on any forward-looking statements, which are based only on information currently available to us (or to third parties making the forward-looking statements).

Exchange Rates

Playa’s reporting currency is the U.S. dollar. Playa has determined that the U.S. dollar is the functional currency of all of its international operations. Following consummation of the Business Combination, with respect to financial reporting of Holdco’s financial statements, foreign currency denominated monetary asset and liability amounts will be re-measured into U.S. dollars at end-of-period exchange rates. Foreign currency non-monetary assets, such as inventories, prepaid expenses, fixed assets and intangible assets, will be recorded in U.S. dollars at historical exchange rates. Foreign currency denominated income and expense items will be recorded in U.S. dollars at the applicable daily exchange rates in effect during the relevant period. For purposes of calculating tax liability in certain foreign jurisdictions, Holdco will index its depreciable tax bases in certain assets for the effects of inflation based upon statutory inflation factors. The effects of these indexation adjustments will be reflected in the income tax benefit line of Holdco’s Consolidated Statements of Operations and Comprehensive Income (Loss). The re-measurement of gains and losses related to deferred tax assets and liabilities will be reported in the income tax provision. Foreign exchange gains and losses will be presented in Holdco’s Consolidated Statements of Operations and Comprehensive Income (Loss) within other (expense) income, net.

 

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EXTRAORDINARY GENERAL MEETING OF PACE SHAREHOLDERS

This proxy statement/prospectus is being provided to Pace shareholders as part of a solicitation of proxies by the Pace Board for use at the Extraordinary General Meeting of Pace Shareholders to be held on [●], 2017, and at any adjournment or postponement thereof. This proxy statement/prospectus contains important information regarding the Extraordinary General Meeting, the proposals on which you are being asked to vote and information you may find useful in determining how to vote and voting procedures.

This proxy statement/prospectus is being first mailed on or about [●], 2017 to all shareholders of record of Pace as of [●], 2017, the record date for the Extraordinary Meeting. Shareholders of record who owned Pace Ordinary Shares at the close of business on the record date are entitled to receive notice of, attend and vote at the Extraordinary General Meeting. On the record date, there were 56,250,000 Pace Ordinary Shares outstanding.

Date, Time and Place of Extraordinary General Meeting

The Extraordinary General Meeting will be held at [●], on [●], 2017 at [●], or such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the proposals.

Proposals at the Extraordinary General Meeting

At the Extraordinary General Meeting, Pace shareholders will vote on the following proposals:

 

    Business Combination Proposal — To adopt the Transaction Agreement and to approve the transactions contemplated thereby, including the Business Combination (Proposal No. 1).

 

    Pace Merger Proposal — To consider and vote upon a proposal to approve the Pace Merger and authorize, approve and confirm the Plan of Merger (Proposal No. 2).

 

    Holdco Articles of Association Proposal — To consider and vote upon, on a non-binding advisory basis, a proposal to approve certain governance provisions contained in the Holdco Articles of Association that are not required by Dutch law and materially affect shareholder rights (Proposal No. 3).

 

    Adjournment Proposal — To approve the adjournment of the Extraordinary General Meeting to a later date or dates (i) to the extent necessary to ensure that any required supplement or amendment to this proxy statement/prospectus is provided to Pace shareholders or, if as of the time for which the Extraordinary General Meeting is scheduled, there are insufficient Pace Ordinary Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the Extraordinary General Meeting, (ii) in order to solicit additional proxies from Pace shareholders in favor of the Business Combination Proposal and the Pace Merger Proposal, or (iii) if Pace shareholders redeem an amount of Class A Shares such that the minimum proceeds condition to each party’s obligation to consummate the Business Combination would not be satisfied. The Adjournment Proposal will only be presented to Pace shareholders in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal and the Pace Merger Proposal, or in the event that Pace shareholders redeem an amount of Class A Shares such that the minimum proceeds condition to each party’s obligation to consummate the Business Combination would not be satisfied (Proposal No. 4).

 

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THE PACE BOARD UNANIMOUSLY RECOMMENDS THAT

YOU VOTE “FOR” EACH OF THESE PROPOSALS.

Voting Power; Record Date

As a shareholder of Pace, you have a right to vote on certain matters affecting Pace. The proposals that will be presented at the Extraordinary General Meeting and upon which you are being asked to vote are summarized above and fully set forth in this proxy statement/prospectus. You will be entitled to vote or direct votes to be cast at the Extraordinary General Meeting if you owned Pace Ordinary Shares at the close of business on [●], 2017, which is the record date for the Extraordinary General Meeting. You are entitled to one vote for each Pace Ordinary Share that you owned as of the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. On the record date, there were 56,250,000 Pace Ordinary Shares outstanding, of which 45,000,000 are public shares and 11,250,000 are Founder Shares held by the Pace Initial Shareholders.

Vote of the Pace Initial Shareholders and Pace’s Other Directors and Officers

Prior to the Pace IPO, Pace entered into agreements with the Pace Initial Shareholders and the other current directors and officers of Pace, pursuant to which each agreed to vote any Pace Ordinary Shares owned by them in favor of an initial business combination. These agreements apply to the Pace Initial Shareholders, including the Pace Sponsor, as it relates to the Founder Shares and the requirement to vote all of the Founder Shares in favor of the Business Combination and Pace Merger. As of the record date, the Pace Initial Shareholders and the other current directors and officers own 11,250,000 Founder Shares, representing 20% of the Pace Ordinary Shares then outstanding and entitled to vote at the Extraordinary General Meeting.

The Pace Initial Shareholders and the other current directors and officers of Pace have waived any redemption rights, including with respect to Class A Shares purchased in the Pace IPO or in the aftermarket, in connection with Business Combination. The Founder Shares held by the Pace Initial Shareholders have no redemption rights upon the liquidation of Pace and will be worthless if no business combination is effected by Pace by September 16, 2017. However, the Pace Initial Shareholders, officers and directors are entitled to redemption rights upon the liquidation of Pace with respect to any public shares they may own.

Quorum and Required Vote for Proposals for the Extraordinary General Meeting

The approval of the Business Combination Proposal requires the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Business Combination Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no the Business Combination Proposal. The Pace Initial Shareholders have agreed to vote their Founder Shares and any public shares purchased by them during or after the Pace IPO in favor of the Business Combination Proposal.

The approval of the Pace Merger Proposal requires the affirmative vote of holders of at least two-thirds of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Pace Merger Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Pace Merger Proposal.

 

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The approval of the Holdco Articles of Association Proposal requires the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Holdco Articles of Association Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Holdco Articles of Association Proposal.

The approval of the Adjournment Proposal requires the affirmative vote of holders of a majority of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Adjournment Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Adjournment Proposal.

The Business Combination is conditioned on the approval of the Business Combination Proposal and the Pace Merger Proposal at the Extraordinary General Meeting. The Holdco Articles of Association Proposal is non-binding and is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus.

It is important for you to note that, in the event that the Business Combination Proposal and the Pace Merger Proposal do not receive the requisite vote for approval, Pace will not consummate the Business Combination. If Pace does not consummate the Business Combination and fails to complete an initial business combination by September 16, 2017, Pace will be required to dissolve and liquidate the Trust Account by returning the then remaining funds in such account to the public shareholders.

Recommendation to Pace Shareholders

The Pace Board believes that each of the Business Combination Proposal, the Pace Merger Proposal, the Holdco Articles of Association Proposal and the Adjournment Proposal to be presented at the Extraordinary General Meeting is in the best interests of Pace and its shareholders and unanimously recommends that its shareholders vote “FOR” each of the proposals.

When you consider the recommendation of the Pace Board in favor of approval of the Business Combination Proposal, you should keep in mind that Pace Sponsor and certain members of the Pace Board and officers of Pace have interests in the Business Combination that are different from or in addition to (or which may conflict with) your interests as a shareholder. Shareholders should take these interests into account in deciding whether to approve the proposals presented at the Extraordinary General Meeting, including the Business Combination Proposal. These interests include, among other things:

 

    the fact that the Pace Initial Shareholders and Pace directors and officers have agreed not to redeem any of the Pace Ordinary Shares held by them in connection with a shareholder vote to approve a proposed initial business combination;

 

    the fact that Pace Sponsor paid an aggregate of $25,000 for the Founder Shares and such securities will have a significantly higher value at the time of the Business Combination which, if unrestricted and freely tradable, would be valued at approximately $75,748,800 after giving effect to the cancellations, but, given the restrictions on such shares, Pace believes such shares have less value;

 

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    the fact that the Pace Initial Shareholders and Pace directors and officers have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Pace Ordinary Shares held by them if Pace fails to complete an initial business combination by September 16, 2017;

 

    the fact that Pace Sponsor paid an aggregate of $11,000,000 for its 22,000,000 Private Placement Warrants to purchase Class A Shares and that such Private Placement Warrants will expire worthless if a business combination is not consummated by September 16, 2017;

 

    the fact that, at the option of Pace Sponsor, any amounts outstanding under any loan made by Pace Sponsor or any of its affiliates to Pace in an aggregate amount up to $1,500,000 may be converted into warrants to purchase Class A Shares;

 

    the right of the Pace Initial Shareholders to hold Holdco Shares and the Holdco Shares to be issued to the Pace Sponsor upon exercise and exchange of its Private Placement Warrants following the Business Combination, subject to certain lock-up periods;

 

    the fact that Pace Sponsor agreed to loan Pace up to $1,250,000 to fund its operating costs, which will only be repaid upon consummation of the Business Combination;

 

    the anticipated election of Mr. Karl Peterson, Pace’s President and Chief Executive Officer, as a director of Holdco following the Business Combination;

 

    the continued indemnification of Pace existing directors and officers and the continuation of Pace’s directors’ and officers’ liability insurance after the Business Combination;

 

    the fact that Pace Sponsor and Pace’s officers and directors may not participate in the formation of, or become directors or officers of, any other blank check company until Pace (i) has entered into a definitive agreement regarding an initial business combination or (ii) fails to complete an initial business combination by September 16, 2017;

 

    the fact that Pace Sponsor and Pace’s officers and directors will lose their entire investment in Pace and will not be reimbursed for any out-of-pocket expenses (of which approximately $300 is owed as of the date hereof) if an initial business combination is not consummated by September 16, 2017;

 

    if the Trust Account is liquidated, including in the event Pace is unable to complete an initial business combination within the required time period, Pace Sponsor has agreed to indemnify Pace to ensure that the proceeds in the Trust Account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which Pace has entered into an acquisition agreement or claims of any third party for services rendered or products sold to Pace, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account; and

 

    that the PHC Investors have entered into the PHC Subscription Agreements with Pace, pursuant to which the PHC Investors have committed to purchase 1,015,000 Class A Shares for a purchase price of $10.00 per share, or an aggregate of $10,150,000. The PHC Investors may assign their rights under the PHC Subscription Agreements to one or more parties, subject to compliance with the securities laws.

Broker Non-Votes and Abstentions

Broker non-votes and abstentions are considered present for the purposes of establishing a quorum, but will have no effect on the Business Combination Proposal, the Pace Merger Proposal, the Holdco Articles of Association Proposal and the Adjournment Proposal.

 

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In general, if your shares are held in “street” name and you do not instruct your broker, bank or other nominee on a timely basis on how to vote your shares, your broker, bank or other nominee, in its sole discretion, may either leave your shares unvoted or vote your shares on routine matters, but not on any non-routine matters. None of the proposals at the Extraordinary General Meeting are routine matters. As such, without your voting instructions, your brokerage firm cannot vote your shares on any proposal to be voted on at the Extraordinary General Meeting.

Voting Your Shares — Shareholders of Record

If you are a Pace shareholder of record, you may vote by mail or in person at the Extraordinary General Meeting. Each Pace Ordinary Share that you own in your name entitles you to one vote on each of the proposals for the Extraordinary General Meeting. Your one or more proxy cards show the number of Pace Ordinary Shares that you own.

Voting by Mail. You can vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. By signing the proxy card and returning it in the enclosed prepaid and addressed envelope, you are authorizing the individuals named on the proxy card to vote your shares at the Extraordinary General Meeting in the manner you indicate. You are encouraged to sign and return the proxy card even if you plan to attend the Extraordinary General Meeting so that your shares will be voted if you are unable to attend the Extraordinary General Meeting. If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the Extraordinary General Meeting. If you sign and return the proxy card but do not give instructions on how to vote your shares, your Pace Ordinary Shares will be voted as recommended by the Pace Board. The Pace Board recommends voting “FOR” the Business Combination Proposal, “FOR” the Pace Merger Proposal, “FOR” the Holdco Articles of Association Proposal and “FOR” the Adjournment Proposal. Votes submitted by mail must be received by [●] on [●], 2017.

Voting in Person at the Meeting. If you attend the Extraordinary General Meeting and plan to vote in person, you will be provided with a ballot at the Extraordinary General Meeting. If your shares are registered directly in your name, you are considered the shareholder of record and you have the right to vote in person at the Extraordinary General Meeting. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should follow the instructions provided by your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the Extraordinary General Meeting and vote in person, you will need to bring to the Extraordinary General Meeting a legal proxy from your broker, bank or nominee authorizing you to vote these shares. That is the only way Pace can be sure that the broker, bank or nominee has not already voted your Pace Ordinary Shares.

Voting Your Shares — Beneficial Owners

If your shares are held in an account at a brokerage firm, bank or other nominee, then you are the beneficial owner of shares held in “street name” and this proxy statement/prospectus is being sent to you by that broker, bank or other nominee. The broker, bank or other nominee holding your account is considered to be the shareholder of record for purposes of voting at the Extraordinary General Meeting. As a beneficial owner, you have the right to direct your broker, bank or other nominee regarding how to vote the shares in your account by following the instructions that the broker, bank or other nominee provides you along with this proxy statement/prospectus. As a beneficial owner, if you wish to vote at the Extraordinary General Meeting, you will need to bring to the Extraordinary General Meeting a legal proxy from your broker, bank or other nominee authorizing you to vote those shares. Please see “— Attending the Extraordinary General Meeting” below for more details.

 

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Attending the Extraordinary General Meeting

Only Pace shareholders on the record date or their legal proxy holders may attend the Extraordinary General Meeting. To be admitted to the Extraordinary General Meeting, you will need a form of photo identification and valid proof of ownership of Pace Ownership Shares or a valid legal proxy. If you have a legal proxy from a shareholder of record, you must bring a form of photo identification and the legal proxy to the Extraordinary General Meeting. If you have a legal proxy from a “street name” shareholder, you must bring a form of photo identification, a legal proxy from the record holder (that is, the bank, broker or other holder of record) to the “street name” shareholder that is assignable, and the legal proxy from the “street name” shareholder to you. Shareholders may appoint only one proxy holder to attend on their behalf.

Revoking Your Proxy

If you give a proxy, you may revoke it at any time before the Extraordinary General Meeting or at the Extraordinary General Meeting by doing any one of the following:

 

    you may send another proxy card with a later date;

 

    you may notify Pace’s Secretary in writing to Pace Holdings Corp., 301 Commerce Street, Suite 3300, Fort Worth, Texas 776102, before the Extraordinary General Meeting that you have revoked your proxy; or

 

    you may attend the Extraordinary General Meeting, revoke your proxy, and vote in person, as indicated above.

No Additional Matters

The Extraordinary General Meeting has been called only to consider the approval of the Business Combination Proposal, the Pace Merger Proposal, the Holdco Articles of Association Proposal and the Adjournment Proposal. Under the amended and restated memorandum and articles of association of Pace, other than procedural matters incident to the conduct of the Extraordinary General Meeting, no other matters may be considered at the Extraordinary General Meeting if they are not included in this proxy statement/prospectus, which serves as the notice of the Extraordinary General Meeting.

Who Can Answer Your Questions About Voting

If you have any questions about how to vote or direct a vote in respect of your Pace Ordinary Shares, you may call Morrow, Pace’s proxy solicitor, at (800) 662-5200 (toll free), or banks and brokerage firms, please call collect at (203) 658-9400.

Redemption Rights

Pursuant to Pace’s amended and restated memorandum and articles of association, any holders of Pace public shares may demand that such shares be redeemed in exchange for a pro rata share of the aggregate amount on deposit in the Trust Account, less franchise and income taxes payable, calculated as of two business days prior to the consummation of the Business Combination. If demand is properly made and the Business Combination is consummated, these shares, immediately prior to the Business Combination, will cease to be outstanding and will represent only the right to receive a pro rata share of the aggregate amount on deposit in the Trust Account which holds a portion of the proceeds of the Pace IPO and the sale of the Private Placement Warrants (calculated as of two business days prior to the consummation of the Business Combination, less franchise and income taxes payable). For illustrative purposes, based on the fair value of marketable securities held in the Trust Account of approximately $450,783,729 as of December 31, 2016, the estimated per share redemption price would have been approximately $10.01.

 

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In order to exercise your redemption rights, you must:

 

    if you hold public units, separate the underlying public shares and public warrants;

 

    check the box on the enclosed proxy card to elect redemption;

 

    check the box on the enclosed proxy card marked “Shareholder Certification” if you are not acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) with any other shareholder with respect to Class A Shares;

 

    prior to [●] on [●], 2017 (two business days before the Extraordinary General Meeting), tender your shares physically or electronically and submit a request in writing that Pace redeem your public shares for cash to Continental Stock Transfer & Trust Company, the Transfer Agent, at the following address:

Continental Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attention: Mark Zimkind

Email: mzimkind@continentalstock.com

and

 

    deliver your public shares either physically or electronically through DTC’s DWAC system to the Transfer Agent at least two business days before the Extraordinary General Meeting. Shareholders seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the Transfer Agent and time to effect delivery. Shareholders should generally allot at least two weeks to obtain physical certificates from the Transfer Agent. However, it may take longer than two weeks. Shareholders who hold their shares in street name will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically. If you do not submit a written request and deliver your public shares as described above, your shares will not be redeemed.

Shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name” are required to either tender their certificates to the Transfer Agent prior to the date set forth in this proxy statement/prospectus, or up to two business days prior to the vote on the proposal to approve the Business Combination at the Extraordinary General Meeting, or to deliver their shares to the Transfer Agent electronically using DTC’s DWAC system, at such shareholder’s option. The requirement for physical or electronic delivery prior to the Extraordinary General Meeting ensures that a redeeming shareholder’s election to redeem is irrevocable once the Business Combination is approved.

Holders of outstanding public units must separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares.

If you hold public units registered in your own name, you must deliver the certificate for such public units to Continental Stock Transfer & Trust Company, the Transfer Agent, with written instructions to separate such public units into public shares and public warrants. This must be completed far enough in advance to permit the mailing of the public share certificates back to you so that you may then exercise your redemption rights upon the separation of the public shares from the public units.

If a broker, dealer, commercial bank, trust company or other nominee holds your public units, you must instruct such nominee to separate your public units. Your nominee must send written instructions by facsimile to Continental Stock Transfer & Trust Company, the Transfer Agent. Such written instructions must include the number of public units to be split and the nominee holding such public units. Your nominee must also initiate

 

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electronically, using DTC’s DWAC system, a withdrawal of the relevant units and a deposit of an equal number of public shares and public warrants. This must be completed far enough in advance to permit your nominee to exercise your redemption rights upon the separation of the public shares from the public units. While this is typically done electronically on the same business day, you should allow at least one full business day to accomplish the separation. If you fail to cause your public units to be separated in a timely manner, you will likely not be able to exercise your redemption rights.

Each redemption of Class A Share by Pace’s public shareholders will reduce the amount in the Trust Account, which held marketable securities with a fair value of approximately $450,628,095 as of September 30, 2016. The Transaction Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the amount in the Trust Account (net of the amount of any Pace shareholder redemptions) and the proceeds from the Private Placement, equaling or exceeding $375,000,000 (net of the aggregate amount of cash required to satisfy any exercise by Pace shareholders of their right to have Pace redeem their Class A Shares in connection with a Business Combination (as such term is defined in Pace’s articles of association) and subject to a reduction to an amount no less than $325,000,000 in connection with any Hyatt Preferred Share Adjustment). The conditions to closing in the Transaction Agreement are for the sole benefit of the parties thereto and may be waived by such parties. If, as a result of redemptions of Class A Shares by Pace’s public shareholders, this condition is not met or is not waived, then each of Pace and Playa may elect not to consummate the Business Combination. In addition, in no event will Pace redeem its Class A Shares in an amount that would cause its net tangible assets to be less than $5,000,001, as provided in Pace’s amended and restated memorandum and articles of association and as required as a closing condition to each party’s obligation to consummate the Business Combination under the terms of the Transaction Agreement.

Prior to exercising redemption rights, Pace shareholders should verify the market price of the Class A Shares, as shareholders may receive higher proceeds from the sale of their Class A Shares in the public market than from exercising their redemption rights if the market price per share is higher than the redemption price. There is no assurance that you will be able to sell your Class A Shares in the open market, even if the market price per share is higher than the redemption price stated above, as there may not be sufficient liquidity in the Class A Shares when you wish to sell your shares.

If you exercise your redemption rights, your Class A Shares will cease to be outstanding immediately prior to the Business Combination and will only represent the right to receive a pro rata share of the aggregate amount then on deposit in the Trust Account. You will no longer own those shares and you will not receive any Holdco Shares in the Business Combination. You will have no right to participate in, or have any interest in, the future growth of Holdco, if any. You will be entitled to receive cash for your Class A Shares only if you properly and timely demand redemption.

If the Business Combination is not approved and Pace does not consummate an initial business combination by September 16, 2017, Pace will be required to dissolve and liquidate the Trust Account by returning the then remaining funds in such account to the public shareholders and all of Pace’s warrants will expire worthless.

Appraisal Rights

With respect to the Pace Merger, the Cayman Islands Companies Law provides for a right of dissenting shareholders, in certain situations, to be paid the fair value of their shares upon their dissenting to the merger if they follow a prescribed procedure. That procedure is as follows:

 

    the shareholder must give their written objection to the merger or consolidation to the exempted company before the vote on the merger or consolidation, including a statement that the shareholder proposes to demand payment for their shares if the merger or consolidation is authorized by the vote;

 

    within 20 days following the date on which the merger or consolidation is approved by the shareholders, the exempted company must give written notice to each shareholder who made a written objection;

 

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    a shareholder must within 20 days following receipt of such notice from the exempted company, give the exempted company a written notice of their intention to dissent including, among other details, a demand for payment of the fair value of their shares;

 

    within seven days following the date of the expiration of the period set out in paragraph (b) above or seven days following the date on which the plan of merger or consolidation is filed, whichever is later, the exempted company, the surviving company or the consolidated company must make a written offer to each dissenting shareholder to purchase their shares at a price that the company determines is the fair value and if the exempted company and the shareholder agree the price within 30 days following the date on which the offer was made, the exempted company must pay the shareholder such amount;

 

    if the exempted company and the shareholder fail to agree a price within such 30 day period, within 20 days following the date on which such 30 day period expires, the exempted company (and any dissenting shareholder) must file a petition with the Cayman Islands Grand Court to determine the fair value and such petition must be accompanied by a list of the names and addresses of the dissenting shareholders with whom agreements as to the fair value of their shares have not been reached by the exempted company.

At the hearing of that petition, the court has the power to determine the fair value of the shares together with a fair rate of interest, if any, to be paid by the exempted company upon the amount determined to be the fair value. Any dissenting shareholder whose name appears on the list filed by the exempted company may participate fully in all proceedings until the determination of fair value is reached. These rights of a dissenting shareholder are not be available in certain circumstances, for example, to dissenters holding shares of any class in respect of which an open market exists on a recognized stock exchange or recognized interdealer quotation system at the relevant date or where the consideration for such shares to be contributed are shares of any exempted company listed on a national securities exchange or shares of the surviving or consolidated company. However, because Pace shareholders currently hold Pace Ordinary Shares that are listed on NASDAQ and will receive Holdco Shares that will be listed on NASDAQ, Pace does not believe that dissenters rights are available to Pace shareholders in connection with the Business Combination.

Appraisal rights are not available to holders of Playa Common Shares in connection with the Business Combination.

Proxy Solicitation Costs

Pace is soliciting proxies on behalf of the Pace Board. This proxy solicitation is being made by mail, but also may be made by telephone or in person. Pace has engaged Morrow to assist in the solicitation of proxies for the Extraordinary General Meeting. Pace and its directors, officers and employees may also solicit proxies in person. Pace will ask banks, brokers and other institutions, nominees and fiduciaries to forward this proxy statement/prospectus and the related proxy materials to their principals and to obtain their authority to execute proxies and voting instructions.

Pace will bear the entire cost of the proxy solicitation, including the preparation, assembly, printing, mailing and distribution of this proxy statement/prospectus and the related proxy materials. Pace will pay Morrow a fee of $25,000, plus disbursements, reimburse Morrow for its reasonable out-of-pocket expenses and indemnify Morrow and its affiliates against certain claims, liabilities, losses, damages and expenses for their services as Pace’s proxy solicitor. Pace will reimburse brokerage firms and other custodians for their reasonable out-of-pocket expenses for forwarding this proxy statement/prospectus and the related proxy materials to Pace shareholders. Directors, officers and employees of Pace who solicit proxies will not be paid any additional compensation for soliciting.

 

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THE BUSINESS COMBINATION

General

On December 13, 2016, Pace, Playa, Holdco and New Pace entered into a Transaction Agreement (as it may be amended from time to time, the “Transaction Agreement”), which provides for, among other things: (i) the issuance by Pace of the Pace Earnout Warrants to Pace Sponsor; (ii) the entry by Pace into the Securities Purchase Agreements with the Playa Preferred Shareholders; (iii) the Pace Merger; (iv) the Distribution; (v) the Playa Preferred Share Acquisition; and (vi) the Playa Merger. For more information about the transactions contemplated in the Transaction Agreement, please see the section entitled “The Transaction Agreement and Related Agreements.” A copy of the Transaction Agreement is attached to this proxy statement/prospectus as Annex A.

Structure of the Business Combination

In connection with the closing of the Business Combination contemplated by the Transaction Agreement, the parties will undertake the following transactions:

 

    the issuance by Pace of the Pace Earnout Warrants to Pace Sponsor;

 

    the conversion of Holdco into a Dutch public limited liability company (naamloze vennootschap) and the amendment of the articles of association of Holdco;

 

    the Pace Merger;

 

    the distribution by New Pace to Holdco of an amount equal to the sum of (x) the aggregate amount of cash held by New Pace at such time and (y) the aggregate amount paid by the Private Placement Investors pursuant to and in accordance with the Subscription Agreements (the “Distribution”); and

 

    the acquisition of all of the Playa Preferred Shares from the Playa Preferred Shareholders by Holdco, as Pace’s successor in interest under the Securities Purchase Agreements, in consideration for an aggregate amount calculated based on an aggregate amount equal to $8.40 for each outstanding Playa Preferred Share, for an aggregate consideration value equal to approximately $346,000,000 (which includes accrued but unpaid dividends on the Playa Preferred Shares through December 31, 2016), plus any additional arrearages and additional accrued but unpaid dividends thereon after December 31, 2016 through the closing of the Business Combination, subject to adjustment, in the case of the acquisition of Playa Preferred Shares from HI Holdings Playa, if any of the Playa Preferred Shares are converted into Playa Common Shares following the date of the Transaction Agreement pursuant to the Securities Purchase Agreement entered into with HI Holdings Playa.

The Playa Merger will become effective at midnight (24:00 hours) CET on the date of execution of the notarial deed of merger effecting the Playa Merger (the “Playa Merger Effective Time”). At the Playa Merger Effective Time, (i) each Playa Common Share issued and outstanding immediately prior to the Playa Merger Effective Time will (A) be exchanged for the number of validly issued, fully paid and non-assessable Holdco Shares calculated in accordance with the principles set forth in the Transaction Agreement, (B) entitle the holder thereof to receive the number of Holdco Private Placement Warrants calculated in accordance with the principles set forth in the Transaction Agreement and (C) entitle the holder thereof to receive the number of Playa Earnout Warrants calculated in accordance with the principles set forth in the Transaction Agreement; and (ii) the consideration to be paid to the Playa Preferred Shareholders in connection with the Playa Preferred Share Acquisition will be calculated based on an aggregate amount equal to $8.40 for each outstanding Playa Preferred Share (plus any arrearages and accrued and unpaid dividends thereon through December 31, 2016), for an aggregate consideration value of approximately $346,000,000 (which includes accrued but unpaid dividends on the Playa Preferred Shares through December 31, 2016), plus any additional arrearages and additional accrued but unpaid dividends thereon after December 31, 2016 through the closing of the Business Combination,

 

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subject to adjustment, in the case of the acquisition of Playa Preferred Shares from HI Holdings Playa, if any of the Playa Preferred Shares are converted into Playa Common Shares following the date of the Transaction Agreement pursuant to the Securities Purchase Agreement entered into with HI Holdings Playa which, following the Playa Preferred Share Acquisition, will be held by Holdco as Pace’s successor in interest under the Securities Purchase Agreements.

Consideration in the Business Combination

Consideration to Pace Shareholders and Warrant Holders in the Business Combination

Subject to the terms and conditions of the Transaction Agreement, the consideration to be paid to the Pace shareholders and warrantholders in connection with the Pace Merger will consist of: (i) Holdco Shares, (ii) Holdco Private Placement Warrants, (iii) Holdco Public Warrants and (iv) Holdco Earnout Warrants. The number of Holdco Shares, Holdco Private Placement Warrants, Holdco Public Warrants and Holdco Earnout Warrants to be received by the Pace securitiesholders will be determined as follows:

 

    each Pace unit will be cancelled in exchange for consideration consisting of (A) the right to receive one validly issued, fully paid and non-assessable New Pace Class A Share, which will be issued to the exchange agent and, immediately after the Pace Merger and prior to the consummation of the Playa Merger, exchanged for one validly issued, fully paid and non-assessable Holdco Share to be issued to the exchange agent against a contribution in kind to Holdco, and (B)&nb