PROXY
STATEMENT
The
extraordinary general meeting (the “extraordinary general meeting”) of shareholders of Garnero Group Acquisition Company
(“GGAC,” “Company,” “we,” “us” or “our”), a Cayman Islands exempted
company, will be held at 11:00 a.m. EDT on June 23, 2016, at the offices of GGAC’s counsel Graubard Miller, 405 Lexington
Avenue, New York, New York 10174, for the sole purpose of considering and voting upon the following proposals:
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a proposal to amend
(the “Extension Amendment”) GGAC’s amended and restated memorandum and articles of association (the “charter”)
to extend the date by which GGAC has to consummate a business combination (the “Extension”) to July 22, 2016 (the
“Extended Date”); and
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a proposal to amend
(the “Conversion Amendment”) GGAC’s charter to allow the holders of ordinary shares issued in GGAC’s
initial public offering (the “IPO”, and such shares sold in the IPO are referred to as the “public shares”)
to elect to convert their public shares into their pro rata portion of the funds held in the trust account established at
the time of the IPO (the “trust account”) if the Extension is implemented (the “Conversion”).
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The
Extension Amendment and the Conversion Amendment proposals are essential to the overall implementation of the board of directors’
plan to extend the date that GGAC has to complete a business combination. The purpose of the Extension Amendment and the
Conversion Amendment is to allow GGAC more time to complete its previously announced proposed business combination with Q1 Comercial
de Roupas S.A. (“Grupo Colombo”) pursuant to the First Amended and Restated Investment Agreement (“Investment
Agreement”), dated as of December 17, 2015, as amended on June 10, 2016, by and among GGAC, Grupo Colombo, Alvaro Jabur
Maluf Jr. and Paulo Jabur Maluf (the “Controlling Persons”) and the persons listed under the caption “Optionholder”
on the signature pages thereto (the “Optionholders”).
Approval
of the Extension Amendment and the Conversion Amendment is a condition to the implementation of the Extension. In addition, we
will not proceed with the Extension if we do not have at least $5,000,001 of net tangible assets following approval of the Extension
Amendment and the Conversion Amendment proposals, after taking into account the Conversion.
If
the Extension Amendment and the Conversion Amendment proposals are not approved, and we have not consummated the business combination
with Grupo Colombo,
we will automatically wind up, liquidate and dissolve starting on June
25, 2016,
as contemplated by our IPO prospectus and in accordance with our charter
.
In connection therewith, holders of our public shares will receive a per-share amount, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including any interest not previously released to us but net of income taxes payable,
divided by the number of then outstanding public shares
.
The
initial shareholders have waived their rights to participate in any liquidation distribution with respect to their initial shares.
As a consequence of such waivers, a liquidating distribution will be made only with respect to the public shares. There will be
no distribution from the trust account with respect to GGAC’s rights or warrants, which will expire worthless in the event
we wind up.
If
there is no Extension and Conversion and GGAC dissolves and liquidates, Mr. Garnero has agreed that he will be personally liable
to pay debts and obligations to third parties or target businesses that are owed money by us for services rendered or contracted
for or products sold to us in excess of the net proceeds of this offering not held in the trust account but only if, and to the
extent, that the claims would otherwise reduce the amount in the trust account payable to its public shareholders in the event
of a liquidation, and only if such a third party or prospective target business does not execute a waiver. There is no assurance,
however, that he will be able to satisfy those obligations. Based on the cash available to GGAC outside of its trust account for
working capital and GGAC’s outstanding expenses owed to all creditors (both those that have signed trust fund waivers and
those that have not), it is not anticipated that Mr. Garnero will have any indemnification obligations. Accordingly, regardless
of whether an indemnification obligation exists, the per share liquidation price for the public shares is anticipated to be approximately
$10.05 per share. Nevertheless, GGAC cannot assure you that the per share distribution from the trust account, if GGAC liquidates,
will not be less than approximately $10.05 due to unforeseen claims of creditors.
If
the Extension Amendment and the Conversion Amendment proposals are approved, the approval of the Conversion will constitute consent
for GGAC to (i) remove from the trust account an amount (the “Withdrawal Amount”) equal to the pro rata portion of
funds available in the trust account relating to the converted public shares and (ii) deliver to the holders of such converted
public shares their pro rata portion of the Withdrawal Amount. The remainder of such funds shall remain in the trust
account and be available for use by GGAC to complete a business combination on or before the Extended Date. Holders
of public shares who do not convert their public shares now, will retain their conversion rights and their ability to vote on
a business combination through the Extended Date if the Extension Amendment is approved. At the time the Extension Amendment becomes
effective, GGAC will also amend the trust account agreement to (i) permit the withdrawal of the Withdrawal Amount from the trust
account and (ii) extend the date on which to liquidate the trust account to the Extended Date.
The
record date for the extraordinary general meeting is May 31, 2016. Record holders of GGAC ordinary shares at the close
of business on the record date are entitled to vote or have their votes cast at the extraordinary general meeting. On
the record date, there were 18,602,813 outstanding ordinary shares of GGAC including 14,375,000 outstanding public shares. GGAC’s
rights and warrants do not have voting rights.
This
proxy statement contains important information about the extraordinary general meeting and the proposals. Please read
it carefully and vote your shares.
This
proxy statement is dated June 17, 2016 and is first being mailed to shareholders on or about that date.
QUESTIONS
AND ANSWERS ABOUT THE EXTRAORDINARY GENERAL MEETING
These
Questions and Answers are only summaries of the matters they discuss. They do not contain all of the information that
may be important to you. You should read carefully the entire document, including the annexes to this proxy statement.
Q.
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Why
am I receiving this proxy statement?
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A. GGAC
is a blank check company formed in February 2014 for the purpose of entering into a merger, share exchange, asset
acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more
businesses or entities. In July 2014, GGAC consummated its IPO from which it derived gross proceeds of
approximately $143,750,000, including proceeds from the exercise of the underwriters’ over-allotment
option. Like most blank check companies, GGAC’s charter provides for the return of the IPO proceeds
held in trust to the holders of ordinary shares sold in the IPO if there is no qualifying business combination(s)
consummated on or before a certain date (in our case, June 25, 2016). The board of directors believes that it
is in the best interests of the shareholders to continue GGAC’s existence until the Extended Date in order to allow
GGAC more time to complete its previously announced business combination with Grupo Colombo.
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Q.
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What
is being voted on?
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A.
You are being asked to vote on:
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a
proposal to amend GGAC’s charter to extend the date by which GGAC has to consummate
a business combination to the Extended Date; and
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a
proposal to amend GGAC’s charter to allow the holders of public shares to elect
to convert their public shares into their pro rata portion of the funds held in the trust
account if the Extension is implemented.
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The
Extension Amendment and the Conversion Amendment proposals are essential to the overall
implementation of the board of directors’ plan to extend the date that GGAC has
to complete a business combination. Approval of the Extension Amendment and the
Conversion Amendment is a condition to the implementation of the Extension.
If
the Extension is implemented, the shareholder’s approval of the Conversion Amendment proposal will constitute consent
for GGAC to remove the Withdrawal Amount from the trust account, deliver to the holders of such converted public shares
their pro rata portion of the Withdrawal Amount and retain the remainder of the funds in the trust account for GGAC’s
use in connection with consummating a business combination on or before the Extended Date.
We
will not proceed if we do not have at least $5,000,001 of net tangible assets following approval of the Extension Amendment
and Conversion Amendment proposals, after taking into account the Conversion.
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If
the Extension Amendment and Conversion Amendment proposals are not approved, and we have not consummated the business combination
with Grupo Colombo,
we will automatically wind up, liquidate and dissolve starting on June
25, 2016,
as contemplated by our IPO prospectus and
in accordance with our charter.
In connection therewith, holders of our public shares will receive a per-share amount, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including any interest not previously released to us but net of income taxes payable,
divided by the number of then outstanding public shares.
The initial shareholders
have waived their rights to participate in any liquidation distribution with respect to their initial shares. There
will be no distribution from the trust account with respect to our rights or warrants, which will expire worthless in the event
we wind up. GGAC will pay the costs of liquidation from its remaining assets outside of the trust account. If
such funds are insufficient, Mr. Garnero has agreed to advance GGAC the funds necessary to complete such liquidation (currently
anticipated to be no more than approximately $15,000) and agreed not to seek repayment of such expenses.
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Q.
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Why
is the Company proposing the Extension Amendment and the Conversion Amendment proposals?
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A. GGAC’s
charter provides for the return of the IPO proceeds held in trust to the holders of ordinary
shares sold in the IPO if there is no qualifying business combination(s) consummated
on or before June 25, 2016. As we explain below, GGAC may not be able to complete
the business combination with Grupo Colombo by that date.
On
December 17, 2015, GGAC entered into the Investment Agreement with Grupo Colombo, the Controlling Persons and the Optionholders.
Pursuant to the Investment Agreement, the Controlling Persons and the Optionholders will contribute to GGAC all of Grupo
Colombo’s equity, as a result of which Grupo Colombo will become a wholly-owned subsidiary of GGAC.
The
foregoing summary of the terms of the Investment Agreement is qualified in all respects by reference to the complete text
of the Investment Agreement, which is attached as Annex A to GGAC’s definitive proxy statement filed with the SEC
on March 31, 2016.
Headquartered
in São Paulo, Grupo Colombo is one of Brazil’s leading retailers focusing on menswear, with approximately
400 stores throughout the country. Grupo Colombo has recently diversified from formalwear into smart casual clothes and
has strengthened its online presence to become, according to Exame Magazine, one of the three most valuable brands within
the Brazilian apparel retail sector.
The
proposed business combination with Grupo Colombo qualifies as a “business combination” under GGAC’s
charter. However, GGAC may not be able to consummate the business combination with Grupo Colombo by June 25, 2016 given
the actions that must occur prior to closing.
GGAC
believes the proposed business combination with Grupo Colombo would be in the best interests of GGAC’s shareholders,
and because GGAC may not be able to conclude the business combination within the permitted time period, GGAC has determined
to seek shareholder approval to extend the date by which GGAC has to complete a business combination.
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GGAC
believes that given GGAC’s expenditure of time, effort and money on the proposed business combination with Grupo Colombo,
circumstances warrant providing public shareholders an opportunity to consider the proposed business combination with Grupo
Colombo. Accordingly, GGAC’s board of directors is proposing the Extension Amendment to extend GGAC’s corporate
existence until the Extended Date and to allow for the Conversion.
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You
are not being asked to vote on any proposed business combination at this time. If the Extension is implemented and you do
not elect to convert your public shares, you will retain the right to vote on the proposed business combination with Grupo
Colombo when it is submitted to shareholders and the right to convert your public shares into a pro rata portion of the trust
account in the event a proposed business combination is approved and completed or the Company has not consummated a business
combination by the Extended Date.
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Q.
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Why
should I vote for the Extension Amendment?
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A. GGAC’s
board of directors believes shareholders will benefit from GGAC consummating a business
combination and is proposing the Extension Amendment to extend the date by which GGAC
has to complete a business combination until the Extended Date and to allow for the Conversion.
The Extension would give GGAC a longer period of time to complete the proposed business
combination with Grupo Colombo.
GGAC’s
charter purports to prohibit amendment to certain of its provisions, including any amendment that would extend its corporate
existence beyond the deadline discussed above, except in connection with, and effective upon consummation of, a business
combination. GGAC’s IPO prospectus did not suggest in any way that this charter provision, or the charter’s
other business combination procedures, were subject to change. We believe that these charter provisions were included
to protect GGAC shareholders from having to sustain their investments for an unreasonably long period, if GGAC failed
to find a suitable business combination in the timeframe contemplated by the charter, and the application of those investments
without the shareholder review customarily provided for them. We also believe, however, that given GGAC’s expenditure
of time, effort and money on the potential business combination with Grupo Colombo, circumstances warrant providing those
who believe they might find the potential business combination to be an attractive investment with an opportunity to consider
such a transaction, inasmuch as GGAC is also affording shareholders who wish to convert their public shares as originally
contemplated, the opportunity to do so as well. Accordingly, we believe that the Extension is consistent with the spirit
in which GGAC offered its securities to the public. As a result, GGAC’s board of directors recommend that you vote
in favor of the Extension Amendment.
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Q.
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Should
I vote for the Conversion Amendment?
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A.
Approval of the Conversion Amendment is a condition to the implementation of the Extension
Amendment.
Whether
a holder of public shares votes in favor of or against the Extension Amendment, the holder may, but is not required to,
convert all or a portion of its public shares into the pro rata portion of the trust account represented by the converted
shares. In order to convert your public shares, you must vote in favor of the Conversion Amendment; however,
if you vote in favor of the Conversion Amendment, you are not required to convert your public shares. We will not
proceed if we do not have at least $5,000,001 of net tangible assets following approval of the Extension Amendment and
the Conversion Amendment proposals, after taking into account the Conversion.
Liquidation
of the trust account is a fundamental obligation of GGAC to the public shareholders and GGAC is not proposing and will
not propose to change that obligation to the public shareholders. If holders of public shares do not elect
to convert their public shares, such holders shall retain conversion rights in connection with any future business combination
GGAC proposes, including with Grupo Colombo
.
Assuming the Extension Amendment is approved, GGAC will
have until the Extended Date to complete a business combination.
GGAC’s
board of directors recommends that you vote in favor of the Conversion Amendment proposal, but expresses no opinion as
to whether you should convert your public shares.
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Q.
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How
do the GGAC insiders intend to vote their shares?
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A. All
of GGAC’s directors, executive officers, initial shareholders and their respective
affiliates are expected to vote any ordinary shares over which they have voting control
(including any public shares owned by them) in favor of the Extension Amendment and Conversion
Amendment proposals.
GGAC’s
directors, executive officers, initial shareholders and their respective affiliates are not entitled to convert the initial
shares. With respect to shares purchased on the open market by GGAC’s directors, executive officers and their respective
affiliates, such public shares may be converted. On the record date, GGAC’s directors, executive officers,
initial shareholders and their affiliates beneficially owned and were entitled to vote 3,593,750 initial shares and 562,188
ordinary shares included in units they purchased privately in connection with the IPO (the “private units”
and the shares included within such private units, the “private shares”), representing approximately 22% of
GGAC’s issued and outstanding ordinary shares. GGAC’s directors, executive officers, initial shareholders
and their affiliates did not beneficially own any public shares as of such date.
Pursuant to the Investment
Agreement, the Controlling Persons have committed to purchase, directly or through other entities acting at their direction,
$10 million of GGAC ordinary shares in the public market. Such shares will be voted in favor of the Extension Amendment
and the Conversion Amendment proposals and will not be converted. Furthermore,
GGAC’s
or Grupo Colombo’s directors, executive officers, initial shareholders and their affiliates may choose to buy additional
public shares in the open market and/or through negotiated private purchases. In the event that such additional purchases
do occur, the purchasers may seek to purchase shares from shareholders who would otherwise have voted against the Extension
Amendment and Conversion Amendment proposals or elected to convert their shares into a portion of the trust account. Any
additional public shares purchased by affiliates of GGAC or Grupo Colombo also will be voted in favor of the Extension
Amendment and the Conversion Amendment proposals and will not be converted.
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Q.
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What
amount will holders receive upon consummation of a subsequent business combination or liquidation if the Extension Amendment
is approved?
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A. If
the Extension Amendment and Conversion Amendment are approved and the Extension is completed, the conversion amount per share
in any subsequent business combination or liquidation will be approximately $10.05 per share, which is the same as the conversion
amount if a shareholder elects to exercise his or her conversion rights in connection with the Extension.
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Q.
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What
vote is required to adopt the Extension Amendment and Conversion Amendment?
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A. Approval
of each of the Extension Amendment and Conversion Amendment will require a special resolution
under Cayman Islands law and our charter. A special resolution is a resolution passed
by a majority of at least two-thirds of members who, being entitled to do so, vote at
the extraordinary general meeting. Approval of the Conversion Amendment is a condition
to the implementation of the Extension Amendment.
Any
holder of public shares that votes in favor of the Conversion Amendment may convert all or a portion of their public shares
into their pro rata portion of the trust account. In order to convert your public shares, you must vote in
favor of the Conversion Amendment; however, if you vote in favor of the Conversion Amendment, you are not required to
convert your public shares.
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Q.
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Since
GGAC’s IPO prospectus states that GGAC would not amend the business combination-related provisions in its charter except
in connection with a business combination, what are my legal rights?
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A.
You should be aware that GGAC’s IPO prospectus stated that GGAC would not take any action to amend or waive its business
combination-related provisions of its charter (except in connection with, and upon the effectiveness of, a business combination),
including, to allow it to survive for a longer period of time. As a result, each shareholder may have securities law claims
against GGAC for rescission (under which a successful claimant has the right to receive the total amount paid for his or her
securities pursuant to an allegedly deficient prospectus, plus interest and less any income earned on the securities, in exchange
for surrender of the securities) or damages (compensation for loss on an investment caused by alleged material misrepresentations
or omissions in the sale of a security). For more information, see “
The Extension Amendment and Conversion Amendment
Proposals—Possible Claims Against and Impairment of the Trust Account
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Q.
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What
if I don’t want to vote for the Extension Amendment or Conversion Amendment proposals?
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A.
If you do not want the Extension Amendment or Conversion Amendment proposals to be approved, you must vote against the proposals. If
the Extension Amendment or the Conversion Amendment proposals are approved, and the Extension is implemented, then the Withdrawal
Amount will be withdrawn from the trust account and paid to the converting holders.
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Q.
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Will
you seek any further extensions to liquidate the trust account?
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A. Other
than the extension until the Extended Date as described in this proxy statement, GGAC does not anticipate seeking any further
extension to consummate a business combination. GGAC has provided that all holders of public shares, including
those who vote against the Extension Amendment, but not those who vote against the Conversion Amendment, may elect to convert
their public shares into their pro rata portion of the trust account and should receive the funds shortly after the shareholder
meeting which is scheduled for June 23, 2016. Those holders of public shares who elect not to convert their
shares now shall retain conversion rights with respect to future business combinations, or, if no future business combination
is brought to a vote of the shareholders or if a business combination is not completed for any reason, such holders shall
be entitled to their pro rata portion of the trust account on the Extended Date.
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Q.
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What
happens if the Extension Amendment is not approved?
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A. If
the Extension Amendment is not approved and we do not complete the business combination with Grupo Colombo, we will automatically
liquidate, wind up and dissolve starting on June 25, 2016 as contemplated by our IPO prospectus and in accordance with our charter. GGAC’s
initial shareholders waived their rights to participate in any liquidation distribution with respect to their initial shares. There
will be no distribution from the trust account with respect to our rights or warrants which will expire worthless in the event
we wind up. GGAC will pay the costs of liquidation from its remaining assets outside of the trust account, which it
believes are sufficient for such purposes. If such funds are insufficient, Mr. Garnero has agreed to advance us the
funds necessary to complete such liquidation (currently anticipated to be no more than approximately $15,000) and has agreed not
to seek repayment of such expenses.
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Q.
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If
the Extension Amendment and Conversion Amendment proposals are approved, what happens next?
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A. GGAC
is continuing its efforts to complete the proposed business combination with Grupo Colombo,
which will involve:
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Grupo
Colombo finalizing the previously disclosed financial restructuring;
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distributing
updated proxy materials to shareholders in connection with their consideration of the
proposed business combination; and
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holding the extraordinary general meeting to consider the proposed
business combination with Grupo Colombo.
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If
the Extension Amendment and Conversion Amendment proposals are approved, GGAC will have until the Extended Date to complete
a business combination. GGAC will remain a reporting company under the Securities Exchange Act of 1934 and its units, ordinary
shares, rights and warrants will remain publicly traded.
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If
the Extension Amendment and Conversion Amendment proposals are approved, the removal of the Withdrawal Amount from the trust
account will reduce the amount remaining in the trust account and increase the percentage interest of GGAC’s ordinary
shares held by GGAC’s officers, directors, initial shareholders and their affiliates.
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Q.
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Would
I still be able to exercise my conversion rights if I vote against the proposed business combination with Grupo Colombo?
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A. Unless
you elect to convert your shares, you will be able to vote on the proposed business combination with Grupo Colombo when it
is submitted to shareholders. If you disagree with the business combination, you will retain your right to convert your public
shares upon consummation of a business combination in connection with the shareholder vote to approve the business combination,
subject to any limitations set forth in the charter.
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Q.
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How
do I change my vote?
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A. If
you have submitted a proxy to vote your shares and wish to change your vote, you may do so by delivering a later-dated, signed
proxy card to GGAC’s secretary prior to the date of the extraordinary general meeting or by voting in person at the
extraordinary general meeting. Attendance at the extraordinary general meeting alone will not change your vote. You
also may revoke your proxy by sending a notice of revocation to GGAC located at Av Brig. Faria Lima 1485 – 19 Andar,
Brasilinvest Plaza, Sao Paulo-SP, CEP 01452-002, Brazil, Attn: Corporate Secretary.
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Q.
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How
are votes counted?
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A. Votes
will be counted by the inspector of election appointed for the meeting, who will separately
count “FOR,” “AGAINST” and “ABSTAIN” votes. Each
of the Extension Amendment and Conversion Amendment proposals must be approved by a special
resolution (requiring at least two-thirds of members who, being entitled to do so, vote
at the extraordinary general meeting).
With
respect to the Extension Amendment and Conversion Amendment proposals, abstentions and broker non-votes will count towards
the quorum for the meeting but not towards the special resolution voting threshold. If your shares are held
by your broker as your nominee (that is, in “street name”), you may need to obtain a voting instruction form
from the institution that holds your shares and follow the instructions included on that form regarding how to instruct
your broker to vote your shares. If you do not give instructions to your broker, your broker can vote your
shares with respect to “discretionary” items, but not with respect to “non-discretionary” items. Discretionary
items are proposals considered routine under the rules of the New York Stock Exchange applicable to member brokerage firms. These
rules provide that for routine matters your broker has the discretion to vote shares held in street name in the absence
of your voting instructions. On non-discretionary items for which you do not give your broker instructions,
the shares will be treated as broker non-votes.
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Q.
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If
my shares are held in “street name,” will my broker automatically vote them for me?
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A. No.
Your broker can vote your shares only if you provide instructions on how to vote. You
should instruct your broker to vote your shares. Your broker can tell you
how to provide these instructions.
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Q.
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What
is a quorum requirement?
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A. A
quorum of shareholders is necessary to hold a valid meeting. The presence
in person or by proxy or, if a corporation or other non-natural person, by its duly authorized
representative, of the holders of a majority of the outstanding ordinary shares of GGAC
constitutes a quorum.
Your
shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your
broker, bank or other nominee) or if you vote in person at the extraordinary general meeting. Abstentions and
broker non-votes will be counted towards the quorum requirement but will not count as votes for the purposes of the voting
threshold. If there is no quorum present within half an hour of the time appointed for the meeting, the meeting
shall stand adjourned to the same day in the next week at the same time and place or to such other day, time and place
as the directors may determine.
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Q.
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Who
can vote at the extraordinary general meeting?
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A. Only
holders of record of GGAC’s ordinary shares at the close of business on May 31,
2016 are entitled to have their vote counted at the extraordinary general meeting and
any adjournments or postponements thereof. On this record date, 18,602,813
ordinary shares were outstanding and entitled to vote.
Shareholder
of Record: Shares Registered in Your Name
. If on the record date your shares were registered directly in
your name with GGAC’s transfer agent, Continental Stock Transfer & Trust Company, then you are a shareholder
of record. As a shareholder of record, you may vote in person at the extraordinary general meeting or vote
by proxy. Whether or not you plan to attend the extraordinary general meeting in person, we urge you to fill
out and return the enclosed proxy card to ensure your vote is counted.
Beneficial
Owner: Shares Registered in the Name of a Broker or Bank
. If on the record date your shares were held,
not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar organization, then you
are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to
you by that organization. As a beneficial owner, you have the right to direct your broker or other agent on
how to vote the shares in your account. You are also invited to attend the extraordinary general meeting. However,
since you are not the shareholder of record, you may not vote your shares in person at the extraordinary general meeting
unless you request and obtain a valid proxy from your broker or other agent.
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Q.
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Does
the board recommend voting for the approval of the Extension Amendment and the Conversion Amendment?
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A. Yes. After
careful consideration of the terms and conditions of these proposals, the board of directors of the Company has determined
that the Extension Amendment and the Conversion Amendment are fair to and in the best interests of GGAC and its shareholders. The
board of directors recommends that GGAC’s shareholders vote “FOR” the Extension Amendment and the Conversion
Amendment.
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Q.
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What
interests do the Company’s current directors and officers have in the approval of the proposals?
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A. GGAC’s
directors, officers, initial shareholders and their affiliates have interests in the proposals that may be different from,
or in addition to, your interests as a shareholder. These interests include ownership of certain securities of
the Company and loans by them that will not be repaid or converted into additional securities in the event of our winding
up. See the section entitled “
The Extension Amendment and Conversion Amendment Proposals—Interests
of GGAC’s Current Directors and Officers
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Q.
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What
if I object to the Extension Amendment and the Conversion Amendment? Do I have appraisal rights?
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A. GGAC
shareholders do not have appraisal rights in connection with the Extension Amendment or the Conversion Amendment under the
Companies Law (2013 Revision) of the Cayman Islands (the “Companies Law”).
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Q.
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What
happens to the GGAC rights and warrants if the Extension Amendment or Conversion Amendment is not approved?
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A. If the
Extension Amendment or Conversion Amendment is not approved, and we do not complete the business combination with Grupo Colombo,
we will automatically wind up, liquidate and dissolve effective starting on June 25, 2016. In such event, your
rights and warrants will become worthless.
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Q.
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What
happens to the GGAC rights and warrants if the Extension Amendment and Conversion Amendment proposals are approved?
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A. If
the Extension Amendment and Conversion Amendment proposals are approved, GGAC will continue to attempt to consummate a business
combination until the Extended Date, and will retain the blank check company restrictions previously applicable to it. The
rights and warrants will remain outstanding in accordance with their terms.
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Q.
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What
do I need to do now?
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A. GGAC
urges you to read carefully and consider the information contained in this proxy statement, including the annexes, and to
consider how the proposals will affect you as a GGAC shareholder. You should then vote as soon as possible in accordance
with the instructions provided in this proxy statement and on the enclosed proxy card.
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Q.
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How
do I vote?
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A. If
you are a holder of record of GGAC ordinary shares, you may vote in person at the extraordinary
general meeting or by submitting a proxy for the extraordinary general meeting. Whether
or not you plan to attend the extraordinary general meeting in person, we urge you to
vote by proxy to ensure your vote is counted. You may submit your proxy by
completing, signing, dating and returning the enclosed proxy card in the accompanying
pre-addressed postage paid envelope. You may still attend the extraordinary
general meeting and vote in person if you have already voted by proxy.
If
your shares of GGAC are held in “street name” by a broker or other agent, you have the right to direct your
broker or other agent on how to vote the shares in your account. You are also invited to attend the extraordinary
general meeting. However, since you are not the shareholder of record, you may not vote your shares in person
at the extraordinary general meeting unless you request and obtain a valid proxy from your broker or other agent.
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Q.
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How
do I convert my GGAC ordinary shares?
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A. If
the Extension is implemented, each public shareholder who votes in favor of the Conversion
Amendment may seek to convert his public shares for a pro rata portion of the funds available
in the trust account, less any income taxes owed on such funds but not yet paid, calculated
as if they had sought conversion of their shares in connection with any proposed business
combination proposal. You will also be able to convert your public shares in connection
with any shareholder vote to approve a proposed business combination, or if GGAC has
not consummated a business combination by the Extended Date.
To
demand conversion, you must check the box on the proxy card provided for that purpose and return the proxy card in accordance
with the instructions provided, and, at the same time, ensure you or your bank or broker complies with the requirements
identified elsewhere herein. You will only be entitled to receive cash in connection with a conversion of these shares
if you continue to hold them until the effective date of the Extension and Conversion. Any conversion referred to herein
shall take effect as a repurchase of shares as a matter of Cayman Islands law.
In connection with
tendering your shares for conversion, you must elect either to physically tender your share certificates to Continental
Stock Transfer & Trust Company, the Company’s transfer agent, at Continental Stock Transfer & Trust Company,
17 Battery Place, New York, New York 10004, Attn: Mark Zimkind, mzimkind@continentalstock.com, prior to the vote at the
extraordinary general meeting or to deliver your shares to the transfer agent electronically using The Depository Trust
Company’s DWAC (Deposit/Withdrawal At Custodian) System. The method you choose would likely be determined based
on the manner in which you hold your shares.
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Q.
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What
should I do if I receive more than one set of voting materials?
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A. You
may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards
or voting instruction cards, if your shares are registered in more than one name or are registered in different accounts. 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. Please complete, sign, date and return each proxy card and voting
instruction card that you receive in order to cast a vote with respect to all of your GGAC shares.
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Q.
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Who
is paying for this proxy solicitation?
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A. GGAC
will pay for the entire cost of soliciting proxies. In addition to these mailed proxy materials, our directors
and officers may also solicit proxies in person, by telephone or by other means of communication. Additionally,
Advantage Proxy, GGAC’s proxy solicitor in connection with the proposed business combination with Grupo Colombo, will
assist GGAC to solicit proxies for this meeting. These parties will not be paid any additional compensation for
soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy
materials to beneficial owners.
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Q.
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Who
can help answer my questions?
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A. If
you have questions about the proposals or if you need additional copies of the proxy
statement or the enclosed proxy card you should contact:
Garnero
Group Acquisition Company
Av
Brig. Faria Lima 1485 – 19 Andar
Brasilinvest
Plaza
Sao
Paulo-SP, CEP 01452-002
Brazil
Attn:
Javier Martin Riva
Telephone:
+55 (11) 3094-7970
or:
Advantage Proxy, Inc.
P.O. Box 13581
Des Moines, WA 98198
Toll Free Telephone: 877-870-8565
Main Telephone: 206-870-8565
E-mail: ksmith@advantageproxy.com
You
may also obtain additional information about the Company from documents filed with the SEC by following the instructions
in the section entitled “Where You Can Find More Information.”
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FORWARD-LOOKING
STATEMENTS
We
believe that some of the information in this proxy statement constitutes forward-looking statements. You can identify
these statements by forward-looking words such as “may,” “expect,” “anticipate,” “contemplate,”
“believe,” “estimate,” “intends,” and “continue” or similar words. You
should read statements that contain these words carefully because they:
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discuss
future expectations;
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contain
projections of future results of operations or financial condition; or
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state
other “forward-looking” information.
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We
believe it is important to communicate our expectations to our shareholders. However, there may be events in the future
that we are not able to predict accurately or over which we have no control. The cautionary language discussed in this
proxy statement provide examples of risks, uncertainties and events that may cause actual results to differ materially from the
expectations described by us in such forward-looking statements, including, among other things, claims by third parties against
the trust account, unanticipated delays in the distribution of the funds from the trust account and GGAC’s ability to finance
and consummate the proposed business combination with Grupo Colombo following the distribution of funds from the trust account. You
are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement.
All
forward-looking statements included herein attributable to GGAC or any person acting on GGAC’s behalf are expressly qualified
in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required
by applicable laws and regulations, GGAC undertakes no obligation to update these forward-looking statements to reflect events
or circumstances after the date of this proxy statement or to reflect the occurrence of unanticipated events.
BACKGROUND
GGAC
We
are a Cayman Islands exempted company incorporated on February 11, 2014 for the purpose of entering into a merger, share exchange,
asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses
or entities.
In
July 2014, we consummated our IPO of 14,375,000 units, including 1,875,000 units under the underwriters’ over-allotment
option, with each unit consisting of one ordinary share, one right to receive one-tenth of one ordinary share upon consummation
of a business combination and one warrant to purchase one-half of one ordinary share at a price of $11.50 per full share. The
units were sold at an offering price of $10.00 per unit, generating gross proceeds of $143,750,000.
Prior
to our IPO, our initial shareholders purchased an aggregate of 3,593,750 initial shares from us for an aggregate of $25,000, and
simultaneously with the consummation of the IPO, the insiders and the underwriters in the IPO purchased an aggregate of 634,063
units (the “private units”) for an aggregate of $6,340,630. The net proceeds of the IPO plus the proceeds
of the sale of the private units were deposited in the trust account. As of May 31, 2016, GGAC had approximately $144.5
million of cash in the trust account.
The
mailing address of GGAC principal executive office is Av Brig. Faria Lima 1485 – 19 Andar, Brasilinvest Plaza, Sao Paulo-SP,
CEP 01452-002, Brazil, and its telephone number is +55 (11) 3094-7970.
The
Proposed Business Combination with Grupo Colombo
On
December 17, 2015, GGAC entered into the Investment Agreement with Grupo Colombo, the Controlling Persons and the Optionholders.
On June 10, 2016, GGAC entered into an amendment to the Investment Agreement. Pursuant to the Investment Agreement, as amended,
the Controlling Persons and the Optionholders will contribute to GGAC all of Grupo Colombo’s equity, as a result of which
Grupo Colombo will become a wholly-owned subsidiary of GGAC.
Headquartered
in São Paulo, Grupo Colombo is one of Brazil’s leading retailers focusing on menswear, with approximately 400 stores
throughout the country. Grupo Colombo has recently diversified from formalwear into smart casual clothes and has strengthened
its online presence to become, according to Exame Magazine, one of the three most valuable brands within the Brazilian apparel
retail sector.
You
are not being asked to vote on any proposed business combination at this time. If the Extension is implemented and you do not
elect to convert your public shares, you will retain the right to vote on the proposed business combination with Grupo Colombo
when it is submitted to shareholders and the right to convert your public shares into a pro rata portion of the trust account
in the event a proposed business combination is approved and completed or the Company has not consummated a business combination
by the Extended Date.
THE
EXTENSION AMENDMENT AND CONVERSION AMENDMENT PROPOSALS
The
Extension Amendment Proposal
GGAC
is proposing to amend its charter to extend the date by which GGAC has to consummate a business combination to the Extended Date.
The
Extension Amendment and the Conversion Amendment are essential to the overall implementation of the board of directors’
plan to allow GGAC more time to complete a business combination. Approval of the Extension Amendment and the Conversion Amendment
is a condition to the implementation of the Extension.
If
the Extension Amendment proposal is not approved and the business combination with Grupo Colombo is not consummated, we will automatically
wind up, dissolve and liquidate starting on June 25, 2016.
The
board of directors believes that decisions regarding GGAC’s future, such as whether to continue its existence or have its
existence terminate, should be determined by GGAC’s current shareholders and they should not be bound by the restrictions
implemented by the shareholders at the time of the IPO. The current shareholders should not be prohibited from amending
the charter to allow GGAC to continue its existence, especially since all holders of public shares are being offered the opportunity
to convert their public shares and receive their pro rata portion of the trust account in connection with the approval of the
proposals which will occur close in time to June 25, 2016 as contemplated in the IPO prospectus. Additionally, given
GGAC’s expenditure of time, effort and money on the proposed business combination with Grupo Colombo, circumstances warrant
providing public shareholders an opportunity to consider the proposed business combination with Grupo Colombo.
The
Conversion Amendment Proposal
The
Conversion Amendment proposal allows the holders of public shares to elect to convert their public shares into their pro rata
portion of the funds held in the trust account if the Extension Amendment is approved. The Conversion Amendment proposal
will not be presented unless the Extension Amendment is approved. Approval of the Extension Amendment and the Conversion Amendment
is a condition to the implementation of the Extension. We will not proceed with the Extension if we do not have at least $5,000,001
of net tangible assets following approval of the Extension Amendment and Conversion Amendment proposals, after taking into account
the Conversion.
All
holders of GGAC’s public shares who vote in favor of the Conversion Amendment, whether they vote for or against the Extension
Amendment, are entitled to convert all or a portion of their public shares into their pro rata portion of the trust account, provided
that the Extension is implemented. Voting in favor of the Conversion Amendment does not require you to convert your
public shares. You must, however, vote in favor of the Conversion Amendment in order to convert your public shares.
A
public shareholder’s election to convert his public shares shall constitute consent for GGAC to remove the Withdrawal Amount
from the trust account relating to converted public shares, deliver to the holders of such shares so tendered such pro rata portion
of the trust account and leave the remainder of the funds in the trust account until the earlier to occur of (y) the completion
of a business combination or (z) the Extended Date.
GGAC
estimates that the per-share pro rata portion of the trust account will be approximately $10.05 at the time of the extraordinary
general meeting. The closing price of GGAC’s ordinary shares on May 31, 2016 was $9.53. Accordingly, if the market price
were to remain the same until the date of the meeting, exercising conversion rights would result in a public shareholder receiving
approximately $0.52 more than if he sold his shares in the open market. Even if the market price per share increases such that
it exceeds the conversion price stated above, GGAC cannot assure shareholders that they will be able to sell their shares in the
open market, as there may not be sufficient liquidity in its securities when such shareholders wish to sell their shares.
At
the time the Extension Amendment becomes effective, GGAC will also amend the trust account agreement to (i) permit the withdrawal
of the Withdrawal Amount from the trust account, and (ii) extend the date on which to liquidate the trust account to the Extended
Date.
The
full text of the Extension Amendment and Conversion Amendment resolutions are set forth in Annex A.
Reasons
for the Proposals
GGAC’s
IPO prospectus and charter provided that GGAC had until June 25, 2016 to complete a business combination. GGAC and its officers
and directors agreed that it would not seek to amend GGAC’s charter to allow for a longer period of time to complete a business
combination. GGAC has determined that it may not be able to consummate a business combination by June 25, 2016. Accordingly, GGAC
is proposing the Extension Amendment and Conversion Amendment proposals to allow for a longer period of time to complete a business
combination. GGAC’s IPO prospectus and charter stated that GGAC would not take any action to amend or waive these provisions
(except in connection with, and to be effective upon, a business combination) to allow it to survive for a longer period of time
if it did not appear it would be able to consummate a business combination by June 25, 2016. Notwithstanding the foregoing, because
GGAC believes the proposed business combination with Grupo Colombo to be in the best interests of GGAC’s shareholders, and
because GGAC may not be able to complete the proposed business combination by June 25, 2016, GGAC has determined to seek shareholder
approval to extend the time for closing a business combination beyond June 25, 2016 to the Extended Date. If the Extension Amendment
and Conversion Amendment are approved, GGAC expects to seek shareholder approval of such business combination once the previously
disclosed financial reorganization is finalized and all other conditions necessary to complete the transaction are fulfilled.
We
believe that the foregoing charter provisions were included to protect GGAC shareholders from having to sustain their investments
for an unreasonably long period if GGAC failed to find a suitable business combination in the timeframe contemplated by the charter,
and the application of those investments without the shareholder review customarily provided for them. We also believe, however,
that given GGAC’s expenditure of time, effort and money on the potential business combination with Grupo Colombo, circumstances
warrant providing those who believe they might find the potential business combination to be an attractive investment with an
opportunity to consider such a transaction, inasmuch as GGAC is also affording shareholders who wish to convert their public shares
as originally contemplated, the opportunity to do so as well. Accordingly, we believe that the Extension Amendment and Conversion
Amendment proposals are consistent with the spirit in which GGAC offered its securities to the public.
If
the Extension Amendment or Conversion Amendment Proposals Are Not Approved
If
the Extension Amendment or Conversion Amendment proposals are not approved and GGAC does not complete the business combination
with Grupo Colombo,
we will automatically wind up, dissolve and liquidate starting on June
25, 2016.
The
holders of the initial shares have waived their rights to participate in any liquidation distribution with respect to such initial
shares. There will be no distribution from the trust account with respect to GGAC’s rights or warrants which
will expire worthless in the event we wind up. GGAC will pay the costs of liquidation from its remaining assets outside
of the trust account. If such funds are insufficient, Mario Garnero has agreed to advance the funds necessary to complete
such liquidation (currently anticipated to be no more than approximately $15,000) and has agreed not to seek repayment of such
expenses.
If
the Extension Amendment is not approved, the holders of the public shares will not vote on the Conversion Amendment, and the trust
account will be liquidated as described above. If the Conversion Amendment is not approved, the Company will not effect the Extension.
If
the Extension Amendment and the Conversion Amendment Are Approved
If
the Extension Amendment and the Conversion Amendment are approved, GGAC will file an amendment to the charter to extend the time
it has to complete a business combination until the Extended Date. GGAC will remain a reporting company under the Securities
Exchange Act of 1934 and its units, ordinary shares, rights and warrants will remain publicly traded. GGAC will then
continue to work to consummate a business combination by the Extended Date.
You
are not being asked to vote on the proposed business combination with Grupo Colombo at this time. If the Extension is implemented
and you do not elect to convert your public shares, you will retain the right to vote on the proposed business combination with
Grupo Colombo when and if it is submitted to shareholders
and the right to convert your public shares into a pro rata portion
of the trust account in the event the proposed business combination is approved and completed or the Company has not consummated
a business combination by the Extended Date.
If
the Extension Amendment and Conversion Amendment proposals are approved, and the Extension is implemented, the removal of the
Withdrawal Amount from the trust account in connection with the Conversion will reduce the amount held in the trust account
and GGAC’s net tangible asset value based on the number of shares that seek conversion. GGAC cannot predict the
amount that will remain in the trust account if the Extension Amendment and Conversion Amendment proposals are approved, and the
amount remaining in the trust account may be only a small fraction of the approximately $144.5 million that was in the trust account
as of May 25, 2016. However, we will not proceed if we do not have at least $5,000,001 of net tangible assets following
approval of the Extension Amendment and Conversion Amendment proposals.
Conversion
Rights
If
the Extension Amendment and Conversion Amendment proposals are approved, and the Extension is implemented, each public shareholder
who votes in favor of the Conversion Amendment may seek to convert his public shares for a pro rata portion of the funds available
in the trust account, less any income taxes owed on such funds but not yet paid, calculated as if they had voted against a business
combination proposal. You will also be able to convert your public shares in connection with any shareholder vote to approve a
proposed business combination, or if the Company has not consummated a business combination by the Extended Date.
To
demand conversion, you must check the box on the proxy card provided for that purpose and return the proxy card in accordance
with the instructions provided and, at the same time, ensure YOU OR your bank or broker complies with the requirements identified
elsewhere herein, including delivering your shares to the transfer agent prior to the vote on the Extension Amendment and Conversion
Amendment
. You will only be entitled to receive
cash in connection with a conversion of these shares if you continue to hold them until the effective date of the Extension Amendment
and Conversion.
In
connection with tendering your shares for conversion, you must elect either to physically tender your share certificates to Continental
Stock Transfer & Trust Company, the Company’s transfer agent, at Continental Stock Transfer & Trust Company, 17
Battery Place, New York, New York 10004, Attn: Mark Zimkind, mzimkind@continentalstock.com, prior to the vote for the Extension
Amendment and Conversion Amendment or to deliver your shares to the transfer agent electronically using The Depository Trust Company’s
DWAC (Deposit/Withdrawal At Custodian) System. The method you choose would likely be determined based on the manner in which you
hold your shares. The requirement for physical or electronic delivery prior to the vote at the extraordinary general meeting ensures
that a converting holder’s election is irrevocable once the Extension Amendment and the Conversion Amendment are approved.
In furtherance of such irrevocable election, shareholders making the election will not be able to tender their shares after the
vote at the extraordinary general meeting.
Through
the DWAC system, this electronic delivery process can be accomplished by the shareholder, whether or not it is a record holder
or its shares are held in “street name,” by contacting the transfer agent or its broker and requesting delivery of
its shares through the DWAC system. Delivering shares physically may take significantly longer. In order to obtain a physical
stock certificate, a shareholder’s broker and/or clearing broker, DTC, and the Company’s transfer agent will need
to act together to facilitate this request. 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 the tendering
broker $45 and the broker would determine whether or not to pass this cost on to the redeeming holder. It is the Company’s
understanding that shareholders should generally allot at least two weeks to obtain physical certificates from the transfer agent.
The Company does not have any control over this process or over the brokers or DTC, and it may take longer than two weeks to obtain
a physical stock certificate. Such shareholders will have less time to make their investment decision than those shareholders
that deliver their shares through the DWAC system. Shareholders who request physical stock certificates and wish to convert may
be unable to meet the deadline for tendering their shares before exercising their conversion rights and thus will be unable to
convert their shares.
Certificates
that have not been tendered in accordance with these procedures prior to the vote for the Extension Amendment and Conversion Amendment
will not be converted into a pro rata portion of the funds held in the trust account. In the event that a public shareholder tenders
its shares and decides prior to the vote at the extraordinary general meeting that it does not want to convert its shares, the
shareholder may withdraw the tender. If you delivered your shares for conversion to our transfer agent and decide prior to the
vote at the extraordinary general meeting not to convert your shares, you may request that our transfer agent return the shares
(physically or electronically). You may make such request by contacting our transfer agent at address listed above. In the event
that a public shareholder tenders shares and the Extension Amendment and the Conversion Amendment are not approved or are abandoned,
these shares will not be converted and the physical certificates representing these shares will be returned to the shareholder
promptly following the determination that the Extension Amendment and the Conversion Amendment will not be approved or will be
abandoned. The Company anticipates that a public shareholder who tenders shares for conversion in connection with the vote to
approve the Extension Amendment and the Conversion Amendment would receive payment of the conversion price for such shares soon
after the completion of the Extension. The transfer agent will hold the certificates of public shareholders that make the election
until such shares are converted for cash or returned to such shareholders.
If
properly demanded, the Company will convert each public share for a pro rata portion of the funds available in the trust account,
less any income taxes owed on such funds but not yet paid, calculated as of two days prior to the filing of the amendment to the
charter. As of the record date, this would amount to approximately $10.05 per share. The closing price of GGAC’s ordinary
shares on May 31, 2016 was $9.53. Accordingly, if the market price were to remain the same until the date of the meeting, exercising
conversion rights would result in a public shareholder receiving approximately $0.52 more than if he sold his shares in the open
market.
If
you exercise your conversion rights, you will be exchanging your ordinary shares for cash and will no longer own the shares. You
will be entitled to receive cash for these shares only if you vote for the Conversion Amendment, properly demand conversion, and
tender your stock certificate(s) to the Company’s transfer agent prior to the vote for the Extension Amendment and Conversion
Amendment. If the Extension Amendment and the Conversion Amendment are not approved or if they are abandoned and the business
combination with Grupo Colombo is not consummated by June 25, 2016, these shares will be redeemed in accordance with the terms
of the charter promptly following the meeting as described elsewhere herein.
The
Extraordinary general meeting
Date,
Time and Place
. The extraordinary general meeting of GGAC’s shareholders will be held at 11:00 a.m., EDT
on June 23, 2016, at the offices of GGAC’s counsel, Graubard Miller, at 405 Lexington Avenue, New York, NY 10174.
Voting
Power; Record Date
. You will be entitled to vote or direct votes to be cast at the extraordinary general meeting,
if you owned GGAC ordinary shares at the close of business on May 31, 2016, the record date for the extraordinary general meeting. You
will have one vote per proposal for each GGAC share you owned at that time. GGAC rights and warrants do not carry voting
rights.
Votes
Required
. Approval of the Extension Amendment and Conversion Amendment proposals will require a special resolution
(a resolution passed by a majority of at least two-thirds of members who, being entitled to do so, vote at the extraordinary general
meeting).
At
the close of business on the record date, there were 18,602,813 outstanding ordinary shares of GGAC each of which entitles its
holder to cast one vote per proposal.
If
you do not want the Extension Amendment and Conversion Amendment approved, you must vote against such proposals. If
you want to obtain your pro rata portion of the trust account in the event the Extension is implemented, which will be paid shortly
after the shareholder meeting which is scheduled for June 23, 2016, you must vote for the Conversion Amendment and demand conversion
of your shares. Holders of public shares who vote against the Conversion Amendment may not convert their public shares.
Proxies; Board Solicitation
. Your
proxy is being solicited by the GGAC board of directors on the proposal to approve the Extension Amendment and the Conversion
Amendment being presented to shareholders at the extraordinary general meeting. Additionally, Advantage Proxy, GGAC’s
proxy solicitor in connection with the proposed business combination with Grupo Colombo, will assist GGAC to solicit proxies for
this meeting. GGAC will pay that firm a fee of US$10,000 plus disbursements up to a maximum of US$2,500, for its services in connection
with this extraordinary general meeting and the proposed business combination. No recommendation is being made as to whether you
should elect to convert your shares. Proxies may be solicited in person or by telephone. If you grant a
proxy, you may still revoke your proxy and vote your shares in person at the extraordinary general meeting.
Possible
Claims Against and Impairment of the Trust Account
You
should be aware that because GGAC’s IPO prospectus stated that GGAC would not take any action allowing it to survive for
a longer period of time except in connection with, and effective upon, the consummation of a business combination, as required
by its charter, you may have securities law claims against GGAC for rescission (under which a successful claimant has the right
to receive the total amount paid for his or her shares pursuant to an allegedly deficient prospectus, plus interest and less any
income earned on the shares, in exchange for surrender of the shares) or damages (compensation for loss on an investment caused
by alleged material misrepresentations or omissions in the sale of the security). Rescission and damages claims would not necessarily
be finally adjudicated by the time the trust account is liquidated. Such claims may entitle public shareholders asserting them
to more than the pro rata share of the trust account to which they are entitled upon conversion or liquidation, as well as punitive
damages. In general under U.S. federal and state securities laws, material misstatements and omissions in a prospectus may give
rise to rights of rescission in favor of, or claims for damages by, persons who purchased securities pursuant to the prospectus.
As a result, it is possible that adopting the Extension Amendment may result in claims being made against GGAC whose holders might
seek to have the claims satisfied from funds in the trust account. GGAC has not made or requested of its advisors a formal comprehensive
analysis of its potential liability for any such misstatements or omissions. Since rescission generally provides successful claimants
with the right to recover the entire purchase price of their securities, holders of GGAC ordinary shares who successfully claim
rescission could be awarded up to approximately $10.00 per share, based on the initial offering price of the units issued in GGAC’s
IPO, which were comprised of shares, rights and warrants, less any amount received from the sale of the original rights and warrants
included in the units, plus interest from the date of GGAC’s IPO. In general, a person who purchased shares pursuant to
a defective prospectus or other representation must make a claim for rescission within the applicable statute of limitations period,
which, for claims made under federal law and some state statutes, is one year from the time the claimant discovered or reasonably
should have discovered the facts giving rise to the claim but not more than three years from the occurrence of the event giving
rise to the claim. A successful claimant for damages under federal or state law could be awarded an amount to compensate for the
decrease in value of his or her shares caused by the alleged violation (including, possibly, punitive damages), together with
interest, while retaining the shares. Claims under the anti-fraud provisions of the federal securities laws must generally be
brought within two years of discovery, but not more than five years after occurrence. Rescission and damages claims would not
necessarily be finally adjudicated by the time the trust account is liquidated, and such claims would not be extinguished by consummation
of that transaction.
If
GGAC were to become subject to such claims as a result of the Extension Amendment, GGAC’s assets following the Extension
Amendment could be significantly reduced or depleted entirely and the trust account could be depleted by those claims to the extent
of any judgments arising from such claims, together with any expenses related to defending such claims if the resources of Mr.
Garnero, who has certain indemnification obligations with respect to the trust account, are insufficient or unavailable to indemnify
GGAC for the full amount. A consequence might be that the amount being held in the trust account is diminished and holders of
public shares who do not convert their public shares now may receive a lesser amount as their pro rata portion of the trust account.
Moreover, attendant litigation could result in delay in payments to public stockholders of trust account funds on liquidation.
If
GGAC’s trust account is not depleted by liabilities for securities law claims or other expenses, GGAC estimates that all
public shareholders would receive, upon liquidation, approximately $10.05 per share (calculated as of the record date). This per
share amount may be less than the possible per-share amount of a successful rescission claim as a rescission award may bear interest
at a higher rate than that earned on trust account funds. Public stockholders would also incur costs in prosecuting such claims,
which would reduce the per-share amount they realize.
GGAC
has attempted to structure the Extension Amendment and the Conversion Amendment to preserve the investment proposition set forth
in the IPO prospectus for public shareholders, specifically, by giving them their right to convert on the date of the extraordinary
general meeting and receive their pro rata portion of the trust account shortly thereafter. This is designed to limit the potential
damages, but it is impossible to predict how courts would rule in such a case. A further deterrent to the bringing of a rescission
claim is the significant costs that stockholders would incur in prosecuting those claims. In view of the foregoing, GGAC’s
board of directors believes it in the best interests of GGAC’s shareholders to approve the Extension Amendment and the Conversion
Amendment.
Required
Vote
Approval
of the Extension Amendment and Conversion Amendment proposals will require a special resolution (a resolution passed by a majority
of at least two-thirds of members who, being entitled to do so, vote at the extraordinary general meeting). GGAC’s board
of directors will abandon the Conversion Amendment if the Extension Amendment is not approved. In that case, assuming
the business combination with Grupo Colombo is not completed, GGAC will automatically wind up, liquidate and dissolve starting
on June 25, 2016.
All
of GGAC’s directors, executive officers, initial shareholders and their affiliates are expected to vote all ordinary shares
owned by them in favor of the Extension Amendment and the Conversion Amendment. On the record date, such holders represented
approximately 22% of GGAC’s issued and outstanding ordinary shares.
In
addition, pursuant to the Investment Agreement, the Controlling Persons have committed to purchase, directly or through other
entities acting at their direction, $10 million of GGAC ordinary shares in the public market. Such shares will be voted
in favor of the Extension Amendment and the Conversion Amendment proposals and will not be converted. Furthermore,
GGAC’s
or Grupo Colombo’s directors, executive officers, shareholders and their affiliates may choose to buy additional ordinary
shares of GGAC in the open market and/or through negotiated private purchases. In the event that such additional purchases
do occur, the purchasers may seek to purchase shares from shareholders who would otherwise have voted against the Extension Amendment
and Conversion Amendment proposals or elected to convert their shares into a portion of the trust account. Any additional
ordinary shares of GGAC purchased by affiliates also will be voted in favor of the Extension Amendment and Conversion Amendment
proposals and will not be converted.
Interests
of GGAC’s Directors and Officers
When
you consider the recommendation of the GGAC board of directors, you should keep in mind that GGAC’s executive officers and
directors have interests that may be different from, or in addition to, your interests as a shareholder. These interests
include, among other things:
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If the Extension Amendment is not approved and
we are forced to wind up, dissolve and liquidate by June 25, 2016, the 562,188 private units that were acquired by the initial
shareholders simultaneously with the IPO for an aggregate purchase price of $5,621,880 will be worthless. Such
units had an aggregate market value of approximately $5,627,502 based on the last sale price of $10.01 per unit on Nasdaq
on May 31, 2016;
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If the Extension Amendment is not approved and
we are forced to wind up, dissolve and liquidate by June 25, 2016, the 3,593,750 ordinary shares held by our initial shareholders,
which were acquired prior to the IPO by the initial shareholders for an aggregate purchase price of $25,000, will be worthless
(as the holders have waived liquidation rights with respect to such shares). Such shares had an aggregate market value of
approximately $34,248,438 based on the last sale price of $9.53 per share on Nasdaq on May 31, 2016;
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In connection with the IPO, Mario Garnero has
agreed that he will be liable under certain circumstances to ensure that the proceeds in the trust account are not reduced
by the claims of target businesses or vendors or other entities that are owed money by the Company for services rendered,
contracted for or products sold to the Company;
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All rights specified in GGAC’s charter
relating to the right of officers and directors to be indemnified by GGAC, and of GGAC’s officers and directors to be
exculpated from monetary liability with respect to prior acts or omissions, will continue after the Extension. If
the Extension is not approved and GGAC liquidates, GGAC will not be able to perform its obligations to its officers and directors
under those provisions;
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Mario Garnero has loaned approximately US$1,466,841
to GGAC, and may in the future loan additional amounts to GGAC in order to meet GGAC’s working capital needs prior to
the closing of the business combination with Grupo Colombo. If GGAC fails to consummate the business combination with Grupo
Colombo or another business combination, the loans would become unsecured liabilities of GGAC; however, Mr. Garnero has waived
any claim against the trust account. Accordingly, GGAC will not be able to repay these loans if the business combination is
not completed. In addition, upon consummation of a business combination, US$500,000 of such loans is convertible at the election
of Mr. Garnero into working capital units at a conversion price of US$10.00 per unit. The working capital units are identical
to the private units. Accordingly, if a business combination is not consummated, Mr. Garnero also will lose the opportunity
to acquire an additional 50,000 units, which would have an aggregate market value of US$500,500 based upon the closing price
of US$10.01 per unit on Nasdaq on May 31, 2016; and
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GGAC’s
officers, directors, initial shareholders and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred
by them in connection with certain activities on GGAC’s behalf, such as identifying and investigating possible business
targets and business combinations. If GGAC fails to obtain the Extension and is forced to wind up, dissolve and liquidate,
they will not have any claim against the trust account for reimbursement. Accordingly, GGAC will not be able to reimburse
these expenses. As of the date of this proxy statement, GGAC’s officers, directors, initial shareholders and their affiliates
have incurred approximately $40,000 of unpaid reimbursable expenses.
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The
Board’s Reasons for the Extension Amendment and Conversion Amendment Proposals and Its Recommendation
As
discussed above, after careful consideration of all relevant factors, GGAC’s board of directors has determined that the
Extension Amendment and Conversion Amendment proposals are fair to, and in the best interests of, GGAC and its shareholders. The
board of directors has approved and declared advisable adoption of the Extension Amendment and Conversion Amendment proposals,
and recommends that you vote “FOR” such adoption. The board expresses no opinion as to whether you should
convert your public shares.
GGAC’s
IPO prospectus and charter provided that GGAC had until June 25, 2016 to complete a business combination. GGAC and its officers
and directors agreed that it would not seek to amend GGAC’s charter to allow for a longer period of time to complete a business
combination. GGAC has determined that it will not be able to consummate a business combination by June 25, 2016. Accordingly,
GGAC is proposing the Extension Amendment and Conversion Amendment proposals to allow for a longer period of time to complete
a business combination. GGAC’s IPO prospectus and charter stated that GGAC would not take any action to amend or waive these
provisions (except in connection with, and to be effective upon, a business combination) to allow it to survive for a longer period
of time if it did not appear it would be able to consummate a business combination by June 25, 2016. Notwithstanding the foregoing,
because GGAC believes the proposed business combination with Grupo Colombo to be in the best interests of GGAC’s shareholders,
and because GGAC may not be able to complete the proposed business combination by June 25, 2016, GGAC has determined to seek shareholder
approval to extend the time for closing a business combination beyond June 25, 2016 to the Extended Date. If the Extension Amendment
and Conversion Amendment are approved, GGAC expects to seek shareholder approval of such business combination once the previously
disclosed financial reorganization is finalized and all other conditions necessary to complete the transaction are fulfilled.
GGAC
is not asking you to vote on the proposed business combination with Grupo Colombo at this time. If you vote in favor of the Extension
Amendment and do not elect to convert your public shares, you will retain the right to vote on any proposed business combination
in the future and the right to convert your public shares into a pro rata portion of the trust account in the event the proposed
business combination is approved and completed or the Company has not consummated a business combination by the Extended Date.
GGAC’s
charter purports to prohibit amendment to certain of its provisions, including any amendment that would extend its corporate existence
beyond the above date, except in connection with, and effective upon consummation of, a business combination. We believe that
the foregoing charter provisions were included to protect GGAC shareholders from having to sustain their investments for an unreasonably
long period if GGAC failed to find a suitable business combination in the timeframe contemplated by the charter, and the application
of those investments without the shareholder review customarily provided for them. We also believe, however, that given GGAC’s
expenditure of time, effort and money on the potential business combination with Grupo Colombo, circumstances warrant providing
those who believe they might find the potential business combination to be an attractive investment with an opportunity to consider
such a transaction, inasmuch as GGAC is also affording shareholders who wish to convert their public shares as originally contemplated,
the opportunity to do so as well. Accordingly, we believe that the Extension Amendment and Conversion Amendment proposals are
consistent with the spirit in which GGAC offered its securities to the public.
After
careful consideration of all relevant factors, GGAC’s board of directors determined that the Extension Amendment and Conversion
Amendment are fair to and in the best interests of GGAC and its shareholders.
The
Board of Directors recommends that you vote “FOR” the Extension Amendment and Conversion Amendment proposals. The
Board of Directors expresses no opinion as to whether you should convert your public shares.