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 July [__], 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 proposal:
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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 September 23, 2016 (the “Extended Date”).
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The
Extension Amendment proposal is essential to the overall implementation of the board of directors’ plan to extend the date
that GGAC has to complete its previously announced business combination with Grupo Colombo. The purpose of the Extension
Amendment is to allow GGAC more time to complete such business combination in case such additional time is needed.
Approval
of the Extension 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 proposal, after taking
into account any 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”) who 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”).
If
the Extension Amendment proposal is not approved and we are not able to consummate our proposed business combination with Grupo
Colombo by July 22, 2016,
we will automatically wind up, liquidate and dissolve starting
on such date
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
.
Our
shareholders prior to the IPO (the “initial shareholders”) have waived their rights to participate in any liquidation
distribution with respect to their initial shares and shares included in private units purchased by them simultaneously with the
IPO (the “private units” and the shares included within such private units, the “private 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
the Extension Amendment is approved and GGAC takes advantage of the Extension, _________ has agreed that he or an affiliate or
designee of his will contribute to us as a loan $0.10 for each public share that is not converted, or up to an aggregate of approximately
$200,187 (the “Contribution”). We will deposit the amount of the Contribution in the trust account. Accordingly, if
the Extension Amendment is approved and the Extension is completed, the conversion amount per share in connection with the business
combination with Grupo Colombo or any liquidation will be approximately $10.15 per share, in comparison to the current conversion
amount of approximately $10.05 per share if the Extension Amendment is not approved. The Contribution is a condition to the implementation
of the Extension Amendment. The Contribution will not occur if the Extension Amendment is not approved or the Extension is not
completed. The amount of the Contribution will not bear interest and will be repayable by us to ________ or his affiliate upon
consummation of an initial business combination. The loan will be forgiven if an initial business combination is not completed.
If
there is no Extension and GGAC is unable to consummate the business combination with Grupo Colombo and is forced to dissolve and
liquidate, 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 proposal is approved, GGAC will (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, plus the Contribution, 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.
The
record date for the extraordinary general meeting is [_____], 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 6,229,686 outstanding ordinary shares of GGAC including 2,001,873 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 related proposal. Please
read it carefully and vote your shares.
This
proxy statement is dated [__________ ___], 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, our 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, currently
July 22, 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 consummate its previously announced proposed business
combination with Grupo Colombo in case such additional time is needed.
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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 a proposal to amend GGAC’s charter to extend the date
by which GGAC has to consummate a business combination to the Extended Date.
The
Extension Amendment proposal is 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 is a condition to
the implementation of the Extension.
If
the Extension is implemented, GGAC will remove the Withdrawal Amount from the trust account, deliver to the holders of
such converted public shares the pro rata portion of the Withdrawal Amount and retain the remainder of the funds in the
trust account, plus the Contribution, 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
proposal, after taking into account the Conversion.
If
the Extension Amendment proposal is not approved and we are not able to consummate the business combination with Grupo
Colombo by July 22, 2016,
we will automatically wind up, liquidate and dissolve
starting on such date 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.
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The
initial shareholders have waived their rights to participate in any liquidation distribution with respect to their initial
shares and private 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 proposal?
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A. GGAC’s
IPO prospectus and charter originally provided for the return of the IPO proceeds held in trust to the holders of ordinary
shares sold in the IPO if there was no qualifying business combination(s) consummated on or before June 25, 2016.
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 were to contribute to GGAC all of
Grupo Colombo’s equity, as a result of which Grupo Colombo was to become a wholly-owned subsidiary of GGAC. Thereafter,
GGAC set out to consummate the business combination before June 25, 2016. However, Grupo Colombo was required to complete
certain financial restructurings and was unable to do so by such date. As a result, GGAC sought an extension of the time
to complete a business combination to July 22, 2016 to allow Grupo Colombo more time to complete such restructuring and
hold the meeting to consummate the business combination. On June 23, 2016, GGAC’s shareholders approved the extension
of time to July 22, 2016. At the meeting to approve such extension, public shareholders holding 12,373,127 shares sought
conversion, leaving 2,001,873 public shares outstanding.
GGAC
has now determined that it may need additional time beyond July 22, 2016 to consummate the proposed business combination
with Grupo Colombo. Accordingly, GGAC’s board of directors is now proposing the Extension Amendment to further extend
GGAC’s corporate existence until the Extended Date in case such an additional amount of time is necessary. GGAC
will only extend the date if it determines that such additional time is in fact necessary.
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 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.
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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. The
Extension would give GGAC a longer period of time to complete the proposed business combination with Grupo Colombo in
case such additional time is needed.
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 potential business combinations, circumstances
warrant providing those who believe they might find a 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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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 proposal. 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 private shares, representing
approximately 66.7% of GGAC’s issued and outstanding ordinary shares. Accordingly, they have sufficient shares to
approve the Extension Amendment.
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. 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 committed to purchase, directly or through other entities acting
at their direction, $10 million of GGAC ordinary shares in the public market by June 20, 2016. However, such shares have
not been purchased as of the date of this proxy statement. To the extent such shares are purchased, they will be voted
in favor of the Extension Amendment proposal 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
proposal 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 proposal 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 is approved and GGAC takes advantage of the Extension, _________ has agreed that he or an affiliate
or designee of his will make the Contribution of $0.10 for each public share that is not converted, or up to an aggregate
of approximately $200,187. We will deposit the amount of the Contribution in the trust account. Accordingly, if the Extension
Amendment is approved and the Extension is completed, the conversion amount per share in connection with the business combination
with Grupo Colombo or any liquidation will be approximately $10.15 per share, in comparison to the current conversion amount
of approximately $10.05 per share if the Extension Amendment is not approved. The Contribution is a condition to the implementation
of the Extension Amendment. The Contribution will not occur if the Extension Amendment is not approved or the Extension is
not completed. The amount of the Contribution will not bear interest and will be repayable by us to ______ or his
affiliate upon consummation of an initial business combination. The loan will be forgiven if an initial business
combination is not completed.
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Q.
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What
vote is required to adopt the Extension Amendment?
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A. Approval
of the Extension 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.
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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 Proposal—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 proposal?
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A.
If you do not want the Extension Amendment proposal to be approved, you must vote against the proposal. If the
Extension Amendment proposal is 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, 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 July [__], 2016. Those
holders of public shares who elect not to convert their shares now shall retain conversion rights with respect to the proposed
business combination with Grupo Colombo or if the business combination is not completed for any reason by such date, such
holders shall be entitled to the 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 GGAC is unable to consummate the proposed business combination with Grupo Colombo
by July 22, 2016, we will automatically liquidate, wind up and dissolve starting on such date in accordance with our charter. GGAC’s
initial shareholders waived their rights to participate in any liquidation distribution with respect to their initial shares
and private 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 proposal is approved, what happens next?
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A.
If the Extension Amendment proposal is 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.
If
the Extension Amendment proposal is 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 and
if 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 the 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. The Extension Amendment proposal 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).
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 proxy 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 [_____], 2016 are entitled to have their
vote counted at the extraordinary general meeting and any adjournments or postponements thereof. On this record
date, 6,229,686 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?
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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 is 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.
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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 proposal?
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A.
GGAC’s directors, officers, initial shareholders and their affiliates have interests in the proposal 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
Proposal—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? Do I have appraisal rights?
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A.
GGAC shareholders do not have appraisal rights in connection with the Extension 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 is not approved?
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A.
If the Extension Amendment is not approved and GGAC is unable to consummate its proposed business combination with
Grupo Colombo by July 22, 2016, we will automatically wind up, liquidate and dissolve effective starting on such date in
accordance with our charter. 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 proposal is approved?
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A.
If the Extension Amendment proposal is 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 proposal 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 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 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. 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, which election 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, 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 any proposed business combination 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.
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 were to contribute to GGAC all of Grupo Colombo’s
equity, as a result of which Grupo Colombo was to become a wholly-owned subsidiary of GGAC. Thereafter, GGAC set out to consummate
the business combination before June 25, 2016. However, Grupo Colombo was required to complete certain financial restructurings
and was unable to do so by such date. As a result, GGAC sought an extension of the time to complete a business combination to
July 22, 2016 to allow Grupo Colombo more time to complete such restructuring and hold the meeting to consummate the business
combination. On June 23, 2016, GGAC’s shareholders approved the extension of time to July 22, 2016. At the meeting to approve
such extension, public shareholders holding 12,373,127 shares sought conversion, leaving 2,001,873 public shares outstanding and
approximately $20,118,824 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
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 is essential to the overall implementation of the board of directors’ plan to allow GGAC more time
to complete its previously announced proposed business combination with Grupo Colombo. Approval of the Extension Amendment
is a condition to the implementation of the Extension.
If
the Extension Amendment proposal is not approved and we are not able to consummate the proposed business combination with Grupo
Colombo by July 22, 2016, we will automatically wind up, dissolve and liquidate starting on such date in accordance with our charter.
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
proposal.
If
the Extension Amendment is approved and GGAC takes advantage of the Extension, _________ has agreed that he or an affiliate or
designee of his will make the Contribution of $0.10 for each public share that is not converted, or up to an aggregate of approximately
$200,187. We will deposit the amount of the Contribution in the trust account. Accordingly, if the Extension Amendment is approved
and the Extension is completed, the conversion amount per share in connection with the business combination with Grupo Colombo
or any liquidation will be approximately $10.15 per share, in comparison to the current conversion amount of approximately $10.05
per share if the Extension Amendment is not approved. The Contribution is a condition to the implementation of the Extension Amendment.
The Contribution will not occur if the Extension Amendment is not approved or the Extension is not completed. The loan will be
forgiven if an initial business combination is not completed.
In
connection with the vote on the Extension Amendment, all holders of public shares shall have the right 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.
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 proposal, after taking into account the Conversion.
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 [_____], 2016 was $[___]. 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 $[___] 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.
If
the Extension Amendment is approved and GGAC takes advantage of the Extension, _________ has agreed that he or an affiliate or
designee of his will make the Contribution of $0.10 for each public share that is not converted, or up to an aggregate of approximately
$200,187. We will deposit the amount of the Contribution in the trust account. Accordingly, if the Extension Amendment is approved
and the Extension is completed, the conversion amount per share in connection with the business combination with Grupo Colombo
or any liquidation will be approximately $10.15 per share, in comparison to the current conversion amount of approximately $10.05
per share if the Extension Amendment is not approved. The Contribution is a condition to the implementation of the Extension Amendment.
The amount of the Contribution will not bear interest and will be repayable by us to _______ or his affiliate upon consummation
of an initial business combination. The loan will be forgiven if an initial business combination is not completed.
The
full text of the Extension Amendment resolution is set forth in Annex A.
Reasons
for the Proposal
GGAC’s
IPO prospectus and charter originally provided for the return of the IPO proceeds held in trust to the holders of ordinary shares
sold in the IPO if there was no qualifying business combination(s) consummated on or before June 25, 2016.
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 were to contribute to GGAC all of Grupo Colombo’s
equity, as a result of which Grupo Colombo was to become a wholly-owned subsidiary of GGAC. Thereafter, GGAC set out to consummate
the business combination before June 25, 2016. However, Grupo Colombo was required to complete certain financial restructurings
and was unable to do so by such date. As a result, GGAC sought an extension of the time to complete a business combination to
July 22, 2016 to allow Grupo Colombo more time to complete such restructuring and hold the meeting to consummate the business
combination. On June 23, 2016, GGAC’s shareholders approved the extension of time to July 22, 2016. At the meeting to approve
such extension, public shareholders holding 12,373,127 shares sought conversion, leaving 2,001,873 public shares outstanding.
GGAC
has now determined that it may need additional time beyond July 22, 2016 to consummate the proposed business combination with
Grupo Colombo. Accordingly, GGAC’s board of directors is now proposing the Extension Amendment to further extend GGAC’s
corporate existence until the Extended Date in case such an additional amount of time is necessary. GGAC will only extend the
date if it determines that such additional time is in fact necessary.
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 the required date. However, 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 that given GGAC’s expenditure of time, effort
and money on potential business combinations, circumstances warrant providing those who believe they might find the proposed business
combination with Grupo Colombo 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 proposal is consistent with the spirit in which GGAC offered
its securities to the public.
If
the Extension Amendment Proposal is Not Approved
If
the Extension Amendment proposal is not approved and GGAC is unable to consummate the proposed business combination with Grupo
Colombo by July 22, 2016,
we will automatically wind up, dissolve and liquidate starting
on such date in accordance with our charter.
The
holders of the initial shares have waived their rights to participate in any liquidation distribution with respect to such initial
shares and private 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 Approved and GGAC takes Advantage of the Extension
If
the Extension Amendment is approved and GGAC takes advantage of the Extension, 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 the proposed business combination with Grupo Colombo 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 any proposed business combination 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 is approved and GGAC takes advantage of the Extension, _________ has agreed that he or an affiliate or
designee of his will make the Contribution of $0.10 for each public share that is not converted, or up to an aggregate of approximately
$200,187. We will deposit the amount of the Contribution in the trust account. Accordingly, if the Extension Amendment is approved
and the Extension is completed, the conversion amount per share in connection with the business combination with Grupo Colombo
or any liquidation will be approximately $10.15 per share, in comparison to the current conversion amount of approximately $10.05
per share if the Extension Amendment is not approved. The Contribution is a condition to the implementation of the Extension Amendment.
The amount of the Contribution will not bear interest and will be repayable by us _______ or his affiliate upon consummation of
an initial business combination. The loan will be forgiven if an initial business combination is not completed.
If
the Extension Amendment proposal is 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 proposal is approved, and the amount remaining in the trust account may be only a
small fraction of the approximately $20.1 million that was in the trust account as of [_____], 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 proposal
(not including the Contribution).
Conversion
Rights
If
the Extension Amendment proposal is approved, and the Extension is implemented, each public shareholder 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
.
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.
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 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 is 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 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 is 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
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 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 June 25, 2016 was $[___]. 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 $[___] more than if he sold his shares in the open
market. Additionally, if the Extension Amendment is approved and the Extension is completed and ________ makes the Contribution,
the conversion amount per share in connection with the business combination with Grupo Colombo or any liquidation will be $10.15,
or $0.10 per share more than the current conversion price.
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 tender your stock certificate(s) to the Company’s transfer
agent prior to the vote for the Extension Amendment. If the Extension Amendment is not approved or if it is abandoned, 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 July [__], 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 [_____], 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 proposal 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 6,229,686 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 approved, you must vote against such proposal. 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 July [__], 2016, you must demand conversion of your shares.
Proxies;
Board Solicitation
. Your proxy is being solicited by the GGAC board of directors on the proposal to approve the
Extension Amendment being presented to shareholders at the extraordinary general meeting. Additionally, Advantage Proxy,
GGAC’s proxy solicitor, will assist GGAC to solicit proxies for this meeting. 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 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.
Required
Vote
Approval
of the Extension Amendment proposal 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).
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. On the record date, such holders represented approximately 66.7%
of GGAC’s issued and outstanding ordinary shares. Accordingly, they have sufficient shares to approve the Extension Amendment.
In
addition, pursuant to the Investment Agreement, the Controlling Persons committed to purchase, directly or through other entities
acting at their direction, $10 million of GGAC ordinary shares in the public market by June 20, 2016. However, such shares have
not been purchased as of the date of this proxy statement. If such shares are purchased they will be voted in favor of the Extension
Amendment proposal 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 proposal 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
proposal 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 July 22, 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 $[______] based on the last sale
price of $[___] per unit on Nasdaq on June 24, 2016;
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If
the Extension Amendment is not approved and we are forced to wind up, dissolve and liquidate
by July 22, 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 $[_____]
based on the last sale price of $[___] per share on Nasdaq on June 24, 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 any business combination. If GGAC fails to consummate an initial 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$10.00 per unit. The working
capital units are identical to the private units. Accordingly, if a business combination
is not consummated, Mr. Garnero also will lose the opportunity to acquire an additional
50,000 units, which would have an aggregate market value of US$[______] based upon the
closing price of US$[___] per unit on Nasdaq on June 25, 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. Although as of the record
date, GGAC’s officers, directors, initial shareholders and their affiliates had
not incurred any unpaid reimbursable expense, they may incur such expenses in the future.
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The
Board’s Reasons for the Extension Amendment Proposal and Its Recommendation
As
discussed above, after careful consideration of all relevant factors, GGAC’s board of directors has determined that the
Extension Amendment proposal is 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 proposal, 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 originally provided for the return of the IPO proceeds held in trust to the holders of ordinary shares
sold in the IPO if there was no qualifying business combination(s) consummated on or before June 25, 2016.
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 were to contribute to GGAC all of Grupo Colombo’s
equity, as a result of which Grupo Colombo was to become a wholly-owned subsidiary of GGAC. Thereafter, GGAC set out to consummate
the business combination before June 25, 2016. However, Grupo Colombo was required to complete certain financial restructurings
and was unable to do so by such date. As a result, GGAC sought an extension of the time to complete a business combination to
July 22, 2016 to allow Grupo Colombo more time to complete such restructuring and hold the meeting to consummate the business
combination. On June 23, 2016, GGAC’s shareholders approved the extension of time to July 22, 2016. At the meeting to approve
such extension, public shareholders holding 12,373,127 shares sought conversion, leaving 2,001,873 public shares outstanding.
GGAC
has now determined that it may need additional time beyond July 22, 2016 to consummate the proposed business combination with
Grupo Colombo. Accordingly, GGAC’s board of directors is now proposing the Extension Amendment to further extend GGAC’s
corporate existence until the Extended Date in case such an additional amount of time is necessary. GGAC will only extend the
date if it determines that such additional time is in fact necessary.
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 the 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.
After
careful consideration of all relevant factors, GGAC’s board of directors determined that the Extension Amendment is fair
to and in the best interests of GGAC and its shareholders.
The
Board of Directors recommends that you vote “FOR” the Extension Amendment proposal. The Board of Directors
expresses no opinion as to whether you should convert your public shares.