Although Better founder Vishal Garg is “taking a break to reflect and refocus,” he remains the company’s chief executive officer, and the special purpose acquisition company formed to take Better public through a merger “remains confident” that the deal will go through.
That’s according to a regulatory filing submitted by Aurora Acquisition Corp. CEO Arnaud Massenet in the wake of revisions to the SPAC merger terms and mass layoffs at Better that cast doubt on the deal’s timeline.
The filing by Aurora, which was intended “to provide an update on events which occurred at Better HoldCo Inc. earlier this month,” notes that while Garg is on leave, CFO Kevin Ryan “will help oversee the leadership team and continue his duties as chief financial officer. Aurora remains confident in Better and the proposed transaction.”
Under an agreement signed in May, Aurora was expected to finalize its merger with Better Holdco — the parent company of Better Mortgage Corp., Better Real Estate LLC, Better Settlement Services LLC, and Better Cover LLC — by the end of 2021.
But the terms of the deal were revised on Nov. 30, and the next day Garg fired approximately 900 Better employees over a Zoom call. After the call went viral, Garg and Better’s board announced he’d be taking a leave of absence.
A source close to the company previously told Inman that revisions to the merger agreement meant Better would have to resubmit regulatory approvals, with the deal now expected to close next year.
The third amendment to the merger agreement since May extended the outside date for calling off the merger from Feb. 12, 2022, to Sept. 30, 2022, Aurora noted in a Nov. 30 regulatory filing.
Under the terms of the original financing agreements announced in May, SoftBank had committed to take a $1.5 billion stake in Better through a “PIPE” — a private investment in public equity — after the merger of Better and Aurora closed.
The new plan reduces SoftBank’s PIPE commitment to $750 million, to be provided up front through interest-free bridge funding that would be converted into shares in Better Home & Finance Holding Co., as Better will be known after the merger.
The new agreement also commits SoftBank and Aurora’s sponsor, Novator Capital, to provide up to $750 million in convertible notes after the merger closes. If state regulators or government-sponsored enterprises don’t approve, the new agreement stipulates that SoftBank and Novator will be off the hook for the convertible notes, but committed to provide a total of $1.25 billion in equity funding.
Garg also entered into a side letter with SoftBank in which he agreed “to use reasonable best efforts to assist [SoftBank] in arranging alternative financing or syndicating its position in the post-closing convertible notes.”
In announcing the new deal terms on Nov. 30, the company said they “do not change the implied equity value for Better of approximately $6.9 billion,” and that Better, Aurora and SoftBank will continue to “work together toward public listing as soon as SEC registration and regulatory approvals are complete.”
The next day, Garg fired roughly 900 Better employees over a Zoom call, triggering a storm of social media and media coverage. While Garg took a leave of absence, several marketing, public relations and communications executives reportedly resigned.
Better said the layoffs will position the company for growth as lenders shift their focus from refinancing mortgages to providing purchase loans to homebuyers.