CompoSecure (CMPO) to Spin-Off Resolute Holdings Management

CompoSecure, Inc. (Nasdaq: CMPO), a leader in metal payment cards, security, and authentication solutions, today announced its intention to spin-off a newly formed subsidiary called Resolute Holdings Management, Inc. (“Resolute Holdings”). The investment team at CompoSecure, and their associated costs, will move to Resolute Holdings upon completion of the spin-off.

As part of the spin-off transaction, a wholly owned subsidiary of CompoSecure, CompoSecure Holdings, L.L.C., will enter into a Management Agreement with Resolute Holdings under which CompoSecure Holdings, L.L.C. will pay Resolute Holdings a quarterly management fee in cash equal to 2.5% of CompoSecure’s Latest Twelve Months’ Adjusted EBITDA¹. Resolute Holdings will be responsible for providing CompoSecure’s business with certain services, including providing oversight of its capital allocation strategy, operational practices, as well as M&A sourcing and execution. The acquisition strategy will focus on bolt-on targets adjacent to CompoSecure’s current operating business as well as larger targets that diversify the current business and customer mix.

CompoSecure’s existing management team, led by President and CEO Jon Wilk, will continue to operate the day-to-day business and deliver for our customers around the world while leveraging the CompoSecure Operating System to drive revenue growth and profitability.

The spin-off of Resolute Holdings will be on a pro rata basis to all existing shareholders of CompoSecure, meaning each existing shareholder will receive an allocation of shares in Resolute Holdings proportional to their current ownership in CompoSecure. The distribution of shares in Resolute Holdings will give rise to a taxable gain to CompoSecure and will be treated as a taxable dividend to all existing shareholders for U.S. federal and applicable state and local tax purposes.

Resolute Holdings anticipates limited profitability in fiscal year 2025 as it establishes operations and builds out infrastructure, including adding to its investment and operating team. These investments are designed to facilitate the acceleration of organic and value enhancing inorganic growth at CompoSecure.

Resolute Holdings will be led by David Cote as Executive Chairman of the Board of Directors and Tom Knott as Chief Executive Officer. In addition to David Cote and Tom Knott, the Board of Directors will include John Cote, Joseph DeAngelo, Roger Fradin, Paul Galant, Brian Hughes, Mark James, Krishna Mikkilineni, and Jane Thompson. Resolute Holdings is expected to trade under the ticker “RHLD” on Nasdaq following completion of the spin-off.

Goldman Sachs & Co. LLC is serving as financial advisor to CompoSecure, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal advisor.

The spin-off is subject to customary conditions, including the effectiveness of Form 10 registration with the Securities and Exchange Commission and final approval by CompoSecure’s Board of Directors. The spin-off is currently expected to be completed during the first quarter of 2025.

^{1) For purposes of the management fee, Adjusted EBITDA, as further defined in the Management Agreement, represents CompoSecure’s historical Adjusted EBITDA methodology, less stock-based compensation expense.}

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