Digital mortgage lender Better.com and blank-check firm Aurora Acquisition Corp. extended the deadline to conclude their merger agreement, but the companies have already started to discuss options in case the deal fails.
In May 2021, Novator Capital-sponsored special purpose acquisition company Aurora announced plans to make Better.com public in the fourth quarter of 2021. The deal valued the SoftBank Group-backed digital lender at nearly $8 billion.
However, amid a shrinking mortgage market, Aurora and Better.com announced on Monday a second extension to the merger agreement end date, from Sept. 30, 2022, to March 8, 2023. The initial deadline was Feb. 12, 2022.
Due to the extension, Better.com will reimburse Aurora a sum not to exceed $15 million for certain reasonable and documented expenses, according to a filing with the Securities and Exchange Commission (SEC).
The filing shows, for the first time, that the companies are studying alternatives to the merger.
“Aurora strongly believes in Better and supports its market strategy,” the document says. However, “Aurora and Better are in discussions regarding alternative financing arrangements for Better pursuant to which the merger agreement and related transactions would be terminated and Better would remain a private company.”
Better.com is reducing expenses and looking for new financing alternatives in the most challenging mortgage market in over a decade.
Last year, Better.com received a cash injection of $750 million from financial backer Softbank and entered into an agreement to issue $750 million of bridge notes convertible to Class A common stock of Aurora, in connection with the closing of the business combination, to SB Northstar LP and Novator.
The new SEC filing, however, shows that Better.com and Aurora also extended from Dec. 2, 2022, to March 8, 2023, the maturity date of $100 million from the bridge notes issued by Better.com to Novator Capital, subject to SB Northstar consent to extend their deadline as well.
“We are considering all capitalization options so that we can continue to make homeownership simpler, faster – and most importantly, more accessible for all Americans,” a spokesperson for Better.com told HousingWire.
The company is also cutting costs. Last week, Better.com conducted its fourth workforce reduction since December 2021, when the company’s Chief Executive Officer Vishal Garg gained infamy for laying off 900 employees in a Zoom meeting. On March 8, Better cut 3,000 jobs, roughly 35% of its staff in the United States and India. The company instituted its third major layoff on April 19.
Better.com reported a $221 million loss in the first quarter of 2022, compared to a $137.5 million profit during the same period in 2021.