Blank-check firm Aurora Acquisition Corp. extended the deadline to complete its merger with struggling digital mortgage lender Better.com for the third time. The deadline for the merger is now September.
“Aurora now has until September 30, 2023 to consummate a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses,” according to the firm’s 8-K filing.
If the merger is not completed on or before September 30, 2023, Novator Capital — the sponsor of the deal, agreed “to subscribe for and purchase for $35 million aggregate cash proceeds to Better a number of newly issued shares of Better’s company series D equivalent preferred stock at a price per share that represents a 50% discount to the pre-money valuation or for a number of shares of Better’s class B common stock at a price per share that represents a 75% discount to the pre-money valuation,” a filing by Aurora from last month showed.
Pre-money valuation refers to the $6.9 billion pre-money equity valuation based on the aggregate amount of fully diluted shares of Better’s common stock.
The two companies entered into an agreement to merge in May 2021, which would have a post-equity value of $7.7 billion following the closure of the deal. However, the deadline had previously been extended citing lack of time to complete the transaction.
Mortgage lenders went public via a SPAC during the pandemic years, including United Wholesale Mortgage (UWM), but there is skepticism over Aurora’s plan to take Better.com public given market conditions.
Founded in 2016, Better.com capitalized on the unprecedented refi boom and homeowners’ growing comfort in an all-digital mortgage experience.
The company grew its headcount by almost five-fold to 10,000 employees in 2021, up from about 2,000 employees in 2019. Origination volume increased to $58 billion from $4.9 billion in the span of two years. The company raised $905 million across several funding rounds and received a $750 million loan from SoftBank in 2021.
In the first quarter of 2022, Better.com reported a net loss of $327.7 million, according to an SEC filing from Aurora in July. The lender didn’t post its financial performance for the second, third or fourth quarters, which they had done in SEC filings through Aurora.
Workforce reductions began for Better.com in December 2021, when company CEO Vishal Garg gained public infamy for firing 900 employees via Zoom. Since then, the lender conducted at least three rounds of layoffs in 2022, impacting staff in India and in the United States.
Better.com’s ranking slipped to the country’s 45th-largest mortgage lender, according to Inside Mortgage Finance‘s data, which pegged the firm as the 42nd-biggest lender in the first 9 months of last year. The digital lender originated $10.3 billion in 2022, down a staggering 80% from 2021.