Mountain & Co. I Acquisition Corp. (NASDAQ:MCAA) announced in an 8-K this afternoon that it has entered into a forward purchase agreement (FPA) with Meteora Special Opportunity Fund I, Meteora Capital Partners, Meteora Select Trading Opportunities Master, and Meteora Strategic Capital for an OTC equity prepaid forward transaction.
Pursuant to the FPA, the seller intends to purchase up to a number of Mountain Class A ordinary shares equal to up to 12,500,000 shares pursuant to its PIPE subscription agreement, less the number of shares of Mountain Class A Shares purchased separately from third parties at prices no higher than the redemption price.
Additionally, the seller has the option to avoid buying Mountain Class A Shares that would result in their ownership exceeding 9.9% of the total outstanding shares, unless it chooses to waive this limit. The number of shares covered by the FPA might be reduced if the agreement is terminated prematurely as detailed in the “Optional Early Termination” section.
Meteora plans to buy Mountain Class A Shares from the FPA funding amount PIPE subscription agreement and from third parties using a broker in the open market, excluding the involvement of Mountain & Co. I. But, if it can’t acquire all the additional shares before the business combination closes, Meteora and Mountain & Co. I will occasionally enter into additional PIPE subscription agreements to purchase the remaining shares.
Furthermore, the FPA states that Meteora must pay the SPAC an amount equal to 7.50% of the product of recycled shares and the initial price, referred to as the “prepayment shortfall.” This payment is required on the prepayment date, which is either the day following the closure of the deal or the earlier date when assets from the trust are distributed. This amount will be subtracted from the total prepayment amount. Meteora can choose to sell shares at any time and price without having to pay the early termination obligation until the proceeds from these sales reach 100% of the prepayment shortfall.
On the prepayment date, the SPAC will pay Meteora a cash amount, which is calculated as the product of the number of shares and the initial price, minus the prepayment shortfall.
Following the business combination, the seller has the right to terminate their FPA either entirely or partially on specific dates termed “OET dates.”
On each OET date, Mountain & Co. I is entitled to receive an amount from Meteora, which is calculated by multiplying the number of terminated shares with the reset price for that particular OET Date. The payment date can be mutually adjusted within a quarter as agreed by both parties. After the business combination closes, the reset price starts at $10.00. However, it can be lowered through a dilutive offering reset.
The valuation date will be the earliest of either the third anniversary of the closing or a date chosen by Meteora through written notice, which can be triggered by events like a VWAP trigger, a delisting, a registration failure, a shortfall variance registration failure, or any termination event.
On the valuation date, Meteora is entitled to receive maturity consideration, which is calculated by multiplying the difference between the maximum number of shares and the number of terminated shares, with $1.00 in cash or $1.50 in the case of shares, and $2.25 only if there’s a registration failure. If it is paid in shares, the value will be determined by 95% of the average daily VWAP over 30 scheduled trading days leading to the valuation date.
If the shares fail to meet these conditions, then Meteora will receive penalty shares instead, calculated as three times the difference between the number of shares and the number of terminated shares. If the penalty shares meet the conditions within 45 days, excess shares will be returned to the SPAC based on their value.
Apart from the prepayment amount, Mountain & Co. I can arrange for the delivery of an amount to Meteora on the prepayment date. This amount is calculated by multiplying 300,000 by the initial price and is used for purchasing shares.
Lastly, on July 31, Mountain engaged in a PIPE subscription agreement with Meteora. The seller committed to purchase an aggregate of a number of shares of up to the maximum number of shares as set forth in the FPA less the number of recycled shares. However, Meteora will not be required to purchase an amount where its ownership would exceed 9.9% ownership of the total shares of Mountain Class A Shares outstanding immediately after giving effect to such issuance unless it waives the 9.9% ownership limitation.
In cases where Meteora cannot acquire all of the subscribed shares before the closing of the business combination, the parties will enter into additional FPA funding PIPE subscription agreements as needed to buy the remaining subscribed shares.
Although Mountain & Co. I is still on the hunt for a target, it announced its $200 million IPO in November 2021 and intends to focus on the consumer internet and B2B digital infrastructure sectors. The SPAC is led by CEO Dr. Cornelius Boersch, CIO Daniel Wenzel, CFO Alexander Hornung, and COO Professor Dr. Utz Claassen.
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