Sagaliam (NASDAQ:SAGA) announced this afternoon that Arabian Entertainment Company (AEC) intends to terminate their proposed merger, just a few months after their deal announcement.
On February 23, 2023, the company notified Sagaliam that since the SPAC did not receive subscription agreement commitments before December 15, 2022, it has chosen to terminate the merger.
AEC contend that as a result of the termination, the business combination agreement obligates Sagaliam to pay a breakup fee of $1 million no later than two business days following the termination. But, the SPAC contends that it has no obligation to pay a termination fee.
Barry Kostiner, the CEO of Sagaliam, has disputed the validity of the fee and instead proposes that there be an acquisition of Sagaliam Sponsor LLC by an independent third party with the intent of presenting an alternative acquisition to AEC. The company and Sagaliam are currently in discussions regarding any termination fee payment.
Pursuant to the original business combination agreement, AEC is allowed to terminate the merger at any time prior to the merger effective time by written notice to the SPAC if it has not received commitments in the form of mutually-agreed subscription agreements for at least 50% of the minimum cash amount of $25 million.
Sagaliam announced the $227 million deal with AEC in November 2022. The SPAC brought about $116.5 million from its trust into the deal and planned to supplement this with a $35 million PIPE, but did not file documents showing that one has been finalized.
The Jeddah, Saudi Arabia-based company is a regional franchisee of Applebee’s and Ocean’s Basket restaurants with plans for live entertainment projects in the works.
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