Social Leverage Acquisition Corp I (SLAC) Reduces W3BCLOUD Valuation in Deal Tweak
by Marlena Haddad on 2023-04-21 at 5:17pm

Social Leverage Acquisition Corp I (NASDAQ: SLAC) announced this afternoon that it has reduced the valuation for its target W3BCLOUD, entered into non-redemption agreements with certain investors, and a non-binding term sheet for a $150 million committed equity facility with B.Riley.

SLAC originally valued the Web3 infrastructure provider at $1.25 billion, but today’s new transaction terms have reduced the pro forma enterprise valuation to approximately $700 million, representing a 44% reduction.

The parties noted that this strategic decision was made in recognition of W3BCLOUD’s commitment to driving long-term value creation for all shareholders.

Social Leverage also announced that W3BCLOUD has agreed to lower the minimum cash balance condition from $150 million to $40 million. As previously announced at deal announcement, W3BCLOUD has received commitments for $50 million from certain existing security holders for new investments in connection with the proposed merger.

Additionally, the SPAC disclosed that it entered into voting, share purchase and non-redemption agreements with certain holders of its Class A common stock. As a part of these agreements, the stockholders have agreed to vote in favor of SLAC’s proposal to extend the completion deadline by nine months, from May 17, 2023 to February 17, 2024.

Under the non-redemption agreements, stockholders holding a total of 650,000 shares of SLAC’s Class A common stock, representing approximately $6.5 million of funds in the trust account, agreed not to redeem their shares in connection with the extension meeting. In exchange for the foregoing commitments, SLAC has agreed to issue 2,238,890 shares of SLAC’s Class A common stock upon the closing of the business combination.

Social Leverage noted that it has entered into these non-redemption agreements in order to secure capital in its trust in an effort to meet its minimum cash balance condition and continue to negotiate its business combination.

Further, the parties also announced that they have entered into a non-binding term sheet with B. Riley Principal Capital II, LLC for a $150 million committed equity facility to further support W3BCLOUD’s growth strategy. The term sheet covers a committed equity facility that provides W3BCLOUD with the right to sell and issue up to $150 million of its Class A common stock over a period of 24 months to B. Riley.

In addition, as previously reported in July 2022, W3BCLOUD Partners Limited and ConsenSys entered into a commitment letter pursuant to which ConsenSys agreed to subscribe to $15 million of equity and/or convertible securities. ConsenSys’ commitment may be increased in its sole discretion to up to $40 million. On April 21, W3BCLOUD Partners Limited, W3BCLOUD and ConsenSys amended this commitment letter to provide for ConsenSys’ commitment being subject to customary due diligence investigations satisfactory to ConsenSys, the entrance into subscription agreements by other PIPE investors for the purchase of an aggregate of at least $35 million and no company material adverse effect occurring.

Social Leverage announced its deal with W3BCLOUD in August 2022. The SPAC originally brought $345 million into the deal through its trust supplemented by a $50 million PIPE with committed funds from strategic investors ConsenSys and AMD (NASDAQ:AMD) alongside institutional investor SK Inc.

But, SLAC saw 95.21% redeemed through a previous extension meeting, leaving it with $16.68 million in its trust post-vote.

Dublin-based W3BCLOUD has built up a global network of high-performance data centers to support Web 3.0 and the blockchain economy.


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