Aesther Healthcare (AEHA) Secures $60M Backstop for Ocean Biomedical Deal
Aesther Healthcare Acquisition Corp. (NASDAQ:AEHA) announced this afternoon that it has entered into an amended $60 million OTC equity prepaid forward transaction with Vellar Opportunity Fund.
The backstop agreement comes a week after Aesther shareholders approved its combination with biotech firm Ocean Biomedical at a special meeting held on February 3, but the parties have not yet closed the deal. As a refresher, the SPAC already secured a $40 million backstop with Meteora Capital Partners back in October and another $40 million from Vellar at its deal announcement.
Pursuant to today’s agreement, Vellar has agreed to support the transaction by purchasing up to 6,000,000 shares of Aesther Class A common stock for up to $60 million, including from other stockholders that chose to redeem and subsequently revoked their elections. The SPAC has agreed to purchase those shares from Vellar on a forward basis and the purchase price will include a prepayment in the amount of the redemption price per share.
The backstop agreement matures on the earlier to occur of 3 years after the deal closes or the date specified by Vellar in a written notice delivered if the VWAP during 30 out of 45 consecutive trading days is less than $4 per share.
In addition, Vellar will receive $12,408,000 from the trust, which will be used to purchase share consideration shares that otherwise would have been redeemed. These shares, however, are not subject to the backstop agreement. Aesther has the option to repurchase the share consideration shares from Vellar for $3 million at any time during the first six months after the prepayment date.
If the VWAP price of AEHA is equal to or above $20.00 per share for any 30 trading days during a 45 consecutive trading day-period and the aggregate trading volume in respect of such shares during the same 20-day period is at least the product of three and the difference of the number of shares and the terminated shares, then Aesther can notify Vellar to cause the maturity date to occur.
Additionally, the backstop agreement calls for the adjustment of the reset price on the first scheduled trading day of each month starting on the first calendar month following the closing of the deal to be the lowest of the then-current reset price, the initial price and the VWAP price of the shares of the last ten trading days of the prior calendar month, but not lower than $10.34.
The reset price may be reduced further in connection with a dilutive offering undertaken by Aesther. This would entitle Aesther to terminate the backstop agreement early and require Vellar to pay an amount equal to the product of the number of shares Aesther elects to terminate from the transaction and the reset price as of the termination date.
At maturity, any remaining shares will be purchased by Aesther at maturity for an additional $2.50 per share. During the term of the agreement, Vellar may sell the shares subject to the agreement after which those shares will no longer be subject to the agreement. In this case, Vellar will repay the SPAC with a portion of the sale proceeds.
If the backstop agreement is terminated after the business combination fails to close, then Aesther will be obligated to pay Vellar a fee of $1 million along with certain fees and expenses.
Aesther Healthcare announced its $345 million combination with Ocean Biomedical on August 31, 2022. Providence, Rhode Island-based Ocean Biomedical is developing treatments for malaria and different cancer types.