Alpha Healthcare III (NASDAQ:ALPA) announced in an 8-K this morning that it has signed a forward purchase agreement (FPA) and a non-redemption agreement to support its combination with biotech firm Carmell.
Meteora Special Opportunity Fund I has agreed to purchase an amount of shares equal to 9.5% of ordinary Alpha Healthcare III stock at close through the FPA. It will be prepaid for these purchases at its redemption price out of funds from Alpha Healthcare III’s trust.
The investor may then sell these shares and terminate the agreements coverage of them at a price equal to the combined company’s VWAP at the beginning of a given week, but this is subject to a floor of $11.50. Otherwise, the agreement is to settle one year after close at the price of the time, but Meteora is to pay a $0.50 fee per share held up to this point.
Meteora has also agreed to not redeem 100,000 other shares that it currently holds.
This all comes as Alpha Healthcare III goes into a vote to complete its combination with Carmell tomorrow, July 11. The two sides initially agreed to their $188 million merger in January. Pittsburgh-based Carmell is developing a treatment platform to accelerate healing in bone fractures and soft tissue wounds.
The deal does not include a minimum cash condition beyond the $5 million needed to maintain listing requirements. But, in late June, Alpha Healthcare III announced it had signed a non-binding LOI for Carmell to acquire a commercial-stage biotech firm for about $65 million post-close.
Under the current non-binding terms of the LOI, the post-close company would need to pay about $8 million of the compensation for this acquisition in cash.