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Mountain Crest Acquisition Corp. IV *

Mountain Crest Acquisition Corp. IV *

May 24, 2021 by Anthony Sozzi

PROPOSED BUSINESS COMBINATIO7N: CH-AUTO TECHNOLOGY CORPORATION LTD.

ENTERPRISE VALUE: $1.71 billion
ANTICIPATED SYMBOL: QTM

Mountain Crest Acquisition Corp. IV proposes to combine with CH-AUTO TECHNOLOGY CORPORATION LTD., a company formed under the laws of the Peoples Republic of China (“CH-AUTO”), an electric vehicle manufacturing and design service company based in China.

  • CH-AUTO is a technology-driven company founded in 2003 and has been an electric vehicle manufacturing and design service company in China.
  • In 2015, CH-AUTO established “QIANTU MOTOR” to enter the electric vehicle market. In 2018, it built a new production facility in Suzhou, China, which replaces the traditional four techniques “Stamping, Welding, Painting & Assembly” of the automobile manufacturing process with just two techniques of “Body and Assembly.”
  • In the same year, QIANTU MOTOR put into production the Qiantu K50 series of all-electric urban supercars.
  • Another series, Qiantu K20, for the young Gen-Z consumers around the world will also be launched in the second half of 2022.

EXTENSION – 12/28/23 – LINK

  • The SPAC approved the extension from January 2, 2024 to July 2, 2024.
    • 6,889 shares were redeemed for $10.97 per share.
    • $0.10/Share will be deposited into the trust account for each 3-month extension.

EXTENSION – 6/28/23 – LINK

  • The SPAC approved the extension from July 2, 2023 to January 2, 2024.
    • 1,810,489 shares were redeemed for $10.54 per share.
    • $250K will be deposited into the trust account

SUBSEQUENT EVENT – 3/6/23 – LINK

  • In the event CH AUTO funds the initial payment of the Loan, the Outside Date shall be extended from May 15, 2023 to July 2, 2023

EXTENSION – 12/16/22 – LINK

  • The SPAC approved the vote to extend the Business Combination Period for a period of 3 months from January 2, 2023 to April 2, 2023, plus an option for the Company to further extend such date to July 2, 2023
    • 2,432,520 shares were tendered for redemption.
    • The Company extended the time it has to complete its initial business combination from January 2, 2023, to April 2, 2023 by depositing $581,000 into the trust account on December 16, 2022.

TRANSACTION

  • The transaction reflects an initial equity value of approximately $1.25 billion.
  • The transaction is expected to close in the fourth quarter of 2022 and Qun Lu, CH-AUTO’s founder and CEO, will continue to lead the holding company as its CEO after the closing of the transaction.
  • As part of the transaction:
    • (1) each share of Mountain Crest will be exchanged for one share of Pubco
    • (2) CH-AUTO shareholders and the pre-existing Pubco shareholders will be entitled to receive approximately 125 million shares valued at $10 per share in Pubco, subject to closing adjustments, and
    • (3) Pubco will assume net debt outstanding of approximately $460 million, for a total purchase price of approximately $1.7 billion.
  • The agreement provides that any additional debt will reduce the purchase price.

mountain 4

PIPE

  • Will use commercially reasonable best efforts to complete a private placement of Pubco Class A Ordinary Shares in the aggregate amount of no less than $100,000,000 at a price of $10 per share or more by November 15, 2022 (the “PIPE Financing”).

STOCK PURCHASE AGREEMENT

  • The Sponsor, Qiantu Motor USA Inc., and NextG Tech Limited entered into a stock purchase agreement for 200,000 shares from the Sponsor for a purchase price of $3,000,000 ($15/Share)

LOCK-UP

  • Company
    • 6 months from the Closing date
  • Sponsor
    • 50% – 6 months from the Closing date or trading for $12.50/Share for 20/30 trading days; 50% 6 months after the Closing date (no restrictions)

NOTABLE CONDITIONS TO CLOSING

  • There shall not be any Proceeding pending by or before any Governmental Authority in which a Governmental Authority is a party, nor shall there be any Order or Law in effect that restrains, enjoins, prevents, prohibits or make illegal the consummation of the Merger
  • After giving effect to all redemptions of SPAC Public Shares, MCAF shall have net tangible assets of at least $5,000,001 immediately prior to the Merger

NOTABLE CONDITIONS TO TERMINATION

  • MCAF and the Company have agreed that the closing of the Merger (the “Closing”) shall occur no later than November 15, 2022 (the “Outside Date”), provided that the Outside Date shall be extended to May 15, 2023
    • In the event CH AUTO funds the initial payment of the Loan, the Outside Date shall be extended from May 15, 2023 to July 2, 2023 – LINK
  • By MCAF, in the event that the Year End Financial Statements have not been delivered by June 30, 2022
  • By MCAF, in the event that the PIPE Financing has not been entered into by November 15, 2022

ADVISORS

  • China Bridge Capital Limited is acting as M&A advisor to CH-AUTO.
  • Wilson Sonsini Goodrich & Rosati, P.C. is serving as legal counsel to CH-AUTO.
  • Jun He Law Offices LLC is serving as legal counsel to CH-AUTO.
  • Harney Westwood & Riegels is serving as legal counsel to CH-AUTO.
  • Loeb & Loeb LLP is serving as legal counsel to Mountain Crest.

MANAGEMENT & BOARD

Executive Officers

Suying Liu, 33
Chairman, Chief Executive Officer, and Chief Financial Officer

Dr. Liu has been a director of PLBY Group, Inc. (Nasdaq: PLBY) since it closed its business combination with Mountain Crest Acquisition Corp (Nasdaq: MCAC) in February 2021. He was the Chairman and Chief Executive Officer of Mountain Crest Acquisition Corp from November 2019 until it closed its business combination with PLBY Group, Inc. He has been the Chairman and Chief Executive Officer of Mountain Crest Acquisition Corp. II (Nasdaq: MCAD) since July 2020. He has also been serving as the Chief Executive Officer, the Chief Financial Officer, and the Chairman of Mountain Crest Acquisition Corp. III (Nasdaq: MCAE) since May 2021. He served as the Head of Corporate Strategy of Hudson Capital Inc. (Nasdaq: HUSN) between May 2020 and September 2020, where he led the company’s strategic development for both general operations and specific growth areas. Between November 2018 and April 2020, Dr. Liu served as the Chief Strategist of Mansion Capital LLC, a privately-held real estate investment firm with brokerage and property management operations serving clients from both North America and Asia for their investments in the U.S. real estate market. Prior to joining Mansion Capital, Dr. Liu was an investment strategist at J.P. Morgan Chase & Co. from July 2015 to October 2018, providing investment strategies to major Wall Street institutions spanning private equity, hedge funds and insurance companies, with a primary focus in commercial mortgages. Dr. Liu began his career in academia, teaching a variety of degree programs from bachelor’s to executive education at Washington University Olin Business School between January 2013 and May 2015 while completing his doctoral studies, for which he received a PhD in finance in May 2015. Dr. Liu obtained a master’s in finance in December 2012 and his BA in economics and mathematics summa cum laude in May 2010 from Washington University in St. Louis.

Board of Directors

Nelson Haight, 56
Director

He served as a member of the board of directors of Mountain Crest Acquisition Corp (Nasdaq: MCAC) from January 2020 to February 2021, and has been serving as a member of the board of directors of Mountain Crest Acquisition Corp. II (Nasdaq: MCAD) since October 2020. He has also been serving as a member of the board of directors of Mountain Crest Acquisition Corp. III (Nasdaq: MCAE) since May 2021. A veteran in the oil and gas industry with over 30 years of professional experience, Mr. Haight currently serves as Senior Vice President, Chief Financial Officer and Treasurer for Key Energy Services, Inc., which he joined in June 2020. From September 2019 to June 2020, Mr. Haight was the interim Chief Financial Officer for Element Markets, LLC, an environmental commodities firm. From November 2018 to June 2019, Mr. Haight was the interim Chief Financial Officer for Epic Companies, LLC, a family office backed oilfield service company. Epic Companies filed for bankruptcy in August 2019. Between July 2017 and September 2018, Mr. Haight was the Chief Financial Officer of Castleton Resources, LLC, a privately held exploration and production company. From December 2011 to July 2017, Mr. Haight served in various capacities from Vice President to Chief Financial Officer at Midstates Petroleum Company, Inc., an exploration and production company founded in 1993 and focused on the application of modern drilling and completion techniques to oil/liquids-prone resources in previously discovered yet underdeveloped hydrocarbon trends. In 2015, Mr. Haight led the team that raised $625 million in new capital for Midstates Petroleum. Midstates Petroleum filed for Chapter 11 bankruptcy in April 2016, and Mr. Haight was instrumental in its successful reorganization and emergence from bankruptcy in October 2016. Mr. Haight received an MPA and BBA from the University of Texas at Austin in May 1988 and is a Certified Public Accountant and member of the American Institute of Certified Public Accountants.

Todd Milbourn, 52
Director

He served as a member of the board of directors of Mountain Crest Acquisition Corp (Nasdaq: MCAC) from January 2020 to February 2021, and has been serving as a member of the board of directors of Mountain Crest Acquisition Corp. II (Nasdaq: MCAD) since October 2020. He has also been serving as a member of the board of directors of Mountain Crest Acquisition Corp. III (Nasdaq: MCAE) since May 2021. Dr. Milbourn is the Vice Dean and Hubert C. and Dorothy R. Moog Professor of Finance at Washington University Olin Business School, where he has researched and built academic programs in the areas of corporate finance, executive compensation and credit ratings since June 2000. With expertise on valuation, corporate finance, corporate governance, executive compensation and corporate risk-taking, Dr. Milbourn has been retained as an expert by private firms as well as the U.S. Department of Justice in cases related to fair rates of return, breach of contract damages and executive compensation programs, among others. Dr. Milbourn is also the Director and Chair of the Audit Committee of the Xanthus Fund at Oppenheimer. Dr. Milbourn obtained his PhD in finance from Indiana University Kelly School of Business in December 1995 and BA in economics and mathematics from Augustana College in May 1991.

Wenhua Zhang, 51
Director

He served as a member of the board of directors of Mountain Crest Acquisition Corp (Nasdaq: MCAC) from January 2020 to February 2021, and has been serving as a member of the board of directors of Mountain Crest Acquisition Corp. II (Nasdaq: MCAD) since October 2020. He has also been serving as a member of the board of directors of Mountain Crest Acquisition Corp. III (Nasdaq: MCAE) since May 2021. Mr. Zhang has been a Partner at Azia Capital Fund LP, a private investment firm, since October 2014. Mr. Zhang began his career in the financial industry as the Vice President of Equity Research in the technology, media and telecom sector with T. Rowe Price from August 2001 to May 2008, and later joined Bain Capital as Director of the Brookside Fund, a long short equity investments fund, between July 2008 and December 2010. From February 2011 to August 2012, Mr. Zhang was Senior Vice President and Portfolio Manager at Harvard Management Company, a wholly owned subsidiary of Harvard University charged with managing the university’s endowment assets, and then as Partner and Portfolio Manager at Newport Asia LLC between October 2012 and October 2014, investing in Asia’s high-growth companies on behalf of clients from institutions, endowments, and family offices. Mr. Zhang received an MBA with dual majors in finance and technology innovation from the Wharton School at the University of Pennsylvania in May 2001.

ByAnthony Sozzi