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Redwoods Acquisition Corp. *

Redwoods Acquisition Corp. *

Mar 10, 2022 by sam.beattie

PROPOSED BUSINESS COMBINATION: ANEW MEDICAL

ENTERPRISE VALUE: $94 million
ANTICIPATED SYMBOL: LEAS

Redwoods Acquisition Corp. proposes to combine with ANEW MEDICAL.

ANEW is a Wyoming corporation with a primary focus on developing disruptive new therapies to alleviate and/or reverse the progression of neurodegenerative diseases through the use of cell and gene therapy. ANEW has assembled a team of highly experienced pharmaceutical professionals and has licensed technologies that are essential and life-saving. Deploying the cell and gene therapy that integrates a proprietary gene splice variant called secreted klotho (s-KL) and delivery of the gene construct to the cytoplasm of cells using an adeno-associated virus (AAV) serotype 9 that concentrates the expressed protein in the central nervous system (CNS) and another AAV9 that has been shown to concentrate in muscle tissue.

SUBSEQUENT EVENT – 6/14/24 – LINK

  • Forward Purchase Agreement with Meteora
    • Pursuant to the terms of the Forward Purchase Agreement, the Seller intends, but is not obligated, to purchase up to 1,000,000 Shares less the number of RWOD Shares purchased by the Seller separately from third parties through a broker in the open market.
    • The Forward Purchase Agreement provides for a prepayment shortfall in an amount in U.S. dollars equal to 0.5% of the product of the Recycled Shares and the Initial Price.
      • The Seller will pay the Prepayment Shortfall to the Counterparty on the Prepayment Date.
      • Additionally, following the closing of the Business Combination, Counterparty may, in its sole discretion, request additional Prepayment Shortfall from Seller in tranches of $250,000
        • (i) Seller has recovered any prior Prepayment Shortfall,
        • (ii) the VWAP Price over the prior ten (10) trading days multiplied by the then current freely-tradeable Shares held by Seller be at least seven (7) times greater than the Additional Prepayment Shortfall request and
        • (iii) the total value traded in Counterparty’s stock, as reported on the relevant Bloomberg Screen, be at least seven (7) times greater than the Additional Prepayment Shortfall request (with (i), (ii) and (iii) collectively as the “Shortfall Conditions”).
    • The Seller in its sole discretion may sell Recycled Shares at any time following the Trade Date and at any sales price, without payment by the Seller of any Early Termination Obligation until such time as the proceeds from such sales equal 110% of the Prepayment Shortfall.
    • The Counterparty will pay to the Seller the Prepayment Amount required under the Forward Purchase Agreement directly from the Counterparty’s trust account maintained by Continental Stock Transfer & Trust Company holding the net proceeds of the sale of the units in the Counterparty’s initial public offering and the sale of private placement shares, no later than the earlier of one New York business day after the date of the closing of the Business Combination pursuant to the Business Combination Agreement (the “Closing Date”)
    • In addition to the Prepayment Amount, the Counterparty will pay directly from the Trust Account, on the Prepayment Date, an amount equal to the product of
      • (x) up to 35,000 (with such final amount to be determined by Seller in its sole discretion via written notice to the Counterparty) and
      • (y) the Initial Price.
        • The Shares purchased with the Share Consideration (the “Share Consideration Shares”) will be incremental to the Maximum Number of Shares (as defined herein) and will not be included in the number of Shares in connection with the Transaction under the Forward Purchase Agreement.
    • Within 30 days after June 13, 2024 (the “Trade Date”), the Counterparty will file (at the Counterparty’s sole cost and expense) with the SEC a registration statement registering the resale of all Shares held by the Seller, including the Recycled Shares, Share Consideration Shares and any Additional Shares (the “Registration Statement”), and have the Registration Statement declared effective as soon as practicable after the filing.
    • The reset price (the “Reset Price”) will initially be $10.00.
    • The “Valuation Date” is the earlier to occur of
      • (a) the date that is 3 months after the Closing Date,
      • (b) the date specified by the Seller in a written notice to be delivered to the Counterparty at the Seller’s discretion (which Valuation Date will not be earlier than the day such notice is effective) after the occurrence of any of
        • (v) a Shortfall Variance Registration Failure,
        • (w) a VWAP Trigger Event, (x) a Delisting Event,
        • (y) a Registration Failure or
        • (z) unless otherwise specified therein, upon any Additional Termination Event, and
      • (c) the date specified by the Seller in a written notice to be delivered to the Counterparty at the Seller’s sole discretion (which Valuation Date will not be earlier than the day such notice is effective).
        • The Valuation Date notice will become effective immediately upon its delivery from the Seller to the Counterparty in accordance with the Forward Purchase Agreement.
    • The “Settlement Amount Adjustment” is the cash amount equal to the product of (i) the Maximum Number of Shares as of the Valuation Date multiplied by (ii) $1.00.
    • The Counterparty has agreed to grant the Seller, for the period beginning on June 13, 2024 and ending on the 12-month anniversary of the Valuation Date, the right, but not the obligation, in its sole discretion, to invest on the terms offered to the Seller by the Counterparty up to 50% of any future debt, equity, derivative or any other kind of financing of the Counterparty, as legally permitted (each a “Covered Financing”).
      • The Seller will be provided at least ten (10) business day notice to invest in any Covered Financing.
  • Subscription Agreement
    • Pursuant to the FPA Funding PIPE Subscription Agreement, Seller agreed to subscribe for and purchase, and RWOD agreed to issue and sell to Seller, prior to the Valuation Date, an aggregate of up to 1,000,000 RWOD Shares, less the Recycled Shares in connection with the Forward Purchase Agreement, at the Initial Price per share.

SUBSEQUENT EVENT – 5/10/24 – LINK

  • On May 9, 2024, Redwoods Acquisition Corp. entered into an agreement with certain investors, who committed to not redeeming up to 360,000 shares of RWOD common stock they previously planned to redeem at a special meeting held on April 12, 2024.
    • Upon consummation of the Transactions, RWOD shall pay or cause to be paid to each Backstop Investor a payment in respect of its respective Backstop Shares in cash released from RWOD’s trust account in an amount equal to the product of (x) the number of Backstop Shares and (y) the Redemption Price (as defined below), less $5.00.
  • As of May 8, 2024, RWOD has received requests to redeem a total of 1,589,776 RWOD Shares compared to the 1,739,776 that initially redeemed.

EXTENSION – 11/14/23 – LINK

  • The SPAC approved the extension from December 4, 2023 to December 4, 2024.
    • 3,636,456 shares were redeemed.
    • $35K per month will be deposited into the trust account.

SUBSEQUENT EVENT – 11/7/23 – LINK

  • On November 4, 2023, Redwoods signed Amendment No. 1 to the Business Combination, extending the termination date from November 4, 2023, to March 4, 2024.

TRANSACTION

  • The pro forma enterprise value of the combined company is up to US$94 million, which includes up to US$54 of cash held in the trust account of Redwoods, which is subject to redemption by Redwoods stockholders.
  • Up to 5 million of additional earn-out shares will be issued to ANEW stockholders if applicable stock performance-based requirements are met.
  • The proposed business combination is expected to be completed by the fourth quarter of 2023.
  • ANEW currently has its common stock quoted on the OTC Markets under the symbol “LEAS”.

SPAC FUNDING

  • PIPE
    • ANEW plans to enter into definitive agreements on terms and conditions satisfactory to the Company (the “PIPE Subscription Agreements”) with certain investors (the “PIPE Investors”) pursuant to which such investors, upon the terms and subject to the conditions set forth therein, will purchase shares of the Company’s Common Stock at a purchase price of $10.00 per share (the “PIPE Investment”); provided that the proceeds of the PIPE Investment will be equal to an aggregate of at least $5,000,000 immediately prior to the Closing.
  • Forward Purchase Agreement with Meteora
    • Pursuant to the terms of the Forward Purchase Agreement, the Seller intends, but is not obligated, to purchase up to 1,000,000 Shares less the number of RWOD Shares purchased by the Seller separately from third parties through a broker in the open market.
    • The Forward Purchase Agreement provides for a prepayment shortfall in an amount in U.S. dollars equal to 0.5% of the product of the Recycled Shares and the Initial Price.
      • The Seller will pay the Prepayment Shortfall to the Counterparty on the Prepayment Date.
      • Additionally, following the closing of the Business Combination, Counterparty may, in its sole discretion, request additional Prepayment Shortfall from Seller in tranches of $250,000
        • (i) Seller has recovered any prior Prepayment Shortfall,
        • (ii) the VWAP Price over the prior ten (10) trading days multiplied by the then current freely-tradeable Shares held by Seller be at least seven (7) times greater than the Additional Prepayment Shortfall request and
        • (iii) the total value traded in Counterparty’s stock, as reported on the relevant Bloomberg Screen, be at least seven (7) times greater than the Additional Prepayment Shortfall request (with (i), (ii) and (iii) collectively as the “Shortfall Conditions”).
    • The Seller in its sole discretion may sell Recycled Shares at any time following the Trade Date and at any sales price, without payment by the Seller of any Early Termination Obligation until such time as the proceeds from such sales equal 110% of the Prepayment Shortfall.
    • The Counterparty will pay to the Seller the Prepayment Amount required under the Forward Purchase Agreement directly from the Counterparty’s trust account maintained by Continental Stock Transfer & Trust Company holding the net proceeds of the sale of the units in the Counterparty’s initial public offering and the sale of private placement shares, no later than the earlier of one New York business day after the date of the closing of the Business Combination pursuant to the Business Combination Agreement (the “Closing Date”)
    • In addition to the Prepayment Amount, the Counterparty will pay directly from the Trust Account, on the Prepayment Date, an amount equal to the product of
      • (x) up to 35,000 (with such final amount to be determined by Seller in its sole discretion via written notice to the Counterparty) and
      • (y) the Initial Price.
        • The Shares purchased with the Share Consideration (the “Share Consideration Shares”) will be incremental to the Maximum Number of Shares (as defined herein) and will not be included in the number of Shares in connection with the Transaction under the Forward Purchase Agreement.
    • Within 30 days after June 13, 2024 (the “Trade Date”), the Counterparty will file (at the Counterparty’s sole cost and expense) with the SEC a registration statement registering the resale of all Shares held by the Seller, including the Recycled Shares, Share Consideration Shares and any Additional Shares (the “Registration Statement”), and have the Registration Statement declared effective as soon as practicable after the filing.
    • The reset price (the “Reset Price”) will initially be $10.00.
    • The “Valuation Date” is the earlier to occur of
      • (a) the date that is 3 months after the Closing Date,
      • (b) the date specified by the Seller in a written notice to be delivered to the Counterparty at the Seller’s discretion (which Valuation Date will not be earlier than the day such notice is effective) after the occurrence of any of
        • (v) a Shortfall Variance Registration Failure,
        • (w) a VWAP Trigger Event, (x) a Delisting Event,
        • (y) a Registration Failure or
        • (z) unless otherwise specified therein, upon any Additional Termination Event, and
      • (c) the date specified by the Seller in a written notice to be delivered to the Counterparty at the Seller’s sole discretion (which Valuation Date will not be earlier than the day such notice is effective).
        • The Valuation Date notice will become effective immediately upon its delivery from the Seller to the Counterparty in accordance with the Forward Purchase Agreement.
    • The “Settlement Amount Adjustment” is the cash amount equal to the product of (i) the Maximum Number of Shares as of the Valuation Date multiplied by (ii) $1.00.
    • The Counterparty has agreed to grant the Seller, for the period beginning on June 13, 2024 and ending on the 12-month anniversary of the Valuation Date, the right, but not the obligation, in its sole discretion, to invest on the terms offered to the Seller by the Counterparty up to 50% of any future debt, equity, derivative or any other kind of financing of the Counterparty, as legally permitted (each a “Covered Financing”).
      • The Seller will be provided at least ten (10) business day notice to invest in any Covered Financing.
  • Subscription Agreement
    • Pursuant to the FPA Funding PIPE Subscription Agreement, Seller agreed to subscribe for and purchase, and RWOD agreed to issue and sell to Seller, prior to the Valuation Date, an aggregate of up to 1,000,000 RWOD Shares, less the Recycled Shares in connection with the Forward Purchase Agreement, at the Initial Price per share.

EARNOUT

  • Company:
    • Certain ANEW stockholders will be issued additional shares of the Company’s Common Stock (the “Contingent Consideration Shares”), which will be issued as follows:
      • (i) 2,000,000 Contingent Consideration Shares upon the Company achieving a closing price equal to or exceeding $12.50 for 10 trading days within a 20-day trading period in the first three years following the Closing;
      • (ii) 2,000,000 Contingent Consideration Shares upon the Company achieving a closing price equal to or exceeding $15.00 for 10 trading days within a 20-day trading period in the first three years following the Closing; and
      • (iii) 1,000,000 Contingent Consideration Shares upon the Company achieving a closing price equal to or exceeding $20.00 for 10 trading days within a 20-day trading period in the first five years following the Closing.
  • Sponsor:
    • The Sponsor Support Agreement commits 1,375,000 Founder Shares (the “Deferred Shares”) to a share escrow account which will be established on the Closing Date.
    • The Deferred Shares will be released from the escrow account as follows:
      • (i) 458,333 Deferred Shares upon the Company achieving a closing price equal to or exceeding $12.50 for 10 trading days within a 20-day trading period in the first three years following the Closing;
      • (ii) 458,333 Deferred Shares upon the Company achieving a closing price equal to or exceeding $15.00 for 10 trading days within a 20-day trading period in the first three years following the Closing; and
      • (iii) 458,333 Deferred Shares upon the Company achieving a closing price equal to or exceeding $20.00 for 10 trading days within a 20-day trading period in the first five years following the Closing.

LOCK-UP

  • Sponsor Lock-up:
    • 50% of the insider shares will be subject to a lock-up until the earlier of:
      • (i) six months after the date of the consummation of the initial business combination, and
      • (ii) the date on which the closing price of the common stock equals or exceeds $12.50 per share for any 20 trading days within any 30-trading day period commencing after the consummation of the initial business combination.
    • The remaining 50% of the insider shares will be subject to a lock-up until six months after the date of the consummation of the initial business combination.
  • ANEW Lock-up:
    • The Company’s shares will be subject to a lock-up until six months after the date of the consummation of the initial business combination.

NOTABLE CONDITIONS TO CLOSING

  • Redwoods and ANEW shareholder approvals
  • Regulatory approvals, including HSR approval

NOTABLE CONDITIONS TO TERMINATION

  • The Business Combination Agreement may be terminated by the Company or ANEW, if:
    • The Closing is incapable of being satisfied by November 4, 2023 (“Outside Date“); and
      • On November 4, 2023, Redwoods signed Amendment No. 1 to the Business Combination, extending the termination date from November 4, 2023, to March 4, 2024. – LINK
    • The Company gives notice to ANEW, within 14 days of May 30, 2023 in its sole discretion, in the event that the Company is not satisfied with the results of ANEW’s due diligence review.

ADVISORS

  • ANEW Advisors:
    • Chardan is acting as M&A and capital markets advisor, and Hunter Taubman Fischer & Li LLC acted as legal counsel to Chardan.
    • Cyruli Shanks & Zizmor, LLP is acting as legal counsel
  • Redwoods Advisors:
    • Loeb & Loeb LLP is acting as legal counsel

EXTENSION – 4/4/23 – LINK

  • The SPAC approved the extension from April 4, 2023 to July 4, 2023, and the option to further extend the date by which it has to consummate a business combination beyond July 4, 2023 up to five times for an additional (1) month each time to December 4, 2023.
    • 6,103,350 shares were redeemed.
    • $360K will be deposited into the trust account to extend until 7/4/23; $120K per month will be deposited thereafter as needed

LETTER OF INTENT – 12/16/22 – LINK

  • Xin Bo Xing Group Limited recently announced that it has signed an agreement of intent with Redwoods Acquisition Corp.
    • Xinboxing is a leading new material technology research and development company in Asia.
    • It focuses on the research and development of precision casting technology mainly based on titanium and zirconium alloys, and provides customers with full chain services of research and development, design, production, and post maintenance through ODM mode.
    • Its business scope covers aviation, shipping, chemical, medical, aerospace, marine, sports, civil hardware and other fields, which can meet the customization needs of different industries, different products, and different regional standards.

MANAGEMENT & BOARD

Executive Officers

Jiande Chen, 67
Chief Executive Officer and Director

Mr. Chen has served as a non-executive director at IMAX China Holding, Inc. (HKG: 1970) since January 2021 and an independent director at Beijing Cultural Investment Development Group Co., Ltd. (SHA: 600715) since June 2017. Mr. Chen is also a member of the board of directors at TCL-IMAX Entertainment Co., Limited, a joint venture of TCL Corporation and IMAX Corporation. Mr. Chen served as the chief executive officer from August 2011 to December 2019 and the vice chairman from December 2019 to December 2020 of IMAX China Holding, Inc. (HKG: 1970), and led IMAX China to complete its first initial offering on Hong Kong Exchanges. Mr. Chen was previously the Senior Vice President, Chief Representative and General Manager of Sony Pictures Entertainment, China from 2000 to 2011. Mr. Chen received a degree in English Literature from Fudan University in 1982. Mr. Chen received a master’s degree and a Ph.D. degree in Communications from University of Washington in 1987 and 1991, respectively.

Edward Cong Wang, 39
Chief Financial Officer and Director

Mr. Wang has served as the Chairman, President and Chief Executive Officer at Pacifico Acquisition Corp. (NASDAQ: PAFO) since March 2021. Mr. Wang has also served as the managing partner at The Balloch (Holding) Group since March 2020. Before that, he was a partner at Prestige Financial Holdings Group Limited from August 2018 to September 2019. Mr. Wang served as a partner at Shenzhen Bode Chuangfu Investment Management Co. Ltd., from January 2017 to July 2018. Mr. Wang served as the chief executive officer of ZS Fur & Leather Fashion Co., a family owned business, from July 2014 to December 2016. Prior to ZS Fur, he worked at Merrill Lynch, Pierce, Fenner & Smith Incorporated as a vice president from July 2011 to June 2014. Mr. Wang received a bachelor’s degree in Economics/Finance from Stony Brook State University in 2006 and graduated with a master’s degree of Statistics from Columbia University in 2010.

Board of Directors

Raymond J. Gibbs, 68
Independent Director

Mr. Gibbs currently serves as an independent director at Pacifico Acquisition Corp. (NASDAQ: PAFO). He has spent the last 21 years as chief financial officer or commercial director of high technology and fast moving consumer goods businesses both in the quoted and private arenas. Mr. Gibbs has co-chaired the UK-China Joint Working Group on Graphene Standardization, organized by the BSI Group and the China Standards Authority, and he has served as the chairman of planarTECH LLC since July 2019. In addition, he served as the president of business development and the chief executive officer of Haydale Graphene Industries PLC, a publicly listed company in the UK, from May 2010 to July 2019. Mr. Gibbs is a Chartered Accountant. Mr. Gibbs received a bachelor’s degree from Nottingham Trent University in 1977.

Wei Kwang Ng, 42
Independent Director

Mr. Ng has held the position of Chief Operating Officer of Parcel Santa Pte Ltd since July 2017. Mr. Ng was the Director of Operations of World Marketing Group Pte Ltd. from March 2019 to March 2020. He was the Managing Director of LegalFocus Consultants, Inc. from 2011 to 2018. He worked in Merrill Brink International as the project manager from May 2008 to March 2011. Mr. Ng received bachelor’s degrees in Business Management with a concentration in Finance and in Economics from Stony Brook State University in 2007.

Hong Li, 58
Independent Director

Mr. Li has served as the CEO at Shanghai Sycamore Asset Management since 2021. Previously, he was the Chief Digital Officer and Chief Product Strategy Officer of Noah Holdings Limited (NYSE: NOAH) from April 2020 to March 2021. At the same time period, he was also the Chief Operating Officer in Gopher Asset Management. Before that, Mr. Li had served as the Chief Product Officer of Lufax Holding Ltd (NYSE: LU) from April 2018 to December 2019 and the Chairman of CITCO Fund Service from May 2010 to November 2015. Mr. Li received a bachelor’s degree in Physics from Zhongshan University in 1984, a master’s degree in Electronic Engineering from Zhongshan University in 1989 and a master’s degree in Computer Science from University of San Francisco in 1993. He also achieved Executive certificate in Management and Leadership from MIT in 2010 and EMBA from China Europe International Business School in 2015.

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