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Orisun Acquisition Corporation *

Orisun Acquisition Corporation *

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: Ucommune Group Holdings

ESTIMATED CURRENT FUNDS in TRUST: $45.3 million*
CURRENT PER SHARE REDEMPTION PRICE: $10.19*
ENTERPRISE VALUE: $765 million

*SPACInsider estimate 

Orisun Acquisition Corp. proposes to combine with Ucommune Group Holdings, an agile office space manager and provider in China.

Founded in 2015, Ucommune currently has more than 700,000 members and more than 94,000 work stations across 211 office spaces in Greater China and Singapore with an aggregate managed area of 686,000 square meters (approximately 7.38 million square feet) as of December 31, 2019. Since its inception, Ucommune has been developing an asset-light model under which Ucommune provides space design, renovation, and management services to develop and manage agile office spaces for landlords who contribute most of the capital investments needed to build out and launch new spaces. In addition to agile office space services, Ucommune cooperates with over 700 business partners to offer its members additional revenue generating services including advertising and branding services, catering, fitness, healthcare, training and entertainment as well as general corporate services, such as corporate secretary, human resources, legal, finance, IT support and tax services. Ucommune’s existing investor base includes Sequoia Capital China, Matrix Partners China, Sinovation Ventures, ZhenFund, and Gopher Asset Management.

The Company’s revenues grew over 160% from 2018 to 2019. In 2020, the Company expects to experience modest revenue decline due to the COVID-19 pandemic. Ucommune has already seen improved revenues in recent weeks . Management forecasts an approximately 66% CAGR of revenues between 2017 and 2022.

SUBSEQUENT EVENTS

  • Orisun Acquisition Corp., together with Ucommune International Ltd, entered into backstop agreements with 19 investors. The investors agreed to invest no less than $66.5 million by either
    • (i) acquiring Orisun’s common stock in the open market or in private transactions prior to the closing of the business combination at the then prevailing market price of the shares, or
    • (ii) acquiring common shares in a private placement concurrently with the closing of the business combination at $10.10 per share.

TRANSACTION SUMMARY

  • Ucommune’s shareholders and management will receive 70 million ordinary shares of Ucommune International.
  • In addition, Ucommune shareholders will be entitled to receive earn-out consideration of up to an additional four million ordinary shares of Ucommune International, subject to Ucommune exceeding certain net revenue targets in 2020, 2021 and 2022 or achieving certain share price thresholds prior to certain future dates as set forth in the Merger Agreement.
  • All shares held by existing Ucommune shareholders will be subject to lock-up agreements for a period of at the least six (6) months following closing of the transaction, subject to certain exceptions.
  • The combined company represents a pro forma market value of approximately $769 million at closing, or 2.58x 2022 estimated net revenue, assuming no shareholder redemption and the Company receiving $44.8 million cash from Orisun’s trust account.

Orisun transaction overview

EARNOUT

Certain Ucommune Shareholders may be entitled to receive earn-out shares as follows:

  • 2,000,000 Purchaser Class A Ordinary Shares if
    • (x) the VWAP of the Purchaser Class A Ordinary Shares equals or exceeds $16.50 (or any foreign currency equivalent) in any twenty trading days within a thirty trading day period before December 31, 2022 on any securities exchange or securities market on which the Purchaser Ordinary Shares are then traded or
    • (y) Ucommune’s revenue exceeds RMB850,000,000 in the fiscal year of 2020 pursuant to the audited consolidated financial statements of Ucommune as of and for the fiscal year ended December 31, 2020;
  • 1,000,000 Purchaser Class A Ordinary Shares if
    • (x) the VWAP of the Purchaser Class A Ordinary Shares equals or exceeds $22.75 (or any foreign currency equivalent) in any twenty trading days within a thirty trading day period before December 31, 2023 on any securities exchange or securities market on which the Purchaser Ordinary Shares are then traded or
    • (y) Ucommune’s revenue exceeds RMB1,275,000,000 in the fiscal year of 2021 pursuant to the audited consolidated financial statements of Ucommune as of and for the fiscal year ended December 31, 2021; and
  • 1,000,000 Purchaser Class A Ordinary Shares if
    • (x) the VWAP of the Purchaser Class A Ordinary Shares equals or exceeds $30 (or any foreign currency equivalent) in any twenty trading days within a thirty trading day period before December 31, 2024 on any securities exchange or securities market on which the Purchaser Ordinary Shares are then traded or
    • (y) Ucommune’s revenue exceeds RMB1,912,000,000 in the fiscal year of 2022 pursuant to the audited consolidated financial statements of Ucommune as of and for the fiscal year ended December 31, 2022.

NOTABLE CONDITIONS TO CLOSING

  • There having been no material adverse effect to Ucommune’s business
  • Minimum cash of $25 million.

NOTABLE CONDITIONS TO TERMINATION

  • By either Orisun or Ucommune, if the closing has not occurred by December 31, 2021
  • By Orisun, if Ucommune has materially breached any representation, warranty, agreement or covenant contained in the Agreement or this Agreement, the plan of merger or the transactions fail to be authorized or approved by the Ucommune Shareholders and such breach has not been cured within fifteen (15) days following the receipt by Ucommune of a notice describing such breach, and Orisun will be entitled to a break-up fee of $3,000,000 promptly after such termination; or
  • By Ucommune, if Orisun has materially breached any representation, warranty, agreement or covenant contained in the Agreement and such breach has not been cured within fifteen (15) days following the receipt by Orisun a notice describing such breach, and Ucommune will be entitled to a break-up fee of $3,000,000 promptly after such termination.

ADVISORS

  • Chardan is acting as an M&A and financial advisor to Orisun.
  • Loeb & Loeb LLP is acting as legal advisor to Orisun.
  • Davis Polk & Wardwell LLP is acting as the legal advisor to Ucommune.

ORISUN ACQUISITION CORP. MANAGEMENT & BOARD

Executive Officers

Wei Chen, 51
Chief Executive Officer, Chairman and President

Ms. Chen has been an independent investor through her family office, Everpower International Holdings Co., Ltd. since January, 2009. She focuses on high technology, the greater health industry, and entertainment opportunities and helps create strategic plans for target companies. Ms. Chen has successfully helped multiple overseas technology companies moving their manufacturing operations to mainland China, including a graphene technology application company supported by Rutgers University and a Taiwanese organic photovoltaic solar cell company. She also helped these companies get local policy support and collaborate with Chinese private equity firms. Her family office has been authorized to act as the exclusive licensee by the Hollywood Chamber of Commerce to engage in certain Hollywood-related commercial activities in China. Ms. Chen is currently leading several projects such as a theme park and other Hollywood related real estate projects. Previously, Ms. Chen was an officer at the China General Administration of Customs from January 1989 to January 2009. She earned a degree in business management from Jiangsu Provincial Party School.

Xiaocheng Peng, 31
Chief Financial Officer

Mr. Peng has served as an investment professional at Ms. Chen’s family office, Everpower International Holdings Co., Ltd. since December 2015. He focuses on high technology and entertainment opportunities and helps create strategic plans for target companies. Mr. Peng has led due diligence and prepared the related investment materials and analysis reports for target companies. He is also experienced in deal negotiation and post-investment management. Mr. Peng earned his Master of Business Administration degree from California State University Long Beach in 2015, a Master of Engineering in Environmental Engineering from Oregon State University in 2013 and a bachelor’s degree in Food Safety and Quality from Jilin University in China in 2001.

 

Board of Directors

Lihua Zheng, 41
Independent Director

Mr. Zheng has served as the Director and Co-Founder of AnHeart Therapeutics Inc. since October 2018and of AnBio Inc. since December 2017, where he leads the operation in licensing in pharmaceutical development programs in both companies. He is also the owner and founding partner of Zheng & Karg LLP, which he founded in January 2018. Prior to that, he was the owner and founding partner of Liu Zheng Chen & Hoofman LLP from October 2015 to December 2017. Mr. Zheng worked at Proskauer Rose LLP from June 2008 until September 2015. He was also a postdoctoral research scientist at Columbia University Medical Center from November 2006 until May 2008. Mr. Zheng earned a juris doctor degree from Fordham University School of Law in 2012, a Ph. D in molecular and human genetics from Baylor College of Medicine in 2006, and a master’s and bachelor’s degree in biology from Fudan University in China in 2001.

Ling Wu, 50
Independent Director

Mr. Wu is the founder and principal attorney of Wu Law Firm PLLC, which he founded in September 2011. Prior to founding his own firm, he served as the project leader of Ricoh Corporation Information Technology Group from October 2002 until August 2011. Mr. Wu was an associate in the investment banking department of Morgan Stanley Dean Witter from October 2000 until February 2002. Prior to that, he was an software engineer at Lockheed Martin IMS from October 1999 until September 2000. Mr. Wu earned a juris doctor degree from Rutgers University School of Law in 2011, a master’s degree in business computer information systems from Baruch College of CUNY in 1999, and a bachelor’s degree in English from Shanghai University in China in 1990.

Tony Chi Ming Chan, 51
Independent Director

Mr. Chan has served as the chief financial officer at Good Resources Holdings Limited (“GRHL,” a Hong Kong public listed company with stock code: 109), where he is mainly responsible for the financial and investment management, since January 2019. Mr. Chan is also an independent director of Theme International Holdings Limited (a Hong Kong public listed company with stock code: 990). Mr. Chan was a non-executive director of Hua Xia Healthcare Holdings Limited (“Hua Xia,” a Hong Kong public listed company with stock code: 8143) from November 2016 until July 2018 and then served as an executive director of Hua Xia from July 2018 to January 2019. Prior to that, he was an executive director of Wan Kei Group Holdings Limited (a Hong Kong public listed company with stock code:1748) from November 2016 until July 2018. Mr. Chan served as company secretary and authorized representative of GRHL from September 2007 until May 2017. Prior to joining GRHL, Mr. Chan worked at Deloitte Touche Tohmatsu (between July 2000 and September 2001), Ernst & Young (from November 1994 to June 2000 and then from June 2004 until August 2007), and Coopers & Lybrand (from July 1994 until November 1994). Mr. Chan holds a bachelor’s degree in Accounting from Australian National University and master’s degree in Finance from University of New South Wales. Mr. Chan was admitted as Certified Practicing Accountant of CPA Australia in November 1993 and was admitted as Certified Public Accountant of Hong Kong Institute of Certified Public Accountants in February 2012.

Lu Zhou, 38
Director

Ms. Zhou has served as the executive secretary and project manager at Capstone Capital Group, LLC, a company providing financing solutions for its clients, since January 2006, where she is responsible for research, evaluation and selection of qualified investment projects, negotiation of funding structure and finance terms, and investor relationships. She also works to facilitate communication between Capstone Capital Group, LLC and Chinese officials at different levels. Ms. Zhou holds a Bachelor’s Degree in Business Management from the University of New Orleans.

ByRoman Developer