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Jupiter Wellness Acquisition Corp. *

Jupiter Wellness Acquisition Corp. *

Nov 1, 2021 by Anthony Sozzi

PROPOSED BUSINESS COMBINATION: Chijet Motor Company, Inc.

ENTERPRISE VALUE: $1.6 billion
ANTICIPATED SYMBOL: tbd

Jupiter Wellness Acquisition Corp. proposes to combine with Chijet Motor Company, Inc., a company developing next-generation electric vehicles and expanding its manufacturing capabilities.

  • The primary business of Chijet is the development, manufacture, sales, and service of traditional fuel vehicles and electric vehicles.
  • Manufacturing systems and stable supply chain management enable the company to provide consumers with products of high performance at reasonable prices.
  • The factory in Yantai, China, will be dedicated to EV production, and the company’s headquarters will be also located at the planned Yantai factory. Chijet has a management team of industry veterans with decades of experience in engineering and design, management, financing, industrial production and financial management.

SUBSEQUENT EVENT – 5/1/23 – LINK

  • The SPAC entered into a non-redemption agreement with several unaffiliated third parties in exchange for them agreeing not to redeem an aggregate of 530,000 shares
    • In exchange, the Subject Seller agreed to provide down-side protection to each Holder.
    • If the daily volume-weighted average price of Pubco ordinary shares falls below $10.00 for 10 consecutive trading days, the Subject Seller will transfer and surrender a number of Pubco ordinary shares to Pubco for cancellation, and Pubco will issue new shares to the Holder.
    • If the price falls below $5.00, the Subject Seller will surrender an additional number of shares, and Pubco will issue new shares to the Holder.
    • The new shares issued to the Holder are called “Downside Protection Shares”.

EXTENSION – 12/1/22 – LINK

  • The Company intends to extend the period it has to consummate its initial business combination by three months from December 8, 2022, to March 8, 2023.
    • This is the first of two 3-month extensions

TRANSACTION

  • The business combination attributes an implied enterprise value to Chijet of an aggregate of $1.6 billion, including Chijet’s controlling interests in Shandong Baoya New Energy Vehicle Co., Ltd., the Chinese company that is developing new EV models, and FAW Jilin, the Chinese company producing and selling traditional fuel vehicles.
  • Of the aggregate $1.6 billion, $674 million is subject to potential surrender and cancellation after the closing of the transaction for Chijet failing to achieve certain financial performance or stock price metrics.
  • Upon completion of the transaction, Chijet currently expects proceeds will be approximately $140.2 million before payment of transaction expenses (assuming no redemptions by JWAC public shareholders).
  • The cash proceeds raised in the transaction are currently anticipated to be used for the construction of Chijet’s Yantai electric vehicle manufacturing base and to fund company operations, support its growth and for general company operating purposes.
  • Following completion of the proposed transaction, Chijet plans to raise additional capital to further its planned expansion of production capacity and product offering to include new models of electric vehicles.

PIPE

  • There is no PIPE for this transaction.

LOCK-UP

  • Company and Sponsor
    • 6 months from the Closing Date or if the shares equal or exceed $12.50 for any 20/30 trading days, 50% of the shares will be tradable.

EARNOUT

  • The issuance of an amount of Exchange Shares to certain Sellers who are earnout participants equal in value to $674,000,000
    • The Earnout Shares and earnings thereon will vest in three tranches consisting of 30% for 2023, 30% for 2024 and any unvested amount for 2025
      • (a) The first tranche shall
        • (i) vest based on gross revenues of Pubco and the Company and its subsidiaries as set forth in Pubco’s audited annual financial statements included in Form 20-F or 10-K filed with the SEC for the calendar year ended December 31, 2023 in excess of the gross revenue milestones specified in the Business Combination Agreement, or alternatively
          • RMB Exchange Rate Adjustment (the “2023 Revenue”), exceeds $528,000,000 (the “2023 Minimum Revenue”)
        • (ii) Equals or exceeds $13.00 per share for at least 20/30 Trading Days, for the fiscal year ended December 31, 2023.
      • (b) The second tranche will likewise either
        • (i) vest based on gross revenues set forth in Pubco’s audited annual financial statements included in Form 20-F or 10-K filed with the SEC for the calendar year ended December 31, 2024 in excess of the gross revenue milestones specified in the Business Combination Agreement; or
          • RMB Exchange Rate Adjustment (the “2024 Revenue”), exceeds $870,000,000 (the “2024 Minimum Revenue”)
        • (ii) Equals or exceeds $13.00 per share for at least 20/30 Trading Days, for the fiscal year ended December 31, 2024
      • (c) Any remaining Earnout Shares not vested in the first or second tranches are eligible either to
        • (i) vest based on gross revenues set forth in Pubco’s audited annual financial statements included in Form 20-F or 10-K filed with the SEC for the calendar year ended December 31, 2025 in excess of the gross revenue milestones specified in the Business Combination Agreement; or
          • RMB Exchange Rate Adjustment (the “2025 Revenue”), exceeds $1,616,000,000 (the “2025 Minimum Revenue”)
        • (ii) Equals or exceeds $13.00 per share for at least 20/30 Trading Days, for the fiscal year ended December 31, 20255

NOTABLE CONDITIONS TO CLOSING

  • The Company having upon the Closing cash and cash equivalents (including funds remaining in the trust account after completion and payment of the Redemption and the proceeds of any private placement financing), net of the Company’s unpaid expenses and liabilities, at least equal to $10,000,000.

NOTABLE CONDITIONS TO TERMINATION

  • The Business Combination Agreement may be terminated at any time prior to the Closing by either the Company or Chijet if the Closing has not occurred on or prior to December 6, 2022 (the “Outside Date”); provided that if the Company elects to extend the date by which it must consummate its initial business combination (by up to an additional six (6) months in two extensions of three (3) months each) (each, an “Extension”), the Company is required five (5) days prior to the applicable Extension deadline to deposit into the Trust Account the sum of $1,380,000, and therefore a total of $2,760,000 for both three (3) month Extensions
  • By either the Company or Chijet if a governmental authority of competent jurisdiction has issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the Business Combination, and such order or other action has become final and non-appealable

Termination

  • If the Business Combination Agreement is terminated, all obligations of the parties under the Business Combination Agreement (except for certain obligations related to public announcements, confidentiality, fees and expenses, trust account waiver, termination and general provisions) will terminate, and no party to the Business Combination Agreement will have any further liability to any other party thereto except for liability for certain fraud claims or for willful breach of the Business Combination Agreement prior to the termination.

ADVISORS

  • I-Bankers Securities, Inc., sole bookrunner for the JWAC’s initial public offering, served as financial advisor to JWAC.
  • Ellenoff Grossman & Schole LLP served as legal counsel to Chijet, Inc.
  • Sichenzia Ross Ference LLP served as legal counsel to JWAC.
  • Maples and Calder (Cayman) LLP served as Cayman Islands counsel to Chijet.

MANAGEMENT & BOARD

Executive Officers

Brian S. John, 53
Chief Executive Officer and Director

Since October 2018, he has been the Chief Executive Officer and a director of Jupiter Wellness, Inc. (NASDAQ: JUPW), a cutting-edge developer of cannabidiol (CBD) based medical therapeutics and wellness products, of which he was a founder. He is the founder of Caro Partners, LLC, a financial consulting firm specializing in assisting emerging growth companies primarily in the sub-$100 million space, and has worked with hundreds of companies in dozens of countries over the last 25 years. Mr. John was the Chief Executive Officer of Teeka Tan Products Inc., a sun care company he co-founded in 2004 and later sold. He also serves on the board of directors of The Learning Center at the Els Center of Excellence–a school for children with autism in Jupiter, Florida. In August 2015, Mr. John voluntarily petitioned the United States Bankruptcy Court in the Southern District of Florida (case #15-24036-PGH) for personal bankruptcy under Chapter 7 of the United States bankruptcy Code, primarily resulting from medical expenses incurred in connection with personal illness. The debtor, Mr. John, was discharged in February 19, 2016 and the matter was terminated in April 2017. There were no allegations of fraud made in the proceedings.

Ke Li, 32
Chief Financial Officer and Secretary

Since September 2014, Ke Li has been the Managing Partner of L&L CPAS, PA, a PCAOB registered public accounting firm of which he was a Co-Founder, which focuses on leading integrated annual audits of publicly traded companies, reviewing the financial statements, and evaluating significant accounting judgements. In addition, since September 2013, Mr. Li has served as an analyst at Greentree Financial Group Inc. which provides financial and accounting advisory services to public companies. Mr. Li has 10+ years of practical experience in publicly traded companies by audits, financial statements preparation and compliance, financial analysis, risk assessments, internal control and business combination. Mr. Li is Certified Public Accountant in North Carolina and Illinois.

Board of Directors

Andrew Goren, M.D., 50 [Resigned 2/2/22]
Director

Andrew Goren, MD has been a director since September 2021, is the President and Chief Medical Officer of Applied Biology, Irvine, California. He is an External Medical Advisor and a Co-Researcher, Trichology Unit, at the Ramon y Cajal Hospital, Madrid, Spain, a Visiting Professor of Dermatology, in the Department of Dermatology and Venereology at the Clinical Hospital Center Sestre Milosrdnice, Zagreb, Croatia, a Medical Doctor at the Skin & Cosmetic Research Dept. in the Shanghai Skin Disease Hospital, Shanghai, China, and a Visiting Medical Doctor in the Department of Dermatology and Venereology at L.T.M. Medical College Sion, Mumbai, India. He is also a Clinical Research Director at Samel Hospital, Manaus, , Brazil.

N. Adele Hogan, 60
Director

N. Adele Hogan has been a director since September 2021, and has been a Partner and Co-Chair of the Corporate and Securities Practice Group at Lucosky Bookman LLP since March 2021. From 2012 to March 2021, she was a Partner at Hogan Law Associates PLLC. During 2016, Ms. Hogan was also a Director at Deutsche Bank. From 2009 to 2012she was Counsel at Cadwalader, Wickersham & Taft LLP; from 2009 to 2012, she was a Partner at White & Case LLP;, and from 2005 to 2007 she was a Partner at Linklaters LLP. From 1995 to 2005, Ms. Hogan was a Senior Attorney at Cravath Swaine & Moore LLP Ms. Hogan received a J.D. from Cornell University Law School in 1985 and a B.A. from Cornell University in 1982.

Hans Haywood, 53
Director

Hans Haywood has been a director since September 2021, and is currently a principal of HKA Capital Advisors, a platform from which to offer consulting services and develop proprietary trading algorithms, which he founded in 2010. From May 2011 to April 2018 Mr. Haywood was the Co-Chief Investment Officer and a Director of Tempest Capital AG, a Zurich-based family office/private equity fund, responsible for structuring and making activist investments in the technology and natural resource sectors. From May 2009 to March 2011, Mr. Haywood was the Chief Investment Officer of Panda Global Advisors, an emerging markets oriented Global Macro fund with a focus on liquid assets, sovereign credit, interest rates, foreign exchange, equity and commodities, which he founded in 2011. From July 2005 to December 2007, Mr. Haywood was a Partner and Senior Portfolio Manager for Sailfish Capital Partners, a multi-strategy fund, where he co-founded and managed the fund’s global Emerging Markets strategy. From December 1997 to June 2005, he was a Managing director at Credit Suisse where he managed the firm’s proprietary credit portfolio and was jointly responsible for the creation of the firm’s customer-oriented trading platform. Mr. Haywood received a master’s degree in Chemical Engineering from Imperial College, University of London in 1990.

Robert D. Allison, M.D., 46
Director

Robert D. Allison, M.D. has been a director since September 2021, and has over 15 years of experience leading clinical research and public health programs for the National Institutes of Health (NIH), the Centers for Disease Control (CDC), the World Health Organization (WHO) and the U.S. Navy. Since February 2021, he has been a medical reviewer in the Division of Antivirals, Office of New Drugs, Center for Drug Evaluation and Research at the U.S. Food and Drug Administration. He has served as the Principal of Quality Management Consultants, LLC, since October 2020, where he leads quality improvement research solutions for the healthcare industry. From January 2019 to February 2020, he was a medical epidemiologist for the CDC supporting hepatitis elimination as a liaison to WHO and COVID-19 response globally. From January 2019 to January 2020 he was the Chief Medical Officer of Sendero Health Plans, Inc., and from January 2016 to January 2019, he was the Chief of the Infectious Diseases Section and Associate Director for Research in the NIH Clinical Center. Dr. Allison has served as an adjunct faculty member in the Department of Health Policy and Management at the Johns Hopkins Bloomberg School of Public Health since March 2017. He received a B.S. in Chemistry in 1997 at the College Of New Jersey, an M.P.H. in infectious diseases epidemiology at the University of South Florida in 2000 and an M.D. from the Florida State University College of Medicine in 2006. From 2006 to 2008 he trained directly under Dr. Harvey J. Alter (Nobel Prize in Medicine, 2020) as a postdoctoral fellow. He completed training in internal medicine at the Naval Medical Center San Diego in 2010 and in preventive medicine at Johns Hopkins in 2014. Dr. Allison has been principal or associate investigator on numerous clinical research studies at the NIH since 2006, has authored over 25 peer-reviewed publications and has 2 patents for his laboratory’s development of a pathogen detection chip.

 

ByAnthony Sozzi