Compute Health (NYSE:CPUH) announced in an 8-K this morning it has adjourned its meeting of warrant holders to vote on previously proposed amendments to the warrant agreement, and it has unveiled a further tweak.
This meeting is set to reconvene at 12 pm ET on July 26 after all parties have had a chance to engage with the new changes.
As previously discussed, Compute Health’s initial amendment would have extended the term of warrants to six years from five and effectively changed the exchange ratio to 0.7102275 for each warrant exchanged. However, that duration has now been extended to seven years in the latest amendment, which adds some additional value.
The new amendment would also eliminate section 4.4 of the original amendment agreement, which was in relation to the Crescent Term, which would have re-struck the exercise price if the term was triggered.
But the first amendment would have also eliminated Section 4.5 – the anti-dilution provision – from the agreement. This may have raised some eyebrows among warrant holders as such protections normally only come into play when some further transaction would shift the capital table in a way that might disadvantage warrant holders.
Under the new amendment, this section will now be replaced by a new Section 4.5. This lays out that, in the case of a merger or internal consolidation, existing warrants will still hold the same rights to purchase or receive the same shares or cash in the same amounts as they would have before such an event.
Should the combined company enter into a transaction in which more than half of the compensation to shareholders is to be offered in stock, then warrant holders would receive the highest amount of stock and/or cash that they would have been entitled to as if they had been shareholders.
If less than 70% of a transaction’s compensation is in the form of stock in an entity traded on a national exchange and the warrant holder exercises its warrants for shares within 30 days, the warrant price will be received equal to the difference between the warrant price and the per share consideration minus the Black-Scholes Warrant Value.
Also, under the original warrant agreement, there was an $18.00 per share redemption trigger price, but this has now been changed to $12.67 in this latest amendment. However, this new trigger is just keeping the everything equal to the original agreement, i.e., an $18.00 trigger with a $10.00 reference value in the original will be similar to a new $12.67 trigger with a $7.04 reference value since both reference values are 55.56.% of their triggers. The combined company may now call all warrants 90 days after the completion of its business combination at a redemption price of $0.01 if the reference value meets or exceeds $12.67.
The company can call its warrants at $0.10 per warrant if the reference value is $7.04 or above and in general sponsor warrants are to be automatically called on the same terms as public warrants if the reference value is below $12.67.
Holders may elect to exercise their warrants on a cashless basis according to the table below under the new amendment.
This caps the per share ratio in exchange at 0.513 shares per warrant with 0.046 as the floor.
Compute will now see if its second amendment provides some clarity and assuages some concerns brought out by the first one.
Terms Tracker for the Week Ending December 8, 2023 Welcome to our weekly column where we discuss the findings from our IPO terms tracker based on the previous week’s pricings. Well that escalated quickly. While last week was quiet, this week was far busier. SPACs saw one IPO start trading after pricing on Friday of...
Mobiv Acquisition Corp. (NASDAQ:MOBV) announced this afternoon that it has closed its combination with EV motorcycle-maker SRIVARU. Shareholders originally approved the deal at a special meeting held back on September 28, but at that time, the parties expected the transaction to take just a week to close. Redemptions whittled Mobiv’s IPO share pool of 10,005,000 down...
Achari Ventures I (NASDAQ:AVHI) has entered into a definitive agreement to combine with medtech firm Vaso Corporation at an equity value of $176 million, or 19.5x its 2022 adjusted EBITDA. Wuxi, China-based Vaso provides IT services and sales support to medical device manufacturers. The combined company is expected to trade on the Nasdaq under the...
EF Hutton Acquisition Corp. I (NASDAQ:EFHT) announced this morning that its shareholders have approved its business combination with E.C.D. Auto Design. At the meeting, there were 5,089,203 shares of common stock, representing approximately 76.82% of the issued and outstanding shares of common stock, present. In connection with the meeting, the company’s stockholders holding 3,470,945 shares,...
Legato Merger Corp. III (NYSE:LEGT) filed for a $175 million IPO yesterday afternoon, becoming the fourth SPAC to file this week. While the other three SPACs that filed their S-1s earlier this week intend to pursue targets in the financial services and biotech industries, Legato III, similar to the earlier Legato SPACs, will focus on...