Item 8.01 Other Events.
As previously announced, on September 21, 2022, Avalon Acquisition Inc.
("Avalon") entered into a definitive business combination agreement (as amended,
supplemented or otherwise modified from time to time, the "Business Combination
Agreement"), by and among Avalon, The Beneficient Company Group, L.P., a
Delaware limited partnership ("BCG," and as converted to a Nevada corporation,
"Beneficient"), Beneficient Merger Sub I, Inc., a Delaware corporation and
subsidiary of BCG, and Beneficient Merger Sub II, LLC, a Delaware limited
liability company and subsidiary of BCG. Pursuant to the Business Combination
Agreement, the parties have agreed to consummate certain transactions
(collectively, the "Business Combination"), subject to the terms and conditions
of the Business Combination Agreement.
On June 6, 2023, BCG entered into a Prepaid Forward Purchase Agreement, by and
between BCG and RiverNorth SPAC Arbitrage Fund, L.P. (the "Purchaser"), pursuant
to which the Purchaser has agreed to, among other things, effect certain
purchases of shares of Avalon Class A common stock ("Avalon Class A Common
Stock") that would have been redeemed in connection with the special meeting of
Avalon's stockholders (the "Special Meeting") to approve the transactions
contemplated Business Combination Agreement (the "Forward Purchase Agreement").
Pursuant to the Forward Purchase Agreement, Purchaser has agreed to purchase
shares of Avalon Class A Common Stock (the "AVAC FPA Shares") at a purchase
price per share of $10.57 (for aggregate consideration of $25,000,000). The AVAC
FPA Shares will not be redeemed in connection with the Special Meeting and will
convert into shares of Class A Common Stock, par value $0.001 per share, of
Beneficient ("Beneficient Class A Common Stock") and Series A Convertible
Preferred Stock, par value $0.001 per share, of Beneficient ("Beneficient Series
A Preferred Stock") upon consummation of the Business Combination. The Series A
Preferred Stock will convert in accordance with its terms to shares of
Beneficient Class A Common Stock, and Purchaser will hold an aggregate of
2,956,480 shares of Beneficient Class A Common Stock following such conversion
in respect of the AVAC FPA Shares (such shares of Beneficient Class A Common
Stock, the "FPA Shares").
The $25,000,000 in proceeds (the "Disbursed Amount") in respect of the FPA
Shares will be disbursed from the Avalon trust account following the
consummation of the Business Combination. $5,000,000 of the Disbursed Amount
will be disbursed to Beneficient, with the remaining $20,000,000 (the "Reserve
Amount") to be disbursed to Purchaser to be held by Purchaser until the Maturity
Date (as defined below) or until its earlier release per the terms of the
Forward Purchase Agreement.
The Forward Purchase Agreement provides for two categories of FPA Shares:(i)
1,064,333 FPA Shares shall be categorized as "Purchased Shares" (the "Purchased
Shares") and (ii) the remaining 1,892,147 FPA Shares shall be categorized as
"Prepaid Forward Shares" (the "Prepaid Forward Shares"). If by the 10th
anniversary of the close of the Business Combination, Purchaser has received
less than $5,000,000, in gross proceeds from, and Purchaser has used good faith
efforts to sell, the Purchased Shares, Beneficient has agreed to cause
Beneficient Company Holdings, L.P. ("BCH") to issue Purchaser an amount of BCH
Preferred Series A-0 Units (or such other senior most preferred security of
Beneficient) as consideration for any shortfall amounts less than $5,000,000
from the sale of the Purchased Shares. Purchaser has agreed for the first six
months following the Business Combination not to sell any Purchased Shares below
$5.00 per share or to sell more than 10% of the daily trading volume of the
Beneficient Class A Common Stock if the volume weighted average price of the
Beneficient Class A Common Stock is between $5.00 and $8.00 for any such trading
day.
For a period of two years following the closing of the Business Combination (the
date on which such two-year period ends, the "Maturity Date"), Purchaser may
sell the Prepaid Forward Shares at a price not lower than $10.57 per share. Upon
consummation of any sales of Prepaid Forward Shares, Purchaser must remit $10.57
per share from the Reserve Amount to Beneficient. At the Maturity Date, any
remaining Reserve Amounts shall be retained by the Purchaser and any unsold
Prepaid Forward Shares shall be remitted to Beneficient.
Additional Information and Where to Find It
In connection with the Business Combination with Avalon, BCG filed a
registration statement on Form S-4 with the Securities and Exchange Commission
(the "SEC") on December 9, 2022, as amended (the "Form S-4"), which included a
prospectus of Beneficient and a proxy statement of Avalon. On May 12, 2023, the
Form S-4 was declared effective by the SEC, and Avalon filed a definitive proxy
statement (the "Proxy Statement") in connection with the Business Combination. A
full description of the terms of the Business Combination are included in the
Proxy Statement. This communication is not intended to be, and is not, a
substitute for the proxy statement/prospectus or any other document Avalon or
BCG has filed or may file with the SEC in connection with the proposed Business
Combination. Each of BCG and Avalon urge its investors, stockholders and other
interested persons to read the Proxy Statement (and any amendments thereto) as
well as other documents filed with the SEC because these documents may contain
important information about BCG, Avalon and the Business Combination. The Proxy
Statement was mailed to stockholders of Avalon as of May 10, 2023, the record
date established for voting on the Business Combination. Before making any
voting or investment decision, investors, and stockholders of Avalon are urged
to carefully read the entire Proxy Statement, and any other relevant documents
filed with the SEC, as well as any amendments or supplements to these documents,
because they will contain important information about the Business Combination.
Avalon stockholders and other interested persons are able to obtain a copy of
the Proxy Statement, and other documents filed with the SEC, without charge, by
directing a request to: Avalon Acquisition Inc., Two Embarcadero, Floor 8, San
Francisco, CA, 94111, (415) 423-0010 or on the SEC's website at www.sec.gov.
Participants in the Solicitation
BCG and Avalon, and their respective directors and executive officers, may be
deemed participants in the solicitation of proxies of Avalon's stockholders in
respect of the Business Combination. Avalon's stockholders and other interested
persons may obtain more detailed information about the names and interests of
the directors and officers of BCG and Avalon in the Business Combination set
forth in Avalon's or BCG's filings with the SEC, including, the Form S-4 and the
Proxy Statement (and any amendments thereto) and other documents filed with the
SEC. These documents can be obtained free of charge from the sources specified
above and at the SEC's web site at www.sec.gov.
This communication does not contain all the information that should be
considered concerning the Business Combination and is not intended to form the
basis of any investment decision or any other decision in respect of the
Business Combination. Before making any voting or investment decision, investors
and security holders are urged to read the Proxy Statement (and any amendments
thereto) and all other relevant documents filed or that may be filed with the
SEC in connection with the Business Combination as they become available because
they will contain important information about the Business Combination.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements included in this communication are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended. Statements regarding the Business Combination and related
matters, as well as all other statements other than statements of historical
fact included in this communication are forward-looking statements. When used in
this communication, words such as "anticipate," "believe," "continue," "could,"
"estimate," "expect," "intend," "may," "might," "plan," "possible," "potential,"
"predict," "project," "should," "would" and similar expressions, as they relate
to Avalon and Beneficient their respective management teams, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of management, as well as assumptions made by, and information currently
available to, Avalon and Beneficient's management. Actual results could differ
materially from those contemplated by the forward-looking statements as a result
of certain factors detailed in Avalon and Beneficient's filings with the SEC.
All subsequent forward-looking statements attributable to Avalon, Beneficient or
persons acting on their behalf are qualified in their entirety by this
paragraph. Forward-looking statements are subject to numerous conditions, many
of which are beyond the control of Avalon and Beneficient, including those set
forth in the Risk Factors section of Avalon's registration statement and
prospectus for Avalon's initial public offering filed with the SEC and the Proxy
Statement (and any amendments thereto). Avalon and Beneficient undertake no
obligation to update these statements for revisions or changes after the date of
this release, except as required by law.
No Offer or Solicitation
This communication will not constitute a solicitation of a proxy, consent, or
authorization with respect to any securities or in respect of the Business
Combination. This communication will also not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor will there be any sale of
securities in any states or jurisdictions in which such offer, solicitation, or
sale would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities will be made
except by means of a prospectus meeting the requirements of Section 10 of the
Securities Act, or an exemption therefrom.
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