DEF: Athena Technology II Seeks Fourth Extension for Ace Green Merger

Athena Technology Acquisition Corp. II is seeking a fourth extension until June 2026 to complete its proposed business combination with Ace Green Recycling, citing insufficient time for SEC review.

Summary

• Athena Technology Acquisition Corp. II (ATEK) is requesting a fourth extension to complete its business combination, pushing the deadline from September 14, 2025, to June 14, 2026, through up to nine monthly extensions.
• The extension is necessary due to insufficient time to complete the SEC review process for the S-4 registration statement related to the proposed merger with Ace Green Recycling, Inc., which was announced on December 4, 2024.
• For each monthly extension, the Sponsor (Athena Technology Sponsor II, LLC) or its affiliates will deposit the lesser of $25,000 or $0.02 per unredeemed public share into the Trust Account.
• The Board of Directors unanimously recommends approval of the extension and the related adjournment proposal.
• The Sponsor, holding approximately 96.9% of outstanding common stock, intends to vote in favor of the extension, ensuring its approval.
• Public stockholders have the right to redeem their shares for an estimated $11.66 per share if the extension is approved, which is higher than the current market price of $10.00 on the OTC Pink Market as of August 21, 2025.
• The company's securities were delisted from NYSE American on December 19, 2024, and now trade on the OTC Pink Market.
• The Trust Account held approximately $3.6 million as of the record date (August 21, 2025), a significant reduction from its initial $256.287 million due to prior redemptions.
• The company faces substantial and growing U.S. federal excise tax liabilities from previous redemptions, totaling $3,688,337 as of June 30, 2025, including interest and penalties, with the 2023 liability of $2,396,049 remaining unpaid.
• The independent auditor's report and management have expressed substantial doubt about the company's ability to continue as a going concern.

Sentiment

Score: 3

Explanation: The sentiment is negative due to repeated delays, high prior redemptions, delisting, significant excise tax liabilities, and a 'going concern' warning. While the pursuit of a business combination and sponsor contributions offer a glimmer of hope, the overall financial and operational challenges are substantial.

Positives

• The company is actively pursuing a business combination with Ace Green Recycling, indicating a potential path forward for the SPAC.
• The Sponsor is committed to funding the monthly extensions, demonstrating continued support for the business combination.
• Public stockholders have the opportunity to redeem their shares at an estimated $11.66 per share, which is higher than the current market price of $10.00, offering a potential arbitrage opportunity.

Negatives

• This is the fourth extension sought by the company, indicating persistent difficulties and delays in completing a business combination.
• Previous extensions have resulted in very high redemption rates (91.3%, 41.4%, 75.9%), significantly depleting the Trust Account from $256.287 million to approximately $3.6 million.
• The company's securities were delisted from NYSE American and now trade on the less liquid OTC Pink Market, which may adversely affect trading and future financing.
• Significant and growing U.S. federal excise tax liabilities from redemptions, totaling $3,688,337 as of June 30, 2025, with the 2023 liability of $2,396,049 remaining unpaid and accruing penalties and interest.
• The independent auditor and management have expressed substantial doubt about the company's ability to continue as a going concern.
• Funds from the Trust Account were previously misallocated for general operating expenses, though later replenished by the Sponsor.
• Warrants will expire worthless if a business combination is not completed, representing a complete loss for warrant holders.

Risks

• There is no assurance that the Fourth Extension will enable the completion of the Proposed Business Combination or an alternative business combination prior to the Extended Date.
• Redemptions by public stockholders could leave insufficient cash in the Trust Account to consummate the business combination on commercially acceptable terms, or at all.
• The company's securities trading on the OTC Pink Market may adversely affect liquidity, trading, and the ability of the combined entity to meet national exchange listing requirements.
• Potential classification as an investment company under the Investment Company Act could restrict activities, impose burdensome compliance, and potentially force liquidation.
• The 1% U.S. federal excise tax on redemptions could reduce cash available for a business combination or distributions to stockholders, and the company has significant unpaid excise tax liabilities.
• Substantial doubt exists about the company's ability to continue as a going concern.
• A potential CFIUS review could block or delay the proposed business combination, potentially leading to liquidation.
• Public stockholders may be unable to recover their investment except through sales of shares on the open market, and there is no assurance of favorable prices or liquidity.
• The Sponsor's ability to satisfy its indemnity obligations for claims against the Trust Account is uncertain, as its only assets are company securities.
• Stockholders may be held liable for claims by third parties against the corporation to the extent of distributions received in a dissolution if the company does not comply with Delaware General Corporation Law Section 280.

Future Outlook

Management believes it can consummate the Proposed Business Combination with Ace Green Recycling before the Extended Date of June 14, 2026. The company intends to apply for listing on Nasdaq or another national exchange for the combined entity, though meeting initial listing requirements may be challenging due to its current OTC Pink Market trading status.

Management Comments

• "Management believes that it can consummate the Proposed Business Combination before the Extended Date."
• "The Board believes that it is in the best interests of the Company and our stockholders to approve the Fourth Extension Amendment Proposal."
• "The Board has unanimously (i) approved and declared advisable the Proposed Business Combination, the Business Combination Agreement and the other transactions contemplated thereby, and (ii) resolved to recommend approval of the Business Combination Agreement and related matters by our stockholders."

Industry Context

The filing highlights the ongoing challenges faced by Special Purpose Acquisition Companies (SPACs) in completing business combinations within initial timelines, often necessitating multiple extensions and leading to significant redemptions. The delisting to the OTC Pink Market is a common consequence for SPACs struggling to de-SPAC, further complicating their ability to attract investors and meet national exchange listing requirements for the target company. The increasing scrutiny and tax implications, such as the 1% excise tax from the IRA, add another layer of complexity and cost to SPAC liquidations and redemptions.

Comparison to Industry Standards

• The repeated need for extensions and high redemption rates are indicative of a challenging SPAC market, where many SPACs struggle to find suitable targets or gain investor confidence for proposed mergers.
• The delisting from a national exchange to the OTC Pink Market is a significant negative deviation from the standard trajectory of a successful SPAC, which typically aims for a national exchange listing post-merger.
• The substantial excise tax liabilities and the 'going concern' warning are red flags that differentiate this SPAC from more successful peers who complete mergers efficiently and maintain strong financial standing.

Corporate Governance

Related Party Transactions

• The Sponsor (Athena Technology Sponsor II, LLC), an affiliate of certain Board members and management, has made prior contributions to the Trust Account for extensions and will continue to do so for the Fourth Extension.
• The Sponsor provided an intercompany loan to replenish $669,440 of misallocated funds used for general operating expenses.
• The Sponsor has waived redemption rights for its shares and agreed to be liable for certain claims against the Trust Account, though its ability to satisfy these obligations is uncertain.
• The company's executive officers and directors, and their affiliates, are entitled to reimbursement of out-of-pocket expenses, which may not be reimbursed if a business combination is not completed.

Stakeholder Impact

• **Shareholders**: Public shareholders have the option to redeem at a premium to market price, but those who remain face further uncertainty, potential dilution, and the risk of warrants expiring worthless if no business combination is completed. The value of their investment is highly dependent on the successful completion of the business combination.
• **Warrant Holders**: Warrants will expire worthless if a business combination is not completed, representing a total loss of investment.
• **Sponsor**: Has significant financial interests tied to the completion of a business combination, as its founder shares and private placement units would become worthless otherwise. It also bears the cost of extension payments and has indemnification obligations.
• **Ace Green Recycling**: The proposed target company's merger is contingent on this extension, impacting its timeline to become a publicly traded entity.
• **Creditors/Vendors**: The company's ability to pay claims is tied to the Trust Account and its remaining assets, with the Sponsor having some liability for claims if the Trust Account is depleted below certain thresholds.

Next Steps

• Hold a Special Meeting on September 10, 2025, to vote on the Fourth Extension Amendment Proposal and the Adjournment Proposal.
• If approved, file an amendment to the Charter with the Secretary of State of Delaware to effectuate the extension.
• Continue efforts to consummate the Proposed Business Combination with Ace Green Recycling or an alternative business combination by June 14, 2026.
• File a definitive proxy statement/prospectus relating to the Proposed Business Combination after the S-4 is declared effective by the SEC.
• Hold a special meeting of stockholders to approve the Proposed Business Combination after the S-4 is effective.
• Address and pay outstanding excise tax liabilities and associated penalties and interest.

Key Dates

Recommendation

Given the repeated delays, high prior redemption rates, delisting to the OTC Pink Market, significant and growing excise tax liabilities, and the 'going concern' warning, the risks associated with holding Athena Technology Acquisition Corp. II shares are substantial. While the redemption option offers a premium to the current market price, the long-term viability and successful completion of the business combination remain highly uncertain. Investors should consider exiting their position to avoid further downside risk and potential loss of capital, especially for warrant holders who face a total loss if the merger fails.

Keywords

SPAC, Ace Green Recycling, Business Combination, Extension, Proxy Statement, Redemption Rights, Trust Account, Delisting, OTC Pink Market, Excise Tax, Going Concern, Corporate Governance, Merger, Athena Technology Acquisition Corp. II