DEFA14A: Evergreen Corporation Seeks Shareholder Approval for Extension to Consummate Business Combination

Evergreen Corporation is seeking shareholder approval to extend the deadline for completing a business combination by up to six months, requiring additional deposits into the trust account.

Summary

• Evergreen Corporation is seeking shareholder approval to amend its Amended and Restated Articles of Association and its Investment Management Trust Agreement.
• The amendments would allow the company to extend the period to complete a business combination by up to six months, from February 11, 2025, to August 11, 2025.
• Each one-month extension requires a deposit of $0.05 per Class A ordinary share into the trust account.
• The company will be liquidated after a 30-day cure period if the required funds are not deposited for any extension.
• The Sponsor has agreed to pay any outstanding dissolution expenses upon liquidation of the Company.
• The company held an extraordinary general meeting of shareholders on July 18, 2023, to allow the Company to extend the time it has to complete an initial business combination (the Combination Period) up to twelve (12) times for an additional one (1) month each time from August 11, 2023 to the August 11, 2024 by depositing into the Trust Account, for each one-month extension, the lesser of (a) $160,000 and (b) $0.055 for each Class A Ordinary Share outstanding, and to allow the Sponsor to convert their Class B Ordinary Shares to Class A Ordinary Shares on a one-for-one basis at the option of the holder.
• On July 18, 2023, 4,004,330 public shares were redeemed by a number of shareholders at a price of approximately $10.75 per share, in an aggregate principal amount of $43,058,659.34.
• Following the redemptions, there were 7,495,670 Class A Ordinary Shares outstanding held by public shareholders.
• The Company subsequently deposited $160,000 per month into the trust account to further extend the Combination Period to May 11, 2024.
• On May 9, 2024, EVGR held an extraordinary general meeting of shareholders to amend EVGRs amended and restated articles of association to give EVGR the right to extend the Combination Period up to nine (9) times for an additional one (1) month each time from May 11, 2024 to February 11, 2025 by depositing into the Trust Account, for each one-month extension, the lesser of (a) $80,000 and (b) $0.03 for each Class A Ordinary Share outstanding.
• On May 9, 2024, 2,831,713 public shares were redeemed by a number of shareholders at a price of approximately $11.43 per share, in an aggregate principal amount of $32,364,393.70.
• Following the redemptions, there were 4,663,957 Class A Ordinary Shares outstanding held by public shareholders.
• The Company subsequently deposited $80,000 per month into the trust account to further extend the Combination Period to January 11, 2025.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the extension provides more time, it also introduces potential dilution and the risk of liquidation if the extension is not approved or a business combination is not found.

Positives

• The Sponsor is willing to provide loans to cover the extension payments, demonstrating commitment.
• Extending the deadline provides more time to find and complete a suitable business combination.

Negatives

• Shareholders face potential dilution due to the extension payments.
• Failure to approve the extension will lead to liquidation and warrant expiration.

Risks

• Shareholder approval for the extension is not guaranteed.
• The company may still fail to find a suitable business combination even with the extension.
• Redemptions could reduce the funds available in the trust account.

Future Outlook

The company intends to seek shareholder approval to extend the deadline for completing a business combination, providing additional time to identify and consummate a transaction.

Management Comments

• Liew Choon Lian, Chairman of the Board, looks forward to seeing shareholders at the meeting.
• EVGR's management believes that, if the Extension Amendment Proposal and the Trust Agreement Amendment Proposal are approved, the Sponsor will extend to EVGR, for each one-month extension period, $0.05 for each Class A ordinary share (the Extension Payment) as a loan so the Company can deposit the funds into the Trust Account as the Extension Payment, upon advance notice prior to the applicable deadlines, and extend the Combination Period for an additional one (1) month period, up to six (6) times until the Extended Date.

Industry Context

SPACs often seek extensions to complete business combinations due to market conditions or difficulty finding suitable targets. The need for extensions and additional capital injections is a common theme in the current SPAC market.

Comparison to Industry Standards

• Many SPACs, like Evergreen Corporation, face challenges in finding suitable merger targets within the initial timeframe.
• Seeking extensions and requiring additional capital deposits are common strategies employed by SPACs to gain more time.
• The $0.05 per share extension payment is within the typical range seen in other SPAC extension scenarios.
• Companies such as Digital World Acquisition Corp. (DWAC) have also faced challenges in completing their mergers, requiring extensions and potentially facing liquidation.

Related Party Transactions

• The Sponsor has agreed to loan the company the extension payments, which will be repayable upon consummation of a business combination.

Stakeholder Impact

• Shareholders will be impacted by the potential dilution from the extension payments.
• Warrantholders face the risk of their warrants expiring worthless if the business combination is not completed.
• Employees and other stakeholders are affected by the uncertainty surrounding the company's future.

Next Steps

• Shareholders need to vote on the Extension Amendment Proposal, the Trust Agreement Amendment Proposal, and the Adjournment Proposal.
• The company will hold an Extraordinary General Meeting on January 28, 2025, to vote on the proposals.
• If approved, the company will execute the Trust Agreement Amendment and continue to seek a business combination.

Key Dates

Keywords

business combination, extension, proxy statement, trust agreement, shareholder vote, liquidation, redemption, sponsor, EVGR