DEFM14A: Finnovate Acquisition Corp. Shareholders to Vote on $800 Million Merger with Scage International

Finnovate Acquisition Corp. is seeking shareholder approval for its business combination with Scage International, a zero-emission solution provider, in a deal valued at $800 million.

Summary

• Finnovate Acquisition Corp. is holding an extraordinary general meeting on January 30, 2025, to vote on a proposed business combination with Scage International.
• The deal involves a two-step merger process, with Scage International becoming a wholly-owned subsidiary of PubCo (Scage Future).
• Finnovate shareholders will exchange their shares for PubCo ADSs or PubCo Ordinary Shares.
• The transaction values Scage International at US$800 million, to be paid in PubCo Ordinary Shares.
• ValueScope, Inc. provided a fairness opinion stating that the enterprise value of Scage International is fair, from a financial point of view, to Finnovate shareholders.
• Following the merger, PubCo ADSs and warrants are expected to be listed on the Nasdaq under the symbols SCAG and SCAGW, respectively.
• The document outlines several proposals for shareholders to vote on, including amendments to Finnovate's articles of association, approval of the merger agreement, and election of PubCo's directors.
• The Sponsor and Finnovate's directors and officers have interests in the Business Combination that may conflict with the interests of unaffiliated shareholders.
• Scage International faces legal and operational risks related to doing business in China, including regulatory oversight and cybersecurity concerns.
• Mr. Chao Gao will beneficially own 62.4% of the total voting power of PubCo after the completion of the Business Combination.

Sentiment

Score: 6

Explanation: The document presents a balanced view, highlighting both the potential benefits and risks associated with the proposed business combination. While the fairness opinion and potential for increased shareholder value are positive, the risks related to Scage International's operations in China and the potential conflicts of interest among Finnovate's stakeholders temper the overall sentiment.

Positives

• The Finnovate Board obtained a fairness opinion from ValueScope, Inc. stating that Scage International's enterprise value in the Business Combination of US$800,000,000 was fair, from a financial point of view, to the shareholders of Finnovate.
• The private placement transactions pursuant to the subscription agreements will satisfy the closing condition of the Business Combination Agreement that the cash proceeds from the PIPE Investment shall not be less than an aggregate of US$15 million.

Negatives

• Scage International faces legal and operational risks related to doing business in China, including regulatory oversight and cybersecurity concerns.
• Finnovate's Sponsor and directors and officers have interests in the Business Combination that may conflict with the interests of unaffiliated shareholders.
• Finnovate's securities have been suspended from trading on Nasdaq and are currently quoted on the OTC Markets.
• Finnovate identified a material weakness in its internal control over financial reporting.

Risks

• Scage International faces various legal and operational risks and uncertainties related to doing business in China.
• Scage International is subject to complex and evolving laws and regulations in China.
• Scage International may face risks associated with regulatory approvals on overseas offerings and oversight on cybersecurity and data privacy.
• Trading in PubCo's securities on any U.S. stock exchange or the U.S. over-the-counter market may be prohibited under the HFCAA if the PCAOB is unable to inspect or investigate completely auditors located in China for two consecutive years.
• The delisting of PubCo's securities, or the threat of being delisted, may materially and adversely affect the value of your investment.
• The filing with the CSRC may be required in connection with the Business Combination, and Scage International cannot predict whether it will be able to obtain such approval or complete such filing.
• Finnovate's Sponsor and directors and officers have interests in the Business Combination that may conflict with the interests of unaffiliated shareholders.
• Finnovate's securities have been suspended from trading on Nasdaq and are currently quoted on the OTC Markets.
• Finnovate identified a material weakness in its internal control over financial reporting.

Future Outlook

The parties anticipate that, following the Business Combination, the PubCo ADSs and Assumed Warrants will be listed on the Nasdaq Stock Market (Nasdaq) under the symbols SCAG and SCAGW, respectively.

Management Comments

• The Finnovate Board has determined that the Business Combination presents a highly attractive business combination opportunity and is in the best interests of Finnovate.
• The Finnovate Board believes that, based on its review and consideration, the Business Combination presents an opportunity to increase shareholder value and completes Finnovate's primary objective of consummating an initial business combination in its required timeframe.

Industry Context

The document highlights Scage International's position as a pioneering and leading zero-emission solution provider in China, focusing on the development and commercialization of heavy-duty NEV trucks and e-fuel solutions, which aligns with the global trend towards sustainable transportation and reduced carbon emissions.

Comparison to Industry Standards

• The document compares Scage International's Galaxy II truck to other hybrid heavy-duty NEV trucks, noting its longer driving range (2,000 km).
• The document compares Scage International's Andromeda truck to other all-electric semi-tractor trucks, noting its peak motor power of 300kW and a maximum load capacity of 71.4 tonnes.
• The document compares Scage International's Q-truck to other autonomous tractor trailers, noting its extreme precise positioning (EDP) system with a guaranteed accuracy of up to 30 millimeters.

Related Party Transactions

• On January 26, 2024, Finnovate issued the January 2024 Promissory Note in the aggregate principal amount of up to $1,500,000 to Scage International for our working capital needs.
• The January 2024 Promissory Note does not bear interest and matures upon the earlier of the closing of our initial business combination and our liquidation.
• As of November 30, 2024, we had US$316,499 outstanding under the January 2024 Promissory Note.

Stakeholder Impact

• Shareholders of Finnovate will exchange their shares for PubCo ADSs or PubCo Ordinary Shares, potentially impacting the value of their investment.
• Employees of Scage International will become employees of PubCo, with potential changes to their roles and compensation.
• Customers of Scage International may benefit from the increased resources and access to capital that PubCo will provide.
• Suppliers of Scage International may see changes in their relationships with the company as a result of the merger.

Next Steps

• Finnovate shareholders will vote on the proposed business combination and related proposals at the extraordinary general meeting on January 30, 2025.
• If approved, the business combination is expected to be consummated promptly following the meeting.
• PubCo will work to list its ADSs and warrants on the Nasdaq Stock Market.

Key Dates

Keywords

Business Combination, Scage International, Finnovate Acquisition Corp, Merger, SPAC, PubCo, China, Electric Vehicles, ADS