425: Learn CW Investment Corp Announces Side Letters, Series B Investment Agreement, and Termination of Unit Purchase Agreement

Learn CW Investment Corporation announces side letters to the Business Combination Agreement and Sponsor Support Agreement, a Series B Preferred Stock Investment Agreement, and the termination of a Class B-1 Unit Purchase Agreement.

Summary

• Learn CW Investment Corporation has entered into a side letter to the Business Combination Agreement (BCA Side Letter) waiving and modifying certain provisions, including Learn CW's covenants to list its shares and warrants, and addressing breaches related to Innventure's termination of certain purchase agreements.
• The BCA Side Letter also acknowledges certain financings as Additional Financings and increases the size of the Learn CW Convertible Promissory Note to $4.8 million.
• A side letter to the Sponsor Support Agreement (SSA Side Letter) was also entered into, modifying provisions related to Additional Financings and allowing the Sponsor to assign its rights.
• The SSA Side Letter deems the VWAP Completion Event to have been satisfied, removing the lockup on At Risk Sponsor Shares.
• Holdco entered into a Series B Investment Agreement with Commonwealth Asset Management LP for the issuance and sale of 750,000 shares of Series B Preferred Stock at $10.00 per share, expected to provide $7.5 million in gross proceeds.
• Holdco is negotiating additional Series B Preferred Stock financing, but there is no guarantee it will close.
• The Series B Preferred Stock will carry an annual 8.0% cumulative dividend and will have voting rights equivalent to the Original Issue Price ($10.00) divided by the Minimum Price of Holdco Common Stock.
• All shares of Series B Preferred Stock will be converted into shares of Holdco Common Stock on the fifth anniversary of the initial issuance date.
• Innventure terminated unit purchase agreements with John Scott and Michael Otworth, who are members of Innventure1 LLC.
• At Closing, Holdco will change its name to Innventure, Inc., and its common stock is expected to be listed on the Nasdaq Global Market under the ticker symbol INV and its warrants are expected to be listed on Nasdaq under the ticker symbol INVWW.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While there are positive aspects such as securing additional financing, there are also risks and uncertainties associated with the deal's completion and future performance. The modifications to existing agreements suggest potential challenges or adjustments to the original plan.

Positives

• The Series B Preferred Stock financing is expected to provide Holdco with approximately $7.5 million of gross proceeds.
• The SSA Side Letter deems the VWAP Completion Event to have been satisfied, removing the lockup on At Risk Sponsor Shares.
• The Series B Preferred Stock will carry an annual 8.0% cumulative dividend.

Negatives

• There is no guarantee that the Additional Preferred Stock Financing will close or that Holdco will receive proceeds from such financing.
• Learn CW is waiving listing requirements for its shares and warrants on the Listing Exchange.

Risks

• The Additional Preferred Stock Financing is subject to general economic, industry and market conditions and other events and factors, many of which are beyond Holdco's control.
• The document contains forward-looking statements that are subject to risks and uncertainties, including the ability to close the Business Combination, recognize anticipated benefits, and obtain funding for operations and future growth.
• The amount of any redemptions by existing holders of Learn CWs common stock being greater than expected could impact the deal.

Future Outlook

Holdco expects to change its name to Innventure, Inc. and list its common stock on the Nasdaq Global Market under the ticker symbol INV and its warrants under the ticker symbol INVWW upon closing.

Industry Context

The announcement reflects ongoing efforts to finalize a business combination between a SPAC (Learn CW Investment Corporation) and a private company (Innventure LLC), a common transaction structure in the current market environment. The additional financing and modifications to existing agreements suggest a need to secure capital and address potential roadblocks to the deal's completion.

Comparison to Industry Standards

• SPAC transactions often involve renegotiations and side letters to address changing market conditions or specific deal terms, as seen in the BCA and SSA Side Letters.
• The Series B Preferred Stock financing is a common method for companies to raise capital, particularly in the context of SPAC mergers where the initial SPAC capital may be insufficient or subject to redemptions.
• The 8.0% cumulative dividend on the Series B Preferred Stock is within the typical range for preferred stock offerings, reflecting the risk and return profile of the investment.
• Comparable companies raising capital through preferred stock offerings include companies such as Nikola Corporation, which issued convertible preferred stock to raise capital for its operations.
• The termination of the unit purchase agreements suggests a simplification of Innventure's capital structure prior to the merger, which is a common practice to streamline the post-merger entity.

Related Party Transactions

• Innventure terminated unit purchase agreements with John Scott and Michael Otworth, who are members of Innventure1 LLC, itself a related party of Innventure.

Stakeholder Impact

• Shareholders of Learn CW will vote on the Business Combination.
• Innventure unitholders will be impacted by the Business Combination.
• The combined company's employees, customers, and suppliers will be affected by the success of the Business Combination and the integration of the two entities.

Next Steps

• Closing of the Series B Preferred Stock Financing concurrently with the consummation of the Business Combination.
• Negotiation and potential closing of the Additional Preferred Stock Financing.
• Filing of a registration statement with the Commission under the Securities Act of 1933, as amended, covering the resale of the shares of common stock, par value $0.0001 per share (Holdco Common Stock), issuable upon conversion of Series B Preferred Stock within 120 days from the original issuance date.
• Holdco will change its name to Innventure, Inc., and its common stock is expected to be listed on the Nasdaq Global Market (the Nasdaq) under the ticker symbol INV and its warrants are expected to be listed on Nasdaq under the ticker symbol INVWW.

Key Dates