8-K: Pono Capital Three and Horizon Aircraft Complete Business Combination, Establishing New Publicly Traded Entity

Pono Capital Three and Horizon Aircraft have finalized their business combination, resulting in New Horizon Aircraft Ltd. becoming a publicly traded company.

Summary

• Pono Capital Three, Inc. and Robinson Aircraft Ltd. d/b/a Horizon Aircraft have completed their business combination on January 12, 2024.
• The transaction involved Pono redomesticating as a British Columbia company and merging its subsidiary with Horizon, with Horizon's shareholders receiving shares of the new entity, New Horizon Aircraft Ltd.
• As part of the deal, New Horizon issued 9,419,084 Class A ordinary shares to Horizon shareholders, including 282,573 shares held in escrow and 754,013 shares to a PIPE investor.
• Concurrently, New Horizon completed private financings, issuing 200,000 shares to a PIPE investor for $2,000,000, 103,500 shares to EF Hutton LLC, and assumed options to purchase 585,230 shares.
• Pono shareholders holding 9,852,558 shares redeemed their shares for approximately $104.5 million, or $10.61 per share, from the trust account.
• After redemptions, approximately $17.45 million remained in the trust account, which, along with $2.00 million from the PIPE offering, was used to pay transaction expenses and other liabilities, including $16.8 million to Meteora.
• New Horizon's common stock and warrants began trading on the Nasdaq Capital Market under the symbols HOVR and HOVRW, respectively, on January 16, 2024.

Sentiment

Score: 7

Explanation: The document is generally positive, highlighting the successful completion of the business combination and the start of trading on Nasdaq. However, the high redemption rate and transaction costs temper the overall sentiment.

Positives

• The business combination has been successfully completed, creating a new publicly traded company.
• New Horizon Aircraft Ltd. has secured additional funding through a PIPE offering.
• The company has established a trading presence on the Nasdaq Capital Market.
• The company has a clear ownership structure with significant holdings by former Horizon shareholders and the Sponsor.

Negatives

• A significant number of Pono shareholders redeemed their shares, reducing the cash available to the new company.
• The company incurred substantial transaction expenses in connection with the business combination.

Risks

• The document mentions risks related to the markets in which New Horizon competes, the need for additional capital, and the ability to recognize the benefits of the business combination.
• There are risks associated with developing, certifying, and manufacturing an aircraft that meets performance expectations.
• The company faces risks related to the successful completion of testing and certification of its Cavorite X7 eVTOL aircraft.
• The document notes the lack of useful financial information for an accurate estimate of future capital expenditures and future revenue.

Future Outlook

The document contains forward-looking statements regarding New Horizons industry and market size, financial condition and performance, ability to develop and manufacture aircraft, and successful completion of testing and certification. It also notes that actual results may differ materially from these statements.

Industry Context

This announcement reflects a trend of special purpose acquisition companies (SPACs) merging with private companies to bring them to the public market. The focus on electric vertical takeoff and landing (eVTOL) aircraft aligns with the growing interest in advanced air mobility.

Comparison to Industry Standards

• The business combination is similar to other SPAC mergers in the aerospace and technology sectors, where a private company is brought public through a merger with a publicly listed shell company.
• The redemption rate of Pono shares is a common occurrence in SPAC transactions, where shareholders often choose to redeem their shares rather than invest in the merged entity.
• The lock-up agreements are standard practice to prevent large-scale selling of shares immediately after the merger, which could negatively impact the stock price.
• The issuance of shares to a PIPE investor is a common method for SPACs to raise additional capital to fund the merged entity's operations.

Management Changes

Corporate Governance

Legal Proceedings

• To the knowledge of New Horizons management, there are no legal proceedings pending against Pono or New Horizon.

Related Party Transactions

• The document mentions that the Sponsor, Mehana Capital LLC, is an affiliate of Pono and received shares in the new company.
• The document mentions that Meteora Capital LLC is a related party and entered into a Forward Purchase Agreement with Pono.

Stakeholder Impact

• Shareholders of Pono who did not redeem their shares now own stock in New Horizon Aircraft Ltd.
• Horizon Aircraft shareholders have received shares in the new publicly traded company.
• Employees of both Pono and Horizon are now part of the new combined entity.
• Customers and suppliers of Horizon will now be dealing with New Horizon Aircraft Ltd.

Next Steps

• New Horizon will file a registration statement for the resale of the PIPE Shares within 30 days of the Closing.
• New Horizon will work to have the registration statement effective within 60 days of the filing deadline or within 5 business days after New Horizon is notified that the SEC will not review the filing.
• The company will continue to develop and test its Cavorite X7 eVTOL aircraft.
• The company will work to meet its obligations under the various agreements, including the Lock-Up Agreements and Registration Rights Agreement.

Key Dates

Keywords

Business Combination, Horizon Aircraft, Pono Capital Three, New Horizon Aircraft, Merger, Nasdaq, PIPE Offering, Redemption, Registration Rights, Lock-Up Agreement