DEF 14A: Rising Dragon Seeks Lower SPAC Extension Fee

Rising Dragon Acquisition Corp. calls an Extraordinary General Meeting to vote on reducing the monthly fee required to extend its business combination deadline, aiming to incentivize its sponsor to fund further extensions for the HZJL merger.

Summary

• An Extraordinary General Meeting (EGM) will be held on December 12, 2025, to consider two proposals: the Trust Agreement Amendment Proposal and the Adjournment Proposal.
• The Trust Agreement Amendment Proposal seeks to reduce the monthly extension fee payable by the sponsor into the Trust Account to extend the business combination period.
• The current monthly extension fee is $189,750 ($0.033 per share), which would be amended to the lesser of (i) $100,000 per month for all remaining public shares or (ii) $0.033 for each remaining public share after redemptions.
• The purpose of the amendment is to incentivize the sponsor to fund extensions, allowing the company more time to complete its initial business combination with HZJL Cayman Limited (HZJL).
• The Combination Period can be extended up to six times, each by an additional one month, potentially moving the deadline from January 15, 2026, to July 15, 2026.
• The HZJL Business Combination was approved by shareholders (5,049,309 ordinary shares voted FOR) at a separate EGM on November 20, 2025.
• In connection with the HZJL Business Combination EGM, 5,715,609 ordinary shares were tendered for redemption.
• The redemption price per public share on November 25, 2025, was approximately $10.52, while the closing price of ordinary shares on Nasdaq on the same date was $11.49.
• If the Trust Agreement Amendment is not approved and the sponsor does not fund extensions, the company will be forced to liquidate.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the high redemption rate for the HZJL Business Combination, the need to reduce extension fees to incentivize the sponsor, and the explicit risk of liquidation if the extension is not approved or funded. These factors indicate significant challenges and uncertainty surrounding the company's future.

Positives

• The Board unanimously recommends approval of the Trust Agreement Amendment, believing it is in the best interests of shareholders to allow more time to consummate the HZJL Business Combination.
• The sponsor has indicated it will contribute the Amended Monthly Extension Fee as a non-interest-bearing loan, repayable upon business combination consummation or forgivable if the combination fails (except for funds outside the Trust Account).
• The HZJL Business Combination has already received shareholder approval at a prior EGM on November 20, 2025.

Negatives

• A significant number of ordinary shares (5,715,609) were tendered for redemption in connection with the HZJL Business Combination EGM, indicating substantial shareholder skepticism.
• The need to reduce the monthly extension fee suggests a potential reluctance from the sponsor to fund extensions at the original higher rate, possibly due to perceived value or financial constraints.
• If the Trust Agreement Amendment is not approved and the sponsor chooses not to fund extensions, the company will be forced to liquidate, rendering founder shares and private units worthless.
• There is no assurance that the Trust Agreement Amendment will ultimately enable the completion of the HZJL Business Combination.
• Shareholders may face insufficient liquidity if they wish to sell their public shares in the open market.

Risks

• No assurance that the Trust Agreement Amendment will enable the company to complete the Business Combination.
• No assurance that the Sponsor will fund the Trust Account to extend the Combination Period, even if the amendment is approved.
• Redemptions could leave the company with insufficient cash to consummate the Business Combination on commercially acceptable terms, or at all.
• The volatility of the market price and liquidity of the ordinary shares and other securities of the company.
• Risk of being deemed an unregistered investment company if funds are held in the trust account for too long, potentially forcing liquidation.
• Potential U.S. foreign investment regulations and review by CFIUS due to the foreign citizenship and residency of most management and board members, which could limit target opportunities or delay/prohibit a U.S. business combination.
• Potential imposition of a 1% U.S. federal excise tax on redemptions if the company domesticates to a U.S. corporation, which could reduce cash available for redemptions or contributions to the target business.

Future Outlook

Rising Dragon aims to complete the HZJL Business Combination by January 15, 2026, or by July 15, 2026, if the proposed extensions are approved and utilized. Management believes the sponsor will fund the amended extension fees as a non-interest-bearing loan if the proposal is approved. If the business combination is not completed by the applicable deadline, the company will liquidate, and public shareholders will receive a pro rata share of the Trust Account, while the sponsor's investment in founder shares and private units will be lost.

Management Comments

• "The Board has determined that it is in the best interests of the Company to seek the Trust Agreement Amendment and have Rising Dragon shareholders approve the Trust Agreement Amendment Proposal to provide the Sponsor with an incentive to make the Extension Payment required for the monthly extension that may be required for the Company to complete a Business Combination."
• "The Board believes that it is in the best interests of Rising Dragon shareholders that the Trust Agreement Amendment be approved so that Rising Dragon will have an additional amount of time to consummate a Business Combination."
• "Without the Trust Agreement Amendment, our Sponsor or its affiliates may choose not to make the Extension Payment and Rising Dragon may not be able to complete a Business Combination on or before the Termination Date, and would be forced to liquidate."
• "After consultation with our Sponsor, the Company's management has reasons to believe that, if the Trust Agreement Amendment Proposal is approved, the Sponsor or its affiliates or designees will contribute the Amended Monthly Extension Fee to the Company as a loan for the Company to deposit the funds into the Trust Account as the Extension Payment, upon five days advance notice prior to the applicable deadlines, and to extend the Combination Period for an additional one (1) month period each time for up to six (6) times."
• "Rising Dragon believes a Business Combination will provide significant benefits to its shareholders."

Industry Context

NA

Corporate Governance

Related Party Transactions

• The sponsor (Aurora Beacon LLC) or its affiliates or designees will make the monthly extension payments, potentially as a non-interest-bearing loan to the company, which would be repayable upon business combination consummation or forgivable upon liquidation.
• The sponsor and initial shareholders own Founder Shares (1,437,500 shares, acquired for $25,000) and Private Units (254,375 units, acquired for $2,543,750), which would become worthless if the company liquidates.
• The sponsor and the company's officers and directors have waived their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them if the company fails to complete a Business Combination.
• Certain directors and executive officers have indirect economic interests in the Private Units and Founder Shares through their association with the Sponsor.

Stakeholder Impact

• Shareholders: Public shareholders have the option to redeem their shares for cash at approximately $10.52 per share or hold them in anticipation of the HZJL Business Combination. If the company liquidates, they receive a pro rata share of the Trust Account. Initial shareholders face a total loss of their investment in Founder Shares and Private Units if no business combination is completed.
• Sponsor: Benefits from a reduced monthly extension fee and a forgivable loan structure, incentivizing continued support for the business combination. However, faces significant risk of losing its substantial investment if the business combination fails.
• HZJL Cayman Limited: The completion of the merger with HZJL is directly impacted by Rising Dragon's ability to secure extensions and consummate the deal.

Next Steps

• Shareholders will vote on the Trust Agreement Amendment Proposal and the Adjournment Proposal at the Extraordinary General Meeting on December 12, 2025.
• If the Trust Agreement Amendment Proposal is approved, the company will continue efforts to consummate the HZJL Business Combination, potentially utilizing monthly extensions until July 15, 2026.
• If the Trust Agreement Amendment Proposal is not approved and the sponsor does not fund extensions, the company will proceed with liquidation.
• Shareholders who have not yet redeemed their shares have the option to redeem them in connection with this Extraordinary General Meeting by December 10, 2025.

Key Dates

Recommendation

The filing reveals a highly concerning situation for Rising Dragon Acquisition Corp. The overwhelming redemption rate of approximately 76% in connection with the HZJL Business Combination EGM indicates a severe lack of confidence from public shareholders in the proposed merger. Furthermore, the need to reduce the monthly extension fee to incentivize the sponsor, coupled with the sponsor's commitment to fund these extensions as a forgivable loan, suggests a weakened financial position or reduced conviction in the deal's prospects. While the current share price is slightly above the redemption value, the significant uncertainties, high redemption risk, and the explicit threat of liquidation if the extension is not approved or funded, make this a high-risk investment. A seasoned investor would likely recommend selling to lock in any premium above the redemption value and avoid potential further downside or the complete loss of investment in a liquidation scenario.

Keywords

SPAC, Rising Dragon Acquisition Corp., RDAC, HZJL Cayman Limited, Business Combination, Merger Agreement, Trust Agreement Amendment, Extension, Redemption, Proxy Statement, Corporate Governance, SEC Filing, Liquidation Risk