425: Pegasus Digital Mobility Secures $20 Million in Non-Redemption Agreements, Adds Key Board Member Ahead of Schmid Group Merger

Pegasus Digital Mobility Acquisition Corp. announces $20 million in non-redemption and investment agreements and the addition of Boo-Keun Yoon as an independent board member to Schmid Group N.V. ahead of the planned business combination.

Summary

• Pegasus Digital Mobility Acquisition Corp., Pegasus Digital Mobility Sponsor LLC, and Pegasus TopCo B.V. have entered into non-redemption and investment agreements totaling approximately $20 million.
• These agreements are in connection with the shareholder meeting scheduled for April 22, 2024, to approve the business combination with Gebr. Schmid GmbH.
• The committed capital includes investments from institutional investors and up to $8 million from the Sponsor, which will be set-off against outstanding promissory notes.
• The Sponsor will not transfer a certain number of Founder Shares, and these shares will not be cancelled at the closing of the business combination.
• Boo-Keun Yoon, former Vice Chairman and CEO of Samsung Electronics, has agreed to join TopCo's board of directors as an independent director.
• The closing of the business combination is scheduled for April 25, 2024, at the earliest, subject to the fulfillment of all closing conditions.

Sentiment

Score: 7

Explanation: The announcement is generally positive, with secured funding and a strong board addition. However, the deal is still subject to closing conditions, introducing some uncertainty.

Positives

• The $20 million in non-redemption and investment agreements reduces potential redemptions and provides additional capital.
• The addition of Boo-Keun Yoon to the board brings significant experience and industry connections.
• The Sponsor's commitment of up to $8 million demonstrates confidence in the business combination.
• The business combination with Gebr. Schmid GmbH is progressing towards closing.

Risks

• The closing of the business combination is subject to the fulfillment of all closing conditions.
• The Company, the Sponsor and TopCo expect to enter into additional Non-Redemption and Investment Agreements prior to the Shareholder Meeting, which may or may not occur.
• Failure of Pegasuss shareholders to approve the Required Shareholder Approval Matters at the Meeting could terminate the agreement.

Future Outlook

The Company, the Sponsor and TopCo expect to enter into additional non-redemption and investment agreements prior to the Shareholder Meeting. The closing of the initial business combination is scheduled for April 25, 2024, at the earliest, subject to the fulfillment of all closing conditions.

Management Comments

• Prof. Dr. Dr. h.c. Sir Ralf Speth, CEO of Pegasus and the future chairman of the Schmid Group N.V.'s board, stated that the addition of Boo-Keun Yoon is a key step for the Schmid Group as the business combination nears.

Industry Context

SPACs often use non-redemption agreements to ensure sufficient capital remains after the merger. The addition of experienced board members is also common to enhance investor confidence and provide strategic guidance.

Comparison to Industry Standards

• Non-redemption agreements are a common tool used in SPAC transactions to mitigate the risk of high redemption rates, which can jeopardize the deal's funding.
• The $20 million secured is within the typical range for such agreements, although the specific amount varies depending on the size and structure of the deal.
• Bringing in independent directors with relevant industry experience, like Boo-Keun Yoon's background at Samsung, is a standard practice to strengthen the board's expertise and credibility.

Management Changes

Related Party Transactions

• The Sponsor's commitment of up to $8 million, which will be offset against outstanding promissory notes, constitutes a related party transaction.

Stakeholder Impact

• Shareholders: Positive impact due to reduced redemption risk and enhanced board expertise.
• Employees: Potential for growth and stability following the business combination.
• Customers: Access to enhanced products and services through the combined entity.

Next Steps

• Shareholder meeting on April 22, 2024, to approve the business combination.
• Closing of the business combination, scheduled for April 25, 2024, at the earliest, subject to the fulfillment of all closing conditions.
• Potential addition of two further independent directors to the TopCo board.

Key Dates