Phoenix biotech Acquisition filed a proxy outlining its proposed merger with CERo Therapeutics. The deal was announced last June at a pro forma equity capitalization of $145 million.
The target is an immunotherapy company seeking to advance the next generation of engineered T cell therapeutics that employ phagocytic mechanisms.
Aassuming no redemptions, CERo would expect to receive up to $13.7 million of cash held in the SPAC's trust at deal announcement. The business combination reflects a pre-money equity value of $50 million for CERo.
The parties currently expect that the total proceeds upon closing will constitute a majority of the $30 million minimum cash condition and that they will successfully negotiate the reduction or deferral of certain cash expenses payable to third-party vendors at closing. It likely that the net cash available to the new company after the payment of any expenses not deferred will be less than the minimum cash condition and that CERo would waive the condition to the extent of a shortfall.
Should the business combination transaction be completed with a waiver of the closing cash condition, but in the absence of additional pipe funding or proceeds from the SPAC's trust, the surviving entity will hold $1.6 million of the SPAC's working capital debt.
If the deal is approved and closes, the SPAC's sponsor is expected to hold approximately 51% of the issued and outstanding New CERo common stock; CERo stockholders are expected to hold approximately 47% of the New CERo common stock.
The sponsor has indicated willingness to transfer a portion of its founder shares to investors in a potential PIPE transaction, CERo stockholders and/or public stockholders who do not exercise their redemption rights. However, Phoenix has not obtained any binding commitments for a PIPE transaction or entered into any non-redemption agreements, while the sponsor has not entered into any agreements with respect to the transfer (which may be accomplished through a forfeiture coupled with a concurrent new issuance by New CERo of an offsetting number of shares) of any reallocation shares. Read more.