Pono Capital Two, Inc. (PTWO) Merge with SBC Medical Group Holdings (Private)

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September 30, 2022

  • Pono Capital Two, Inc. (PTWO) to acquire SBC Medical Group Holdings (private) in a transaction valuing the pro forma entity at $1360.0 million in Equity Value.
  • SBC shareholders will receive equity consideration of $1,200 million at $10.00 per share subject to adjustments.
  • SPAC Sponsors will be provided with 1.20 million shares of Class A common stock on or before to the earlier of: (a) 6 months post-closing and (b) the expiration of the lock-up of PONO founder shares OR (c) such later date as determined by the Sponsor in its sole discretion in accordance with the Merger Agreement.
  • No minimum cash condition.
  • Business combination transaction is targeted to close in the fourth quarter of 2023 or first quarter of 2024.
  • SPAC Details:
    • Unit Structure: 1 share of Class A common stock + 1 Redeemable Warrant
    • #Cash in Trust: $118,225,850 (102.8% of Public Offering)
    • Public Shares Outstanding: 11.50 million shares
    • Private Shares Outstanding: 3,509,375 shares (include 634,375 in units)
    • Reported Trust Value/Share: $10.28
    • Liquidation Date: May 9, 2023
    • Outside Liquidation Date:  February 9, 2024
  • Name of Target: SBC Medical Group Holdings
  • Description of Target: Since its establishment, SBC Medical Group has sought to provide the best “medical care” for customers’ problems, mainly in the field of cosmetic medicine, not only in Japan but also overseas. Today, SBC provides not only cosmetic medicine, but also high quality services through “medical corporations.” SBC considers “medical care” in the broadest sense of the word as a “service” because it wants to solve each person’s problems and realize each person’s hopes through “medical care.” SBC refers to its clients as “customers” rather than “patients” because SBC provides “medical services” to people who are not medically ill. What makes our customers happy? How can we contribute to society? What makes our staff proud? SBC believes resolving all three of these questions is the “realization of the three good things,” which is what makes SBC Medical Group distinct and is its purpose. SBC aims to contribute not only to its customers but also to society as a whole through the provision of medical services, and will continue to respond to the voices of its customers with the utmost in medical services. SBC will continue to embody the evolution of medical x technology in order to pursue technology for its customers, pursue further growth, and achieve globalization.
  • Announced Date: February 1, 2023
  • Expected Close: “Fourth Quarter of 2023” or “First Quarter of 2024”
  • Press Release: https://www.sec.gov/Archives/edgar/data/1930313/000149315223003426/ex99-1.htm
  • Transaction Terms (N/A):
    • Market Cap Value:  $1,360.0 million
    • Target Shareholders Receive (~*88.24%):
      • Equity consideration of $1,200 million (120.0 million shares of PONO Class A Common Stock at $10.0 per share) subject to following adjustments
        • Confirmed amounts of the Closing Net Indebtedness, Net Working Capital, and Transaction Expenses of the Closing Date
          • If the adjustment is negative to the SPAC, the escrow agent will distribute SPAC a number of shares which will be equal to the absolute value of the adjustment amount
          • If the adjustment is positive to the Target, SPAC will provide the Target an additional number os shares which will be equal to the adjustment amount
  • PIPE / Financing:
    • None
  • Redemption Protections:
    • None
  • Support Agreement:
    • Standard voting support
    • Sponsor will be granted 1.20 million shares of PONO Class A Common Stock on or before to the earlier of:
    • (a) 6 months post-closing and (b) the expiration of the lock-up of PONO founder shares
    • OR
    • (c) such later date as determined by the Sponsor in its sole discretion in accordance with the Merger Agreement
  • Lock-up:
    • SPAC Sponsor: 6 months post-closing
      • Early Release: If the price equals or exceeds $12.0 per share after 150 days post-closing
    • Key Target Shareholders: 6 months post-closing
      • Early Release: If the price equals or exceeds $12.00 per share after 150 days post-closing provided that:
        • 1/3rd Shares shall be released if price ≥ $13.0
        • 1/3rd Shares shall be released if price ≥ $15.0
        • 1/3rd Shares shall be released if price ≥ $17.0
  • Closing Conditions:
    • Termination date: September 30, 2023 (subject to extension)
    • No Minimum Cash Condition
    • PCAOB Audited Financials by June 30, 2023
    • Disclosure schedules and Due Diligence materials to Pono by April 28, 2023
    • Other customary closing conditions
  • Termination:
    •  Standard termination clauses
  • Advisors:
    • Target US Legal Advisors: Anthony L.G., PLLC
    • SPAC US Legal Advisors: Loeb & Loeb LLP
    • SPAC Japanese Legal Counsel: Mori Hamada & Matsumoto
  • Financials (N/A):
    • No historical or projected financials provided
  • Comparables (N/A):
    • No valuations provided
  • Management Equity Incentive Plan
    • 15.0% of shares outstanding post-closing

*Denotes estimated figures by CPC

#Reported as on September 30, 2022