Perception Capital Corp. II (PCCT) Merge with Spectaire (Private)

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January 17, 2023

  • Perception Capital Corporation II (PCCT) to acquire Spectaire (private) in a transaction valuing the pro forma entity at $203 million in Enterprise Value ($233 million equity value).
  • Spectaire shareholders will receive aggregate merger consideration (Cash + Equity) of $125 million. 
  • Transaction includes 7.50 million earnout shares to Spectaire shareholders vesting in three equal tranches at $15.0, $20.0 and $25.0 per share respectively.
  • Transaction is supported by up to 2,457,892 shares of forward purchase agreements.
  • No minimum cash condition.
  • Business combination transaction is targeted to close in the second quarter of 2023.
  • SPAC Details:
    • Unit Structure: 1 Class A Ordinary Share + ½ Redeemable Warrant
    • #Cash in Trust: $25,423,173 (103.4% of Public Offering)
  • Public Shares Outstanding: 2,457,892 shares (*10.69% after redemption in connection with charter extension)
  • Private Shares Outstanding: 5.75 million shares
    • Estimated Trust Value/Share: $10.34
    • Liquidation Date: May 1, 2023
  • Name of Target: Spectaire
  • Description of Target: Spectaire Inc. manufactures, distributes and installs a patented portable mass spectrometry system that pioneers emissions reduction of logistics assets through direct observational measurement.
  • Announced Date: January 17, 2023
  • Expected Close: “Second Quarter of 2023”
  • Press Release: https://www.sec.gov/Archives/edgar/data/1844149/000156459023000454/pcct-ex991_30.htm    
  • Transaction Terms (https://content.bamsec.com/0001564590-23-001474/slide-n01fjwawmxb.jpg):
    • Enterprise Value: $203.0 million  
    • Market Capitalization: $233.0 million
    • Target Shareholders Receive (~53.8%):
      • Aggregate consideration of $125 million
        • Cash Consideration: Lower of:
          • $6.25 million
          • the amount by which the Available Cash at closing exceeds $5.00 million (Aggregate Cash Consideration will be zero if available cash less than $5,.00 million)
            • Available Cash = Aggregate cash proceeds received by Target and SPAC + CIT – Transaction Expenses
        • Equity consideration: $125 million – Cash Consideration (shares of PCCT Common Stock at $10.0 per share)
    • Earn-Out: 7.50 million PCCT Common Stock (5 years after closing)
      • 2.50 million shares @ $15.0 per share
      • 2.50 million shares @ $20.0 per share
      • 2.50 million shares @ $25.0 per share
  • PIPE / Financing:
    • $25.0 million of PIPE is expected to be raised at $10.0 per share
    • Transaction assumes $50.0 million of ELOC
  • Redemption Protections:
    • Up to 2,457,892 shares of FPAs by Meteora Capital
      • SPAC needs to pay an escrow amount = 99% * (# of Recycled Shares * Initial Price)
      • SPAC needs to pay (150,000 Ordinary Shares * Initial Price) directly from the trust account
  • Support Agreement:
    • Standard voting support
  • Lock-up:
    • SPAC Sponsors and Key Target Shareholders: 6 months post-closing, 1 month early-release if price ≥ $12.0
  • Closing Conditions:
    • No Minimum Cash Condition
    • Termination date: May 1, 2023
    • Other customary closing conditions
  • Termination:
    •  Standard termination clauses
  • Advisors:
    • Target Legal Advisors: Latham & Watkins LLP
    • SPAC Legal Advisors: Skadden, Arps, Slate, Meagher & Flom LLP
  • Financials (N/A):
    • No historical or projected financials provided
  • Equity Incentive Plan
    • 12% of fully diluted shares outstanding post-closing
    • Includes evergreen provision for annual automatic increase of up to 5%

*Denotes estimated figures by CPC

#Estimated as on January 17, 2023