Summit Healthcare Acquisition Corp. (SMIH) Merger with YS Biopharma (Private)

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October 1, 2022

  • Summit Healthcare Acquisition Corp. (SMIH) to merge with YS Biopharma (private).
  • The transaction values the combined company at pro forma enterprise value of $849 million ($834 million of pre-money equity value).
  • Summit Healthcare shareholders will receive YS Biopharma shares (including bonus shares) as merger consideration.
  • Transaction includes FPA of $30 million (3 million Class A shares of Summit at $10/share + 0.75 million redeemable warrants). Proceeds will count towards available closing cash.
  • Up to 2,732,325 incentive bonus shares (including up to 1,285,800 shares to be newly issued by the combined entity and 1,446,525 shares (29%) to be contributed by the SPAC sponsor) will be provided to non-redeeming SPAC shareholders and Forward Purchase Investors.
  • One of the closing conditions is waiver of deferred underwriting fee by the underwriters.
  • Minimum gross cash condition of $30 million.
  • The business combination is expected to close in first quarter of 2023.
  • SPAC Details:
    • Unit Structure: 1 class A ordinary share + 0.5 Redeemable Warrant
    • #Cash in Trust: $200,297,492 (100.1% of Public Issue)
    • Public Shares outstanding: 20.00 million
    • Private Shares Outstanding: 5.00 million
    • Reported Trust Value/ Share: $10.01
    • Liquidation Date: June 11, 2023
  • Name of Target: YS Biopharma
  • Description of Target: YS Biopharma is a global biopharmaceutical company dedicated to discovering, developing, manufacturing and commercializing new generations of vaccines and therapeutic biologics for infectious diseases and cancer. It has developed a proprietary PIKA® immunomodulating technology platform and a series of preventive and therapeutic biologics targeting Rabies, Hepatitis B, Shingles, influenza, Coronavirus. YS Biopharma operates in China, Singapore, the United States, the United Arab Emirates and the Philippines with over 800 employees and led by a management team that combines rich local expertise and global vision in the vaccine and pharmaceutical industry.
  • Announced Date: September 29, 2022
  • Expected Close: “First Quarter of 2023”
  • Press Release: https://www.sec.gov/Archives/edgar/data/1839185/000110465922104148/tm2226545d2_ex99-1.htm
  • Transaction Structure (https://www.sec.gov/Archives/edgar/data/1839185/000110465922104148/tm2226545d2_ex99-2img018.jpg):
  • Transaction Terms (https://www.sec.gov/Archives/edgar/data/1839185/000110465922104148/tm2226545d2_ex99-2img015.jpg):
    • Enterprise Value: $849 million (Pre-money)  
    • Market Cap Value:  $834 million
    • SPAC Shareholders (Non-redeeming) Receive:
      • YS Biopharma shares (including bonus shares) based on “SPAC Class A Exchange Ratio”
        • SPAC Class A Exchange Ratio (ER) = Total YS Biopharma Shares issued to SPAC Public shareholder/SPAC Non-redeeming Public Shares
        • ER ranges between 1.1169 and 1.4286 depending on Redemption Rate (Capped at 85%)
  • SPAC Sponsors Receive:
    •  3,553,475 YS Biopharma Ordinary Shares (after the forfeiture of 29% Sponsor Shares)
  • PIPE / Financing:
    • $30 million from FPAs (3 million SPAC Class A shares each at $10/share and 0.75 million redeemable warrants)
    • FPA investors to receive 390,000-1,450,000 bonus shares based on SPAC Class A Exchange Ratio
  • Support Agreement:
    • Standard voting support
    • Surrender of 1,446,525 Class B ordinary shares (or 29%) of SPAC for no consideration
    • Right to appoint two directors on the BOD of Target so long as the Sponsor beneficially owns not less than 1% of all the issued and outstanding shares of Target Post-closing
    • Reimbursement (to SPAC or Target) at closing:
      • Transaction & Operating expenses exceeding mutually agreed amounts
  • Lock-up:
    • SPAC Insiders: 365 days post first merger
      • Early Release: If equal or above $12 per share after 180 days following first merger
    • Pre-Closing Target shareholders: 180 days post first merger
      • Early Release: If equal or above $12 per share after 180 days following first merger
    • Up to 3,000,000 YS Biopharma shares held by SPAC Insiders & Pre-Closing Target shareholders may be released from lock-up to satisfy Minimum Public Float Requirement  
  • Closing Conditions:
    • Termination date: June 27, 2023 (270th day after the date of agreement)
    • Completion of Target Capital restructuring
    • Waiver of Deferred Underwriting Fee by the underwriter for SPAC’s IPO
    • Gross Closing Cash of $30 million
    • Six-year Tail policy
    • Other customary closing conditions
  • Termination:
    •  Standard termination clauses
  • Advisors:
    • Target Legal Advisors: Wilson Sonsini Goodrich & Rosati, Jingtian & Gongcheng and Maples and Calder (Hong Kong) LLP
    • SPAC Legal Advisors: Cooley LLP and Ogier
  • Financials (N/A):
    • No historical or projected financials provided
  • Company Incentive Plan:
    • The maximum number of Target Ordinary Shares that may be issued post-closing should reflect the Target Capital Restructuring

*Denotes estimated figures by CPC

#Reported as on June 30, 2022