Business Context and Reporting Period
This Form 8-K, filed on March 1, 2023, reports on events occurring on February 23, 2023, involving Oxus Acquisition Corp. (Oxus) and Borealis Foods Inc. (Borealis). Oxus, a Cayman Islands exempted company, entered into a Business Combination Agreement to merge with Borealis, a Canadian corporation. The transaction involves Oxus domesticating to Ontario, Canada, and amalgamating with Borealis to form a new public entity ("New Oxus").
Key Financial Metrics and Transaction Terms
- Valuation: Borealis is valued at $150 million less net indebtedness (aggregate consolidated indebtedness minus cash).
- Consideration: Borealis shareholders will receive New Oxus shares calculated by dividing the Borealis Value by $10.00.
- Debt and Liquidity Conditions:
- Closing Available Cash must be no less than $30,000,000.
- Borealis indebtedness must not exceed $17,000,000 at Closing.
- Oxus must maintain at least $5,000,001 in net tangible assets after redemptions.
- Financing:
- New Investor Notes: $20,000,000 executed on February 8, 2023; converts to New Oxus shares post-closing.
- Sponsor Notes: $20,000,000 principal amount funded in December 2022; converts to Borealis shares at Closing.
- Promissory Note: Oxus entered an Amended and Restated Promissory Note with the Sponsor on February 28, 2023, allowing borrowing up to $3,500,000. As of March 1, 2023, the outstanding balance was $1,500,000.
- Termination Fee: Borealis may owe Oxus a $5,000,000 fee under specific termination scenarios (e.g., failure to obtain shareholder approval, material adverse effect, or failure to deliver audited financials by May 30, 2023).
Material Changes and Transaction Structure
The primary material change is the execution of the Business Combination Agreement. The transaction structure includes:
- Continuance: Oxus will de-register in the Cayman Islands and continue as an Ontario corporation.
- Amalgamations: A wholly-owned subsidiary of Oxus ("Newco") will amalgamate with Borealis, followed by the amalgamation of the surviving entity with New Oxus.
- Capitalization Adjustments: Outstanding Borealis options will be fully vested and exercised; convertible instruments will convert to shares prior to closing.
- Lock-Up Agreements: Directors, officers, and significant shareholders of Borealis will be subject to lock-up periods for 50% of their New Oxus shares for 12 months or until the share price exceeds $12.00 for 20 trading days within a 30-day period.
Guidance, Outlook, Risks, and Contingencies
Conditions to Closing: The transaction is contingent upon shareholder approval from both Oxus and Borealis, regulatory approvals (including the Investment Canada Act), and the effectiveness of the SEC Registration Statement (Form S-4).
Timeline and Deadlines: The transaction must close by December 8, 2023 ("Outside Date"). Borealis must deliver PCAOB audited financials by May 30, 2023, or Oxus may terminate the agreement.
Risks and Contingencies:
- Transaction Failure: Risks include failure to meet the Outside Date, inability to secure regulatory approvals, or failure to satisfy minimum cash conditions.
- Operational Disruption: The pendency of the transaction may disrupt Borealis's business relationships and operations.
- Capital Needs: Borealis may require additional capital to execute its business plan, which may not be available on acceptable terms.
- Forward-Looking Statements: The filing contains projections regarding market size and future results, which are subject to significant uncertainties including economic trends and regulatory changes.
Investor Verification Checklist
- Verify the final "Borealis Value" calculation, specifically the net indebtedness figure at the time of closing.
- Confirm the outcome of the shareholder votes for both Oxus and Borealis.
- Monitor the receipt of regulatory approvals, particularly under the Investment Canada Act.
- Review the upcoming Form S-4 Registration Statement for detailed financial statements and risk factors.
- Track the status of the $20 million New Investor Convertible Note and any additional Permitted Borealis Financing.
- Check for any Material Adverse Effect (MAE) events that could trigger termination rights.