ESSC - Evolving potential Gamma Squeeze similar to IRNT

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Here’s my summary of the filing

https://www.sec.gov/Archives/edgar/data/0001760683/000121390022004594/pre14a0122_eaststoneacq.htm

  • ESSC Special Meeting scheduled for February 24, 2022, at 10:00 a.m. Any shareholder can listen to and participate in the Special Meeting live via the Internet at East Stone Acquisition Corp. 2022 Special Meeting

  • The termination date is February 24, 2022.

  • 7,168,605 Ordinary Shares of East Stone outstanding.

  • The Special Meeting will be held for the purpose of considering and voting on the following proposals:

    Proposal No. 1 — Extension Amendment Proposal — To amend East Stone’s amended and restated memorandum and articles of association (the “ Memorandum and Articles of Association ”) to extend the date by which East Stone has to consummate a business combination (the “ Extension ”) from February 24, 2022 to August 24, 2022 (the “ Extended Date ”) (the “ Extension Amendment Proposal ”); and

    Proposal No. 2 — Adjournment Proposal — To instruct the chairman of the Special Meeting to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, there are not sufficient votes to approve the Extension Amendment Proposal (the “ Adjournment Proposal ”).

  • (the “ Business Combination Agreement ”),

    1. by and among East Stone, JHD Holdings (Cayman) Limited, a Cayman Islands exempted company (“ JHD ”)

    2. JHD Technologies Limited, a Cayman Islands exempted company (“ Pubco ”). Xiaoma (Sherman) Lu, East Stone’s Chief Executive Officer and a member of its board of directors, has received an offer to serve as President and Vice Chairman of Pubco and as a member of Pubco’s board of directors following the consummation of the Business Combination.

    3. Yellow River MergerCo Limited, a British Virgin Islands business company and a wholly-owned subsidiary of Pubco (“ Merger Sub ”)

    4. Navy Sail International Limited, a British Virgin Islands business company, in the capacity as the Purchaser Representative thereunder. Chunyi (Charlie) Hao is the sole officer and director of Navy Sail International Limited. Navy Sail International Limited is indirectly owned by East Stone’s directors Chunyi (Charlie) Hao, Xiaoma (Sherman) Lu, along with certain other individuals

    5. Yellow River (Cayman) Limited, a Cayman Islands exempted company, in the capacity as the Seller Representative thereunder and the sole holder of JHD’s outstanding capital shares (the “ Primary Seller ”)

    6. Each of the holders of JHD’s capital shares that become parties to the Business Combination Agreement after the date thereof (each individually, a “ Seller ”, and collectively with the Primary Seller, the “ Sellers ”)

    7. Double Ventures Holdings Limited, a British Virgin Islands business company, solely with respect to Sections 10.3 and Articles XII and XIII thereof, as applicable (the “ Sponsor ”). Chunyi (Charlie) Hao is the sole officer and director of Double Ventures Holdings Limited, East Stone’s sponsor. Mr. Hao owns 33.3% of East Stone’s sponsor, and Fan Yu owns 66.7% of East Stone’s sponsor.

  • If East Stone’s shareholders approve the Business Combination at the Business Combination Special Meeting and the other conditions to the Business Combination are then satisfied or will be satisfied or waived on or before the Termination Date, then East Stone intends to use its best efforts to complete the Business Combination on or before the Termination Date. East Stone will cancel the Special Meeting and will not implement the Extension if, on or before February 24, 2022.

  • If the Extension Amendment Proposal is approved by the requisite vote of shareholders (and not abandoned), the remaining holders of Public Shares will retain their right to redeem their Public Shares for their pro rata portion of the funds available in the trust account upon consummation of a business combination.

  • If the Extension is implemented (the “ Redemption ”), regardless of how such public shareholders vote in regard to the Extension Proposal.

  • If the Extension Amendment Proposal is not approved, and the Business Combination is not completed on or before the Termination Date, February 24, 2022, then as contemplated by and in accordance with the Memorandum and Articles of Association, East Stone will

    1. Cease all operations except for the purpose of winding up

    2. As promptly as reasonably possible but not more than five business days thereafter, redeem the Public Shares, at a per -share price , payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest will be net of taxes payable) divided by the number of then issued and outstanding Public Shares, which Redemption will completely extinguish the rights of the holders of the Public Shares (the “ Public Shareholders ”) as shareholders, (including the right to receive further liquidation distributions, if any), subject to applicable law

    3. As promptly as reasonably possible following such Redemption, subject to the approval of East Stone remaining shareholders and board of directors, dissolve and liquidate, subject in each case to East Stone’s obligations under British Virgin Islands law to provide for claims of creditors and the requirements of other applicable law.

  • If East Stone does not implement the Extension, it will not redeem any Public Shares (units sold in East Stone’s initial public offering) submitted for Redemption solely in connection with the Special Meeting (but will redeem all Public Shares submitted for Redemption in connection with the Business Combination Special Meeting).

  • JHD loaned East Stone $1,380,000 on the behalf of Double Ventures Holdings Limited to support the First Extension, such loan being made pursuant to the terms of the Original Business Combination Agreement.

  • JHD also loaned East Stone an additional $1,380,000 to support the Second Extension. The loaned funds were deposited into East Stone’s Trust Account. The loans are non-interest bearing and will be payable upon the earlier of (i) the consummation of the Transactions and (ii) East Stone’s liquidation.

  • On November 12, 2021, East Stone entered into forward share purchase agreements and share transfer agreements with three investor groups pursuant to which these investors have agreed, among other things, not to redeem certain East Stone shares in connection with either the vote on the Third Extension (November 24, 2021 to February 24, 2022).

  • As of January 27, 2022, there was approximately $33,505,073.45 held in the Trust Account following the redemption of $108,088,023 exercised by shareholders of East Stone on November 24, 2021.

  • East Stone entered into three Forward Share Purchase Agreements —

    1. one with Sea Otter Securities (“ Sea Otter ”) (the “ Sea Otter Purchase Agreement ”)

    2. one with Stichting Juridisch Eigendom Mint Tower Arbitrage Fund (“ Mint Tower ”) (the “ Mint Tower Purchase Agreement”)

    3. one with Glazer Special Opportunity Fund I, LP (“ Glazer ”), Meteora Capital Partners, LP (“Meteora”, and together with Glazer, the “ Principal Investors ”), Meteora on behalf of itself and its affiliated investment funds (which together with the Principal Investors are referred to as the “ Glazer Investors ” and, together with Sea Otter and Mint Tower, the “ Backstop Investors ”) (the “ Glazer Purchase Agreement”)

  • Each of the Backstop Investors would not redeem shares that they each hold in connection with the Third Extension and the Business Combination and instead would each either hold such shares for a period of time following the consummation of the Business Combination.

  • One of two scenarios:

    1. The Backstop Investors will each have the right to sell such shares to the Company at $10.41 per share

    2. The Backstop Investors will sell such shares on the open market during such time period at a market price of at least $10.26 per share

  • The Backstop Investors who held shares prior to signing the Backstop Agreements may have otherwise redeemed such shares in the absence of such Forward Share Purchase Agreements.

  • Double Ventures Holdings Limited agreed to transfer to the Backstop Investors an aggregate of 399,996 founder shares to be transferred to such investors.

  • The total potential cost to Pubco for the Backstop Arrangements is $30,438,569. To the extent that Pubco is required to pay the Backstop Investors to repurchase the Backstop Shares that such investors have not sold prior to the end of the three-month period.

  • The Backstop Investors who held shares prior to signing the Backstop Agreements may have otherwise exercised their Redemption rights in connection with the Extension in the absence of such arrangements.

  • The aggregate number of ESSC ordinary shares which would be subject to the Backstop Agreements is up to 2,923,974 shares, resulting in up to $30,438,569.30 that will not be redeemed from the Trust Account and placed into escrow for up to three months following the Business Combination.

  • 135,000 founder shares were transferred to the Backstop Investors in connection with the Third Extension, and an aggregate of up to 264,996 founder shares will be transferred to the Backstop Investors contemporaneously with the Business Combination.

  • In connection with the Forward Share Purchase Agreements, Double Ventures Holdings Limited agreed to transfer to the Backstop Investors 44,444 founder shares for every 324,886 public shares not redeemed, for an aggregate of up to 399,996 founder shares to be transferred to such investors. Of such amount, an aggregate of up to 135,000 founder shares were transferred to the Backstop Investors in connection with the Third Extension, and an aggregate of up to 264,996 founder shares will be transferred to the Backstop Investors on or before the closing of the Business Combination.

  • On January 31, 2022, the Backstop Investors entered into the February 2022 Founder Share Transfer Agreements with the Double Ventures Holdings Limited to support the Extension . Pursuant to February 2022 Founder Share Transfer Agreements, Backstop Investors agreed to not request redemption of an aggregate of up to 600,000 ordinary shares of East Stone in connection with the Extension.

  • Double Ventures Holdings Limited agreed to transfer to the Backstop Investors an aggregate of 180,000 founder shares on or prior to the Special Meeting.

  • 60,000 founder shares for each month past May 24, 2022 that the Business Combination has not yet closed, for a total of up to 360,000 founder shares to be received by the Backstop Investors to support the Extension.

  • Each Forward Share Purchase Agreement provides that the aggregate number of our ordinary shares which would be subject to each of such agreements is up to 974,658 ordinary shares, for a total of up to 2,923,974 shares subject to non-redemption.

  • Pursuant to February 2022 Founder Share Transfer Agreements, Backstop Investors agreed to not request redemption of an aggregate of up to 600,000 ordinary shares of East Stone in connection with the Extension.

  • Any of the up to 759,996 founder shares transferable to the Backstop Investors described herein will be worthless in the event the Business Combination is not consummated . To each of East Stone and JHD’s knowledge, other than the benefits that the Backstop Investors stand to receive in connection with Backstop Arrangements, the Backstop Investors do not have any other interests in the Business Combination.

  • Any founder shares transferred pursuant to these arrangements will be subject to the same rights and obligations as the remaining founder shares held by Double Ventures Holdings Limited and grants the following rights:

    1. Vote any founder shares held by the Backstop Investors in favor of the Business Combination.

    2. Subject any founder shares held by them to the same lock-up restrictions as the founder shares held by Double Ventures Holdings Limited.

  • The closing price of the Ordinary Shares on the Nasdaq Capital Market on January 27, 2022 was $10.30. Accordingly, if the market price of the Ordinary Shares were to remain the same until the date of the Special Meeting, exercising redemption rights would result in a public shareholder receiving approximately $0.04 less per share than if the stock was sold in the open market.

    • East Stone cannot assure shareholders that they will be able to sell their Ordinary Shares in the open market, even if the market price per share is higher than the redemption price stated above, as there may not be sufficient liquidity in its securities when such shareholders wish to sell their shares.

  • As contemplated by the Memorandum and Articles of Association, the holders of East Stone’s ordinary shares, with no par value (the “ Ordinary Shares ”), issued as part of the units sold in East Stone’s initial public offering (the “ Public Shares ”) may elect to redeem all or a portion of their Public Shares in exchange for their pro rata portion of the funds held in a trust account established to hold a portion of the proceeds of the initial public offering (the “ initial public offering ”) and the concurrent sale of the private placement units (the “ Trust Account”).

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