Key Takeaways:
- Ace Global Business Acquisition Limited (NASDAQ: ACBA) has mutually terminated its Business Combination Agreement with LE Worldwide Limited.
- The termination follows concerns over LE Worldwide’s declining revenue, liquidity challenges, and uncertainty regarding its supply chain.
- Ace Global’s Board has decided to cease its business combination efforts and plans to liquidate and dissolve the company.
- The company will redeem all outstanding shares from public shareholders, with no redemption rights for warrants, which will expire worthless.
- The decision comes as Ace Global does not have sufficient time to complete an alternative business combination within its defined timeframe.
Ace Global Business Acquisition Limited (NASDAQ: ACBA), a special purpose acquisition company (SPAC), announced today the mutual termination of its Business Combination Agreement with LE Worldwide Limited, a British Virgin Islands business company. The agreement, originally signed on December 23, 2022, has undergone multiple amendments but has now been dissolved following concerns about LE Worldwide’s financial stability and operational viability.
Business Combination Agreement Mutually Terminated
The decision to terminate the agreement came on May 24, 2024, when Ace Global, LE Worldwide, and associated entities entered into a Mutual Termination Agreement. This termination was driven by significant declines in LE Worldwide’s business revenue, liquidity issues related to certain bank financings, and uncertainty about the continued supply of its tools and products.
A critical factor in the termination was the winding-up petition served to LE Worldwide’s related-party manufacturer and primary supplier on April 12, 2024. This development raised concerns over LE Worldwide’s ability to sustain its operations post-business combination.
Ace Global to Liquidate and Dissolve
Following the termination, Ace Global’s Board of Directors determined that the company would not have sufficient time to complete an alternative business combination within the timeframe specified in its amended and restated memorandum and articles of association (the “Charter”). As a result, Ace Global will begin the process of liquidating and dissolving the company, in accordance with its Charter and the terms outlined in its IPO prospectus.
The company plans to redeem all of its issued and outstanding ordinary shares that were part of its initial public offering. These shares will be redeemed from public shareholders, while the company’s warrants, which were also issued as part of the IPO, will expire worthless without redemption rights or liquidating distributions.
Background on LE Worldwide’s Struggles
LE Worldwide, a key player in the business combination with Ace Global, experienced significant operational challenges leading up to the termination of the merger agreement. Declining revenue streams, liquidity problems, and uncertainty surrounding its supply chain made it difficult for LE Worldwide to maintain its business viability. The winding-up petition against LE Worldwide’s primary supplier only added to these issues, ultimately resulting in both parties agreeing to terminate the merger.
Impact on Shareholders and Future Plans
With Ace Global’s liquidation, shareholders who participated in the company’s IPO will receive the redemption of their shares. However, warrant holders will not receive any compensation, as the warrants are set to expire without value. The company will work closely with its trustee to ensure the liquidation proceeds smoothly and in compliance with its Charter.
As the company winds down, this development marks the end of Ace Global’s efforts to complete its business combination plans. The dissolution of Ace Global highlights the risks and uncertainties involved in SPAC mergers, especially when target companies face unforeseen financial challenges that jeopardize their ability to operate effectively post-combination.
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