Arabian Entertainment Company Ltd. (“AEC”), a leading food,
beverage and entertainment company in Saudi Arabia and Sagaliam
Acquisition Corp. (NASDAQ: SAGA) (“Sagaliam”), a special purpose
acquisition company (“SPAC”), announced today that they have
entered into a definitive business combination agreement.
Under the terms of the agreement, Supraeon
Investments, Ltd. (“Supraeon”), the parent company of AEC and
Sagaliam will combine into a new company that is expected to be
listed on NASDAQ and will adopt Tarfeeh Holdings, Ltd. as the
corporate operating brand.
The transaction, once completed, will provide
AEC with significant additional capital to continue its growth,
better serve customers and execute its strategic plan to become a
leading provider of food and beverage and live entertainment
offerings in the MENA region.
In addition, Sagaliam and AEC expect to raise an
additional $35 million through a private investment in public
equities (“PIPE”). The anticipated $35 million from the
PIPE is expected to be primarily used by AEC to pay
transaction-related expenses and fund the expansion of its business
platform in Saudi Arabia and the MENA Region.
AEC
Overview
Headquartered in Jeddah, Saudi Arabia, AEC
is a premier owner and operator of fast casual restaurant
franchises operating under the Applebee’s and Ocean Basket
brands.
AEC has been in operation since 2001. Together
with its parent company, Supraeon, AEC is a portfolio company of
GLD Partners, LP., a Los Angeles based private equity firm
(“GLD”).
Sagaliam
Overview
Sagaliam is a SPAC that raised $116.5
million in its initial public offering on December 23,
2021.
The business combination agreement between AEC
and Sagaliam requires that the sponsor agree not to sell its
founder shares for a period of twelve months after the business
combination subject to the provisions of the lock up agreement. The
sponsor believes that this "lock-up" period aligns the interests of
the sponsor with those of Sagaliam’s investors. As such, with
certain limited exceptions, the sponsor expects to continue to be
invested in the combined company after the completion of the
business combination.
Management Commentary
"AEC is raising the bar in the fast casual food
and beverage industry in the MENA region and strives to create the
best possible experience for customers, partners, and employees so
it can create more moments that matter," said Omar Mirza,
Interim CEO of AEC. "We are excited to enter the public markets
through our business combination with Sagaliam. We expect that this
capital, combined with our leadership team's significant food,
beverage and entertainment industry experience, will allow AEC to
grow our workforce, expand our offerings and further invest in our
customer experience, while maintaining our core values and
family-first culture."
"We believe AEC has become one of the
fastest-growing providers of fast casual dining experiences in
Saudi Arabia thanks to its world-class leadership team, and the
consistent high-quality service it provides to customers,"
said Barry Kostiner, CEO and Director of Sagaliam. "We are
confident in the AEC team and we believe they are ready to further
accelerate their market position through this opportunity to become
a public company."
"GLD is pleased to support the combination of
AEC and Sagaliam. GLD initially acquired AEC because of its faith
in the growth potential of AEC and the overall MENA region. GLD
remains committed to seeking out investment opportunities in the
MENA region and this transaction is in line with GLD’s investment
strategy,” said Eric Miller, a spokesperson for GLD Partners,
LP. "AEC and Sagaliam are ideal partners. AEC’s differentiated
model and track record of performance, combined with Sagaliam’s
investment, will allow AEC to extend their leadership position and
deliver shareholder value."
Transaction Overview
Under the terms of the definitive business
combination agreement, the transaction is expected to provide AEC
up to $151.5 million in proceeds, including $35 million from an
anticipated PIPE offering described above and $116.5 million of
SPAC cash in trust assuming no redemptions, based on a
pre-transaction equity value of $379 million. No additional
funding beyond the $35 million PIPE offering is contemplated for
the business combination, which includes a minimum net cash
condition of $25 million in the aggregate to close.
Upon the closing of the proposed transaction,
AEC’s senior management will continue to serve in their current
roles. The current AEC owners will retain approximately 50% of the
ownership at close, assuming no SPAC shareholder redemptions.
The respective boards of directors of both
Sagaliam and AEC have each approved the proposed transaction.
Completion of the proposed transaction is subject to approval of
Sagaliam stockholders and other customary closing conditions. The
parties expect that the proposed transaction will be completed in
the first half of 2023.
A more detailed description of the transaction
terms and a copy of the definitive business combination agreement
will be included in a Current Report on Form 8-K to be filed by
Sagaliam with the United States Securities and Exchange Commission
(the “SEC”). Sagaliam or one of its subsidiaries or affiliates will
file a registration statement (which will contain a proxy statement
and prospectus) with the SEC in connection with the
transaction.
Investor Conference Call
AEC and Sagaliam will host a joint investor
conference call discussing the business and the proposed
transaction. Information as to how to join the call will be made
available at
either https://sagaliam.com or www.tarfeehksa.com.
For Investor Relations, including a copy of an
investor presentation as filed with the SEC, please visit the
Sagaliam website at www.sagaliam.com or the SEC's website
for Sagaliam’s filings at: https://sec.report/CIK/0001855351.
Advisors
King & Spalding LLP is serving as legal
advisor to AEC and Mayer Brown LLP and Al Akeel & Partners
are serving as legal advisors to Sagaliam. Marshall & Stevens,
Inc. has delivered a fairness opinion to a Special Committee of the
Board of Directors of Sagaliam in connection with the proposed
transaction.
Important Information about the Proposed
Business Combination and Where to Find It
This document relates to a proposed transaction
between AEC and Sagaliam. This document does not constitute an
offer to sell or exchange, or the solicitation of an offer to buy
or exchange, any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, sale or
exchange would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. Sagaliam
intends to file a preliminary proxy statement with the SEC in
connection with the proposed transaction. Sagaliam will mail the
definitive proxy statement to all Sagaliam shareholders. Sagaliam
also will file other documents regarding the proposed transaction
with the SEC. Before making any voting decision, investors and
security holders of Sagaliam are urged to read the preliminary
proxy statement (and, when available, the definitive proxy
statement) and all other relevant documents filed or that will be
filed with the SEC in connection with the proposed transaction as
they become available because they will contain important
information about the proposed transaction.
Investors and security holders will be able to
obtain free copies of the proxy statement and all other relevant
documents filed or that will be filed with the SEC by Sagaliam
through the website maintained by the SEC at www.sec.gov.
Participants in
Solicitation
Sagaliam and AEC and their respective directors
and executive officers may be deemed to be participants in the
solicitation of proxies from Sagaliam Acquisition Corp.'s
shareholders in connection with the proposed transaction. A list of
the names of the directors and executive officers of Sagaliam and
information regarding their interests in the business combination
will be contained in the proxy statement when available. You may
obtain free copies of these documents as described in the preceding
paragraph.
Non-Solicitation
This press release is not a proxy statement or
solicitation of a proxy, consent, or authorization with respect to
any securities or in respect of the proposed business combination.
This press release shall also not constitute an offer to sell or
the solicitation of an offer to buy any securities, nor shall there
be any sale of securities in any states or jurisdictions in which
such offer, solicitation, or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended, or an exemption therefrom.
Cautionary Statement Regarding
Forward-Looking Statements
This document contains certain forward-looking
statements within the meaning of the federal securities laws with
respect to the proposed transaction between AEC and Sagaliam. These
forward-looking statements generally are identified by the words
"believe," "project," "expect," "anticipate," "estimate," "intend,"
"strategy," "future," "opportunity," "plan," "may," "should,"
"will," "would," "will be," "will continue," "will likely result,"
and similar expressions. Forward-looking statements are
predictions, projections and other statements about future events
that are based on current expectations and assumptions and, as a
result, are subject to risks and uncertainties. Many factors could
cause actual future events to differ materially from the
forward-looking statements in this document, including but not
limited to: (i) the risk that the transaction may not be completed
in a timely manner or at all, which may adversely affect the price
of Sagaliam’s securities, (ii) the risk that the transaction may
not be completed by Sagaliam's business combination deadline and
the potential failure to obtain an extension of the business
combination deadline if sought by Sagaliam, (iii) the failure to
satisfy the conditions to the consummation of the transaction,
including the approval by the shareholders of Sagaliam and the
receipt of certain governmental and regulatory approvals, (iv) the
lack of a third party valuation in determining whether or not to
pursue the transaction, (v) the occurrence of any event, change or
other circumstance that could give rise to the termination of the
Business Combination Agreement, (vi) the effect of the announcement
or pendency of the transaction on AEC’s business relationships,
operating results and business generally, (vii) risks that the
proposed transaction disrupts current plans and operations of AEC
and potential difficulties in AEC’s employee retention as a result
of the transaction, (viii) the outcome of any legal proceedings
that may be instituted against AEC or against Sagaliam related to
the Business Combination Agreement or the transaction, (ix) the
ability to maintain the listing of the Sagaliam's securities a
national securities exchange, (x) the price of Sagaliam's
securities may be volatile due to a variety of factors, including
changes in the competitive industries in which Sagaliam plans to
operate or AEC operates, variations in operating performance across
competitors, changes in laws and regulations affecting Sagaliam's
or AEC's business and changes in the combined capital structure,
(xi) the ability to implement business plans, forecasts, and other
expectations after the completion of the proposed transaction, and
identify and realize additional opportunities, and (xii) the risk
of downturns and a changing regulatory landscape in the highly
competitive food and beverage industry. The foregoing list of
factors is not exhaustive. You should carefully consider the
foregoing factors and the other risks and uncertainties described
in the "Risk Factors" section of Sagaliam 's registration on Form
S-1, the proxy statement that will be filed as discussed below and
other documents filed by Sagaliam from time to time with the SEC.
These filings identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Forward-looking statements speak only as of the date they are made.
Readers are cautioned not to put undue reliance on forward-looking
statements, and AEC and Sagaliam assume no obligation and do not
intend to update or revise these forward-looking statements,
whether as a result of new information, future events, or
otherwise. AEC nor Sagaliam gives any assurance that either AEC or
Sagaliam or the combined company will achieve its expectations.
CONTACT INFORMATION
Eric MillerGLD Partners,
LP213-315-2550press@gldlp.com
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