Chardan NexTech Acquisition 2 in a regulatory filing said it secured a debt commitment from CCM Investments 5, an affiliate of Chardan Capital Markets, and EICF Agent to support the SPAC’s proposed merger with Dragonfly Energy. The lenders have a backstop agreement with a third-party financier committed to buying the loan.
The term loan will be advanced in a single tranche on the closing date, amoritizing at 5% annually beginning 24 months after closing and mature on the fourth anniversary, according to the filing.
Chardan also agreed to issue penny warrants to the initial term loan lenders exercisable to purchase an aggregate number of shares equal to 5.6% of common stock on a fully diluted basis, as well as issue warrants to the initial lenders exercisable to purchase 1.6 million shares at $10 each, The amount of penny warrants was increased from 3.6% to 5.6% of common stock on a fully basis. The additional shares will dilute the pro forma ownership of the other stockholders proportionately.
Dragonfly is engaged in energy storage and production of deep cycle lithium-ion storage batteries.
Chardan’s shareholder vote on the deal is set for Oct. 6.
The business combination values Dragonfly at an implied $500 million pro forma enterprise value. Terms include an earn-out provision for up to an additional 40 million shares.
As announced in May, estimated cash proceeds are expected to consist of the SPAC’s approximately $128 million of cash in trust (assuming no redemptions) and an additional $230 million. Read more.
