trading day prior to the date on which the notice of redemption is sent to the warrant holders. The Company has agreed to use its commercially reasonable efforts to file a registration statement with the SEC for the Class A common stock issuable upon exercise of the warrants under the Securities Act as soon as practicable, but in no event later than 20 business days following the completion of a Business Combination.
Eleven qualified institutional buyers or institutional accredited investors which are not affiliated with the Company, the Sponsor, the Company’s directors, or any member of the Company’s management (the “anchor investors”), have each purchased Units in the Initial Public Offering at varying amounts not exceeding 9.9% of the units sold in the Initial Public Offering.
NOTE 4—RELATED PARTY TRANSACTIONS
On June 25, 2021, the Sponsor purchased an aggregate of 7,187,500 Founder Shares for an aggregate purchase price of $25,000. In September 2021, the Sponsor transferred an aggregate of 25,000 founder shares (for a total of 125,000 founder shares) to each of its independent directors and special advisor at their original purchase price. Subsequently, on September 30, 2021, the Sponsor sold an aggregate of 1,872,159 Founder Shares to the anchor investors at their original purchase price. Following the expiration of the underwriter’s over-allotment option, on November 12, 2021 the Sponsor forfeited 310,000 Founder Shares. At March 31, 2022 and December 31, 2021, there were 6,877,500 Founder Shares issued and outstanding.
With certain limited exceptions, the Founder Shares are not transferable, assignable or salable by the initial stockholders until the earlier of (i) one year after the completion of an initial Business Combination and (ii) subsequent to the initial Business Combination, (a) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any
30-trading
day period commencing at least 150 days after the initial Business Combination, or (b) the date on which the Company completes a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of its public stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property.
In connection with each anchor investor purchasing 100% of the Units allocated to it in the Initial Public Offering, the Sponsor sold an aggregate of 1,872,159 Founder Shares to the anchor investors at their original purchase price. The Company estimated the excess aggregate fair value over the amount paid by the anchor investors of the Founder Shares attributable to the anchor investors to be $13,610,087 or $7.274 per share. The estimated fair value was determined using the Company price per share less a discount for lack of marketability using a Finnerty Model. The excess of the fair value of the Founder Shares sold over the purchase price was determined to be an issuance cost of the Initial Public Offering incurred on the Company’s behalf. Accordingly, this issuance cost was accounted for as an equity contribution from the Sponsor.
Since a portion of the Initial Public Offering consisted of warrants that are accounted for as liabilities, a portion of the excess of fair value was expensed to the statement of operations.
Private Placement Warrants
Simultaneously with the consummation of the Initial Public Offering and the partial exercise by the underwriters of their over-allotment option, the Sponsor purchased from the Company 7,502,000 Private Placement Warrants at a price of $1.00 per warrant, or approximately $7,502,000, in private placements. Each Private Placement Warrant entitles the holder to purchase one share of Class A common stock at $11.50 per share, subject to adjustment. A portion of the purchase price of the Private Placement Warrants was added to the proceeds from the Initial Public Offering to be held in the Trust Account. The Private Placement Warrants will not be redeemable by the Company so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the warrants issued as part of the Units in the Initial Public Offering. The Sponsor, or its permitted transferees, will have the option to exercise the Private Placement Warrants on a cashless basis. In addition, the Private Placement Warrants (and the shares of Class A common stock issuable upon exercise of such Private Placement Warrants) will, subject to certain limited exceptions, be subject to transfer restrictions until 30 days after the completion of a Business Combination.
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