UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
to
FORM
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
(Exact name of registrant as specified in its charter)
| 6770 | ||||
(State or Other Jurisdiction of Incorporation or Organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification No.) |
(
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Chief Executive Officer
(
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Darrin Ocasio, Esq Arthur Marcus, Esq. Sichenzia Ross Ference LLP 1185 Avenue of the Americas, 31st Floor New York, NY 10036 T:(646) 810-0592 F:(212) 930-9725 |
Matthew McMurdo, Esq. McMurdo Law Group, LLC 1185 Avenue of the Americas, 3rd Floor New York, NY 10036 (917) 318-2865
|
Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective and upon consummation of the business combination described in the enclosed proxy statement/prospectus.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| Non-accelerated | ☒ | Smaller reporting company | ||||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary proxy statement/prospectus is not complete and may be changed. These securities may not be issued until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROXY STATEMENT/PROSPECTUS
SUBJECT TO COMPLETION, DATED [●], 2022
PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS OF ALSET CAPITAL ACQUISITION CORP.
AND
PROSPECTUS FOR SHARES OF COMMON STOCK AND WARRANTS OF ALSET CAPITAL ACQUISITION CORP.
To the Stockholders of Alset Capital Acquisition Corp.:
You are cordially invited to attend the special meeting of stockholders (the “special meeting”) of Alset Capital Acquisition Corp., a Delaware corporation, which we refer to as “Alset,” “we,” “us” or “our”, to be virtually held at 10:00 a.m., Eastern time, on , 2022. The special meeting can be accessed via live webcast by visiting , where you will be able to listen to the meeting live and vote during the meeting.
On September 9, 2022 we entered into an Agreement and Plan of Merger with HWH Merger Sub, Inc., a Nevada corporation and newly formed, wholly owned, direct subsidiary of us (“Merger Sub”), and HWH International Inc., a Nevada corporation (“HWH”) (as may be amended from time to time, the “Merger Agreement”). The Merger Agreement provides for the combination of HWH and Merger Sub under Alset, with HWH surviving as the Surviving Corporation (collectively, the “Merger”). At the consummation of the Merger, HWH will survive as a direct, wholly-owned subsidiary of Alset. The transactions contemplated by the Merger Agreement and the Merger we refer to herein as the “Business Combination.” A copy of the Merger Agreement is attached to the accompanying proxy statement/prospectus as Annex A. Upon the consummation of the Business Combination, Alset will change its name to “HWH International Inc.”
The Merger Agreement provides that at the effective time of the Business Combination (the “Effective Time”):
| (i) | all of the outstanding units representing all of the company membership interests of HWH (the “HWH Common Stock”) will be cancelled in exchange for the right to receive 12,500,000 shares of common stock, par value $0.0001 per share, of Alset (the “Alset Common Stock”); |
| (ii) | Each of the 2,156,250 shares of Alset Class B Common Stock shall automatically convert into and become one validly issued, fully paid and non-assessable share of Alset Class A Common Stock, along with any equity securities paid as dividends or distributions after the closing of the Business Combination (the “Closing”) with respect to such shares or into which such shares are exchanged or converted after the Closing; and |
| (iii) | 4,549,375 Alset Warrants are issued and outstanding, consisting of (A) 4,312,500 Alset Public Warrants and (B) 236,875 Alset Private Placement Warrants. There are Alset Rights to receive up to 909,875 shares of which 862,500 are Alset Public Rights and 47,375 are Alset Private Placement Rights. There are no shares of Alset Preferred Stock issued and outstanding. Each Alset Public Warrant is exercisable for one share of Alset Class A Common Stock at an exercise price of $11.50. Each Alset Private Placement Warrant is exercisable for one share of Alset Class A Common Stock at an exercise price of $11.50. |
Upon the consummation of the Business Combination, the outstanding publicly traded units of Alset will be separated into their component securities, consisting of (a) one share of Alset Class A Common Stock and one-half (1/2) of one Alset Warrant (each of which shall be exchanged in accordance with the foregoing description), and (b) one right to receive one tenth (1/10) of one share of Alset Class A Common Stock (collectively, the “Alset Rights”). Each Alset Right entitles its holder (the “Rights Holder”) to receive such one-tenth (1/10) of one share of Alset Class A Common Stock after the consummation of the Business Combination, upon return of a valid certificate of Rights to the rights agent for Alset Rights. As of the date of the accompanying proxy statement/prospectus, there is a maximum of 909,875 shares of Alset Class A Common Stock issuable in exchange for Alset Rights. For each Rights Holder so tendering their certificates, the cumulative amount of Alset Rights held by that Rights Holder will be rounded up to the nearest whole share of Alset Class A Common Stock, and this stock shall be exchanged for Alset Common Stock as provided in the foregoing description. For more information, please see “Question and Answers – I am a Rights Holder, and how do I receive stock in the Merger?”
The estimated total consideration in the Business Combination is $125 million, subject to adjustment based on net working capital and indebtedness on the closing date of the Merger and transaction expenses adjustments in accordance with the terms and conditions of the Merger Agreement, as described further in the accompanying proxy statement/prospectus. The merger consideration generally will be paid in shares of Alset Common Stock. The exact number of shares of Alset Common Stock to be issued as merger consideration in connection with the Business Combination remains subject to adjustment based on the working capital and net debt of HWH, transaction expenses relating to the Business Combination, those shares issuable to holders of Alset Class A Common Stock, and the number of HWH Units outstanding as of immediately prior to the Effective Time, and shall be finally determined in accordance with, and subject to, the terms of the Merger Agreement. For an explanation and estimate of the consideration in the Business Combination, see the section entitled “The Business Combination Proposal (Proposal 1) — Merger Consideration.”
It is anticipated that, immediately following completion of the Business Combination and if there are no redemptions by Alset’s public stockholders, Alset’s existing shares held by stockholders, including Sponsor, will equal to approximately 34.9% of the outstanding capital stock of Alset (of which approximately 8.2% will be owned by the Sponsor), newly issued shares (excluding shares issued to HWH Holders) will equal to approximately 26.3% of outstanding capital stock of Alset, and shares issued to the existing HWH Holders will equal to approximately 38.8% of the outstanding capital stock of Alset. If there are redemptions by Alset’s public stockholders up to the maximum level that would permit completion of the Business Combination, immediately following completion of the Business Combination, Alset’s existing shares held by stockholders, other than the Sponsor, will equal to approximately 0% of the outstanding capital stock of Alset, newly issued shares (excluding shares issued to HWH Holders and Sponsor) will equal to approximately 34.7%, shares held by the Sponsor will equal to approximately 12.3%, (of which approximately 6.9% will be owned by Mr. Chan), and shares issued to the existing HWH Holders will equal to approximately 53.0% (of which approximately 25.1% will be owned by Mr. Chan) of the outstanding capital stock of Alset. These percentages are calculated based on a number of assumptions (as described in this proxy statement/prospectus) and are subject to adjustment in accordance with the terms of the Merger Agreement. For a discussion of these assumptions, see “Summary of the Proxy Statement/Prospectus — The Business Combination Proposal (Proposal 1) — Merger Consideration.”
Alset and HWH are both under the control of Alset Inc., which is effectively controlled by Heng Fai Ambrose Chan, a controlling shareholder of Alset Inc. Heng Fai Ambrose Chan is also an executive officer and director of Alset and the executive chairman and director of HWH. Heng Fai Ambrose Chan is deemed to beneficially own 47.3% of HWH Common Stock held through his ownership of Alset International Limited, a subsidiary of Alset Inc., of which Mr. Chan is a beneficiary. In addition, Mr. Chan along with William Wu, Chan Tung Moe, Wong Tat Keung, Wong Shui Yeung, and Lui Wai Leung Alan serve as officers and directors of both HWH and Alset Inc.
It is anticipated that, upon completion of the transaction, assuming no redemptions: (i) the Company’s shares held by public stockholders (other than our sponsor and Heng Fai Ambrose Chan) will equal to approximately 52.1% of the economic interests of HWH; and (ii) Heng Fai Ambrose Chan and his affiliates will beneficially own approximately 47.9% of the economic interests of; assuming holders of 8,625,000 public shares redeem their shares (the maximum redemption scenario): (i) the shares held by Company’s existing public stockholders (other than our sponsor and Heng Fai Ambrose Chan) will equal to approximately 0% of the economic interests of HWH; (ii) newly issued shares held by public stockholders will equal to approximately 34.7% of the economic interests of HWH; (iii) Heng Fai Ambrose Chan and his affiliates will beneficially own approximately 65.3% of the economic interests of HWH. Mr. Chan and his affiliates will have a controlling interest in Alset and will control matters submitted to shareholders such as the election of directors and approval of significant corporate transactions. As a result, we may take advantage of the controlled company exemption.
At the special meeting, our stockholders will be asked to consider and vote upon the following proposals:
| ● | Proposal No. 1 — The Business Combination Proposal — to consider and vote upon a proposal to approve the Business Combination described in this proxy statement/prospectus, including (a) adopting the Merger Agreement, a copy of which is attached to the accompanying proxy statement/prospectus as Annex A, which, among other things, provides for the merger of Merger Sub with and into HWH, with HWH surviving as a direct, wholly-owned subsidiary of Alset, and (b) approving the other transactions contemplated by the Merger Agreement and related agreements described in this proxy statement/prospectus (which we collectively refer to as the “Business Combination Proposal”); | |
| ● | Proposal No. 2 — The Charter Amendments Proposal — to consider and vote upon a proposal to approve and adopt the amended and restated certificate of incorporation of Alset (the “Proposed Charter”), in the form attached hereto as Annex B (which we refer to as the “Charter Amendments Proposal”); | |
| ● | Proposal No. 3— The Advisory Charter Amendments Proposals — to consider and vote upon, on a non-binding advisory basis, certain governance provisions in the Proposed Charter, presented separately in accordance with U.S. Securities and Exchange Commission (“SEC”) requirements (which we refer to as the “Advisory Charter Amendments Proposals”); | |
| ● | Proposal No. 4 — The Nasdaq Stock Issuance Proposal — to consider and vote on a proposal to approve, for purposes of complying with applicable listing rules of the Nasdaq Capital Market (“Nasdaq”), the issuance of more than 20% of the total issued and outstanding Alset Common Stock in connection with the Business Combination (which we refer to as the “Nasdaq Proposal”); | |
| ● | Proposal No. 5 — The Adjournment Proposal — to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of one or more proposals at the special meeting (which we refer to as the “Adjournment Proposal”). |
Each of the Business Combination Proposal, the Charter Amendments Proposal, and the Nasdaq Proposal is cross-conditioned on the approval of each other. Each of the Advisory Charter Amendments Proposals and the Adjournment Proposal is not conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus. Each of these proposals is more fully described in the accompanying proxy statement/prospectus, which we encourage you to read carefully and in its entirety.
Alset Units, Alset Common Stock, Alset Warrants, and Alset Rights are listed on the Nasdaq Stock Market, with trading symbols “ACAXU,” “ACAX”, “ACAXW” and “ACAXR,” respectively.
We intend to list the Alset Common Stock on the Nasdaq Capital Market under the symbols “[●]” and “[●],” respectively, upon the Closing of the Business Combination. As Alset’s publicly traded units and rights will have separated into their component parts, and exchanged in the Business Combination, neither Alset nor HWH will have units or rights traded following closing of the Business Combination.
The Board of Directors of Alset (the “Board”) has fixed the close of business on , 2022 as the record date (the “Record Date”) for the determination of stockholders entitled to notice of, and to vote at, the special meeting or any postponement or adjournment thereof. Stockholders should carefully read the accompanying Notice of Special Meeting and proxy statement/prospectus for a more complete statement of the proposals to be considered at the Special Meeting.
After careful consideration, the Board has unanimously approved and adopted the Merger Agreement and approved the Business Combination, has approved the other proposals described in this proxy statement/prospectus, and has determined that it is advisable to consummate the Business Combination.
The Alset board of directors recommends that its stockholders vote “FOR” the proposals described in this proxy statement/prospectus.
This proxy statement/prospectus provides you with detailed information about the Business Combination and other matters to be considered at the special meeting. We urge you to read the accompanying proxy statement/prospectus including the financial statements and annexes and other documents referred to herein, carefully and in their entirety. In particular, when you consider the recommendation regarding these proposals by the Board, you should keep in mind that Alset’s directors and officers have interests in the Business Combination that are different from or in addition to, or may conflict with, your interests as a stockholder of Alset. For instance, the Sponsor will benefit from the completion of a business combination and may be incentivized to complete a business combination that is less favorable to stockholders of Alset than liquidating Alset.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT ALSET AND HWH THAT IS NOT INCLUDED IN OR DELIVERED HEREWITH. THIS INFORMATION IS AVAILABLE WITHOUT CHARGE TO STOCKHOLDERS OF ALSET UPON WRITTEN OR ORAL REQUEST. IF YOU WOULD LIKE TO MAKE SUCH REQUEST, YOU SHOULD CONTACT ALSET IN WRITING AT Heng Fai Ambrose Chan, Chairman and Chief Executive Officer, 4800 Montgomery LN, STE 210, Bethesda, MD 20814 OR BY TELEPHONE AT 301-971-3955. TO OBTAIN TIMELY DELIVERY, YOU MUST REQUEST THE INFORMATION NO LATER THAN ____________, 2022.
You should carefully consider the matters discussed under “Risk Factors” beginning on page 60 of this proxy statement/prospectus. See also the section entitled “The Business Combination Proposal — Interests of Alset’s Directors and Officers and Others in the Business Combination” for additional information.
Pursuant to our current certificate of incorporation, our public stockholders have redemption rights in connection with the Business Combination. Our public stockholders are not required to affirmatively vote for or against the Business Combination to redeem their shares of common stock. This means that public stockholders who hold shares of Alset Class A Common Stock on or before , 2022 (two (2) business days before the special meeting) will be eligible to elect to have their shares of Alset Class A Common Stock redeemed for cash in connection with the special meeting, whether or not they are holders as of the Record Date, and whether or not such shares are voted at the special meeting. Alset public stockholders should carefully refer to the accompanying proxy statement/prospectus for the requirements and procedures of redemption.
We are providing this proxy statement/prospectus and accompanying proxy card to our stockholders in connection with the solicitation of proxies to be voted at the special meeting and at any adjournments or postponements of the special meeting.
Your vote is very important. If you are an Alset stockholder, whether or not you plan to attend the special meeting, please take the time to vote as soon as possible. On behalf of Alset’s board of directors, I would like to thank you for your support and look forward to the successful completion of the Business Combination.
| Very truly yours, | |
Heng Fai Ambrose Chan Chairman and Chief Executive Officer |
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under the accompanying proxy statement/prospectus or determined that the accompanying proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.
The accompanying proxy statement/prospectus is dated , 2022 and will first be mailed to the stockholders of Alset on or about , 2022.
ALSET CAPITAL ACQUISITION CORP.
4800 Montgomery LN
STE 210
Bethesda, MD 20814
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
OF ALSET CAPITAL ACQUISITION CORP.
TO BE HELD ON , 2022
TO THE STOCKHOLDERS OF ALSET CAPITAL ACQUISITION CORP.:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the “Special Meeting”) of Alset Capital Acquisition Corp. (“Alset,” “we,” “us” or “our”) will be virtually held at 10:00 a.m., Eastern time, on , 2022. The Special Meeting can be accessed via live webcast by visiting , where you will be able to listen to the meeting live and vote during the meeting.
The Board of Directors of Alset (the “Board”) has fixed the close of business on , 2022, as the record date (the “Record Date”) for the determination of stockholders entitled to notice of, and to vote at, the special meeting or any postponement or adjournment thereof. As of the Record Date, 2022, there were __________ shares of Alset’s Class A and Class B common stock outstanding; holders of our Class A and Class B common stock are entitled to one vote per share.
At the Special Meeting, you will be asked to consider and vote upon the following proposals (the “Proposals”):
| (1) | Proposal No. 1 — The Business Combination Proposal —to consider and vote upon a proposal to approve and adopt the Agreement and Plan of Merger (the “Merger Agreement”), dated as of September 9, 2022, among Alset, HWH Merger Sub, Inc., a Nevada corporation and newly formed, wholly owned, direct subsidiary of Alset (“Merger Sub”), and HWH International Inc., a Nevada corporation (“HWH”). The Merger Agreement provides for the combination of HWH and Merger Sub under Alset, with HWH surviving as the Surviving Corporation (collectively, the “Merger”). At the consummation of the Merger, HWH will survive as a direct, wholly-owned subsidiary of Alset. The transactions contemplated by the Merger Agreement and the Merger are referred to herein as the “Business Combination.” A copy of the Merger Agreement is attached to the accompanying proxy statement/prospectus as Annex A. |
Pursuant to the Merger Agreement, upon consummation of the Business Combination,
| (i) | all of the outstanding shares of HWH’s common stock, with a par value of $0.001 per share (the “HWH Common Stock”) will be cancelled in exchange for the right to receive shares of common stock, par value $0.0001 per share, of Alset (the “Alset Common Stock”); | |
| (ii) | all of the outstanding shares of Class B common stock, par value $0.0001 per share, of Alset, along with any equity securities paid as dividends or distributions after the closing of the Business Combination (the “Closing”) with respect to such shares or into which such shares are exchanged or converted after the Closing (the “Alset Class B Common Stock”), will be converted into the right to receive shares of Alset A Common Stock; and | |
| (iii) | all of the outstanding public and placement warrants of Alset, entitling the holder thereof to purchase one share of Alset Class A Common Stock at an exercise price of $11.50 per share (collectively, the “Alset Warrants”) will be converted into the right to receive a warrant to purchase one share of Alset Common Stock at an exercise price of $11.50 per share (collectively, the “Alset Warrants”). |
Upon the consummation of the Business Combination, the outstanding publicly traded units of Alset will be separated into their component securities, consisting of one share of Alset Class A Common Stock and one-half (1/2) of one Alset Warrant, each of which shall be exchanged in accordance with the foregoing description, and one right to receive one tenth (1/10) of one share of Alset Class A Common Stock (the “Alset Rights”). Each Alset Right entitles its holder (the “Rights Holder”) to receive one share of Alset Class A Common Stock upon the consummation of the Business Combination. The amount of Alset Rights held by each Rights Holder will be rounded up to the nearest whole share of Alset Class A Common Stock and this stock shall be exchanged for Alset Common Stock as provided in the foregoing description.
All other convertible securities and other rights to purchase membership interests of HWH will be retired and terminated, if they have not been converted, exchanged or exercised for outstanding membership interests of HWH immediately prior to the effective time of the Merger.
| (2) | Proposal No. 2 — The Charter Amendments Proposal — to consider and vote upon a proposal to approve the Amended and Restated Certificate of Incorporation of Alset (the “Proposed Charter”), a copy of which is attached to the accompanying proxy statement/prospectus as Annex B, which we refer to as the “Charter Amendments Proposal,” and providing for, among other things, the following material differences from Alset’s current amended and restated certificate of incorporation: |
| (a) | Alset’s name to be changed to “HWH International Inc.”; | |
| (b) | a single class of common stock with 100 million authorized shares; | |
| (c) | 10 million authorized shares of preferred stock; | |
| (d) | establishing that the board of directors of Alset following the Closing of the Business Combination (the “Alset Board”) will not be divided into classes (with the number of directors of the Alset Board being initially fixed at seven pursuant to the Merger Agreement and in accordance with the initial appointment rights provided therein, as discussed under “The Business Combination Proposal—Covenants of the Parties”); | |
| (e) | prohibiting stockholder actions by written consent; and | |
| (f) | removing various provisions applicable to special purpose acquisition corporations. |
| (3) | Proposal No. 3— The Advisory Charter Amendments Proposals — to consider and vote upon, on a non-binding advisory basis, certain governance provisions in the Proposed Charter, presented separately in accordance with SEC requirements, which we refer to as the “Advisory Charter Amendments Proposals”; | |
| (4) | Proposal No. 4 — The Nasdaq Stock Issuance Proposal — to consider and vote on a proposal to approve, for purposes of complying with applicable listing rules of Nasdaq, the issuance of more than 20% of the total issued and outstanding Alset Common Stock in connection with the Business Combination, which we refer to as the “Nasdaq Proposal”; | |
| (5) | Proposal No. 5 — The Adjournment Proposal — to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of one or more proposals at the special meeting, which we refer to as the “Adjournment Proposal.” |
The transactions contemplated by the Merger Agreement will be consummated only if the Business Combination Proposal, the Charter Amendments Proposal, and the Nasdaq Proposal are approved at the Special Meeting. Each of these Proposals are cross-conditioned on each other. The Advisory Charter Amendments Proposals and the Adjournment Proposal are not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus.
Each of these proposals is more fully described in the accompanying proxy statement/prospectus, which we encourage you to read carefully and in its entirety before voting. Only holders of record of Alset Class A Common Stock and Alset Class B Common Stock at the close of business on , 2022 (the “Record Date”) are entitled to notice of the Special Meeting and to vote at the Special Meeting and any adjournments or postponements of the Special Meeting. A complete list of Alset stockholders of record entitled to vote at the Special Meeting will be available for ten (10) days before the Special Meeting at the principal executive offices of Alset for inspection by stockholders during ordinary business hours for any purpose germane to the Special Meeting.
After careful consideration, the Board has unanimously approved and adopted the Merger Agreement and unanimously recommends that our stockholders vote “FOR” all of the proposals presented to our stockholders at the Special Meeting. When you consider the Board recommendation of these proposals, you should keep in mind that directors and officers of Alset have interests in the Business Combination that may conflict with your interests as a stockholder. See the section titled “The Business Combination Proposal — Interests of Alset’s Directors and Officers and Others in the Business Combination” in the accompanying proxy statement/prospectus.
Pursuant to Alset’s current certificate of incorporation, its public stockholders may demand that Alset redeem, upon the Closing of the Business Combination, shares of our Alset Class A Common Stock then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the Closing of the Business Combination) in the trust account (the “Trust Account”) that holds the proceeds (including interest but less taxes payable) of the Alset initial public offering (the “Alset IPO”). As of October 31, 2022, based on funds in the Trust Account of $88 million on such date, the pro rata portion of the funds available in the Trust Account for the redemption of public shares of Alset Class A Common Stock was approximately $10.06 per share. Our public stockholders are not required to affirmatively vote for or against the Business Combination in order to redeem their shares of Alset Class A Common Stock for cash. This means that public stockholders who hold shares of our Alset Class A Common Stock on or before, 2022 (two (2) business days before the Special Meeting) will be eligible to elect to have their shares of Alset Class A Common Stock redeemed for cash in connection with the Special Meeting, whether or not they are holders as of the Record Date, and whether or not such shares are voted at the Special Meeting. To redeem their shares of Alset Class A Common Stock for cash, our public stockholders can demand that Alset convert their public shares into cash and tender their shares to Alset’s transfer agent. Alset stockholders should carefully refer to the accompanying proxy statement/prospectus for the requirements and procedures of redemption. Holders of Alset’s outstanding warrants, rights and units do not have redemption rights with respect to such securities in connection with the Business Combination. Holders of Alset’s publicly traded units must separate the underlying shares of Alset Class A Common Stock, public rights and public warrants prior to exercising redemption rights with respect to the public Alset Class A Common Stock.
Our sponsor, Alset Acquisition Sponsor, LLC, a Delaware limited liability company (our “Sponsor”) (who held our Class B Common Stock issued prior to our IPO) and our officers and directors (collectively, the “Alset Initial Stockholders”), and EF Hutton, a division of Benchmark Investments, LLC, the underwriter in our IPO (“EFH”), have agreed to waive their redemption rights with respect to any shares of Alset Common Stock held by them in connection with the consummation of the Business Combination (which waiver was provided in connection with Alset’s IPO and without any separate consideration paid in connection with providing such waiver), and such shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Currently, the Sponsor and Alset Initial Stockholders beneficially own 23.6%, Alset’s public stockholders beneficially own 76.63% and EFH beneficially owns 0%, of the issued and outstanding shares of Alset Class A Common Stock giving effect to conversion from Alset Class B Common Stock immediately prior to the effective time of the Merger. The Sponsor, the Alset Initial Stockholders and our officers and directors have agreed to vote any shares of Alset Common Stock owned by them in favor of the Business Combination.
You are urged to carefully read and consider the “Risk Factors” beginning on page 60 of this proxy statement/prospectus and the other information contained in this proxy statement/prospectus in its entirety, including the Annexes and accompanying financial statements.
Your vote is very important. Whether or not you plan to attend the Special Meeting, please vote as soon as possible by following the instructions in the accompanying proxy statement/prospectus to ensure that your shares are represented at the Special Meeting. If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the proposals presented at the Special Meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that votes relating to the shares you beneficially own are properly counted.
Your attention is directed to the proxy statement/prospectus accompanying this notice (including the annexes thereto) for a more complete description of the proposed Business Combination and related transactions and each of the Proposals. We encourage you to read this proxy statement/prospectus carefully. If you have any questions or need assistance voting your shares, please call us at [●].
| By Order of the Board of Directors | |
| Heng Fai Ambrose Chan | |
| Chairman and Chief Executive Officer |
, 2022
TABLE OF CONTENTS
ABOUT THIS PROXY STATEMENT/PROSPECTUS
This document, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (the “SEC”) by Alset, constitutes a prospectus of Alset under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to (1) the Alset Common Stock to be issued to the HWH stockholders, (2) the Alset Common Stock to be issued in exchange for Alset Class A Common Stock issued pursuant to Alset Rights, and (3) the Alset Class A Common Stock to be issued in exchange for Alset Class B Common Stock. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) with respect to the special meeting of Alset stockholders at which Alset stockholders will be asked to consider and vote upon a proposal to approve the Business Combination by the approval and adoption of the Merger Agreement, among other matters.
You should rely only on the information contained or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated as of the date set forth on the cover hereof. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of such incorporated document. Neither the mailing of this proxy statement/prospectus to Alset stockholders nor the issuance by HWH of its common stock in connection with the Business Combination will create any implication to the contrary.
Information contained or incorporated by reference in this proxy statement/prospectus regarding Alset and its business, operations, management and other matters has been provided by Alset, and information contained in this proxy statement/prospectus regarding HWH and its business, operations, management and other matters has been provided by HWH. Information provided by either Alset, on the one hand, or HWH, on the other hand, does not constitute any representation, estimate or projection of any other party.
This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities, or the solicitation of a proxy or consent, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.
If you would like additional copies of this proxy statement/prospectus or if you have questions about the Business Combination or the proposals to be presented at the special meeting, please contact Alset’s proxy solicitor listed below. You will not be charged for any of these documents that you request.
Proxy Solicitor Name:
Telephone:
Email:
In order for you to receive timely delivery of the documents in advance of the special meeting to be held on , 2022, you must request the information by , 2022.
For a more detailed description of the information incorporated by reference in this proxy statement/prospectus and how you may obtain it, see the section captioned “Where You Can Find More Information” beginning on page 211 of this proxy statement/prospectus.
TRADEMARKS
Alset and HWH own or have rights to trademarks that they use in connection with the operation of their respective businesses and that are used in this proxy statement/prospectus. This proxy statement/prospectus also includes other trademarks, trade names and service marks that are the property of their respective owners. Solely for convenience, in some cases, the trademarks, trade names and service marks referred to in this proxy statement/prospectus are listed without the applicable®, ™ and SM symbols, but they will assert, to the fullest extent under applicable law, their rights to these trademarks, trade names and service marks.
MARKET AND INDUSTRY DATA
This proxy statement/prospectus includes industry data and forecasts that Alset and HWH obtained or derived from internal company analyses, independent third party publications and other industry data. Some data are also based on good faith estimates, which are derived from internal company analyses, information, assumptions or judgments, as well as the independent sources referred to above. Statements as to industry position are based on market data currently available. Any estimates underlying such market-derived information and other factors could cause actual results to differ from those expressed in the independent parties’ estimates and in our estimates, and are subject to change based on various factors, including those discussed under the heading “Risk Factors” in this proxy statement/prospectus.
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FREQUENTLY USED TERMS
Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” “ACAX” and “Alset” refer to Alset Capital Acquisition Corp.
In this document:
“Affiliate” of a specified Person means a Person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person. For the avoidance of doubt, Merger Sub shall be deemed to be an Affiliate of Alset.
“Alset” means Alset Capital Acquisition Corp., a Delaware corporation. Upon consummation of the Business Combination, HWH will be a direct, wholly-owned subsidiaries of Alset, and Alset will change its name to “HWH International, Inc.”
“Alset Certificate of Incorporation” means Alset’s amended and restated certificate of incorporation, as may be amended from time to time.
“Alset Class A Common Stock” or “our Class A Common Stock” means the Class A common stock, par value $0.0001 per share, of Alset.
“Alset Class B Common Stock” or “our Class B Common Stock” means the Class B common stock, par value $0.0001 per share, of Alset.
“Alset Common Stock” or “our Common Stock” means common stock of Alset, par value $0.0001, including the Alset Class A Common Stock and Alset Class B Common Stock.
“Alset Preferred Stock” means the shares of preferred stock, par value $0.0001 per share, of Alset.
“Alset Private Placement Rights” means the rights sold in the Units to the Sponsor.
“Alset Initial Stockholders” means our Sponsor who purchased our founder shares (consisting of our Class B Common Stock issued prior to our IPO), and its permitted transferees, and our Sponsor who purchased our Class A Common Stock in a Private Placement in connection with our IPO.
“Alset IPO” or “IPO” means Alset’s initial public offering.
“Alset Rights” means, collectively, the rights, each of which is exchangeable into one-tenth of one share of Alset Class A Common Stock.
“Alset Warrants” means, collectively, Alset Public Warrants and Alset Private Placement Warrants.
“Alset Units” means a unit consisting of one share of Alset Class A Common Stock, one Alset Right and one-half of one Alset Warrant.
“Board,” unless otherwise defined, means the board of directors of Alset.
“Business Combination” means the transactions contemplated by the Merger Agreement whereby, among other things, HWH is merged with Merger Sub and HWH survives as a direct, wholly-owned subsidiary of Alset.
“Closing” means the closing of the Business Combination.
“Closing Date” means the date and time of the Closing.
“Code” means the Internal Revenue Code of 1986, as amended.
“Combined Entity” or “Combined Company” means Alset after the consummation of the Business Combination in which it becomes the parent company of its direct, wholly-owned subsidiary, HWH.
“Condition Precedent Proposals” mean the Business Combination Proposal, the Charter Amendments Proposal, and the Nasdaq Proposal.
“DGCL” means the Delaware General Corporation Law.
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“HWH” means HWH International, Inc., a Nevada corporation.
“HWH International, Inc.” is the name of the Combined Entity, after the proposed filing of the Proposed Charter with the Delaware Secretary of State following the Business Combination.
“HWH Holder” or “HWH Stockholder” means Alset International Limited, a Singapore public limited company.
“HWH Common Stock” means HWH’s common stock, with a par value of $0.001 per share.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“EFH” means EF Hutton, a division of Benchmark Investments, LLC, the representative of the underwriters in the Alset IPO.
“founder shares” means 2,156,250 shares of the Company’s Class B common stock purchased by the Sponsor on November 8, 2021.
“ValueScope” means ValueScope Inc.
“ValueScope Opinion” means the formal written opinion of ValueScope, Inc. delivered to the Board on September 9, 2022, in respect of a valuation and opinion relating to the Business Combination, a copy of which is attached to his proxy statement/prospectus as Annex D.
“Merger Agreement” means the Agreement and Plan of Merger, dated as of September 9, 2022, by and among (i) Alset, (ii) HWH, and (iii) Merger Sub.
“Merger Consideration” means Twelve Million Five Hundred (12,500,000) shares, with an assumed price of $10.00 per share.
“Merger Sub” means HWH Merger Sub, Inc., a Nevada Corporation and a wholly owned subsidiary of Alset.
“Nasdaq” means the Nasdaq Global Select Market or the Nasdaq Global Market.
“placement shares” means 473,750 shares of Alset Class A Common Stock underlying the placement units.
“placement units” means 473,750 Alset Units sold in the private placement to the Sponsor simultaneously with the consummation of the IPO.
“placement warrants” means the warrants exercisable to purchase shares of Alset Class A Common Stock at a price of $11.50 per share.
“Private Placement” means the private placement consummated simultaneously with the Alset IPO in which Alset issued the placement units to the Sponsor.
“Proposals” means the Business Combination Proposal, the Charter Amendments Proposal, the Advisory Charter Amendments Proposals, the Nasdaq Proposal, and the Adjournment Proposal.
“Proposed Charter” means the Amended and Restated Certificate of Incorporation of Alset, a copy of which is attached to this proxy statement/prospectus as Annex B,
“public rights” means the Alset Rights underlying the Alset Units issued in the Alset IPO held by public stockholders.
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“public shares” means Alset Class A Common Stock underlying the Alset Units sold in the Alset IPO.
“public stockholders” means holders of public shares.
“publicly traded units” means Alset Units issued in the Alset IPO.
“public warrants” means Alset Warrants underlying thef Alset Units issued in the Alset IPO held by public stockholders.
“rights agent” means Vstock Transfer LLC, the rights agent designed under the Rights Agreement.
“Rights Agreement” means the Rights Agreement between Alset and the rights agent, dated January 31, 2022.
“Rights Holder” means a holder of Alset Rights.
“redemption” means the right of the holders of Alset Class A Common Stock to have their shares redeemed in accordance with the procedures set forth in this proxy statement/prospectus.
“Special Meeting” means the special meeting of the stockholders of Alset, to be virtually held at 10:00 a.m. Eastern Time, on , 2022.
“Sponsor” means Alset Acquisition Sponsor, LLC, a Delaware limited liability company.
“Surviving Corporation” means HWH shall be the surviving corporation in the Merger and become a wholly owned Subsidiary of Alset, and the separate corporate existence of HWH with all of its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger as provided in the Nevada Revised Statutes (“NRS”), and (c) the Merger shall have such other effects as provided in the NRS and the Merger Agreement.
“Trust Account” or “Alset trust account” means the trust account of Alset, which holds the net proceeds of the Alset IPO and the sale of the placement units, together with interest earned thereon, less amounts released to remit tax payable obligations and up to $100,000 of any remaining interest for dissolution expenses.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. This includes, without limitation, statements regarding the financial position, financial performance, business strategy, expectations of our business and the plans and objectives of management for future operations, including as they relate to the potential Business Combination. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this proxy statement/prospectus, forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target”, “designed to” or other similar expressions that predict or indicate future events or trends or that are not statements of historical facts. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements may include statements, among other things, relating to:
| ● | the benefits of the Business Combination; | |
| ● | the future financial and business performance of Alset and its subsidiaries, including HWH, following the Business Combination; | |
| ● | the potential market size and the assumptions and estimates related thereto; |
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| ● | changes in the market for HWH products and services; | |
| ● | expansion and other plans and opportunities; and | |
| ● | other statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek” or “target,” or similar expressions. |
These forward-looking statements are based on information available as of the date of this proxy statement/prospectus, and expectations, forecasts and assumptions as of that date, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
In addition, you should not place undue reliance on forward-looking statements in deciding how to grant your proxy, instruct how your vote should be cast or vote your shares on the proposals set forth in this proxy statement/prospectus. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by our forward-looking statements. Some factors that could cause actual results to differ include, among others:
| ● | the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement; | |
| ● | a delay in completing, or the inability to complete, the transactions contemplated by the proposed Business Combination, due to a failure to obtain the approval of the stockholders of Alset, a failure to satisfy other conditions to Closing in the Merger Agreement or some other reason; | |
| ● | the inability to obtain the listing of Alset Common Stock on Nasdaq or another exchange following the Business Combination; | |
| ● | the risk that the proposed Business Combination disrupts HWH’s current plans and operations; | |
| ● | the reaction of HWH’s customers to the Business Combination; | |
| ● | the inability to realize anticipated benefits of the Business Combination, which could result from, among other things, competition, the inability to integrate the Alset and HWH businesses or the inability of the combined business to generate revenue, grow and manage growth profitably; | |
| ● | the level of redemptions by holders of Alset Common Stock; | |
| ● | differences in the debt, or working capital, or other expenses, or other items that affect the consideration in the Business Combination, or other assumptions relating to our calculation of possible values and percentages holdings by parties to the Business Combination; | |
| ● | costs related to the Business Combination; | |
| ● | the outcome of any legal proceedings that might be instituted against Alset or HWH, including any legal proceedings relating to the proposed Business Combination; | |
| ● | changes in applicable laws or regulations; | |
| ● | the timing of revenue and expenditures; | |
| ● | the ability of HWH to access sufficient capital to run its business; | |
| ● | assumptions regarding, and changes in material and labor prices; | |
| ● | the possibility that Alset or HWH might be adversely affected by other economic, business or competitive factors; and | |
| ● | other risks and uncertainties indicated in this proxy statement/prospectus, including those indicated under the section entitled “Risk Factors.” |
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RISK FACTOR SUMMARY
HWH’s business and its ability to execute its strategy, the proposed Business Combination, and any investment in the securities of Alset after the Business Combination are subject to risks and uncertainties, many of which are beyond Alset’s or HWH’s control and will be beyond the control of the Combined Company. You should carefully consider and evaluate all of the risks and uncertainties with respect to any investment in the securities of the Combined Company, including, but not limited to, the following and those discussed under “Risk Factors.” References below to HWH shall be deemed to also refer to Alset and the post-Business Combination company, as the context requires or as appropriate.
Risks Relating to HWH
| ● | HWH will require significant additional capital to pursue its business strategy, but it may not be able to obtain additional financing on acceptable terms or at all. |
| ● | HWH’s failure to secure new contracts may adversely affect its business operations and financial results. |
| ● | If HWH is not able to successfully manage its growth strategy, its business operations and financial results may be adversely affected. |
| ● | An increase in the prices of materials used in HWH’s business could adversely affect its business. |
| ● | HWH may be unable to complete or operate its projects on a profitable basis or as HWH has committed to its customers. |
| ● | Operation of its business in international markets may expose HWH to additional risks that HWH would not face in the United States, which could have an adverse effect on its operating results. |
| ● | Failure of third parties to timely manufacture quality products or provide reliable services in a timely manner could cause delays in the delivery of HWH’s services and completion of its projects, which could damage its reputation, have a negative impact on its relationships with its customers and adversely affect its growth. |
| ● | HWH’s estimates of market opportunity and forecasts of market growth may prove to be inaccurate. |
Risks Relating to Alset, HWH and the Business Combination
| ● | If Alset does not consummate the Business Combination and fails to complete an initial business combination by 12 months from the closing of our IPO (February 3, 2023) (or up to 21 months from the closing of the IPO (November 3, 2023)), Alset will have to liquidate, or seek approval of its stockholders to extend the termination date. |
| ● | Following the consummation of the Business Combination, your ability to achieve a return on your investment will depend on appreciation in the price of Alset Common Stock. |
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| ● | Alset will incur significant costs in connection with the Business Combination and if not consummated, Alset may not have sufficient cash available to pay such costs. |
| ● | The working capital available to Alset after the Business Combination will be reduced by any redemptions and transaction expenses in connection with the Business Combination. |
| ● | If the funds held outside of our Trust Account are insufficient to allow us to operate until at, our ability to complete an initial business combination may be adversely affected. |
| ● | Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern. |
| ● | The Sponsor, and Alset’s directors and officers, have conflicts of interest in determining to pursue the business combination with HWH. |
| ● | There are risks to unaffiliated stockholders who become stockholders of the Combined Company through the Business Combination rather than acquiring securities of HWH or Alset directly in an underwritten public offering, including no independent due diligence review by an underwriter and conflicts of interest of the Sponsor. |
| ● | The process of taking a company public by means of a special purpose acquisition company is different from an underwritten public offering and may create risks for unaffiliated investors. |
| ● | Concentration of ownership among HWH’s existing executive officers, directors and their affiliates may prevent new investors from influencing significant corporate decisions. |
| ● | There can be no assurance that Alset Common Stock will be approved for listing on Nasdaq upon the Closing, or be able to comply with its listing standards. |
| ● | The ability to execute Alset’s strategic plan could be negatively impacted by redemptions. |
| ● | There is no guarantee that Alset stockholders’ decision to redeem their shares for a pro rata portion of the Trust Account will put the stockholders in a better future economic position. |
| ● | The Sponsor and Alset’s directors, officers, advisors or their affiliates may elect to purchase shares of Alset Common Stock from Alset’s stockholders, which may influence a vote on a proposed business combination and reduce the public float of Alset’s capital stock. |
| ● | To complete the Business Combination, management’s focus and resources may be diverted from operational matters and other strategic opportunities. |
| ● | HWH’s and Alset’s operations may be restricted before Closing by the Merger Agreement. |
QUESTIONS AND ANSWERS FOR STOCKHOLDERS OF ALSET
The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the Special Meeting of Alset stockholders. The following questions and answers do not include all the information that is important to stockholders of Alset. We urge the stockholders of Alset to read carefully this entire proxy statement/prospectus, including the annexes and other documents referred to herein.
| Q: | Why am I receiving this proxy statement/prospectus? |
| A: | Alset’s stockholders are being asked to consider and vote upon a proposal to approve the Business Combination contemplated by the Merger Agreement, among other proposals. Upon the completion of the transactions contemplated by the Merger Agreement, HWH will become a direct, wholly-owned subsidiary of Alset. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A. |
This proxy statement/prospectus and its annexes contain important information about the proposed Business Combination and the other matters to be acted upon at Alset’s Special Meeting. You should read this proxy statement/prospectus and its annexes and the other documents referred to herein carefully and in their entirety.
YOUR VOTE IS IMPORTANT. YOU ARE URGED TO SUBMIT YOUR PROXIES AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS AND ITS ANNEXES AND CAREFULLY CONSIDERING EACH OF THE PROPOSALS BEING PRESENTED AT THE SPECIAL MEETING.
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| Q: | What proposals are stockholders of Alset being asked to vote upon? |
| A: | Stockholders of Alset are being asked to vote on the following proposals: |
| (1) | The Business Combination Proposal (Proposal 1) — To approve and adopt the Merger Agreement and the transactions contemplated therein, including the Business Combination. A summary of the Business Combination is set forth in the “Business Combination (Proposal 1)” section of this proxy statement/prospectus and a complete copy of the Merger Agreement is attached hereto as Annex A. You are encouraged to read them in their entirety. | |
| (2) | The Charter Amendments Proposal (Proposal 2) — Assuming the Business Combination Proposal (Proposal 1) is approved and adopted, to approve and adopt the Proposed Charter of Alset, in the form appended to this proxy statement/prospectus as Annex B, and a summary of which is set forth in “The Charter Amendments Proposal (Proposal 2)” section of this proxy statement/prospectus, which provides for the following material differences from the Alset’s existing certificate of incorporation: |
| (a) | Alset’s name to be changed to “HWH International Inc.”; | |
| (b) | a single class of common stock with 100 million authorized shares; | |
| (c) | 10 million authorized shares of preferred stock; | |
| (d) | establishing that the board of directors of Alset following the Closing of the Business Combination (the “Alset Board”) will not be divided into classes (with the number of directors of the Alset Board being initially fixed at seven pursuant to the Merger Agreement and in accordance with the initial appointment rights provided therein, as discussed under “The Business Combination Proposal—Covenants of the Parties”); | |
| (e) | prohibiting stockholder actions by written consent; and | |
| (f) | removing various provisions applicable to special purpose acquisition corporations. |
| (3) | Advisory Charter Amendments Proposals (Proposal 3) — To consider and vote upon, on a non-binding basis, certain governance provisions in the Proposed Charter, presented separately in accordance with SEC requirements. A summary of these provisions is set forth in the “Advisory Charter Amendments Proposals (Proposal 3)” section of this proxy statement/prospectus. | |
| (4) | The Nasdaq Stock Issuance Proposal (Proposal 4) — To approve, for purposes of complying with applicable listing rules of Nasdaq, for purposes of complying with applicable listing rules of Nasdaq, the issuance of more than 20% of the total issued and outstanding Alset Common Stock in connection with the Business Combination. A summary of this proposal is set forth in the “The Nasdaq Proposal (Proposal 4)” section of this proxy statement/prospectus. | |
| (5) | The Adjournment Proposal (Proposal 5) — To consider and vote upon a proposal to adjourn the Special Meeting of Alset 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 one or more of the proposals at the special meeting. |
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| Q: | Are the proposals conditioned on one another? |
| A: | Yes. We refer to the Business Combination Proposal, the Charter Amendments Proposal, and the Nasdaq Proposal as “Condition Precedent Proposals”. The Business Combination is conditioned on the approval of each of the Condition Precedent Proposals at the special meeting. The Condition Precedent Proposals are each conditioned on each other. If the Business Combination Proposal is not approved, the other Proposals, other than the Adjournment Proposal, will not be presented to the stockholders of Alset at the Special Meeting. The Adjournment Proposal and Advisory Charter Amendments are not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. It is important for you to note that in the event that the Business Combination Proposal does not receive the requisite vote for approval, after taking into account any approved adjournment or postponement, if necessary, then we will not consummate the Business Combination. If Alset does not consummate the Business Combination and fails to complete an initial business combination by 12 months from the closing of our IPO (February 3, 2023) (or up to 21 months from the closing of the IPO (November 3, 2023) or as extended by our stockholders in accordance with our amended and restated certificate of incorporation), Alset will be required to dissolve and liquidate its Trust Account by returning the then remaining funds in such account to its public stockholders. |
| Q: | What will happen in the Business Combination? |
| A: | Upon consummation of the Business Combination, HWH will become a direct, wholly owned subsidiary of Alset. The merger consideration in the Business Combination is $125 million, subject to adjustment based on net working capital and indebtedness on the Closing Date and transaction expenses adjustments in accordance with the terms and conditions of the Merger Agreement, as described further herein. The merger consideration will be paid in shares of Alset Common Stock. The amount of shares of Alset Common Stock to be received by holders of HWH and Alset Common Stock will not be known until the Closing. For an explanation and estimate of the consideration to HWH Holders in the Business Combination, see the section entitled “—The Business Combination Proposal – Merger Consideration.” |
In connection with the Business Combination, the Alset Warrants will entitle the holder thereof to purchase one share of Alset Common Stock at the same exercise price as had been for exercise into one share of Alset Class A Common Stock. Each of the outstanding publicly traded units of Alset also will be separated into their component securities, consisting of one share of Alset Class A Common Stock, one-half (1/2) of one Alset Warrant, which shall be exchanged in accordance with the foregoing description, and one Alset Right. The amount of Alset Rights held by each Rights Holder will be rounded up to the nearest whole share of Alset Class A Common Stock and likewise exchanged for Alset Common Stock.
All convertible securities and other rights to purchase membership interests of HWH will be retired and terminated, if they have not been converted, exchanged or exercised for outstanding membership interests of HWH immediately prior to the effective time of the Merger.
| Q: | What conditions must be satisfied to complete the Business Combination? |
| A: | In addition to approval of the Condition Precedent Proposals, there are a number of closing conditions in the Merger Agreement, including the approval by the holders of HWH Common Stock of the Business Combination. For a summary of the conditions that must be satisfied or waived prior to the Closing of the Business Combination, see the section titled “The Business Combination Proposal — The Merger Agreement — Conditions to Consummation of the Merger” and “Summary of the Proxy Statement/Prospectus — The Proposals — The Business Combination Proposal.” |
| Q: | What entity controls Alset and HWH? |
| A: | Alset and HWH are both under the control of Alset Inc., which is effectively controlled by Heng Fai Ambrose Chan, a controlling shareholder of Alset Inc. Heng Fai Ambrose Chan is also an executive officer and director of Alset and the executive chairman and director of HWH. Heng Fai Ambrose Chan is deemed to beneficially own 47.3% of HWH Common Stock held through his ownership of Alset International Limited, a subsidiary of Alset Inc., of which Mr. Chan is a beneficiary. In addition, Mr. Chan along with William Wu, Chan Tung Moe, Wong Tat Keung, Wong Shui Yeung, and Lui Wai Leung Alan serve as officers and directors of both HWH and Alset Inc. |
| Q: | Why is Alset providing stockholders with the opportunity to vote on the Business Combination? |
| A: | Under the DGCL and the Alset Certificate of Incorporation, Alset must provide all holders of its public shares with the opportunity to have their public shares redeemed upon the consummation of Alset’s initial business combination either in conjunction with a tender offer or in conjunction with a stockholder vote. For legal and other reasons, Alset has elected to provide its stockholders with the opportunity to have their public shares redeemed in connection with a stockholder vote rather than a tender offer. Therefore, Alset is seeking to obtain the approval of its stockholders of the Business Combination Proposal in order to allow its public stockholders to effectuate redemptions of their public shares in connection with the closing of the Business Combination. |
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| Q: | How many votes do I have at the Special Meeting? |
| A: | Alset stockholders are entitled to one vote at the Special Meeting for each share of Alset Class A Common Stock and Alset Class B Common Stock held of record as of [ ], 2022, the Record Date for the Special Meeting. As of the date of this proxy statement/prospectus, there were 9,098,750 outstanding shares of Alset Class A Common Stock and 2,156,250 outstanding shares of Alset Class B Common Stock. |
| Q: | What vote is required to approve the proposals presented at the Special Meeting? |
| A: | The approval of the Charter Amendments Proposal requires the affirmative vote of a majority of the issued and outstanding Alset Common Stock as of the Record Date. Accordingly, Alset stockholder’s failure to vote by proxy or to vote in person at the Special Meeting or an abstention will have the same effect as a vote “AGAINST” the Business Combination Proposal. |
In contrast, approval of the remaining Proposals, including the Business Combination Proposal, in each case require the affirmative vote of the holders of a majority of the shares of Alset Common Stock cast by the stockholders represented in person or by proxy and entitled to vote thereon at the Special Meeting. Accordingly, Alset stockholder’s failure to vote by proxy or to vote in person at the Special Meeting will not be counted towards the number of shares of Alset Common Stock required to validly establish a quorum, and if a valid quorum is otherwise established, it will have no effect on the outcome of the vote on these remaining Proposals.
If the Business Combination Proposal is not approved, the other Condition Precedent Proposals will not be submitted to a vote. The approval of the Condition Precedent Proposals are preconditions to the consummation of the Business Combination.
Our Sponsor, Alset Initial Stockholders, and our directors and officers have agreed to vote all of their founder shares and all of their shares of Alset Common Stock (including, but not limited to, shares of Alset Class A Common Stock underlying the placement units, and Alset Class B Common Stock) in favor of the Business Combination Proposal. As a result, we may need as few as only 3,033,500, or approximately 35.2%, of the 8,625,000 of our public shares, to be voted in favor of the Business Combination Proposal (as well as the other Proposals except for the Charter Amendments Proposal), and as few as 3,033,500, or approximately 35.2% of our 8,625,000 public shares, to be voted in favor of the Charter Amendments Proposal, in order to have our Business Combination approved.
Specifically, the letter agreement among Alset and our offices and directors and the Sponsor, provides therein that: the Sponsor and each Insider (as defined in such letter agreement) agrees that if the Company (i.e. Alset) seeks stockholder approval of a proposed Business Combination, then in connection with such proposed Business Combination, it, he or she shall (i) vote any shares of Capital Stock (as defined in such letter agreement) owned by it, him or her in favor of any proposed Business Combination and (ii) not redeem any shares of Common Stock owned by it, him or her in connection with such stockholder approval. If the Company engages in a tender offer in connection with any proposed Business Combination, the Sponsor and each Insider agrees that it, he or she will not seek to sell or tender any shares of Capital Stock owned by it, him or her to the Company in connection with such tender offer.
| 10 |
| Q: | May Alset, the Sponsor or Alset’s directors, officers, advisors or their affiliates purchase shares in connection with the Business Combination? |
| A: | The Sponsor and Alset’s directors, officers, advisors or their affiliates may purchase Alset Class A Common Stock in privately negotiated transactions or in the open market either prior to or after the Closing, including from holders of Alset Common Stock who would have otherwise exercised their redemption rights, at a price no higher than the price offered through the SPAC redemption process. In the event such occurs, we will comply with Compliance and Disclosure Interpretation located at Question 166.01 of the Tender Offers and Schedules interpretations of the SEC. However, the Sponsor, directors, officers and their affiliates have no current commitments or plans to engage in such transactions and have not formulated any terms or conditions for any such transactions at the date of this proxy statement/prospectus. None of the Sponsor, or Alset’s directors, officers or advisors or their respective affiliates will make any such purchases when they are in possession of any material non-public information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. Any such purchase after the Record Date would include a contractual acknowledgement that the selling shareholder, although still the record holder of Alset Class A Common Stock, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event the Sponsor or Alset’s directors, officers or advisors or their affiliates purchase shares in privately negotiated transactions from holders of public shares who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. Any such privately negotiated purchases may be effected at purchase prices that are in excess of the per-share pro rata portion of the aggregate amount then on deposit in the Trust Account. The purpose of these purchases could be to vote such shares in favor of Proposals contained herein, including the Business Combination Proposal and the Charter Amendments Proposal, and thereby increase the likelihood of obtaining stockholder approval of the Proposals, and could be to increase the amount of cash available to Alset for use in the Business Combination. Unlike our Sponsor’s and Alset Initial Stockholders’ holdings currently, such newly purchased shares (if any) by those purchasers would not be subject to a lock-up period under the terms of our Sponsor Support Agreement. However, these newly purchased shares would be subject to limitations on resale under Rule 144 of the Securities Act as “control securities”, to the extent those shares were acquired by an affiliate of Alset, unless they are registered on a subsequent registration statement filed under the Securities Act. Limitations on resale would require those affiliated purchasers of such newly purchased shares to hold them for at least one year (from the date Alset files certain information on Form 8-K following the Closing in accordance with rules applicable to special purpose acquisition companies), assuming they are not registered on a registration statement following the Closing and Alset has fully complied with its reporting requirements and other requirements under Rule 144. When eligible to be sold, such securities if not registered under such a registration statement would be limited by applicable requirements of Rule 144, including limitations in their manner of sale and to the volume of sales eligible under Rule 144. |
| Q: | What constitutes a quorum at the Special Meeting? |
| A: | The presence, in person or by proxy, at the Special Meeting of the holders of shares of outstanding capital stock of Alset representing a majority of the voting power of all outstanding shares of capital stock of Alset entitled to vote at such meeting shall constitute a quorum for the transaction of business. In the absence of a quorum, the chairman of the meeting has the power to adjourn the Special Meeting. As of the Record Date, shares of Alset Common Stock would be required to achieve a quorum assuming Alset has shares of Alset Common Stock issued and outstanding. As of the date of this proxy statement/prospectus, [●] shares of Alset Common Stock would be required to achieve a quorum assuming Alset has [●] shares of Alset Common Stock issued and outstanding. |
| Q: | What equity stake will current stockholders of Alset and the HWH Holders hold in Alset after the Closing? |
| A: | Alset’s public stockholders currently own approximately 76.6% of Alset’s issued and outstanding capital stock, and the Sponsor together with our directors and officers currently own approximately 23.4% of Alset’s issued and outstanding capital stock. |
It is anticipated that, immediately following completion of the Business Combination and if there are no redemptions by Alset’s public stockholders, Alset’s existing shares held by stockholders, including Sponsor, will equal to approximately 34.9% of the outstanding capital stock of Alset (of which approximately 8.2% will be owned by the Sponsor), newly issued shares (excluding shares issued to HWH Holders) will equal to approximately 26.3% of the outstanding capital stock of Alset and shares issued to the existing HWH Holders will equal to approximately 38.8% of the outstanding capital stock of Alset. If there are redemptions by Alset’s public stockholders up to the maximum level that would permit completion of the Business Combination, immediately following completion of the Business Combination, Alset’s existing shares held by stockholders, other than the Sponsor, will equal to approximately 0% of the outstanding capital stock of Alset, newly issued shares (excluding shares issued to HWH Holders and Sponsor) will equal to approximately 34.7%, shares held by the Sponsor will equal to approximately 12.3% (of which approximately 6.9% will be owned by Mr. Chan), and shares issued to the existing HWH Holders will equal to approximately 53.0% (of which approximately 25.1% will be owned by Mr. Chan) of the outstanding capital stock of Alset. These percentages are calculated based on a number of assumptions (as described in this proxy statement/prospectus) and are subject to adjustment in accordance with the terms of the Merger Agreement. For a discussion of these assumptions, see “Summary of the Proxy Statement/Prospectus — The Business Combination Proposal (Proposal 1) — Merger Consideration.”
If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership in Alset will be different. See “Summary of the Proxy Statement/Prospectus – Impact of the Business Combination on Alset’s Public Float” and “Unaudited Pro Forma Condensed Combined Financial Information” for further information.
| 11 |
The ownership percentage set forth above and in the table below with respect to Alset includes the shares issuable to the HWH Holders, and assumes Rights Holders exercise all of their Alset Rights, and the exercise of all outstanding warrants to purchase up to a total of 4,549,375 shares of Alset Common Stock but does not take into account (i) any additional private placement units that are issued or issuable to our Sponsor pursuant to the conversion of the Sponsor’s up to $1.5 million working capital loans that were made to Alset, (ii) any adjustments to the Merger Consideration payable to HWH as a result of HWH’s working capital, transaction expenses and/or debt as of the completion of the Business Combination varying from certain specified targets set forth in the Merger Agreement, and (iii) any indemnification payments that are made after the consummation of the Business Combination by delivery of shares of Alset Common Stock. See “Unaudited Pro Forma Condensed Combined Financial Information” for further information.
The following table presents share information based on the various redemption scenarios, including no redemptions, 33.3%, 50%, 66.6% and maximum redemption scenarios.
| No | 33.3% | 50% | 66.6% | Maximum | ||||||||||||||||
| Redemption (1) | Redemption (1)(2) | Redemption (1)(3) | Redemption (1)(4) | Redemption (1)(5) | ||||||||||||||||
| Alset public stockholders | 52.1 | % | 47.5 | % | 44.8 | % | 41.8 | % | 34.7 | % | ||||||||||
| Alset initial stockholders – Mr. Chan and Alset Inc. | 9.1 | % | 9.9 | % | 10.4 | % | 11.0 | % | 12.3 | % | ||||||||||
| HWH holders – Mr. Chan and Alset Inc. | 36.4 | % | 40.0 | % | 42.0 | % | 44.3 | % | 49.7 | % | ||||||||||
| HWH holders - others | 2.4 | % | 2.6 | % | 2.8 | % | 2.9 | % | 3.3 | % | ||||||||||
| Pro Forma Combined Company Common Stock | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
| (1) | Includes potential dilution from public warrants and placement warrants. |
| 12 |
| (2) | Assumes that 2,872,125 public shares are redeemed for aggregate redemption payments of $28.9 million assuming a $10.06 per share Redemption Price and based on funds in the Trust Account and working capital available to Alset outside of the Trust Account as of October 31, 2022. The Merger Agreement includes a condition to the Closing, waivable by HWH, that, at the Closing, Alset have cash or cash equivalents, including funds remaining in the Trust Account (after giving effect to the completion and payment any Redemptions), prior to giving effect to the payment of Alset’s unpaid transaction expenses or liabilities, at least equal to $5,000,001. |
| (3) | Assumes that 4,312,500 public shares are redeemed for aggregate redemption payments of $43.4 million assuming a $10.06 per share Redemption Price and based on funds in the Trust Account and working capital available to Alset outside of the Trust Account as of October 31, 2022. The Merger Agreement includes a condition to the Closing, waivable by HWH, that, at the Closing, Alset have cash or cash equivalents, including funds remaining in the Trust Account (after giving effect to the completion and payment of any Redemptions), prior to giving effect to the payment of Alset’s unpaid transaction expenses or liabilities, at least equal to $5,000,001. |
| (4) | Assumes that 5,744,250 public shares are redeemed for aggregate redemption payments of $57.8 million assuming a $10.06 per share Redemption Price and based on funds in the Trust Account and working capital available to Alset outside of the Trust Account as of October 31, 2022. The Merger Agreement includes a condition to the Closing, waivable by HWH, that, at the Closing, Alset have cash or cash equivalents, including funds remaining in the Trust Account (after giving effect to the completion and payment of any Redemptions), prior to giving effect to the payment of Alset’s unpaid transaction expenses or liabilities, at least equal to $5,000,001. |
| (5) | Assumes that 8,625,000 public shares are redeemed for aggregate redemption payments of $86.8 million assuming a $10.06 per share Redemption Price and based on funds in the Trust Account and working capital available to Alset outside of the Trust Account as of October 31, 2022. The Merger Agreement includes a condition to the Closing, waivable by HWH, that, at the Closing, Alset have cash or cash equivalents, including funds remaining in the Trust Account (after giving effect to the completion and payment of any Redemptions), prior to giving effect to the payment of Alset’s unpaid transaction expenses or liabilities, at least equal to $5,000,001. |
All of the relative percentages above are for illustrative purposes only. These percentages are calculated based on a number of assumptions (as described in this proxy statement/prospectus) and are subject to adjustment in accordance with the terms of the Merger Agreement. For a discussion of these assumptions, see “Summary of the Proxy Statement/Prospectus — The Business Combination Proposal (Proposal 1) — Merger Consideration.” Should one or more of the assumptions prove incorrect, actual beneficial ownership percentages may vary materially from those described in this proxy statement/prospectus as anticipated, believed, estimated, expected or intended. Pursuant to Alset’s underwriting agreement with EFH, EFH is entitled to $3,018,750 in deferred underwriting commissions.
In addition to the changes in percentage ownership depicted above, variation in the levels of redemptions will impact the dilutive effect of certain equity issuances related to the Business Combination, which would not otherwise be present in an underwritten public offering. Increasing levels of redemptions will increase the dilutive effect of these issuances on non-redeeming holders of our public shares.
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The following table shows the dilutive effect and the effect on the per share value of Alset Common Stock held by non-redeeming holders of Alset Common Stock under a range of redemption scenarios and Alset Warrant exercise scenarios:
| No Redemptions(1) | Assuming
50% Redemptions(2) | Maximum Redemptions(3) | ||||||||||||||||||||||
| (shares in thousands) | ||||||||||||||||||||||||
| Shares | Value Per Share (4) | Shares | Value Per Share (5) | Shares | Value Per Share (6) | |||||||||||||||||||
| Base Scenario(7) | 27,665 | $ | 4.1 | 23,352 | $ | 3.0 | 19,040 | $ | 1.4 | |||||||||||||||
| Excluding Sponsor Shares(8) | 24,988 | 4.6 | 20,675 | 3.4 | 16,363 | 1.7 | ||||||||||||||||||
| Exercising Alset public warrants (9)(10) | 31,977 | 3.6 | 27,665 | 2.6 | 23,352 | 1.2 | ||||||||||||||||||
| Exercising Alset placement warrants (9)(10) | 27,902 | 4.1 | 23,589 | 3.0 | 19,277 | 1.4 | ||||||||||||||||||
| Exercising All Alset Warrants(9)(10) | 32,214 | 3.5 | 27,902 | 2.5 | 23,589 | 1.1 | ||||||||||||||||||
| (1) | Assumes that no shares of Alset Class A Common Stock are redeemed. | |
| (2) | Assumes that 4,312,500 shares of Alset Class A Common Stock, or 50% of our public shares outstanding are redeemed. | |
| (3) | Assumes that 8,625,000 shares of Alset Class A Common Stock, or 100% of the shares outstanding are redeemed. | |
| (4) | Based on a post-transaction equity value of Alset of $114 million. | |
| (5) | Based on a post-transaction equity value of Alset of $71 million. | |
| (6) | Based on a post-transaction equity value of Alset of $27 million. |
| (7) | Represents the post-Closing share ownership of Alset assuming various levels of redemption by holders of Alset Common Stock. Includes exercise of Rights, as Rights are generally exercisable upon consummation of the Business Combination, and which includes exercise of placement rights sold to Sponsor as part of the placement units exercisable into up to 47,375 shares of Alset Common Stock. | |
| (8) | Represents the Base Scenario excluding the founders’ shares held by Sponsor and the Alset Initial Stockholders and excluding the placement units (consisting of placement shares, placement warrants and placement rights) held by Sponsor, and which we collectively refer to in this table as “Sponsor Shares.” | |
| (9) | Represents the Base Scenario plus the full exercise of the Alset Warrants. Alset Warrants are exercisable up to 4,549,375 shares of Alset Common Stock. Of these, our public warrants are exercisable into 4,312,500 shares, and our placement warrants are exercisable into 236,875 shares. Our public warrants and placement warrants are only exercisable after the consummation of the Business Combination. Assumes no redemption of Alset warrants. See “Description of Securities of Alset —Warrants” for more information, including the terms for redemption of warrants, which, among other things, are only redeemable after the Business Combination and if the price of Alset Common Stock exceeds $18 per share for a specified period of time. | |
| (10) | Does not account for proceeds paid to Alset or HWH, if any, in connection with payment of the exercise prices for warrants, which may be exercisable, in the case of our public warrants, by payment either of an exercise price or on a cashless basis under certain circumstances. See “Description of Securities of Alset —Warrants” for more information. |
| 14 |
In addition, the following table illustrates varying ownership levels in Alset Common Stock immediately following the consummation of the Business Combination based on the varying levels of redemptions by the public shareholders, on a fully diluted basis, showing full exercise and conversion of all securities expected to be outstanding as of the Closing of the Business Combination, including (i) public warrants and the placement warrants, and (ii) any outstanding securities of Alset and HWH:
| Additional Dilution Sources (1) | Assuming No Redemption | %
of Total (2) | Assuming 50% Redemption (3) | %
of Total (2) | Assuming Maximum Redemption (4) | %
of Total (2) | ||||||||||||||||||
| Shares underlying placement warrants (5) | 236,875 | 0.7 | % | 236,875 | 0.9 | % | 236,875 | 1.0 | % | |||||||||||||||
| Shares underlying public warrants(6) | 4,312,500 | 13.4 | % | 4,312,500 | 15.5 | % | 4,312,500 | 18.3 | % | |||||||||||||||
| (1) | All share numbers and percentages for the Additional Dilution Sources are presented without the potential reduction of any amounts paid by the holders of the given Additional Dilution Sources and therefore may overstate the presentation of dilution. | |
| (2) | The Percentage of Total with respect to each Additional Dilution Source set forth below, including the Total Additional Dilutive Sources, includes the full number of shares issued with respect to the applicable Additional Dilution Source in both the numerator and denominator. For example, in the illustrative redemption scenario, the Percentage of Total with respect to the shares of Alset Common Stock underlying the placement warrants would be calculated as follows: (a) 236,875 shares issued pursuant to the placement warrants; divided by (b) (i) 31,977,375 shares (the number of shares outstanding prior to any issuance pursuant to the shares underlying the placement warrants) plus (ii) 236,875 shares issued pursuant to the shares underlying the placement warrants. |
| (3) | Amount shown represents share redemption levels reflecting 50% of the redeemable public shares outstanding (approximately 4,312,500 shares). | |
| (4) | Assumes that approximately 100% of Alset’s outstanding public shares are redeemed in connection with the Business Combination, which is the maximum permitted number of redemptions while still satisfying the conditions to the consummation of the Business Combination in the Merger Agreement. | |
| (5) | Assumes exercise of all placement warrants and rights to purchase 236,875 shares of Alset Common Stock. | |
| (6) | Assumes exercise of all publicly held warrants to purchase 4,312,500 shares of Alset Common Stock. |
The ownership percentages above also do not reflect dilution from (i) any additional private placement units that are issued or issuable to our Sponsor pursuant to the conversion of the Sponsor’s up to $1.5 million working capital loans that were made to Alset, because no such loans are currently outstanding, (ii) any adjustments to the Merger Consideration payable to the HWH Holders as a result of HWH’s working capital, transaction expenses and/or debt as of the completion of the Business Combination varying from certain specified targets set forth in the Merger Agreement, and (iii) any indemnification payments that are made after the consummation of the Business Combination by delivery of shares of Alset Common Stock. See “Unaudited Pro Forma Condensed Combined Financial Information” for further information. For further details, see “Business Combination Proposal—Merger Consideration.”
| Q: | What are the effective deferred underwriting fees on a percentage basis for Alset Common Stock based on the level of redemptions? |
| A: | Approximately $3,018,750 of deferred underwriting fees related to the IPO are conditioned upon completion of an initial business combination by Alset, which fees are not impacted by the size of such transaction or the level of redemptions associated therewith. The following table illustrates the effective deferred underwriting fee on a percentage basis for Alset Class A Common Stock at each redemption level identified below. |
| No Redemption Scenario |
Assuming 50% Redemption Scenario |
Maximum Redemption Scenario |
||||||||||
| (shares in thousands) | ||||||||||||
| Unredeemed public shares of Alset Class A Common Stock | 8,625 | 4,313 | 0 | |||||||||
| Trust proceeds to Alset | $ | 87,538,959 | $ | 44,327,709 | $ | 1,116,459 | ||||||
| Deferred Underwriting Fees | $ | 3,018,750 | $ | 3,018,750 | $ | 3,018,750 | ||||||
| Effective Deferred Underwriting Fees* | 2.4 | % | 3.7 | % | 7.8 | % | ||||||
| * | Assuming a trading price of $10.00 share. |
The level of redemptions will also impact the effective deferred underwriting fee per share of our public shares incurred in connection with the IPO and payable upon the completion of the Business Combination. Alset incurred $3,018,750 in deferred underwriting fees. Assuming no exercise of Alset Warrants but exercise of the Rights, in a no redemption scenario, the effective deferred underwriting fee would be approximately $0.24 per public share on a pro forma basis (or 2.4% of the value of shares assuming a trading price of $10.00 per public share). In a medium redemption scenario in which 50% of the shares assumed to be redeemed under the maximum redemption scenario are redeemed in connection with the Business Combination, the effective deferred underwriting fee would be approximately $.037 per public share on a pro forma basis (or 3.7% of the value of shares assuming a trading price of $10.00 per share). In the maximum redemption scenario, the effective deferred underwriting fee would be approximately $0.78 per public share on a pro forma basis (or 7.8% of the value of shares assuming a trading price of $10.00 per share).
| 15 |
| Q: | How will the Sponsor and our directors and officers vote? |
| A: | Our Sponsor currently owns 2,156,250 shares of Alset
Class B common stock, representing 19.2% of the issued and outstanding shares of Alset Common Stock. Shares of Alset Class
B Common Stock will automatically convert into shares of Class A Common Stock on a one-for-one basis, subject to adjustment as provided
in our amended and restated certificate of incorporation. See “Certain Relationships and Related Person Transactions.”
As a result, we may need only 3,033,500, or approximately 35.2%, of the 8,625,000 of our public shares, to be
voted at the Special Meeting in favor of the Business Combination Proposal (as well as other Proposals except for the Charter Amendments
Proposal), and as few as 3,033,500, or approximately 35.2% of our 8,625,000 public shares, to be voted in favor
of the Charter Amendments Proposal, in order to have our Business Combination approved. |
| Q: | What interests do Alset’s current officers and directors have in the Business Combination? |
| A: | The Sponsor, members of Alset’s Board and its executive officers have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interest. These interests include, among other things: |
| ● | the fact that our Sponsor paid an aggregate of approximately $25,000 for the founder shares, which are currently held by the Sponsor and its permitted transferees, including our directors and officers, and the market value of such shares as of , 2022 was approximately $[ * ] , and such securities should have a significantly higher value than $25,000 at the time of the Business Combination; | |
| ● | the fact that our Sponsor paid an aggregate of approximately $4,737,500 for the placement units, at a price of $10.00 per unit, the market value of such securities as of October 11, 2022 was approximately $10.04, and such securities should have a higher value than $4,737,500 at the time of the Business Combination; | |
| ● | the fact that our Sponsor and its permitted transferees, including our officers and directors, have waived their rights to liquidating distributions from the Trust Account with respect to any founders shares and placement shares (but not public shares) held by them if we do not consummate the Business Combination and fail to complete an initial business combination by 12 months from the closing of our IPO (February 3, 2023) (or up to 21 months from the closing of the IPO (November 3, 2023) or as extended by our stockholders in accordance with our amended and restated certificate of incorporation), and therefore if we are unable to consummate a business combination by that time, those shares would expire worthless; | |
| ● | the fact that our Sponsor and its permitted transferees, including our officers and directors, have waived their redemption rights with respect to any founder shares, placement shares and public shares held by them (other than relating to liquidating distributions to public shares from the Trust Account if we fail to complete our initial business combination by 12 months from the closing of the IPO February 3, 2023 or up to 21 months from the closing of the IPO November 3, 2023 or as extended by our stockholders in accordance with our amended and restated certificate of incorporation) to complete the initial Business Combination, which waiver was provided in connection with our IPO and without any separate consideration paid in connection with providing such waiver; | |
| ● | Alset and HWH are both under the control of Alset Inc., which is effectively controlled by Heng Fai Ambrose Chan, a controlling shareholder of Alset Inc. Heng Fai Ambrose Chan is also an executive officer and director of Alset and the executive chairman and director of HWH. Heng Fai Ambrose Chan is deemed to beneficially own 47.3% of HWH Common Stock held through his ownership of Alset International Limited, a subsidiary of Alset Inc., of which Mr. Chan is a beneficiary.In addition, Mr. Chan along with William Wu, Chan Tung Moe, Wong Tat Keung, Wong Shui Yeung, and Lui Wai Leung Alan serve as officers and directors of both HWH and Alset Inc. | |
| ● | It is anticipated that, upon completion of the transaction, assuming no redemptions: (i) shares held by the Company’s public stockholders (other than our sponsor and Heng Fai Ambrose Chan) will equal to approximately 52.1% of the economic interests of HWH; and (ii) Heng Fai Ambrose Chan and his affiliates will beneficially own approximately 47.9% of the economic interests of; assuming holders of 8,625,000 public shares redeem their shares (the maximum redemption scenario): (i) shares held by the Company’s existing public stockholders (other than our sponsor and Heng Fai Ambrose Chan) will equal to approximately 0% of the economic interests of HWH; (ii) newly issued shares held by public stockholders will equal to approximately 34.7% of the economic interests of HWH; (iii) Heng Fai Ambrose Chan and his affiliates will beneficially own approximately 65.3% of the economic interests of HWH. Mr. Chan and his affiliates will have a controlling interest in Alset and will control matters submitted to shareholders such as the election of directors and approval of significant corporate transactions. |
| 16 |
| ● | the fact that our Sponsor, officers and directors and their affiliates can earn a positive rate of return on their overall investment in Alset after the Business Combination, even if other holders of Alset Common Stock experience a negative rate of return, due to having purchased the founder shares, as described above, for $25,000 or approximately $0.012 per share; | |
| ● | if Alset is unable to complete a business combination within the required time period, our Sponsor will be liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors that are owed money by Alset for services rendered or products sold to Alset, but only if such a vendor or target business has not executed a waiver of claims against the Trust Account and except as to any claims under our indemnity of the underwriters; | |
| ● | unless Alset consummates an initial business combination, Alset’s officers, directors and the Sponsor will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceed the amount of available proceeds not deposited in the Trust Account, and which amount as of October 31, 2022 was approximately $88 million, although the amount of such expenses vary depending on the level of redemptions of Alset Common Stock in connection with the Business Combination, and are estimated to be approximately $6.12million if there are no redemptions, $6.13million if 50% of the outstanding shares of Alset Common Stock are redeemed and $6.13million if the maximum amount of redemptions occur which would continue to allow us to consummate the Business Combination; | |
| ● | the fact that, assuming the exercise and conversion of all of securities following the consummation of the Business Combination, the Sponsor and its affiliates’ total potential ownership in the Combined Company is estimated to comprise approximately 9.0% of outstanding Alset Common Stock in a no redemption scenario, 10.4% in a 50% redemption scenario and 12.4% of outstanding Alset Common Stock in a maximum redemption scenario (see the section entitled “Security Ownership of Certain Beneficial Owners and Management” for more information);12 | |
| ● | the fact that a Registration Rights Agreement was entered into by the Sponsor and Alset’s directors and officers, and such parties will have customary registration rights, including demand and piggy-back rights, subject to cooperation and cut-back provisions, following the consummation of the Business Combination; | |
| ● | the fact that the Sponsor (including its representatives and affiliates) and Alset’s directors and officers, are, or may in the future become, affiliated with entities that are engaged in a similar business to Alset, and the Sponsor and Alset’s directors and officers are not prohibited from sponsoring, or otherwise becoming involved with, any other special purpose companies prior to Alset completing its initial business combination, and as result of which, the Sponsor and Alset’s officers and directors may become aware of business opportunities which may be appropriate for presentation to Alset, and the other entities to which they owe fiduciary or contractual duties, and may have conflicts of interests in determining to which entity a particular business opportunity should be presented (and these conflicts may include presentation to other entities prior to their presentation, if at all, to Alset, and may not always be resolved in the favor of Alset, subject to applicable fiduciary duties under Delaware law, in that Alset has provided in its amended and restated certificate of incorporation that Alset has renounced its interest in any corporate opportunity presented to Alset); | |
| ● | the Sponsor and Alset’s directors and officers have agreed that the founders shares and placement units, and all of their underlying securities, will not be sold or transferred by it until a period of time after Alset has completed a business combination, subject to limited exceptions; | |
| ● | continued indemnification of current directors and officers of Alset after the Business Combination |
| 17 |
| Q: | What happens if I sell my shares of Alset Class A Common Stock before the Special Meeting? |
| A: | The Record Date is earlier than the date of the Special Meeting. If you transfer your shares of Alset Common Stock after the Record Date, but before the Special Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Special Meeting. However, you will not be able to seek redemption of your shares because you will no longer be able to deliver them for cancellation upon consummation of the Business Combination in accordance with the provisions described herein. If you transfer your shares of Alset Common Stock prior to the Record Date, you will have no right to vote those shares at the Special Meeting. |
| Q: | What happens if the Business Combination Proposal is not approved? |
| A: | Pursuant to the amended Alset Certificate of Incorporation, if the Business Combination Proposal is not approved and Alset fails to complete an initial business combination by 12 months from the closing of our IPO (February 3, 2023) (or up to 21 months from the closing of the IPO (November 3, 2023) or as extended by our stockholders in accordance with our amended and restated certificate of incorporation), we will be required to dissolve and liquidate our Trust Account by returning the then remaining funds in such account to the public stockholders. |
| Q: | Do I have redemption rights? |
| A: | Pursuant to the Alset Certificate of Incorporation, holders of public shares may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with the Alset Certificate of Incorporation. As of October 31, 2022, based on funds in the Trust Account of $88 million, this would have amounted to approximately $10.06 per share (net of taxes payable on accrued interest in the Trust Account). It is anticipated that the per share redemption price will be approximately $10.06 (net of taxes payable on accrued interest in the Trust Account) at the closing of the Business Combination, which is anticipated to occur during the second half of 2022. If a holder exercises its redemption rights, then such holder will be exchanging its shares of Alset Class A Common Stock for cash. Such a holder will be entitled to receive cash for its public shares only if it properly demands redemption and delivers its shares (either physically or electronically) to Alset’s transfer agent prior to the Special Meeting. See the question titled “How do I exercise my redemption rights?” below and the section titled “Special Meeting of Alset Stockholders—Redemption Rights” for the procedures to be followed if you wish to redeem your public shares for cash. |
Holders of Alset Warrants and Rights do not have redemption rights with respect to their warrants or rights. At the Closing of the Business Combination, the HWH Warrants will be exchanged for Alset Warrants, and your Rights will be eligible to be exchanged for one-tenth (1/10) of one share of Alset Class A Common Stock, as described elsewhere in this proxy statement/prospectus.
Holders of our public shares who also hold Alset Warrants or Rights may elect to redeem their public shares, and still retain their Alset Warrants and Rights. The value of our Alset Warrants based on a recent trading price as of October 7, 2022 was $0.3 million, and the value of our Rights based on their recent trading prices as of October 7, 2022 was $1.1 million. Public stockholders who redeem their shares of Alset Class A Common Stock may continue to hold any Alset Warrants that they owned prior to redemption, which results in additional dilution to non-redeeming holders upon exercise of such Alset Warrants. Assuming the maximum redemption of the shares of Alset Class A Common Stock held by the redeeming holders of Alset public shares, up to [8,625,000] publicly traded Alset Warrants would be retained by redeeming holders of Alset public shares (assuming all such holders elected not to exercise their warrants) with an aggregate market value of $0.3 million based on the market price of $0.07 per Alset Warrant as of October 7, 2022, and the value of our Rights is expected to be $0.9 million.
As indicated by the foregoing reduction in expected prices upon maximum redemptions, there are material risks relating to electing to redeem your public shares (and redemptions generally), relating to the value of your Alset Warrants and Rights. For more information see “Risk Factors — Our holders of Alset Warrants and Rights may elect to redeem their public shares while retaining their Alset Warrants and Rights, although if redemptions exceed the threshold allowable for us to consummate the Business Combination, the Alset Warrants and Rights will expire worthless.”
For information about the per share value of Alset Class A Common Stock given different levels of redemptions, see “Questions and Answers — What equity stake will current stockholders of Alset and the HWH Holders hold in Alset after the Closing?”
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Our Rights are eligible to be converted following the Effective Time of the Business Combination into Alset Class A Common Stock, as described elsewhere in this proxy statement/prospectus. Accordingly, your Rights will cease to be traded upon consummation of the Business Combination, and will only have value based on the value of Alset Common Stock which the holder is eligible to receive upon closing of the Business Combination. Because redemptions will deplete our Trust Account, and the assets of Alset would be calculated, in part, based on the cash in the Trust Account at the Closing, an increase in redemptions of our public shares would reduce the assets available from the Trust Account to Alset at Closing which may negatively impact the value of Alset Common Stock that you would receive in exchange for your Rights.
If in excess of the maximum redemptions occur, and as a result we are unable to consummate the Business Combination, because your Alset Warrants are only exercisable following a business combination, if Alset does not consummate the Business Combination and fails to complete an initial business combination by 12 months from the closing of our IPO (February 3, 2023) (or up to 21 months from the closing of the IPO (November 3, 2023) or as extended by our stockholders in accordance with our amended and restated certificate of incorporation), your Alset Warrants will not be exercisable and expire worthless. In this circumstance, likewise your Rights (which are only exercisable following a business combination) will not be exercisable, and expire worthless.
| Q: | Will how I vote affect my ability to exercise redemption rights? |
| A: | No. You may exercise your redemption rights whether or not you attend or vote your shares of Alset Common Stock at the Special Meeting, and regardless of how you vote your shares with respect to the Business Combination Proposal or any other proposal described by this proxy statement/prospectus. As a result, the Merger Agreement can be approved by stockholders who will redeem their shares and no longer remain stockholders, leaving stockholders who choose not to redeem their shares holding shares in a company with a potentially less liquid trading market, fewer stockholders, potentially less cash and the potential inability to meet the listing standards of Nasdaq. |
| Q: | How do I exercise my redemption rights? |
| A: | In order to exercise your redemption rights, you must, prior to 5:00 p.m., Eastern time, on , 2022 (two (2) business days before the Special Meeting), tender your shares physically or electronically and submit a request in writing that we redeem your public shares for cash to Vstock Transfer LLC, our transfer agent, at the following address: |
Vstock Transfer LLC
18 Lafayette Place
Woodmere, NY 11598
E-mail: info@vstocktransfer.com
Stockholders seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the transfer agent and time to effect delivery. It is Alset’s understanding that stockholders should generally allot at least two (2) weeks to obtain physical certificates from the transfer agent. However, Alset does not have any control over this process and it may take longer than two weeks. Stockholders who hold their shares in street name will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically.
Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with our consent, until the vote is taken with respect to the Business Combination. If you delivered your shares for redemption to our transfer agent and decide within the required timeframe not to exercise your redemption rights, you may request that our transfer agent return the shares (physically or electronically). You may make such request by contacting our transfer agent at the phone number or address listed under the question “Who can help answer my questions?” below.
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| Q: | What are the federal income tax consequences of exercising my redemption rights? |
| A: | Alset stockholders who exercise their redemption rights to receive cash in exchange for their shares of Alset Common Stock generally will be required to treat the transaction as a sale of such shares and recognize gain or loss upon the redemption in an amount equal to the difference, if any, between the amount of cash received and the tax basis of the shares of such common stock redeemed. Such gain or loss should be treated as capital gain or loss if such shares were held as a capital asset on the date of the redemption. The redemption, however, may be treated as a distribution to a redeeming stockholder for U.S. federal income tax purposes if the redemption does not effect a sufficient reduction (as determined under applicable federal income tax law) in the redeeming stockholder’s percentage ownership in us (whether such ownership is direct or through the application of certain attribution and constructive ownership rules). Any amounts treated as such a distribution will constitute a dividend to the extent of our current and accumulated earnings and profits as measured for U.S. federal income tax purposes. Any amounts treated as a distribution and that are in excess of our current and accumulated earnings and profits will reduce the redeeming stockholder’s basis in his or her redeemed shares of Alset Common Stock, and any remaining amount will be treated as gain realized on the sale or other disposition of Alset Common Stock. These tax consequences are described in more detail in the section titled “The Business Combination Proposal — Material U.S. Federal Income Tax Considerations.” We urge you to consult your tax advisor regarding the tax consequences of exercising your redemption rights. |
| Q: | What are the U.S. federal income tax consequences if I do not exercise my redemption rights and instead participate in the Business Combination? |
| A: | It is intended that the Business Combination will qualify as part of an exchange described in Section 351 of the Internal Revenue Code of 1986, as amended, which we refer to as the Code. If the Business Combination qualifies as part of an exchange described in Section 351, then U.S. Holders (as defined in the section entitled “The Business Combination Proposal — Material U.S. Federal Income Tax Considerations”) of Alset Class A Common Stock who do not exercise their redemption rights and who participate in the Business Combination generally will not recognize gain or loss for U.S. federal income tax purposes as a result of the exchange of Alset Common Stock for Alset Common Stock. You are strongly urged to consult with a tax advisor to determine the particular U.S. federal, state or local or foreign income or other tax consequences of your participation in the Business Combination. See “The Business Combination Proposal — Material U.S. Federal Income Tax Considerations.” |
| Q: | If I am a right or warrant holder, can I exercise redemption rights with respect to my rights or warrants? |
| A: | No. The holders of rights or warrants have no redemption rights with respect to such rights or warrants. |
| Q: | Do I have appraisal rights in connection with the proposed Business Combination? |
| A: | Under the DGCL, there are no appraisal rights available to holders of shares of Alset Common Stock or holders of Alset Warrants in connection with the Business Combination. |
| Q: | What happens to the funds held in the Trust Account upon consummation of the Business Combination? |
| A: | If the Business Combination is consummated, the funds held in the Trust Account will be released to pay: |
| ● | Alset stockholders who properly exercise their redemption rights; | |
| ● | $3,018,750 of deferred underwriting fees to EFH in connection with the Business Combination; | |
| ● | certain other fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees, and other professional fees) that were incurred by Alset or HWH in connection with the transactions contemplated by the Business Combination and pursuant to the terms of the Merger Agreement; | |
| ● | any loans owed by Alset to its Sponsor for any Alset transaction expenses or other administrative expenses incurred by Alset; and | |
| ● | for general corporate purposes including, but not limited to, working capital for operations. |
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| Q: | What happens if the Business Combination is not consummated? |
| A: | There are certain circumstances under which the Merger Agreement may be terminated. See the section titled “The Business Combination Proposal — Merger Agreement” for information regarding the parties’ specific termination rights.
If, as a result of the termination of the Merger Agreement or otherwise, Alset is unable to complete the Business Combination or another initial business combination transaction by 12 months from the closing of the IPO (February 3, 2023) (or up to 21 months from the closing of the IPO November 3, 2023 or as extended by our stockholders in accordance with our amended and restated certificate of incorporation), our certificate of incorporation provides that it will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten (10) business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including any interest earned on the funds held in the Trust Account net of interest not previously released to Alset to pay taxes payable and up to $100,000 to pay dissolution expenses, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Holders of founder shares have waived any right to any liquidation distribution with respect to those shares.
In the event of liquidation, there will be no distribution with respect to Alset’s outstanding warrants and rights. Accordingly, the warrants and rights will expire worthless. |
| Q: | When is the Business Combination expected to be completed? |
| A: | The closing is expected to take place in 2022. |
For a description of the conditions to the completion of the Business Combination, see the section titled “The Business Combination Proposal.”
| Q: | What will Alset stockholders receive in the Business Combination? |
| A: | Upon completion of the Business Combination, each share of Alset Class B Common Stock will be automatically converted into applicable shares of Alset Class A Common Stock immediately prior to the Effective Time of the Business Combination. Shares held by Alset as treasury stock or that are owned by Alset, which we refer to as the Alset excluded shares, will not be exchanged and will be cancelled. |
| Q: | What will Alset warrant holders receive in the Business Combination? |
| A: | Upon completion of the Business Combination, all of the warrants exercisable into Alset Common Stock will be converted into warrants exercisable into Alset Common Stock having the same exercise price and other terms and conditions as the original warrants. |
| Q: | If I am an Alset warrant holder, will my warrants become exercisable for shares of Alset Common Stock if the Business Combination is consummated? |
| A: | Yes. Pursuant to the Merger Agreement and the terms of the Alset warrants, each Alset Warrant will be converted into an Alset Warrant exercisable into shares of Alset Common Stock. However, in the event that Alset fails to complete an initial business combination by 12 months from the closing of our IPO (February 3, 2023) (or up to 21 months from the closing of the IPO (November 3, 2023) or as extended by our stockholders in accordance with our amended and restated certificate of incorporation), Alset will be required to liquidate and any Alset warrants you own will expire without value. |
Alset warrant holders should not submit certificates, if any, relating to their warrants. Holders of warrants to purchase Alset Common Stock will receive warrants to purchase Alset Common Stock, without needing to take any action and, accordingly, such holders should not submit the certificates, if any, relating to their warrants.
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| Q: | How do the public warrants differ from the Alset’s placement warrants acquired in the placement and what are the related risks for any holders of public warrants? |
| A: | The public warrants are identical with the placement warrants, which were acquired by the Sponsor in the placement in connection with the IPO, except that, as long as the placement warrants are held by the Sponsor or its permitted transferees, the placement warrants (i) may be exercised either on a cashless basis or on with a cash exercise, (ii) may not be transferred, assigned or sold, nor the Alset Common Stock/HWH Common Stock issuable upon their exercise, until thirty (30) days after the completion of the Business Combination, except to permitted transferees, and (iii) are not redeemable by Alset/HWH as long as they are held by the Sponsor or its permitted transferees. The placement warrants are not listed on the Nasdaq Capital Market, while the public warrants are listed on the Nasdaq Capital Market under the symbol “ACAXW” and are intended to be listed following the consummation of the Business Combination under the symbol “[●].” Placement warrants have certain registration rights to be registered for sale to the public and possible listing on Nasdaq. Alset Units, Alset Common Stock, Alset Warrants, and Alset Rights are listed on the Nasdaq Stock Market, with trading symbols “ACAXU,” “ACAX”, “ACAXW” and “ACAXR,” respectively. |
The public warrants are not exercisable (and not redeemable by Alset/HWH) until thirty (30) days after the date of the Closing of the Business Combination, according to the terms of their warrant agreement. Accordingly, if the Business Combination or another business combination is not completed within 15 months of our IPO (May 3, 2023) upon completion of this Form S-4, (or up to up to 21 months (November 3, 2023) if we extend the period of time to consummate a Business Combination, at our election by two separate three month extensions, subject to satisfaction of certain conditions, including the deposit of up to $862,500 for each three month extension, into the Trust Account, or as extended by our stockholders in accordance with our Amended and Restated Certificate of Incorporation), subject to applicable law), the public warrants (and the placement warrants) will expire worthless.
Public warrants and placement warrants terminate on the earlier of five (5) years after the date of the Business Combination, the liquidation of Alset/HWH, or the date of redemption of the warrants (except for the placement warrants which are not redeemable if held by the Sponsor or its permitted transferees). If not exercised or exercisable before this termination date, the applicable warrants will become void and all rights thereon cease as of 5:00 p.m. on such date, unless Alset/HWH extends the termination date in its sole discretion.
The public warrants and placement warrants are exercisable, only thirty (30) days after the Closing of the Business Combination, and only if a registration statement under the Securities Act with respect to the Alset Common Stock issuable upon exercise of the warrant is then effective and a prospectus relating thereto is current, or, if the Company elects for cashless exercise, then the Alset Common Stock issuable upon exercise of the warrant has been registered under the Securities Act or otherwise qualified or deemed exempt from registration or qualification (collectively, the “warrant exercise conditions”). If Alset elects for cashless exercise of a public warrant, Alset is required to use best efforts to register or qualify for sale the Alset Common Stock issuable upon exercise of the public warrants under applicable blue sky laws of the state of residence of the holder of the public warrant to the extent an exemption from registration under the Securities Act is not available. If the holder of a public warrant will not be able to exercise that public warrant, such warrant will have no value and expire worthless, in which case the purchaser of a Alset Unit containing such public warrant will have paid the full purchase price for that Alset Unit solely for the share of Alset Common Stock underlying such Unit and its Rights.
In no event will Alset be required to net cash settle any exercise of Alset Warrants, and each warrant may be exercised solely for a whole share of Alset Common Stock. Alset may require the holder of public warrants to exercise such warrants on a cashless basis and if such exercise would entitle the holder to receive a fractional interest in Alset Common Stock, Alset will round down to the nearest whole number the number of shares of Alset Common Stock to be issued to that holder. In contrast to public warrants, regarding which Alset has the option to cause these warrants to be exercised on a cashless basis, the Sponsor or its permitted transferees may elect to exercise placement warrants held by them, on a cashless basis. This means holders of public warrants have the risk that, if the public warrants are otherwise exercisable, but Alset does not have a registration statement effective covering the shares of Alset Common Stock issuable upon exercise of those warrants, the holders of public warrants may not be able to exercise their warrants until Alset elects to allow cashless exercise of those warrants or has such a registration statement declared effective.
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Public warrants are not subject to redemption by Alset, effectively, because public warrants cannot be redeemed until they are exercisable, with the conditions to exercise discussed above, which includes waiting until thirty (30) days following the Business Combination, among other requirements discussed above as warrant exercise conditions. Upon the public warrants being exercisable, Alset may redeem them prior to their exercise at a time that is disadvantageous to the holder, thereby significantly impairing the value of such warrants. Alset will have the ability to redeem outstanding Alset Warrants upon not less than 30 days’ prior written notice of redemption to each warrant holder at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of the Alset Common Stock for any 20 trading days within a 30 trading day period ending on the third trading day prior to the date on which a notice of redemption is sent to the warrant holders (which we refer to as the “Reference Value”) equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like). Redemption of the outstanding Alset Warrants could force the holders of Alset Warrants (i) to exercise their Alset Warrants and pay the exercise price therefore at a time when it may be disadvantageous for such holders to do so, (ii) to sell their Alset Warrants at the then-current market price when they might otherwise wish to hold their Alset Warrants, or (iii) to accept the nominal redemption price which, at the time the outstanding Alset Warrants are called for redemption, is likely to be substantially less than the market value of the Alset Warrants.
The value received upon exercise of the Alset Warrants (1) may be less than the value the holders would have received if they had exercised their Alset Warrants at a later time when the underlying share price is higher, particularly in the event the Alset Warrants are eligible to be redeemed and called for redemption, and (2) may not compensate the holders for the value of the Alset Warrants.
In comparison to the public warrants/Alset Warrants, the placement warrants/Alset placement warrants will not be redeemable by Alset so long as they are held by our Sponsor or its permitted transferees.
In each case, Alset may only call the Alset Warrants for redemption upon a minimum of 30 days’ prior written notice of redemption to each holder, provided that holders will be able to exercise their Alset Warrants prior to the time of redemption and, at Alset’s election, any such exercise may be required to be on a cashless basis.
Recent trading prices for the Alset Class A Common Stock have not exceeded the $18.00 per share threshold at which the Alset Warrants would become redeemable, even if the if the other conditions to redemption of these warrants were fulfilled, including that the Business Combination was already consummated and Alset had a registration statement effective, which would have allowed the warrants to be redeemable. For more information, see “Description of Securities of Alset – Warrants.”
| Q: | If I am an Alset Rights Holder, will my rights become exchangeable for shares of Alset Common Stock if the Business Combination is consummated? |
| A: | Yes. Pursuant to the Merger Agreement and the terms of the Alset rights, each Alset right will be exchanged for one-tenth (1/10) of one share of Alset Class A Common Stock, and these shares will be cancelled in exchange for Alset Common Stock pursuant to the Merger. However, in the event that Alset fails to complete an initial business combination by 12 months from the closing of our IPO (February 3, 2023) (or up to 21 months from the closing of the IPO November 3, 2023 or as extended by our stockholders in accordance with our amended and restated certificate of incorporation), Alset will be required to liquidate and any Alset rights you own will expire without value. |
Alset will not issue fractional shares of our Class A Common Stock in exchange for rights, but will instruct the rights agent to round up for each Rights Holder the amount of our Class A Common Stock to be received by that Rights Holder to the nearest whole share.
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| Q: | I am a Rights Holder, and how do I receive stock in the Merger? |
| A: | As soon as practicable after the Business Combination, according to the terms of the Rights, Alset will direct holders of the Rights to return their certificate of Rights to our rights agent, Vstock Transfer LLC (the “rights agent”). Upon receipt of a valid certificate of Rights, the rights agent will issue to the registered Rights Holder a certificate or certificates for the number of shares, being full shares, of Alset Class A Common Stock to which that Rights Holder is entitled, aggregated on a per Rights Holder basis, in such name or names as may be directed by the Rights Holders. In no event will there be an issuance of net cash to settle the Rights, and Alset and HWH will not issue fractional shares to such Rights Holder. Alset will instruct the rights agent to round up to the nearest whole share of Alset Class A Common Stock, when the rights agent issues to the registered Rights Holder a certificate for the number of shares of Alset Class A Common Stock to which that Rights Holder is registered. Alset and the rights agent will then exchange those shares of HWH Common Stock for Alset Common Stock as discussed in this proxy statement/prospectus. In the interests of efficiency and to avoid duplication of certificates, Alset may instruct the rights agent to issue a certificate of Alset Common Stock to the Rights Holder, without the Rights Holder having again to exchange a certificate of Alset Class A Common Stock for HWH Common Stock. |
| Q: | What will Alset unit holders receive in the Business Combination? |
| A: | Upon the consummation of the Business Combination, the outstanding publicly traded units of Alset will be separated into their component securities, consisting of one share of Alset Class A Common Stock, one-half (1/2) of one Alset Warrant, and one Alset Right, equal to the right to receive one tenth (1/10) of one share of Alset Class A Common Stock. Each of the holders of Alset Class A Common Stock, the Alset Warrants the Alset Rights will receive consideration in the Business Combination as answered in the questions above. |
| Q: | If the Business Combination is completed, when can I expect to receive the Alset Common Stock for my shares of HWH Common Stock? |
| A: | After the consummation of the Business Combination, Alset’s transfer agent will send instructions to HWH security holders regarding the exchange of their HWH securities for Alset securities. Alset stockholders who exercise their redemption rights must deliver their stock certificates to Alset’s transfer agent (either physically or electronically) at least two (2) business days prior to the vote at the Special Meeting. |
Upon effectiveness of the Business Combination, all of the outstanding Alset Class B Common Stock will be converted into Alset Class A Common Stock on a one-for-one basis, subject to adjustment as provided the Alset Certificate of Incorporation. Hence, upon consummation of the Business Combination, Alset Common Stock will consist of our Class A Common Stock which will be exchanged for HWH Common Stock.
| Q: | How much cash will be available to Alset following the closing of the Business Combination, assuming maximum and minimum redemptions? To what extent will Alset need to secure additional financing in connection with the Business Combination following the Business Combination? |
| A: | Following the closing of the Business Combination, it is currently anticipated that Alset will have available to it approximately $113.8 million of cash from the Trust Account, after payment of estimated expenses and assuming no redemptions are made by Alset public stockholders prior to the closing of the Business Combination, or approximately $27.4 million of cash from the Trust Account, after payment of estimated expenses and assuming that the maximum amount of redemptions are made by Alset public stockholders prior to the closing of the Business Combination. |
The Sponsor has made certain commitments regarding funding of the Company. The Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amounts in the Trust Account to below $10.00 per share (whether or not the underwriters’ over-allotment option is exercised in full), except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters in the IPO against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third party claims. The Company seeks to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the company’s independent registered accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
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On November 8, 2021, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $300,000. The Promissory Note is non-interest bearing and payable on the earlier of (i) May 8, 2022, or (ii) the consummation of the Initial Public Offering. As of August 31, 2022, there was no amount outstanding under the Promissory Note.
In order to meet Alset’s working capital needs, the Sponsor or its affiliates, or our officers and directors may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, and which we refer to as working capital loans. Each such loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at a holder’s discretion, up to $1,500,000 of the notes may be converted into units at a price of $10.00 per unit. If Alset does not complete a business combination, Alset may use a portion of proceeds held outside the Trust Account to repay these loans, but no proceeds held in the Trust Account would be used to repay these loans.
There were no amounts outstanding relating to working capital loans as of December 31, 2021. See “Certain Relationships and Related Party Transactions.”
Following the Business Combination, assuming no redemptions are made prior to the Closing, the Combined Entity believes it will have enough cash on its balance sheet to finance operations. In the event of maximum redemptions, we may be in need of raising additional financing. We expect that from time to time we may need to raise additional financing to maintain our operations, and from time to time we may wish to raise additional financing in order to take advantage of business opportunities. To the extent we need or wish to raise such additional financing, our access to commercial bank financing or the debt and equity capital markets may be limited by various factors, including the condition of overall credit and capital markets, general economic factors, the state of the industry, our financial performance, credit ratings, and other factors. Commercial credit and debt and equity capital may not be available to us on favorable terms, or at all. While HWH is in continuing discussions with several potential lenders, no commitments for financing have been obtained to date, and there can be no assurances that any such financing will be consummated on terms acceptable to HWH, if at all.
| Q: | What do I need to do now? |
| A: | You are urged to read carefully and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee. |
If you hold membership interests of HWH, you may execute and return your written consent to HWH in accordance with the instructions provided.
| Q: | How do I vote? |
| A: | If you were a holder of record of Alset Class A Common Stock or Alset Class B Common Stock on , 2022, the Record Date, you may vote with respect to the Proposals in person at the Special Meeting, or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should follow the instructions provided by your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the Special Meeting and vote in person, obtain a proxy from your broker, bank or nominee. |
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| Q: | What will happen if I abstain from voting or fail to vote at the Special Meeting? |
| A: | Abstentions will have the same effect as a vote “AGAINST” the Charter Amendments Proposal. Abstentions will have no effect on the remaining Proposals in a special meeting with a duly called quorum. |
A “broker non-vote” occurs when shares held by a broker for the account of a beneficial owner are not voted for or against a particular proposal because the broker has not received voting instructions from that beneficial owner and the broker does not have discretionary authority to vote those shares in the absence of such instructions. If you do not provide instructions to your broker, your broker will not have discretionary authority to vote on any of the Proposals at the Special Meeting, because Alset does not expect any of the Proposals to be considered a routine matter. Broker non-votes will not be counted as present for the purposes of establishing a quorum.
Broker non-votes will have the same effect as a vote “AGAINST” the Charter Amendments Proposal. At a meeting with a quorum, broker non-votes will have no effect on the vote on the remaining Proposals.
| Q: | What will happen if I sign and return my proxy card without indicating how I wish to vote? |
| A: | Signed and dated proxies received by Alset without an indication of how the stockholder intends to vote on a proposal will be voted “FOR” each proposal presented to the stockholders. The proxyholders may use their discretion to vote on any other matters which properly come before the Special Meeting. |
| Q: | If I am not going to attend the Special Meeting in person, should I return my proxy card instead? |
| A: | Yes. Whether you plan to attend the Special Meeting or not, please read the enclosed proxy statement/prospectus carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. |
| Q: | If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me? |
| A: | No. Under the rules of various national and regional securities exchanges, your broker, bank or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. Alset believes the proposals presented to the stockholders will be considered non-discretionary and therefore your broker, bank or nominee cannot vote your shares without your instruction. Your bank, broker or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide. |
| Q: | May I change my vote after I have mailed my signed proxy card? |
| A: | Yes. You may change your vote by sending a later-dated, signed proxy card to Alset’s secretary at the address listed below so that it is received by Alset’s secretary prior to the Special Meeting or virtually attend the Special Meeting in person and vote. You also may revoke your proxy by sending a notice of revocation to Alset’s secretary, which must be received by Alset’s secretary prior to the Special Meeting. |
| Q: | Who will solicit and pay the cost of soliciting proxies? |
| A: | Alset will pay the cost of soliciting proxies for the Special Meeting. Alset has engaged the Proxy Solicitor, to assist in the solicitation of proxies for the Special Meeting. Alset has agreed to pay the Proxy Solicitor a fee of $ , plus disbursements. Alset will reimburse the Proxy Solicitor for reasonable out-of-pocket expenses and will indemnify the Proxy Solicitor and its affiliates against certain claims, liabilities, losses, damages and expenses. Alset will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of Alset Common Stock for their expenses in forwarding soliciting materials to beneficial owners of the Alset Common Stock and in obtaining voting instructions from those owners. Alset’s directors and officers may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies. |
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| Q: | What should I do if I receive more than one set of voting materials? |
| A: | You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares. |
| Q: | Who can help answer my questions? |
| A: | If you have questions about the proposals or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card you should contact: |
Heng Fai Ambrose Chan
Chairman and Chief Executive Officer
Alset Capital Acquisition Corp.
4800 Montgomery LN STE 210
Bethesda, MD 20814
(301)-971-3955
You may also contact our proxy solicitor at:
Proxy Solicitor:
Telephone:
E-mail:
To obtain timely delivery, Alset stockholders must request the materials no later than , 2022.
You may also obtain additional information about Alset from documents filed with the SEC by following the instructions in the section titled “Where You Can Find More Information.”
If you intend to seek redemption of your public shares, you will need to send a letter demanding redemption and deliver your stock (either physically or electronically) to Alset’s transfer agent prior to the Special Meeting in accordance with the procedures detailed under the question “How do I exercise my redemption rights?” If you have questions regarding the certification of your position or delivery of your stock, please contact:
Vstock Transfer LLC
18 Lafayette Place
Woodmere, NY 11598
E-mail: info@vstocktransfer.com
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS
This summary, together with the section entitled, “Questions and Answers About the Proposals” summarizes certain information contained in this proxy statement/prospectus and may not contain all of the information that is important to you. To better understand the Business Combination and the Proposals to be considered at the Special Meeting, you should read this entire proxy statement/prospectus carefully, including the annexes. See also the section titled “Where You Can Find More Information.”
Parties to the Business Combination
Alset
Alset is a special purpose acquisition company incorporated on October 20, 2021, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses.
Alset’s units, common stock, warrants, and rights are currently quoted on the Nasdaq Capital Market under the symbols “ACAXU,” “ACAX”, “ACAXW” and “ACAXR,” respectively.
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Alset’s executive office is located at 4800 Montgomery LN, STE 210 Bethesda, MD 20814, and its telephone number is (301)-971-3955. Alset’s website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this proxy statement/prospectus.
Sponsor
Alset Acquisition Sponsor, LLC, a Delaware limited liability company, is the sponsor of Alset and currently, together with our officer and directors, owns 23.4 % of the issued and outstanding shares of Alset Common Stock. Alset Acquisition Sponsor’s principal executive office is located at 4800 Montgomery LN, STE 210 Bethesda, MD, 20814, and its telephone number is (301)-971-3955.
HWH
HWH International Inc., a Nevada corporation, was incorporated on March 29, 2022 to create a purpose-driven business model enabling home-based people in the new GIG economy to create lasting wealth. In doing so, the Company has developed new pathways to help people in their pursuit of health, wealth and happiness.
Using the access provided by (i) the many affiliate companies we have through DSS, Inc., a holding company under common control of our Chairman, Heng Fai Ambrose Chan Alset, including its subsidiaries RBC Life World, Inc., HWH World, Inc. (Texas), HWH Holdings, Inc., and Sharing Services Global Corp., and (ii) potentially, EHome International Inc., we operate an a mostly membership driven business model based on the concept that offering our members low prices in a selection of products and services in multiple segments or categories.
The segments are:
HWH Marketplace, which will be the discounted sale of certain products, manufactured by our affiliate company Sharing Services Global Corporation, to members.
Hapi Café, which are, and will be, in-person, location-based social experiences at a Hapi Café where members can build a sense of community with like-minded customers with a potential interest in the same products and expose them to and educate them about the products and services of our affiliates, we can significantly increase our membership base as well as increase the amounts spent by our members on the products and services of our affiliates.
Hapi Travel Destinations is in the planning stages, with our Singapore subsidiary, Hapi Travel Pte. Ltd., working with our affiliates to determine the market-by-market services. Through Hapi Travel, we plan to offer exclusive access to unpublished rates and discounts on air travel, cruises, car rentals, hotels, and resorts for members.
Hapi Wealth Builder is also in the planning stages, with our Singapore subsidiary Hapi Wealth Builder Pte. Ltd., exploring the options of providing services to our members through educational materials and seminars aimed at various types of investing opportunities.
Merger Sub
HWH Merger Sub Inc. is a wholly-owned subsidiary of Alset formed for the sole purpose of the merger, in which HWH will be the surviving entity. Merger Sub was formed under the laws of the State of Nevada on September 9, 2022. Merger Sub owns no material assets and does not operate any business. At the consummation of the Business Combination, Merger Sub will cease to exist after being merged into HWH.
The mailing address and telephone of the principal executive offices of Merger Sub and HWH are the same as for Alset.
Alset’s and HWH’s Organizational Structure Pre-Business Combination
Alset’s and HWH’s Organizational Structure Post-Business Combination, Assuming No Redemption
The Business Combination and the Merger Agreement
On September 9, 2022, Alset entered into the Merger Agreement with HWH and Merger Sub. The Merger Agreement provides for the combination of HWH and Alset under Alset as a wholly owned subsidiary of Alset, and pursuant to which each of HWH and Merger Sub will merge with and into each other, with HWH surviving the Merger as direct, wholly-owned subsidiary of Alset. At the Closing, Alset will change its name to “HWH International Inc.” For more information about the transactions contemplated by the Merger Agreement, please see the section entitled “The Business Combination Proposal—Merger Agreement.” A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A, and is incorporated herein by reference.
Merger Consideration
Subject to the terms and conditions set forth in the Merger Agreement at the effective time of the Merger, which we refer to as the Effective Time:
| (a) | all of the outstanding HWH common stock, with a par value of $0.001 per share will be cancelled in exchange for the right to receive shares of Alset Common Stock; and | |
| (b) | all of the outstanding shares of Alset Class B Common Stock will be cancelled in exchange for the right to receive shares of Alset Class A Common Stock. |
Upon the consummation of the Business Combination, the outstanding publicly traded units of Alset will be separated into their component securities, consisting of one share of Alset Class A Common Stock, one-half (1/2) of one Alset Warrant, each of which shall be exchanged in accordance with the foregoing description, and one right to receive Alset Rights equal to one tenth (1/10) of one share of Alset Class A Common Stock upon the consummation of the Business Combination. The amount of Alset Rights held by each Rights Holder will be rounded up to the nearest whole share of Alset Class A Common Stock and this stock shall be exchanged for Alset Common Stock at the Effective Time.
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As Alset does not have any outstanding shares of preferred stock, and is anticipated to have no outstanding shares of preferred stock at the Effective Time, no exchange of preferred stock is expected to occur at the Effective Time.
All other convertible securities and other rights to purchase membership interests of HWH will be retired and terminated, if they have not been converted, exchanged or exercised for HWH’s membership interests immediately prior to the Effective Time.
The amount of shares of Alset Common Stock that the HWH Holders and our security holders described above in the Business Combination will receive, depends on the redemption price of Alset Common Stock in the redemption described in this proxy statement/prospectus, which per share price determines the value of one share of Alset Common Stock under the terms of the Merger Agreement, for purposes of determining the consideration to be received by HWH Holders and our security holders in the Business Combination. Based on that per share price, and subject to the aggregate fully diluted number of HWH Common Stock at the Closing, the HWH Holders will receive such number of shares of Alset Common Stock, with an aggregate value equal to $125,000,000 minus adjustments for net working capital, net indebtedness and transaction expenses as provided in the Merger Agreement, which we refer to as the Merger Consideration.
The Merger Consideration will be paid in the form of shares of Alset Common Stock as described above.
Conditions to Consummation of the Merger
The consummation of the Merger is conditioned upon, among other things, (i) the absence of any applicable law or order that makes the transactions contemplated by the Merger Agreement illegal or otherwise prohibits consummation of such transactions; (ii) the Registration Statement shall have become effective under the Securities Act of 1933, as amended (the “Securities Act”); (iii) approval by Alset’s stockholders of the Merger and related transactions; (iv) approval by HWH’s shareholders of the Merger and related transactions; (v) the aggregate cash available to Alset at the Closing (after giving effect to any redemptions by Alset’s stockholders and the payment of all authorized transaction expenses) being at least $30,000,000; (vi) all Ancillary Agreements shall have been executed by all parties thereto; and (vii) all required filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and with any other governmental authority shall have been completed and cleared.
Solely with respect to Alset, HWH, and Merger Sub (the “Alset Parties”), the consummation of the Merger is conditioned upon, among other things: (i) HWH having duly performed or complied with all of its obligations under the Merger Agreement in all material respects; (ii) the representations and warranties of HWH being true and correct in all material respects; (iii) no event having occurred that would result in a Company Material Adverse Effect (as defined in the Merger Agreement); (iv) HWH providing Alset a certificate from an authorized officer of HWH as to the accuracy of the foregoing conditions; (v) after giving effect to the Merger, Alset shall have at least $5,000,001 in net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act); and (vi) Alset shall have received executed employment agreements from certain HWH executives, in a form reasonably acceptable to Alset.
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The transactions contemplated by the Merger Agreement further will be consummated only if the Condition Precedent Proposals described in this proxy statement/prospectus (consisting of the Business Combination Proposal, the Charter Amendments Proposals, and the Nasdaq Proposal) are approved at the Special Meeting. The Advisory Charter Amendments Proposals and the Adjournment Proposal in each case is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus.
Termination
The Merger Agreement may be terminated as follows:
| (i) | By the mutual consent of Alset and HWH;
| |
| (ii) | by Alset, if any of the representations or warranties of HWH set forth in the Merger Agreement shall not be true and correct, or if HWH has failed to perform any covenant or agreement set forth in the Merger Agreement (including an obligation to consummate the Merger), in each case such that the conditions to closing would not be satisfied and the breach or breaches causing such representations or warranties not to be true and correct, or the failure to perform any covenant or agreement, as applicable, are not cured (or waived by Alset) by the earlier of (i) the Outside Date (as defined below) or (ii) 10 days after written notice thereof is delivered to HWH; provided, however that Alset is not then in material breach of any representation, warranty, covenant, or obligation in the Merger Agreement, which breach has not been cured; | |
| (iii) | by HWH, if any of the representations or warranties of Alset or Merger Sub set forth in the Merger Agreement shall not be true and correct, or if Alset or Merger Sub has failed to perform any covenant or agreement set forth in the Merger Agreement (including an obligation to consummate the Merger), in each case such that the conditions to closing would not be satisfied and the breach or breaches causing such representations or warranties not to be true and correct, or the failure to perform any covenant or agreement, as applicable, are not cured (or waived by HWH) by the earlier of (i) the Outside Date or (ii) 10 days after written notice thereof is delivered to Alset; provided, however that HWH is not then in material breach of any representation, warranty, covenant, or obligation in the Merger Agreement, which breach has not been cured; | |
| (iv) | by either Alset or HWH: | |
| (A) on or after May 1, 2023 (the “Outside Date”), if the Merger shall not have been consummated prior to the Outside Date; provided, however, that this right to terminate the Merger Agreement shall not be available to a party if the failure of the Merger to have been consummated before the Outside Date was due to such party’s breach of or failure to perform any of its covenants or agreements set forth in the Merger Agreement; or; | ||
| (B) if any applicable law or order that makes the transactions contemplated by the Merger Agreement illegal or otherwise prohibits consummation of such transactions shall have become final and non-appealable; | ||
| (C) if Alset has not received approval from its stockholders of the Merger and related transactions at the Alset Special Meeting; | ||
| (vi) | by Alset if the HWH shareholder’s written consent approving the Merger and related transactions shall not have been obtained within three business days following the Registration Statement being declared effective by the Securities and Exchange Commission (the “SEC”); | |
| (vii) | by Alset within five business days after receiving notice that the fairness opinion described in the Prospectus and delivered to Alset does not meet the terms of the Prospectus; | |
| (viii) | by Alset, in the event that HWH’s audited financial statements for 2019, 2020 and 2021 have not been delivered to the Parent Parties on or before September 30, 2022, and remain undelivered prior to the termination of the Merger Agreement. |
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Related Agreements
This section describes the material provisions of certain additional agreements entered into or to be entered into pursuant to the Merger Agreement, and which we refer to as Related Agreements, but does not purport to describe all of their terms. The following summary is qualified in its entirety by reference to the complete text of each of these Related Agreements, which are included as exhibits to this proxy/statement prospectus. You are urged to read such Related Agreements in their entirety.
Letter Agreement
Simultaneously with the consummation of the IPO, Sponsor and Chief Executive Officer of Alset, Heng Fai Ambrose Chan, a member of Alset’s board of directors and management team executed a letter agreement that if the Company seeks shareholder approval of a proposed Business Combination, then in connection with such proposed Business Combination, it, he or she shall (i) vote all Founder Shares and any shares of Common Stock owned by it, him or her in favor of any proposed Business Combination and (ii) not redeem any shares of Common Stock owned by it, him or her in connection with such shareholder approval. If the Company engages in a tender offer in connection with any proposed Business Combination, each Insider agrees that it, he or she will not seek to sell its, his or her shares of Common Stock to the Company in connection with such tender offer.
Lock-up Agreements
At the Closing, each of the HWH Holders holding more than 5% of the HWH Common Stock and certain members of HWH’s management team will enter into a Lock-Up Agreement with Alset in substantially the form attached to the Merger Agreement (each, a “Lock-Up Agreement”). Under the Lock-Up Agreement, each such holder will agree not to, during the period commencing from the Closing and (A) with respect to the shares of Alset Common Stock to be received as part of the Merger Consideration by the HWH Holder (together with any securities paid as dividends or distributions with respect to such securities or into which such securities are exchanged or converted, the “Restricted Securities”), ending on the earlier of six months after the date of the Closing, (y) the date on which the closing sale price of shares of Alset 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 Closing and (z) the date after the Closing on which Alset consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in all of Alset’s stockholders having the right to exchange their equity holdings in Alset for cash, securities or other property.
Registration Rights
Pursuant to a registration rights agreement entered into on January 31, 2022, the holders of the founder shares, placement units (and their underlying securities), and any units that may be issued upon conversion of the working capital loans (and their underlying securities) are entitled to registration rights. The holders of a majority of these securities are entitled after the Business Combination to submit a written demand that Alset register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a business combination and rights to require Alset to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that Alset will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. Alset will bear the expenses incurred in connection with the filing of any such registration statements.
Sponsor Support Agreement
Simultaneously with the execution of the Merger Agreement, Alset, HWH and a shareholder of Alset (the “Alset Shareholder”) entered into a Sponsor Support Agreement in substantially the form attached to the Merger Agreement (the “Sponsor Support Agreement”) pursuant to which, among other things, vote all shares of Alset Common Stock beneficially owned by them, including any additional shares of Alset they acquire ownership of or the power to vote, in favor of the Merger and related transactions.
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Shareholder Support Agreement
Simultaneously with the execution of the Merger Agreement, Alset, HWH and a shareholder of HWH (the “HWH Shareholder”) entered into a certain Shareholder Support Agreement dated September 9, 2022 (the “Shareholder Support Agreement”), pursuant to which the HWH Shareholder agreed to vote all HWH Common Stock beneficially owned by them, including any additional shares of HWH they acquire ownership of or the power to vote, in favor of the Merger and related transactions.
Letter of Transmittal
At the Closing, each HWH Holder will provide Alset with a completed and duly executed letter of transmittal, in substantially the form attached to the Merger Agreement, with respect to their Alset Units. In the letter of transmittal, each HWH Holder makes customary representations and warranties, acknowledges its obligations with respect to the indemnification obligations under the Merger Agreement and provides a general release to Alset and its affiliates and certain related persons with respect to claims relating to the HWH Holder’s capacity as a holder of Alset Units, and agrees to be bound by confidentiality obligations to HWH for two years after the Closing.
Total Shares to be Issued in the Business Combination
Alset’s public stockholders currently own approximately 76.6% of Alset’s issued and outstanding capital stock, and the Sponsor together with our directors and officers currently own approximately 23.4% of Alset’s issued and outstanding capital stock. It is anticipated that, immediately after the Business Combination and if there are no redemptions, Alset’s existing public stockholders will own approximately 26.7% of Alset’s issued and outstanding capital stock, new investors will own approximately 25.4% of Alset’s issued and outstanding capital stock, the Sponsor and our directors and officers will own approximately 9.1% of Alset’s issued and outstanding capital stock, and the HWH Holders will own approximately 38.8% of Alset’s issued and outstanding capital stock.
For a Description of Alset’s securities, see the section entitled “Description of Securities of Alset” which provides a description of Alset Common Stock and Alset warrants.
If any of Alset’s public stockholders exercise their redemption rights, the ownership interest in Alset of Alset’s public stockholders will decrease and the ownership interest in Alset of the HWH Holders and the Sponsor will increase. If there are redemptions by Alset’s public stockholders up to the maximum level that would permit completion of the Business Combination, Alset’s public stockholders will own 34.7% of Alset’ issued and outstanding capital stock, the Sponsor and our directors and officers will own approximately 12.3% of Alset issued and outstanding capital stock (of which approximately 6.9% will be owned by Mr. Chan) and the HWH Holders will own approximately 53.0% of Alset issued and outstanding capital stock (of which approximately 25.1% will be owned by Mr. Chan). If the actual facts are different than these assumptions (based on redemptions by Alset’s public stockholders, changes in the terms of the Business Combination, adjustments to the Merger Consideration pursuant to the Merger Agreement or otherwise), the percentage ownership interests in Alset post-Business Combination may be different.
The ownership percentages referenced above and set forth below with respect to Alset include the shares issuable to the HWH Holders, and assumes Rights Holders exercise all of their Alset Rightsand the exercise of warrants to purchase up to a total of 4,549,375 shares of Alset Common Stock but does not take into account (i) any additional private placement units that are issued or issuable to our Sponsor pursuant to the conversion of the Sponsor’s up to $1.5 million working capital loans that were made to Alset, (ii) any adjustments to the Merger Consideration payable to the HWH Holders as a result of HWH’s working capital, transaction expenses and/or debt as of the completion of the Business Combination varying from certain specified targets set forth in the Merger Agreement, and (iii) any indemnification payments that are made after the consummation of the Business Combination by delivery of shares of Alset Common Stock. These percentages are calculated based on a number of assumptions (as described in this proxy statement/prospectus) and are subject to adjustment in accordance with the terms of the Merger Agreement. For a discussion of these assumptions, see “Summary of the Proxy Statement/Prospectus — The Business Combination Proposal (Proposal 1) — Merger Consideration.”
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If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership in Alset will be different. See “Summary of the Proxy Statement/Prospectus – Impact of the Business Combination on Alset’s Public Float” and “Unaudited Pro Forma Condensed Combined Financial Information” for further information.
The following table illustrates varying ownership levels of the issued and outstanding capital stock of Alset, assuming varying levels of redemptions by Alset’s public stockholders:
| Ownership Percentage Assuming No Redemption of Shares | Ownership Percentage Assuming 50% Redemption of Shares | Ownership Percentage Assuming Maximum Redemption of Shares | ||||||||||
| HWH holders – Mr. Chan and Alset Inc. | 36.4 | % | 42.0 | % | 49.7 | % | ||||||
| HWH holders - others | 2.4 | % | 2.8 | % | 3.3 | % | ||||||
| Alset initial stockholders – Mr. Chan and Alset Inc. | 9.1 | % | 10.4 | % | 12.3 | % | ||||||
| Alset’s public stockholders | 52.1 | % | 44.8 | % | 34.7 | % | ||||||
Sources and Uses of Funds for the Business Combination
The following table summarizes the sources and uses for funding the Business Combination assuming no redemptions:
| Sources | Uses | |||||||||
| ($ in Millions) | ||||||||||
| Alset Cash | $ | 87.54 | New Equity to the HWH Holders | $ | 2.40 | |||||
| Cash from HWH | 2.42 | Deferred Underwriting Fees | 3.02 | |||||||
| New Equity to the HWH Holders | 30.00 | Transaction Expenses | 0.70 | |||||||
| Cash to Balance Sheet | 0 | |||||||||
| Total Sources | $ | 119.96 | Total Uses | $ | 6.12 | |||||
The following table summarizes the sources and uses for funding the Business Combination assuming Alset stockholders exercise their redemption rights assuming 50% redemption:
| Sources | Uses | |||||||||
| ($ in Millions) | ||||||||||
| Alset Cash | $ | 44.33 | New Equity to the HWH Holders | $ | 2.40 | |||||
| Cash from HWH | 2.42 | Deferred Underwriting Fees | 3.02 | |||||||
| New Equity to the HWH Holders | 30.00 | Transaction Expenses | 0.70 | |||||||
| Redemptions | 0.01 | |||||||||
| Cash to Balance Sheet | 0 | |||||||||
| Total Sources | $ | 76.75 | Total Uses | $ | 6.13 | |||||
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The following table summarizes the sources and uses for funding the Business Combination assuming Alset stockholders exercise their redemption rights assuming maximum redemption:
| Sources | Uses | |||||||||
| ($ in Millions) | ||||||||||
| Alset Cash | $ | 1.12 | New Equity to the HWH Holders | $ | 2.40 | |||||
| Cash from HWH | 2.42 | Deferred Underwriting Fees | 3.02 | |||||||
| New Equity to the HWH Holders | 30.00 | Transaction Expenses | 0.70 | |||||||
| Redemptions | 0.01 | |||||||||
| Cash to Balance Sheet | 0 | |||||||||
| Total Sources | $ | 33.54 | Total Uses | $ | 6.13 | |||||
Alset’s Reasons for the Business Combination
Alset was organized for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. Alset has sought to capitalize on the ability of its management team to identify, acquire and partner with management to operate a business.
The Board, in evaluating the Business Combination, consulted with Alset’s management and legal, accounting and financial advisors. In reaching its unanimous resolution (i) that the Merger Agreement and the transactions contemplated thereby, including the Business Combination, are advisable, fair to and in the best interests of Alset and its stockholders and (ii) to recommend that Alset’s stockholders adopt the Merger Agreement and approve the Business Combination and the other transactions contemplated by the Merger Agreement, the Board considered a range of factors, including, but not limited to, the factors discussed below.
In light of the number and wide variety of factors considered in connection with its evaluation of the Business Combination, the Board did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors that it considered in reaching its determination and supporting its decision. The Board viewed its decision as being based on any and all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors. This explanation of Alset’s reasons for the Business Combination and all other information presented in this section may be forward-looking in nature and, therefore, should be read in light of the factors discussed under “Cautionary Note Regarding Forward-Looking Statements.” Many factors were considered by Alset, and the factors outlined herein may or may not have been considered by any particular directors, member of management, or advisor of Alset Notwithstanding whether any of these factors were considered by any individual board member, the Board voted unanimously to proceed with the transaction.
The officers and directors of Alset have substantial experience in a wide range of industries and are confident that their experience and background, together with the experience of Alset’s advisors, enabled them to exercise the necessary business judgment to make the determinations regarding the Business Combination. The Board also obtained the ValueScope Opinion, described below, prior to the execution of the Merger Agreement, relating to the fairness, from a financial point of view, to Alset of the Merger Consideration to be paid to the equity holders of HWH in the Business Combination.
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The Board considered a number of factors pertaining to the Business Combination as generally supporting its decision to enter into the Merger Agreement and the transactions contemplated thereby, including, but not limited to, the following material factors:
| ● | Due Diligence. Business, financial and technical due diligence examinations of HWH and discussions with HWH’s management team were conducted, including extensive in-person meetings and calls with HWH’s management team and its representatives regarding HWH’s operations and financial prospects, technical analysis. Additional legal and technical review of HWH’s material contracts, intellectual property and labor matters was conducted. Such due diligence examination of HWH, in consultation with Alset’s legal, technical, and financial advisors, indicated to Alset management that HWH could assemble the required elements to create a foundation for a potentially very successful company; | |
| ● | Stockholder Liquidity. The obligation in the Merger Agreement to have Alset Common Stock issued as merger consideration listed on the Nasdaq, a major U.S. stock exchange, which the Board believes has the potential to offer Alset stockholders enhanced liquidity following the Business Combination; | |
| ● | Management Team Continuity. HWH’s senior management team including Heng Fai Ambrose Chan and John Thatch intend to remain with the Combined Company in the capacity of officers and/or directors following the Business Combination, providing beneficial continuity in advancing HWH’s strategic and growth goals; | |
| ● | Lock-Up. Key HWH Holders (including its management team) agreed to be subject to lockup provisions of 6 months in respect of their Alset Common Stock (subject to certain customary exceptions), which would provide important stability to the Combined Company; | |
| ● | Fairness Opinion. On June 24, 2022, Alset engaged ValueScope for the benefit of its Board in connection with the consideration by the Board of the Business Combination between Alset and HWH pursuant to which Alset would acquire all or substantially all of the assets and business of HWH (the “Acquired Business”) in consideration of the issuance of common stock of the surviving company. Subject to various agreed procedures, terms, conditions, assumptions, qualifications and limitations, ValueScope valued the Acquired Business and, at the request of the Board rendered its formal written opinion, which we refer to as the “ValueScope Opinion,” that as of that date the Merger Consideration to be paid to the equity holders of HWH in the Business Combination for the Acquired Business was fair to Alset from a financial point of view. See discussion under “—The Business Combination Proposal: ValueScope Opinion.” The full text of the opinion is included with this proxy statement/prospectus; All descriptions of and disclosures concerning ValueScope Opinion are qualified in their entirety by reference to the specific text of ValueScope Opinion, a copy of which is included as Annex D to this proxy statement/prospectus. The included copy is provided only for informational purposes and is not for the benefit of or to be relied on by any person or entity other than the Board; | |
| ● | Other Alternatives. The Board believes, after a thorough review of other business combination opportunities reasonably available to Alset that the proposed Business Combination represents the most promising potential business combination for Alset and the most attractive opportunity based upon the process utilized to evaluate and assess other potential acquisition targets. Alset’s Board believes HWH offers its stockholders the most potential value when compared to other target candidates; and | |
| ● | Negotiated Transaction. The financial and other terms of the Merger Agreement and the fact that such terms and conditions are reasonable. |
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The Board also considered a variety of uncertainties and risks and other potentially negative factors concerning the Business Combination including, but not limited to, the following:
| ● | Macroeconomic Risks. Macroeconomic uncertainty, including the potential impact of the COVID-19 pandemic, and the effects it could have on HWH’s revenues post-closing; | |
| ● | Business Plan and Growth Initiatives May Not Be Achieved. The risk that HWH may not be able to execute on its business plan and realize the potential financial performance presented to Alset’s management team, or that HWH’s growth initiatives may not be fully achieved or may not be achieved within the expected timeframe. Although Alset’s board was provided access to HWH’s investor presentation summarizing the company’s plans for medium and long term growth, those plans were believed to be subject to significant uncertainty due to several factors, including but not limited to fluctuation in legal and regulatory risks, lack of legal certainty in certain international markets, market access limitations, uncertainties relating to timing and scale, competition from other membership oriented companies and uncertainty relating to HWH’s ability to optimize operational efficiency. Additionally, although Alset’s board received certain preliminary sales estimates, these estimates were prepared by HWH based upon certain assumptions, and excluded potentially material components, such as customer contracts still in negotiation that were subject to significant uncertainty. Due to such uncertainty, Alset’s board did not rely on such financial estimates as a determinative factor in its decision to enter into the Merger Agreement; | |
| ● | Redemption Risk. The potential that a significant number of Alset stockholders elect to redeem their shares prior to the consummation of the Business Combination and pursuant to the Alset Certificate of Incorporation, which would potentially make the Business Combination more difficult or impossible to complete; | |
| ● | Stockholder Vote. The risk that Alset’s stockholders may fail to provide the votes necessary to effect the Business Combination; | |
| ● | Closing Conditions. The fact that the completion of the Business Combination is conditioned on the satisfaction of certain closing conditions that are not within Alset’s control; | |
| ● | Litigation. The possibility of litigation challenging the Business Combination or that an adverse judgment granting permanent injunctive relief could indefinitely enjoin consummation of the Business Combination; | |
| ● | Listing Risks. The challenges associated with preparing HWH, a private entity, for the applicable disclosure and listing requirements to which the Combined Company will be subject as a publicly traded company on the Nasdaq; | |
| ● | Benefits May Not Be Achieved. The risks that the potential benefits of the Business Combination may not be fully achieved or may not be achieved within the expected timeframe; | |
| ● | Liquidation of Alset. The risks and costs to Alset if the Business Combination is not completed, including the risk of diverting management focus and resources from other business combination opportunities, which could result in Alset being unable to effect a business combination by May 1, 2023, the termination date under the Merger Agreement (the “Outside Date”); | |
| ● | Regulatory Risks. The risks to the adoption of HWH’s technology include national and local labor and environmental regulations, which are subject to change; | |
| ● | Board and Independent Committees. The risk that the Combined Company’s board of directors post-Closing and independent committees do not possess adequate skills set within the context of the Combined Company operating as a public company; | |
| ● | Holders of Alset Common Stock, and Alset Warrants Receiving a Minority Position in the Combined Company. The risk that Alset stockholders will hold a minority position in the Combined Company; | |
| ● | Fees and Expenses. The fees and expenses associated with completing the Business Combination; and | |
| ● | Other Risk Factors. Various other risk factors associated with the business of HWH, as described in the section entitled “Risk Factors” appearing elsewhere in this proxy statement/prospectus. |
The above discussion of the material factors considered by the Board is not intended to be exhaustive, but does set forth the principal factors considered by the Board.
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The Board concluded that the potential benefits expected to be achieved by Alset and its stockholders resulting from the Business Combination outweighed the potentially negative factors associated with the Business Combination. Accordingly, the Board determined that the Business Combination was advisable, fair to, and in the best interests of, Alset and its stockholders.
HWH’s Reasons for the Business Combination
The HWH Board considered a variety of factors in connection with its evaluation of the Business Combination. In light of the complexity of those factors, the HWH Board, as a whole, did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it took into account in reaching its decision. The HWH Board viewed its decision as being based on all of the information available and the factors presented to and considered by it. In addition, individual members of the HWH Board may have given different weight to different factors.
In the course of reaching its decision to approve the Business Combination, the HWH Board considered a number of factors, including, among others:
| ● | Access to Capital. Due to the recent growth of the membership oriented industry and the resulting increase in both competition and opportunities, HWH believes that the Business Combination is a more time- and cost-effective means to access capital to build and expand its operations than other options considered, including a traditional IPO. | |
| ● | Other Alternatives. It is the belief of HWH, after review of alternative strategic opportunities from time to time, that the proposed Business Combination represents the best potential transaction for HWH to create greater value and provide significant liquidity for the HWH Holders by giving them access to public markets, even during periods of market instability. The Business Combination would also allow HWH’s management to continue in their existing roles and maintain control over the Combined Company’s strategic direction; in doing so, the Business Combination would avoid the post-closing friction and power struggles that often exist in the operations and management of a combined company following a strategic merger transaction. | |
| ● | Advantages over a Traditional IPO. Prior to executing the Merger Agreement, the HWH Board considered the alternative of a traditional IPO. The HWH Board considered that the Business Combination provided certain advantages over a traditional IPO, in particular that, based on available information at the time, including with respect to the conditions of the IPO market for companies with HWH’s characteristics, the Business Combination was likely to provide for a more time- and cost- effective means to capital with less dilution to the existing HWH Holders. | |
| ● | Size of Combined Company. HWH considered the Business Combination implied enterprise value of approximately $125 million for HWH, providing the HWH Holders with the opportunity to go forward with ownership in a public company with a larger market capitalization. | |
| ● | Benefit from Being a Public Company. HWH believes that under public ownership, it will have the flexibility and access to financial resources to pursue and execute a growth strategy to increase revenues and stockholder value. HWH also believes the Business Combination will increase public awareness of HWH and its technology and may attract additional customers. HWH should benefit from being publicly traded and expects to be able to effectively utilize the broader access to capital and public profile that are associated with being a publicly traded company. |
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In the course of reaching its decision to approve the Business Combination, the HWH Board also considered negative factors, including, among others:
| ● | Uncertainty of Consummation of the Business Combination. The HWH Board considered the risk that the Business Combination may not be approved by the necessary vote of the Alset stockholders and that time and resources for other potential opportunities could be lost to the Business Combination process. | |
| ● | Uncertainty as to Amount of Redemptions and Cash in Trust following the Business Combination. The HWH Board considered that the Alset stockholders have the right to redeem their shares for cash. Any such redemptions shall serve to reduce the amount of cash in the Trust Account following the Business Combination and reduce the amount of capital available to operate and grow HWH’s business. The amount of redemptions and the amount of cash that will remain in the Trust Account following the Business Combination cannot be determined, and may not be sufficient to meet the Combined Company’s near term cash requirements or provide sufficient capital for the Combined Company to complete projects currently under contract. | |
| ● | Diversion of Resources to the Business Combination Process. The HWH Board noted that HWH’s management and capital resources would be diverted in part to the Business Combination process at a time when such resources are required to shepherd HWH’s entrance into new markets and manage HWH’s business. | |
| ● | Expense of Being a Public Company. The HWH Board considered the added financial expense of being a public company, including greater legal and accounting expenses, and the requirement to dedicate personnel and other resources to quarterly, annual and other reporting obligations. |
Alset Special Meeting
Alset is furnishing this proxy statement/prospectus to its stockholders as part of the solicitation of proxies by its Board for use at the Special Meeting to be held on , 2022, and at any adjournment or postponement thereof. This proxy statement/prospectus is first being furnished to you on or about , 2022. This proxy statement/prospectus provides you with information you need to know to be able to vote or instruct how your vote shall be cast at the Special Meeting.
Date, Time and Place of Special Meeting
The Special Meeting will be virtually held at 10:00 a.m. Eastern Time on , 2022, or at such other time, on such other date and at such other place to which the meeting may be adjourned or postponed. The special meeting can be accessed via live webcast by visiting , where you will be able to listen to the meeting live and vote during the meeting.
Voting Power; Record Date
You will be entitled to vote or direct votes to be cast at the Special Meeting if you owned shares of Alset Common Stock as of the close of business on 2022, which is the Record Date for the Special Meeting. You are entitled to one vote for each share of Alset Common Stock that you owned as of the close of business on the Record Date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. As of the date of this proxy statement/prospectus, there were 11,255,000 shares of Alset Common Stock issued and outstanding, consisting of 9,098,750 publicly traded shares of our Class A Common Stock (consisting of 8,625,000 shares originally sold as part of units in the Alset IPO, 473,750 shares of our Class A Common Stock originally sold as part of units to the Sponsor in a Private Placement that occurred simultaneously with the consummation of the Alset IPO, 2,156,250 founder shares that were issued to the Sponsor prior to the Alset IPO. Alset does not expect to issue any shares of common stock on or before the Record Date.
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Registering for the Special Meeting
Pre-registration for virtual attendance at the Special Meeting is recommended but is not required in order to attend through the following website: [Insert Proxy Link]
Any stockholder wishing to attend the virtual meeting should register for the meeting by , 2022. To register for the Special Meeting, please follow these instructions as applicable to the nature of your ownership of our common stock:
| ● | If your shares are registered in your name with Vstock Transfer LLC and you wish to attend the online-only Special Meeting, go to [Insert Proxy Link], enter the 12-digit control number included on your proxy card or notice of the meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Just prior to the start of the meeting you will need to log back into the meeting site using your control number. Pre-registration is recommended but is not required in order to attend. | |
| ● | Beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) who wish to attend the virtual meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy to [Insert Proxy Email]. Beneficial stockholders who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the special meeting. After contacting Vstock Transfer LLC, a beneficial holder will receive an e-mail prior to the meeting with a link and instructions for entering the virtual meeting. Beneficial stockholders should contact Vstock Transfer LLC at least five (5) business days prior to the meeting date in order to ensure access. |
Quorum and Required Vote for Proposals for the Special Meeting
A quorum of Alset stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if a majority of the common stock outstanding and entitled to vote at the Special Meeting is represented in person (including by virtual attendance) or by proxy. Abstentions will count as present for the purposes of establishing a quorum. Broker non-votes will not be counted for purposes of establishing a quorum.
Approval of the Charter Amendments Proposal requires the affirmative vote of a majority of the issued and outstanding shares of Alset Common Stock as of the Record Date. Accordingly, an Alset stockholder’s failure to vote by proxy or to vote in person at the Special Meeting or an abstention will have the same effect as a vote “AGAINST” the Charter Amendments Proposal.
The approval of the remaining Proposals (consisting of the Business Combination Proposal, the Nasdaq Proposal, and the Adjournment Proposal) requires the affirmative vote of a majority of the votes cast by stockholders present in person or represented by proxy at the Special Meeting. Accordingly, an Alset stockholder’s failure to vote by proxy or to vote in person at the Special Meeting or the failure of a Alset stockholder who holds his or her shares in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee (a “broker non-vote”) will result in that stockholder’s shares not being counted towards the number of shares of Alset Common Stock required to validly establish a quorum, but if a valid quorum is otherwise established, it will have no effect on the outcome of any vote on the Business Combination Proposal, the Nasdaq Proposal, or the Adjournment Proposal. Abstentions of persons appearing at the Special Meeting likewise will also have no effect on the outcome of these proposals.
The transactions contemplated by the Merger Agreement will be consummated only if the Condition Precedent Proposals (consisting of the Business Combination Proposal, the Charter Amendments Proposal, and the Nasdaq Proposal) are approved at the Special Meeting. The Advisory Charter Amendments Proposals, and the Adjournment Proposal are not Condition Precedent Proposals for consummation of the Business Combination, and the Adjournment Proposal does not require the approval of any other proposal to be effective.
It is important for you to note that in the event that the Business Combination Proposal and the other Condition Precedent Proposals do not receive the requisite vote for approval, after taking into account any approved adjournment or postponement, if necessary, then we will not consummate the Business Combination. If we do not consummate the Business Combination and should we fail to complete an initial business combination by 12 months from the closing of our IPO (February 3, 2023) (or up to 21 months from the closing of the IPO (November 3, 2023) or as extended by our stockholders in accordance with our amended and restated certificate of incorporation), we will be required to dissolve and liquidate our Trust Account by returning the then remaining funds in such account to the public stockholders.
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The Proposals
The Business Combination Proposal
On September 9, 2022, Alset entered into the Merger Agreement by and among Alset, HWH and Merger Sub.
The Merger Agreement provides for the combination of HWH and Merger Sub under Alset. At the consummation of the Merger, HWH will survive as a direct, wholly-owned subsidiary of Alset. The transactions contemplated by the Merger Agreement and the Merger we refer to herein as the “Business Combination.” A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A.
Merger Consideration
Subject to the terms and conditions set forth in the Merger Agreement at the effective time of the Merger, which we refer to as the Effective Time:
| (a) | all of the outstanding HWH Common Stock will be cancelled in exchange for the right to receive shares of Alset Common Stock; and | |
| (b) | all of the outstanding shares of Alset Class B Common Stock will be cancelled in exchange for the right to receive shares of Alset Class A Common Stock. |
Upon the consummation of the Business Combination, the outstanding publicly traded units of Alset will be separated into their component securities, consisting of one share of Alset Class A Common Stock, one-half (1/2) of one Alset Warrant, each of which shall be exchanged in accordance with the foregoing description, and one right to receive Alset Rights equal to one tenth (1/10) of one share of Alset Class A Common Stock upon the consummation of the Business Combination. The amount of Alset Rights held by each Rights Holder will be rounded up to the nearest whole share of Alset Class A Common Stock and this stock shall be exchanged for Alset Common Stock at the Effective Time.
As Alset does not have any outstanding shares of preferred stock, and is anticipated to have no outstanding shares of preferred stock at the Effective Time, no exchange of preferred stock is expected to occur at the Effective Time.
All other convertible securities and other rights to purchase membership interests of HWH will be retired and terminated, if they have not been converted, exchanged or exercised for HWH’s membership interests immediately prior to the Effective Time.
The amount of shares of Alset Common Stock that the HWH Holders and our security holders described above receive in the Business Combination depends on the redemption price of Alset Common Stock in the redemption described in this proxy statement/prospectus, which per share price determines the value of one share of Alset Common Stock under the terms of the Merger Agreement, for purposes of determining the consideration to be received by HWH Holders and our security holders in the Business Combination. Based on that per share price, and subject to the aggregate fully diluted number of HWH Common Stock at the Closing, the HWH Holders will receive such number of shares of Alset Common Stock, with an aggregate value equal to $125,000,000, minus adjustments for net working capital, net indebtedness and transaction expenses as provided in the Merger Agreement, which we refer to as the Merger Consideration.
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Because the per share price of redemption (and the price of Alset Common Stock or Alset Class A Common Stock at that time) is not currently known, and the aggregate fully diluted number of HWH Common Stock at the Closing is not fully known, the exact value of the consideration to be received by each HWH Holder, which we refer to as the “Pro Rata Share” of the Merger Consideration, will not be known with certainty until the Closing.
For informational purposes only, if the Closing had occurred on , 2022, and assuming:
| 19,039,875 outstanding shares of Alset Common Stock assuming 100% redemption rights were exercised by our stockholders; |
| 10,000 outstanding HWH Common Stock that will be cancelled in exchange for the right to receive shares of Alset Common Stock immediately prior to the Merger; |
| no issuance of any shares of Alset Common Stock upon the exercise of Alset Warrants (or HWH Warrants) to purchase up to a total of 4,549,375 shares of Alset Common Stock that will remain outstanding following the Business Combination or any other warrants underlying units that are issued or issuable to the Sponsor pursuant to the conversion of its working capital loans that were made to Alset; |
| no adjustments to the Merger Consideration payable to the HWH Holders as a result of HWH’s working capital, transaction expenses and/or debt as of the completion of the Business Combination varying from certain specified targets set forth in the Merger Agreement, nor any adjustment for transaction expenses, |
| issuance of 909,875 shares of Alset Common Stock upon the conversion of Alset Rights; |
| no indemnification payments are made after the consummation of the Business Combination by delivery of shares of Alset Common Stock; and |
| a redemption price of Alset Class A Common Stock of $10.06 per share (based on the value of the Trust Account on October 31, 2022 and assuming that value to be the redemption price), then the aggregate market value of the Alset Common Stock received in the Merger would be $125 million. |
If the actual facts are different than these assumptions (which they are likely to be), the Pro Rata Share of the Merger Consideration consisting of Alset Common Stock will be different.
We have provided the above calculations for informational purposes only based on the assumptions set forth above. The foregoing also is subject to change based on the adjustments for net working capital, net indebtedness and transaction expenses as provided in the Merger Agreement. The actual value of the Pro Rata Share of the Merger Consideration in the Merger will be determined at the Closing pursuant to the provisions and terms set forth in the Merger Agreement. The aggregate number of fully diluted shares of HWH as of Closing, and the price and amount of our shares subject to redemption assumed for purposes of the foregoing illustration, are each subject to change, and the actual values for such inputs at the time of the Closing could result in the actual Pro Rata Share of the Merger Consideration and the value of the consideration to be received by HWH Holders being more or less than the amounts reflected above.
In addition to the approval of the Proposals at the Special Meeting, unless waived by the parties to the Merger Agreement, in accordance with applicable law, the Closing of the Business Combination is subject to a number of conditions set forth in the Merger Agreement including, among others, receipt of the requisite stockholder approval contemplated by this proxy statement/prospectus. For more information about the closing conditions to the Business Combination, see the section titled “The Business Combination Proposal — Conditions to Consummation of the Merger.”
The Merger Agreement may be terminated at any time prior to the Closing of the Business Combination upon the mutual agreement of HWH and Alset, or by HWH or Alset acting alone, in specified circumstances. For more information about the termination rights under the Merger Agreement, see the section titled “The Business Combination Proposal—Merger Agreement—Termination.”
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The Business Combination involves numerous risks. For more information about these risks, see the section titled “Risk Factors.”
The Charter Amendments Proposal
Assuming the Business Combination Proposal is approved, in connection with the Business Combination, Alset is proposing that its stockholders approve amendments to the Proposed Charter for the following:
| (a) | Alset’s name to be changed to “HWH International Inc.”; | |
| (b) | a single class of common stock with 100 million authorized shares; | |
| (c) | 10 million authorized shares of preferred stock; | |
| (d) | establishing that the board of directors of Alset following the Closing of the Business Combination (the “Alset Board”) will not be divided into classes (with the number of directors of the Alset Board being initially fixed at seven pursuant to the Merger Agreement and in accordance with the initial appointment rights provided therein, as discussed under “The Business Combination Proposal—Appointments of Directors”); | |
| (e) | prohibiting stockholder actions by written consent; and | |
| (f) | removing various provisions applicable to special purpose acquisition corporations. |
Advisory Charter Amendments Proposals
Assuming the Business Combination Proposal and other Condition Precedent Proposals are approved, Alset’s stockholders are also being asked to approve the Advisory Charter Amendments Proposals in connection with the Proposed Charter under the DGCL. In accordance with SEC guidance, this proposal is being presented separately and will be voted upon on a non-binding advisory basis.
A summary of these provisions is set forth in the “Advisory Charter Amendments Proposals (Proposal 3)” section of this proxy statement/prospectus and a complete copy of these provisions is attached hereto as Annex B. You are encouraged to read them in their entirety.
The Nasdaq Proposal
Alset is asking its stockholders to consider and vote on a proposal to approve, for the purposes of complying with Nasdaq Listing Rule 5635, the issuance, pursuant to the Merger Agreement, of up to 12,500,000 shares of Alset Common Stock to HWH Holders upon the Closing and up to an additional 862,500 shares of Alset Common Stock to Rights Holders.
The Adjournment Proposal
Alset is proposing that its stockholders approve and adopt a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if Alset is unable to consummate the Business Combination for any reason.
ValueScope Opinion
On June 24, 2022, Alset engaged ValueScope, Inc. to serve as an independent financial advisor for the benefit of the Board in connection with the consideration by the Board of the Business Combination between Alset and HWH pursuant to which Alset would acquire all or substantially all of the assets and business of HWH (the “Acquired Business”).
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Subject to various agreed procedures, terms, conditions, assumptions, qualifications and limitations, ValueScope valued the Acquired Business and, at the request of the Board rendered its formal written opinion, which we refer to as the “ValueScope Opinion,” that as of that date the Merger Consideration to be paid to the equity holders of HWH in the Business Combination for the Acquired Business was fair to Alset from a financial point of view. See discussion under “—The Business Combination Proposal: ValueScope Opinion.”
The full text of the opinion is included with this proxy statement/prospectus. All descriptions of and disclosures concerning ValueScope Opinion are qualified in their entirety by reference to the specific text of ValueScope Opinion, a copy of which is included as Annex D to this proxy statement/prospectus. The included copy is provided only for informational purposes and is not for the benefit of or to be relied on by any person or entity other than the Board.
Recommendation to Alset Stockholders
After careful consideration, our Board has concluded that the Business Combination is in the best interests of Alset’s stockholders. Our directors believe that the proposals being presented at the Special Meeting are in the best interests of Alset’s stockholders, and they recommend that Alset’s stockholders vote FOR each of the proposals.
The existence of financial and personal interests of one or more of Alset’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of Alset and its stockholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that stockholders vote for the proposals. In addition, Alset’s officers have interests in the Business Combination that may conflict with your interests as a stockholder. See the section entitled “ —Interests of Alset’s Directors and Officers in the Business Combination” for a further discussion of these considerations.
Interests of Alset’s Directors and Officers in the Business Combination
When you consider the recommendation of our Board in favor of the proposals, you should keep in mind that our directors and officers have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests as a stockholder. These interests include, among other things:
| ● | the fact that our Sponsor paid an aggregate of approximately $25,000 for the founder shares, which are currently held by the Sponsor and its permitted transferees, including our directors and officers, and the market value of such shares as of , 2022 was approximately $ , and such securities should have a significantly higher value than $25,000 at the time of the Business Combination; | |
| ● | the fact that our Sponsor paid an aggregate of approximately $4,737,500 for the placement units, at a price of $10.00 per unit, the market value of such securities as of , 2022 was approximately $ , and such securities should have a higher value than $4,737,500 at the time of the Business Combination; | |
| ● | the fact that our Sponsor and its permitted transferees, including our officers and directors, have waived their rights to liquidating distributions from the Trust Account with respect to any founders shares and placement shares (but not public shares) held by them if we fail to complete an initial business combination by 12 months from the closing of our IPO (February 3, 2023) (or up to 21 months from the closing of the IPO (November 3, 2023) or as extended by our stockholders in accordance with our amended and restated certificate of incorporation), and therefore if we are unable to consummate a business combination by that time, those shares would expire worthless; |
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| ● | the fact that our Sponsor and its permitted transferees, including our officers and directors, have waived their redemption rights with respect to any founder shares, placement shares and public shares held by them (other than relating to liquidating distributions to public shares from the Trust Account if we fail to complete our initial business combination by 12 months from the closing of our IPO (February 3, 2023) (or up to 21 months from the closing of the IPO (November 3, 2023) or as extended by our stockholders in accordance with our amended and restated certificate of incorporation), which waiver was provided in connection with our IPO and without any separate consideration paid in connection with providing such waiver; | |
| ● | the fact that our Sponsor, officers and directors and their affiliates can earn a positive rate of return on their overall investment in Alset after the Business Combination, even if other holders of Alset Common Stock experience a negative rate of return, due to having purchased the founder shares, as described above, for $25,000 or approximately $0.012 per share; | |
| ● | if Alset is unable to complete a business combination within the required time period, our Sponsor will be liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors that are owed money by Alset for services rendered or products sold to Alset, but only if such a vendor or target business has not executed a waiver of claims against the Trust Account and except as to any claims under our indemnity of the underwriters; | |
| ● | unless Alset consummates an initial business combination, Alset’s officers, directors and the Sponsor will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceed the amount of available proceeds not deposited in the Trust Account, and which amount as of October 31, 2022 was approximately $88 million, although the amount of such expenses vary depending on the level of redemptions of Alset Common Stock in connection with the Business Combination, and are estimated to be approximately $6.12million if there are no redemptions, $6.13million if 50% of the outstanding shares of Alset Common Stock are redeemed and $6.13million if the maximum amount of redemptions occur which would continue to allow us to consummate the Business Combination; | |
| ● | the fact that, assuming the exercise and conversion of all of securities following the consummation of the Business Combination, the Sponsor and its affiliates’ total potential ownership in the Combined Company is estimated to comprise of approximately 9.0% of outstanding Alset Common Stock in a no redemption scenario, 10.4% in a 50% redemption scenario and 12.4% of outstanding Alset Common Stock in a maximum redemption scenario (see the section entitled “Security Ownership of Certain Beneficial Owners and Management” for more information); | |
| ● | the fact that a Registration Rights Agreement was entered into by the Sponsor and Alset’s directors and officers, and such parties will have customary registration rights, including demand and piggy-back rights, subject to cooperation and cut-back provisions, following the consummation of the Business Combination; | |
| ● | the fact that the Sponsor (including its representatives and affiliates) and Alset’s directors and officers, are, or may in the future become, affiliated with entities that are engaged in a similar business to Alset, and the Sponsor and Alset’s directors and officers are not prohibited from sponsoring, or otherwise becoming involved with, any other special purpose acquisition companies prior to Alset completing its initial business combination, and as result of which, the Sponsor and Alset’s officers and directors may become aware of business opportunities which may be appropriate for presentation to Alset, and the other entities to which they owe fiduciary or contractual duties, and may have conflicts of interests in determining to which entity a particular business opportunity should be presented (and these conflicts may include presentation to other entities prior to their presentation, if at all, to Alset, and may not always be resolved in the favor of Alset, subject to applicable fiduciary duties under Delaware law, in that Alset has provided in its amended and restated certificate of incorporation that Alset has renounced its interest in any corporate opportunity presented to Alset); | |
| ● | the Sponsor and Alset’s directors and officers have agreed that the founders shares and placement units, and all of their underlying securities, will not be sold or transferred by it until a period of time after Alset has completed a business combination, subject to limited exceptions; |
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| ● | the appointment of Heng Fai Ambrose Chan as a designee to the board of directors of Alset, with Alset having a right to appoint, under certain circumstances discussed in this proxy statement/prospectus, John Thatch as second designee, and which will entitle such individuals to any cash fees, stock options or stock awards that Alset determines to pay to its non-executive directors following the Closing of the Business Combination; and | |
| ● | the continued indemnification of current directors and officers of Alset after the Business Combination. |
These interests may influence our directors in making their recommendation that you vote in favor of the Business Combination.
Certain of our officers and directors presently have, and any of them in the future may have additional, fiduciary or contractual obligations to other entities, including entities that are affiliates of the Sponsor, pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity, which is suitable for an entity to which he has then-current fiduciary or contractual obligations, he will honor his fiduciary or contractual obligations to present such business combination opportunity to such entity, subject to their fiduciary duties under Delaware and applicable law. Given the substantial target universe considered by Alset’s management team, which included initial contact with eleven companies and non-disclosure agreements with approximately four companies, Alset’s Board did not believe that the other fiduciary duties or contractual obligations of Alset’s officers and directors materially affected Alset’s ability to source a potential business combination. Alset’s Board considered the factors supporting, and risks and uncertainties related to, a business combination with HWH as set forth above under “Summary of the Proxy Statement/Prospectus— Alset’s Reasons for the Business Combination,” and did not believe that such other fiduciary duties or contractual obligations impacted such consideration.
Interests of HWH’s Directors and Officers in the Business Combination
When you consider the recommendation of the HWH Board of Directors (the “HWH Board”) in favor of the Business Combination Proposal, you should keep in mind that HWH’s directors and executive officers have interests in the Business Combination that may be different from, or in addition to, your interests as a stockholder. The HWH Board was aware of such interests during its deliberations on the merits of the Business Combination Proposal and in deciding to recommend that HWH members approve the Business Combination Proposal. These interests include, among other things:
| ● | Certain of HWH’s directors and executive officers are expected to become directors and/or executive officers of Alset upon the consummation of the Business Combination. Specifically, the following individuals who are currently executive officers of HWH are to be executive officers after the Business Combination in the capacities set for their names below. |
| Name | Position | |
| Heng Fai Ambrose Chan | Executive Chairman, Director, CEO |
| ● | Certain of HWH’s executive officers and directors hold HWH Common Stock, the treatment of which is described in “The Business Combination Proposal,” which description is incorporated herein by reference. Heng Fai Ambrose Chan may be deemed to beneficially own 21.6% HWH Common Stock held by Alset Inc., of which Mr. Chan is a beneficiary and through his ownership of Alset International Limited, through which he may be deemed to beneficially own 2.2% of HWH Common Stock. |
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HWH Interest Holder Approval
The adoption of the Merger Agreement and the approval of the Business Combination and related transactions by a vote of the HWH Holders is a condition to consummation of the Business Combination, according to the Merger Agreement. This vote requires the affirmative votes of the holders of a majority of the outstanding HWH Common Stock.
Risk Factors
In evaluating the proposals set forth in this proxy statement/prospectus, you should carefully read this proxy statement/prospectus, including the annexes and the other documents referred to herein, for a discussion of factors, including the risks to holders of Alset Common Stock who do not redeem in connection with the Special Meeting, you should consider carefully before making an investment decision.
Accounting Treatment for the Business Combination
The Business Combination will be accounted for as an acquisition under common control.
U.S. Federal Income Tax Considerations
For a discussion summarizing certain U.S. federal income tax considerations in connection with the Business Combination, please see section entitled “Material U.S. Federal Income Tax Considerations” of this proxy statement/prospectus.
Regulatory Matters
Under the Hart-Scott-Rodino (“HSR”) Act and the rules that have been promulgated thereunder by the Federal Trade Commission (“FTC”), certain transactions may not be consummated unless information has been furnished to the Antitrust Division of the Department of Justice (“Antitrust Division”) and the FTC and certain waiting period requirements have been satisfied. The Business Combination is not subject to these requirements
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Neither Alset nor HWH is aware of any material regulatory approvals or actions that are required for completion of the Business Combination. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.
Alset Appraisal Rights
Under the DGCL, there are no appraisal rights available to holders of shares of Alset Common Stock or Alset Warrants in connection with the Business Combination.
Alset Appraisal Rights
Following the Business Combination, under the DGCL, with certain exceptions, the Combined Company’s stockholders will have appraisal rights in connection with a merger or consolidation of Combined Company. Pursuant to the DGCL, stockholders who properly request and perfect appraisal rights in connection with such merger or consolidation will have the right to receive payment of the fair value of their shares as determined by the Delaware Court of Chancery.
Redemption Rights
In connection with the Business Combination, holders of Alset Common Stock may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with the Alset Certificate of Incorporation. As of October 31, 2022, the pro rata portion of the funds available in the Trust Account for the public shares was approximately $10.06 per share (net of taxes payable). Alset anticipates the per share redemption price will be approximately $10.06 (net of taxes payable) at the closing of the Business Combination, which is anticipated to occur during the second half of 2022. If a holder exercises its redemption rights, then such holder will be exchanging its shares of Alset Common Stock for cash and will no longer own shares of Alset Common Stock and will not participate as a future stockholder of Alset. Our public stockholders are not required to affirmatively vote for or against the Business Combination in order to redeem their shares of common stock for cash. This means that public stockholders who hold shares of Alset Class A Common Stock on or before , 2022 (two (2) business days before the Special Meeting) will be eligible to elect to have their shares of Alset Class A Common Stock redeemed for cash in connection with the Special Meeting, whether or not they are holders as of the Record Date, and whether or not such shares are voted at the Special Meeting. To redeem their shares of Alset Common Stock for cash, holders of Alset Common Stock can demand Alset to convert their public shares into cash and tender their shares to Alset’s transfer agent in accordance with the procedures described herein. See the section entitled “Special Meeting of Alset Stockholders – Redemption Rights” for the procedures to be followed if you wish to redeem your shares for cash. The transactions contemplated by the Merger Agreement will be consummated only if the Condition Precedent Proposals (consisting of the Business Combination Proposal, the Charter Amendments Proposals, and the Nasdaq Proposal) are approved at the Special Meeting. The Advisory Charter Amendments Proposals and the Adjournment Proposal in each case is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus.
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Directors and Officers of Alset following the Business Combination
The Parties also agreed to take all necessary action so that the board of directors of Alset following the Closing will consist of seven individuals, consisting of (a) three (3) directors designated by Alset, and (b) four (4) designated by the Company, at least four (4) of whom, in the aggregate, will serve as independent directors satisfying the independence requirements of the Securities Act and the Nasdaq rules.
Alset’s directors and executive officers upon consummation of the Business Combination, and their ages, as of the date of this proxy statement/prospectus, will be as follows:
| Name | Age | Position | ||
| Heng Fai Ambrose Chan | 78 | Executive Chairman, Director | ||
| John Thatch | 60 | Chief Executive Officer, Director | ||
| Chan Tung Moe | 44 | Executive Director | ||
| Alan Lou | 52 | Chief Financial Officer | ||
| William Wu | 56 | Independent Director | ||
| Wong Tat Keung | 51 | Independent Director | ||
| Wong Shui Yeung | 52 | Independent Director | ||
| Joanne Wong | 46 | Independent Director |
Alset has designated Heng Fai Ambrose Chan to serve on the board of directors of Alset, and John Thatch and Joanne Wong as potential second and third directors. HWH has designated Chan Tung Moe, William Wu, Wong Tat Keung and Wong Shui Yeung to serve on the board of directors of Alset. For more information on the new directors and management of Alset, see “Management of Alset After the Business Combination.”
Quotation of Alset Securities
It is anticipated that Alset Common Stock will be traded on the Nasdaq Capital Market under the symbols “[●]” and “[●]” respectively, following the closing of the Business Combination.
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SELECTED HISTORICAL FINANCIAL INFORMATION OF HWH
The following tables present selected historical financial data for HWH. HWH derived the selected statement of operations data for the nine months ended September 30, 2022 and 2021 and fiscal years ended December 31, 2021 and 2020, and the unaudited balance sheet data as of September 30, 2022 and audited balance sheets as of December 31, 2021 and 2020, from its consolidated financial statements that are included elsewhere in this proxy statement/ prospectus. HWH’s historical results are not necessarily indicative of the results that may be expected in any future period.
You should read this information together with HWH’s financial statements and related notes included elsewhere in this proxy statement/prospectus and the section titled “HWH’s Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Consolidated Statements of Operations Data:
|
Nine Months Ended September 30, |
Nine Months Ended September 30, |
Year Ended December 31, |
Year Ended December 31, |
|||||||||||||
| 2022 | 2021 | 2021 | 2020 | |||||||||||||
| (in thousands) | (Unaudited) | (Unaudited) | (Audited) | (Audited) | ||||||||||||
| Total revenue | $ | 1,013 | $ | 4,398 | $ | 4,870 | $ | 3,147 | ||||||||
| Total cost of sales | 593 | 2,424 | 299 | 356 | ||||||||||||
| Gross profit | 420 | 1,974 | 4,571 | 2,791 | ||||||||||||
| Sales commission | - | - | 2,296 | 1,478 | ||||||||||||
| General and administrative expenses | 1,057 | 418 | 540 | 585 | ||||||||||||
| Total operating expenses | 1,057 | 418 | 2,836 | 2,063 | ||||||||||||
| (Loss) income from operations | (637 | ) | 1,556 | 1,735 | 728 | |||||||||||
| Other income | 119 | 43 | 119 | 1 | ||||||||||||
| Provision for income taxes | 69 | 326 | 489 | 97 | ||||||||||||
| Net (loss) income | $ | (587 | ) | $ | 1,273 | $ | 1,365 | $ | 632 | |||||||
Balance Sheet Data:
|
As of September 30, |
As of December 31, |
As of December 31, |
||||||||||
| 2022 | 2021 | 2020 | ||||||||||
| (in thousands) | (Unaudited) | (Audited) | (Audited) | |||||||||
| Cash and cash equivalents | $ | 2,093 | $ | 2,619 | $ | 1,590 | ||||||
| Property, plant, equipment and intangibles, net | 164 | 4 | 7 | |||||||||
| Total assets | 3,928 | 3,742 | 4,690 | |||||||||
| Related party liabilities | 1,576 | 764 | 342 | |||||||||
| Total debt | 1,576 | 764 | 342 | |||||||||
| Total liabilities | 2,850 | 1,875 | 4,094 | |||||||||
| Total stockholders’ equity (deficit) | 1,078 | 1,867 | 596 | |||||||||
Non-GAAP Financial Measure — Adjusted EBITDA
HWH collects and analyzes operating and financial data to evaluate the health of its business and assess its performance. In addition to revenue, gross margin, loss from operations, and net loss, HWH uses Adjusted EBITDA to evaluate its business. Adjusted EBITDA is a non-GAAP financial measure that management uses to evaluate HWH’s ongoing operations and for internal planning and forecasting purposes, because, among other reasons, it eliminates the effect of financing, non-recurring items, capital expenditures, and non-cash expenses such as stock-based compensation. However, you should be aware that when evaluating Adjusted EBITDA, HWH may incur future expenses similar to those excluded when calculating these measures. HWH’s presentation of this measure should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items. Further, this non-GAAP financial measure should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. HWH compensates for these limitations by relying primarily on its GAAP results and using Adjusted EBITDA on a supplemental basis. HWH’s computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies because not all companies calculate this measure in the same fashion. You should review the reconciliation of net loss to Adjusted EBITDA below and not rely on any single financial measure to evaluate HWH’s business.
|
Nine Months ended September 30, |
Year Ended December 31, |
Year Ended December 31, |
||||||||||
| (in thousands) | 2022 | 2021 | 2020 | |||||||||
| Adjusted EBITDA Reconciliation: | ||||||||||||
| Net (loss) income | $ | (587 | ) | $ | 1,365 | $ | 632 | |||||
| add: | ||||||||||||
| Depreciation expense | 23 | 3 | 2 | |||||||||
| Income tax expense | 69 | 489 | 97 | |||||||||
| Adjusted EBITDA | $ | (679 | ) | $ | 1,857 | $ | 731 | |||||
SELECTED HISTORICAL FINANCIAL INFORMATION OF ALSET
The following tables set forth selected historical financial information derived from Alset’s unaudited consolidated financial statements included elsewhere in this proxy statement/prospectus, as of and for the nine months then ended August 31, 2022, and audited consolidated financial statements included elsewhere in this proxy statement/prospectus, as of and for the year then ended November 30, 2021, and for the period from October 20, 2021 (inception) through November 30, 2021, respectively.
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This information is only a summary and should be read in conjunction with Alset’s financial statements and related notes and the sections entitled “Alset’s Management’s Discussion and Analysis of Financial Condition and Results of Operation” included elsewhere in this proxy statement/prospectus. The historical results presented below are not necessarily indicative of the results to be expected for any future period. All amounts are in dollars.
|
For the Nine August 31, 2022 |
For the Period From October 20, 2021 (Inception) Through November 30, 2021 |
|||||||
| (in thousands) | (Unaudited) | (Audited) | ||||||
| Consolidated Statement of Operations Data: | ||||||||
| Formation and operating costs | $ | - | $ | 5 | ||||
| Administration fee-related party | 70 | - | ||||||
| General and Administrative | 272 | - | ||||||
| Total Expenses | 342 | 5 | ||||||
| Other income | 357 | - | ||||||
| Net income (loss) | 15 | (5 | ) | |||||
| As of August 31, 2022 |
As of |
|||||||
| (in thousands) | (Unaudited) | (Audited) | ||||||
| Balance Sheet Data: | ||||||||
| Cash and Cash Equivalents | $ | 1,507 | $ | 50 | ||||
| Deferred offering costs | - | 85 | ||||||
| Cash in Trust Account | 87,469 | - | ||||||
| Total assets | 89,069 | 135 | ||||||
| Total liabilities | 3,266 | 115 | ||||||
| Class A common stock subject to possible redemption | 87,269 | - | ||||||
| Total stockholders’ (deficit) equity | (1,466 | ) | 20 | |||||
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
The following unaudited pro forma condensed combined financial statements of Alset present the combination of the historical financial information of Alset and HWH adjusted to give effect for the Business Combination. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X.
The unaudited pro forma condensed combined balance sheet as of August 31, 2022 combines the historical balance sheet of Alset as of August 31, 2022 and the historical balance sheet of HWH as of September 30, 2022, on a pro forma basis as if the Business Combination and related transactions, summarized below, had been consummated on August 31, 2022.
The unaudited pro forma condensed combined statement of operations for the nine months ended August 31, 2022 combines the historical statements of operations of Alset for the nine months ended August 31, 2022 and HWH for the nine months ended September 30, 2022 on a pro forma basis as if the Business Combination and related transactions had been consummated on December 1, 2020, the beginning of the earliest period presented.
The unaudited pro forma condensed combined statement of operations for the year ended November 30, 2021 combines the historical statements of operations of Alset for the year ended November 30, 2021 and HWH for the year ended December 31, 2021 on a pro forma basis as if the Business Combination and related transactions had been consummated on December 1, 2020, the beginning of the earliest period presented.
The unaudited pro forma condensed combined financial statements have been developed from and should be read in conjunction with:
● the accompanying notes to the unaudited pro forma condensed combined financial statements;
● the historical unaudited financial statements of Alset as of and for the nine months ended August 31, 2022 and the related notes thereto, included elsewhere in this proxy statement/ prospectus;
● the historical audited financial statements of Alset as of and for the year ended November 30, 2021 and the related notes thereto, included elsewhere in this proxy statement/ prospectus;
● the historical unaudited financial statements of HWH as of and for the nine months ended September 30, 2022 and the related notes thereto, included elsewhere in this proxy statement/ prospectus;
● the historical audited financial statements of HWH as of and for the year ended December 31, 2021 and the related notes thereto, included elsewhere in this proxy statement/ prospectus; and
● the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of ACAX” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of HWH,” and other financial information relating to Alset and HWH included elsewhere in this proxy statement/prospectus, including the Merger Agreement.
The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and does not necessarily reflect what the Combined Company’s financial condition or results of operations would have been had the Business Combination occurred on the dates indicated.
Further, the unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of the Combined Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited transaction accounting adjustments represent management’s estimates based on information available as of the date of this unaudited pro forma condensed combined financial information and are subject to change as additional information becomes available and analyses are performed. Assumptions and estimates underlying the unaudited pro forma adjustments set forth in the unaudited pro forma condensed combined financial statements are described in the accompanying notes. The Combined Company believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination based on information available to management at this time and that the transaction accounting adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.
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Description of transaction
On September 9, 2022, Alset entered into an agreement and plan of merger (the “Merger Agreement”) by and among Alset, HWH and HWH Merger Sub Inc., a Nevada corporation and a wholly owned subsidiary of Alset (“Merger Sub”). Alset and Merger Sub are sometimes referred to collectively as the “Alset Parties.” Pursuant to the Merger Agreement, a business combination between Alset and HWH will be effected through the merger of Merger Sub with and into HWH, with HWH surviving the merger as a wholly owned subsidiary of Alset (the “Merger”). Upon the closing of the Merger (the “Closing”), it is anticipated that Alset will change its name to “HWH International Inc.” The board of directors of Alset has (i) approved and declared advisable the Merger Agreement, the Ancillary Agreements (as defined in the Merger Agreement) and the transactions contemplated thereby and (ii) resolved to recommend approval of the Merger Agreement and related transactions by the stockholders of Alset.
The Merger is expected to be consummated in the fourth quarter of 2022, following the receipt of the required approval by the stockholders of Alset and the shareholder of HWH and the satisfaction of certain other customary closing conditions.
The total consideration to be paid at Closing (the “Merger Consideration”) by Alset to the HWH shareholders will be $125,000,000, and will be payable in shares of Class A common stock, par value $0.0001 per share, of Alset (“Alset Common Stock”). The number of shares of the Alset Common Stock to be paid to the shareholders of HWH as Merger Consideration will be 12,500,000, with each share being valued at $10.00. All cash proceeds remaining in the trust will be used to pay transaction costs and as growth capital for HWH.
Pursuant to the existing Alset Charter, public stockholders are being offered the opportunity to redeem, upon the Closing, shares of Alset common stock then held by them for cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account (as of two business days prior to the Closing). The unaudited pro forma condensed combined information contained herein assumes that Alset stockholders approve the Business Combination. Alset’s public stockholders may elect to redeem their common stock for cash even if they approve the Business Combination. Alset cannot predict how many of its stockholders will exercise their right to have their shares redeemed for cash.
For illustrative purposes, the unaudited pro forma condensed combined financial information has been prepared assuming two alternative levels of additional redemptions of Alset common stock:
● Assuming Minimum Additional Redemptions (“Minimum Redemption”)— this scenario assumes that no shares of Alset common stock are redeemed; and
● Assuming Maximum Redemptions (“Maximum Redemption”) — This scenario assumes the redemption of 8.6 million shares of Alset common stock at $10.06 per share, for aggregate payment of approximately $88 million from the Trust Account.
The public stockholder redemptions are expected to be within the parameters described by the above two scenarios. However, there can be no assurance regarding which scenario will be closest to the actual results.
The Business Combination between Alset and HWH under both the minimum and maximum redemption scenarios is expected to be accounted for as an acquisition under common control as Alset Inc. controls both companies.
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Pro Forma Information
ALSET AND HWH
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF AUGUST 31, 2022
(in thousands)
| Pro Forma | Pro Forma | Pro Forma | Pro Forma | |||||||||||||||||||||||||||||
| Adjustments | Combined | Adjustments | Combined | |||||||||||||||||||||||||||||
| Assuming | Assuming | Assuming | Assuming | |||||||||||||||||||||||||||||
| HWH | ALSET | Minimum | Minimum | Maximum | Maximum | |||||||||||||||||||||||||||
| (Historical) | (Historical) | Redemption | Redemption | Redemption | Redemption | |||||||||||||||||||||||||||
| ASSETS | ` | |||||||||||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 2,093 | $ | 1,507 | $ | 87,469 | A | $ | 114,950 | (87,269 | ) | H | 27,681 | |||||||||||||||||||
| (3,019 | ) | B | ||||||||||||||||||||||||||||||
| (700 | ) | C | ||||||||||||||||||||||||||||||
| 27,600 | E | |||||||||||||||||||||||||||||||
| Accounts receivable | ||||||||||||||||||||||||||||||||