Bison Capital Acquisition Corp. (“BCAC”), announced this morning that they have entered into a backstop agreement with Yinglin Mark Xu, a majority shareholder of Xynomic, to purchase up to $7,500,001 of Ordinary Shares in the open market or in other privately negotiated transactions. This is to ensure that there is at least $7.5 million of net tangible assets at closing.
The purchases will take place between now and up to the third trading day prior to their vote in order to allow the transactions to settle. Bison is current scheduled to vote on their combination with Xynomic on May 13th, which puts the third trading day prior to the vote at May 8th. Additionally, Bison has agreed to register the re-sale of the Backstop Shares.
As of April 5th, Bison had $8,492,157 held in trust, so a backstop of $7.5 million is nearly all of it. Plus, the estimated cash per share in trust is currently approximately $10.60, so this could potentially get very expensive for Mr. Xu. He’s not obligated to purchase shares above $10.15, but if shareholders can redeem at $10.60, why would they sell for anything lower?
Bison and Mr. Xu have approximately a week until May 8th to shore up this closing, so it will be interesting to see how BCAC trades. Let’s see what happens.