Mountain Crest III (MCAE) Terminates PIPE

Mountain Crest III (NASDAQ:MCAE) announced this afternoon that a PIPE investor will terminate its $250 million investment in connection to its proposed merger with healthcare group ETAO.

The investor, SME Investment Group Co., had originally agreed to purchase 250,000 ordinary shares at deal announcement for an aggregate cash amount of $250 million at $10.00 per share. But, MCAE and the investor terminated the PIPE agreement on July 25, 2022, by mutual consent. However, a reason was not provided.

The terminated PIPE comes just weeks after Mountain Crest III noted its uncertainty about the investment in an amendment to the merger. ETAO had originally expected to take in a $51 million investment prior to February 15, 2022, but last month’s 8-K revealed that it had failed to do so. Additionally, MCAE reduced ETAO’s valuation from $2.5 billion to $1 billion citing unfavorable market conditions, ETAO’s financial statements, and its failure to close the $51 million private placement.

MCAE brings $54.1 million into the deal, but has a minimum cash closing condition of at least $200 million.

The SPAC originally announced its business combination with ETAO on January 28, 2022. Beijing-based ETAO is a diversified digital healthcare group managing 12 hospitals, about 30 chain clinics and an insurance brokerage.