East Stone Acquisition Corporation (ESSC) experienced an increase of 9.4% in the premarket. The rally seems to follow discussions on social media sites like Reddit. However, the last trading session closed at $15.54 with an increase of 0.78%.
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Initial Acquisition – What’s going on?
On 25th August 2021, ESSC announced that a total of $1,380,000 has been deposited into East Stone’s trust account for its public shareholders. East Stone was given the Extension Payment by JHD on behalf of Double Venture Holdings Limited, East Stone’s sponsor. In the amount of the Extension Payment, East Stone issued a promissory note to JHD.
The promissory note loan is interest-free and will be returned after the planned business merger has been completed. The general partnership is subject to a number of conditions, including shareholder approval, fulfillment of the conditions which are specified forth in the acquisition agreement, and other customary closing conditions. It includes the completion of the US Securities and Exchange Commission’s review of the proxy statement/prospectus relating to the transaction, receipt of certain regulatory approvals, and approval by a court.
Sponsor Approval to Extend Deadline – Worth it?
ESSC reported on 20th August 2021 that the company has requested that the deadline for completing a business combination be extended from August 24, 2021, to November 24, 2021. Moreover, East Stone’s governing papers allow for a maximum of two three-month renewals. The Sponsor has informed East Stone that it plans to deposit $1,380,000 into East Stone’s trust account on or before August 24, 2021. Last but not the least, ESSC now has more time to finalize its proposed business combination with JHD Holdings (Cayman) Limited.
Business Combination with JHD Holdings (Cayman) Limited
On 18th February 2021, ESSC stated an update on the signing of a final business combination agreement. The merged business will be known as JHD Technologies Limited when the transaction closes, and it plans to list on the Nasdaq Stock Market. According to the provisions of the business combination agreement, the resultant public company i.e., Pubco will issue shares to the selling parties valued at one billion dollars ($1,000,000,000) at closure. Furthermore, 10% of the Pubco shares to be distributed to the selling parties at closure will be subject to an earn-out.
More About JHD
JHD is an online and offline merchant enablement services platform that offers a comprehensive array of services and technology, including point-of-sale (POS), supply chain and logistics, and fintech/payment capability, to around 90,000 independent shops throughout five provinces.
In addition, JHD’s platform has already allowed 3,000 outlets to become licensed rural area financial stations, allowing incumbent banks to expand their branch network to serve more people. This allows communities that are substantially underbanked to have access to financial services. Lastly, JHD delivers a dependable supply chain to the partner retailers by delivering branded consumer items on the schedule.
