NEW YORK and SHANGHAI, Dec. 27,
2016 /PRNewswire/ -- Pacific Special Acquisition Corp.
("Pacific" or the "Company", NASDAQ: PAACU, PAAC, PAACR and PAACW)
announced today that it has signed a definitive merger agreement
with Borqs International Holding Corp ("Borqs"), a leading global
provider of smart connected devices and cloud service solutions for
the Internet of Things ("IoT") industry. Upon closing under the
merger agreement, Borqs will become the operating entity of the
combined company.
Borqs, which is headquartered in Beijing, China with R&D centers in
Bangalore, India and Beijing, was founded in 2007 by respected
veterans in the communication technologies industry from
Canada, China, India
and the United States. Borqs has
world renowned investors including Intel Capital, Norwest Venture
Partners, SK Telecom China Fund, Keytone Ventures and GSR Ventures.
Following the closing and pursuant to the merger agreement, the
Borqs founders and key executives are expected to remain as key
executives of the combined company and continue to drive business
growth.
Borqs, through its subsidiaries and variable interest entities,
is principally engaged in the provision of commercial grade Android
connected device software and hardware products and mobile virtual
network operator ("MVNO") services in China. Borqs had consolidated revenue of
US$75.1 million for the year ended
December 31, 2015, and net income of
US$0.8 million and anticipates a 40%
growth in revenue for 2016. Borqs' revenues from its Android
connected device software and hardware sales are primarily from
international markets and revenues from its MVNO business are
primarily from providing voice / data plans and mobile
communication services in China.
Borqs intends to introduce its IoT products and cloud solutions in
2017 to its MVNO network to generate additional recurring
revenue.
Yaqi Feng, Chief Operating
Officer of Pacific, remarked, "On behalf of Pacific, our
sponsor, Zhengqi International Holding Limited, and our
sponsor's parent, Pacific Securities Co. Ltd., we are extremely
excited about the merger with Borqs. Our team looked at many
opportunities in a variety of industry sectors and determined that
the transaction with Borqs would provide the greatest value to our
shareholders. Borqs is a leading IoT company backed by some of the
world's leading investors, all of whom will become shareholders in
the new company. Borqs covers both Chinese and Indian fast growing
markets, as well as developed markets such as the United States and Japan. We are extremely excited about
the opportunities ahead for this company."
Pat Chan, founder, Chairman and
CEO of Borqs, also expressed his confidence in the proposed merger
and of Borqs becoming a U.S. public company. "We believe that as a
company with its shares listing on Nasdaq, Borqs can achieve its
goals faster within the IoT industry; taking advantage of the
resources from the public capital markets to bring innovations to
commercially viable products and services quickly, motivate our
workforce and grow together with our customers and partners to new
and higher levels."
Transaction Details
Under the terms of the merger agreement, Borqs will merge with
and into a newly formed subsidiary of Pacific, with Borqs
continuing as the surviving company. Shareholders of Borqs will
receive ordinary shares of Pacific, holders of Borqs warrants will
receive replacement warrants of Pacific and Borqs outstanding
options will be assumed by Pacific (with the number of shares and
exercise price of Borqs warrants and options being adjusted based
on the merger consideration payable to Borqs shareholders).
Pacific will issue ordinary shares to Borqs shareholders in the
merger at a price of US$10.40 per
Pacific share based on a valuation of Borqs of US$303 million. The valuation and number of
shares issued will be reduced by the net debt of the Company as of
the closing and subject to adjustment based on Borqs' net working
capital as of the closing and Pacific's transaction expenses as of
the closing. 4% of the Pacific shares payable to Borqs
shareholders in the merger will be held in escrow to cover any
claims made pursuant to Borqs' indemnification obligations under
the merger agreement in the 18 months period following the
closing.
The board of directors of Pacific after the closing will be
classified into 3 classes and consist of 7 directors, 2 of which
will be appointed by Pacific (with at least 1 being an independent
director), 3 of which will be appointed by Borqs (with at least 1
being an independent director), and 2 other independent directors
mutually agreed upon by Pacific and Borqs.
The transaction is subject to the satisfaction of customary
closing conditions, including stockholder approvals of both Pacific
and Borqs (although in connection with the merger agreement,
Pacific received voting agreements from the requisite shareholders
of Borqs necessary to approve the transactions), Pacific's
continued listing on Nasdaq Capital Markets and Pacific having at
the closing (before reasonable expenses) at least $24 million of trust proceeds (together with
proceeds of any private placement of Pacific stock prior to the
closing). The transaction is expected to close promptly following
Pacific's special shareholders' meeting to approve the transaction.
Upon and immediately following the consummation of the transaction,
assuming no Pacific shareholder redemptions and no adjustment to
the valuation of Borqs, it is anticipated that the
shareholders of Borqs will collectively own approximately 78% of
Pacific's outstanding ordinary shares, and Pacific's existing
shareholders will retain an ownership interest in the remaining
approximately 22%. It is expected that after the closing, Pacific
will change its name to "Borqs Technologies, Inc."
EarlyBird Capital, Inc. is acting as financial advisor to
Pacific. Ellenoff Grossman & Schole LLP, King & Wood
Mallesons and Ogier are acting as legal advisors to Pacific, and
Fenwick & West LLP, Maples and Calder and Han Kun Law Offices
are acting as legal advisors to Borqs.
The description of the transaction contained herein is only a
summary and is qualified in its entirety by reference to the
definitive agreement relating to the transaction, a copy of which
will be filed by Pacific with the Securities and Exchange
Commission (the "SEC") as an exhibit to a Current Report on Form
8-K.
About Borqs
Borqs is recognized as a global leader in smart connected
devices and IoT solutions. Deloitte named Borqs as one of the
fastest growing technology companies in China & Asia
Pacific in 2011, 2012 & 2013. In 2013, 2014 and 2015,
Borqs was awarded the Company of the Year for Innovation &
Leadership in Mobile Technology for Asia
Pacific from the International Alternative Investment
Review. Recently Borqs received the "50 Most Promising IoT Solution
Providers 2016" recognition from CIO Review magazine.
Borqs has a proven track record in design, development and
commercial shipments of various Android devices and is a Google GMS
licensed partner. Qualcomm has chosen Borqs as a strategic partner
for its Android based platforms. Borqs developed the world first 4G
connected wearable with Qualcomm and launched the world's first
FDD/TDD combined carrier aggregation 4.75G Android phone for
Reliance Jio in India. OEMs such
as Vizio and Motorola, operators like AT&T and Sprint in the
U.S. and Reliance Jio in India,
and IoT solution providers to restaurants, utility, public safety,
hospitality categories are examples of Borqs' broad customer base
and target markets.
Borqs' believes that its modular platform architecture and its
ability to tailor Android for various vertical applications and
form factors, together with its flexible Borqs-ware platform, are
keys to its success. Borqs has a deep pipeline of products ranging
from tablets, phones, smartwatches, smart appliances, POS
terminals, digital signage, to automobile IVI, for various well
known international brands.
About Pacific
Pacific is a blank check company, also commonly referred to as a
Special Purpose Acquisition Company, or SPAC, formed for the
purpose of acquiring, engaging in a share exchange, share
reconstruction and amalgamation, purchasing all or substantially
all of the assets of, entering into contractual arrangements, or
engaging in any other similar business combination with one or more
businesses or entities. The Company's efforts to identify a target
business have not been limited to a particular industry or
geographic region, although it intends to focus efforts on seeking
a business combination with a company or companies that have their
primary operations located in Asia, with an emphasis on China. Pacific is sponsored by Zhengqi
International Holding Limited, a subsidiary of Pacific Securities
Co. Ltd., a publicly traded company in China (Ticker 601099.SS). LH Group
Holdings Inc., the largest shareholder of Pacific Securities Co.
Ltd., invests in financial services, clean energy as well as golf
course and resort businesses globally and currently has billions of
U.S. dollars in assets.
Additional Information About the Transaction and Where to
Find it
The proposed transaction will be submitted to shareholders of
Pacific for their approval. In connection with that approval,
Pacific intends to file with the SEC a proxy statement containing
information about the proposed transaction and the respective
businesses of Borqs and Pacific. Pacific will mail a definitive
proxy statement and other relevant documents to its shareholders.
Pacific shareholders are urged to read the preliminary proxy
statement and any amendments thereto and the definitive proxy
statement in connection with Pacific's solicitation of proxies for
the special meeting to be held to approve the proposed transaction,
because these documents will contain important information about
Pacific, Borqs and the proposed transaction. The definitive proxy
statement will be mailed to shareholders of Pacific as of a record
date to be established for voting on the proposed transaction.
Shareholders will also be able to obtain a free copy of the proxy
statement, as well as other filings containing information about
Pacific, without charge, at the SEC's website (www.sec.gov) or by
calling 1-800-SEC-0330. Copies of the proxy statement and other
filings with the SEC can also be obtained, without charge, by
directing a request to Zhouhong Peng
at pengzh@tpyzq.com or Yaqi Feng,
fengyq@tpyzq.com, +1 (646) 512-5674 or +(86) 21-61376584.
Participants in the Solicitation
Pacific and its directors and executive officers and other
persons may be deemed to be participants in the solicitations of
proxies from Pacific's shareholders in respect of the proposed
transaction. Information regarding Pacific's directors and
executive officers is available in its annual report on Form 10-K
filed with the SEC on September 28,
2016. Additional information regarding the participants in
the proxy solicitation and a description of their direct and
indirect interests will be contained in the proxy statement when it
becomes available.
Disclaimer
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which the offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
Forward-Looking Statements
This press release includes "forward-looking statements" that
involve risks and uncertainties that could cause actual results to
differ materially from what is expected. Words such as "expects",
"believes", "anticipates", "intends", "estimates", "seeks", "may",
"might", "plan", "possible", "should" and variations and similar
words and expressions are intended to identify such forward-looking
statements, but the absence of these words does not mean that a
statement is not forward-looking. Such forward-looking statements
relate to future events or future results, based on currently
available information and reflect Pacific management's current
beliefs. A number of factors could cause actual events or results
to differ materially from the events and results discussed in the
forward-looking statements. Such factors include, among other
things: the possibility that the merger will not close or that the
closing may be delayed because conditions to the closing may not be
satisfied, including shareholder and other approvals, the
performances of Pacific and Borqs, and the ability of the combined
company to meet the NASDAQ Capital Market's listing standards; the
reaction of Borqs customers to the merger; unexpected costs,
liabilities or delays in the transaction; the outcome of any legal
proceedings related to the transaction; the occurrence of any
event, change or other circumstances that could give rise to the
termination of the transaction agreement; and general economic
conditions. In addition, please refer to the Risk Factors section
of Pacific's Form 10-K, its Quarterly Reports on Form 10-Q for
additional information identifying important factors that could
cause actual results to differ materially from those anticipated in
the forward looking statements. Except as expressly required by
applicable securities law, Pacific disclaims any intention or
obligation to update or revise any forward looking statements
whether as a result of new information, future events or
otherwise.
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SOURCE Pacific Special Acquisition Corp.