MGO Global, Heidmar enter business combination agreement

MGO Global and Heidmar jointly announce that they have entered into an agreement for a business combination. Upon completion of the proposed transaction, the combined company will operate under the Heidmar name and be listed on the Nasdaq Capital Market under the symbol “HMAR.” The transaction will be effectuated through a holding company structure, whereby MGO and Heidmar will each become wholly-owned subsidiaries of a newly incorporated Marshall Islands company. Under the agreement, shareholders of MGO will receive one registered common share of PubCo for each share of MGO’s common stock they own with an implied fully diluted equity value of $18.0 million. Heidmar’s shareholders will exchange their shares of Heidmar common stock for $300 million in registered common shares of PubCo, subject to certain adjustments, at the same implied price per share as MGO. The transaction also includes an earnout payable to existing shareholders of Heidmar which, if earned, consists of $30 million of additional registered common shares of PubCo. PubCo would issue these shares to Pre-Closing Heidmar Shareholders if PubCo achieves or exceeds US$45 million of revenue, US$30 million EBITDA or US$25 million of net income for the fiscal year ending 2024. The boards of directors of both companies have unanimously approved the signing of the BCA. The Business Combination is expected to close late in the third quarter of 2024, subject to satisfying certain customary closing conditions, including the receipt of approvals from MGO’s shareholders and the listing of PubCo registered common shares on Nasdaq. The Business Combination Agreement contains customary representations, warranties and covenants made by MGO and Heidmar, including covenants that both parties use their commercially reasonably efforts to cause the transactions contemplated by the agreement to be completed, regarding obtaining the requisite approval of MGO’s shareholders, regarding indemnification of directors and officers, and regarding MGO’s and Heidmar’s conduct of their respective businesses between the date of signing of the Business Combination Agreement and the closing. The BCA also contains certain termination rights for both MGO and Heidmar. The MGO Board of Directors has recommended to MGO shareholders that they vote to approve the BCA and the transaction. MGO also received a fairness opinion in connection with the transaction. MGO’s existing shareholders are expected to own approximately 5.6% of the PubCo after the transactions.