Merger FRLAU

VCV Digital Technology to Become Publicly Traded Via Business Combination with Fortune Rise Acquisition Corporation

, SPAC Research

VCV Power Sigma, Inc. (“Sigma”) and VCV Power Gamma, Inc. (“Gamma” and, together with Sigma, the “Companies” or “VCV Digital Technology”), affiliated companies that together form a fast-growing and sustainable U.S.-based Bitcoin mining business, and Fortune Rise Acquisition Corporation (NASDAQ: FRLAU, FRLA and FRLAW), a special purpose acquisition corporation sponsored by Fortune Rise Sponsor LLC, announced today that they have entered into a definitive merger agreement pursuant to which Fortune Rise will acquire the business of the Companies and the Companies will continue as surviving, directly wholly-owned subsidiaries of the combined company.

Upon completion of the Business Combination, the combined company is expected to operate under the name “VCV Digital Technology, Inc.” and remain listed on the Nasdaq stock market under the new ticker symbol “XVC” with respect to its common stock.

VCV Digital Technology develops digital asset mining solutions and services that aim to rely on renewable energy for Blockchain/Web3 computing infrastructure deployment. With expected strong power sourcing capability – up to 1,000MW of hosting capacity in various stages of development deliverable from its affiliate, VCV Digital Technology management believes that the Companies’ self-mining, leased mining and managed mining businesses are well-positioned for rapid growth. VCV Digital Technology existing mining operations are 100% U.S.-based. VCV Digital Technology management has a deeply rooted investment banking and finance background with an extensive network of lenders and investors. VCV Digital Technology management has successfully closed multiple miner-backed financings and anticipates tapping into its broad lender network to finance the acquisition of mining equipment.

The combined company is expected to have a combined implied initial pro forma equity value of approximately $381.4 million, translating into an enterprise value of approximately $294.1 million, with the proposed business combination expected to provide approximately $99.7 million in gross proceeds from the cash held in trust by Fortune Rise, assuming no redemptions of the public shares of Fortune Rise and without taking account of the transaction fees and expenses. All references to available cash from the trust account and retained transaction proceeds are subject to any redemptions by the public stockholders of Fortune Rise and payment of transaction fees and expenses. As part of the transaction, all Sigma and Gamma shares owned by their existing equity holders will be converted into common stock of Fortune Rise. 

 At closing, approximately 24.5 million shares of Fortune Rise common stock representing the initial merger consideration and 9.8 million shares of Fortune Rise common stock representing the earnout consideration will be issued to the Sigma and Gamma stockholders at the redemption price of Fortune Rise public shares in connection with the Business Combination (an implied value of $10.20 per share). The earnout shares will be issued at the closing to pre-closing stockholders of Gamma and deposited into an escrow account either to be released to these stockholders if certain milestones are reached or to be forfeited if such milestones have not been reached by April 30, 2023. One fourth of the earnout shares (with an implied value of $25 million) will be released to pre-closing stockholders of Gamma if an aggregate of 4,500 miners are deployed. An additional one fourth of the earnout shares (with an implied value of $25 million) will be released for each additional tranche of 2,000 miners deployed through April 30, 2023, up to a total of an additional 6,000 miners, for total earnout consideration of $100 million implied value.

 Pre-closing stockholders of Sigma and Gamma will roll 100% of their equity into the combined company and, including the earnout shares, will own approximately 72.7% of the combined company’s outstanding shares of common stock, and pre-closing stockholders of Fortune Rise will own approximately 27.3% of the combined company’s outstanding shares of common stock on a pro forma basis (assuming no redemptions) immediately after the closing. Pre-closing stockholders of Sigma and Gamma will own approximately 65.5%, and pre-closing stockholders of Fortune Rise will own approximately 34.5%, of the combined company if all earnout shares are forfeited following April 30, 2023.

 The Business Combination and the related transactions contemplated therein (collectively, the “proposed transactions”) have been unanimously approved by the boards of directors of each of Sigma, Gamma, Fortune Rise and two merger subs of Fortune Rise established solely for the purpose of the Business Combination, and the stockholders of each of the merger subs.

The Business Combination and the transactions contemplated thereby are expected to close in the third quarter of 2022, subject to regulatory and stockholder approvals and the satisfaction or waiver of other customary closing conditions.

Maxim Group LLC is serving as the sole financial advisor to VCV Digital Technology, and Day Pitney LLP serves as legal counsel to VCV Digital Technology. US Tiger Securities, Inc. is serving as the financial advisor to Fortune Rise, and Robinson & Cole LLP is acting as legal counsel to Fortune Rise.



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