- VCV Digital Technology is an emerging U.S.-based digital
assets company providing computing infrastructure for Crypto/Web3
networks to help accelerate adoption of digital asset mining
solutions
- Combined company to have an 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 and assuming no redemptions by
public stockholders of Fortune Rise Acquisition
Corporation
- An additional $100 million
in equity value offered in the form of earnout consideration to be
issued and placed into escrow at closing, subject to forfeiture if
certain milestones are not reached
- All existing VCV Digital Technology stockholders are
rolling 100% of their equity into the combined company
- The proposed business combination is expected to be
completed in the third quarter of 2022
NEW YORK ,
May 2,
2022 /PRNewswire/ – 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) ("Fortune Rise"), 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 (the "Business Combination").
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 Highlights
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. In addition, VCV Digital
Technology management believes that the Companies' existing
relationships with manufacturers, distributors and logistics
providers throughout the world will provide the combined company
with a competitive advantage in accessing quality miner supplies.
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. As a result of these factors, VCV
Digital Technology has been able to scale its business rapidly and
Sigma generated $5.2 million in net
income in fiscal 2021. U.S.-based crypto mining companies have
directly benefited from China's
June 2022 ban on domestic crypto
mining, as the U.S. share of global Bitcoin mining computing power
has risen from 4.1% in September 2019
to 35.4% as of August 2021, ranking
first worldwide, according to the Cambridge Centre for Alternative
Finance. VCV Digital Technology management expects the positive
market dynamics to continue and further fuel VCV Digital
Technology's growth in the digital asset mining market.
VCV Digital Technology and Fortune Rise Commentary
Jerry Tang, Co-Founder and CEO of
VCV Digital Technology, remarked: "VCV Digital Technology's core
mission is to build sustainable computing infrastructure. We are
excited about this opportunity to list on Nasdaq, as it will allow
us access to a much larger pool of capital and increase our global
profile. We believe that the ability to utilize such additional
capital resources will facilitate and accelerate our progress in
becoming a leader in blockchain computing infrastructure. At
our core, we believe blockchain/Web3 to be one of
the most important and revolutionary technologies of the
21st century and are excited to provide the underlying computing
infrastructure in an environmentally friendly way."
Lei Huang, CEO and Director of Fortune Rise, commented: "We are
truly excited about the merger with VCV Digital Technology, which
we believe will enable us to bring innovative digital asset mining
solutions to the public market. We believe the future prospects of
the combined company will provide great value to our stockholders.
We look forward to continuing to work with VCV Digital Technology
to bring this Business Combination to fruition."
Transaction Overview
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. Certain stockholders
of Sigma and Gamma representing a majority of the voting power of
the outstanding Sigma common stock and a majority of the voting
power of the outstanding Gamma common stock have agreed to vote all
of their shares of Sigma and Gamma capital stock, as applicable, in
favor of the proposed transactions. Initial stockholders of Fortune
Rise representing 24% of the voting power of the outstanding
Fortune Rise common stock have agreed to vote all of their shares
of Fortune Rise common stock in favor of the proposed
transactions.
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.
Additional information regarding the proposed transactions,
including a copy of the merger agreement and an investor
presentation, can be found in or as an exhibit to a Fortune Rise
Current Report on Form 8-K to be filed with the U.S. Securities and
Exchange Commission (the "SEC") and made available at
www.sec.gov.
Advisors
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.
Management Presentation
A presentation regarding the transaction will be available on
the website of VCV Digital Technology
at www.vcvdigitaltechnology.com. Fortune Rise will also file
the presentation with the SEC as an exhibit to a Current Report on
Form 8-K, which can be viewed on the SEC's website
at www.sec.gov.
About VCV Digital Technology
VCV Digital Technology is an emerging U.S.-based digital assets
business providing computing infrastructure for Crypto/Web3
networks to help accelerate adoption of digital asset mining
solutions. VCV Digital Technology intends to provide computing
infrastructure not only to Bitcoin mining, but also to the
fast-growing ecosystem of blockchain. The Companies believe that
the blockchain computing infrastructure will replace the current
dominant centralized platforms with its transparency, security,
protection of privacy and censorship resistance. For more
information, please visit www.vcvdigitaltechnology.com.
About Fortune Rise
Fortune Rise Acquisition Corporation is a blank check company
formed as a Delaware corporation
for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization, or similar
business combination with one or more businesses except any entity
that conducts a majority of its business or is headquartered in
China (including Hong Kong and Macau). Fortune Rise Sponsor LLC, which is
managed by its manager Mr. Koon Keung
Chan, is the sponsor of Fortune Rise.
Forward-Looking Statements
This press release includes forward-looking statements that
involve risks and uncertainties. Forward-looking statements are
statements that are not historical facts and may be accompanied by
words that convey projected future events or outcomes, such as
"believe," "may," "will," "estimate," "continue," "anticipate,"
"design," "intend," "expect," "could," "plan," "potential,"
"predict," "seek," "target," "aim," "plan," "project," "forecast,"
"should," "would," or variations of such words or by expressions of
similar meaning. Such forward-looking statements, including
statements regarding anticipated financial and operational results,
projections of market opportunity and expectations, the estimated
post-transaction enterprise value, the advantages and expected
growth of the combined company, the cash position of the combined
company following closing, the ability of VCV Digital Technology
and Fortune Rise to consummate the proposed business combination
and the timing of such consummation, are subject to risks and
uncertainties, which could cause actual results to differ from the
forward-looking statements. These risks and uncertainties include,
but are not limited to, those factors described in the section
entitled "Risk Factors" in the Annual Report on Form 10-K filed by
Fortune Rise with the SEC on March 28,
2022, including its amendment filed on April 22, 2022 (the "2021 Form 10-K") and in
other documents filed by Fortune Rise with the SEC from time to
time. Important factors that could cause the combined company's
actual results or outcomes to differ materially from those
discussed in the forward-looking statements include: VCV Digital
Technology's limited operating history; VCV Digital Technology's
ability to manage growth; VCV Digital Technology's ability to
execute its business plan; VCV Digital Technology's estimates of
the size of the markets for its business; the rate and degree of
market acceptance of VCV Digital Technology's business; VCV Digital
Technology's ability to identify and integrate acquisitions;
general economic and market conditions impacting demand for VCV
Digital Technology's products and services; the inability to
complete the proposed transactions; the inability to recognize the
anticipated benefits of the proposed transactions, which may be
affected by, among other things, the amount of cash available
following any redemptions of Class A common stock of Fortune Rise
by its public stockholders; the ability to meet Nasdaq's listing
standards following the consummation of the proposed transactions;
costs related to the proposed transactions; and such other risks
and uncertainties as are discussed in the 2021 Form 10-K and the
proxy statement to be filed relating to the business combination.
Other factors include the possibility that the proposed business
combination does not close, including due to the failure to receive
required security holder approvals, or the failure of other closing
conditions.
Each of VCV Digital Technology and Fortune Rise expressly
disclaims any obligations or undertaking to release publicly any
updates or revisions to any forward-looking statements contained
herein to reflect any change in VCV Digital Technology's or Fortune
Rise's expectations with respect thereto or any change in events,
conditions or circumstances on which any statement is based, except
as required by law.
Use of Projections
This press release contains projected financial information with
respect to VCV Digital Technology and the combined company. Such
projected financial information constitutes forward-looking
information, and is for illustrative purposes only and should not
be relied upon as necessarily being indicative of future results.
The assumptions and estimates underlying such projected financial
information are inherently uncertain and are subject to a wide
variety of significant business, economic, competitive and other
risks and uncertainties that could cause actual results to differ
materially from those contained in the prospective financial
information. See "Forward-Looking Statements" above. Actual results
may differ materially from the results contemplated by the
projected financial information contained in this press release,
and the inclusion of such information in this press release should
not be regarded as a representation by any person that the results
reflected in such projections will be achieved. Neither the
independent auditors of Fortune Rise nor VCV Digital Technology
audited, reviewed, compiled, or performed any procedures with
respect to the projections for the purpose of their inclusion in
this press release, and accordingly, neither of them expressed an
opinion or provided any other form of assurance with respect
thereto for the purpose of this press release.
Additional Information about the Transaction and Where to
Find It
The proposed transactions have been approved by the board of
directors of each of Sigma, Gamma, Fortune Rise and merger subs of
Fortune Rise, and the stockholders of the merger subs, and will be
submitted to stockholders of Fortune Rise, Sigma and Gamma for
their approval. In connection with the approval of the Fortune Rise
stockholders, Fortune Rise intends to file with the SEC (initially
on a confidential basis) a registration statement on Form S-4 (the
"Registration Statement"), which will include a proxy statement
containing information about the proposed transactions and the
respective businesses of VCV Digital Technology and Fortune Rise,
as well as the prospectus relating to the offer of the Fortune Rise
securities to be issued to pre-closing stockholders of VCV Digital
Technology in connection with the completion of the proposed
transactions (the "proxy statement/prospectus"). After the
Registration Statement has been declared effective, Fortune Rise
will mail a definitive proxy statement and other relevant documents
to its stockholders as of the record date established for voting on
the proposed transaction. Fortune Rise stockholders are urged to
read, once available, the preliminary proxy statement/prospectus
and any amendments thereto and the definitive proxy
statement/prospectus in connection with the proposed transaction,
as these materials will contain important information about VCV
Digital Technology, Fortune Rise and the proposed transactions.
Stockholders will also be able to obtain a free copy of the proxy
statement/prospectus, as well as other filings containing
information about Fortune Rise, without charge, at the SEC's
website (www.sec.gov).
Participants in the Solicitation
Fortune Rise, VCV Digital Technology and their respective
directors and executive officers and other persons may be deemed to
be participants in the solicitation of proxies from Fortune Rise's
stockholders with respect to the proposed transactions. Information
regarding Fortune Rise's directors and executive officers is
available in the 2021 Form 10-K. Additional information regarding
the persons who may, under the rules of the SEC, be deemed to be
participants in the proxy solicitation relating to the proposed
transactions and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the proxy statement/prospectus when it becomes available.
No Offer or Solicitation
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities, or a solicitation
of any vote or approval, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of the Securities Act of 1933, as amended.
For investor and media inquiries, please
contact:
VCV Digital
Technology:
ir@vcvdigitaltechnology.com
Fortune Rise Acquisition
Corporation:
fortuneriseir@gmail.com
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SOURCE Fortune Rise Acquisition Corporation
