aibioPowerUp Acquisition (now Aspire-Lakewood) gets loan of up to $500,000 before merger
Tickers ASBP
The lender is an entity controlled by Aspire Biopharma's director of investor relations. $184,543.80 had been loaned as of the filing.
Key facts
- Company
- Aspire-Lakewood Holdings, Inc. (NASDAQ: ASBP)
- News type
- Mergers
- Primary source
- Aspire-Lakewood Holdings, Inc. 8-K (2024-12-26)
The loan
PowerUp Acquisition Corp., a blank-check company based at 188 Grand Street in New York, entered into a subscription agreement, a promissory note and a registration rights agreement with Blackstone Capital Advisors, Inc. The company entered into the agreements on December 18, 2024, effective December 13, 2024, and reported them in a Form 8-K filed on December 26, 2024. EDGAR now lists the registrant as Aspire-Lakewood Holdings, Inc. The company's Class A ordinary shares trade on Nasdaq under the symbol PWUP.
The purpose of the loan, according to the filing, is to help the company pursue its business combination with Aspire Biopharma, Inc., a Puerto Rico corporation. The filing says Blackstone is controlled by Aspire's Director of Investor Relations, Lance Friedman. Blackstone may lend up to $500,000 in total. The loan carries an original issue discount of twenty percent (20%), so the company receives less cash than the face amount of the note. As of the filing date, $184,543.80 had been loaned.
The note's terms
The note bears interest at ten percent (10%) a year, payable at maturity. The company must also pay Blackstone an exit fee of ten percent (10%) of principal and accrued interest on the maturity date. The note matures on the earlier of June 1, 2025 or the day PowerUp receives gross proceeds of at least $5,000,000 from an offering of its debt or equity securities. If the company raises that amount in an offering, the note would be due before June 1, 2025.
The company says it offered and will issue the securities in reliance on Section 4(a)(2) of the Securities Act and Regulation D. The 8-K says the agreements contain customary representations, warranties, indemnification rights and obligations.
The shares paid to the lender
When the business combination closes, the sponsor, SRIRAMA Associates, LLC, will transfer three Class A ordinary shares of PowerUp to Blackstone for each dollar loaned. The 8-K describes this as a transfer from the sponsor, not a new issue of shares. The company agreed to register those shares in any registration statement it files for a qualified offering, a term defined in the subscription agreement. The filing adds that such an offering would occur only "if any."
The merger behind the loan
The merger agreement was signed on August 26, 2024. Under it, PowerUp Merger Sub II, Inc., a Delaware subsidiary of PowerUp, will merge into Aspire, and Aspire will survive as a wholly owned subsidiary of PowerUp. The sponsor and Stephen Quesenberry, who will act as representative for Aspire stockholders after the merger takes effect, are parties to the agreement. Surendra Ajjarapu signed the 8-K as chief executive officer of PowerUp.
The 8-K refers to a registration statement on Form S-4 and a proxy statement/prospectus that PowerUp has filed with the SEC. It says the definitive proxy statement will be mailed to shareholders when it is available, and urges them to read it before any voting decision.
What the filing warns
The 8-K's cautionary statements list risks to the deal. They include the possibility that the combination is not completed by PowerUp's business combination deadline, that shareholders do not approve it, that the agreement is terminated, and that redemptions by public shareholders exceed expectations. The list also includes a failure to meet Nasdaq initial listing standards for the combined company. The filing names risks specific to Aspire, including the need to raise more capital on terms that may not be available, the risk of product liability or regulatory lawsuits, and failure to commercialize products or win market acceptance. The company says the list is not exhaustive.
The 8-K does not describe Aspire's products, clinical programs or cash position. It does not give the amount held in PowerUp's trust account or a closing date for the merger. It discloses no other financing beyond the Blackstone note, so the loan is the only new money the filing describes. Holders can see the cost of that money in the 20% discount, the 10% interest, the 10% exit fee and the share transfer, all before the merger has closed.