Denali Capital Acquisition Corp. Announces Extension of Deadline to Complete Business Combination

Rhea-AI Summary

Denali Capital Acquisition Corp. (NASDAQ: DECA) has announced a one-month extension of its deadline to complete a business combination, moving from January 11, 2025, to February 11, 2025. To facilitate this extension, the company has deposited $15,063.74 into its trust account.

The deposit was funded through a convertible promissory note issued to Scilex Holding Company (NASDAQ: SCLX) with a maximum principal amount of $180,000. The note carries no interest and is convertible into DECA's Class A ordinary shares at $10.00 per share upon closing of a business combination. The remaining $89,672.56 of the note may be used for future monthly extensions if needed.

Positive

• Secured additional time to complete business combination
• No interest bearing on the promissory note
• Potential for future extensions with remaining note balance

Negative

• Additional funding required to extend deadline indicates potential delays in completing business combination
• Possible dilution for shareholders if note converts to shares
• Company approaching original deadline without completed business combination

Insights

Financial Analyst

This extension announcement reflects a critical development for Denali Capital Acquisition Corp., a Special Purpose Acquisition Company (SPAC). The $15,063.74 deposit to extend the merger deadline by one month, funded through a convertible note from Scilex Holding Company, indicates potential challenges in finalizing their business combination within the original timeframe. The convertible note's structure, with a $180,000 principal amount and $10.00 conversion price, suggests a strategic move to maintain deal momentum while preserving shareholder value.

The remaining $89,672.56 available under the note provides flexibility for up to 5 additional monthly extensions. This structured approach to timeline management is particularly noteworthy given DECA's relatively small market cap of $39.8 million. The zero-interest terms and conversion option are favorable for the SPAC, though they also signal some urgency in completing the business combination.

For retail investors, SPAC deadline extensions often indicate increased uncertainty about deal completion, which typically impacts trading patterns and could affect share price stability. The convertible note's terms could lead to future dilution if converted, though the $10.00 conversion price provides a clear valuation benchmark.

Legal Expert

The extension mechanism employed here follows standard SPAC regulatory compliance procedures under SEC guidelines. The use of a convertible promissory note for extension funding represents a structured approach to maintaining the SPAC's viability while adhering to trust account requirements. The specific terms - no interest, conditional conversion rights and clear repayment triggers - are crafted to protect both shareholder interests and deal integrity.

The dual-trigger repayment clause (either at business combination or liquidation) provides important legal safeguards for all parties. The $10.00 conversion price aligns with typical SPAC IPO pricing, suggesting careful consideration of fairness to existing shareholders. This extension also buys important time for due diligence and regulatory approvals, essential for successful SPAC mergers in today's heightened regulatory environment.

NEW YORK, NEW YORK, Jan. 08, 2025 (GLOBE NEWSWIRE) -- Denali Capital Acquisition Corp. (NASDAQ: DECA) (the “Company”) announced today that it has deposited into the Company’s trust account (the “Trust Account”) an aggregate of $15,063.74 to fund the one-month extension from January 11, 2025 to February 11, 2025. This deposit was funded via a convertible promissory note with a principal amount of up to $180,000 issued by the Company to Scilex Holding Company (Nasdaq: SCLX, “Scilex”), which bears no interest and is repayable on the earlier of the effective date of the consummation of the Company’s initial business combination or the date of the liquidation of the Company. Upon the closing of a business combination, the note is convertible, at Scilex’s discretion, into the Company’s Class A ordinary shares at a conversion price of $10.00 per share. Any future drawdowns of the remaining $89,672.56 principal amount available under the convertible promissory note are expected to fund future one-month extensions as necessary to provide additional time for the Company to complete a business combination.

About the Company

Denali Capital Acquisition Corp. is a blank check company incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses or entities.

Forward-Looking Statements

This press release includes forward looking statements that involve risks and uncertainties. Forward-looking statements are subject to numerous conditions, risks and changes in circumstances, many of which are beyond the control of the Company, including those set forth in the “Risk Factors” section of the Company’s most recent annual report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission. The Company 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 the Company’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.

FAQ

What is the new deadline for Denali Capital Acquisition Corp (DECA) to complete its business combination?

The new deadline for DECA to complete its business combination is February 11, 2025, extended from January 11, 2025.

How much did DECA deposit for the January 2025 deadline extension?

DECA deposited $15,063.74 into its trust account for the one-month extension.

What are the terms of DECA's convertible promissory note with Scilex Holding Company?

The note has a principal amount of up to $180,000, bears no interest, and is convertible into DECA's Class A ordinary shares at $10.00 per share upon business combination completion.

How much funding remains available for future DECA deadline extensions?

There is $89,672.56 remaining in principal amount available under the convertible promissory note for future extensions.