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SciSparc Advances the Acquisition Process of a Leading Vehicle Importer Company in Israel with the provision of a Bridge Loan of $1.4 million

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SciSparc Ltd. announced a bridge loan agreement with a leading vehicle importer company in Israel for the acquisition of the Target Company. The bridge loan amount is $1.4 million, with an interest rate of 7% per annum. The company intends to acquire 100% of the Target Company and establish a new wholly-owned Israeli subsidiary, with shareholders holding approximately 50.01% of the share capital of the resulting combined company.
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The bridge loan of $1.4 million provided by SciSparc to a vehicle importer company is a strategic financial maneuver that precedes a potential acquisition. The interest rates set at 7% per annum, or 9% if the acquisition does not go through, are indicative of the inherent risks associated with the deal. These rates are slightly higher than the average corporate loan rates, reflecting the speculative nature of the bridge financing in the context of an acquisition.

Investors should note that the bridge loan is a precursor to a larger financing amount of $4.25 million, which SciSparc plans to provide upon closing the acquisition. This suggests that SciSparc is heavily invested in the success of this transaction. The fact that shareholders of SciSparc would hold just over 50% of the share capital of the combined entity post-acquisition is a critical detail, as it implies a merger of near equals rather than a straightforward takeover.

The short-term implications for stakeholders include the potential dilution of shares and the reallocation of capital towards the acquisition rather than internal development projects. In the long term, however, if the acquisition is successful, it could lead to diversification of SciSparc's portfolio and possibly create new revenue streams.

SciSparc's decision to enter into a bridge loan agreement with a leading vehicle importer in Israel signifies a strategic pivot or diversification from its core business in the pharmaceutical sector. The move to acquire a company outside of its primary industry raises questions about SciSparc's market strategy and long-term vision.

From a market perspective, the diversification could be seen as a hedge against the volatile pharmaceutical market, especially considering the high risks and long timelines associated with bringing new drugs to market. However, it also introduces a new set of risks associated with the automotive import industry, which has its own regulatory and market challenges.

Stakeholders should consider the potential synergies between the two companies. While at first glance, the pharmaceutical and vehicle import businesses may seem unrelated, there could be underlying strategic reasons for the acquisition, such as leveraging logistical capabilities or diversifying against sector-specific downturns.

The terms of the bridge loan agreement, particularly the interest rates and conditions of repayment, are structured to incentivize the timely completion of the acquisition. The increase in interest rate from 7% to 9% if the acquisition is not consummated acts as a safeguard for SciSparc, compensating for the additional risk undertaken.

Moreover, the provision that allows the bridge loan to be set-off against the financing amount at closing is a common clause in acquisition finance, ensuring that the bridge loan effectively becomes part of the purchase consideration. This mechanism can simplify the financial transactions involved in the acquisition and may provide tax or accounting efficiencies.

It is also noteworthy that the bridge loan is due at the earlier date of the closing, termination of the definitive agreement, or a set date in July 2024. This creates a clear timeline for the acquisition process and provides a degree of certainty for both parties involved. Stakeholders should be aware of the legal implications of these terms, as they could affect the financial health of SciSparc if the acquisition encounters unforeseen obstacles.

TEL AVIV, Israel, Jan. 19, 2024 (GLOBE NEWSWIRE) -- SciSparc Ltd. (Nasdaq: SPRC) ("Company" or "SciSparc"), a specialty clinical-stage pharmaceutical company focusing on the development of therapies to treat disorders and rare diseases of the central nervous system, announced today that it entered, as lender, into a bridge loan agreement (the "Agreement) with a leading vehicle importer company in Israel, as borrower (the "Target Company"), pursuant to which the Target Company received a bridge loan (the “Bridge Loan”) in the amount of $1.4 million, further to the previously-announced non-binding letter of intent (the “LOI”) for the Company to acquire the Target Company (the “Acquisition”).

With this Bridge Loan, SciSparc continues to proceed towards the Acquisition, pursuant to the LOI and the additional negotiated terms between the Company and the Target Company, announced on November 22 and December 7, 2023, respectively. As previously announced on December 7, 2023, the Company intends to acquire 100% of the Target Company and will establish a new wholly-owned Israeli subsidiary, which would in turn merge with and into the Target Company. Following the Acquisition closing (the”Closing”), it is contemplated that shareholders of the Company will hold approximately 50.01% of the share capital of the resulting combined company. 

The Agreement, signed on January 16, 2024, states that the principal amount of the Bridge Loan will bear interest at a rate of 7% per annum (or 9% per annum if the Acquisition is not consummated prior to the repayment date), compounded annually. The Bridge Loan amount, together with any accrued interest (the “Owed Amount”), may be repaid in part or in whole at the discretion of the Target Company prior to the repayment date. The repayment of the Owed Amount will be due at the earlier date of: (a) the Closing, in which the Owed Amount shall be deemed a part of, and set-off against, the financing amount the Company will provide the Target Company with upon Closing, which is expected to be $4,250,000; or (b) if the definitive agreement for the Acquisition is terminated in accordance with its terms, within three months from such termination date; or (c) July 15, 2024.

About SciSparc Ltd. (Nasdaq: SPRC):

SciSparc Ltd. is a specialty clinical-stage pharmaceutical company led by an experienced team of senior executives and scientists. SciSparc’s focus is on creating and enhancing a portfolio of technologies and assets based on cannabinoid pharmaceuticals. With this focus, the Company is currently engaged in the following drug development programs based on THC and/or non-psychoactive CBD: SCI-110 for the treatment of Tourette Syndrome, for the treatment of Alzheimer's disease and agitation; SCI-160 for the treatment of pain; and SCI-210 for the treatment of ASD and status epilepticus. The Company also owns a controlling interest in a subsidiary whose business focuses on the sale of hemp seeds oil-based products on Amazon Marketplace.

Forward-Looking Statements:

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws. For example, SciSparc is using forward-looking statements when it discusses its proceeding towards the Acquisition pursuant to the LOI, the execution of binding definitive agreements with respect to the Acquisition, the anticipated completion of the Acquisition, and the terms of repayment of the Bridge Loan. The Company may not enter into a definitive agreement for the Acquisition or complete the Acquisition. Because such statements deal with future events and are based on SciSparc's current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of SciSparc could differ materially from those described in or implied by the statements in this press release. The forward-looking statements contained or implied in this press release are subject to other risks and uncertainties, including those discussed under the heading "Risk Factors" in SciSparc's Annual Report on Form 20-F filed with the SEC on May 1, 2023, and in subsequent filings with the U.S. Securities and Exchange Commission. Except as otherwise required by law, SciSparc disclaims any intention or obligation to update or revise any forward-looking statements, which speak only as of the date they were made, whether as a result of new information, future events or circumstances or otherwise.

Investor Contact:
IR@scisparc.com
Tel: +972-3-6167055


The bridge loan amount announced by SciSparc Ltd. is $1.4 million.

The interest rate on the bridge loan is 7% per annum, or 9% per annum if the Acquisition is not consummated prior to the repayment date.

After the Acquisition, shareholders of the Company will hold approximately 50.01% of the share capital of the resulting combined company.

The repayment of the Owed Amount will be due at the earlier date of: (a) the Closing, in which the Owed Amount shall be deemed a part of, and set-off against, the financing amount the Company will provide the Target Company with upon Closing, which is expected to be $4,250,000; or (b) if the definitive agreement for the Acquisition is terminated in accordance with its terms, within three months from such termination date; or (c) July 15, 2024.
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