UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01. Entry into a Material Definitive Agreement.
Amendment of Trust Agreement
On February 5, 2021, Kernel Group Holdings, Inc., a Cayman Islands exempted company (the “Company”), consummated its initial public offering (the “Offering”). In connection therewith, the Company entered into an Investment Management Trust Agreement, dated February 5, 2021 (the “Trust Agreement”), by and between the Company and Continental Stock Transfer & Trust Company, as trustee (“Continental”). The form of the Trust Agreement was initially filed as an exhibit to the Company’s Registration Statement on Form S-1 (File No. 333-252105) for the Offering.
On August 3, 2023, at 9:00 a.m. ET, the Company held an extraordinary general meeting of its shareholders at https://agm.issuerdirect.com/krnl, pursuant to due notice (the “Shareholders Meeting”). At the Shareholders Meeting, the Company’s shareholders entitle to vote at the meeting cast their votes and approved a proposal to amend the Trust Agreement to conform the procedures in the Trust Agreement by which the Company may extend the date on which Continental must liquidate the Trust Account if the Company has not completed its initial business combination to the procedures in an amendment to the Company’s Amended and Restated Memorandum and Articles of Association which was also approved by the Company’s shareholders at the meeting and which is described under Item 5.03 below, which description is incorporated herein by reference.
The foregoing summary of the amendment to the Trust Agreement is qualified by the full text of the Amendment No. 2 to Investment Trust Agreement dated August 3, 2023 by and between the Company and Continental included as Exhibit 10.1 hereto, which is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The Company has deposited an aggregate of $150,000 (the “Extension Payment”) into the trust account of the Company for its public stockholders, representing $0.02 per public share remaining outstanding after the redemptions described below, which enables the Company to further extend the period of time it has to consummate its initial business combination by one month from August 5, 2023 to September 5, 2023 (the “Extension”). The Extension is the first of up to six monthly extensions permitted under the Certificate of Amendment to the Company’s Amended and Restated Articles of Association filed with the Cayman Registrar following shareholder approval of the Extension at the Shareholders Meeting discussed in Items 5.03 and 5.07 of this report.
Item 3.03. Material Modification to Rights of Security Holders.
Amendment of Memorandum and Articles of Association
As described in Item 5.03 below, which description is incorporated herein by reference, the shareholders of the Company approved the Amendment to the Amended and Restated Articles of Association of the Company at the August 3, 2023 Shareholders Meeting, and the Company subsequently filed the Amendment to the Amended and Restated Articles of Association with the Cayman Islands authorities.
Item 5.03. Articles of Incorporation or Bylaws.
The shareholders of the Company approved the Amendment to the Amended and Restated Memorandum and Articles of Association of the Company (the “Charter Amendment”) at the August 3, 2023 Shareholders Meeting, changing the structure and cost of the Company’s right to extend the date (the “Termination Date”) by which the Company must (i) consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company and one or more businesses (a “business combination”), (ii) cease its operations if it fails to complete such business combination, and (iii) redeem or repurchase 100% of the Company’s Class A ordinary shares included as part of the units sold in the Company’s initial public offering that closed on February 5, 2021 (the “IPO”) which is currently August 5, 2023 unless extended.
The Charter Amendment allows the Company to extend the Termination Date by up to six (6) one-month extensions to February 5, 2024 (each of which we refer to as an “Extension”, and such later date, the “Extended Deadline”) provided that if any Extended Deadline ends on a day that is not a business day, such Extended Deadline will be automatically extended to the next succeeding business day. To obtain each 1-month extension, the Company, its sponsor or any of their affiliates or designees must deposit into the Company’s Trust Fund with Continental the lesser of (x) $150,000 or (y) $0.04 per share for each of the Company’s publicly held shares outstanding as of the deadline prior to the extension (after giving effect to redemptions in connection with the approval of the Charter Amendment by the Company’s shareholders with respect to the first such extension), unless the closing of the Company’s initial business combination shall have occurred (the “Extension Payment”), in exchange for a non-interest bearing, unsecured promissory note payable upon consummation of a business combination.
Following receipt of shareholder approval of the Charter Amendment and the Trust Amendment, the Company filed the Amendment to the Amended and Restated Articles of Association with Cayman Islands authorities. The foregoing summary is qualified by the full text of the Amendment to the Amended and Restated Articles of Association is included as Exhibit 3.1 hereto, which is incorporated herein by reference.
Item 5.07. Submission of Matters to a Vote of Security Holders.
On August 3, 2023, at 9:00 a.m. ET, the Company held an extraordinary general meeting of its shareholders at https://agm.issuerdirect.com/krnl, pursuant to due notice. On the record date of June 29, 2023, the Company had 7,626,878 Public Shares entitled to vote at the Shareholders Meeting. At the Shareholders Meeting, holders of the Company’s shares (the “Shareholders”) voted on two of the three proposals presented, the Extension Amendment Proposal and the Trust Amendment Proposal each as described in the proxy statement dated July 21, 2023. The Shareholders entitled to vote at the general meeting cast their votes as described below:
Proposal 1- Extension Amendment Proposal
The Shareholders approved the proposal (the “Extension Amendment Proposal”) to change the structure and cost of the Company’s right to extend the date by which the Company must (i) consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company and one or more businesses (a “business combination”), (ii) cease its operations if it fails to complete such business combination, and (iii) redeem or repurchase 100% of the Company’s Class A ordinary shares included as part of the units sold in the Company’s IPO from August 5, 2023 by up to six (6) one-month extensions to February 5, 2024 provided that if any Extended Deadline ends on a day that is not a business day, such Extended Deadline will be automatically extended to the next succeeding business day. The following is a tabulation of the voting results:
Ordinary Shares:
| Votes For | Votes Against | Abstentions | Broker Non-Votes | |||
| 13,088,532 | 476,104 | – | – |
Proposal 2 - Trust Amendment Proposal
The Shareholders approved the proposal to amend the Company’s Trust Agreement with Continental (the “Trust Amendment Proposal”), pursuant to which the Company’s Trust Agreement with Continental was amended to conform the procedures in the Trust Agreement by which the Company may extend the date on which Continental must liquidate the Trust Account if the Company has not completed its initial business combination to the procedures in the Charter Amendment approved in the Extension Amendment Proposal The following is a tabulation of the voting results:
Ordinary Shares:
| Votes For | Votes Against | Abstentions | Broker Non-Votes | |||
| 13,088,532 | 476,104 | – | – |
Proposal 3 – Adjournment Proposal
The third proposal to adjourn the Shareholder Meeting (the “Adjournment Proposal”), was not presented at the Shareholders Meeting since the Extension Amendment Proposal and the Trust Amendment Proposal received sufficient favorable votes to be adopted.
Item 7.01. Regulation FD Disclosure.
A press release describing the results of the Shareholders Meeting and the Company’s intention to obtain the Extension to the Termination Date is attached hereto as Exhibit 99.1.
Item 8.01. Other Events.
Redemption of Public Shares
In connection with the approval of the Extension Amendment Proposal and the Trust Amendment Proposal at the Shareholders Meeting, holders of 1,310,929 of the Company’s Class A ordinary shares (the “Public Shares”) exercised their right to redeem those shares for cash at an approximate price of $10.42 per share, for an aggregate of approximately $13.6 million. Following the payment of the redemptions, the Trust Account will have a balance of approximately $65.4 million before the Extension Payment.
Item 9.01. Exhibits.
Exhibit Number |
Description of Exhibit | |
| 3.1 | Amendment to the Amended and Restated Articles of Association of the Company dated August 3, 2023. | |
| 10.1 | Amendment No. 2 to Investment Management Trust Agreement dated August 3, 2023 by and between the Company and Continental Stock Transfer and Trust Company. | |
| 99.1 | Press Release | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| KERNEL GROUP HOLDINGS, INC. | ||
| Date: August 4, 2023 | By: | /s/ Suren Ajjarapu |
| Suren Ajjarapu | ||
| Chief Executive Officer | ||
Exhibit 3.1
AMENDMENT
TO THE
AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
OF
KERNEL GROUP HOLDINGS, INC.
“RESOLVED, as a special resolution, that the Amended and Restated Articles of Association of the Company be amended by the deletion of the existing definition of section 49.7 in its entirety and the insertion of the following language in its place:
The Company will have 24 months from the consummation of the IPO to consummate a Business Combination. If the Directors anticipate that the Company may not be able to consummate a Business Combination within 24 months from consummation of the IPO, the Sponsor or its affiliates or designees may, but are not obligated to, extend the period of time to consummate a Business Combination six times by an additional month each time; provided that, the Sponsor or its affiliates or designees, upon five days’ advance notice prior to the applicable deadline, shall deposit into the trust account the lesser of (x) $150,000 or (y) $0.04 per share for each public share that is not redeemed in connection with the Extraordinary General Meeting for each such one-month extension until February 5, 2024, unless the closing of a Business Combination shall have occurred. In the event that the Sponsor or its affiliates or designees elect to extend the time to complete a Business Combination and deposit the applicable amount of money into trust, the Sponsor or its affiliates or designees would receive a non-interest bearing, unsecured promissory note equal to the amount of any such deposit that will not be repaid in the event that the Company is unable to close a Business Combination unless there are funds available outside the trust account to do so. In the event that the Company receives notice from our Sponsor or its affiliates or designees five days prior to the applicable deadline of its intent to effect an extension, the Company will issue a press release announcing such intention at least three days prior to the applicable deadline. The Company will also issue a press release the day after the applicable deadline announcing whether the funds had been timely deposited. Neither the Sponsor nor its affiliates or designees are obligated to fund the trust account to extend the time for the Company to complete the Business Combination.”
Exhibit 10.1
AMENDMENT
TO THE
INVESTMENT MANAGEMENT TRUST AGREEMENT
This Amendment No. 2 (this “Amendment”), dated as of August 3, 2023, to the Investment Management Trust Agreement (as defined below) is made by and between Kernel Group Holdings, Inc. (the “Company”) and Continental Stock Transfer & Trust Company, as trustee (“Trustee”). All terms used but not defined herein shall have the meanings assigned to them in the Trust Agreement.
WHEREAS, the Company and the Trustee entered into an Investment Management Trust Agreement dated as of February 5, 2021 (the “Trust Agreement”);
WHEREAS, Section 1(i) of the Trust Agreement sets forth the terms that govern the liquidation of the Trust Account under the circumstances described therein;
WHEREAS, at an Extraordinary General Meeting of the Company held on August 3, 2023, the Company’s shareholders approved (i) a proposal to amend the Company’s amended and restated articles of association (the “Amended and Restated Articles of Association”) extending the date by which the Company has to consummate a business combination from August 5, 2023 to February 5, 2024; and (ii) a proposal to amend the Trust Agreement requiring the Company to, deposit into the Trust Account the lesser of (x) $150,000 or (y) $0.04 per share for each public share that is not redeemed in connection with the Extraordinary General Meeting for each such one-month extension up to a maximum of $900,000 for a total of six one (1) month extensions until February 5, 2024, unless the Closing of the Company’s initial business combination shall have occurred, subject to the terms and conditions of the Amended and Restated Articles of Association, and the Trust Agreement, and updating related defined terms; and
NOW THEREFORE, IT IS AGREED:
1. Section 1(i) of the Trust Agreement is hereby amended and restated in its entirety as follows:
“(i) Commence liquidation of the Trust Account only after and promptly after (x) receipt of, and only in accordance with, the terms of a letter from the Company (“Termination Letter”) in a form substantially similar to that attached hereto as either Exhibit A or Exhibit B, as applicable, signed on behalf of the Company by at least two of its Chief Executive Officer, Chief Financial Officer, President, Executive Vice President, Vice President, Secretary or Chairman of the board of directors of the Company (the “Board”) or other authorized officer of the Company, and, in the case of a Termination Letter in a form substantially similar to the attached hereto as Exhibit A, acknowledged and agreed to by the Representative, and complete the liquidation of the Trust Account and distribute the Property in the Trust Account, including interest not previously released to the Company to pay its taxes (less up to $100,000 of interest that may be released to the Company to pay dissolution expenses), only as directed in the Termination Letter and the other documents referred to therein, or (y) the date which is the later of (1) 30 months after the closing of the Offering or up to 36 months after the closing of the Offering if the Company exercises the six-month one month extensions described in the Company’s Amended and Restated Articles of Association, as it may be further amended, and (2) such later date as may be approved by the Company’s shareholders in accordance with the Company’s amended and restated articles of association (“Charter”) if a Termination Letter has not been received by the Trustee prior to such date, in which case the Trust Account shall be liquidated in accordance with the procedures set forth in the Termination Letter attached as Exhibit B and the Property in the Trust Account, including interest not previously released to the Company to pay its taxes (less up to $100,000 of interest that may be released to the Company to pay dissolution expenses) shall be distributed to the Public Shareholders of record as of such date; provided, however, that in the event the Trustee receives a Termination Letter in a form substantially similar to Exhibit B hereto, or if the Trustee begins to liquidate the Property because it has received no such Termination Letter by the date specified in clause (y) of this Section 1(i), the Trustee shall keep the Trust Account open until twelve (12) months following the date the Property has been distributed to the Public Shareholders;”
2. A new Section 1(m) shall be added as follows:
“(m) Upon receipt of an extension letter (“Extension Letter”) substantially similar to Exhibit E hereto at least five business days prior to the application termination date (as may be extended in accordance with Section 1(i), signed on behalf of the Company by an executive officer, and receipt of the dollar amount specified in the Extension Letter on or prior to such termination date (if and as applicable), to follow the instructions set forth in the Extension Letter.”
3. The following defined term in the Trust Agreement shall be amended and restated in their entirety:
“Trust Agreement” shall mean that certain Investment Management Trust Agreement dated February 5, 2021, between Kernel Group Holdings, Inc. and Continental Stock Transfer & Trust Company.”
4. The term “Property” shall be deemed to include any Extension Fee paid to the Trust Account in accordance with the terms of the Amended and Restated Articles of Association and the Trust Agreement.
5. A new Exhibit E of the Trust Agreement is hereby added as follows:
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, N.Y. 10004
Attn: Mark Zimkind
Re: Trust Account — Extension Letter
Gentlemen:
Pursuant to paragraphs 1(j) and 1(m) of the Investment Management Trust Agreement between Kernel Group Holdings, Inc. (“Company”) and Continental Stock Transfer & Trust Company (“Trustee”), dated as of February 5, 2021, (“Trust Agreement”), this is to advise you that the Company is extending the time available in order to consummate a Business Combination with the Target Businesses for an additional six months, from August 5, 2023 to February 5, 2024 (the “Extension”). Capitalized words used herein and not otherwise defined shall have the meanings ascribed to them in the Trust Agreement. This Extension Letter shall serve as the notice required with respect to Extension prior to the Applicable Deadline. In accordance with the terms of the Trust Agreement, we hereby authorize you to deposit the Extension Fee in the amount of the lesser of (x) $150,000 or (y) $0.04 per share for each public share that is not redeemed in connection with the Extraordinary General Meeting for each such one-month extension until February 5, 2024, unless the Closing of the Company’s initial business combination shall have occurred, which will be wired to you, into the Trust Account investments upon receipt.
Very truly yours,
KERNEL GROUP HOLDINGS, INC.
| By: | |
| Name: | Suren Ajjarapu |
| Title: | Chief Executive Officer |
6. All other provisions of the Trust Agreement shall remain unaffected by the terms hereof.
7. This Amendment may be signed in any number of counterparts, each of which shall be an original and all of which shall be deemed to be one and the same instrument, with the same effect as if the signatures thereto and hereto were upon the same instrument. A facsimile signature or electronic signature shall be deemed to be an original signature for purposes of this Amendment.
8. This Amendment is intended to be in full compliance with the requirements for an Amendment to the Trust Agreement as required by Section 6(c) and Section 6(d) of the Trust Agreement, and every defect in fulfilling such requirements for an effective amendment to the Trust Agreement is hereby ratified, intentionally waived and relinquished by all parties hereto.
9. This Amendment shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction.
IN WITNESS WHEREOF, the parties have duly executed this First Amendment to the Investment Management Trust Agreement as of the date first written above.
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Trustee |
||
| By: | /s/ Francis Wolf | |
| Name: | Francis Wolf | |
| Title: | Vice President | |
| KERNEL GROUP HOLDINGS, INC. | ||
| By: | /s/ Suren Ajjarapu | |
| Name: | Suren Ajjarapu | |
| Title: | Chief Executive Officer | |
Exhibit 99.1
Kernel Group Holdings, Inc. Announces Charter and Trust Agreement Amendments and Intention to Extend the Deadline to Complete a Business Combination to September 5, 2023
New York – August 4, 2023 - Kernel Group Holdings, Inc. (NASDAQ: KRNLU, KRNL, KRNLW) (“KRNL” or the “Company”), a special purpose acquisition company, announced today that its shareholders approved amendments to its charter and trust agreement to change the structure and cost of how KRNL can obtain extensions to the deadline to complete its initial business combination and that KRNL obtained the first of up to six 1-month extensions of the deadline - from August 5, 2023 to September 5, 2023 - by depositing $150,000 into its trust account (the “Trust Account”) with Continental Stock Transfer and Trust Company (“Continental”).
KRNL’s shareholders, at an extraordinary general meeting of its shareholders held on August 3, 2023, approved amendments to KRNL’s Amended and Restated Articles of Association (the “Charter Amendment”) and KRNL’s Investment Management Trust Agreement dated February 5, 2021 with Continental (the “Trust Agreement Amendment”) to change how KRNL can obtain extensions to the previously applicable August 5, 2023 deadline to complete its initial business combination. The amendments allow KRNL to instead obtain up to six 1-month extensions by depositing the lesser of (x) $150,000 or (y) $0.04 per outstanding public share into the Trust Account by the deadline applicable prior to the extension.
The Charter Amendment triggered a right of KRNL’s public shareholders to demand the redemption of their public shares out of funds held in the Trust Account. Holders of 1,310,929 public shares properly requested redemption leaving 6,315,949 public shares outstanding. After payment of the redemption price to the redeeming public shareholders of approximately $10.42 per share for an aggregate of $13.6 million, KRNL will have approximately $65.4 million left in its Trust Account. Based on the shares redeemed, the $150,000 per month represents approximately $0.02 per unredeemed share.
As a consequence of adoption of the Charter Amendment and the Trust Agreement Amendment and the redemptions, KRNL can now obtain up to six 1-month extensions to the deadline to complete its initial business combination at a cost of lesser of (x) $150,000 or (y) $0.04 per outstanding public share per extension. In connection with the amendments, KRNL notified Continental that it intends to obtain the first extension.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “outlook,” “guidance” or the negative of those terms or other comparable terminology. These statements are based on the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause future events to differ materially from those in the forward-looking statements, many of which are outside of the Company’s control. These factors include, but are not limited to, a variety of risk factors affecting the Company’s business and prospects, see the section titled “Risk Factors” in the Company’s Prospectus filed with the SEC on February 4, 2021 and subsequent reports filed with the SEC, as amended from time to time. Any forward-looking statements are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Contact:
hd@kernelcap.com
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