Fortune Rise Acquisition Corporation (Nasdaq: FRLA) and OriginClear Inc. (OTC Other: OCLN), the Clean Water Innovation Hub™, today announced that FRLA and Water On Demand Inc. (WOD), a subsidiary of OriginClear, Inc., have entered into a definitive business combination agreement (the "BCA").
The transaction represents a pro forma equity valuation of approximately $72 million of the Combined Company, assuming no further redemptions of FRLA public shares by FRLA's public shareholders. The estimated cash proceeds available to the Combined Company from the transaction consists of FRLA's $ 39,635,883 of cash held in trust, assuming no further redemptions of FRLA public shares.
The proceeds will be used to develop the Water On Demand water-as-a-service network, grow the Modular Water and Progressive Water business units, and carry out an aggressive acquisition program, which is expected to accelerate the existing growth. A number of assumptions have been made as to purchase multiples, net growth, synergies and other factors, and there are no guarantees that the Combined Company will succeed in the acquisitions and subsequent integrations of the acquired entities. The acquisitions will prioritize network management software, management and engineering staffing, and vertical integration through acquisition of component fabricators.
Upon closing of the transactions contemplated under the BCA, and assuming none of FRLA's public shareholders elect to redeem their shares of common stock and no additional shares of common stock are issued, it is anticipated that FRLA's public shareholders would retain an ownership interest of approximately 46% of the Combined Company, the sponsors, officers, directors and other holders of FRLA founder shares and private shares will retain an ownership interest of approximately 18% of the Combined Company, and the WOD stockholders will own approximately 36% of the Combined Company, based on its agreed acquisition valuation of $32 million, an approximate 3.2x multiple of its 2022 revenue. The existing stockholders of WOD are expected to roll 100% of their equity into the Combined Company.
The board of directors of each of FRLA and WOD unanimously approved the transaction, which is expected to be completed in the second quarter of 2024, subject to, among other things, the approval by the shareholders of FRLA and WOD, satisfaction of the conditions stated in the definitive agreement and other customary closing conditions, including a registration statement being declared effective by the SEC, and approval by The Nasdaq Stock Market to list the securities of the Combined Company.