Alpha Star Acquisition Corporation Announces Receipt of Letter from Nasdaq Regarding Failure to Complete Initial Business Combination

Rhea-AI Summary

Alpha Star Acquisition (ALSA) has received a delisting notice from Nasdaq due to failing to complete an initial business combination within the required 36-month timeframe. The company's securities will be suspended from trading on December 23, 2024, and will be delisted from Nasdaq. ALSA plans to transition to the OTC market under the same ticker symbols.

Despite the delisting, ALSA continues to pursue its planned business combination with OU XDATA GROUP. The company has scheduled an extraordinary general meeting on December 27, 2024, to approve amendments allowing up to six one-month extensions (until June 15, 2025) for completing the business combination, with each extension requiring a $35,000 deposit into the Trust Account.

Positive

• Planned transition to OTC market maintains trading capability
• Business combination with OU XDATA GROUP still proceeding
• Option to extend business combination deadline up to 6 months

Negative

• Delisting from Nasdaq effective December 23, 2024
• Failed to meet 36-month deadline for business combination
• Additional costs of $35,000 per month for each extension
• Potential loss of institutional investor interest due to OTC listing

Insights

Investment Banking Analyst

The delisting scenario for Alpha Star Acquisition represents a critical juncture for this SPAC. The failure to complete a business combination within the mandated 36-month timeframe triggers automatic delisting procedures, though several key aspects warrant attention:

Key implications:

• The company's transition to OTC markets maintains some trading liquidity but typically results in reduced institutional interest and potentially wider bid-ask spreads
• The proposed monthly extensions, costing $35,000 each, could provide up to 6 months of additional time to complete the OU XDATA GROUP merger
• The total potential extension cost of $210,000 represents a relatively small premium to maintain the SPAC structure and avoid immediate liquidation

The planned merger with OU XDATA GROUP remains viable, with a critical shareholder vote scheduled for December 27. While the delisting adds complexity, the company's strategy to maintain SEC reporting status while pursuing OTC listing preserves essential market access during this transition period.

Corporate Governance Expert

This delisting event highlights significant regulatory compliance challenges and strategic governance decisions. The company's dual-track approach - managing the Nasdaq delisting while simultaneously pursuing extensions and the OU XDATA merger - requires careful navigation of multiple stakeholder interests:

Critical governance considerations:

• The extension mechanism provides important operational flexibility but requires careful cash management and shareholder approval
• Maintaining SEC reporting compliance during the OTC transition demonstrates commitment to transparency
• The planned re-listing strategy post-merger indicates a structured approach to maintaining long-term shareholder value

The timing of these events, particularly the shareholder meeting scheduled just days after the trading suspension, suggests a well-coordinated response to maintain corporate continuity despite the technical default under Nasdaq rules.

New York, NY, Dec. 20, 2024 (GLOBE NEWSWIRE) -- Alpha Star Acquisition Corporation (Nasdaq: ALSA) (the “Company”) announced that it has received a letter (the “Letter”) from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”) indicating that (i) the Staff has determined that the Company’s securities will be delisted from The Nasdaq Stock Market; (ii) trading of the Company’s Ordinary Shares, Units, Rights, and Warrants will be suspended at the opening of business on December 23, 2024; and (iii) a Form 25-NSE will be filed with the Securities and Exchange Commission (the “SEC”), which will remove the Company’s securities from listing and registration on The Nasdaq Stock Market. Pursuant to Nasdaq Listing Rule IM-5101-2, a special purpose acquisition company must complete one or more business combinations within 36 months of the effectiveness of its IPO registration statement. Since the Company failed to complete its initial business combination by December 13, 2024, the Company did not comply with IM-5101-2, and its securities are now subject to delisting.

The Company will not appeal Nasdaq’s determination to delist the Company’s securities and accordingly, the Company’s securities will be suspended from trading on Nasdaq at the opening of business on December 23, 2024. The Company intends to apply for the listing of its securities on the OTC market under the same ticker symbols after they are delisted from Nasdaq. The delisting from Nasdaq does not affect the Company’s previously announced business combination with OU XDATA GROUP, a company incorporated in Estonia, as both parties continue to work to effectuate the closing of the business combination. The merged entity will apply for listing of its securities on the Nasdaq Stock Market in connection with the closing of the business combination.

On December 16, 2024, the Company filed a definitive proxy statement for an extraordinary general meeting of shareholders to be held on December 27, 2024, to, among other things, approve amendments to the investment management trust agreement between the Company and Wilmington Trust, N.A. providing the Company with the discretion to extend the date on which to commence liquidating the trust account (the "Trust Account") established in connection with the Company’s initial public offering up to six (6) additional times, each by a period of one month, from December 15, 2024 to June 15, 2025 by depositing into the Trust Account $35,000 for each one-month extension. The Company believes that it is very likely that it will fully exercise such discretion to extend the business combination period. The Company and OU XDATA GROUP are working diligently to complete the business combination as soon as practicable.

The Company will remain a reporting entity under the Securities Exchange Act of 1934, as amended, with respect to continued disclosure of financial and operational information. 

About Alpha Star Acquisition Corporation

Alpha Star Acquisition Corporation is a blank check company formed under the laws of the Cayman Islands for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

Forward Looking Statements

This press release contains statements that constitute “forward-looking statements”. Forward-looking statements are subject to numerous conditions, many of which are beyond the control of the Company, including those set forth in the Risk Factors section of the Company’s registration statement and final prospectus for the offering filed with the SEC. Copies are available on the SEC’s website, www.sec.gov. The Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

Company Contacts:

Zhe Zhang
Chairman and Chief Executive Officer
100 Church Street, 8th Floor, New York, New York
(332) 233-4356
Email: zhangzhe@siftcap.cn

FAQ

Why is Alpha Star Acquisition (ALSA) being delisted from Nasdaq?

ALSA is being delisted because it failed to complete an initial business combination within the required 36-month timeframe as per Nasdaq Listing Rule IM-5101-2.

When will ALSA stock be suspended from trading on Nasdaq?

ALSA's securities will be suspended from trading on Nasdaq at the opening of business on December 23, 2024.

What happens to ALSA shares after the Nasdaq delisting?

ALSA intends to apply for listing its securities on the OTC market under the same ticker symbols after the Nasdaq delisting.

How long can ALSA extend its business combination deadline?

ALSA can extend the deadline up to six times, each for one month, from December 15, 2024 to June 15, 2025, by depositing $35,000 per extension.

Will the Nasdaq delisting affect ALSA's merger with OU XDATA GROUP?

No, the delisting does not affect the planned business combination with OU XDATA GROUP, and both parties continue to work toward closing the deal.