AtlasClear Holdings, Inc. Announces Agreement for an Investment of up to $45 million in its Company

Rhea-AI Summary

AtlasClear Holdings (NYSE: ATCH) has secured an agreement with Hanire for an investment of up to $45 million through equity and convertible debt. The investment will be structured in tranches, with the first $5 million expected in January 2025. The deal includes a $5 million equity investment through 20 million common stock shares and a convertible loan for the remaining amount.

The investment aims to help AtlasClear achieve key strategic goals, including: restructuring current debt with better terms, increasing capital base at Wilson-Davis subsidiary to expand clearing business, supporting the planned Commercial Bancorp of Wyoming acquisition, and providing capital for targeted acquisitions. The convertible loan features a 40% discount to the volume-weighted average stock price at conversion, subject to stockholder approval.

Positive

• Secured up to $45 million investment commitment from Hanire
• Debt restructuring opportunity with better terms and reduced dilution
• Capital increase for Wilson-Davis subsidiary expansion
• Funding support for Commercial Bancorp of Wyoming acquisition
• Strategic partnership providing cost efficiencies and revenue opportunities

Negative

• 40% discount on convertible debt may lead to significant dilution
• Investment is milestone-based and not guaranteed in full
• First tranche delayed until January 2025
• Stockholder approval required for convertible loan shares

Insights

Financial Analyst

The $45 million investment agreement marks a pivotal financial restructuring for AtlasClear Holdings, with strategic implications for its growth trajectory. The deal's structure, combining equity and convertible debt, is particularly noteworthy. The initial $5 million equity portion through 20 million shares provides immediate capital, while the convertible loan's 40% discount to VWAP structure balances investor protection with upside potential.

The milestone-based tranches create a performance-linked funding mechanism that aligns investor and company interests. This capital injection addresses multiple critical needs: debt restructuring, Wilson-Davis subsidiary capitalization and potential bank acquisition funding. The reduced dilution impact compared to traditional equity raises demonstrates sophisticated financial engineering.

The strategic partnership with Hanire extends beyond mere funding, potentially creating revenue synergies through their brokerage and investment banking operations. This could accelerate AtlasClear's path to profitability and enhance its competitive position in the small and middle-market financial services segment.

Banking Industry Expert

The proposed acquisition of Commercial Bancorp of Wyoming represents a strategic vertical integration play that could significantly enhance AtlasClear's service offering. Securing Federal Reserve approval for bank acquisition requires substantial capital adequacy - this investment provides important backing for regulatory compliance.

The combination of a traditional banking platform with modern clearing and settlement technology could create a unique competitive advantage. Farmers State Bank's established presence since 1915 provides a stable foundation for expanding into contemporary financial services. This hybrid model, merging traditional banking with modern fintech capabilities, positions AtlasClear to capture emerging opportunities in digital asset services while maintaining regulatory compliance.

Market Structure Specialist

The strategic focus on correspondent clearing through Wilson-Davis is particularly timely given market structure evolution and increasing demand for efficient middle-market clearing solutions. The capital injection enables Wilson-Davis to expand its clearing capabilities and potentially capture market share in a segment underserved by larger clearing firms.

The planned cloud-based integration of account opening, trading, risk management and settlement addresses key pain points in current market infrastructure. The management team's track record with companies like Penson Clearing and Southwest Securities adds credibility to their execution capability. This could position AtlasClear as a significant player in modernizing financial market infrastructure for smaller institutions.

TAMPA, Fla.--(BUSINESS WIRE)-- AtlasClear Holdings, Inc. (“AtlasClear Holdings” or the “Company”) (NYSE: ATCH) is excited to announce it has secured an agreement from Hanire LLC (“Hanire”) to invest up to $45 million into the Company, through a combination of equity and convertible debt in a milestone based series of tranches, with the first tranche of $5 million expected in January 2025, subject to satisfaction of closing conditions.

“We are very excited about this partnership and the investment being made into AtlasClear Holdings by Hanire. This is the culmination of a relationship between Management of the Company and the Principals of Hanire that we have been developing over the course of many years. The investment is expected to allow AtlasClear Holdings to accomplish a number of our priorities, and we believe it is a real turning point for our Company. For Hanire, AtlasClear Holdings provides an expanding platform that will assist it with its brokerage and investment banking businesses while creating cost efficiencies and enhanced revenue opportunities for both parties. This is an exciting and synergistic deal,” said Craig Ridenhour, President, AtlasClear Holdings.

The agreements signed with Hanire provide for an up-to-$45 million investment in the form of a combination of equity and convertible debt, comprised of an up-to-$5 million equity investment through the sale of 20 million shares of common stock and a convertible loan for the balance of the investment, including an initial advance of $5 million and additional advances subject to the achievement of specified milestones. The loan will be convertible at a conversion price calculated based on a 40% discount to the volume-weighted average price of the Company’s common stock at the time of conversion. The conversion of any portion of the convertible loan is subject to the Company’s receipt of stockholder approval of the issuance of the shares.

The Company believes the investment will allow AtlasClear Holdings to achieve a number of strategic goals, including:

• Allow for the restructuring of the current debt structure of the Company with better terms and less dilution to existing stockholders
• Increase the capital base at its wholly-owned subsidiary, Wilson-Davis & Co., Inc. (“Wilson-Davis”), thereby allowing Wilson-Davis to expand its correspondent clearing business and accelerate additional business lines.
• Allow the Company to move forward with the formal filings with the Federal Reserve for the proposed acquisition of Commercial Bancorp of Wyoming while providing additional capital for the bank upon a potential approval.
• Provide capital for targeted, accretive acquisitions.

“We believe this is a tremendous day for our Company and our stockholders. It’s a thoughtfully structured deal that we believe delivers more capital into the Company as we restructure our debt, hope to achieve profitability, and deliver the capital needed for our proposed bank acquisition upon approval. In full, we believe this investment will solidify our capital foundation, reduce potential dilution, and position our Company to maximize our long-term stockholder value. We took great care to find the right investment partner to help us grow,” said Mr. Ridenhour.

About AtlasClear Holdings, Inc.

AtlasClear Holdings plans to build a cutting-edge technology enabled financial services firm that would create a more efficient platform for trading, clearing, settlement and banking of evolving and innovative financial products with a focus on the small and middle market financial services firms. The strategic goal of AtlasClear Holdings is to have a fully vertically integrated suite of cloud-based products including account opening, trade execution, risk management, regulatory reporting and settlement. The team that leads AtlasClear Holdings consists of respected financial services industry veterans that have founded and led other companies in the industry including Penson Clearing, Southwest Securities, NexTrade, Symbiont, and Anderen Bank.

About Wilson-Davis & Co., Inc.

Wilson-Davis is a full-service correspondent securities broker-dealer. The company is registered with the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority and the Securities Investor Protection Organization. In addition, Wilson-Davis is a member of DTCC as well as the National Securities Clearing Corporation. Headquartered in Salt Lake City, Utah and Dallas, Texas. Wilson-Davis has been servicing the investment community since 1968, with satellite offices in California, Arizona, Colorado, New York, New Jersey and Florida.

About Commercial Bancorp of Wyoming

Commercial Bancorp is a bank holding company operating through its wholly-owned subsidiary, Farmers State Bank (“FSB”) and has been servicing the local community in Pine Bluffs, WY since 1915. It has focused the majority of its services on private and corporate banking. A member of the Federal Reserve, FSB is expected to be a strategic asset for AtlasClear Holdings’ long-term business model.

Cautionary Statements Regarding Forward-Looking Statements

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that reflect AtlasClear Holdings’ current views with respect to, among other things, the future operations and financial performance of AtlasClear Holdings. Forward-looking statements in this communication may be identified by the use of words such as "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "foreseeable," "future," "intend," "may," "outlook," "plan," "potential," "proposed," "predict," "project," "seek," "should," "target," "trends," "will," "would" and similar terms and phrases. Forward-looking statements contained in this communication include, but are not limited to, statements as to (i) the closing of all or any portion of the investment from Hanire, (ii) AtlasClear Holdings’ expectations regarding the benefits of the investment from Hanire, including its ability to allow AtlasClear Holdings to accomplish a number of its strategic goals, achieve profitability, deliver the capital needed for its proposed bank acquisition upon approval, solidify its capital foundation, reduce potential dilution, and position the Company to maximize long-term stockholder value, (iii) AtlasClear Holdings’ expectations as to future operational results, (v) AtlasClear Holdings’ anticipated growth strategy, including expected acquisitions, and (v) the financial technology of AtlasClear Holdings.

The forward-looking statements contained in this communication are based on the current expectations of AtlasClear Holdings and its management and are subject to risks and uncertainties. No assurance can be given that future developments affecting AtlasClear Holdings will be those that are anticipated. Actual results may differ materially from current expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond the control of AtlasClear Holdings. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Factors that could cause actual results to differ may emerge from time to time, and it is not possible to predict all of them.

Such factors include, but are not limited to: any failure by Hanire to deliver the tranches of capital on the anticipated schedule, or at all; any failure by the Company to meet the milestones required to receive the tranches of capital on a timely basis, or at all; failure of the Company to realize the anticipated benefits of the investment of capital, such as achieving profitability, delivering the capital needed for its proposed bank acquisition upon approval, solidifying its capital foundation, reducing potential dilution, and positioning the Company to maximize long-term stockholder value; failure by AtlasClear Holdings to satisfy the closing conditions to any of the tranches of capital, including receipt of stockholder approval; AtlasClear’s inability to successfully integrate, and/or realize the anticipated benefits of, the acquisition of Wilson-Davis and the technology acquired from Pacsquare Technologies LLC (the "Transaction"); failure to recognize the anticipated benefits of the Transaction, which may be affected by, among other things, competition, the ability of AtlasClear Holdings to maintain relationships with customers and suppliers and strategic alliance third parties, and to retain its management and key employees; AtlasClear Holdings’ inability to integrate, and to realize the benefits of, the Transaction and other potential acquisitions; changes in general economic or political conditions; changes in the markets that AtlasClear Holdings targets; slowdowns in securities or cryptocurrency trading or shifting demand for trading, clearing and settling financial products; any change in laws applicable to AtlasClear Holdings or any regulatory or judicial interpretation thereof; factors that may cause a delay in timely filing the transition report described herein; the risk that additional or different information may become known prior to the expected filing of the transition report, and other factors, risks and uncertainties, including those that were included under the heading "Risk Factors" in AtlasClear Holdings’ Transition Report on Form 10-KT filed with the Securities and Exchange Commission on October 16, 2024 and its subsequent filings with the SEC. AtlasClear Holdings cautions that the foregoing list of factors is not exhaustive. Any forward-looking statement made in this communication speaks only as of the date hereof. Plans, intentions or expectations disclosed in forward-looking statements may not be achieved and no one should place undue reliance on such forward-looking statements. AtlasClear Holdings does not undertake any obligation to update, revise or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

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Media

AtlasClearPR@atlasclear.com

Investors

AtlasClearIR@atlasclear.com

Source: AtlasClear

FAQ

What is the total investment amount Hanire agreed to invest in ATCH?

Hanire has agreed to invest up to $45 million in AtlasClear Holdings through a combination of equity and convertible debt.

When will ATCH receive the first investment tranche from Hanire?

The first tranche of $5 million is expected in January 2025, subject to satisfaction of closing conditions.

What is the conversion discount for ATCH's convertible debt with Hanire?

The convertible loan features a 40% discount to the volume-weighted average price of AtlasClear's common stock at the time of conversion.

How many common stock shares will be issued in ATCH's equity investment portion?

The equity investment portion includes the sale of 20 million shares of common stock for up to $5 million.

What are the main strategic goals for ATCH's $45 million investment?

The investment aims to restructure current debt, increase Wilson-Davis capital base, support the Commercial Bancorp of Wyoming acquisition, and provide capital for targeted acquisitions.