Shanghai-based Zhibao Technology plans to sell $220 million in stock for 3,500 Bitcoin in a non-binding deal with buyer Joyertech. The deal would give Joyertech majority control of Zhibao's board. The move comes as Zhibao faces a Nasdaq delisting notice for its low stock price and a "going concern" warning, reflecting a wider trend of public companies pivoting to a Bitcoin treasury strategy.
Bitcoin PIPE financing deal
- ▪The transaction is non-binding and conditional upon final valuation, audits, and regulatory approvals
- ▪Zhibao Technology signed a non-binding term sheet to sell stock in exchange for approximately 3,500 Bitcoin
- ▪The 3,500 Bitcoin payment is valued at approximately $220 million at current prices
- ▪The buyer in the proposed deal is a firm named Joyertech and Information OPC
- ▪The deal is structured as a private investment in public equity (PIPE), with shares sold directly to an investor
Board control transfer
- ▪Zhibao's current management is expected to run the legacy insurance business until the new owners decide on its future restructuring or disposition
- ▪Upon closing the deal, the buyer, Joyertech, would designate a majority of Zhibao Technology's board of directors
Nasdaq compliance issues
- ▪Zhibao Technology pioneered a "2B2C" digital embedded insurance model in China, launching the country's first digital insurance brokerage platform in 2020
- ▪Following the announcement, Zhibao Technology's stock (ZBAO) price briefly more than doubled
- ▪Zhibao Technology's market capitalization of $12-15 million is dwarfed by the proposed $220 million Bitcoin holding
- ▪On July 15, Zhibao Technology received a Nasdaq deficiency notice because its stock traded below the $1 minimum bid price
- ▪Zhibao Technology has until January 6, 2027, to regain compliance with Nasdaq's minimum price requirement
- ▪Previous SEC filings for Zhibao Technology raised "substantial doubt about our ability to continue as a going concern."
Bitcoin treasury strategy trend
- ▪Some analysts have described the corporate Bitcoin treasury trend as a bubble, and some firms have begun selling their holdings
- ▪The deal would place a Bitcoin treasury directly on Zhibao's balance sheet, as payment is in BTC, not cash
- ▪The strategy of public companies remaking themselves around a Bitcoin treasury has been a trend over the last two years
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