Kernel Group Holdings (NASDAQ: KRNLU) (“Kernel”), a special purpose
acquisition company (SPAC) formed for the purpose of effecting a
merger, capital stock exchange, asset acquisition, stock purchase,
or similar business combination with one or more businesses,
announced today that it has entered into a definitive business
combination agreement (the “Merger Agreement”) with AIRO Group
Holdings, Inc. (“AIRO”), a multi-faceted air mobility, autonomy
& aerospace platform with differentiated technologies and
capabilities that dynamically address high growth market trends
across the entire aviation & aerospace ecosystem. The Merger
Agreement provides AIRO with a path to becoming a publicly listed
company through a new Delaware holding company, AIRO Group, Inc.
(“PubCo”) that will acquire both Kernel and AIRO.
Upon closing of the merger transaction (the
“Transaction”), AIRO and Kernel will be wholly-owned subsidiaries
of PubCo. PubCo common stock and warrants are expected to be listed
on Nasdaq, under the symbols “AIRO” and “AIROW,” respectively.
AIRO’s Executive Chairman and co-founder is Dr.
Chirinjeev Kathuria M.D., M.B.A. an entrepreneur, investor,
physician, philanthropist, and graduate of Brown University’s
School of Medicine, and Stanford University’s Graduate School of
Business. Dr. Kathuria has founded and served as Chairman on
several publicly traded companies, most recently co-founding Ocean
Biomedical which is pursuing programs in oncology, fibrosis, and
infectious diseases and listed on NASDAQ in February of 2023.
Additionally, Dr. Kathuria was the Founding Director of MirCorp,
the first commercial company to privately launch and fund manned
space programs
AIRO’s Chief Executive Officer and co-founder is
Captain Joe Burns, a thirty-five year veteran of aviation,
technology, and communications industries, and has a B.S. and
M.B.A. from Miami University. He served as Managing Director of
Flight Standards, Managing Director of Technology and Flight Test,
and FAA Certificate Director of Operations at United Airlines. Mr.
Burns is currently on the U.S. Executive Committee Advisory Board
for Position, Navigation, and Timing, a NASA Special Government
Employee, and has served in chairmanship roles in multiple national
advisory boards
AIRO’s President and Chief Operating Officer,
John Uczekaj, has over 40 years of experience in the aerospace
industry. While at Honeywell, John was executive vice president and
general manager of a $2B revenue Aerospace Electronics Systems
division. He led Aspen Avionics from a pre-revenue startup to a
successful avionics company that merged with AIRO. Mr. Uczekaj was
inducted into the Living Legends of Aviation in 2013. Mr. Uczekaj
holds a Bachelor of Science in Electrical and Computer Engineering
from Oregon State University and an MBA from City University,
Seattle, Washington.
AIRO is positioned to create a new middle market
aerospace and defense sector company operating in four key
divisions:
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Advanced Avionics: Highly critical electronic
systems used in aircraft. Areas of application include:
communications, navigation, monitoring, flight-control system, AI,
collision-avoidance systems, radar, and electro-optics |
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Electric Air Mobility: Urban transport systems
that move passengers or cargo by air in urban/suburban areas. eVTOL
(electric vertical take off & landing) aircraft are expected to
be used for fixed route flights, on-demand trips, and military
operations |
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Uncrewed Air System: UAS platforms and services
used for civilian/commercial and military applications. Areas of
application include: reconnaissance, attack, surveillance,
inspection, weather analysis, and healthcare |
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Training: Professional and military aviation
training for clients within wider A&D sector. Areas of
application include: customer specific solutions, close air
support, aircraft leasing, ab initio pilot training, and training
or aviation consulting services |
AIRO’s four divisions focus on critical elements
of the future aerospace and defense market construct that will
bring autonomy, artificial intelligence (AI), and advanced
operations to mainstream commercial and military marketplaces
AIRO’s Advanced Avionics
Division, with its brand Aspen Avionics, has built a
strong presence in general and business aviation through its focus
on world-class capabilities and a service organization that puts
both the current and future needs of its customers first. Building
on this experience of certified avionics across numerous platforms,
the Advanced Avionics division will lead the industry into the
safe, efficient and integrated world of autonomous aviation, and
will work cohesively with AIRO’s other three divisions to
accelerate certification of Electric Air Mobility solutions for
decades to come.
AIRO’s Electric Air Mobility
Division is leading with its Jaunt Journey aircraft and is
working with Transport Canada towards certification under Chapter
529: Transport Category Rotorcraft. With nearly 300 flight hours
and well over 1,000 takeoffs and landings, Jaunt Journey’s Slowed
Rotor Compound technology is the safest and quietest eVTOL in
certification.
AIRO’s Uncrewed Air Systems
Division is leading the global military and
civilian drone markets with advanced AI capabilities, autonomous
operations, and BVLOS special mission use. With a dual focus on
military and civilian applications, AIRO is growing its diversified
business through advancements in defensive posture operations, such
as its current work in Ukraine, specialized sensor payloads and
close-quarter/GPS denied environment work with numerous commercial
clients.
AIRO’s Training Division is
building on its decades of military and civilian specialized
training operations, from ab-initio pilot instruction to adversary
air and close air support missions. The Training division will
support filling the enormous gaps in civil pilot availability and
at the same time, bring a curriculum that bridges the divide
between uncrewed, minimally crewed, and crewed aviation.
AIRO’s Executive Chairman, Dr. Chirinjeev
Kathuria remarks, “The attractiveness of AIRO is based on four key
factors; 1) the strength of the brands and existing orders and
contracts, 2) a diversified yet synergistic portfolio that is
already proving its robustness with AIRO’s support of drone
technologies in Ukraine, 3) a training division that is
participating in the $6.40 billion U.S. D.O.D. contract program to
provide Close Air Support, Intelligence, Reconnaissance,
Surveillance and Adversary Air training, which will drive
significant revenue and profit growth, and 4) a management team
with significant experience and global successes that span an
evolving defense and aerospace marketplace that’s changed
significantly over the last four decades.”
“Operators are looking for a pedigree of
certification and safety as well as robust, dynamic capabilities,
efficiencies, and quiet operations,” says AIRO CEO, Joe Burns.
“AIRO is proud to have received numerous pre-order commitments as
well as multiple US DoD contracts aimed at optimizing eVTOL speed
and minimizing acoustic signatures for quiet operations. Aircraft
certification is driven out of AIRO’s Electric Mobility Office in
Montreal, and the certification will be validated through the
Federal Aviation Administration (FAA) and European Aviation Safety
Authority (EASA) shortly thereafter.”
Suren Ajjarapu, Chairman and CEO of Kernel
states “AIRO leverages decades of industry expertise across the
drone services, aviation, and avionics markets to offer a
sector-leading enterprise providing innovative aerospace, urban air
mobility, and UAS products and services. We think that the
combination will result in positive valuations and long term
growth, as we build the leading mid-market publicly traded
aerospace and defense company.”
Leadership Team
Following the closing of the proposed
transaction, Dr. Chirinjeev Kathuria will serve as the Chairman of
the Board of Directors. The Board will consist of nine members
including Joe Burns, John Uczekaj, Suren Ajjarapu, and Michael
Peterson (current member of the Kernel Board of Directors.)
Transaction Overview
The proposed Transaction was unanimously
approved by the boards of directors of all parties, at an expected
combined pro forma enterprise value of approximately $847 million,
assuming no redemptions of current Kernel public stockholders.
Prior to entering into the Merger Agreement, Kernel signed a
forward purchase agreement for up to 7.7 million shares with
Meteora. Based on Kernel’s current redemption price, the 7.7
million shares would be valued at approximately $78 million. At the
closing of the transaction, Kernel security holders will receive
equivalent securities in PubCo in exchange for their Kernel
securities, and both Kernel and AIRO will become wholly-owned
subsidiaries of PubCo. Additionally, the proposed Transaction
includes a contingent earnout payable to the AIRO stockholders and
the sponsor. The proposed Transaction is expected to be completed
in Q3 2023, subject to, among other things, the approval by Kernel
stockholders, governmental, regulatory and third party approvals,
satisfaction of minimum closing net tangible asset and cash
requirements and the satisfaction or waiver of other customary
closing conditions.
Advisors
Cohen & Company Capital Markets, a division
of J.V.B. Financial Group, LLC is serving as lead capital markets
advisors to Kernel. Nelson Mullins Riley & Scarborough LLP is
serving as legal counsel to Kernel and PubCo. and Withum
Smith+Brown, PC is serving as auditors to Kernel. Dykema Gossett
PLLC is serving as legal counsel to AIRO and BPM LLP is serving as
auditors to AIRO.
About Kernel (KRNLU)
Kernel Group Holdings (NASDAQ:KRNLU) is a
special purpose acquisition company formed for the purpose of
effecting a merger, stock purchase or similar business combination
with a business in the Commerce Enablement, Logistics Technologies,
Marketplaces and Services space. The team is composed of seasoned
executives with a unique combination of experiences in wholesale
and retail, logistics, distribution, technology development and
transformation.
To learn more, visit: www.kernelspac.com
About AIRO
AIRO is a privately-held
mid-market aerospace and defense company with offices in the US,
Canada and the EU, providing innovative, industry-leading products
and services via its four synergistic divisions: Advanced Avionics,
Electric Air Mobility, Commercial Drones, and Training.
To learn more, visit: www.theairogroup.com
Additional Information and Where to Find
It
In connection with the Merger Agreement and the
proposed Transaction, PubCo intends to file with the U.S.
Securities and Exchange Commission (the “SEC”) a 14ARegistration
Statement on Form S-4, which will include a document that serves as
a proxy statement of Kernel, referred to as a proxy
statement/prospectus relating to the proposed Transaction. This
communication is not intended to be, and is not, a substitute for
the proxy statement or any other document that Kernel or PubCo has
filed or may file with the SEC in connection with the proposed
Transaction. Kernel’s stockholders and other interested persons are
advised to read, when available, the preliminary proxy statement
and the amendments thereto, the definitive proxy statement and
documents incorporated by reference therein filed in connection
with the proposed Transaction, as these materials will contain
important information about PubCo, Kernel, AIRO, the Merger
Agreement, and the proposed Transaction. When available, the
definitive proxy statement/prospectus and other relevant materials
for the proposed Transaction will be mailed to stockholders of
Kernel as of a record date to be established for voting on the
proposed Transaction. Before making any voting or investment
decision, investors and stockholders of Kernel are urged to
carefully read the entire proxy statement, when they become
available, and any other relevant documents filed with the SEC, as
well as any amendments or supplements to these documents, because
they will contain important information about the proposed
Transaction. Kernel investors and stockholders will also be able to
obtain copies of the preliminary proxy statement/prospectus, the
definitive proxy statement/prospectus, and other documents filed
with the SEC that will be incorporated by reference therein,
without charge, once available, at the SEC’s website at
www.sec.gov, or by directing a request to: Kernel Healthcare
Acquisition Corp., 515 Madison Avenue, Suite 8078, New York, NY
10022, Attention: Mr. Suren Ajjarapu.
Participants in the
Solicitation
Kernel, AIRO, PubCo and their respective
directors, executive officers, other members of management and
employees may be deemed participants in the solicitation of proxies
from Kernel’s stockholders with respect to the proposed
Transaction. Investors and security holders may obtain more
detailed information regarding the names and interests in the
proposed Transaction of Kernel’s directors and officers in Kernel’s
filings with the SEC, including, when filed with the SEC, the
preliminary proxy statement/prospectus and the amendments thereto,
the definitive proxy statement/prospectus, and other documents
filed with the SEC. Such information with respect to AIRO’s
directors and executive officers will also be included in the proxy
statement/prospectus.
No Offer or Solicitation
This press release is not a solicitation of a
proxy, consent or authorization with respect to any securities or
in respect of the proposed Transaction and will not constitute an
offer to sell or the solicitation of an offer to buy any
securities, nor will there be any sale of securities in any states
or jurisdictions in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
Forward-Looking Statements
This press release contains certain statements
that are not historical facts and are forward-looking statements
within the meaning of the federal securities laws with respect to
the proposed Transaction between PubCo, Kernel and AIRO, including
without limitation statements regarding the anticipated benefits of
the proposed Transaction, the anticipated timing of the proposed
Transaction, the implied enterprise value, future financial
condition and performance of AIRO and the combined company after
the closing and expected financial impacts of the proposed
Transaction, the satisfaction of closing conditions to the proposed
Transaction, the level of redemptions of Kernl’s public
stockholders and the products and markets and expected future
performance and market opportunities of AIRO. These forward-looking
statements generally are identified by the words “believe,”
“project,” “expect,” “anticipate,” “estimate,” “intend,” “think,”
“strategy,” “future,” “opportunity,” “potential,” “plan,” “seeks,”
“may,” “should,” “will,” “would,” “will be,” “will continue,” “will
likely result,” and similar expressions, but the absence of these
words does not mean that a statement is not forward-looking.
Forward-looking statements are predictions, projections and other
statements about future events that are based on current
expectations and assumptions and, as a result, are subject to risks
and uncertainties.
These forward-looking statements are provided
for illustrative purposes only and are not intended to serve as,
and must not be relied on as, a guarantee, an assurance, a
prediction or a definitive statement of fact or probability. Actual
events and circumstances are difficult or impossible to predict and
will differ from assumptions. Many factors could cause actual
future events to differ materially from the forward-looking
statements in this communication, including but not limited to: (i)
the risk that the proposed Transaction may not be completed in a
timely manner or at all, which may adversely affect the price of
Kernl’s securities; (ii) the risk that the proposed Transaction may
not be completed by Kernl’s business combination deadline; (iii)
the failure to satisfy the conditions to the consummation of the
proposed Transaction, including the approval of the Merger
Agreement by the stockholders of Kernel, the satisfaction of the
minimum net tangible assets and minimum cash at closing
requirements and the receipt of certain governmental, regulatory
and third party approvals; (iv) the occurrence of any event, change
or other circumstance that could give rise to the termination of
the Merger Agreement; (v) the failure to achieve the minimum amount
of cash available following any redemptions by Kernl’s
stockholders; (vi) redemptions exceeding anticipated levels or the
failure to meet The Nasdaq Capital Market’s initial listing
standards in connection with the consummation of the proposed
Transaction; (vii) the effect of the announcement or pendency of
the proposed Transaction on AIRO’s business relationships,
operating results, and business generally; (viii) risks that the
proposed Transaction disrupts current plans and operations of AIRO;
(ix) the outcome of any legal proceedings that may be instituted
against AIRO or against Kernl related to the Merger Agreement or
the proposed Transaction; (x) changes in the markets in which
AIRO’s competes, including with respect to its competitive
landscape, technology evolution, or regulatory changes; (xi)
changes in domestic and global general economic conditions; (xii)
risk that AIRO may not be able to execute its growth strategies;
(xiii) risks related to the ongoing COVID-19 pandemic and response,
including supply chain disruptions; (xiv) risk that AIRO may not be
able to develop and maintain effective internal controls; (xv)
costs related to the proposed Transaction and the failure to
realize anticipated benefits of the proposed Transaction or to
realize estimated pro forma results and underlying assumptions,
including with respect to estimated stockholder redemptions; (xvi)
the ability to recognize the anticipated benefits of the proposed
Transaction and to achieve its commercialization and development
plans, and identify and realize additional opportunities, which may
be affected by, among other things, competition, the ability of
AIRO to grow and manage growth economically and hire and retain key
employees; (xvii) the risk that AIRO may fail to keep pace with
rapid technological developments to provide new and innovative
products and services or make substantial investments in
unsuccessful new products and services; (xviii) the ability to
develop, license or acquire new therapeutics; (xix) the risk that
AIRO will need to raise additional capital to execute its business
plan, which may not be available on acceptable terms or at all;
(xx) the risk that AIRO, post-combination, experiences difficulties
in managing its growth and expanding operations; (xxi) the risk of
product liability or regulatory lawsuits or proceedings relating to
AIRO’s business; (xxii) the risk of cyber security or foreign
exchange losses; (xxiii) the risk that AIRO is unable to secure or
protect its intellectual property; and (xxiv) those factors
discussed in PubCo’s filings with the SEC and that that will be
contained in the proxy statement/prospectus relating to the
proposed Transaction .
The foregoing list of factors is not exhaustive.
You should carefully consider the foregoing factors and the other
risks and uncertainties that will be described in the “Risk
Factors” section of the preliminary proxy statement/prospectus and
the amendments thereto, the definitive proxy statement, and other
documents to be filed by PubCo from time to time with the SEC.
These filings identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Forward-looking statements speak only as of the date they are made.
Readers are cautioned not to put undue reliance on forward-looking
statements, and while PubCo, AIRO and Kernel may elect to update
these forward-looking statements at some point in the future, they
assume no obligation to update or revise these forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by applicable law. Neither PubCo,
AIRO nor Kernel gives any assurance that PubCo, AIRO or Kernel, or
the combined company, will achieve its expectations. These
forward-looking statements should not be relied upon as
representing PubCo’s, Kernel’s or AIRO’s assessments as of any date
subsequent to the date of this press release. Accordingly, undue
reliance should not be placed upon the forward-looking
statements.
# # #
INVESTOR CONTACT:
Media Relations:
Dan Johnson, dan.johnson@theairogroup.com
Perri Coyne, perri.coyne@aspenavionics.com
Nancy Richardson,
nmrichardson@jauntairmobility.com
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