Lowenstein Sandler represented Sonnet BioTherapeutics, Inc., (NASDAQ: SONN) in a definitive agreement to enter into a business combination with Rorschach I LLC, a newly formed entity affiliated with Atlas Merchant Capital LLC, an affiliate of Paradigm Operations LP and additional sponsors, to transform its business by building a reserve of HYPE, the token of the Hyperliquid Layer-1 blockchain.
The combined company expected to become largest U.S.-based publicly listed company to hold HYPE in its treasury.
At the closing of the business combination, the newly created entity is to be named Hyperliquid Strategies Inc.; it is expected to hold approximately 12.6 million HYPE tokens, representing $583 million in value and gross cash invested of at least $305 million, for a total assumed closing value of $888 million. The transaction includes participation by prominent strategic investors, including Paradigm, Galaxy Digital, Pantera Capital, D1 Capital, Republic Digital, and 683 Capital. HSI is expected to remain listed on NASDAQ under a new ticker symbol and become a public cryptocurrency treasury company upon the closing of the combination.
The gross cash proceeds of $305 million at the closing will enable HSI to acquire significantly more HYPE, creating one of the top strategic reserves of the HYPE token.
In connection with the signing of the agreement, Sonnet will raise an aggregate $5.5 million in a private placement to accredited investors through the issuance and sale of shares of non-voting convertible preferred stock and warrants to purchase shares of common stock of Sonnet.
Sonnet BioTherapeutics is an oncology-focused biotechnology company with a proprietary platform for innovating biologic drugs of single or bifunctional action. Lowenstein also represented Sonnet in its merger with Chanticleer Holdings, Inc. in 2020.
The Lowenstein team included Steven M. Skolnick, Lauren VanderDrift, Stephen Zapf, Donna Calia, Amani Taha, Anthony Santiago, Zarema A. Jaramillo, Kristin V. Taylor, and Megan Monson.
