Oak Woods Acquisition Corp (OAKU, OAKUR, OAKUU, OAKUW)
Oak Woods Acquisition Corporation (OAKU) is a blank check SPAC formed in March 2022 to merge with a target business by May 28, 2025. In its March 2023 IPO it raised $61.6 million into a trust account invested in U.S. government securities. As of December 31, 2024, it generated net income of $191,...
Oak Woods Acquisition Corporation (OAKU) 2024 10-K Review: Navigating the SPAC Landscape and the Path to a Merger
Oak Woods Acquisition Corporation (NASDAQ: OAKUU, OAKU, OAKUR, OAKUW) is a blank check company, or special purpose acquisition company (SPAC), formed in March 2022 in the Cayman Islands. Its sole purpose is to merge with or acquire an operating business. In August 2023 Oak Woods signed a merger agreement with Huajin (China) Holdings Limited, an elderly care and healthcare services provider in China. This blog post dives deep into the Company’s 2024 10-K (fiscal year ended December 31, 2024), analyzing the business description, financial performance, trust account mechanics, risk factors, and outlook for Oak Woods and its proposed combination with Huajin.
Warren.AI 💰 5.0 / 10
Table of Contents
- 1. Business Overview
- 2. Financial Highlights
- 3. Trust Account and Redemptions
- 4. Extensions and Liquidity
- 5. Proposed Merger with Huajin
- 6. Risk Factors
- 7. Valuation and Score
- 8. Outlook
1. Business Overview
Oak Woods Acquisition Corporation is a blank check company incorporated on March 11, 2022. It has no operating business or revenues. Its mission is to complete a business combination (merger, share exchange, asset acquisition, etc.) within a specified time frame—initially 12 months, extendable up to 21 months (current deadline: May 28, 2025).
• The Company raised $61.6 million in its March 28, 2023 IPO (5.75 million units at $10.00/unit) plus a $3.43 million private placement. • Proceeds were deposited into a Trust Account invested in U.S. treasuries and money market funds. • Each unit consists of: 1 Class A ordinary share (public share), 1 redeemable warrant ( $11.50 exercise price), and 1 right (1/6 share upon combination).
Sponsor and Founder Shares
• Sponsor: Whale Bay International Co. Ltd. purchased 343,125 private units. • Founders and directors hold 1,437,500 Class B shares at $0.017 each (20% post-IPO ownership).
2. Financial Highlights
Fiscal Year 2024 Results (December 31, 2024)
• Net income: $191,545 – Generated mainly from interest: • $2.94 million interest on Trust Account
• $5,852 interest on operating cash – Offset by $2.75 million in formation and operating costs – Minor non-cash warrant liability remeasurement gain: $8,100
Fiscal Year 2023 Results (December 31, 2023)
• Net income: $1.31 million – $2.26 million interest income on Trust Account – $25,035 interest on operating cash – $1.03 million in operating costs – $53,500 warrant liability remeasurement loss
Balance Sheet Snapshot (12/31/24 vs. 12/31/23)
| Item | 2024 | 2023 |
|---|---|---|
| Cash (outside Trust) | $4,637 | $367,321 |
| Trust Account Investments | $48.08 million | $60.76 million |
| Cash in Transit to Trust | $345,000 | $— |
| Total Assets | $48.43 million | $61.20 million |
| Liabilities (operating, notes, etc.) | $6.42 million | $2.84 million |
| Redeemable Class A Shares (Trust value) | $48.43 million | $58.998 million |
| Shareholders’ Deficit | ($6.42 million) | ($0.64 million) |
Working Capital Deficit: $4.39 million (primarily due to operating liabilities and related‐party notes).
Cash Mix: Almost all liquidity is in the Trust Account, requiring sponsor loans for operating cash.
3. Trust Account and Redemptions
Mechanics
• Trust Account holds IPO plus private proceeds: originally $58.5 million; $61.6 million by year-end (earned interest, extension deposits). • Invested in short-term U.S. Treasuries/money markets. • Public Shares ((and rights) can redeem at $10.175/share (or higher if Trust value grows) upon combination or liquidation.
Redemption Rights
• Each Class A share may be redeemed pro rata for Trust balance ÷ outstanding public shares. • Founders & sponsor waive redemption on their private/founder shares. • If no combination by deadline, Company liquidates, redeems public shares, then dissolves.
4. Extensions and Liquidity
Timeline
| Extension Vote Date | New Deadline | Deposit to Trust | Redemption Payment | Shares Redeemed |
|---|---|---|---|---|
| Original | 3/28/24 | — | — | — |
| 3/23/24 (Form 8-K) | 6/28/24 | $330,969 (from Huajin) | — | — |
| 6/28/24 (Sponsor note) | 9/28/24 | $575,000 | — | — |
| 9/26/24 (EGM) | 3/28/25 | $1,035,000 (six×) | $16.54 million | 1,492,646 |
| 3/20/25 (EGM) | 9/28/25 | $345,000 (two×) | $7.86 million | 679,929 |
Key Point: Sponsor/founder funds extension via loans/promissory notes repayable at combination.
Liquidity Risk
• Operating cash outside the Trust is <$5k; working capital deficit $4.39 M. • Sponsor loans total $3.23 million as of 12/31/24. • Additional sponsor or third-party financing needed to close.
5. Proposed Merger with Huajin
On August 11, 2023, Oak Woods and Huajin (China) Holdings Limited signed a definitive Merger Agreement and Plan of Reorganization.
Target: Huajin provides elderly care and healthcare services in China, focusing on smart home care solutions.
Deal Terms:
- Merger Sub (a new subsidiary) merges into Huajin; Huajin survives as Oak Woods’ wholly owned subsidiary.
- Merger consideration:
(Agreed Valuation $250 M – Closing Net Debt)÷ $10 per share = number of new Class A shares to issue. - $330,969 deposit from Huajin to cover initial extension costs.
Governance: Post-closing board of 5 directors: 3 designated by Oak Woods, 2 by Huajin.
Backstop Agreement: (terminated Dec 2024) would’ve supplied $5 million in primary placement.
Status: Merger Agreement amended twice (March 2024, December 2024) to extend termination date. Next deadline: May 28, 2025.
6. Risk Factors
- Blank check vehicle: No operations, revenues or assets beyond trust account.
- Time pressure: Must close by May 28, 2025 or liquidate.
- Liquidity: Operating cash is nearly zero; heavy reliance on sponsor loans.
- Dilution: Potential equity raises for deal financing may dilute existing shareholders.
- Regulatory & legal: Cross-border merger complexity, Chinese regulations, U.S. SEC rules.
- Sponsor conflicts: Sponsor, officers hold 20% and control extensions.
- Market conditions: SPAC market volatility may affect stock price and warrant value.
- Redemption risk: Large redemptions reduce cash for the merger.
- Warrant overhang: ~7.1 million warrants outstanding could-pressure shares.
7. Valuation and Score
Trust Floor & Upside
- Floor value: ~$10 per public share redemption value.
- Merger upside: shares issued at $10 valuation vs. $10.175 trust price.
- Post-combination Huajin valuation: $250 million deal.
Score (1–10): 5.0
Balanced between a solid trust floor, clear merger counterpart, and significant deal risks:
| Factor | Weight | Analysis | Subscore |
|---|---|---|---|
| Trust Floor | 20% | $10.175/share protections | 9 |
| Sponsor & Governance | 10% | 20% insiders control, extension funding | 4 |
| Merger Target | 25% | Huajin in growing elderly care market | 6 |
| Cash & Liquidity | 15% | Operating cash near zero | 3 |
| Market Environment | 10% | Weak SPAC market, high redemptions | 4 |
| Time Risk | 10% | Deadline May 28, 2025 | 4 |
| Warrant Overhang | 10% | 7 M warrants, $11.50 exercise price | 4 |
Weighted average: 5.0
8. Outlook
Oak Woods’ merger with Huajin presents a path to an operating business in China’s elderly care market. The trust protections limit downside to ~$10/share, but operational uncertainty, sponsor dependencies, tight deadlines, and redemption risks temper the upside. Investors seeking SPAC exposure with a built-in floor may view OAKU as a relatively safer SPAC, while growth-oriented shareholders need conviction in the post-merger business. Close monitoring of redemptions, sponsor funding, and regulatory milestones will be critical over the next few months.
Net income (2024): $191,545
Investment Score: 5.0 / 10