Ethereum Builder ConsenSys and AMD SPAC Plows on Despite 95% of Shares Being Redeemed

W3BCLOUD, a joint venture between chip maker Advanced Micro Devices (AMD) and Ethereum builder ConsenSys, says it will plow on with plans to go public, despite investors opting to redeem 95% of the shares in the deal with blank check company Social Leverage Acquisition Corp (SLAC).

Billed as a decentralization-promoting alternative to Amazon Web Services (AWS), the W3BCLOUD special purpose acquisition company (SPAC) deal was expected to bring $345 million to the balance sheet of the combined business and value it at about $1.25 billion. The SPAC will carry on with just $16.6 million remaining in its coffers for now, following the redemption vote, filed over the Christmas period.

“We remain very excited about the opportunity to merge with SLAC and become a public company,” a W3BCLOUD spokeswoman said via email.

Last year, which turned out to be something of a nightmare for the cryptocurrency industry, saw a number of high profile crypto firms canceling plans to go public via a SPAC, including stablecoin firm Circle and crypto exchange Bullish bowing out last month, while trading platform eToro and bitcoin miner PrimeBlock terminated their plans in July and August, respectively.

The W3BCLOUD SPAC also sought a three-month extension, giving those involved in the deal until May 17 to raise enough capital to meet the $150 million minimum cash condition to go public. (The initial August 2022 announcement mentioned commitments for $40 million from ConsenSys, and a further $10 million investment agreement with AMD, plus the intention to raise additional capital of up to $100 million post-announcement.)

“As markets got tough last year, deals took longer to get done and SPACs started nearing the end of their lives,” said Alan Annex, co-chair of law firm Greenberg Traurig’s global corporate practice. “The requirement in the charter, designed to protect the shareholders’ money, says you can't extend the life of the SPAC without offering people the option to get their money back at the time you offer that extension.”

Some of the SPACs today that are experiencing high redemption rates may involve situations where the target wants to go public for reasons other than just raising the money, Annex added. “When it comes to high redemption rates, it’s not that people don't like the company, just that they don't like it at $10 a share,” he said.

W3BCLOUD aimed to dilute the high concentration of Ethereum blockchain nodes being hosted in data centers owned by giants like AWS. The company’s goal is “advancing decentralization of the hardware layers of Web3,” ConsenSys founder Joseph Lubin said in a statement.

Read more: What Is a SPAC?