Rising Dragon Acquisition Corp. (RDAC) shares jumped 33.20% to $13.84 in after-hours trading Thursday after the company filed an 8-K with the Securities and Exchange Commission announcing changes that make it much cheaper to keep the SPAC alive while it works to close its deal.
For those keeping score at home, an 8-K filing is how companies tell the SEC about material events that happen between quarterly reports. In this case, the material event was good news for the company's cash burn rate.
A Much Smaller Monthly Bill
The China-based blank check company amended its Investment Management Trust Agreement last week, according to the filing dated Thursday. The key change? A dramatic reduction in what it costs to buy more time.
Under the new terms, the monthly extension payment dropped from $189,750 (or $0.033 per share) to the lesser of $100,000 per month or $0.033 for each remaining public share after redemptions.
Here's where the math gets interesting. After shareholder redemptions whittled down the outstanding shares, the revised monthly extension fee now totals just $2,703.69 for each one-month extension. That's a 98.6% reduction from the original monthly cost.
Redemptions Reshape The Picture
A total of 1.54 million ordinary shares were tendered for redemption in connection with the recent meeting. All told, an aggregate of 5.66 million ordinary shares were redeemed following the extraordinary general meeting held on Nov. 20 to approve both the business combination and the extension.
The amendment also permits up to six additional one-month extensions beyond the initial period, potentially giving Rising Dragon as much as 21 months in total to complete its business combination.
The company, a special purpose acquisition company, is working to finalize its merger with HZJL Cayman Limited, a comprehensive solution provider. Shareholders approved the deal at last month's extraordinary general meeting.
Where The Stock Stands
The technical picture shows the stock's Relative Strength Index at 50.97, right in the middle of the neutral zone.
RDAC has posted a 12-month performance of 3.80%. While that's a modest gain reflecting relatively stable longer-term trends, the recent after-hours volatility suggests traders should buckle up for potential swings ahead.
The company carries a market capitalization of $83.24 million. The stock's 52-week range stretches from a low of $7.50 to a high of $16.43.
Before the after-hours surge, RDAC was trading at 32.36% of its 52-week range, positioning it closer to its lows than its highs. This suggests the stock may have room to run higher, though investors should watch for potential pullbacks if momentum fades.
During regular trading hours, the stock closed at $10.39, already up 17.16% before the additional after-hours pop.