DAAQ delays merger vote, leaving Old Glory short of $50M

Digital Asset Acquisition Corp. moved its shareholder vote on the proposed merger with Old Glory Holding Company from July 31 to 10 a.m. Eastern on Aug. 14 and provided no reason. The postponement occurred after the SPAC’s stated July 29 redemption deadline. The filing said the company will continue soliciting proxies but did not disclose a redemption tally or how much cash remains in the trust. The delay did not automatically reopen redemptions. The final prospectus allows investors to withdraw redemption requests through the deadline and only with the company’s consent afterward; the filing did not indicate whether any post-deadline withdrawals had been approved.

Old Glory Holding is the parent of regulated lender Old Glory Bank. As of June 29 the bank’s Tier 1 leverage ratio was below the ordinary 4% threshold referenced in the merger covenant, a technical noncompliance the company described as nonmaterial. A May 2024 consent order from the Federal Deposit Insurance Corp. and the Oklahoma State Banking Department requires a 14% Tier 1 leverage ratio while the order remains in effect. That order also requires regulator-reviewed capital and business plans and prior approval for dividends and bonuses. Prompt corrective action rules apply while a bank is undercapitalized, restricting growth, capital distributions, acquisitions, branches and new business lines.

Old Glory Holding’s consolidated financial disclosures state its capital likely will not cover operating losses and minimum regulatory capital needs over the next 12 months, creating substantial doubt about the company’s ability to continue as a going concern. Management identified funds from the merger as a possible mitigation but said the closing depends on other parties and market conditions and is not assured.

The merger agreement requires at least $50 million of aggregate closing cash. That amount is calculated from trust cash remaining after redemptions, PIPE proceeds actually received, and proceeds from other transaction financing. The party that benefits from the cash condition may waive it in a signed writing where lawful.

As of March 31, the SPAC reported $178.58 million of trust securities and 17.25 million redeemable public shares, but that figure does not show what will be available after summer redemptions. A July 7 prospectus stated no PIPE or other transaction financing had been entered into or obtained. A June filing showed an intention to negotiate non-redemption agreements but included no executed commitments. The final prospectus listed a pending Federal Reserve application and Nasdaq approval of the combined company’s initial listing as closing conditions; the July 31 filing did not report their status.

With the vote set for Aug. 14, the SPAC has two more weeks to secure votes and any financing or investor agreements. Market participants will be watching for a redemption tally, confirmation of any PIPE or other financing commitments, and an updated capital ratio for Old Glory to assess whether the merger can meet the $50 million closing test and address the bank’s regulatory shortfall.