Precision Aerospace & Defense Group, Inc., a high-growth aerospace & defense engineering and manufacturing firm, and FACT II Acquisition Corp., a special purpose acquisition company, today announced that they have entered into a definitive business combination agreement. Upon closing of the proposed business combination, the combined company will operate under the name Precision Aerospace & Defense Group, Inc. The transaction implies an enterprise value of up to $320 million for PAD (assuming a $10.00 per share price and after giving effect to certain pending acquisitions). It is expected that the combined company will continue to be led by PAD’s existing management team, with Brent Borden remaining as Chief Executive Officer.

PAD’s Platform – PAD has rapidly expanded via strategic acquisitions into a robust multi-platform business delivering mission-critical products and services across the aerospace, defense, and space sectors. PAD operates through three complementary divisions – engineering & sustainment, precision manufacturing, and advanced non-destructive testing – each possessing deep technical expertise and specialized certifications in support of critical programs. PAD’s engineering & sustainment unit provides custom design, reverse engineering, and MRO solutions to extend the life of legacy military aircraft and systems. Its precision manufacturing division efficiently produces complex aerospace and defense components to exacting specifications, leveraging advanced CNC machining and assembly capabilities. PAD’s advanced non-destructive testing division offers specialized testing services and equipment to ensure the structural integrity of high-performance aerospace parts. This diversified suite of capabilities has historically made PAD a trusted partner to blue-chip defense contractors, OEMs, and U.S. government organizations, supported by multi-year contracts and a proven track record of quality and on-time delivery. PAD’s solutions play a mission-critical role in arenas ranging from military fleet sustainment and next-generation hypersonic flight systems to commercial aviation fleets and cutting-edge space launch infrastructure. PAD operates multiple AS9100-certified and ITAR-registered facilities across the United States, reflecting its commitment to rigorous quality standards and compliance with defense regulations.

In addition, PAD intends to continue to execute on its accretive, programmatic acquisition strategy, adding highly specialized capabilities across its platform enabling it to provide a full suite of service solutions to its existing and pipeline customer base. There can be no assurance that any planned acquisitions will be completed.

Brent Borden, Chief Executive Officer of PAD, commented: “Today marks a pivotal milestone for PAD. This proposed business combination with FACT and our transition to a public company will provide significant growth capital and is a strong validation of the business we have built. Over the past few years, we have assembled a world-class engineering, manufacturing, and testing platform to address the most demanding needs of the aerospace, defense, and space industries. Our team’s relentless focus on innovation, quality, and execution has strategically positioned PAD with respect to key industry trends – from military fleet sustainment to the new space economy. We are thrilled to partner with FACT on this next chapter. We expect that the anticipated proceeds from and in connection with this transaction will allow us to accelerate product development, invest in cutting-edge equipment, and pursue strategic acquisitions already identified in our pipeline. Most importantly, it ensures we can continue to deliver exceptional value and performance to our customers and stakeholders. I am incredibly proud of what our employees have achieved to date, and I’m confident that as a public company, PAD will be even better positioned to drive innovation and growth in our sector.”

Adam Gishen, Chief Executive Officer of FACT, noted: “Our goal at FACT was to identify a high-quality, visionary company with strong fundamentals and an excellent management team – and we have found that in Precision Aerospace & Defense Group, Inc. Brent and his team have built an impressive platform with strategic end-to-end capabilities that meet the demands of their customers and the industry. PAD’s strategic positioning at the nexus of aerospace and defense modernization (including the increasing demand for efficiency and the burgeoning space sector) truly sets it apart. With a blue-chip customer base and multi-year contracts, PAD offers both stability and exciting growth prospects, coupled with strong free cash generation from operations. We believe PAD is poised for sustained expansion and value creation, and we are excited to partner with them to bring this outstanding business to the public markets. We look forward to working closely with the PAD team to support their strategic vision.”

Key Transaction Terms and Structure

Under the business combination agreement, PAD’s implied enterprise value is up to $320 million (at a $10.00 per share reference price and after giving effect to certain pending acquisitions). Key terms of the business combination include:

- Capital & Financing: In connection with the proposed business combination, PAD has entered into a non-binding indicative term sheet with BC Partners relating to a potential credit facility and equity financing of up to an anticipated aggregate amount of $80 million (the Financing). The Financing is subject to numerous conditions, including, without limitation, the completion of due diligence and the execution and delivery of definitive documentation. We anticipate that the Financing, together with the funds in FACT’s trust account (consisting of approximately $175 million in gross proceeds raised in FACT’s initial public offering, subject to any redemptions), would provide funding to strengthen PAD’s balance sheet, finance strategic acquisitions, and support ongoing growth. In addition, the parties may seek other sources of financing in connection with the business combination and to bolster PAD’s balance sheet and fund future growth initiatives. There can be no assurance that any definitive agreement will be entered into in relation to the Financing or that the Financing or any other financing will be completed on the terms described, or at all.

- Incoming Capital: Incoming capital would permit PAD to optimize its balance sheet, consummate existing planned acquisitions and fund its future acquisition pipeline. Any additional cash to PAD’s balance sheet is expected to be used for general corporate purposes, positioning the combined company for robust growth post-closing. There can be no assurance that any planned acquisitions will be completed or additional funding will be consummated.

- Pro Forma Ownership Structure: Following the business combination, PAD’s current shareholders are expected to own approximately 59% of the combined company’s outstanding shares.

- Governance and Leadership: We anticipate that the combined company’s board of directors will include, among others, certain current directors of PAD, one designee by FACT’s sponsor, and independent directors with relevant industry experience. The combined company will remain headquartered in Overland Park, Kansas, and PAD’s seasoned executive team will continue to lead day-to-day operations.

Advisors: BTIG, LLC is acting as sell-side advisor and debt placement agent to PAD. BTIG, LLC is also acting as co-placement agent alongside Craig-Hallum Capital Group LLC to FACT. Cohen & Company Capital Markets, a division of Cohen & Company Securities, LLC, and Craig-Hallum Capital Group LLC are acting as financial advisors to FACT. Cohen & Company Capital Markets and Seaport Global Securities LLC are acting as capital markets advisors to FACT. Paul Hastings LLP is acting as legal counsel to FACT. Lucosky Brookman LLP is acting as legal counsel to PAD. Ellenoff Grossman & Schole LLP is acting as legal counsel to BTIG, LLC.

Anticipated Closing: The business combination is expected to be completed in the first half of 2026, subject to the approval of the parties’ shareholders, any applicable regulatory approvals, the approval for listing by the Nasdaq Stock Market of the combined company’s common stock and warrants, and other customary closing conditions. Upon closing, the combined company will be renamed Precision Aerospace & Defense Group, Inc., and the combined company’s common stock and warrants are anticipated to be listed on the Nasdaq Stock Market under the ticker symbols “PAD” and “PADWW,” respectively.