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New SPAC Filing: TKK Symphony Acquisition Corp. Files for $200 Million IPO

news update

New SPAC Filing: TKK Symphony Acquisition Corp. Files for $200 Million IPO

Jul 30, 2018 INTEL by Kristi Marvin

TKK Symphony Acquisition Corporation:  Focused on Consumer/Lifestyle in China

After the market close today, TKK Symphony Acquisition Corporation filed for a $200 million SPAC IPO with a focus on the Consumer and Lifestyle sectors in China. TKK Symphony is being led by Sing Wang, as Chairman and CEO.  Mr. Sing Wang is currently Chairman of TKK Capital, a private equity/wealth management company, and is also CEO and Director of CM Seven Star Acquisition Corporation.

Looking at this IPO’s structure, there is a new twist to the completion deadline extension.  Specifically, TKK is allowed no more than one 4-month extension on top of their stated 18 months. Plus, in order to access that extension, there is no shareholder vote. Instead, TKK must issue to shareholders, via a dividend, another warrant to purchase one-half of one share.  That means a potential extra 20,000,000 warrants (for 1/2 share) added to the cap table.  This essentially turns the deal into a “1 share + 1 full warrant + 1 full right” SPAC, rather than the initial 1+1/2+1. (Terms for the dividend warrant are the same as the public warrants included in the unit).

On the one hand, removing the vote protects the cash in trust (temporarily). On the other hand, now they’re back to a big (potential) warrant overhang. The potential dilution is certainly a big motivator to wrap things up by 18 months, but the biggest question I have is, how does having Sing Wang as a CEO of two SPACs work (CMSS and TKKS)?  The fact that Sing Wang is CEO of both SPACs is not that prominent in the filing.  Does this mean we can read through the lines and assume that very shortly this won’t be an issue anymore, i.e., CMSS will announce soon? Because frankly, this seems like a big conflict for a CEO. Which SPAC gets the best deal?

Keep in mind, this is the initial filing….a lot can happen between now and IPO.  However, for now, this is something that is worth keeping an eye on.

Listed below are the current deal terms and you can find the profile page for TKK Symphony here.

Summary of terms are as follows:
  • Focus:  Consumer/Lifestyle in China
  • $10.00 unit comprised of one Ordinary Share + one Warrant (1/2 share) + one Right
  • Each Right entitles the holder to receive one-tenth (1/10) of one Share
  • Warrant call for redemption threshold: equals or exceeds $18.00 (cash or cashless exercise)
  • 100% held in trust ($10.00 per share)
  • 18 months to complete an acquisition + 4 month extension by vote (shareholders receive 1/2 warrant)
  • Underwriter fees: 2.0% + 3.5% business combination marketing agreement.  EarlyBirdCapital is sole book-runner.

Ellenoff Grossman & Schole LLP and Maples and Calder are Issuer’s Counsel and Underwriter’s Counsel, respectively.