The Warrant Exchange Consideration is now $2.00.
As a refresher, GTY expects to hold a special meeting of its warrant holders (to be held immediately prior to the special meeting of GTY’s shareholders for the business combination) to approve an amendment to the warrant agreement. If the proposal is approved by a yes vote of at least 50% of the outstanding public warrants, each whole public warrant will be automatically exchanged for what was originally $1.35 in cash and now amended to $2.00. Furthermore, the original proposal stated the private placement warrants that were purchased by GTY’s sponsor at IPO for $1.50, would be exchanged for $0.75 in cash. These sponsor private placement warrants will remain exchangeable for $0.75 cash. No change.
Per today’s press release, GTY has 18,400,000 public warrants and 8,693,334 private placement warrants outstanding. If approved, the warrant agreement amendment would provide for aggregate cash consideration of $36,800,000 to holders of GTY’s public warrants and $6,520,001 to holders of GTY’s private placement warrants. The cash amount to be exchanged per public warrant represents a 55% premium to the last reported closing price of the public warrants on October 19, 2018.
A 55% premium is a pretty big jump in price, but this is what happens when you get on the road and receive feedback from investors. Clearly $1.35 wasn’t enough. Plus, GTY is holding it’s shareholder vote to extend its completion deadline on October 31st. GTY will be asking at that vote for an additional six months to complete by extending from Nov. 1st to May 1st, 2019. Although, trying to close six different companies must be like trying to herd cats so even May 1st might be a little tight. However, investors aren’t going to want to give them any more time on top of that without additional funds contributed to the trust.
Check back on October 31st for the results of the extension vote.