TKK Symphony (TKKS) Extends Tender Offer for Its Shares

As most everyone already knows by now, TKK Symphony (TKKS) announced earlier that it would be extending the expiration of it’s tender offer.  The tender offer was expected to expire tonight (at one minute past 11:59PM), but will now expire at 5:00 p.m. New York City time, on Monday, December 2, 2019.  Keep in mind that TKKS does not run out its SPAC deadline until February 20, 2020, so there could be an additional extension of the tender offer after December 2nd.

Interestingly, only 12,210,031 of the 25,000,000 TKKS shares available have been tendered to-date, or roughly 50%.  However, leading up to today’s tender expiration, the share price had traded down significantly, closing yesterday at $6.17, after trading as low as $5.50.  So, presumably, TKKS is going to use the next two weeks for additional marketing to generate much needed demand.

However, given that approximately $125 million of the trust that still hadn’t tendered as of this morning (12.2 million shares x $10.26 per share), and the share price was in the low sixes, did those remaining shareholders want to own the share? Or, were they waiting until the end of the day to tender? OR, although unlikely given the sheer size of $125 million, did they just not understand the tender offer process and that was simply a mistake?  Perhaps a little bit of all three, but it’s interesting that TKKS would not want to close this tender offer TODAY and keep that $125 million. Instead, now those 12.2 million shares that haven’t tendered yet have a little more than two weeks to do so, further depleting the trust. So it’s a bit of a mystery what’s really going on here. Plus, there is always the possibility that TKKS will now use the additional time to round up a quick backstop.

Something else to consider is that TKK Symphony’s Unit has a Right. So even if they do get a backstop, there will be 2.5 million Rights Shares looking to sell post-close and based on yesterday’s share price, it will be difficult to generate enough demand to counteract that selling pressure.  As a result, any backstops will need to be done at a price significantly below $10.00.

Let’s see what happens, but for now, there are still a lot of question marks. Stay tuned.