After the Closing Bell: Two New 1/4 Warrant SPACs
The stock market may have taken a beating this week, but SPACs just keeping pumping out 1/4 warrant deals.
Read below for a short summary of the latest two new IPOs that were filed tonight.
FORTRESS VALUE ACQUISITIONS CORP. (FVAC.U)
Fortress Value Acquisition Corp. (FVAC.U), the Fortress Investment Group-sponsored SPAC, filed their S-1 early this afternoon for a $300 million IPO and naturally, this is another 1/4 warrant deal. However, it’s got a few extra bells and whistles thrown in, such as the ability to call their warrants at $10.00 for shares, in addition to cash and cashless exercise. Additionally this is a 24 month SPAC, but they can extend to 27 months if they have an LOI or definitive agreement on file. And of course there is also the currently fashionable term where the SPAC can remove earned interest to fund their working capital. In Fortress Value’s case, they can remove $750,000 per year, or $0.025 per year. Although, if interest rates keep going lower, that might eventually be the entirety of the interest earned on the trust.
Deutsche Bank, Morgan Stanley and RBC Capital Markets will be underwriting.
CC NEUBERGER PRINCIPAL HOLDINGS I (PCPL.U)
CC Neuberger Principal Holdings I (PCPL.U), also a $300 million SPAC, will be sponsored by both CC Capital (Chinh Chu’s firm) and Neuberger Berman Investment Advisers LLC. Hence, the name “CC Neuberger”. And just like Fortress Value, it’s also a 1/4 warrant SPAC. Additionally, CC Neuberger has 24 months to find an acquisition (no extra three months).
Nonetheless, whereas Fortress Value is purchasing their at-risk warrants at $2.00, CC Neuberger is purchasing their at-risk warrants at $1.00, similar to Churchill III. However, CC Neuberger will not be dipping into the interest to fund their working capital. Furthermore, CC Neuberger can also call their public warrants at $10.00 for shares, as is commonplace with the tier-1 SPACs, in addition to cash and cashless exercise.
Lastly, there is a $200 million forward purchase agreement for this deal with Neuberger Berman, and while the FPA is for 200 million units at $10.00, that unit will be comprised of one Class A ordinary share and three-sixteenths of one warrant….just to see if anyone can still do fractions anymore.
Goldman Sachs and BofA Securities will be joint book-running.
Look for longer write-ups next week after I’ve had a chance to read through both prospectuses.