HumanCo Acquisition Corp. (NASDAQ:HMCO) revealed in an 8-K that it signed a series of financing agreements on February 15 that will transfer much of its private placement shares and warrants to BlackRock (NYSE:BLK).
CAVU Venture Partners III, an affiliate of HumanCo’s sponsor, sold 2,500,000 private placement units to affiliates of BlackRock. These were originally issued to CAVU in a private placement alongside HumanCo’s IPO in December 2020. HumanCo’s sponsor also sold 2,005,243 private placement warrants (24.8% of total) to BlackRock.
In exchange for taking over CAVU’s position, BlackRock is also set to receive 1,370,247 Class A shares for a purchase price of $4,900 at close. HumanCo is set to cancel an equal number of promote shares (19% of total) and these shares headed BlackRock’s way are subject to the same restrictions as HumanCo’s promote. These include a one-year lockup with an early release should the post-combination company trade at or above $12 for 20 of 30 trading days at least 150 days out from close.
It is unusual for a SPAC to make such moves before announcing a transaction, but they can also be interpreted as a sign of the times, given the crunch on the market at the moment. The concessions in sponsor economics aside, the change may also be positive for HumanCo in gaining frequent SPAC-backer BlackRock as fundamental partner in its deal to come. Perhaps this is also a signal of a pending deal announcement.
BlackRock has participated in 36 PIPEs since January 2021 with the average PIPE size of $555.8 million (note: not Blackrock’s investment size, but the total PIPE size). This potentially bodes well for HumanCo’s ability to secure a PIPE once it does announce. It has until December 11, 2022 to close a transaction.