Lionheart II (LCAP) Secures Funded & Committed Equity Facilities for MSP Recovery Deal

Lionheart II (LCAP) Secures Funded & Committed Equity Facilities for MSP Recovery Deal

Lionheart Acquisition Corp. II (NASDAQ:LCAP) announced this morning that it has secured a funded and committed equity facility with an affiliate of Cantor.

As background, Lionheart II entered into a definitive agreement to combine with medical billing firm MSP Recovery at an enterprise value of $32.6 billion back in July 2021.

Today’s funded equity facility (FEF) will allow Cantor to purchase up to 3.5 million shares from LCAP stockholders who have elected to redeem their shares at or below the redemption price. At any time after acquiring the FEF shares and prior to the settlement date, Cantor may sell the shares at its sole discretion in one or more transactions, publicly or privately, at any price.

Later, at a time that is either five months from close, or when MSP’s resale registration statement is declared effective, Cantor will deliver these shares back to MSP in exchange for the aggregate redemption price of any shares it has not sold on the open market. For any shares that Cantor sells prior to that time below the redemption price, it will receive a payment of the difference at this settlement time.

This provides some security to Lionheart II in its redemptions situation and covers the deal’s $30 million minimum cash condition. This may also be an indication of what the the team saw as it reaches its redemption deadline today for its completion vote to be held May 18.

Should the SPAC be facing high redemptions this would simultaneously not be a surprise given the climate of high redemptions and risk-off trading due to macro-economic conditions, but also somewhat surprising considering the extent to which Lionheart II has worked to sweeten the pot.

Earlier this week, Lionheart II announced it’s previously disclosed pool of 1,029,000,000 warrants it intends to distribute to non-redeeming shareholders. Non-redeeming shareholders will receive these as a dividend on the 10th day following closing of the combination. Meanwhile, the warrants from the SPAC’s IPO units have been amended and will be exercisable on a cashless basis 10 days out from close.

But, that’s not all! The parties also signed a committed equity facility with Cantor, giving the post-transaction company the right to sell up to $1 billion shares to Cantor from time to time at its option. However, sales of the Shares to Cantor under the Facility and the timing of any sales is unknown, but will be determined by the Company and will depend on a variety of factors, including, among other things, market conditions and the trading price of the Shares.  Furthermore, Cantor would be required to buy a specified percent of the daily trading volume of the shares, subject to a maximum of 33%.

LCAP heads to a completion vote on Wednesday, May 18th, with a redemption deadline of Monday, May 16th. However, today marks its “ex-redemption” date. Meaning, you can no longer buy the share and have it settle in time in order to qualify to redeem.