The Music Acquisition Corp. (TMAC.U) Files to Liquidate Early by Vote

The Music Acquisition Corp. (NYSE: TMAC.U) filed a proxy this morning to seek shareholder approval to liquidate its trust early.

TMAC doesn’t have a completion deadline until February 5, 2023, but the SPAC’s board has determined that it is very unlikely that it will be able to complete a business combination before then. The management team also referred to Biden’s Inflation Reduction Act of 2022, which imposes a 1% excise tax on any domestic corporation that repurchases its stock after December 31, as its main motivation to liquidate early.

“While not free from doubt, absent any further guidance, there is significant risk that the Excise Tax will apply to any redemptions of our public shares after December 31, 2022, including redemptions made if we are unable to consummate a business combination by or before the Original Termination Date. The application of the Excise Tax to any redemptions we make after December 31, 2022 could potentially reduce the per-share amount that our public stockholders would otherwise be entitled to receive,” The Music Acquisition Corp. stated in its proxy.

While it’s still not clear whether it’s the sponsor or the trust that is on the hook for the tax, TMAC seems to suggest it’s a possibility it would result in a lower redemption value.

As a result, TMAC will hold a special meeting in November where it hopes shareholders will approve its amended charter proposal to change the termination date to an earlier day.

If the amendment is approved, TMAC will cease all operations immediately after the shareholder meeting and promptly complete redemptions. The SPAC will then voluntarily delist the Class A Ordinary Shares from the NYSE as soon as practicable after completion of the post-amendment share redemption.

The Music’s board has fixed the close of business on October 31 as the record date for determining shareholders entitled to receive notice of, and vote at, the shareholder meeting and any adjournment thereof.

This marks the fourteenth such SPAC to hold a shareholder vote to move up their completion deadline to liquidate early, but given lingering economic uncertainty and turbulent market conditions, it is anticipated that other SPACs will follow suit. The Music Acquisition Corp. originally announced the pricing of its $200 million IPO in February 2021 with the intention of combining with a business that has strategic and operational expertise and a long-standing position within the music industry. The Music is led by Chairman and CEO Neil Jacobson and COO Todd Lowen.