New SPAC: SilverBox Corp. III Files for $100M IPO

Last Friday, SilverBox Corp. III filed for a $100 million IPO to sell 10 million units for a prospective business combination with one or more businesses with an aggregate enterprise value over $750 million. Although the SPAC has a broad industry focus, its primary sectors of interest include consumer goods, technology, media, finance, telecommunications, and energy. Each unit is priced at $10, which consists of one share of Class A common stock and one-third of a redeemable warrant. A whole warrant can be exercised to buy one Class A common stock at $11.50 per share.

In the event that the company fails to complete its initial business combination within 18 months of the offering, it can execute a one-time extension of three months (for a total of 21 months) by contributing $0.10 per share to the trust account. The trust account is currently over-funded with 101% of initial IPO proceeds ($10.10 per unit), below the 2023 average of 102.0% ($10.20 per unit).  Presumably, overfunding at only 1% is partially due to this not being SilverBox’s first rodeo in the SPAC market.

As for SilverBox Capital’s first deal, they priced a $300 million IPO via SilverBox Engaged Merger Corp I (SBEA), which culminated in a business combination with Black Rifle Coffee Company (NYSE: BRCC) for an enterprise value of $1.71 billion in February 2022. The SPAC’s common shares soared to a high of $33.11 on April 11, 2022, representing a 231% return on the share for IPO investors. However, the share price has since fallen to $6.87, a decline of -31.3%, which, when compared to peer consumer De-SPACs, which as a group are down -74.8%, shows a better result.

SilverBox Corp. III is led by the same key figures as SilverBox Engaged Merger Corp I (SBEA), with Stephen M. Kadenacy acting as the Executive Chairman, and Joseph E. Reece, as the Chief Executive Officer, after serving reversed roles in their last cup of coffee. To add to their CVs, Mr. Kadenacy and Mr. Reece are both Co-Founders and Co-Managing Partners of SilverBox Capital.

Also, likely contributing to this deal structure is Credit Suisse’s stature as the left lead underwriter. The firm is re-entering the SPAC game for the first time since May 2022 when it served as the left lead underwriter for a $225 million IPO with Investorcorp India Acquisition Corp. (IVCA). The firm has acted as the left lead underwriter on 95 SPAC IPOs since 2016, facilitating median proceeds of $310 million, 100.0% in trust, or $10.00 per unit, over a median 24-month initial time horizon. However, these terms are more indicative of a friendlier terms environment for sponsors. SilverBox III’s terms, while still generous considering the typical terms we’ve seen recently, are akin in structure to terms we normally see from larger, bulge bracket underwriters.

The sponsor, SilverBox Sponsor III LLC, will purchase 3.5 million warrants at $1.50 per warrant, which can be increased to 3.8 million warrants if the underwriters’ over-allotment option is exercised fully, rendering its at-risk capital $5.3 million, or $5.7 million in the aggregate if the underwriters’ option to purchase additional units is exercised in full.

With the SilverBox team’s sight set on another business combination, investors should hope the caffeine from its previous deal is a strong cup of fuel for the SPAC’s progression.

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