Two Cancelled LOIs and a Growing Pipeline

Noteworthy events of the last week…

First up is Barington/Hilco with the announcement they have terminated their LOI with Specialty Brands Holdings. For those that can remember that far back, Barington/Hilco IPO’d on May 5th of 2015 and were supposed to complete a business combination in 21 months. Well, they’re going on three years now after multiple deadline extensions and are now looking at June 30th, 2018 to complete an acquisition. If they can manage to pull off yet another LOI and another extension, they could technically still complete, but realistically, how good of a transaction can they actually bring to the table with so little cash left??

Barington/Hilco still hasn’t filed their 10-K, but as of the most recent 10-Q they had only $14.7 million cash left in trust (after redemptions) and that number will likely get worse after this next round. You can see that public lack of confidence reflected in the price of the warrants which are currently trading at only $0.14….if you’re still holding the common, redeem! redeem! redeem!

Jensyn Acquisition Corp. has the exact same problem. This time however, it was the seller (BAE Energy) that terminated the LOI, but Jensyn is in a slightly better position with $41 million currently held in trust as of their recently released 10-K. Their completion deadline is June 5th, so it is highly likely they will extend.

However, both Barington/Hilco and Jensyn again demonstrate the importance of evaluating SPAC management teams and the underwriters/advisors when choosing to invest. You want an A+ SPAC management team that has solid experience negotiating deals and the ability to tap into deal flow via the banks and advisors. That’s not to say a smaller bank won’t have access to good deals (Leerink is a great example of a specialty boutique focused on the life sciences), but chances are just greater if you have a bulge bracket bank on the cover.

I’m predicting a busy summer of announcements come June and July.  There are currently 22 SPACS seeking a target that have less than one year left to complete an acquisition and of those, 11 have less than 7 months.  In order to complete by year end (and taking into account the dead month of August) you should see a flurry of annoucements in the next 2-3 months.

You can check all of the completion deadlines by checking the most recently posted weekly update found here.