Crescendo is Putting the Band Back Together. Again!
Crescendo Partners’ Eric Rosenfeld, filed for a $130 million IPO late Tuesday, making Allegro Merger Corp., Rosenfeld’s sixth consecutive SPAC. In addition to an obsessive penchant for musical-term branding, the Allegro team and board seem to have a penchant for each other as well, since all have worked together (with the exception of board member Robert Deluce) on one or more of Rosenfeld’s five prior SPACs. It’s a reunion tour roadshow for sure, but let’s get to the details.
Summary terms include:
- Sector Focus: General / Broad
- $10.00 unit comprised of one share of common stock, one right and one full warrant
- Each right entitles the holder to receive one-twentieth (1/20) of one share
- 100% held in trust ($10.00 per share)
- 21 months to complete an acquisition
- Warrant redemption price: $18.00
- Redemption rights: limitation of 20% of the shares sold in the IPO
- Founders and Cantor Fitzgerald (the Underwriter) to purchase 372,500 private placement units at $10.00 to bring the trust to 100% (Founders – 322,500 units / Cantor – 50,000 units)
- Underwriter fees: 2.0% + 3.5% deferred fee. Cantor Fitzgerald is sole book-runner.
The Rights term is what stands out immediately. 1/20th of one share is the first to deviate from the standard 1/10th of one share. While on the face of it this might seem like a negative, Allegro does balance this by offering a full warrant and a 21 month time period to complete their business combination. Additionally, the limit for shareholders wishing to redeem is at 20% of the shares sold in the offering. More recent SPACs have had limits of 15%.
As for the five prior SPACs that the Crescendo team have completed, I’ve provided a summary below.
| Name | IPO Date | Unit Price | Gross Proceeds (mms) | Acquisition | Acquisition Symbol | Acquisition Current Share Price |
|---|---|---|---|---|---|---|
| Arpeggio Acquisition Corporation | June-04 | $6.00 | $40.8 | Hill International | HIL | $5.60 |
| Rhapsody Acquisition Corporation | Oct-06 | $8.00 | $41.4 | Primoris Services | PRIM | $26.27 |
| Trio Merger Corp. | June-11 | $10.00 | $69.0 | SAExploration | SAEX | $1.41 |
| Quartet Merger Corp. | Nov-13 | $10.00 | $96.6 | Pangaea Logistics | PANL | $3.39 |
| Harmony Merger Corp. | Mar-15 | $10.00 | $115.0 | NextDecade | NEXT | $6.35 |
Primoris is a hit, but the majority are misses.
“Past performance may not be indicative of future results…” Let’s hope that famous warning disclosure at the end of every performance report rings true here. On the whole, this deal looks like it might need some sweetening. Perhaps more at-risk capital from management to over-fund the trust and/or reverting the rights terms to 1/10th of one share will give investors additional comfort.
Lastly, Issuer’s Counsel and Underwriter’s Counsel are Graubard Miller and Ellenoff Grossman & Schole LLP, respectively.
Part of the fun of the SPAC market is seeing the constantly evolving terms and approaches of teams in both securing their IPOs and their later business combinations. But, there are nonetheless a few hard rules to set the state of play among sponsors and investors, including sacrosanct deadlines for dispersing of trust funds back...
At the SPAC of Dawn Car-sharing networks had their moment in the sun as hot items in the tech scene, with some hopes that the companies could grow to the same scale as vacation rental disrupters like AirBnB (NASDAQ:ABNB). But, signs are showing that this startup category may not be ready for the public markets....
Blue Water III (NASDAQ:BLUWU) has filed for a $200 million SPAC to follow up on the healthcare-focused sponsor’s 2021 pharmaceutical deal. This new SPAC is set to have 1/2 warrants in its units with no overfunding of its trust and a solid 24 months to complete a business combination. It is the third new S-1...
At the SPAC of Dawn While yesterday brought news of better-than expected housing starts, albeit with slightly lower building permits beginning, today’s market news should include an update on jobless claims, which could be a key harbinger of the Fed’s rate cut policy. Other leading economic indicators are set to come in later in the...
CCIS Acquisition Corp (NASDAQ:CCACU) has filed for a $60 million SPAC that would bring a fresh new underwriter to the market in the smaller range of the spectrum. This is the first SPAC IPO filing by underwriter Benjamin Securities Inc. as left lead, although it served as co-manager for Plum IV‘s (NASDAQ:PLMKU) January 15 IPO...