Well…it’s Friday afternoon. That means it’s “Hide Yo Deal” time.
Hunter Maritime, a $150 million SPAC focused on the international maritime shipping industry and underwritten by Morgan Stanley, just announced they have entered into a definitive agreement with NCF Wealth Holdings Limited. The deal will be an all-stock transaction which values NCF at an equity value of $2 billion.
So what kind of a shipping company is NCF, you say? Well, it’s not. NCF is a fintech company in China….about as far removed from shipping as you can get.
Additionally, there wasn’t an investor presentation included in the filings, nor was there an investor conference call scheduled. That’s never a good sign.
So here’s the kicker: Hunter also announced they are going to do a tender offer at $10.00. Yep. Even though Hunter’s trust has been earning interest for two years, they are going to let you tender your shares at $10.00. Additionally, Hunter has also called a special meeting asking shareholders to vote on an extension deadline, moving the completion deadline date from November 23, 2018 to April 23, 2019.
So what does all this mean… Essentially, shareholders have the option to tender their shares at $10.00 and vote yes or no (or abstain) on the extension. If Hunter get the extension, shareholders then have the ability to redeem at the vote in April. However, Hunter still needs a “Yes Vote” of at least two-thirds of all outstanding Class A common shares and Class B common shares voting. So, if enough voters vote no, they do not get the extension and they will then need to close by November 23rd. However, trying to close a deal with a company based in China in five weeks would be highly unlikely. At that point, the SPAC would liquidate.
Nevertheless, by offering to tender the shares at $10.00, Hunter is gambling that shareholders would rather NOT tender at that price and vote yes on the extension and stay in the deal until April where they can redeem for $10.00 + interest earned. It preserves the cash in trust (temporarily), but there is always risk with a vote and shareholders have been holding on to this stock for nearly two years without a return.
Having said all that, we do not have any information on NCF and the details of the transaction have not been filed yet. Without any additional information, it’s hard to evaluate the transaction at face value (maybe it is a good deal??), but a fintech company in China seems really outside the wheelhouse (shipping term!) of this SPAC team’s expertise.
We’ll wait to evaluate additional documents that get filed, but it’s 11:59PM on the clock for Hunter and time still flies even when you’re not having fun.