Schultze Special Purpose Acquisition Corp. (SAMAU), the $150 million SPAC focusing on restructured companies, amended their S-1 this morning by adding the “Crescent Term,” which adjusts the warrant strike in the event of the issuance of additional securities in connection with a business combination closing. This term has been used so far in just Megalith Financial and EdTechx, but the originator was the Crescent Funding SPAC, which never actually made it to IPO.
As a refresher for how the term works, if Schultze issues additional shares of common stock or equity-linked securities for capital raising purposes in connection with their combination and the price of those securities are issued at less than $9.50 per share, then the strike price of the public warrants will be adjusted. to be equal to 115% of either the market value or the newly issued price, whichever is higher.
However, in order for the strike price to be adjusted, the gross proceeds from any additional issuances must be greater than 60% of the SPAC proceeds (plus interest and net of redemptions). AND…the market value of the issued share price needs to be below $9.50 per share.
As an example, if Schultze does a PIPE at business combination, but it’s done at effectively $9.51 or above and the total proceeds of the PIPE are less than $90 million (assuming Trust is $150 million at the time), plus the share price is trading at $9.50 or above, the warrant strike will not adjust.
However, if Schultze does a $100 million PIPE at $9.40, but the share is trading at $9.60. Again, no adjustment, because the share’s market value is above $9.50. But…if the share price is trading at $9.49, then the warrant strike will be adjusted.
One important note though: In Megalith’s “Crescent Term”, the redemption trigger was also adjusted along with the warrant strike and this is not adjusted in Schultze “Crescent Term”. Is this meaningful? Only if Schultze does a PIPE at a price far below $10.00.
A summary of Schultze’s terms have been provided below and given that they just re-filed, a Monday pricing is probably in the cards rather than tonight. However, we’ll be watching to see if that changes.
EarlyBirdCapital and BTIG are joint lead underwriting managers.
Greenberg Traurig, LLP and Graubard Miller are issuer’s counsel and underwriter’s counsel, respectively.
Terms Tracker for the Week Ending July 3, 2025 Welcome to our weekly column where we discuss the findings from our IPO terms tracker based on the previous week’s pricings. We’re heading into the July 4th holiday, so we’ll keep this week’s column short and to the point. But before you head to the beach,...
Crown PropTech (OTC:CPTKW) has entered into a definitive agreement to combine with rare earth mining firm Mkango Resources (TSX-V:MKA) at a pre-money equity value of $400 million. London-based Mkango is working to commercialize a chain of rare earth mining and refining facilities in Africa and Europe. The combined company is expected to trade on the...
At the SPAC of Dawn One of the biggest sources of uncertainty in the SPAC market in recent years has been regulatory changes, but new shifts could be in its favor. SEC Chairman Paul Atkins told CNBC yesterday that the commission would review the rules for SPACs after “rather controversial” changes to the rules passed...
McKinley Acquisition Corporation (NASDAQ:MKLYU) has filed for a $150 million SPAC to hunt for an innovative target company with an experienced financial team that has dabbled in SPACs before. The new SPAC is offering investors one right to a 1/10 share in each unit with no overfunding of the trust, but it could provide a...
At the SPAC of Dawn The rain of SPACs has continued with four expected to make their debuts during today’s trading sessions after pricing their IPOs overnight. The largest of these, EQV Ventures II (NASDAQ:EVACU), even managed an upsize, making it the largest SPAC IPO since Ares II (NYSE:AACT) pulled together $450 million in 2023....