Some of you may have already noticed, but yesterday, we added two new tables to the Yield-To-Maturity page. However, a bit of background first….
The initial Yield-To-Maturity tables we published used a very conservative method whereby we used either the trust value at IPO (for SPACs still searching for targets) or the “illustrative value” that SPACs use in their proxies or presentations (for announced SPACs) to calculate the YTM. This is the safest way to calculate a YTM figure, but it never reflects the actual cash per share value at this current moment in time. This is particularly true for “announced SPACs” that use an illustrative value based on their most recent 10-Q, so the value is almost always a couple of months out of date.
While this is the conservative, and arguably the safest way to approach the YTM calculation, it always felt…kind of lame. Hence, we decided to publish a second set of tables based on our own estimates. Our models take into account the taxes (income and franchise, if any – BVI, Cayman), interest rates, any withdrawls from interest income for working capital purposes and contributions to trust for extensions to arrive at the current trust balance and ultimately, the implied cash per share value. To make our estimated cash per share values easy to find, we’ve highlighted those columns in yellow.
However, a few notes: There are a few SPACs that have an illustrative value that projects what they are estimating to be the cash per share value at vote. MTech does this. MTech does not expect to close their transaction until Q1 of 2019, but they have already estimated that their pro rata cash amount will be $10.16 at the time of the vote. Hence, you will see MTech’s value of $10.16 under the “Announced: Illustrative Values” table, but only $10.14 under the “Announced: Estimated Values” table, since the Estimated tables are reflecting what’s currently in trust RIGHT NOW, not in Q-1 2019. Additionally, we believe we have a very accurate model, but it’s still just an estimate. Please keep that in mind.
Finally, we may be tweaking the layout in the coming weeks to make the tables easier to read and we will also be re-working the current Redemption Prices page to better reflect these changes. Plus, we intend to also publish our estimated trust balances on the forthcoming “new” Redemption Prices page as well.
We hope you find the new tables useful and we look forward to continuing to improve and provide meaningful data to our subscribers.
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