Act II Global Acquisition Corp. re-filed their amended S-1 tonight, with a few changes, large and small. The most noticeable change being the removal of their prior left lead – J.P. Morgan. As noted previously, J.P. Morgan hasn’t been involved in a SPAC since 2017 and never as left lead. So…we can speculate all sorts of reasons as to why J.P. Morgan is no longer involved in Act II, but the net result is, this is a nice coup for Cantor, who is now their sole book-runner. J.P. Morgan is a great bank, but in SPAC Land it’s always advantageous to have a really experienced SPAC underwriter. Perhaps JPM wouldn’t go to the right of Cantor.
Nonetheless, the other change to Act II’s IPO filing includes a small reduction of their at-risk capital from $7.0 million to $6.75 million. Additionally, Cantor is using one of their standard plays from their playbook, where in the event of an over-allotment, management does not have to contribute additional at-risk capital. This is because they are back loading the underwriter fees on the over-allotment.
Using Act II’s $250 million SPAC as an example, the upfront underwriting fee is 2% and the deferred fee is 3.5%. However, if they exercise the full over-allotment for a total deal size of $287.5 million, normally, an underwriter would be paid 2% upfront on the additional $37.5 million over-allotment. Instead, what Cantor does is not take any additional UPFRONT (2%) underwriting fees on the over-allotment of $37.5 million, but will instead collect 5.5% at the closing of the business combination on just the over-allotment portion and the $250 million will still be subject to a 3.5% fee. (If this is a little confusing, just compare the Use of Proceeds tables in the first and most recent S-1s.) This enables the SPAC management team to not have to increase their private placement purchase (at-risk capital) in order to account for the additional upfront underwriting fees.
In any event, Act II was previously expected to price Wednesday, April 24th for trading Thursday, April 25th. This schedule should remain the same, but we’ll update any further changes.
Act II revised summary of terms below: