This morning, we had another new SPAC filing with the addition of Fellazo Inc. (FLLCU), a $50 million SPAC IPO focused on health food and supplements in Asia. Fellazo will be led by Nicholas Ting Lun Wong, who is currently a director of Shanghai Linxin Food and Beverage Management Ltd.
Looking at this SPAC’s structure, there are a few changes to the terms we usually see in Asia-focused SPACs. Namely, there is no Right included in the Unit and the amount the sponsor will contribute to trust for each 3-month extension has been reduced from $0.10 per extension to $0.075. Fellazo will be allowed to extended up to three separate times, which means if they need to use all three extensions the total amount contributed to trust will be $0.225, rather than $0.30.
Regarding the removal of a Right from the Unit, Fellazo is instead offering a full Warrant rather than the usual 1 Warrant for 1/2 share. However, we do still see a $16.50 warrant call trigger, which is typical for the smaller Asia-focused deals, but still lower than the $18.00 found in most SPACs.
In total, is the reduction in the extension contribution significant enough to turn off SPAC investors? Well, it’s definitely going to be a conversation point. Usually you need a strong team when a change in terms is considered “unfavorable” to investors by making the case that the team’s deal-making abilities supercede any potentially less attractive returns. However, the Fellazo team’s strength feels about the same level as the other SPACs of this size and focus (not much deal-making capability, but are well-connected), hence, there is most likely going to be pushback. However, $50 million is a small enough size that this deal should get sold even if they lose a few of the typical SPAC players. The trade-off being, it might not trade that well.
Summary of terms below: