Black Ridge Acquisition Corp. Switches Vote to an Extension

Black Ridge Acquisition Corp. (BRAC) filed a new preliminary proxy this morning, switching their previously scheduled shareholder vote to complete their combination with Allied Esports, to an extension vote.  In fact, BRAC had filed a definitive proxy for their combination vote as recently as last Wednesday, June 12th, with a vote date of June 28th. However, it looks like that timeline no longer works for this deal.

Here’s what we do know from today’s preliminary proxy, albeit, it’s not much:

• The new vote date will take place in July, with an actual day to-be-determined.  However, BRAC runs out their clock July 10th, so presumably some date between July 1st and 10th.
• The date BRAC is asking to extend to (new completion deadline) is left blank, so we still don’t know how many months BRAC will be asking for.
• BRAC has included language for a monthly extension contribution, but the exact amount is currently left blank. The amount to be contributed will be on a “cents-per-share basis” and not as a flat amount, as seen recently in GigCapital1.
• BRAC appears to be using an out-of-date conversion price for shareholders who opt to redeem.  BRAC states a “current conversion amount of approximately $10.29 per share”, based on $142,000,000 in trust.  However, the amount BRAC held in trust as of their most recent 10-Q (3/31/19) said the trust held $142,027,742. Huh? The trust can’t have lost $27,742 since March, and it’s earning interest, so that trust amount and $10.29 figure most likely just need to be updated.  (Per BRAC’s prospectus, they cannot removed interest from the trust for purposes other than taxes or $50,000 for liquidation expenses).
• The record date will remain as June 10, 2019.

Lastly, Black Ridge announced their combination with Allied Esports and World Poker Tour back on December 19, 2018, six months ago.  Given that the current average for completed SPACs is currently 5.2 months from announcement to close, Black Ridge is overdue, plus, they’re about to ask for more time.  That’s a little worrisome.  Perhaps, now that this deal is close to a vote, BRAC has a little more insight into the amount of redemptions they might be facing.  The best way to protect against a run on the cash in trust is to backstop the transaction with a PIPE.  So maybe that’s in their future and the reason for the delay.

Stay tuned for any further updates.