With No Additional Contribution to Trust…

Pensare Aquisition Corp. (WRLS) announced this afternoon, via a new proxy, that they are proposing to further extend their deadline to December 1, 2019.  Pensare currently has until August 1, 2019, but cited that they are, “…in discussions with respect to several business combination opportunities“.  However, they do not believe they will be able to complete a combination by August 1st.

Furthermore, Pensare is currently contributing $0.033 to trust per each outstanding public share, but also stated that, “…it does not intend to continue to make these contributions for any period after August 1, 2019″.  As we’ve seen, when a team does not offer additional funds to trust for an extension, there are typically a significant amount of redemptions.  In fact, most recently, Modern Media did just that, no funds to trust, and they had approximately 90% of their trust redeemed to just $14.7 million at their extension vote.

However, Pensare had previously stated that, “The Company is currently in active discussions with a target company regarding a potential business combination that is anticipated to require an amount of funding less than the current balance of the Trust Account to consummate the business combination.”  Clearly, Pensare had too much money going into the last vote, but perhaps the $63 million that they have left is still too much.

Or, maybe they would rather replace the cash from redeeming SPAC investors with a new PIPE. The following was included in the press release as well:

“The withdrawal of funds from the trust account in connection with the Election will reduce the amount held in the trust account following the redemption, and the amount remaining in the trust account may be significantly reduced from the approximately $63 million that was in the trust account as of June 19, 2019. In such event, Pensare may need to obtain additional funds to complete a business combination and there can be no assurance that such funds will be available on terms acceptable to the parties or at all.”

So they’re giving everyone a heads up that a future PIPE is on the table.  They may not actually do a PIPE, but just in case, better to give everyone fair warning that it may be done below $10.00. The tricky thing about a PIPE is, if new investors are subject to a lock-up, we’re looking at another low-float company post-combination.

Regardless, Pensare needing another extension is not a surprise.  They are only a little more than a month away from running out their clock and are still only in discussions with a potential target.  However, without at least an LOI on file, even an LOI with an un-disclosed name of a target, Pensare is looking at significant redemptions. And like MMDM, it sounds like that’s what they want to happen. Which means, either $63 million is significantly way too much money for an intended target or they want to replace SPAC investors with a PIPE, which may or may not be below $10.00.  Either way, redeemers gonna redeem…

Stay tuned for any further updates.