We had yet another new SPAC filing on Wednesday evening, with the addition of Orisun Acquisition Corp. (ORSNU), a $40 million SPAC IPO focused on what the team is calling the “High Tech” sector. Is that a sector? Seems kind of vague. Although, if you read the proposed business section, they drill down and get more specific saying they believe, “…there are significant opportunities in the Technology, Media and Telecommunications Industries globally…”.
Nonethless, Orisun will be led by Wei Chen, as CEO, Chairman and President, and Lu Zhou, as CFO and Director. Ms. Chen has been an independent investor through her family office, Everpower International Holdings Co., Ltd. since January, 2009.
Looking at this SPAC’s structure, it follows the typical “small SPAC” deal terms. That is, 100% in trust, 12 months to find an acquisition, plus three 3-month extensions for $0.10 to trust for each. Additionally, there is a warrant for 1/2 share and a right (1 for 10) included in the unit. However, while this is an “All-China” team (both management and board), the SPAC intends to focus on companies in the United States, which is a little unusual.
However, there are a few concerns with this prospectus. For one, the proposed business section feels meager, at best. Plus, they state that they intend to focus on companies in the High-Tech industry in the U.S., but then point out that there are TMT opportunities globally. It all feels a little sloppy. Furthermore, the management team doesn’t have a ton of experience. In fact, if you go to Ms. Chen’s family office’s website (Everpower International), there’s not a lot of meat there. For instance, if you look at their Entertainment section under their Projects tab, it lists a bunch of famous places in Hollywood, like the Hollywood sign and the Walk of Fame, but there’s no indication that Everpower is involved. Maybe their just pointing out cool things? Hard to tell.
The thing is though, this SPAC will once again, probably get done simply because the terms are fairly attractive, but are they really attractive enough? It has a 1/2 warrant, right, and three 3-month extensions for $0.10 a share. However, keep in mind that that those extensions are not combined with a shareholder vote. They are automatic extensions as long as the sponsor contributes the $0.10 at the time of extension. Which means, this is really a 21 month duration SPAC with the POTENTIAL for $10.30 in trust + interest. Just to be clear, shareholders will not have a chance to redeem for potentially 21 months if the SPAC takes all three extensions. This SPAC might be one of the rare cases where this structure STILL needs to be sweetened in order to get investors involved. Perhaps a full warrant or 101% in trust.
Summary of terms below: