Modern Media Acquisition Corp. (MMDM), today announced the completion of their merger with Akazoo Ltd. The shareholder vote was held a full two weeks ago on August 28th, so this has been an extra long close. However, Akazoo began trading today on the Nasdaq Stock Market under the symbols SONG and SONGW, for the shares and warrants, respectively.
It also appears that the PIPE was a little smaller than expected, which could account for the delay in closing. If you recall, there was $14 million left in trust post vote, so with today’s announcement of $55 million in available cash, that means the PIPE actually only raised $41 million. As a result, the founders cancelled 2.6 million founders shares instead of the previously stated 2.35 million (if the amount of available cash was greater than $61 million, only 2.35 million founders shares would have been cancelled and forfeited).
Furthermore, Modern Media’s 2.07 million Rights were converted into SONG Shares today as well. However, the Share was fairly immediately halted after trading down to $5.40 from $6.40. Essentially, the laws of supply and demand kicked in. An additional 2.07 million Shares is a whole lot of extra supply and it swamped any demand. It’s currently trading at $4.95, but it should probably hang around the $5.00 price.
So while we get to move another SPAC to the completed column, it was not the ideal outcome. Looking back at the past few years history of SPACs with Rights, there has only been one successful outcome – Atlantic Acquisition Corp., which bought HF Food Group (HFFG), currently trading at $18.52. Although, that SPAC only had Rights in their unit, no Warrants. Additionally, you can technically include Forum Merger Corp. I as a successful SPAC with Rights since it was bought by CVC Fund VII for $12.50 per share in 2018, but Forum Merger I did do a PIPE at combination close at $8.00 a share. So it’s a mixed bag. However, while these Rights are tough, Modern Media still did a PIPE below $10.00 and investors didn’t love it, so the share performance can’t be blamed on the Rights, but they sure do exacerbate the problem….
You can read the press release HERE.