- First up, while Mosaic will need to extend three months post their 24 month deadline of October 23rd, this SPAC has the ability to extend to 27 months without an extension vote. Per the prospectus: “…. 24 months from the closing of this offering, or 27 months from the closing of this offering if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months from the closing of this offering….“
- Two, Mosaic also has the ability to call their warrants for shares at $10.00. This is in addition to Mosaic’s ability to call their warrants for cash or cashless exercise at $18.00. That’s not to say they will automatically opt for the call for shares (they may prefer the cash), but it’s something to consider if you’re a warrant holder.
- Three, termination rights: If the merger agreement is terminated, due to either a superior proposal or if Vivint’s Board of Directors change their recommendation, Mosaic is entitled to receive a termination fee of $81,060,000.
- Four, notable conditions to termination: this transaction can be terminated by either Mosaic or Vivint Smart Home if the transactions are not consummated on or before January 22, 2020 (or April 23, 2020, if stockholders of Common Stock have approved an extended deadline to consummate the Business Combination)
- Five, Vivint’s notable conditions to closing: redemptions must be less than 10,350,000 shares in the aggregate. As a reminder, Mosaic has 34,500,000 public shares outstanding, so the 10.35 million figure represents fewer than 30%.
The fact that Mosaic does not need to go to an extension vote to extend is significant. This SPAC does not need to worry about their cash in trust being depleted in order to extend and potentially having to re-jigger any parts of this deal. HOWEVER, at the combination closing vote, the minimum amount of redemptions of 10.35 million shares means 70% of the Trust must NOT redeem. Which means the Mosaic and Vivint teams have their work cut out for them as far as marketing. Keeping 70% in trust can be a challenging hurdle if a combination is not a very well received. Let’s see what happens when they hit the road and get to tell their story.