For your daily Gig News, GigCapital (GIG) made yet another arrangement for both its Rights and its Shares, this time with Yakira Capital Management (“Yakira”). However, the real take-away here is that Gig now has three agreements that will effectively (if all three max out their purchases) remove the Rights from its Business Combination equation. Plus, Gig now also has a share backstop to secure the closing of the transaction. See below for details. However, keep in mind that the Yakira deal is a “non-binding LOI”, which is not as definitive as the forward purchase agreements with Greenhaven and Kepos.
Per the non-binding letter of intent, the terms, which are similar to the forward purchase agreements with Greenhaven and Kepos, are that Yakira agrees to not sell the Shares underlying its 419,299 Rights and Gig will purchase those 41,929 Shares underlying the Rights on or after the later of the sixtieth (60th) day after the Business Combination Closing Date or January 1, 2020 (the “Rights Shares Closing Date”), at $1.05 per Right (which reflects $10.50 per Rights Share).
Yakira may, but is not obligated to, acquire an additional 500,000 Rights.
As for the Shares, Yakira, currently holds 408,750 shares of Gig, and agrees to “hold, and not offer, sell, contract to sell, pledge, transfer, assign, or otherwise dispose of, directly or indirectly, or hedge (including any transactions involving any derivative securities of Kaleyra and any Short Sales involving any of GigCapital and Kaleyra’s securities) the Shares prior to the six (6) month anniversary of the Business Combination Closing Date.” Furthermore, Yakira will not redeem any of the Shares at the shareholder vote to approve their business combination and may, but is not obligated to, acquire an additional 500,000 shares of GIG.
Commencing on the day after the Business Combination Closing Date, Yakira may sell the Shares at any per Share price above $10.50 per Share. However, if Yakira still owns Shares as of the four (4) month anniversary of the Business Combination Closing Date, Yakira can sell its Shares to Gig at a price equal to the redemption price at the combination vote. BUT…for holding those shares for those extra months, Yakira will get an extra $0.03 per share for each month it holds the shares post vote. Lastly, Yakira can only sell its Shares to Gig between four and six months post vote.
All told, Gig has been working hard to secure its vote and clean up its Rights and now, the likelihood of a tender offer for any remaining Rights is a lot slimmer. However, again, that will depend on the amount of additional Rights that Greenhaven, Kepos and Yakira are able to purchase. However, on top of Yakira’s Rights arrangement, the additional Shares arrangement with Yakira provides assurance that there will be at least $5,000,001 of net tangible assets at closing,backstopping this deal. However, again, Yakira is a non-binding LOI. But bottom line, Gig1 is reasonably close to getting this deal done.