Trident Acquisitions Corp. (TDAC), filed a preliminary proxy this morning to extend their completion deadline a full six months from December 1, 2019, to May 29, 2020. The vote will be held on November 26th, with a Record Date of October 31st, but there’s a big asterisk here…
First up, Trident will not be contributing any additional funds to trust to extend. Furthermore, in order to redeem your shares at the extension vote, you MUST vote (yes or no) and that means, you MUST be a shareholder of record. Again, the record date is October 31st, so in order to be a shareholder of record, the last day you can buy TDAC shares is October 29th. Anybody who buys TDAC shares on October 30th and would like to redeem is out of luck since their shares will settle post-record date.
So, to review, Trident is asking for an additional six months to announce and close a combination, but they will not be contributing any additional funds to trust in order to extend. Plus, they are also requiring shareholders to vote in order to be able to redeem. As we’ve seen many times before, this will result in significant redemptions of the trust. So either Trident WANTS redemptions, meaning they have too much money for an intended combination or, they want to replace the trust with a PIPE (most likely at a price lower than $10.00). There is also the possibility that TDAC will drop a contribution into the proxy at a later date and that this is just the initial preliminary proxy.
There is also a third possibility, but it seems unlikely. They have a combination that they intend to announce very shortly and they think it will be very well received and therefore, they are trying to gauge investor reaction to the announcement before they lock themselves into a contribution. However, this seems unlikely because they have made it mandatory that you need to be a shareholder of record and vote in order to redeem. This is not something teams that are confident in a transaction require. Tying a vote and redemption is no longer standard and the confusion results in shareholders that wanted to redeem, not being able to, thereby preserving the cash in trust.
Regardless, this extension proxy, as is, will most likely result in a significant reduction of the Trust. Stay tuned for any changes.
Per the proxy:
In order to exercise your conversion rights, you must:
- check the box on the proxy card to elect conversion;
- affirmatively vote for or against both the Charter Amendment and the Trust Amendment;
- submit a request in writing prior to 5:00 p.m., Eastern time on [__], 2019 (two business days before the Annual Meeting) that we convert your public shares for cash to Continental Stock Transfer & Trust Company, our transfer agent, at the following address:
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, NY 10004
Record Date: October 31, 2019
Redemption Deadline: November 22, 2019**
Vote Date: November 26, 2019
**YOU MUST BE A SHAREHOLDER OF RECORD AND VOTE