Sentinel Energy Services (STNL), three trading days post-redemption of it’s Shares, rose from the dead tonight and announced a special meeting of Warrant Holders. Amen. Sentinel will be asking Warrant Holders to vote on a proposal to approve an amendment to the Warrant Agreement whereby Sentinel will automatically convert the Public Warrants into the right to receive $0.02 per whole Public Warrant. Water into wine? Or maybe just more water.
Approval of the Warrant Amendment Proposal requires the affirmative vote of 50% of the Company’s outstanding Public Warrants. However, if the amendment is not approved, the Warrants will expire worthless, same as they were going to do pre-vote.
This does bring up a lot of questions though. What is Sentinel up to? Clearly they’re trying to clean up all that warrant overhang, which would create a pristine shell. Additionally, while the Sponsor has agreed to cancel all 5,933,333 of their Private Placement Warrants, they ARE keeping 10% of the Founder Shares, or 855,000 Shares. Which would make a pretty handy shell. Keep in mind, most liquidated SPACs do not just offer cash to warrant holders for no reason, they let the warrants expire worthless. However, if they have something in store for a shell, why couldn’t they use it for the SPAC? Keep in mind, Sentinel was planning on extending their completion date right up until they announced their liquidation on the day of their shareholder extension vote.
However, $0.02 per public warrant seems like a meager amount for 11.5 million public warrants ($230,000). The alternative is, they expire worthless if the proposal is voted down. But…the question remains, why are they doing this? Warrant Holders are most likely asking themselves the same question and in light of that, are probably contemplating that $0.02 price. Sentinel might need to offer that wine with a tequila chaser.