No Contribution to Trust for Non-Redeeming Shareholders
Leo Holdings Corp. (LHC), in a not unexpected move, filed a new preliminary proxy tonight to extend their completion deadline five and a half months from February 15, 2020 to July 31, 2020. However, what was unexpected is that LHC will not be offering any contribution to trust for non-redeeming shareholders at the extension vote.
By way of background, Leo Holdings, which raised $200 million at IPO on February 12th, 2018, had previously announced their intent to combine with CEC Entertainment (Chuck E. Cheese). However, the deal fell through this past July and the agreement was terminated. Nonetheless, today’s proxy states that LHC is “currently in discussions with respect to several business combination opportunities…“, but clearly they’re going to need more time.
However, by not offering any contribution to trust for non-redeeming shareholders, LHC can expect a heavy number of redemptions at the extension vote. Especially since they are asking for five and a half more months. That’s a long time for investors to wait (on top of the 24 months they’ve already waited) without knowing if LHC will be able to announce a deal or not. Usually you need to pay up to get investors to stay in these situations. However, in this type of a scenario, the redemptions are typically intentional. Meaning, the SPAC has too much money for any new targets they are talking to for a deal to make sense. Hence, the need to reduce the trust value via redemptions.
Or, LHC wants to replace the cash in trust with PIPE investors. In fact, they put that in the proxy too…”The withdrawal of funds from the Trust Account in connection with the Election will reduce the amount held in the Trust Account following the Election, and the amount remaining in the Trust Account may be only a small fraction of the approximately $[?] that was in the Trust Account as of January [?], 2020. In such event, we may need to obtain additional funds to complete an initial business combination, and there can be no assurance that such funds will be available on terms acceptable or at all.” (the blanks are what’s in the proxy. It will be added in later filings).
Regardless, without an additional contribution to trust and without an announced deal for investors to chew on, LHC is looking at some amount of redemptions. The question is, how much?
Pyrophyte II (NYSE:PAII.U) has filed for a $175 million SPAC to dig for a natural resources target while the team’s first deal remains pending. The new SPAC is offering investors 1/2 warrants in each unit and it will have 24 months to complete a business combination without asking shareholders for an extension. It is the...
At the SPAC of Dawn The last day of the quarter is to play host to a pair of shareholder votes and a possible pricing of Indigo‘s (NASDAQ:INACU) $100 million IPO. This week is also to play host to fresh jobs numbers just before the long July 4 weekend. Black Hawk (NASDAQ:BKHA) was also one...
Terms Tracker for the Week Ending June 27, 2025 Welcome to our weekly column where we discuss the findings from our IPO terms tracker based on the previous week’s pricings. June continued its late-month rally with another five SPAC IPOs pricing this week, bringing the monthly total to 10 and the 2025 year-to-date count to...
Blueport (NASDAQ:BPACU) has filed for a $69 million SPAC that would bring another first-time sponsor team to market. The new SPAC is offering investors a right to a 1/6 share in each unit and it will have 15 months to complete a business combination. It is underwritten by Alliance Global Partners and will not be...
At the SPAC of Dawn The markets appear to poised to continue a rosy week with futures in the green in anticipation of PCE inflation readings. Space is one of the sectors feeling the most love recently and launch services firm Rocket Lab (NASDAQ:RKLB) is keeping up the momentum, scheduling two launches within 48 hours...