It seems Alberton will NOT be providing an additional $60,000 per month contribution. Rather, it’s in lieu of the original $0.02 per month contribution. This changes things considerably….
So now it’s back to game theory again. If no one redeems, that amounts to only an additional $0.005 per month, less than a penny. However, if half of shareholders redeem, that results in an ONLY an additional $0.01 per month, and so on. If 75% of the trust redeems, that brings us back to a $0.02 per month contribution. However, there is also the warrant kicker. But is it enough to keep investors in the deal, especially since they do not receive the additional 1 warrant for 1/2 share until combination close or the extension expires (at October 26, 2020), whichever comes earlier.
Something to consider is that it will be challenging for any SPAC to get a combination done right now, but Alberton just doubled their outstanding warrants which should make it even more challenging. Plus, Alberton is asking for six more months with a potentially smaller contribution to trust than they were previously going to provide. However, as is usually the case, when a SPAC offers minimal or no contribution to trust, that may be strategic…meaning, perhaps they are trying to reduce the trust size via redemptions to make a potential combination work.
We’ll have to wait and see what shakes out on Thursday. Stay tuned.
Alberton Acquisition Corp. (ALAC), put out an 8-K this morning with a very interesting amendment to their extension contribution to trust. As background, Alberton will be holding their shareholder vote to extend to October 26, 2020, this Thursday, April 23rd. Originally, Alberton stated that they would be contributing $0.02 per month to trust, for six months, but they’ve sweetened that contribution considerably.
Those sweeteners include an additional $60,000 contributed to trust monthly for non-redeemers as well as an additional dividend of 1 warrant for 1/2 share. Alberton already had 1 warrant for 1/2 share that was included in its IPO unit, so this additional 1 warrant for 1/2 share essentially turns that into one whole warrant for one whole share. However, you do not receive the additional 1 warrant for 1/2 share until the closing of the business combination or the expiration of the extension on October 26th, whichever comes earlier.
So, to review: If you a shareholder that does not redeem at the extension vote you are entitled to receive the original $0.02 monthly contribution, plus the pro rata amount of $60,000 (based on how shareholder are left post-redemption), PLUS a dividend of 1 warrant for 1/2 share. Not bad.
As for that $60,000 pro rata per month kicker, Alberton has 11,487,992 shareholders, so if no one redeems, that amounts to only an additional $0.005 per month. However, if half of shareholders redeem, that results in an additional $0.01 per month, and so on.
Lastly, the cash Contribution is subject to the following deposit schedule: the aggregate amount of the cash contribution of first two months of $120,000 will be deposited into the trust account within 7 business days of April 27, 2020 and the cash contribution of each subsequent month of $60,000 will be deposited into the trust account with 7 business days of 27th day of such month.
All told, this should be sufficient to keep a majority of investors from redeeming and they’ve asked for an additional six months so they don’t have to go back to the well again three months from now. It’s a bit expensive for the team, but these are expensive times.
Stay tuned and look for vote results on Thursday.