This morning, Nebula Acquisition Corp.’s (NEBU), announced a few changes to their proposed warrant amendment and specifically, the condition to closing in regards to the warrant amendment passing by a majority in order to close their business combination with Open Lending LLC.
If you recall, Nebula and Open Lending originally intended to tender the public warrants for $1.50 per whole warrant. However, according to the original terms, in order to receive $1.50 per warrant, you had to vote in favor of the amendment. And that amendment would reduce the term of any and all remaining NEBU Warrants to expire upon the consummation of the Merger. And further to that, in order for the warrant amendment to pass, it would need the approval of at least 50% of public warrant holders. And lastly, Open Lending made it a condition to closing that the warrant amendment be approved.
Instead, now Open Lending and Nebula have agreed to increase the redemption price for the outstanding warrants to $1.80 per whole warrant, but keep in mind that they still need a majority to vote “Yes” in order for the amendment to be approved. However, if they do not have a majority, and the warrant amendment is voted down, Open Lending has agreed to waive the warrant amendment approval as a closing condition to the combination. So regardless of the results, their deal is still happening, assuming shareholders vote yes on their deal (two separate votes).
However, what happens if the warrant amendment is not approved? For instance, what if only 45% of warrant holders vote “Yes”? In that case, warrant holders do not get the $1.80 per whole warrant, but they do get to keep their warrants, but the real takeaway here is that the vote is no longer an impediment to the combination.
Although, by increasing the warrant tender price by $0.30 to $1.80, Nebula and Open Lending will be spending an extra $2.75 million. That’s a significant sum, so clearly they are motivated to clean up their warrants. But again, to re-emphasize, regardless of the warrant vote, it doesn’t have an bearing on the outcome of the combination. We should find out results tomorrow. Stay tuned.