Signs non-binding LOI 

Earlier this morning, SCVX Corp. III (Nasdaq: SCVX), announced they have signed a non-binding LOI with an unnamed company in the Environmental, Social, and Governance (ESG) space. The target company’s existing shareholders  are also anticipated to roll over 100% of their equity. However, additional details on the company are scant.

What was revealed was that SCVX has already rounded up $75 million in PIPE indications from an institutional investor and certain strategic partners. But again, these are also “non-binding” and subject to a definitive agreement being signed.  Furthermore, we don’t know if said anticipatory PIPE will be equity or some sort of convertible preferred or note, or at what price it would be struck, so we can’t quite put this in the “win column” just yet. Plus, getting an investor to indicate and then getting them to actually hand over capital are sometimes very different things. Nonetheless, $75 million worth of investors that are “interested” is certainly a good sign in a very challenging SPAC market.

Keep in mind that this is a “non-binding LOI” and as such, it is not technically announced.  They’re still negotiating.  In the past, we’ve had other SPACs announce non-binding LOIs, such as Graf Industrial (GRAF), which first teased a combination with Pure Cycle, but then actually announced a different definitive agreement with Velodyne Lidar.

However, SCVX has an extension vote on the calendar for January 25th, where investors will be voting to extend their deadline six months to July 28, 2022.  SCVX will not be contributing any additional funds to the trust account in order to extend so by releasing some details around a potential definitive agreement as a teaser they are hoping to whet appetites enough to secure the vote with minimal losses to redemptions.

SCVX had previously announced a combination with manufacturing-software company Bright Machines on May 17, 2021, but subsequently terminated the agreement on December 13, 2021, citing, “..the low likelihood that the business combination agreement could be completed prior to the January 15, 2022 “outside date” .”  However, SCVX appears to have rebounded quickly by announcing today’s non-binding LOI in a little more than a month, which must have made for a very busy holiday season for the team.

We’ll have to wait and see if this evolves into a full definitive agreement, but as stated above, this is a very challenging SPAC environment. More information would be helpful going into a vote, but we’ll have to wait and see if today’s teaser was enough to keep investors interested.