ECP (NASDAQ:ENNV) announced this morning that it had adjourned the January 31 special meeting convened for its completion vote until February 2, while altering the terms of its combination with supply chain technology firm Fast Radius.
The deal’s revision was straightforward – Fast Radius’ price was chopped by 25% from $1 billion to $750 million. Of the 75,000,000 shares now set to be issued, 10,000,000 are still to be set aside for the company earnout.
The changes came as ECP shareholders elected to redeem 31,512,573 shares, removing $315.4 million from its trust, leaving $29.9 million remaining and amounting to 91.3% redeemed. But, these shareholders may still reverse course and revoke their redemption decision with a new redemption deadline of February 3 at 5 pm ET.
ECP announced the deal with a $75 million PIPE and $25 million in forward purchase agreements, but unless some redeeming shares come back into the fold it is on track to miss its $175 million minimum cash condition. This can be waived, however, and both parties are likely well aware of the market conditions driving a particularly brutal month of redemptions for SPACs. The 10 SPACs that reported redemptions on votes in January faced on average 82% of shares redeemed.
Another macro factor affecting ECP and its deal is that it would join a cohort of manufacturing technology de-SPACs that have gotten hammered in the market recently.
Fast Radius, which provides on-demand manufacturing through micro-factories connected to a cloud-based software system, initially cut a slight discount to other manufacturing de-SPACs at 9.7x its 2022E. Desktop Metal (NYSE:DM) and Markforged (NYSE:MKFG) were valued at announcement, at 10x and 11.2x, respectively.
This thin discount that came with the deal announcement in July now looks like a stiff premium, given that Desktop Metal closed yesterday at $4.09, Markforged at $4.73 and Shapeways at $3.20. So, while the 25% slash in valuation for Fast Radius may help meet some investors halfway, it will be interesting to see if it’s enough of a cut.
ADVISORS
- Credit Suisse Securities (USA) LLC and Citigroup Global Markets Inc. are serving as co-financial and co-capital market advisors to Fast Radius, Inc.
- DLA Piper LLP (US) is serving as legal counsel to Fast Radius, Inc.
- Barclays Capital Inc. and Morgan Stanley & Co. LLC are serving as financial and capital markets advisors to ENNV
- Latham & Watkins LLP is serving as legal counsel to ENNV.
- Credit Suisse Securities (USA) LLC and Barclays Capital Inc. are serving as co-placement agents on the PIPE.
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