(AUS), Forest Oil Corporation (NYSE:FST) – How Net Asset Value is Still in Place for SPACs with Terminated Agreements

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Along with the hundreds of announced SPAC mergers and deals completed in 2021, a handful of SPAC deals have been terminated. Here’s a look at what that means for SPACs that rolled back the mergers.

What happened: SPACs can terminate transactions for many reasons, including a change in valuation sentiment, missing deadlines, or information from the acquisition target.

When SPACs cancel deals, they waste the time and money spent researching and trying to close a deal. The termination also sends the team back to the drawing board in an attempt to find a new acquisition target.

SPACs have a deadline to meet, which is usually 24 months from its IPO date. With canceled deals, many companies find themselves with a smaller window to complete an acquisition. The timeline should include researching the company, announcing the deal, proper review by the SEC, and the voting date for shareholders.

All of these must be completed before the deadline. Companies can vote to extend the deadline, and in doing so, they open up a buy-back period where shareholders can redeem their shares at net asset value with the changing terms of SPAC’s initial IPO.

Related Link: What’s Next for SPACs in 2022: Experts Share Stocks to Watch

Why it matters: Many SPACs fail after announcing the termination of a deal, as investors often see this as a negative sign for the future of the business.

As the shares fall below the typical net asset value of $10, the terminated SPACs could provide value to investors who can redeem the shares on the merger vote for net asset value ($10 plus interest) in the future when a new objective is announced and the merger voting process is defined. A future announcement of agreement for a new target could also drive the stock higher.

In some cases, when no deal can be reached or when voting dates are extended, SPAC may choose to liquidate, returning capital to shareholders. This happened in 2021 with Yunhong International, which terminated an agreement with Giga Energy and then chose to liquidate.

Here are some examples of companies that canceled mergers in 2021 with timelines and share price information.

Austerlitz Acquisition Corp I (NYSE: AU)

  • Contract terminated with: Wynn Resorts, a unit of Wynn Resorts, Limited (NASDAQ: WYNN)
  • Contract ended: November 2021
  • Transaction deadline: February 2023
  • Stock price: $9.76
  • 52 week range: $9.71 to $16.16

Quick acquisition company (NYSE: FST)

Contract terminated with: Fertitta Entertainment

  • Contract terminated: December 2021
  • Transaction deadline: August 2022
  • Stock price: $10.19
  • 52 week range: $10.03 to $14.10

Hennessy Capital Investment Corp V (NASDAQ:HCIC)

  • Contract terminated with: More
  • Contract ended: November 2021
  • Transaction deadline: January 2023
  • Stock price: $9.76
  • 52 week range: $9.60 to $10.54

Khosla Ventures Acquisition Co (NASDAQ: KVSA)

  • Contract terminated with: Valo Health
  • Contract ended: November 2021
  • Transaction deadline: March 2023
  • Stock price: $9.71
  • 52 week range: $9.58 to $10.97

Northern Star Investment Corp II (NYSE: NSTB)

  • Contract terminated with: Apex Glade
  • Contract terminated: December 2021
  • Transaction deadline: January 2023
  • Stock price: $9.74
  • 52 week range: $9.38 to $11.62

Pathfinder Acquisition Company (NASDAQ: PFDR)

  • Contract terminated with: ServiceMax
  • Contract terminated: December 2021
  • Transaction deadline: February 2023
  • Stock price: $9.74
  • 52 week range: $9.68 to $10.11

SCVX Corp (NYSE: SCVX)

  • Contract terminated with: Luminous machines
  • Contract terminated: December 2021
  • Transaction deadline January 2022
  • Stock price: $10
  • 52 week range: $9.66 to $11.59

TPG Pace Beneficial Finance Corp. (NYSE:TPGY)

  • Contract terminated with: EVBox
  • Contract terminated: December 2021
  • Transaction deadline: October 2022
  • Stock price: $9.83
  • 52 week range: $9.80 to $34.28

Velocity Acquisition Corp. (NASDAQ: BIKE)

  • Contract terminated with: BBQGuys
  • Contract ended: November 2021
  • Transaction deadline: February 2023
  • Stock price: $9.75
  • 52 week range: $9.59 to $10.85

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