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SEC has released new SPAC rules that target 'unreasonable' revenue projections and require more disclosures
On Wednesday, the SEC recommended a package of measures to strengthen disclosure requirements for SPACS (or special purpose acquisition companies), following a wave of scrutiny aimed at the popular go-public vehicles whose use soared during the pandemic.
SPACinformer
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Hong Kong's SPAC godfather expects a record harvest
According to Jason Wong, one of the first financiers to file for a Hong Kong SPAC listing, at least 40 blank-check companies could list in the city this year.
SPACinformer
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SPACs 101 – Educational SPAC video
Here at SPACinformer we're all about democratizing SPAC education and data. Check out this video we made for a short and simple explanation on what special purpose acquisition companies (SPACs) are and how they work.
SPACinformer
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Binance, the world's largest crypto exchange, is investing $200 million in Forbes
The world's largest cryptocurrency exchange, Binance, is investing $200 million in Forbes, the 104-year-old magazine and digital publisher. The investment will allow Forbes to complete its plan for Q1 to merge with a publicly traded special purpose acquisition company (SPAC), according to people familiar with the deal. Binance will become one of the top two owners of Forbes post-IPO, as it will replace half of the previously announced $400 million institutional investment in Forbes.
SPACinformer
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How do SPACs work?
How do SPACs work? SPACs put the money they raise in an initial public offering (IPO) into an interest-bearing trust account. This cash can only be utilized to complete a purchase or to repay money to investors in the case that the SPAC is liquidated. Normally, a SPAC will have two years to complete a deal or it will have to liquidate. Sometimes, part of the interest earned from the trust can be used as working capital for the SPAC. These companies will often have a $10 floor on their share price, as this is the amount that must be paid out to shareholders if the company fails to reach an agreement. If the transaction is not completed on time, the warrants will expire and the leftover cash will be returned to the owners. Following the completion of an acquisition, a SPAC trades like any other business listed on an exchange. Unless you specifically looked up a listed company's history, you wouldn’t know it started as a SPAC. Finally, the SPAC symbol and name will be updated to reflect the newly acquired corporation. The SPAC frequently adopts the new company's name, although this is not always the case. If you have common shares or warrants in your brokerage account, they will be translated to the new name/symbol automatically.
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What are the risks of investing in SPACs?
What are the risks of investing in SPACs? Losses if they were unable to locate a target, opportunity cost, too many SPACs and too few target companies and the risk of warrants being redeemed.
rSPACs
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Why do people invest in SPACs?
Why do people invest in SPACs? The short answer is that there's a lot of upside potential with limited risk. Investors in SPACs can profit significantly depending on the target business, and they can rest certain that the negative risk is contained around or slightly below the SPAC's IPO price. Exercising warrants may add a lot of value. If a SPAC does well, exercising warrants can add a large amount of value to the ordinary stock's rise. For example, imagine a SPAC was trading at $10 per share, but then hit around $80 per share after announcing its target company. In the case that investors exercised all of their warrants, they would get more common stock at a price of $11.50 per share. Selling the shares after exercising the warrants would yield over 600 percent gains in this situation. If, on the other hand, the SPAC had not found a target in time, shareholders would get a payout of around $10 per share, thereby limiting the negative risk.
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How do SPAC units convert to target company shares & warrants after the acquisition?
How do SPAC units convert to target company shares and warrants after the acquisition? The "U" at the end of most SPAC tickers denotes the "units"of the SPAC, which typically consist of one share of common stock plus a portion of a warrant to acquire a share of common stock in the future. Almost all SPACs IPO at $10 per unit, with warrants having a strike price of $11.50 (or 15% more than the IPO price of $10 per unit). It's worth noting that only whole warrants can be executed. The common stock and warrants can be exchanged independently 52 days following the SPAC's IPO – allowing investors to trade units, common stock, and warrants.
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