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How do you exercise a SPAC warrant?

March 15, 2022 Education

You must contact your broker in order to exercise your warrants. However, this can only be done if the company chooses to redeem its warrants, so you would need to keep a watch out for any announcements (using our SPAC Calendar, for example). Exercising a warrant can only be done when a SPAC's business combination is complete, and there may be a price associated with redeeming it.

Source: SPACinformer
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What are SPAC tickers?

March 15, 2022 Education

What are SPAC tickers? SPAC shares usually have a four-character ticker, such as ACBA. The SPAC units are identifiable by the stock ticker followed by a "U" — for example, ACBAU. Whereas, the warrants are the share ticker followed by a "W" - for example, ACBAW.

Source: SPACinformer
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What are SPAC shares?

March 15, 2022 Education

What are SPAC shares? The SPAC's safe trust account is linked to its common stock. SPACs are set up so that each public share has at least $10.00 in the trust account. In the open market for shares liquidity may be limited, but the specified liquidation term of SPAC common equity might give a relatively attractive return with the possibility to own a SPAC's prospective acquisition target. All public shares are redeemed if the SPAC fails to carry out an acquisition within the stipulated time frame (usually two years). All public shares are redeemed for a pro rata fraction of the funds retained in the trust account if the SPAC fails to conclude a business combination within the specified period. Companies usually set a $10 floor on their share price, since it is the amount that must be paid out to shareholders if the firm fails to achieve an agreement.

Source: SPACinformer
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What are SPAC units?

March 15, 2022 Education

What are SPAC units? When an initial public offering IPO occurs, a SPAC will typically offer units - usually at a price of $10 per unit. These units consist in one share of common stock (share) plus a warrant (or portion of a warrant) to purchase common stock (usually exercisable at $11.50). Units may consist of one share of common stock plus one full warrant, 1/2 of a warrant, or 1/3 of a warrant, depending on the size, track record and prominence of sponsors and the investment bank managing the IPO. The common stock (shares) and warrants included in SPAC units become separate in the weeks following the IPO. The warrants and shares then trade independently alongside the unseparated units.

Source: SPACinformer
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What are SPAC warrants?

March 15, 2022 Education

What are warrants? A warrant is similar to an option, except it is traded on the stock exchange. Warrants provide the holder the right (but not the responsibility) to buy one share of the underlying corporation at a set price per warrant, which is usually $11.50. After a merger is completed, almost all SPAC Warrants have a five-year duration, but they are a binary wager on a five-year warrant on a hypothetical future firm that expires and becomes worthless in the case that the SPAC wasn't able to complete a merger. Only if the SPAC completes a business combination deal before the designated date do warrants become exercisable. Warrants can only be exercised one year after the SPAC's IPO or 30 days following the merger, according to several SPACs. Many SPACs additionally provide that the corporation can redeem the shares if the price of the underlying common share trades over a specified threshold, generally $18, for 20 out of 30 trading days. This can be done with cash (the $11.50) or without cash. You would just trade your warrant for a fraction of a share if you were working on a cashless basis.

Source: SPACinformer
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IPO vs. SPAC: Why companies choose SPACs over traditional IPOs?

March 15, 2022 Education

Why go public through a SPAC instead of an IPO? The short answer is to save money and time. Going public through an initial public offering (IPO) is a time-consuming procedure that entails complicated regulatory filings and months of talks with underwriters and regulators. This can hinder a company's ambitions to go public, particularly during times of increased uncertainty, when the danger of investors rejecting its IPO is significantly higher. On the other hand, if a firm merges or is bought by a special purpose acquisition company (SPAC), which is an organization that exists only for the purpose of completing such an acquisition, it can become public within months. In comparison to another buyer, such as a private equity firm, which may drive a hard bargain, the owners of a target company may be able to better negotiate an advantageous price from a SPAC as it has limited time to make an acquisition.

Source: SPACinformer
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What is a SPAC, aka a blank check company?

March 15, 2022 Education

What is a SPAC? A special purpose acquisition company (SPAC), also known as a blank check company, is a business formed only for the purpose of accessing capital through an initial public offering (IPO) in order to buy another company. SPACs are commonly referred to as "blank check companies" because they go public without having any real commercial activity.

Source: SPACinformer
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