Original source:
SPACinformer

What are SPAC warrants?

r

rSPACs

guest

Education
March 15, 2022

Jump to heading 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 stipulate 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.

To learn more about SPACs, check out our other articles.


Next Article
You have reached the end.
Background pattern

Create your free SPACinformer account

  • Weekly database updates.
  • Weekly news articles.
  • Product launch updates.
  • Interactive data analytics.
  • SPAC events calendar.
  • Top community discussions
  • Exclusive access to sponsors.
Sign up for free now

© 2022 All rights reserved. Spacinformer.com (eBuild Ventures)

The information on this website is provided for your convenience only and is not intended to be treated as financial, investment, tax or any other advice. All information is provided "as is", without any warranty. Please read the privacy policy and terms of use. SPACinformer is an affiliate of ENDI Corp.