SPAC IPO FILING
Friday, March 7th, 2008 Washington Post |
The New Way To Make Deals: Blank Checks |
|
SPAC IPO FILING: Apple Creek, Backed By Tricadia (AKU) |
|
SPACs And PIPEs: A User’s Guide |
Overture SPAC: What’s On Its Shopping List?
Seeking Alpha, NY -
SPACs also known as “blank-check” companies, are founded without an operating business. Once they go public, they have 18 months to complete a deal using about 80% of their net assets.
February 06, 2008
SPAC IPO FILING: Apple Creek, Backed By Tricadia (AKU)
Apple Creek Acquisition Corp. is a special purpose acquisition company, or a SPAC, that has filed to come public. For filing purposes it lists that it intends to sell up to 25.875 million units for a maximum proposed amount of $258.75 million. The actual IPO filing is for 22.5 million units at a traditional price of $10 per unit, with each unit holding 1 share of common stock and 1 warrant with a $7.50 strike price. The company will list units on the American Stock Exchange under the ticker “AKU” after it begins trading. J.P.Morgan is listed as the lead underwriter and Ladenburg Thalmann is also in the underwriting.
This blank check company was formed November 28, 2007, and like all SPAC’’s it has no operations currently. While this says that it is not limited to any specific sector, the company said in the filing that it intends to focus on on acquiring an operating business in the alternative asset management sector or a similar business. The company has a different filing than many as it has the right of first review with a company:
- We have entered into a business opportunity right of first review agreement with Tricadia Capital, which provides that from the effective date of the registration statement of which this prospectus forms a part until the earlier of the filing by us of a current report on Form 8-K with the SEC announcing the execution of a definitive agreement for our initial business combination, or our liquidation, we will have a right of first review with respect to business combination opportunities of Tricadia Capital with a fair market value of $177 million or more that Tricadia Capital, including its principals and employees, first becomes aware of after the effective date. Tricadia Capital will first offer any such business opportunity to us (subject to fiduciary obligations it has to its clients as a registered investment advisor) and will not, and will cause each fund and other investment vehicle managed or advised by Tricadia Capital not to, pursue such business opportunity unless and until our board of directors has determined for any reason that we will not pursue such opportunity.
Apple Creek’s management team will be made up of five senior managers of Tricadia Capital (the managing member of our founding stockholder) with an average, 20 years of experience in the fields of credit analysis and trading, leveraged loans, capital markets, risk management, structured products, and special situation investing. The following Tricadia officers are managing this SPAC:
- Chairman & Co-CEO, Michael Barnes;
- Co-CEO & Director, Arif Inayatullah;
- COO is Geoffrey Kauffman;
- Executive Vice President is John McCormick;
- CFO is Julia Wyatt.
Jon C. Ogg
February 6, 2008
http://www.247wallst.com/2008/02/spac-ipo-fili-2.html
Expectations high for launch of Spac age
Bankers braced for a slowdown in mergers and acquisitions are rushing to sell the virtues of cash shells and “blank cheque” companies in uncertain markets.
They have been fired up by last week’s launch of Liberty International, Europe’s second special purpose acquisition vehicle. The Spac raised €600m (£446m) on Euronext to buy a European company worth between €3bn and €5bn within two years.
In a week when most international stock markets fell, bankers heralded the listing as a taste of M&A vehicles to come.
Liberty’s launch has reignited the debate in Europe about the merits of cash shells and their use in bear markets. It came shortly after Melrose, which was launched as a cash shell in the UK in 2003, revealed its 70p-a-share approach to FKI, the engineer.
Bankers say the Liberty launch is a milestone in the spread of Spacs into Europe from the US and more will follow. “There are five or six Spacs queuing up to list on Euronext,” says one.
But their enthusiasm is tempered by investor scepticism, particularly in the UK. “Bankers are racing from one structured investment product to the next. Raising money for unspecified purpose is pure speculation,” says the investment head at a UK pensions group.
“These things are not being launched in the UK because no one would invest in them,” says another.
Simon Peckham, chief operating officer at Melrose, says: “There is a cultural block in the UK. Raising blind pools of cash is not popular in the UK.”
Melrose raised financing only when it had alighted on its first acquisition.
Several UK investors were burned in a rush of acquisition vehicles launched on the UK’s Alternative Investment Market five years ago. These vehicles had no purpose, were too small and did little but charge management fees.
Bankers say the “blank cheque” companies are different. They are bigger, bound by time limits and the sponsors, who previously invested little of their own money, invest on average 3 per cent of the equity.
David Spivak, a managing director at Citigroup, says: “Spacs offer investor protections along with the possibility of significant returns, which makes them different from cash shell structures of the past.”
Spacs, as they have evolved in the US, are publicly listed companies that have large amounts of cash for an acquisition. The sponsors or managers - usually well-known industrialists, financiers, turnround specialists or activist hedge funds - raise cash and invest it in Treasury bills until they identify a suitable acquisition. They limit investors’ downside in volatile markets while giving them an equity option.
Shareholders have to approve the target. Those who don’t can redeem their investments. If no target is found within two years, the money is returned. But the managers get 20 per cent of the equity if an acquisition goes ahead.
Spacs now dominate the US initial public offering market. Last year 68 US Spacs were launched, raising $12bn. Sponsors included Nelson Peltz, the activist investor.
The landmark Spac deal was Freedom Acquisitions, set up in 2006 by Nicolas Berggruen and Martin Franklin, who are also the managers of Liberty International. Freedom raised about $500m from investors that included Wellington and Fidelity at about $10 a unit of shares-plus-warrants.
In June, Freedom agreed to buy GLG Partners, the UK hedge fund group, and the unit price rose to about $18. It borrowed $500m through a syndicated loan and issued shares to GLG’s management worth $2.4bn. Original investors in Freedom ended up with close to a third of GLG and owning units worth currently about $16.
At the time GLG said reversing into Freedom was a quicker, simpler and cheaper route to a US listing than an IPO.
Since then, backers have confidently hailed Spacs as a transparent alternative to private equity. With Spacs, acquisitions do not have to be financed by high levels of debt, they say.
But investors who remember previous waves of cash shell launches remain wary.
Among the more successful Aim launches in 2003 was Melrose, the shell backed by former managers of Wassall and Hanson. Melrose launched with £4m from the managers and £12m of investors’ money. It was two years before it raised £429m from backers in 2005 to buy Dynacast and McKechnie.
But Melrose, headed by David Roper, chief executive, and Christopher Miller, chairman, contrasts with other shells listed in 2003 that were too small, had no clear business plan and struggled to find suitable growth targets to appeal to investors. Their failure forced the London Stock Exchange to step in and set a £3m minimum size limit and time limits in which shells had to make an acquisition. A number were forced to disband.
Today’s bankers argue that Spacs have come a long way. So far, for example, only seven of 151 US Spacs have liquidated after failing to find, or get shareholder approval for, an acquisition.
ΠΗΓΗ: FT.com
Copyright The Financial Times Ltd. All rights reserved.
/////////////////
http://seekingalpha.com/article/62937-overture-spac-what-s-on-its-shopping-list
Overture SPAC: What’s On Its Shopping List?
posted on: February 04, 2008
Whenever a new blank-check company registers to go public, we try to plumb the depths of its filing to figure out what kind of acquisition it might strike with its newly raised capital. Usually, the company gives the boilerplate “We do not have any specific initial business combination under consideration,” so we’re forced to look at the resumes of its management to try to predict whether the special purpose acquisition company, or SPAC, will go shopping for a technology company.