Elizabeth Warren enters the SPAC conversation

The Nightcap newsletter: SPAC Track’s nightly recap of the action in the SPAC world. (September 22, 2021)

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SPAC Kingpins Scrutinized by Elizabeth Warren Over ‘Misaligned Incentives’ (Bloomberg—paywalled)

Elizabeth Warren and other Senate Democrats have set their crosshairs on some of the biggest names behind SPACs, questioning whether the once red-hot market will trigger outsized losses for retail investors.  

In letters to six prominent operators of special purpose acquisition companies, the lawmakers highlighted concerns that insiders can take advantage of regulatory loopholes at the expense of shareholders. 

The missives, which requested information about how executives are compensated and how they solicit investments, were sent to Howard Lutnick, chief executive officer of Cantor Fitzgerald; Michael Klein, a former star Citigroup Inc. banker; Tilman Fertitta, the billionaire owner of the Houston Rockets; serial SPACer and former Facebook Inc. executive Chamath Palihapitiya; David Hamamoto, whose blank-check company merged with Lordstown Motors Corp. (RIDE) and Stephen Girsky, who was instrumental in the deal to take electric truck startup Nikola Corp. (NKLA) public. 

“We are concerned about the misaligned incentives between SPACs’ creators and early investors on the one hand, and retail investors on the other,” Senators Warren, Sherrod Brown, Tina Smith and Chris Van Hollen said in a Wednesday statement. 

SPACs have mushroomed over the past couple of years, attracting huge amounts of money from small-time investors who see them as way to get in early on young companies that could be future tech stalwarts. Amid the rush, some insiders have found creative ways to get rich even when public shareholders don’t. 

The letters referenced a June Bloomberg article that detailed how Lutnick, Klein and Fertitta benefited from their own SPACs. Klein’s offerings, for example, hired his own investment bank for consulting services, lining the dealmaker’s pockets with millions of dollars in fees. 

Quick News Corner:

  • Fusion Acquisition (FUSE: $10.00 -7.06%) completed its merger with MoneyLion. FUSE will trade as ML tomorrow.

  • Cerberus Telecom Acquisition Corp (CTAC) postpones the shareholder meeting to approve its merger with KORE (for the second time) to 9/29.

    • The deadline to redeem was 9/14 with a total of 86.3% redemptions now (dropped from 90.4%), and shareholders are able to withdraw redemption until 9/28

    • Fortress Credit Corp committed an additional $25M backstop in exchange for 100,000 sponsor shares

  • Union Acquisition Corp II (LATN: $9.89 -8.09%) shareholders approved the merger with Procaps

    • An estimated 57% of public shares were redeemed

    • Merger is expected to close on 9/30 with the ticker changing to PROC after closing

  • Amplitude Healthcare Acquisition Corp (AMHC) shareholders approved the merger with Jasper Therapeutics

    • Jasper agreed to waive the $130M min. cash requirement due to an estimated 93% of public shares being redeemed

    • Merger is expected to close on 9/24 with the ticker changing to JSPR on 9/27

Tracking De-SPAC S-1s (PIPE Registrations):

  • Nexters (GDEV: $7.60 -14.12%) filed its F-1 registering PIPE shares

  • Rockley Photonics (RKLY: $10.17 -8.63%) filed its 424B3 (meaning S-1 is likely to go effective tomorrow)

IPOs to Begin Trading Tomorrow*:

1) Live Oak Crestview Climate Acquisition Corp. Announces Pricing of $200,000,000 Initial Public Offering (LOCC-U)

*Priced at the time of this writing

New S-1s:

1) Sanaby Health Acquisition Corp. I (SANB)

  • $150M, 1/2 Warrant

  • Focus: Healthcare, with a specific focus on digital health, life science tools & services and innovative treatment developers

  • Management:

    Sandra Shpilberg (Founder of Seeker Health)

Upcoming Dates:

This Week’s Announced Shareholder Meetings, Unit Splits, Warrant Redemptions, and Expected Ticker Changes

Thurs, Sep 23

  • Unit Splits: 

    Springwater Special Situations Corp. (SWSS-U)

    Healthwell Acquisition Corp. I (HWEL-U)

Fri, Sep 24

  • Unit Split: AMCI Acquisition Corp. II (AMCI-U)

Thanks for reading,

SPAC Track


Note: Share prices only included if 5%+ moves and for all De-SPAC PIPE entries
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