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December 6, 2021
Welcome to the SPAC Research weekly newsletter.
Recuts and Broken Deals
SPACs have been mostly climbing uphill since March. There's been more interest in individual deals since the Digital World Acquisition Corp. (DWAC) deal for Trump Media and Technology Group was announced in late October, but it's tough to tell if any of the resurgence is fundamental in nature.

We predicted in October that the DWAC announcement would result in a resurgence of deal announcements after an autumn nadir. And that's what we've seen: there were 18 deals in November, up from 11 in October, and then six more in the first three days of December! But after a number of deals saw initial pops of enthusiasm, the vast majority are still trading within 2% of trust.
Committed financing is also on the rise. December's deals have averaged roughly $125mm in common stock PIPE financing and the month has almost eclipsed November's total PIPE commitments already.

It's exciting to see these signs of life in new deal announcements. But there's a flip side that's also worth examining.

We'll leave an evaluation of trading performance for another study (but we will note that as of this writing, the 180 or so closed deals in 2021 are trading at an average price of $8.70). Today we're going to look at recuts, broken deals and restructured cash conditions.

There were a huge number of deal announcements in Q4 2020 and Q1 2021. Given how hot the SPAC market was running at that point, many deals may have been struck on aggressive terms with stretched valuations.

Deals conceived in easy times are likely at greater risk when the tide turns. Earlier this year, we predicted an increase in recuts and broken deals. And it looks like that's what we've gotten. The chart below shows all the instances we could find of "troubled deals" (recuts, broken deals, and reworkings of minimum cash conditions) that we could find over the past two years.
It wasn't that hard to anticipate the increase in troubled deals given the trend in redemption rates over time. Redemptions are the clearest barometer of the market's sentiment on any given transaction that isn't simply trading above trust. And you can see below that the average redemption rate by month plummeted to 12% in Q1 of this year but has risen steadily since then.
But it's important to look at broken deals in context. There were only 18 live SPAC deals on April 1, 2020. And there were 150 on July 1, 2021.

So we took the "troubled deals" chart from above and added a line showing the total number of live deals at the beginning of each quarter.
It appears the increase in troubled deals is reasonably in line with the total number of deals.

Of course, that analysis glosses over the fluctuations in sentiment that we've seen recently. But it's worth noting -- you wouldn't really expect troubled deals to fall apart immediately when the market falters. It likely takes time for stakeholders to come to terms with the fact that the market is no longer receptive to original deal terms. Even the initial uncertainty created last March didn't weigh on markets for a long enough period to decimate the class of active SPAC deals at that time.

It's impossible to say for certain but it seems likely that the current troubled deal count isn't actually outpacing previous periods and that Q1 2022's count will be dramatically higher. We'll be watching this phenomenon closely as this year turns into next.


News From the Past Week

Deal News

  • Apollo Strategic Growth Capital (APSG) announced a deal to acquire American Express Global Business Travel, a B2B travel platform. The deal reflects an enterprise value of $5bn and includes a $335mm PIPE with investors including Apollo, Ares and HG Vora. The transaction is expected to close in 1H 2022.

  • Adit EdTech Acquisition Corp. (ADEX) announced a deal to acquire Griid Infrastructure, a vertically integrated bitcoin mining company. The deal reflects an enterprise value of $3.3bn and is expected to close in Q2 2022.

  • CF Acquisition Corp. VI (CFVI) announced a deal to acquire Rumble, a video distribution platform. The deal reflects an enterprise value of $2.1bn and includes a $100mm PIPE. The transaction is expected to close in Q2 2022.

  • ArcLight Clean Transition Corp. II (ACTD) announced a deal to acquire OPAL Fuels LLC, a vertically integrated producer and distributor of renewable natural gas. The deal reflects an enterprise value of $1.75bn and includes a $125mm PIPE anchored by NextEra Energy, Inc. (NYSE: NEE), Electron Capital Partners, and Gunvor Group. The transaction is expected to close in Q2 2022.

  • BOA Acquisition Corp. (BOAS) announced a deal to acquire Selina, a hospitality and experiential brand targeting Millennial and Gen Z travelers. The deal reflects an enterprise value of $1.2bn and includes a $70mm PIPE with investors including MORE Investment House and Sir Ronald Cohen. The transaction is expected to close in 1H 2022.

  • Atlantic Coastal Acquisition Corp. (ACAH) announced a deal to acquire Essentium, Inc., a provider of industrial additive manufacturing solutions. The deal reflects an enterprise value of $974mm and includes a $40mm PIPE with investors including BASF, Atalaya Capital Management LP and Apeiron Investment Group. The transaction is expected to close in Q1 2022.

  • Broadscale Acquisition Corp. (SCLE) announced a deal to acquire Voltus, Inc., a Distributed Energy Resource (DER) software technology platform. The deal reflects an enterprise value of $816mm and includes a $100mm PIPE led by Equinor Ventures, Belfer Management and Solanas Capital. The transaction is expected to close in 1H 2022.

  • Northern Star Investment Corp. II (NSTB) and Apex Clearing terminated their deal, citing the expiration of the 11/30/2021 outside date.
  • Fertitta Entertainment announced its intention to terminate its deal with FAST Acquisition Corp. (FST), citing the passage of the deal's 12/1/2021 outside date. FST responded that Fertitta is not permitted to terminate the merger agreement because the latter's failure to deliver requisite financial statements is the primary cause of the failure to close by the outside date.

  • Greenrose Acquisition Corp. (GNRS) closed its acquisition of Theraplant on Monday 11/29/2021 with 11.5% of public shares remaining. The Greenrose Holding Company Inc. will continue to be listed on the OTC under the symbols “GNRS” and “GNRSW.” GNRS expects to continue to work toward the acquisition of Shango Holdings, Futureworks, and certain assets of True Harvest.

  • ION Acquisition Corp 2 Ltd. (formerly IACB) closed its acquisition of Innovid on Monday 11/29/2021 with 22.6% of public shares remaining. Ordinary shares and warrants are now trading on the NYSE as “CTV” and “CTV/W.”

  • DD3 Acquisition Corp. II (formerly CDRO) closed its acquisition of Codere on Tuesday 11/30/2021. Redemption statistics were not provided. Ordinary shares and warrants are now trading on the NASDAQ as “CDRO” and “CDROW.”

  • Altimeter Growth Corp. (formerly AGC) closed its acquisition of Grab on Wednesday 12/1/2021 with less than 1% of public shareholders exercising redemption rights. Ordinary shares and warrants are now trading on the NASDAQ as “GRAB” and “GRABW.”

  • Aldel Financial Inc. (formerly ADF) closed its acquisition of Hagerty on Thursday 12/2/2021 with approximately 73.9% of public shares remaining. Ordinary shares and warrants are now trading on the NYSE as “HGTY” and HGTY/W.”

  • 890 5th Avenue Partners, Inc. (formerly ENFA) closed its acquisition of BuzzFeed on Friday 12/3/2021. Redemption statistics were not provided. Ordinary shares and warrants will begin trading on the NASDAQ as “BZFD” and “BZFDW” beginning Monday 12/6/2021.

  • Foresight Acquisition Corp. (formerly FORE) closed its acquisition of P3 Health Partners on Friday 12/3/2021 with 11.8% of public shares remaining. Ordinary shares and warrants will begin trading on the NASDAQ as “PIII” “PIIIW” beginning Monday 12/6/2021.

  • Thimble Point Acquisition Corp. (formerly THMA) closed its acquisition of Pear Therapeutics on Friday 12/3/2021. Redemption statistics were not provided. Ordinary shares and warrants will begin trading on the NASDAQ as “PEAR” and “PEARW” beginning Monday 12/6/2021.

  • TPG Pace Solutions Corp. (TPGS) shareholders approved the company’s acquisition of Vacasa at a meeting Tuesday 11/30/2021. Redemption statistics were not provided. Ordinary shares are expected to trade on the NASDAQ beginning Tuesday 12/7/2021.

  • GigCapital4, Inc. (GIG) shareholders approved the company’s acquisition of BigBear.ai at a meeting Friday 12/3/2021. Redemption statistics were not provided. The transaction is expected to close Tuesday 12/7/2021 with ordinary shares and warrants trading on the NYSE as “BBAI” and BBAI/W” beginning Wednesday 12/8/2021.

  • dMY Technology Group, Inc. IV (DMYQ) shareholders approved the company’s acquisition of Planet at a meeting Friday 12/3/2021 with approximately 98% of public shares remaining. The transaction is expected to close Tuesday 12/7/2021 with ordinary shares trading on the NYSE beginning Wednesday 12/8/2021.

New S-1's
Name Ticker Size ($mm) Underwriter Trust Funding Coverage
Atlantic Coastal II ACAB 250 Cantor 102% 1/2
AP Acquisition APCA 150 CS 103% 1/2
USA Acquisition USAX 150 Jefferies 101.5% 1/2
Keyarch Acquisition KYCH 100 EBC 101% 1/2 + R
DUET Acquisition TBD 75 EF Hutton 101.5% 1/2
Welsbach Technology Metals WTMA 75 Chardan 100% R


IPOs
Name Ticker Raised ($mm) Sector Cash in Trust Coverage
ST Energy Transition I STET 250 Energy 101.5% 1/2
PROOF Acquisition PACI 240 General 102% 1/2
Canna-Global CNGL 230 Cannabis 101.5% 1
BioPlus Acquisition BIOS 200 Healthcare 102% 1/2
Bullpen Parlay Acquisition BPAC 200 Media & Ent. 102% 1/2
Capitalworks Emerging Markets CMCA 200 Consumer 102% 1/2
TLGY Acquisition TLGY 200 Technology 102% 1/2
UTA Acquisition UTAA 200 Media & Ent. 102% 1/2
ROC Energy ROC 180 Energy 101% R
Games & Esports Experience GEEX 175 Media & Ent. 102.5% 1/2
Blue Ocean Acquisition BOCN 165 Technology 102% 1/2
Roth CH V ROCL 115 General 101.5% 1/2

Upcoming Meetings and Deadlines

  • 12/6/2021 CBAH Altus Power approval meeting
  • 12/7/2021 SVOK Boxed approval meeting (outside date 12/10/2021)
  • 12/7/2021 DCRC Solid Power approval meeting (outside date 12/13/2021)
  • 12/7/2021 DGNS Cvent approval meeting
  • 12/7/2021 PFDR ServiceMax approval meeting
  • 12/8/2021 CFV Satellogic approval meeting
  • 12/9/2021 ACKIT Shareholder meeting to appoint directors and ratify auditors
  • 12/9/2021 FVAM Shareholder meeting to appoint directors and ratify auditors
  • 12/13/2021 YAC SIGNA Sports United approval meeting
  • 12/13/2021 PAIC Liquidation deadline
  • 12/14/2021 ISOS Bowlero approval meeting
  • 12/14/2021 FST Fertitta Entertainment approval meeting (outside date 12/1/2021)
  • 12/14/2021 BSN Vertical Aerospace approval meeting (outside date 12/1/2021)
  • 12/15/2021 IIAC Ermenegildo Zegna Group approval meeting
  • 12/15/2021 GLAQ Liquidation deadline
  • 12/15/2021 EUSG ADS-TEC Energy approval meeting
  • 12/16/2021 CMLT EQRx approval meeting
  • 12/17/2021 ATA Liquidation deadline

Links

  • Bloomberg reported that Betsy & Daniel Cohen are planning a $300mm fintech-focused investment fund called FTAC Ventures.
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