Repairable, Salvage and Wrecked H&H Trailer Auctions. A SPAC will file a registration statement on Form S-1 with the U.S. Securities and Exchange Commission to register the units, the public shares and the public warrants issued in its IPO. On June 21, 2002, upon completion of claimant's orientation, he signed and dated an agreement entitled "MAVERICK TRANSPORTATION, INC. Maverick Transportation Orientation. Drive maximum value across your supply chain. SPAC Sponsors Receive SPAC Founder Shares In return for sponsoring a SPAC in its pre-IPO stage, sponsors receive 25% of the SPACs founder shares. Try Now! BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. A sponsor creates a SPAC with a goal of $250 million in capital, investing roughly $6 million to $8 million to cover administrative costs that include underwriting, attorney, and due diligence. For example, in several recent SPAC IPOs, the sponsor transferred between 30,000 and 40,000 founder shares to each of the SPACs independent directors. %dfnjurxqg +rz glg zh jhw khuh" 63$&vkdyh ehhq durxqg iru ghfdghv exw kdyh jurzq lq vl]h dv zhoo dv wkh surplqhqfh ri wkh 6srqvruv dqg xqghuzulwhuv lq uhfhqw \hduv In 2019, SPAC IPOs raised $13.6 billion. In a traditional IPO, the sponsor and directors and officers sign a lock-up agreement for 180 days from the pricing of the IPO. This will result in a more involved transaction structure and may introduce complex tax issues. These latter requirements include, among others, that (i) within 36 months of the effective date of its IPO, the SPAC must complete one or more business combinations having an aggregate fair market of at least 80% of the value of the SPACs trust account, (ii) if the SPAC holds a shareholder vote on the business combination, the business combination must be approved by a majority of votes cast by public shareholders, with the NYSE excluding votes of shareholders who are officers, directors or hold more than 10% of the SPACs outstanding shares, and Nasdaq requiring approval by a majority of the SPACs independent directors, and (iii) holders of the public shares must have the right to redeem their public shares for a pro rata share of the aggregate amount held in the SPACs trust account if the business combination is consummated, regardless of whether such shareholders previously voted to approve the business combination. SPACs enter into a letter agreement with their officers, directors and sponsor. Google LLC (/ u l / ) is . For one, the target equity holders will suffer a measure of dilution on account of the founder shares and private placement warrants in the surviving company held by the sponsor and any PIPE investors, and on account of the warrants issued to the SPAC IPO investors. These include, for example: While a partnership target cannot be acquired by a SPAC in a tax-free reverse triangular reorganization or merger, businesses operating as partnerships that want to go public have the option of a traditional incorporation and IPO, an umbrella partnership C corporation (Up-C) structure, or an umbrella partnership SPAC (Up-SPAC) structure, all of which have their own tax consequences. We have not, nor has anyone on our behalf, taken any measure, directly or indirectly, to identify or locate any suitable acquisition candidate for us, nor have we engaged or retained any agent or other representative to identify or locate any such acquisition candidate., We have not (nor have any of our agents or affiliates) been approached by any candidates (or representatives of any candidates) with respect to a possible acquisition transaction with us.. We may have further comment. (go back), 9The target business financial statements must be audited for the most recent year only to the extent practicable, and earlier years need not be audited if they were not previously audited. Mallard Point Bulldogs. These White Rino shells are part of the Exacta Target line of ammunition. The features of the SPAC world described in this primer give some insight into why this may be so. [6] The NYSE rules have recently changed, such that the NYSE and NASDAQ listing requirements are substantially similar, and pricing is comparable. focuses on legal issues of interest to M&A practitioners for private and closely held companies, providing explanation, analysis and practical application on timely topics. The sponsor is often a new limited liability company formed solely for the purpose of sponsoring the SPAC. The proxy process can take three to five or more months to complete from the date a definitive agreement for the De-SPAC transaction is signed. Under interim IRS guidance on new Section 4501 stock repurchase excise tax, U.S. Subsidiaries of foreign-parented groups could be subjected to the excise tax under a "per se" rule. Newcourt SPAC Sponsor LLC ("Sponsor") Sponsor is organized under the laws of the State of Delaware. Here is an incomplete list of SPAC sponsors: Citigroup alum Michael Klein Chinh Chu, formerly of Blackstone Group Gary Cohn, formerly of the Trump administration and Goldman Sachs Reid Hoffman,. We use cookies on this website to optimize user experience and site functionality and to give you the best possible experience. The purchase price is funded one business day prior to the closing of the IPO, and again one business day prior to the closing of any exercise of the green shoe. If no De-SPAC transaction occurs, the deferred 3.5% discount is never paid to the underwriters and is used with the rest of the trust account balance to redeem the public shares. Under stock exchange rules, the De-SPAC transaction must be with one or more target businesses or assets that together have an aggregate fair market value of at least 80% of the assets held in the trust account (excluding the deferred underwriting discount and taxes payable on the interest earned on the trust account) at the time of signing a definitive agreement for the De-SPAC transaction. The retail investor also holds warrants. Among other things, it explains what a SPAC is, lays out the economic terms of the equity offered in a SPAC IPO, introduces the players that inhabit the SPAC world and describes the benefits of going public in combination with a SPAC instead of through a traditional IPO. Maverick Transportation is an outstanding company as recognized in 2018 and 2019 by receiving the honor of being one of the "Best Fleets To Drive. donors, and sponsors. Our family-run single estate vineyard, winery and distillery located in Essendine, Rutland is home to over 11,000 vines; the first of which were planted in 2019. Much of the information in the Super 8-K will already have been included in the SPACs proxy statement or tender offer materials for the De-SPAC transaction, but the Super 8-K may require additional financial statement information for the target business. Tabula Rasa Limited, a British Virgin Islands company with limited liability, is the sole manager of Sponsor. (go back), 2Other investments raise Investment Company Act considerations for the SPAC during the period before it completes its De-SPAC transaction, as well as risk issues around whether the trust account will have sufficient cash to return $10.00 per public share to public shareholders on a redemption or liquidation. To this end, most SPAC IPO prospectuses contain disclosure that says that the SPAC will only complete [a] business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires an interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940. Occasionally, readers of SPAC IPO prospectuses interpret this as a maximum size for a target business of two times the size of the SPAC. Sponsors and their investors get the opportunity to invest in a growth stage company or other attractive target, carefully selected to match their investment criteria, with substantial upside opportunity. There are no historical financial results to be disclosed or assets to be described, and business risk factors are minimal. In addition to understanding the benefits of using a SPAC, it is important that SPAC sponsors and shareholders of target companies understand and plan for the federal income tax consequences associated with SPAC structures. LLC, a global public speaking coaching company. 1NYSE and NASDAQ listing requirements would permit an amount less than 100% of the gross IPO proceeds to be funded into the trust account, but market practice is to fund 100% or more so that, when the SPAC liquidates or conducts redemption offers, the public shareholders should receive at least $10.00 for each public share purchased. In many SPAC structures, the founder shares automatically convert into public shares [4] at the time of the de-SPAC transaction on a one-for-one basis. Today, consideration must also be given to a de-SPAC transaction in lieu of an IPO. SPACs are required to have a majority of independent board members under stock exchange listing requirements, subject to the same phase-in exceptions as are applicable to all newly public companies. SPACs have the following characteristics: The process can take three to five months from the date the business combination agreement is signed to complete, but in most cases is still shorter than the corresponding review of an IPO registration statement. 1. Blank check companies are subject to Rule 419 of the Securities Act. Formed by individuals with experience and reputations to allow them to identify and acquire one or more target businesses that will ultimately be successful public company/s. SPACs are publicly traded companies formed for the sole purpose of raising capital through an IPO and using the proceeds to acquire one or more unspecified businesses at a future date. SEC rules require that SPACs file a special Form 8-K within four business days following completion of a De-SPAC transaction. Finally, SPACs typically enter into agreements with their directors and officers to provide them with contractual indemnification in addition to the indemnification provided for in the charter. Prior results do not guarantee a similar outcome. On any device & OS. The sponsor files the registration statement publicly at the time it addresses the comments of the SEC staff. Documentation relating to subscription for founders' shares and warrants Insider Letter Agreement (entered into by sponsor, officers and directors) lock-up agreement of insiders The sponsor will pay a minimal amount (e.g., $25,000) for the founder shares. As a practical matter, SPACs typically target business combination targets that are at least two to three times the size of the SPAC in order to mitigate the dilutive impact of the 20% founder shares. 3. All rights reserved. If the business combination transaction closes, investors choosing to remain with their investment will enjoy potential upside both in their shares and their warrants. Prior to consummation of a business combination, after the public shares and the public warrants separate, investors will have separate liquidity opportunities in their public shares and their public warrants. If any party, affiliated or unaffiliated with the registrant, has approached you with a possible candidate or candidates, then so disclose or advise the staff. Many SPAC sponsors are serial SPAC sponsors, and their track record will include the success of their prior business combinations. This results in the founder shares equaling 20% of the total shares outstanding after completion of the IPO, including any exercise or expiration of the green shoe. The sponsor will be looking to the underwriters to fill their book with investors who have a long-term investment horizon and/or a strong interest in the industry in which the sponsor will seek a target. Rushing through the process without the right expertise can put a successful outcome at risk, not to mention loss of funding and reputation of the sponsors. For more information on the tax treatment of SPAC sponsors, see BDOs article BDO Knows SPACs: Tax Treatment of SPAC Founders Shares. Upon consummation of the IPO, the units begin to trade on the applicable stock exchange. The 2023 BDO CFO Outlook Survey offers critical insights to support strategic decision-making and help your company thrive. After this date COVID-19 cannot be the reason to make tax free "qualified disaster relief payment under IRC Sec. Servicemaster Fm ApplicationAt ServiceMaster Facilities Maintenance, we provide both one-time and routine cleaning services for your commercial facility in Memphis and the surrounding . ] The SEC sometimes describes SPACs as blank check companies. Blank check companies are development stage companies that have indicated that their business plan is to engage in a merger or acquisition with an unidentified company or companies and that are issuing penny stock under Rule 3a-51 of the Exchange Act. After the staff has signed off on the public filing, the sponsor can move quickly to have the registration statement declared effective, most often with limited amendments. The warrant agreement provides that the terms of the public warrants generally can be amended with the approval of holders of 50% of the public warrants. The per unit purchase price is almost always $10.00. A SPAC will go through the typical IPO process of filing a registration statement with the U.S. Securities and Exchange Commission (SEC), clearing SEC comments, and undertaking a road show followed by a firm commitment underwriting. These follow-on equity raises customarily take the form of a forward purchase agreement or a PIPE commitment. However, the SEC staff does focus on the structure of the sponsor and has increasingly commented on potential conflicts of interest. The warrants become exercisable on the later of (i) 30 days after the De-SPAC transaction and (ii) the twelve-month anniversary of the SPAC IPO. After reading this primer, you will be able to answer the following question: what do Shaquille ONeal, Bill Ackman, Serena Williams, former House Speaker Paul Ryan, Alex Rodriguez and Chamath Palihapitiya have in common? The private equity group and the management of the SPAC will often negotiate a private arrangement (usually contained in the organizational documents of the sponsor) dealing with, among other things, how much each of the parties will fund of the at risk capital, relative participation in forward purchase commitments (as described below), and vesting of equity (including incentive equity). EX-10.16 12 rubicontech_ex10-16.htm EXHIBIT 10.16 . The team then raises seed capital for a SPAC sponsor from various sources, including private equity or venture capital-backed funds. Mallard Pointe 1951 LLC is the ownership entity of Mallard Pointe and is a partnership of local families. The Sponsors must invest a portion of capital to cover the expenses of the SPAC, as the IPO proceeds are placed entirely in trust until the point of Business Combination.