Bad News All Around for SPACs, Except One

Reading a recent issue of weekly newsletter SPAC Wire, one gets a distinct sense that the wave of blank check companies raised or announced last year are in hot water:

One SPAC was voted down. Another is seeking early liquidation. One SPAC withdrew registration and another cancelled its planned merger. Three SPACs received warnings from the NYSE for failing to hold shareholder meetings, yet others are using puts and bridges to try to complete their deals.

It’s all quite gloomy, but there is one ray of hope for the asset class. Polaris Acquisition Corp., once the largest-ever SPAC, has set a date for its shareholder vote to approve its acquisition of Apollo Management-backed Hughes Telematic. This is significant because the deal’s leader, Marc Byron, had said Polaris would not hold its shareholder vote until he was confident he had the support of enough “yes-voting” shareholders to approve the deal.

You may remember the Hughes Telematic deal from peHUB’s coverage in December. Since then, of course, increased volatility in the public markets, massive hedge fund redemptions and volatility in the auto industry have hurt the deal’s chances of getting approved.

To adjust to the times, Apollo Management and Hughes restructured the deal for a lower value ($385 million). Further, Apollo and Hughes Telematics’ management and shareholders agreed to hold their shares for a two-year lock-up period. The first earnout shares are unable to vest till the stock price hits $20.

Byron said he needed to secure investors who could see the long term view of the company. That amount equals $105 million worth of shareholders. The fact that a date is set must mean this seemingly impossible task has been achieved, and indicates a vote of confidence in a number of long-shot areas: SPACs, the public markets, and the auto industry. I’d say that’s good news, but we’ll have to wait until March to know for sure.

Earlier: Hughes Telematic’s Uphill Battle