Value Investing

SPAC Weekly 01/05: Special Purpose Acquisition Corps 101

SPAC Weekly 01/05: Special Purpose Acquisition Corps 101 by Troy Marchand, Foundry Capital

Fourth edition of SPAC Weekly, an offering of Valuewalk.com, for the week of January 4th.

New SPAC Announced:

Andina Acquisition Corp II was formed in November 2015. This management team merged with Tecnoglass (TGLS) in their prior SPAC. Current stock price for TGLS is $13.35. While I have no recommendation on TGLS, it was a well thought out deal, and has proven to be successful. It seems like a solid company, manufacturing architectural glass out of Columbia. At first glance, it seems to be a nicely growing company at a reasonable valuation, albeit it operates out of Columbia, which may give investors some pause and cause it to trade at a discount to comps.

Andina raised $40 million in equity and the management team is looking to make a minority investment in a sizable Andean private company. EarlyBird Capital is representing Andina on this transaction. Each holder of the unit (ANDAU) will receive a right, which is equivalent to 1/7th a share of common stock, upon consummation of a business combination. Unlike most SPAC deals, this unit does not come with any warrants, just the rights. They have 24 months from November 2015, to complete a business combination. Luke Weil will again be the chairman for Andina, as he also was for SPAC #1.

SPAC Weekly 01/05: Special Purpose Acquisition Corps 101

Terminated SPAC:

The most recent SPAC to have a deal rejected and thus liquidate the SPAC, was ROI Acquisition Corp II, which after proposing to merge with Ascend Telecom out of India, had far too many shareholder redemptions. The SPAC sponsor, Clinton Group, changed the structure of the warrants and extended the vote by an extra month, but on the last possible day the SPAC had left, they were not able to get a deal struck with Ascend Telecom. This caused the warrants to be worthless, and another SPAC to go by the wayside. After Clinton’s disaster with Everywhere Global, I would guess this was their last effort of launching a SPAC. You need the utmost credibility in order to get a deal passed by investors, and clearly shareholders have been worn thin by Clinton Group.

SPAC’s Without Mergers Approved:

Andina Acquisition Corp II (ANDA)

Capitol Acquisition Corp III (CLAC)

Boulevard Acquisition Corp II (BLVD)

Double Eagle Acquisition Corp (EAGL)

Pace Holding Corp (PACE)

WL Ross Holding Corp (WLRH)

Hennessy Capital Acquisition Corp II (HCAC)

Quinpario Acquisition Corp 2 (QPAC)

Harmony Merger Corp (HRMN)

FinTech Acquisition Corp (FNTC)

Easterly Acquisition Corp (EACQ)

Barington/Hilco Acquisition Corp (BHAC)

1347 Capital Corp (TFSCU)

Dundee Acquisition Corp (DAQ-UN.TO) – Canadian

Infor Acquisition Corp (IAC-A.TO) – Canadian

E-Compass Acquisition Corp (ECAC) – Chinese

Electrum Special Acquisition Corp (ELECU) – Focused on Gold

Pacific Special Acquisition Corp (PAAC)

Garnero Group Acquisition Co (GGAC) – Brazilian

Global Partners Acquisition Corp (GPAC)

JM Global Holding Company (WYIGU)

GP Investments Acquisition Corp (GPIA) – Brazilian

Arowana Inc (ARWA) – Australian

Atlantic Alliance Partnership Corp (AAPC) – Led by NFL free agent

CB Pharma Acquisition Corp (CNLM)

Hydra Industries Acquisition Corp (HDRA)

AR Capital Acquisition Corp (AUMA)

DT Asia Investments Ltd (CADT) – Hong Kong

Terrapin 3 Acquisition Corp (TRTL)

The idea is to keep investors up to speed on Special Purpose Acquisition Corps, also known as SPAC’s, on a weekly basis. A SPAC is a blank check company created for the purpose of acquiring a private company. It is a backdoor route to taking a private company public while enriching the teams that executes on completing a deal. Due to the nature of what we just described Wall Street does not pay attention to SPAC’s and they often time are under the radar investments that come and go in cycles. They were all the rave in the 2005-2008 period, prior to the financial collapse, and were in hibernation for many years, but in the past couple years we have seen quite a few SPAC’s announced. Some transactions are really good, and some are awful, so please pay attention to the players involved and what they are buying. Investors will treat bad deals very harshly, either voting down the deal entirely or thrashing shares post-deal announcement. I have many examples of each. The hard part writing weekly about SPAC’s is the unknown and infrequent announcement of a deal or IPO. Therefore, some weeks may be longer than others strictly due to this nature. We intend to keep this weekly update to the point and use terms any investor can understand, regardless of your experience level. We apologize to those who fully understand SPAC’s as we get those new to the asset up to speed on the inner workings. Feel free to email us [email protected] for specific questions and we will do our best to respond in a timely fashion. Thanks for reading and we look forward to providing more color around all things SPAC’s. E-mail Troy at [email protected] to be placed on the distribution list.

The purpose of this weekly update is not meant to be a recommendation to buy or sell SPAC securities but is for informational purposes only. Please do your own research and read the 300 plus pages of the S-1. We also try to be completely accurate with the information we report, so please excuse any misstatements and feel free to let us know in the comments section or an email. While we will attempt to keep the lists exhaustive of all deals, please feel free to let us know if you are aware of one that we missed, both North American and Europe listed.

Disclaimer: The Author of this newsletter may hold positions in the securities mentioned personally or in his fund, Foundry Value Fund, LP. He may trade in and out of the position without obligation to update readers.