If they bring a deal, all shareholders vote on it. Generally, if you vote “No”, you’re also allowed to say “give me my money back” and you get your pro-rata share of the trust account. If enough shareholders vote “no”, the deal doesn’t close. What you have probably heard about is SPAC management negotiating with large shareholders to buy large blocks of stock that would otherwise be voted “no”. These transactions would use management’s personal or professional money, not trust account money.
Could you pick 5 out of the list that I should start with on my dd?
HIA, NTQ, HMR, TGY, TAQ, /not an investment rec, do your own homework.
NakedPuts Wrote: ------------------------------------------------------- > Fair enough, but there is a pretty obvious > explanation as to why this anomaly exists. > > I don’t know what the VIX and options have to do > with this. I’m talking about buying the common > and waiting to redeem for cash. No warrants > involved, although I bet you can decently enhance > the yield doing a little unit/common/warrant arb. What is the obvious explanation of the anomaly? To meet redemptions? Higher yielding opportunities elsewhere?
Hedge funds liquidating because this is the most liquid thing in their portfolio. Also, potential fears about trust assets being invested in money markets with agency or LEH CP. However, if you do your research, you’ll see many only invest in s/t treasuries, and several have recently issued statements highlighting the security of their trust assets. I would stick to SPACs which have done that - which I can’t verify for the list I posted above.
http://biz.yahoo.com/bw/081013/20081013005680.html?.v=1 NTR Acquisition Co. (AMEX: NTQ, the “Company”) is providing additional details on its trust account. The funds raised in the Company’s initial public offering on January 30, 2007 are deposited in a segregated trust account at Citibank N.A. and the trustee is American Stock Transfer & Trust Company. As of October 9, 2008 the account balance was $246,441,371. I’ve never heard of these companies before this post. From the F/S this looks like an all cash company but has a market value of $292.43M. How is this a deal?
The management of these companies gets 20% of the company for free, but that 20% has no claim on trust assets in the event of liquidation. That 20% is being included in the market cap calculation. They also have a warrant liability which isn’t real, as the warrants are worthless in the event of liquidation. So the only numbers you need to worry about are the $245M in the trust account, and the 24.31M shares issued in the IPO. That’s $10.09 per share, and it recently traded as a low as $9.32! This particular SPAC is set to liquidated 2/1/09, so the yield looks particularly good because of the short time period.
I had never heard of SPACs before, but I found this online: According to SPAC Analytics, a research firm, the annualized return for all SPACs that have completed an acquisition target since 2003 is a negative 1.4 percent, while those that end up being liquidated return a negative 2.3 percent. In an example of the premium paid for hope, SPACs that have yet to find a target have an annualized return of 1.7 percent.
I’m with NakedPuts on this… In general, I think SPACs are stupid but the liquidation play looks good to me.
JoeyDVivre Wrote: ------------------------------------------------------- > I’m with NakedPuts on this… In general, I think > SPACs are stupid but the liquidation play looks > good to me. 100% agree with this post. I thought SPAC issuance signaled a peak in excess capital trying to find a home.
Check out this statement in form 8-K of one of the SPACs: "the funds held in the trust account were deposited with Merrill Lynch & Co., Inc. Such funds have been continuously held by Merrill Lynch & Co., Inc. and are currently invested in an institutional tax-exempt fund managed by BlackRock Investment Advisors. These funds are insured by the U.S. Treasury Department as of September 19, 2008 for three months. It is unknown at this time if the insurance will be extended. The yield on this fund is currently 4% compared to less than 0.5% for treasuries. "