SPAC that went splatHow ex-Apple CEO Gil Amelio raised $173 million - and lost almost all of it.
(Fortune Magazine) -- Normally investors make decisions based on close evaluation of the fundamentals underlying a company. In a SPAC, or special-purpose acquisition corporation, popular Wall Street vehicles whose organizers raise money to spend on yet-to-be-determined targets, investors buy solely into the pedigree of the founders.
Which is why they were so quick to pour $173 million into Acquicor, a SPAC formed in 2005 by a supergroup of Apple (AAPL, Fortune 500) alumni - co-founder Steve Wozniak, former CEO Gil Amelio, and ex-senior executive Ellen Hancock. Instead, the trio turned that cash into a highly indebted company whose equity today is worth $15 million.
In early 2007, Acquicor bought a Southern California chip company called Jazz Semiconductor for $253 million (after returning $33 million to shareholders who wanted their money back instead). But the timing was terrible. Jazz sells to wireless companies like mobile-phone makers, who have been in a nasty downturn. Shares of Acquicor - renamed Jazz Technologies (JAZ) - have cratered from their IPO price of $6 to a recent 71 cents per share. On Feb. 13 the company retained UBS to explore "strategic alternatives."
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