SPAC Talk

SPAC Squeeze Play for Cubbies?

2008-06-21T08:15:00.000-07:00

2 more buyers court Cubs: Publicly traded firm, former bidder for Reds have team data

By Ameet Sachdev |Tribune reporter

10:07 PM CDT, June 20, 2008

Two more prospective buyers for the Chicago Cubs have emerged, both with baseball connections and the necessary deep pockets, the Chicago Tribune has learned.

A publicly traded company called Sports Properties Acquisition Corp. and a group that includes Broadway theater owner Rocco Landesman are reviewing the team's financial records provided by Cubs owner Tribune Co., sources said Friday.

They are among a handful of potential bidders that had to be preapproved by Major League Baseball before receiving the financial data. The others include a group led by John Canning, chairman of Chicago-based Madison Dearborn Partners LLC; Dallas Mavericks owner Mark Cuban; the partnership of attorney Thomas Mandler and businessman Jim Anixter; and the Ricketts family of Omaha.

Sports Properties presents one of the more unusual ownership opportunities. It has no operations but is sitting on $216 million that it raised in January in an initial public offering. Its stock trades under the ticker symbol HMR.

Read more >>> view original article

View related >>> No Bonds for Hammerin' Hank

And in closely related, better two months late than never news

2008-06-04T12:12:00.000-07:00

Have SPACs jumped the shark?

June 4, 2008 at 11:55 AM

At Dealflow Media's SPAC Conference 2008, Phil Goldstein, founder of hedge fund Bulldog Investors, sank his teeth into the question of whether "SPACs have jumped the shark." "It's difficult to tell if SPACs have jumped the shark," Goldstein said, "but the days of announcing the deal and the vote being a fait complete [sic] are over."

After reviewing the massive slowdown in SPAC IPOs activity this year, Goldstein traced many of the problems SPACs have faced in 2008 back to tight credit markets. "The one problem that's not been talked about, but that's vital to the health of this industry, is the credit problem," Goldstein commented. "It's very hard to get credit from prime brokers on what I consider the safest investment I've ever seen." "The ironic thing is that a lot of prime brokers will give you more credit on a deal that's done, where the stock could go down on company performance, than they will when you've got a lot of money just sitting in the bank," he continued.

Goldstein felt the problem to be severe enough that he implored the audience to lend a hand, saying, "I would urge anyone who has access to these people to do everything you can to loosen up these credit restraints." Still he was confident that SPACs would be around for the long term, although he thinks that major changes will come to the industry overall. "I don't see the demise of SPACs happening," Goldstein said.

"The one positive for this industry is that there are talented, creative minds within it. There are smart people out there; they will tinker with it; the structure may change, and I think that 10 years from now there will still be SPACs. It's been a lousy market in general, but if the credit loosens up, [SPACs] can come back." - George White

Original article

Goldman-SPACs a No-Go

2008-05-31T16:34:00.000-07:00

UPDATE 1-Goldman pulls Liberty Lane IPO, deal a tough sell

Wed May 28, 2008 7:13pm EDT

By Joseph A. Giannone

NEW YORK, May 28 (Reuters) - Goldman Sachs' (GS.N: Quote, Profile, Research) efforts to launch a new kind of "blank-check" company, Liberty Lane Acquisition Corp (LLACU.O: Quote, Profile, Research), got the cold shoulder both from hedge funds and the traditional stock buyers the bank hoped to win over, and the deal was pulled.

Liberty Lane, a special purpose acquisition company, was Goldman's first foray into setting up the companies known as SPACs, and it was designed to prevent hedge fund investors from messing with the structure.

But even with Goldman's endorsement, Liberty Lane's unique terms made it a tough sell -- especially in a SPAC market that has cooled in the past year.

Pricing for the planned $350 million deal was postponed twice, first last week and again on Tuesday, before the offering was shelved late on Wednesday.

Liberty Lane said in a statement "it has decided not to proceed with its proposed initial public offering at this time due to market conditions."

SPACs are companies that raise money and hunt for takeovers. They pay a rich dividend and have to liquidate after a specified period -- usually two years -- if they do not identify an acquisition that wins shareholder approval.

Last year, Wall Street managed offerings for 60 SPACs, raising more than $12 billion, representing a quarter of domestic IPO activity. But recently the market has cooled off.

No blank-check company with a market cap over $50 million has priced since late February, according to Renaissance Capital, a Greenwich, Connecticut, firm that tracks the IPO market. Meanwhile, many of the blank-check shares issued over the past year have traded down.

Liberty Lane was designed to appeal to traditional buy-and-hold stock investors. The problem with most SPACs, analysts said, is that hedge funds and other traders could buy the shares when they traded below net asset value and then reject every deal.

This strategy guaranteed a rate of return for short-term traders but worked against the original purpose of the blank check, which was to give investors a chance to profit from smart deals.

So Goldman changed the terms of Liberty Lane to fend off short-term investors -- management put up just 1 percent of capital and was to receive a smaller stake than normal. The new company had a smaller "trust pool," the escrow account that holds IPO proceeds until a deal is completed.

Each unit was to contain one share and half a warrant, rather than the usual one share and one warrant, reducing potential dilution to shareholders. Management was supposed to receive just 7.5 percent of the company, below the usual 20 percent.

By making shares that are less attractive to traditional SPAC buyers, Goldman gambled it could be first to sell a blank-check offering to an audience of long-term investors.

"Goldman Sachs reached out to fundamental investors to fill their book, and there wasn't enough interest at this moment in time," said Michael Tew, co-founder of SPAC Research Partners in Palo Alto, California. (Additional reporting by Dan Wilchins) (Editing by Gary Hill).

View original article

PUNK'D SPAC Suffers From Kutch-lash?

2008-04-06T09:01:00.000-07:00

William Morris Involved in $500M SPAC For M&A In Entertainment Sector; Ashton Kutcher On Board

Rafat Ali

Sunday, March 30, 2008; 5:06 AM

In the weirdly complex world of blank-check IPOs and SPAC s, this one is a bit of a puzzler: the talent agency William Morris (WMA), along with John Mass, EVP and head of corp dev and new ventures at the agency, and two other SPAC vets, have recently filed to raise about $500 million in financing on the American Stock Exchange, for acquisition in the entertainment, media and publishing space. The company hasn't yet identified any target.

Eric Watson, the SPAC's chairman of the board and treasurer, and Jonathan Ledecky, its president and secretary, have been involved with various other blank-check companies in the past. Other directors of the company included actor Ashton Kutcher, Jim Gray, the ESPN (NYSE: DIS) sportscaster and Ed Mathias, media and entertainment lead at Carlyle Group. Some of the directors of the company were recently part of another blank check company Endeavor Acquisition, which last year bought American Apparel.

As for how WMA will be involved with the company, this explains it well: "William Morris and Mr. Mass have entered into right of first review agreements with us, in which they have agreed to present to us for our consideration any suitable business opportunity to acquire a target business with a fair market value in excess of $375 million, prior to presentation to any other entity, provided such target business allows them to present their company to us. In any event, neither William Morris nor Mr. Mass will seek to acquire such target business or be a principal in such opportunity. In addition, if a client of William Morris has already identified a specific acquisition in which it seeks the assistance of William Morris, William Morris will not be obligated to present such opportunity to us."

Would be interesting to see what, if any, targets come up for the company within its 24 month deadline. WMA recently launched The Mailroom Fund, which is focused on venture capital investments in the digital media sector.

Original article

Related Info

Amelio's SPAC Upside the Head

2008-03-23T09:02:00.000-07:00

SPAC that went splat

How ex-Apple CEO Gil Amelio raised $173 million - and lost almost all of it.

By Adam Lashinsky
senior writer

(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."

Nasdaq-Amex SPAC-down!

2008-03-06T18:13:00.000-08:00

Nasdaq wants piece of Amex's lucrative SPAC market

Wednesday, March 5, 2008

At this time last year, the Nasdaq was the happening place for a new company to come out. The exchange greeted 22 initial public offerings in January and February 2007, while the NYSE and Amex both saw new entrants in the single digits.

This year, the picture looks totally different. Only five IPOs have appeared on the Nasdaq, compared to four on the NYSE and 10 on Amex. The reason for the Amex's dominance is simple: special purpose acquisition companies, or SPACs.

SPACs are shell companies that come public to raise money in order to buy another company. They started popping up on bulletin boards in 2003, and the Amex started taking them in 2005. Now, they've turned into big business. Last year, they consumed 25% of the IPO market, according to Renaissance Capital.

Read more >>> Tehran Times

See also >>> NYSE Amendment to Allow for SPAC IPOs (NYX, NDAQ)

Hedge Fund SPACmail?

2008-02-23T16:16:00.000-08:00

IPO VIEW-For blank-check IPOs, popularity comes at a price
02.22.08, 8:06 PM ET

By Jonathan Keehner

NEW YORK (Reuters) - Blank-check companies have been some of the hottest initial public offerings in recent months, but hedge funds with an eye for profit may be short-circuiting them, a trend that could end up stunting the IPO market.

Blank-check companies, or special purpose acquisition companies (SPACs), which use proceeds from share sales to fund future acquisitions, can work well. Retailer American Apparel Inc was acquired last year by one.

SPACs raised nearly four times more in 2007 than in the year before, bolstered by a credit crunch that sidelined competitors like private equity firms that rely on debt to make acquisitions.

But SPACs, which sold more than $12 billion of shares last year, have run afoul of investors like hedge funds -- who can demand that the companies return cash if they don't like a potential acquisition."

Some of the difficulty for SPACs in completing acquisitions is the entrance of what might be described as activist investors," said Brett Goetschius, publisher of DealFlow Media, which collects data and has a newsletter on SPACs. "Investors can essentially 'greenmail' the SPAC management to buy out their shares in order to get acquisition approval."

Read more >>> Reuters via Forbes

MAC SPAC's Vague PR

2008-02-23T11:21:00.000-08:00

Huh?

NEW YORK, NY – February 20, 2008 – Marathon Acquisition Corp. (AMEX: MAQ.U) (the “Company”) announced today that it has met the condition under its Certificate of Incorporation that permits it until August 30, 2008 to complete an appropriate acquisition meeting the criteria set forth therein. The Company will make an additional announcement once it has entered into a definitive agreement to complete a business combination.

View PR at SEC.gov

Read More >>> NY Times DealBook and Sydney (Australia) Morning Herald

Nasdaq Floats SPAC Listing Plan

2008-02-21T17:32:00.001-08:00

Nasdaq plans blank-check company listing standards

NEW YORK, Feb 21 (Reuters) - Nasdaq Stock Market Inc (NDAQ.O: Quote, Profile, Research) said on Thursday it will propose standards for listing "blank-check" companies, an increasingly popular type of entity formed solely to acquire other businesses.

Blank-check companies, also known as special-purpose acquisition vehicles, raised more than $12 billion last year in initial public offerings, more than four times the record $2.6 billion in 2006, according to research firm Dealogic.

Nasdaq said it plans to ask the U.S. Securities and Exchange Commission for a rule change to allow it to list blank-check companies. It said it plans to require such companies to meet more stringent standards than typical companies before winning Nasdaq listings. (Reporting by Jonathan Stempel; Editing by Phil Berlowitz).

Read more >>> WSJ and Forbes and BloggingStocks

Hedgie SPAC: From Shell to Big Board

2008-02-06T19:08:00.000-08:00

A Public Hedge Fund With Good News to Report
February 6, 2008, 2:27 pm

So far, the public markets have been kind to GLG Partners, a British hedge fund.

GLG made its first-ever earnings announcement as a public company, reporting a profit, excluding compensation costs related to its public offering last year, of $127.1 million. That’s a 72.3 percent rise over the same period a year earlier. Including the costs, GLG lost $315 million for the three months ended Dec. 31.

The news drove GLG’s shares up more than 10 percent in trading Wednesday morning, though they have since drifted down to about $12.47, or a 2.5 percent gain over Tuesday’s closing price.

Read more >>> NYT DealBook

See related >>> SEC Admin. Proceedings: In the Matter of GLG PARTNERS, LP

Biggest Ever EuroSPAC is Next...

2008-02-02T15:45:00.000-08:00

Financiers to list cash shell on Euronext

By Kate Burgess in London
January 31 2008 02:15

Shares in a new cash shell are to be listed on Euronext early next month with the aim of buying into a European company worth between €3bn ($4.45bn) and €5bn within two years.

Nicolas Berggruen and Martin Franklin, who completed the biggest takeover by a “blank cheque” acquisition company in the US last year, are seeking to raise €700m for a new European “blank cheque” company called Liberty International.

It will be the biggest “special purpose acquisition company”, or Spac, to be launched in Europe and marks a new phase in the spread of these publicly-listed shells which are designed to raise cash from investors and then identify a business to buy.

Read more >>> Financial Times article

Feb. 10, 2008 Update >>> Berggruen Holdings and Marlin Equities List €600 Million Liberty International on Euronext

Bulldog Bites Into Blank Checks

2008-02-02T09:49:00.001-08:00

Goldstein Launching SPAC Fund
by Paula Schaap

Activist hedge fund firm Bulldog Investors is preparing a special purpose acquisitions companies (SPACs) fund in anticipation of strong returns for that sector.

Bulldog’s cofounder Phil Goldstein said that the firm had a lot of experience over the past two years in SPACs. Sometimes called “blank check” companies, these firms raise a pool of money to put into unspecified mergers.

Goldstein said he likes the SPAC model because most of the money is held in a trust.

“We see a lot of opportunities in SPACs to make money with pretty low risk,” Goldstein said.

Read more >>> HedgeFund.net article

Hollywood: Attack of the SPAC

2008-02-02T07:43:00.000-08:00

By DADE HAYES

New investment scheme attracting big names

Hollywood has been hopping with hedge funds and pumped with private equity. Now, get ready for a SPAC attack.

The dissonant acronym -- which stands for Special Purpose Acquisition Company --represents a new investment scheme attracting big names and heralding a potential wave of media deals.

There are not apt to be deals in the $1 billion-plus price range. And many of the outfits tilt toward new media, videogames and telecom rather than TV and film production. But the list of those steering SPACs suggests that even modest-size deals could rearrange the media landscape in some intriguing ways.

The roster includes former high-ranking execs at Sony, AOL, DirecTV, ABC and Anchor Bay. Both R. Steven Hicks, the Austin, Texas-based radio mogul, and billionaire brother Tom Hicks jumped into the game last year, as did Ron Perelman. SPAC board members and advisors include the likes of one-time NBC exec Scott Sassa, Walden Media's Cary Granat and deep-pocketed AOL alum Ted Leonsis.

A more mellifluous shorthand for these firms -- "blank-check companies" -- helps explain their quirky mission and sudden popularity. And with everyone from Time Warner to Barry Diller rethinking the bigger-is-better mantra that helped create the media congloms, this could be prime time for those with blank checks to write.

There are now almost 100 such firms across all industries, at least eight of them targeting media and entertainment. The number of SPACs spiked 78% in 2007, according to industry tracker SPAC Analytics.

And Wall Street has taken notice.

Read more >>> Variety article
.

‘Blank Cheques’ Thrive in Volatile Market

2008-01-29T19:59:00.000-08:00

SPACs are luring investors into fresh opportunities

Stephanie Baum in New York

30 Jan 2008

At least 75 hedge funds are trying to take advantage of corporate acquisition opportunities, left open by the evaporation of debt finance, by investing in special purpose acquisition companies – publicly-quoted “blank cheque” vehicles.

US hedge fund managers Fortress, Och-Ziff Capital, Ospraie Management, Pequot Capital, SAC Capital, Tudor Investment, Wellington and York Capital are among new investors in Spacs.

Spacs have cash with which to make acquisitions. Investors pay an average of $10 each for a combined share and a warrant, which allows buyers to acquire additional shares in return for more cash.

The companies and private equity firms that would normally compete with Spacs for acquisitions rely on loans to finance their purchases and have had to put their plans on hold because of the credit crunch. Meanwhile, market volatility has lowered the price of acquisition targets.

The chief executive of a large US fund manager said: “There are a lot of interesting acquisition opportunities around. Many companies are trading at low price/earnings ratios.”

Steven A. Cohen of SAC Capital

Although Spacs began in 1994 as small scale investment vehicles, the size and scope of deals brought to market has risen sharply in the past four years.

Endeavor Acquisition Corporation and Services Acquisition Corporation each raised about $100m for their 2005 purchases of clothing retailer American Apparel for $384m and smoothie business Jamba Juice for $265m.

Last year Tom Hicks, co-founder of buyout group Hicks, Muse, Tate and Furst, launched a Spac that raised $522m while activist investor Nelson Peltz and billionaire investor Ronald Perelman

followed.

Freedom Acquisition Holdings, which had raised $500m, made a reverse acquisition of UK hedge fund manager GLG Partners, allowing the multi-strategy firm to obtain a listing on the New York Stock Exchange with a valuation of $3.4bn.

Spacs allow investors to vote against acquisitions if they do not like the target. Even if the majority of shareholders decide to pursue the deal, a shareholder at odds with the others may liquidate his or her investment. If the majority is against the acquisition, their investment is returned minus the underwriter’s fee.

These mechanisms mean the transactions take time. Spacs are usually set up to allow managers 24 months to acquire a target company. Even when a target is found, it takes about six months to complete a takeover because of US Securities and Exchange Commission requirements.

Read more >>> original article

Super Bowl SPACulation

2008-01-27T14:09:00.000-08:00

Will Heinz Profit From Pats/G-Men Rematch?

Posted Jan 27th 2008 9:40AM by Aaron Katsman

HJ Heinz Co. (NYSE: HNZ) should have really strong sales this week leading up to Sunday's Super Bowl. With more interest this year than in any Super Bowl in recent memory, with the two storylines of the Patriots trying to run the table, and a New York team in the big game, not only should TV ratings skyrocket, but I would expect the number of Super Bowl parties to be up as well. Clearly that will benefit the condiment maker.

Heinz is trading toward the bottom of its 52-week range and sports a yield of over 3%. What makes this even more interesting is that investing guru Nelson Peltz owns a share. About two months ago, Peltz filed a prospectus for the $750 million initial public offering of a special purpose acquisition company (SPAC). Due to the ways SPACs are set up, he will need to make some kind of acquisition, and that deal may just be Heinz.

View original article

Grab a SPAC and a Smile...

2008-01-26T08:36:00.000-08:00

Psyop, the New York-based VFX and animation studio responsible for spots like Coca-Cola’s “Happiness Factory” has merged with an Israeli-based acquisitions company for $10 million in cash and $20 million in stock.

Based on the agreement, executive producer Justin Booth-Clibborn becomes CEO of the new venture, which could get an additional $14 million in cash and stock if performance goals are reached over the next three years. Representatives from Psyop declined to comment.

The deal is essentially a merger with a company that’s already public. Fortissimo is a Special Purpose Acquisition Corporation, or SPAC, a company set up so general shareholders can function like private equity firms and offer IPO-like deals to companies of their choosing.

Read more >>> Nmancer's Teklog

SPACs Pick up Slack in Shaky Credit Market

2008-01-25T17:36:00.000-08:00

SPACs seen by some as less risky than blind pools

by Julia Neyman

Imagine the following investment scenario: You give a large sum of money to a seasoned principal, who uses it to take a promising company public. The principal, who has spent the last 30 years building his Rolodex on Wall Street, has two years to seal the deal.

If the deal happens, you could get a solid return when the company goes public. If two years pass and a deal hasn't materialized, you get your money back.

It's called a special purpose acquisition company (SPAC), and finance insiders say it's as close to a win-win as they've seen in awhile. They explain a SPAC as a cousin of the traditional blind pool offering, but not as susceptible to fraud.

Investors are safer because 99 percent of their investment is held in a trust until the deal goes. Principals take on more risk, but if they have solid Wall Street contacts, making a SPAC work is just a matter of finding a promising private company and filing all the paperwork to take it public.

Read more >>> original article

Sporty SPAC Scores on IPO Completion

2008-01-24T17:41:00.000-08:00

Sports Properties Acquisition Corp. Announces Completion of Its Initial Public Offering

Thursday, January 24, 2008; Posted: 12:36 PM

NEW YORK, Jan 24, 2008 (BUSINESS WIRE) -- HMR/U | news | PowerRating | PR Charts -- Sports Properties Acquisition Corp. (AMEX: HMR.U), announced today that it had completed its initial public offering. Sports Properties is a special purpose acquisition company, also known as a SPAC. The initial public offering of units was sold at an offering price of $10 per unit resulting in gross proceeds of $200,000,000. Each unit issued in the initial public offering consists of one share of Sports Properties's common stock, and one warrant to purchase one share of common stock, at an exercise price of $7 per share. Initially, the units will be the only security trading.

Andrew Murstein, Vice-Chairman of Sports Properties stated, "The entire team is very excited to start looking at investment opportunities. We believe there are many exciting opportunities for us to look at in the sports, leisure and entertainment industries, and we very much look forward to starting the process."

The President and CEO of Sports Properties is Tony Tavares. Mr. Tavares is the former CEO and President of SMG, a premier management company engaged in the private management of stadiums, arenas, theaters and convention facilities in the U.S., Europe and Pacific Rim. He has served as president of several Major League Baseball franchises, most recently the Montreal Expos and Washington Nationals.

Mr. Tavares previously served as the President and CEO of Disney Sports Enterprises, successfully launching and operating the Mighty Ducks of Anaheim, an NHL expansion franchise, and leading negotiations for the acquisition of the California Angels.

The board of Sports Properties consists of:

Jack Kemp, Chairman, was the Republican Vice-Presidential candidate in 1996. He played 13 years as a quarterback in the American Football League and National Football League, followed by election to the United States House of Representatives for 18 years before serving as Secretary of Housing and Urban Development ("HUD") from 1989 to 1993. Mr. Kemp currently serves on the boards of several companies including Six Flags, Inc. and Oracle Corp.

Andrew Murstein, Vice Chairman, has served as the President and a director of Medallion Financial Corp., a publicly traded investment company, since its founding and IPO in 1996. He is also one of its largest stockholders. Under Mr. Murstein's guidance, Medallion has acquired several companies and invested over $3 billion in various companies and industries.

Henry Aaron, Director, has an unmatched reputation as one of the world's most respected sports ambassadors. A member of Major League Baseball's Hall of Fame, he held the title of Major League Baseball's all-time leader in home runs for 33 years and currently is the all-time leader in total bases and RBIs. He is currently an executive with the Atlanta Braves and a recipient of the Presidential Medal of Honor, which was bestowed on him by President George W. Bush.

Mario Cuomo, Director, is a former three-term Governor of the State of New York. He has extensive relationships within and working knowledge of government and public / private partnerships, and as Governor oversaw annual state budgets in excess of $10 billion.

Read more >>> Press Release

Related >>> Grand Slam Acquisition

Related >>> No bonds for Hammerin' Hank

Blank Checks Cashing in During Decline

2008-01-23T18:05:00.000-08:00

January 23rd, 2008 by Lilla Zuill

While traditional initial public offerings on U.S. stock exchanges have floundered, the once-obscure “blank check” arena has only gained traction so far this year, becoming a kind of safe playground for investors, and a retreat for some private equity players finding it tougher to raise debt now that credit terms have tightened.

Four weeks into 2008, 5 IPOs by so-called blank check companies– also called special purpose acquisition companies, or SPACs – have tapped investors for about $4 billion. The latest, activist Nelson Peltz’s Trian Acquisition I Corp, was expected to raise $750 million on Wednesday.

In stark comparison, only one mainstream IPO has managed to stir up enough interest — Williams Pipeline Partners which raised $325 million last week – to actually make it to market, and has disappointed since its debut.

Blank check companies, which are formed to acquire other businesses and are little more than a shell until an acquisition is made, took off in 2007, accounting for roughly every fourth new U.S. listing, raising nearly $12 billion.

'Blank Check' Companies Having Day In The Sun

2008-01-19T10:36:00.000-08:00

The first five IPOs of 2008 have priced, and four of them have some curious things in common: no revenue, no history and no operations.

That's because they're special purpose acquisition companies, or SPACs. Sometimes called "blank-check" companies, SPACs are corporate shells formed in order to make buyouts. Although they don't reveal their buyout targets at the time of the offering, they do have to put the candidates up for the approval of at least 70% of shareholders. If the buyout doesn't go through, shareholders get a refund.

This unique investment model has grown explosively in the past few years. According to Renaissance Capital, in 2003 just one SPAC came public. But last year 65 of them hit the boards, raising $11.7 billion. The 2008 pipeline already is looking to beat that.

One important SPAC player is Mark Klein, former chief of Ladenburg Thalmann LTS and current CEO of Alternative Asset Management Acquisition (AMEX:AMV) AMV, which came public on Aug. 1. In an interview with IBD, he explained the SPAC concept and why it has become so popular.

IBD: SPACs are often called "blank-check" companies, but apparently they're a little different from traditional blank-check companies. Can you explain that?

Klein: There's obviously been an evolution of the product.

HAC SPAC Meeting Setback

2007-12-29T09:43:00.000-08:00

Boston-based Harbor Acquisition Corporation (Amex: HAC; HAC.U; HAC.WS; "Harbor") announced today that it intends to further adjourn the special meeting of its stockholders now scheduled for 10:00 a.m. (EST) on Friday, December 21, 2007, without conducting any business, and reconvene the special meeting at 10 a.m. (EST) on Monday, December 31, 2007, in order to give it more time to solicit proxies and its stockholders additional time to consider and vote on the proposed acquisition of Elmet Technologies, Inc., and the related proposals at the special meeting.

The reconvened special meeting on December 31, 2007 will be held at the offices of Davis, Malm & D'Agostine, P.C., One Boston place, 37^th Floor, Boston, Massachusetts, the same location as described in the original notice for the special meeting.

Harbor encourages all its stockholders to vote at the reconvened [a/k/a New Year's Eve] special meeting.

About Elmet Technologies, Inc.

Originally founded in 1929, Elmet became an independent company in early 2004 when its current CEO Jack Jensen led the management buyout of Elmet from its former parent, Philips Electronics North America Corporation.

Grand Slam Acquisition Corp. (APP, VRY, TCW) - SPAC IPO

2007-12-29T09:10:00.000-08:00

Grand Slam Acquisition Corp. is a SPAC (special purpose acquisition company) that has filed to come public via an IPO. But this is larger than most SPAC IPO's with a $750 million proceeds target. Each unit will consist of a share of stock at the $10 set SPAC price and will consist of a warrant. Citigroup is listed as the lead underwriter.

As you can see by its filing, it is not honing in on a set business for the time being: "Our efforts in identifying a prospective target business will not be limited to a particular industry although we will not search for target businesses in the financial services industry or the entertainment, media and/or publishing industry.... We do not have any specific initial business combination under consideration. We have not, nor has anyone on our behalf, contacted or been contacted by any prospective target business or had any substantive discussions, formal or otherwise, with respect to such a transaction."

While the target sector may not be disclosed, the SPAC says it wants to pursue stable leadership companies. Here are the notes:

Established Companies with Proven Track Records;
Companies with Strong Free Cash Flow Characteristics;
Strong Competitive Industry Position;
Experienced Management Team.

The company is led by the old Endeavor Acquisition Corp. chairman Eric Watson, which just recently became American Apparel (AMEX:APP). He's been around this game before as he has been behind other SPAC's such as Victory Acquisition Corp. (AMEX: VRY) with a $390 million market cap today, Triplecrown Acquisition Corp. (AMEX: TCW), and Performance Acquisition Corp.

View original article

Blank check IPOs soared in popularity

2007-12-29T08:44:00.000-08:00

In 2007, special purpose acquisition companies, or blank-checks, made up 23% of the total number of IPOs. In other words, nearly a quarter of IPOs this year have been for businesses with no business. A blank check IPO exists to raise money, and then seeks to use that money to acquire another company.

For instance, Endeavor Acquisition went public as a blank-check IPO and then acquired American Apparel. Now the company trades as American Apparel (AMEX: APP), and Kevin Kelly wrote about why he thinks that company is a buy here.

Sometimes companies that go public through this process can be good investments, but there’s something investors need to keep in mind: A company that has been acquired by a SPAC has just been put up for sale and is therefore unlikely to be undervalued. If the sellers could have gotten more for it, they would have sold it to someone else.

A piece in the Wall Street Journal discusses (subscription req'd) blank checks and some of their pitfalls. American Apparel is definitely one of the better/most interesting companies to go public this way (the CEO’s alleged perversions aside) in recent years but, in general, I think blank checks are something for investors to avoid.

View original article

Be afraid. Be very afraid.

According to Fortune, blank check IPOs are popular again. Also known as special purpose acquisition companies (SPACs), these are IPOs that are done to raise money to possibly buy another company. That is, you are investing in a company with no business model, no sales… nothing. You’re just hoping that the management can find some brilliant acquisition that will create value.

Given the tendency of acquisitions to do anything but create value, you have to wonder why anyone would invest in a SPAC. But that doesn’t mean people won’t do it anyway. From Fortune: “SPACs have soared in popularity in recent years. So far this year, some 40 blank check companies have raised $5.3 billion through public offerings, compared to 13 companies that raised $484 million in all of 2004, according to Dealogic.”

The idea of investing in a company where you have no idea what the business will be is hardly new. During England’s 18th Century South Sea Bubble, a promoter raised money through a stock offering for “a company for carrying on an undertaking of great advantage, but nobody is to know what it is.”

View original article

Starwood's Sternlicht seeks to surf SPAC wave

2007-11-22T07:25:00.000-08:00

IPO Filing Floodgates: Third Wave Acquisition Corp. (TWV)

Third Wave Acquisition Corp. has filed for an initial public offering to sell 35,000,000 million units to raise $350 million, with each unit consisting of one share and one warrant. Deutsche Bank Securities is listed as the sole lead managing underwriter as of the filing. This is another special purpose acquisition company (or "SPAC") that intends to acquire or merge with an outside company. Its proposed ticker is "TWV" on the American Stock Exchange.

No bonds for Hammerin' Hank...

2007-10-20T07:02:00.000-07:00

SPAC IPO FILING: Sports Properties Acquisition Corp. (HMR, TAXI)

Sports Properties Acquisition Corp. filed to sell 20 million units at the traditional $10.00 per unit, and the company is granting an overallotment allowance of 3 million more shares. Sports Properties is taking the proposed ticker "HMR" on the American Stock Exchange and so far lists only Banc of America Securities as the lead underwriter.

The company is a SPAC, a special purpose acquisition company, so it has no existing operations.

This was formed to acquire, through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction, joint venture or other similar business combination, one or more domestic or international operating businesses. It intends to focus efforts on companies that create, produce, deliver, distribute, market content, products and services pertaining to the sports, leisure or entertainment industries.

Here is SPAC's managment all-stars:

Tony Tavares, President and Chief Executive Officer, is the former CEO and President of SMG, a premier management company engaged in the private management of stadiums, arenas, theaters and convention facilities.
Jack Kemp, Chairman, was the Republican Vice Presidential candidate in 1996, and is a former AFL quarterback.
Andrew Murstein, Vice Chairman and Secretary, has served as the President and a director of Medallion Financial Corp. (NASDAQ:TAXI), a publicly traded investment company, since its IPO in 1996.
Richard Mack, Director, is a senior partner at Apollo Real Estate Advisors.
Henry "Hank" Aaron, Director, the unjuiced homerun king of major League baseball.
Mario Cuomo, Director, is a former three-term Governor of the State of New York.
Randel Vataha, Advisor, is a former Stanford football player and NFL wide receiver.
Robert Caporale, Advisor, is a former sports and entertainment law attorney who has represented a number of professional sports leagues and franchises.

A unit consists of 1 common share and 1 warrant with a $7.50 strike price per unit. Maybe investors will get to own another public sports team since these have essentially all gone private. Prior public sports teams were the Cleveland Indians and Boston Celtics, and the Green Bay Packers are one of the community owned and quasi-public companies (that you can't buy a share in easily).

View the original article.

Ladenburg's SPAC Alert

2007-10-20T06:56:00.000-07:00

SPAC Product Overview

Special Purpose Acquisition Companies, commonly referred to as "SPACs," are newly formed companies that raise equity capital through an initial public offering for the sole purpose of pursuing a business combination in a dedicated industry or geographic location. SPAC offerings are typically sponsored by experienced corporate executives, managers of private equity firms and seasoned entrepreneurs.

The offering is in the form of a unit, comprised of a common share and warrant(s). The offering proceeds are held in escrow in an interest bearing trust account. Immediately following the offering, the SPAC typically has 18 months to announce an acquisition and then an additional six months to receive shareholder approval of the proposed business combination. The sponsors typically receive founder shares or units for 20% of the company, which have value only if an acquisition is completed.

If an acquisition is not completed within the allotted 18 to 24 months, the cash held in escrow is liquidated and shareholders are returned their prorated cash amount. This typically would lead to an investor having 90-100% of their initial investment returned. Currently, SPACs trade on the over-the-counter bulletin board, the American Stock Exchange, and the Alternative Investment Market (AIM), a subsidiary of the London Stock Exchange.

sign up for Ladenburg-Thalman's alerts.

Boise unrolls paper and packaging units via SPAC

2007-09-07T08:57:00.001-07:00

Chicago private-equity firm Madison Dearborn Partners said this morning that its Boise Cascade unit has agreed to sell its paper, packaging and newsprint segments to a publicly traded shell company for $1.625 billion.

The sale to Aldabra 2 Acquisition Corp. offers a fast way to return the Boise Cascade operations to public ownership.

Read more >>> view article.

SPACtacular special shareholder meeting

2007-08-09T20:33:00.000-07:00

SAN DIEGO & BEIJING--(BUSINESS WIRE)--Chardan North China Acquisition Corp. (OTCBB: CNCA, CNCAU, CNCAW) (“Chardan North”) today announced that it will hold a special meeting of its shareholders at 1:00 p.m. EDT, on September 7, 2007 at its corporate headquarters, located at 625 Broadway, Suite 1111, San Diego, CA., to approve its acquisition of a controlling interest in Beijing HollySys Company, Limited and Hangzhou HollySys Automation, Limited (collectively referred to as “HollySys”). The acquisition will be effected by acquiring all of the issued and outstanding common stock of Gifted Time Holdings, a British Virgin Islands company that currently holds those interests. The announcement was made following the news that the Securities and Exchange Commission had declared Chardan North’s S-4 prospectus/proxy materials effective earlier this afternoon. Those materials also relate to an exchange offer to be made to holders of the outstanding preferred stock of Gifted Time that will commence following the closing of the transaction, if approved.

Upon approval of the stock purchase, Chardan will merge with and into its wholly-owned BVI subsidiary, HLS Systems International, Limited (“HLS”) for the purpose of changing its domicile, with each share of Chardan North automatically converting into one share of HLS common stock. Each outstanding warrant of Chardan North will be assumed by HLS with the identical terms, except for its now being exercisable into common stock of HLS. Following completion of the stock purchase and assuming the preferred shareholders participate fully in the exchange offer, HLS will own 74.11% and 89.64%, respectively, of the two companies.

Chardan North’s definitive proxy statement relating to this merger will be mailed on or about August 15, 2007 to shareholders of record as of August 10, 2007.

Chardan North has applied for the listing of HLS Systems International, Limited on the Nasdaq National Market under the proposed symbols, HLSS, HLSSW, and HLSSU. Chardan North anticipates that approval of the listing should be effective on or shortly after the closing.

About the Company

Chardan North is a SPAC® incorporated in March 2005 for the purpose of acquiring an operating entity in the PRC. HollySys is one of the leading automation control systems providers in the PRC.

Additional information regarding Chardan North and HollySys is available in the Form S-4/A that Chardan North filed with the Securities and Exchange Commission today. A copy of the filing in its entirety is available at www.sec.gov.

A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold, nor may offers to buy be accepted, prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, about Chardan North, HollySys and their combined business after completion of the proposed acquisition. Forward-looking statements are statements that are not historical facts. Such forward-looking statements, based upon the current beliefs and expectations of Chardan North's and HollySys' management, are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China; continued compliance with government regulations; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which HollySys is engaged; cessation or changes in government incentive programs: potential trade barriers affecting international expansion; fluctuations in customer demand; management of rapid growth and transitions to new markets; intensity of competition from or introduction of new and superior products by other providers of automation and control system technology; timing, approval and market acceptance of new product introductions; general economic conditions; geopolitical events and regulatory changes, as well as other relevant risks detailed in Chardan North's filings with the Securities and Exchange Commission, and the registration statement on Form S-4 , as amended (Reg. No. 333-132826). The information set forth herein should be read in light of such risks. Neither Chardan North nor HollySys assumes any obligation to update the information contained in this press release.

In connection with the pending transaction, HLS Systems International Ltd. ("HLS Systems") has filed with the SEC a Registration Statement on Form S-4 containing a Proxy Statement/Prospectus for the stockholders of Chardan North. The stockholders of Chardan North are urged to read the Registration Statement and the Proxy Statement/Prospectus, when it is available, as well as all other relevant documents filed or to be filed with the SEC, because they will contain important information about HollySys, HLS Systems, Chardan North and the proposed transaction. The final Proxy Statement/Prospectus will be mailed to stockholders of Chardan North after the Registration Statement is declared effective by the SEC. Chardan North stockholders will be able to obtain the Registration Statement, the Proxy Statement/Prospectus and any other relevant filed documents for free at the SEC's website (www.sec.gov). These documents can also be obtained for free from Chardan North by directing a request to Lori Johnson c/o Chardan Capital, 625 Broadway, Suite 1111, San Diego, CA 92101.

HLS Systems, Chardan North and their respective directors and officers may be deemed to be participants in the solicitation of approvals from Chardan North stockholders in respect of the proposed transaction. Information regarding Chardan North's participants will be available in the Proxy Statement / Prospectus. Additional information regarding the interests of such participants will be included in the Registration Statement containing the Proxy Statement / Prospectus.

Contacts

Chardan North China Acquisition Corp.
Richard Propper, MD, Chairman, 619-795-4627
or
Investor Relations Counsel:
The Equity Group Inc.
Adam Prior, 212-836-9606
aprior@equityny.com

At A Glance

Chardan North China Acquisition Corp
Source: via Business Wire Updated 12/13/2005 by company
Headquarters:	San Diego, CA
Website:	http://www.chardancapital.com
CEO:	Dr. Richard Propper
Employees:	Not Disclosed
Ticker:	CNCA (OTCBB)
Revenues:	Not Disclosed (2005)
Net Income:	Not Disclosed (2005)

View original >>> press release

SPACs snack on chips and wafers

2007-07-31T18:25:00.000-07:00

Another special purpose acquisition company has grabbed a semiconductor firm.

Ascend Acquisition Corp., which raised $38.5 million in an IPO in May, said Tuesday it has agreed to acquire ePak Resources Pte. Ltd., a maker of chip handling equipment for semiconductor makers.

SPACs, also known as "blank check" companies, are founded without an operating business. Once they go public, they have 18 months to complete a deal using about 80% of their net assets. SPACs that fail to make an acquisition are liquidated and the cash is returned to shareholders.

Ascend was pretty vague in its S-1, originally filed in February 2006, about what industry it aimed to pursue — the filing only said it might look at the "manufacturing, services or distribution" markets.

With ePak, it gets an eight-year-old, profitable chip equipment maker, with $36.2 million in annual sales, that's been growing at a decent clip.Ascend doesn't have the tech star power of Acquicor Technology Inc., a blank-check company led by Gil Amelio, the former CEO of Apple Computer and National Semiconductor Corp. Acquicor last year announced the $260 million acquisition of Jazz Semiconductor Inc., a specialty chip wafer maker.

Read more >>> view original article @ dealblogs

SPACknowledgement and disclosure form

2007-07-26T04:46:00.000-07:00

SPECIAL PURPOSE ACQUISITION COMPANY (SPAC) INVESTMENT DISCLOSURE AND ACKNOWLEDGEMENT

TO: Granite Financial Group, Inc.
FROM: ______________________________________________
ACCOUNT NUMBER: ___________________________________
RE: InterAmerican Acquisition Company, Inc. SPAC Investment

LADIES AND GENTLEMEN:

The undersigned Authorized Agent hereby acknowledges the following information and fully understands the investment in this Special Purpose Acquisition Company (SPAC).

I hereby represent that I have completely read the preliminary prospectus and understand what a Special Purpose Acquisition Company is and what an investment in this product represents.

I understand that the proceeds of this offering will be deposited into a trust account, less the fees and costs associated with the underwriting, until a proposed business combination (proposed acquisition) is identified. I understand that I have the right to vote for or against a proposed acquisition. I understand that if 80% or less of the public stockholders vote against the proposed acquisition, my Organization’s pro rata share of the trust account will be returned to us. I understand that if more than 80% vote for the proposed acquisition and I vote against the proposed acquisition, I will be entitled to convert our Organization’s stock into a pro rata share of the trust account, including any interest earned (net of taxes payable) on their pro rata share, if the business combination is approved and consummated.

I hereby represent that I have the requisite authority to enter orders to purchase, sell or sell short securities of every kind and description for and on behalf of this Organization and to sell, assign and endorse or transfer certificates representing stocks, bonds or other securities registered in the name or for the account of this Organization.

I also represent that I have completed the IPO Certification form indicating that this Organization is eligible to purchase Initial Public Offering shares.

You may follow the instructions of the Authorized Agent in every respect concerning the undersigned’s account with you. In all matters and things aforementioned, as well as in all other things necessary or incidental to the furtherance or conduct of the account of the undersigned, the Authorized Agent is authorized to act for the undersigned and in the undersigned’s behalf in the same manner and with the same force and effect as the undersigned might or could do.

_______________________________ _________________________
Signature of Authorized Agent Printed Name of Authorized Agent
_______________________________ ________________________
Title of Authorized Agent Date

View original form

Euro-SPAC raises €115M

2007-07-19T12:10:00.000-07:00

Euronext Amsterdam Welcomes Pan-European Hotel Acquisition Company N.V. - First Special Purpose Acquisition Company Floated In Continental Europe Raises €115 Million

July 19, 2007 - Pan-European Hotel Acquisition Company N.V. (PEHAC), a special purpose acquisition company (SPAC) that invests in European hotel companies, was successfully listed today on the Amsterdam market of NYSE Euronext.

The company raised a total of €115 million in new capital from the sale of 14.375 million shares and warrants at an introductory price of €7.25 per share and €0.75 per warrant. After opening of trade the first market price of PEHAC was €7.60 per share and €0.80 per warrant. Based on a the total number of 17.375 million shares and warrants, total market capitalization of the company at opening price is €146 million.

PEHAC is the first SPAC floating on the European continent and the latest of nine listings on the Amsterdam market this year, which involved placing €2.6 billion in fresh capital. Over €19 billion in market capitalisation has been added to the Amsterdam market so far this year, more than the total additional market capitalisation for the whole of 2006. Since the beginning of the year, a total of €5.6 billion in capital has been placed on the combined Euronext markets, resulting in over €54.6 billion in additional market capitalisation.

“We are delighted to welcome Pan-European Hotel Acquisition Company N.V. to our market. Amsterdam has enjoyed a great deal of success in the area of innovative listings, such as private equity funds, hedge funds and now special purpose acquisition companies, and has become the most popular gateway to the euro market for this fast-growing segment,” said Joost van der Does de Willebois, chairman of the Amsterdam market and member of the Management Committee of NYSE Euronext.

View original article.

SPAC up the truck?

2007-07-16T14:21:00.000-07:00

“Crave Huge Risk, this investment may be for you” says a 2005 article by the New York Times. “A fools game” states another recent editorial regarding highly unknown and underappreciated investment vehicles known as SPAC’s, or Special Purpose Acquisition Corporations.

So little is known about these investments that many top tier hedge fund managers shy away from them due to their blatant uncertainty. Brokers and advisors regard them as merely tools of speculation, with one recent news article quoting a prominent broker stating “if this is your thing, just go to Vegas, your odds are the same and you’ll eat for free”.

Read more >>> Thoughts on Investing blog

Don't Get Whacked By India SPACs

2007-07-16T06:41:00.000-07:00

MUMBAI - Global investors may want in on the India story, but market professionals here are voicing concerns over a rising number of speculators in the U.S. and U.K. who are raising funds through specialized investment vehicles without strong business plans for how to make use of the money in India.

Special-purpose acquisition companies, or SPACs, are essentially blank-check entities with no operations — they go public with the promise to investors that they will use the money they've raised to acquire or merge with another company.

There are an estimated 10 India-dedicated SPACs listed mainly in the U.S. and U.K. that have raised funds ranging between $350 million and $500 million to acquire companies here.

“Is India going to get whacked by SPACs? Piggybacking on the red-hot M&A wave that India is currently riding on, I believe it’s only a matter of time,” HDFC Bank Chairman Deepak Parekh said at a conference this week. M&A volume so far in 2007 has already hit an annual record of $50 billion; Parekh believes the total will surpass $100 billion by the end of the year.

Triplecrown files for SPAC, Chairman's past raises questions

2007-07-13T07:42:00.000-07:00

Triplecrown Acquisition Corp. has filed to come public as a 'blank check' or SPAC (Special Purpose Acquisition Company). Triplecrown is a newly organized blank check company formed for the purpose of acquiring one or more operating businesses in the financial services industry.

The company is selling 40,000,000 units in a deal valued at $400 million, or $10.00 per unit. Each unit will represent one share and one warrant, and underwriters have been allocated a 6 million shares over-allotment. Citigroup is listed as the lead underwriter, with Jefferies, Ladenburg Thalman, and Broadband Capital Management involved in the deal.

Read more >>> 24/7 Wall St.

HDFC head cautions against acquisition firms

2007-07-12T11:02:00.000-07:00

HDFC Chairman Deepakh Parekh today cautioned investors against the increasing trend of setting up Special Purpose Acquisition Companies (SPACs) for raising funds on the AIM.

SPACs are essentially firms that raise money through public offerings with an objective to acquire small- and medium-sized firms focusing on a particular sector or country. The acquisitions are made within a specified timeframe or the funds are returned to the investors.

Parekh, also the chairman of the CII National Council for Infrastructure Development, was speaking at a seminar on "London Listing - Special Emphasis on AIM."

"Conventional investment wisdom or perhaps even a pea-sized brain would tell us that you do not hand over millions of dollars to a group of a publicly listed company that does nothing, has no firm business strategy and may never have any assets. Yet the impressive returns of 40 per cent is reason enough for investors to savour SPACs," he said.

He added that there were close to 10 India dedicated SPACs, that have raised funds ranging between $350 million to $500 million and were now on the prowl to acquire Indian companies. There was already an AIM-listed India dedicated SPAC, which

recently made an acquisition for $110 million.

"Clearly, this is just the beginning of sophisticated investment vehicles, but investors must also realise that the India party with extraordinarily high returns cannot go on forever," he said.

"At the same time, we must caution against reaching a pump and dump kind of situation which can undo all the good investor sentiment that has so painstakingly been built up in India." Parekh also questioned the Securities and Exchanges Board of India's (Sebi) restrictive regulations.

China SPAC seeks amendments, extension

2007-07-10T07:44:00.000-07:00

Chardan North China Acquisition Corp. Sets Meeting and Record Dates for Special Meeting of Stockholders; Calls for Extension of Date to Complete Business Combination

Company Still Working Toward Completing Acquisition by August 2007

SAN DIEGO & BEIJING--(BUSINESS WIRE)--Chardan North China Acquisition Corp. (OTCBB: CNCA, CNCAU, CNCAW) ("Chardan North" or “the Company”), a SPAC® incorporated in March 2005 for the purpose of acquiring an operating entity in the PRC, announced today that its Board of Directors has set August 7, 2007 as the date for its Special Meeting of Stockholders to consider and approve amendments to its certificate of incorporation to:

i)  eliminate the provision that purports to prohibit amending its
    "business combination" provisions;

ii)  extend the date before which Chardan North must complete a
     business combination ("Extension Amendment"), to avoid being
     required to liquidate, beyond August 10, 2007 to November 10,
     2007; and

iii) allow holders of up to 20% of the shares issued in Chardan
     North's IPO who vote against the Extension Amendment and elect
     conversion to convert their shares into cash held in the IPO
     trust account.

Read more >>> View CNCA 07-10-07 PR

Motley Fool talking SPACs: The Incredible Bulk

2007-07-09T14:10:00.000-07:00

By Toby Shute - July 9, 2007

Speaking of margin of safety, I've stolen my dry bulk shipper idea from the guy who wrote the book on the subject. In case you don't have the $1,450 to shell out on a used copy of Seth Klarman's Margin of Safety on Amazon.com (Nasdaq: AMZN), there are extensive notes presented here. Klarman runs a hedge fund called the Baupost Group, and I enjoy checking out his top holdings from time to time. The guy has turned in some world-beating results, even while reportedly maintaining massive cash balances, so his positions are always worth a peek.

I was initially surprised to discover Star Maritime Acquisition (AMEX: SEA) among the firm's largest reported holdings -- first, because I'd never heard of it, and second, because once I looked it up, I discovered that it's a blank-check company. Fellow Fool Emil Lee explained both the how's and why's of investing in these vehicles, also known as SPACs (special purpose acquisition company). I think the key phrase from those articles is "heads I win, tails I get my money back with interest." A SPAC either finds an acquisition target by a set date, or it liquidates and returns the capital to shareholders.

Read more >>> TMF "The Incredible Bulk"

See also >>> TMF Return of the SPAC: Part 1 and TMF Return of the SPAC: Part 2

Paramount announces updated Chem Rx investor presentation

2007-07-02T08:04:00.000-07:00

July 02, 2007: 08:55 AM EST

NEW YORK, July 2 /PRNewswire-FirstCall/ -- Paramount Acquisition Corp., a special purpose acquisition corporation ("SPAC"), announced today the release of an updated Chem Rx corporate presentation. The presentation includes a corporate overview and pro forma estimates and valuation pertaining to its proposed acquisition of Chem Rx, a major privately-owned long-term care pharmacy based in Long Beach, New York.

The presentation is available in the Investor Relations section of Chem Rx's website at http://www.chemrx.net. The presentation may also be found as an exhibit to Paramount Acquisition Corp.'s Current Report on Form 8-K, which is being filed today, on the SEC's website at http://www.sec.gov.

Read more >>> Paramount press release

DealBreaker.com snarks Dan Quayle, SPACs

2007-06-29T09:48:00.000-07:00

From those fun people who brought you the Solengo offering brochure... and were sued by Brian Hunter (yes, that Brian Hunter) for doing it!

Read more >>> DealBreaker.com

U.S. / U.K. lawyers team up for GLG reverse merger, largest SPAC deal ever

2007-06-27T10:45:00.000-07:00

US ally aids Olswang's hedge fund deal
by Caroline Binham
27-June-2007

The alliance with Greenberg Traurig gifted Olswang a key role on the landmark $3.4bn (£1.7bn) reverse takeover of hedge fund and Chadbourne & Parke client GLG Partners.

Olswang's US ally Greenberg was already an adviser to shell company Freedom, which, when it floated last year on the New York Stock Exchange (NYSE) and raised $528m (£265m), was the largest flotation of a special-purpose acquisition company (Spac).

Olswang won instruction on the reverse takeover of GLG through an introduction from Greenberg's New York head of corporate Alan Annex. Both firms worked on the deal for Freedom, with head of corporate Tony Leifer leading the Olswang team. Chadbourne's New York-based corporate partner Alejandro San Miguel led for GLG, heading a ten-partner team.

Leifer told The Lawyer: "We were working mostly with US lawyers in a UK context and the blend of concepts was exciting."

Read more >>> TheLawyer.com (U.K.)

U.K. hedge fund uses SPAC to gain U.S. listing

2007-06-25T10:59:00.000-07:00

GLG Partners Two-Stepping To U.S. Listing

Hedge-Fund Manager Seeks to Raise Capital And Profile via NYSE

By HENNY SENDER and ALISTAIR MACDONALD
June 25, 2007; Page C1

GLG Partners LP, the large London hedge-fund manager with a turbulent past, is engineering a two-step transaction that will make it a publicly listed U.S. company, giving it a higher profile with American investors.

The first step, to be announced today, calls for 28% of GLG Partners to be acquired by Freedom Acquisition Holdings Inc., people familiar with the matter said.

Freedom is part of a crop of special-purpose acquisition vehicles, also known as blank-check companies, that have exploded in popularity in the past year and exist solely to buy companies. Freedom trades on the American Stock Exchange and after acquiring the stake in GLG, which has $20 billion in assets under management, the merged entity plans to list on the New York Stock Exchange under the symbol GLG and expects an initial stock-market value of $3.4 billion.

As part of GLG's push to bring in more investors, GLG co-founder Jonathan Green last week sold part of his stake in the firm to an investment arm of the government of Dubai and the largest private bank in Germany, giving each a 3% stake.

Read more >>> Wall Street Journal article

See also >>> Greg Newton has a few questions @ SeekingAlpha

Indian SPAC makes restaurant acquisition

2007-06-23T15:15:00.000-07:00

India Hospitality Corp (IHC) is buying Mumbai’s Mars Restaurants from Malaysian private equity fund Navis Capital Partners. It also has the option to buy restaurant chain Nirula’s from Navis by the year-end.

IHC is a special purpose acquisition corporation (SPAC) promoted by two US-based entrepreneurs, hospitality sector investment and research analyst Jason Ader and entrepreneur-designer Andrew Sasoon, to acquire Indian businesses or assets in the hospitality and related industries.

IHC bought Mars and its sister airline catering company Sky Gourmet Catering for $110 million. Navis can also re-invest up to $75 million in IHC, which will take its stake in the company to approximately 20.7%. “This deal allows Navis to retain management control of the two companies and some shares of IHC,” said IHC India head Vivek Narayan.

Read more >>> view India Economic Times article

SPACs - the horse before the cart

2007-06-20T12:24:00.000-07:00

New York - In a recent wrinkle in the IPO market, firms are going public before having a company to take public. The financial vehicle that lets this happen is called a SPAC – Special Purpose Acquisition Company. According to an article in Monday’s Wall Street Journal (Acquisition Vehicles Gather Stream, 6/18/07), there have been 30 SPACs listed this year for a total of $3.5 billion.

If this rate keeps up, the SPAC market will double from last year’s total, when there were 40 SPACs listed for a total of $3.4 billion. Additionally, the average deal size has increased from an average of $84.5 million to $115.9 million. The largest SPAC so far was the December 2006 listing of Freedom Acquisition Holdings Inc., which raised $528 million.

Read More >>> IntegrityResearch Blog

Paramount files prelim proxy for proposed SPAC acquisition of Chem Rx

2007-06-20T10:14:00.000-07:00

NEW YORK, June 20 /PRNewswire-FirstCall/ -- Paramount Acquisition Corp. (BULLETIN BOARD: PMQC, PMQCU, PMQCW), a special purpose acquisition corporation ("SPAC"), announced the filing on June 18, 2007 of a preliminary proxy statement with the Securities and Exchange Commission (SEC) with respect to a special meeting of stockholders to be held to consider and vote upon the previously announced stock purchase agreement that provides for the acquisition of Chem Rx, a major privately-owned long-term care pharmacy based in Long Beach, New York.

Read more >>> view press release

See also >>> SPAC Talk post

Tom Hicks Wants a $400 Million 'Blank Check'

2007-06-18T12:27:00.000-07:00

Thomas O. Hicks, the owner of the Texas Rangers and a veteran of the leveraged buyout business, is seeking to raise $400 million for his “blank check” company, Hicks Acquisition. He is jumping into a crowded field: Nearly 100 blank check companies have held initial public offerings since August 2003, creating a small army of shell companies, each prowling for an acquisition target.

Also known as special-purpose acquisition companies, or SPAC’s, black check companies raise money from the public with the sole mission of buying a company — whose identity is unknown at the time of the I.P.O. In large part, investing in SPAC’s represents a bet on the deal-making prowess of the company’s founder. Other prominent figures that have gone into the SPAC business include Michael Gross, who co-founded the private equity firm Apollo Management with Leon Black, and Apple’s co-founder Steve Wozniak.

Mr. Hicks, who is 61, has been making deals for decades. From 1989 to 2004, he was chairman of Hicks Muse Tate & Furst, the private equity firm he cofounded. Now he leads Hicks Holdings, an investment vehicle that owns the Rangers baseball team, the Dallas Stars hockey team and half of the Liverpool Football Club in the United Kingdom.

In a way, Mr. Hicks’s new SPAC looks a bit like a private equity fund. Mr. Hicks himself paid a nominal sum ($25,000) for what will be a 20 percent stake in the post-I.P.O. company. (Investors, by contrast, will pay $400 million for their 80 percent stake.)

Read more >>> New York Times DealBook blog

View article >>> Star-Telegram

View filing >>> Hicks’ Prospectus via SEC

See related >>> Financial News Online: Billionaire launches $400m spac and WSJ: Acquisition Vehicles Gather Steam

It’s Hard Out There for a SPAC

2007-06-11T19:50:00.001-07:00

June 11, 2007, 1:41 pm

You might think that shopping with other people’s money would be an easy mission in life. But for the dozens of “blank-check companies” — which raise cash through initial public offerings for the sole purpose of making acquisitions — sealing the deal can take a lot of effort.

Monday’s proxy filing from Endeavor Acquisition, which agreed late last year to buy the trendy clothing chain American Apparel for $385 million, gives a glimpse of how, especially with so many well-funded private equity firms competing for deals these days, there can be plenty of failed talks on the way to a takeover deal.

Some prominent names in technology and finance have formed blank check companies, also known as special-purpose acquisition companies — or S.P.A.C.s — in the past year or so. These include Michael Gross, who co-founded the private equity firm Apollo Management with Leon Black, and Apple’s co-founder Steve Wozniak.

When they sell shares to the public, these kinds of companies usually pledge to liquidate if they don’t reach an agreement on a deal within a specified timeframe.

Endeavor’s chief executive is Jonathan Ledecky, who led a group that made an unsuccessful bid for the Washington Nationals baseball team a few years ago.

Read more >>> view original NYT DealBook blog post.

see also, M&A Prof. Blog.

Value Find: Avantair, Inc.

2007-06-07T07:20:00.000-07:00

After a bumpy ride into the public markets, shares of Avantair, Inc. (OTCBB: AAIR) could be ready to take flight.

by Matt Ragas | Jun 07, 2007 5:03am EDT

While dwarfed in size by industry leader NetJets, Clearwater, Fla.-based Avantair is the only independent, publicly traded “fractional” aircraft operator. The fractional aircraft category has exploded in growth over the past decade as more corporations and high-net worth individuals look to gain the advantages of private air travel without the hassles and costs that come with buying an entire plane outright.

Founded just four years ago, Avantair operates a fleet of 33 Piaggio Avanti P-180s, a light turboprop aircraft, which compete with light jets on a price basis, but have the cabin size of a mid-sized jet. Importantly, the Avanti uses 30%-50% less fuel than comparable jets, leading to annual operating costs that are 40% lower than its peer aircraft. The Avanti also doesn’t have the cabin noise issues of older turbo-props. Avantair is the exclusive North American provider of fractional aircraft shares in the Avanti.

Avantair quietly came public in February of this year when Ardent Acquisition Corp. (OTCBB: AACQU), a special purpose acquisition company (SPAC), acquired the operating assets of Avantair. The acquisition injected much needed additional capital into the upstart fractional operator. Ardent, which has a management team with substantial aviation industry experience, reviewed 70 potential targets before deciding upon Avantair.

Read more >>> view article @ SmallCapInvestor.com.

Shanghai SPAC acquires I.V. product mfr. Sichuan Kelun

2007-06-05T11:34:00.000-07:00

Posted on Jun 5th, 2007 with stocks: SHA

ChinaBio Today submits: Shanghai Century Acquisition Corporation (SHA), a special-purpose acquisition company, or SPAC, listed on the American Stock Exchange, reached an agreement to buy Sichuan Kelun Pharmaceutical Co., Ltd. Kelun is the largest producer of intravenous [IV] solution products in China. After completion of the deal, Shanghai Century will become known as China Kelun Pharmaceutical Corporation.

To buy Kelun, Shanghai Century will issue 20 million new shares, which are worth almost $160 million at the present price of $7.98 for Shanghai Century. Kelun and its subsidiary companies produced revenues of $176.7 million in 2006, on which the company made a profit of $14.5 million. The transaction price reflects a price-earnings ratio of 11.

PAC SPAC to acquire Long Beach-based Chem Rx

2007-06-04T09:32:00.000-07:00

Paramount Acquisition Corp. Announces Signing of Definitive Agreement to Acquire Chem Rx, an Institutional Pharmacy Leader

NEW YORK, June 4 PRNewswire-FirstCall — Paramount Acquisition Corp. (OTC Bulletin Board: PMQC, PMQCU, PMQCW), a special purpose acquisition corporation ("SPAC"), announced today the signing of a definitive agreement to acquire Chem Rx, a major privately-owned long-term care pharmacy based in Long Beach, New York.

Under the terms of the agreement, Paramount will acquire all of the outstanding capital stock of Chem Rx ("Chem Rx" or the "Company") for $133.0 million in cash, and will issue 2,500,000 shares of Paramount common stock to the selling shareholders, who will, as a group, have the largest ownership interest in Paramount based on current holdings. The selling shareholders will also be entitled to additional consideration of up to $12.5 million cash and 9,000,000 shares of Paramount common stock upon the achievement of certain financial and share price milestones between 2007 and 2011.

AIM-listed mining SPAC signs non-binding Golden Eagle deal

2007-06-04T07:37:00.000-07:00

Golden Eagle Signs Non-Binding Term Sheet for Multi-Million Dollar Sale of Buen Futuro Project, Joint Venture on Precambrian Properties and Sale of Gold Bar Mill

June 04, 2007 09:00 AM Eastern Daylight Time

SALT LAKE CITY--(BUSINESS WIRE)--Golden Eagle International, Inc. (OTCBB:MYNG) announced today that it signed a non-binding Term Sheet with Platinum Diversified Mining Inc. (“PDM”) on June 2, 2007 for: (a) the sale of its Buen Futuro gold and copper project in eastern Bolivia; (b) a joint venture on its Precambrian Properties; and, (c) an option for the sale of its Gold Bar Mill. Golden Eagle will be entitled to receive $13.5 million in cash and PDM securities as an initial payment and Gold Bar option fee; $31 million in cash and PDM securities as a production payment from the Buen Futuro project, if and when initiated, as well as warrants to purchase an additional $24 million of PDM stock, and other forms of consideration. In addition, Golden Eagle will have a 40% participation in the joint venture on the Precambrian Properties, to which PDM will contribute the first $5 million for exploration and development. Completion of the transaction is subject to the negotiation and execution of definitive agreements, satisfaction of the conditions set out in the non-binding Term Sheet, as well as other requirements discussed below.

PDM is a special purpose acquisition company (“SPAC”) formed in the Cayman Islands and listed on the London Stock Exchange Alternative Investment Market (“London AIM”). PDM raised $80 million in 2006 and began the process of seeking to acquire a suitable mining project. PDM requested the suspension of trading in its shares and warrants on the London AIM on March 14, 2007 because it had not acquired a suitable project within the one-year timeframe set by the AIM for a SPAC. However, PDM was granted a 6-month extension by the AIM until September 14, 2007 to acquire a project for approval by its shareholders. If and when the project is approved, PDM will apply for the re-admission of trading of its shares and warrants again on the London AIM.

The non-binding Term Sheet between the two companies sets out the following terms and conditions that will be further refined in definitive agreements to be negotiated between the parties by August 7, 2007:

Clal Finance to invest $60m in new US financial concern

2007-05-30T09:18:00.000-07:00

Titanium Assets Management Corp. plans to raise a gross $120 million in an IPO on AIM.

Amir Keidan 30 May 07 15:31

Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) subsidiary Clal Finance Batucha Ltd. (TASE:CLFN) has committed to invest $60.6 million in Titanium Assets Management Corporation of the US. Clal Finance is using proceeds from its IPO in March to finance the investment.

Clal Finance said that Titanium Assets was incorporated in February 2007 and is preparing for an IPO on London’s Alternative Investment Market (AIM). It is a Special Purpose Acquisition Corporation (SPAC), whose strategy is to acquire one or more asset assets under management (AUM) companies, such as mutual funds and portfolio management companies. The company will initially focus on acquiring companies in the US, and will later seek target companies around the world.

Clal Finance added that it expected that Titanium Assets would offer no more than 20 million units at $6 per unit for total gross proceeds of $120 million. Clal Finance committed to the purchase of 10.1 million units, which will give it control of the corporation.

Published by Globes [online], Israel business news - www.globes.co.il - on May 30, 2007.

View original article.

SPAC specialist joins Mintz-Levin

2007-05-22T10:50:00.000-07:00

Mintz Levin Expands Private Equity Practice with Addition of Len J. Nannarone

Firm’s Corporate Expansion Continues with Addition of Nationally-Recognized Private Equity Attorney

BOSTON--(BUSINESS WIRE)--Prominent private equity attorney Len J. Nannarone, who has represented many of the country’s leading investment firms, has joined the Boston office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC as a Member in the firm’s Corporate Section.

Formerly a partner at Greenberg Traurig and in-house counsel to Intel Capital, Mr. Nannarone brings an extensive background representing major private equity firms, including The Blackstone Group, in acquiring target companies as well as serving as general counsel to their portfolio companies.

Mr. Nannarone is joined by Mathew C. McMurdo. Mr. McMurdo, formerly with Greenberg Traurig, joins as Of Counsel and will be based in the firm’s New York office. His practice focuses on general corporate and securities law. In addition to representing underwriters and issuers in public and private offerings, Mr. McMurdo has extensive experience in PIPE transactions and in representing underwriters in SPAC (special purpose acquisition corporations) public offerings.

SPACs: Dazzling Profits, Exceptional Risk

2007-05-21T11:01:00.001-07:00

Euromoney - June 2006, Pgs. 82-87

by: Helen Avery

No assets, no product, no business plan. The special purpose acquisition company (SPAC) exists for the sole purpose of receiving investors' money so it can go acquire some sort of a company. The chosen target is not part of a well-defined strategy with a particular purpose in a broader business plan. In fact, the publicly traded SPAC has no business plan and no assets, apart from what it can convince investors to give it. American and British investment bankers, hedge funds, and other professional investors have quietly socked $3 billion into SPACs since they initially listed on the American Stock Exchange and the OTC Bulletin Board in August 2003, the first of 50 SPACs listed in the United States. In the United Kingdom, SPACs are beginning to show up on the Alternative Investment Market (AIM). Helen Avery thought that canny professional investors would give SPACs a wide berth, but she now knows otherwise. Investors have turned millions over to these cash shells in the hopes that the SPAC might find a lucrative acquisition.

Dazzling potential profits. Certainly one lure is the SPAC's potential for dazzling profits, the author notes. Origen Agritech, a 2004 SPAC underwritten by SPAC pioneer EarlyBirdCapital, has generated a total return of 595%. EarlyBirdCapital has put together other deals with over 100% in total return. This upside potential has led many hedge funds and some mutual funds to pump millions into SPACs, although almost no one is willing to discuss the matter publicly. Not all SPACs make money, of course, and most have total returns in the single or low double digits. More worrisome is the tendency for returns to decrease over time. Flipping early will generate the highest return, but the total number of shareholders per SPAC indicates that retail investors have crept into the investor mix. "Buyer beware" may be reasonable for institutional investors, but regulators demand greater safety for retail investors.

read more >>> view article at Bowne Securities Connect.

Abstracted from Euromoney, published by Euromoney Institutional Investor Publs., Nestor House, Playhouse Yard, London EC4V 5EX, England. http://www.euromoney.com.

Business Buffet

2007-05-21T10:50:00.000-07:00

When hungry investors want to make a meal of a company, they can pool their millions in something called a SPAC

By Kit R. Roane

You may think that "SPACs" sound like something to keep your feet dry or the kind of gift sure to be returned. But for investors hoping to make a killing on a leap of faith, special purpose acquisition companies are hot commodities.

SPACs are publicly traded shell companies, meaning they have no business operations and exist as little more than a name until investors pump money into them. The payoff comes if a SPAC's management team is savvy enough to purchase an undervalued private company within a specific field--like shipping--and then run it successfully as a public company. In a perfect world, that private company would be bought at a fraction of what it is later valued at on the public market.

Such investment vehicles have been luring some big names. Steven Berrard, the former CEO of Blockbuster Entertainment Group, now heads a SPAC called Services Acquisition Corp. International, and Apple Computer cofounder Steve Wozniak is helping shepherd another SPAC called Acquicor Technology. A few top banks have also begun underwriting the deals, including Citibank and Deutsche Bank. The latter recently priced a 20 million-share offering for a real-estate SPAC called Cold Spring Capital, raising $120 million

In all, more than 50 SPACs filed to go public in 2005. About half of these, including Cold Spring Capital, have made it to market, raising around $1.2 billion that can be used for acquisitions. By comparison, only 11 deals went public in 2004, and those raised less than $500 million.

read more >>> this story originally appeared in the January 30, 2006 print edition of U.S. News & World Report.

Global Logistics Acquisition Corp. to Acquire The Clark Group, Inc.

2007-05-21T10:09:00.000-07:00

2007-05-21 8:15 AM

NEW YORK, May 21 /PRNewswire-FirstCall/ -- Global Logistics Acquisition Corporation ("GLAC"), a specified purpose acquisition corporation (a SPAC), today announced that it has reached a definitive agreement to acquire The Clark Group, Inc. ("Clark"), a closely held provider of mission- critical supply chain solutions to the print media industry, for $75 million.

Under terms of the agreement, GLAC will acquire Clark, based in Trenton, NJ, for $72.5 million of cash and issue 320,276 shares to certain shareholders. Clark is majority owned by members of the Anderson family and

individuals associated with Anderson companies. The transaction is subject to the review of the Securities and Exchange Commission, shareholder approval, and other customary closing conditions. Assuming conditions are met, GLAC anticipates completing the transaction in the third quarter of 2007.

Over its 30-year history, Clark has built a position as the leading independent provider of value-added distribution, transportation management, and international air and ocean freight forwarding services to the print media industry. The Company's asset-light business model has enabled Clark to increase revenues and EBIT while requiring minimal capital investment. In 2006, Clark generated revenue of $77 million.

Ladenburg underwrites $2.8B in SPAC offerings since 2005

2007-05-19T12:25:00.000-07:00

Ladenburg Thalmann Reports First Quarter 2007 Financial Results

MIAMI, Fla.--(BUSINESS WIRE)--Ladenburg Thalmann Financial Services Inc. (AMEX: LTS) today announced financial results for the first quarter ended March 31, 2007.

In the first quarter of 2007, the Company had revenues of $15.9 million and net income of $874,000, or $0.01 per basic and diluted share. This compares to revenues of $14.8 million and net income of $4.7 million, or $0.03 per basic and diluted share, in the comparable 2006 period, which included a $4.8 million gain from the sale of the Company’s New York Stock Exchange (NYSE) membership in the first quarter of 2006. Excluding this one time gain, first quarter 2007 revenues increased $6.0 million, or 60%, and net income rose by $921,000 from the prior-year period. The first quarter 2007 results include non-cash compensation expense of $1.3 million, while the first quarter 2006 results include non-cash compensation expense of $0.7 million and the $4.8 million gain from the sale of the NYSE membership

Blind Confusion

2007-05-17T20:36:00.000-07:00

Shlomo Reifman 05.17.07, 6:00 PM ET

Business development companies (BDCs) are often confused with Special Purpose Acquisition Companies (SPACs), also known as "blank check" companies or "blind pools." These have a bad reputation because "the lifespan of a typical SPAC is usually not long or successful," says BB&T Capital Markets' Vernon Plack.

Unlike BDCs, which already have an investment portfolio at least partly in place before they have a public offering, SPACs typically come to market as empty shells, but with plans to buy and operate one or more companies in a particular sector. Plack prefers to see a prior history so that "you're not just handing $100 million to someone with no track record."

SPACs also tend to use leverage in their acquisitions. A recent example is Ad.Venture Partners, run by former Net2Phone Chief Executive Howard "Howie" Balter. Last August it raised $54 million, and in March it acquired 180 Connect, a company that installs and integrates home entertainment and communications devices.

According to Dealogic, since the start of 2004, underwriters brought 106 SPACs to market, in offerings worth $8.5 billion. These stocks have a relative-to-market performance of 105 (where 100 means matching the S&P) from their offering value until the end of April this year.

read more >>> view article and SPAC performance tables.

CNBC on "blank check" IPOs

2007-05-16T12:50:00.001-07:00

Blank check IPOs, shell companies that promise to invest your money, but without saying what they'll invest in, with Michael Connors, Information Services Group chairman & CEO; Jennifer Reingold, Fortune Magazine senior writer and CNBC's Carl Quintanilla

View CNBC video.

‘Blank-Check’ firms gain favor

2007-05-16T12:21:00.000-07:00

Buyout Vehicles Going Public Score Hit With Investors

By YVONNE BALL April 23, 2007; Page C5

They have no operating assets, and there is no guarantee they will find any, but blank-check companies are growing in popularity after a quarterly record 17 of them went public in U.S. markets in the first three months of this year.

Also known as special-purpose acquisition companies, or SPACs, blank-check companies are essentially empty shells that promise to buy a business with the proceeds from their initial public offerings of shares.

Their popularity has been rising since 2004 when only 13 went public, raising $483.6 million, according to data tracker Dealogic.

That grew to 30 in 2005 and 40 last year, raising $2.1 billion and $3.4 billion, respectively.

Already this year, 20 blank-check companies have gone public, including three last week. Together, they have raised $2.1 billion. The average size of the deals in the past four months is about $107 million, with the largest belonging to Stamford, Conn.-based Information Services Group Inc.'s $259 million IPO. As the name suggests, the company intends to scour the information-services industry, including business, media, marketing and consumer information, for potential acquisitions.

Despite first-day returns averaging 0.1%, which may not be that surprising given that these companies have no real businesses, their popularity appears likely to continue. Since November, 12 more have filed paperwork to go public with plans to raise $1.5 billion, according to Dealogic.

As their numbers continue to grow, so too is their credibility, according to Michael Kollender, a managing director at financial-services firm Stifel Nicolaus. He has no connection to any SPACs.

"The market is certainly much more mature than it has been," he said. "There are much larger firms investing in and managing the SPAC IPOs."

Citigroup, Merrill Lynch and Deutsche Bank are prominent Wall Street firms that have underwritten some of the deals.

read more >>> view article.

Media execs give SPACs a boost

2007-05-16T12:10:00.000-07:00

Former Media Executives Give New Life to ‘Blank Check’ Corporations

An obscure financing technique called “special purpose acquisition corporations,” or SPACs, are increasingly being used as an alternative to private equity.

Time was that former media executives were offered consulting contracts, partnerships at private equity firms or book deals. Now, they are being offered a blank check.

Over the past several months, new shell companies led by former senior executives of companies like Time Warner, ABC, RCN, DirecTV and VNU have raised hundreds of millions of dollars on the stock market in low-profile deals using an obscure but growing financing technique called “special purpose acquisition corporations,” or SPACs.

SPACs have been gathering steam over the past two years as an alternative to private equity as Wall Street firms like Deutsche Bank, Citigroup, Merrill Lynch and Lazard have begun underwriting them.

The catch in these deals is that investors do not actually know what their money is going to be spent on when they buy shares — hence the “blank check” designation given by the Securities and Exchange Commission.

In return, the founders — who include such media veterans as Herbert A. Granath and Eddy W. Hartenstein — put their own money and reputations on the line. But, they can’t spend the millions raised without first getting the approval of a majority of the shareholders.

Last month, a company called Media & Entertainment Holdings led by Mr. Granath, the longtime ABC executive and former chairman of ESPN, raised $100 million by selling shares and warrants. In February, another SPAC called Churchill Ventures raised $108 million. Its chief executive, Christopher Bogart, is a former general counsel of Time Warner and chief executive of Time Warner Cable Ventures.

read more >>> view article.

Blank checks are hot tickets

2007-05-16T12:04:00.000-07:00

Liz Moyer 12.20.05, 7:39 AM ET

New York -Blank check companies are proliferating, though just eight of the several dozen that have been formed have remotely succeeded in their original missions.

These companies -- shells, really, that promise they will take investors' money and use it to buy real companies -- are effectively Wall Street's Wild West.

There are 39 of these companies in registration to sell shares to the public, including 32 that have filed with the Securities and Exchange Commission just since July 1. Several are seeking listings on the American Stock Exchange, where four already trade. The total capital expected to be raised in these stock offerings is nearly $3 billion.

They are also popping up in Europe, where two have begun trading on the alternative marketplace of the London Stock Exchange (which, incidentally, is itself publicly traded).

But investors, mainly value fund investors, hedge funds and high-net-worth individuals, aren't getting much for their money. These blank check companies, also known as special purpose acquisition corporations, have no operations or businesses. Instead, they are set up with the support of private equity investors with the goal of acquiring a business within a specific time frame.

In most cases, the name of the CEO is all a SPAC has going for it. On Friday, Star Maritime Acquisition Corp. raised $188 million in its listing on the American Stock Exchange. It is run by a group of executives who have a high profile in the shipping business, though they aren't necessarily household names. Its chief executive is Prokopios Tsirigakis.

Also on Friday, shares of Boulder Specialty Brands joined the crowd of SPACs that trade on the over-the-counter bulletin board market, or pink sheets, where most of them are to be found. The Longmont, Colo., company run by chief executive Stephen Hughes, a food industry executive, raised $136 million.

Among those in registration and preparing for a listing on the American Stock Exchange: Endeavor Acquisition Corp., run by Eric Watson, a New Zealand investor, and Jonathan Ledecky, a private equity manager and the founder and former chief executive of US Office Products. Endeavor's board of directors includes Edward Mathias, the founder of buyout shop Carlyle Group. It is looking to raise $200 million.

Then there is Acquicor Technologies, founded by former Apple Computer executive Steve Wozniak and others and looking to raise $150 million to buy in the technology, multimedia and networking sectors.

Around since the 1990s, SPACs have exploded in popularity in the last couple of years as hedge funds and other institutions and individuals scour for the next great thing that has gone unnoticed by Wall Street. They are raising far more than the $20 million to $50 million that used to be typical, and they are attracting the interest of deal makers at large investment banks, like Citigroup and Deutsche Bank--a niche where boutiques once dominated.

Citigroup underwrote the Boulder Specialty deal, along with Roth Capital. Deutsche Bank is the underwriter behind a pending $150 million IPO being arranged for Grubb & Ellis Realty Advisors, which aims to buy commercial real estate properties.

Apple co-founder "Woz" launches SPAC

2007-05-16T11:55:00.000-07:00

Former Apple execs, including Woz, launch "blank-check" company, Acquicor

Wozniak (credit)

Here's our story in the Mercury News today about the trio of former Apple Computer executives who are riding on the reputation of the famous company's brand, and have created a new shell public company, Acquicor, that will shop to acquire technology properties.

Acquicor is quite an extraordinary story, for a few reasons. It is led by former Apple Chief Executive Gilbert Amelio, who was ousted from Apple in 1997; co-founder Steve Wozniak, who is now an entrepreneur running a Mountain View wireless start-up called Wheels of Zeus (WOZ); and Ellen Hancock, who was chief technology officer, also until 1997.

First reason it is remarkable: Acquicor raised $150M yesterday in its IPO, even though these three folks are the company's only employees. The company is a so-called blank-check company, meaning it will basically write checks for technology assets. Its credibility rests entirely on the reputation, experience and network of the three executives.

Second reason it is remarkable: These guys are already leading extremely busy lives. Read our story, although we didn't have enough space in our Merc story to list all of their jobs and board seats. Read the SEC prospectus for full details. Amelio, the CEO, has a full time job as CEO of another company (perhaps he is trying to keep up with Steve Jobs, who is now CEO of Apple and, until Disney's acquisition, CEO of Pixar?)

Third reason it is remarkable: The execs are indeed big names, and each one of them are undoubtedly highly respected, but how much have they really proven recently? It is noteworthy how former success here in Silicon Valley can live on in perception. There is a saying among reporters in the news business: "You're only as good as your last story." In former days, some veteran reporters just got so "tired" in their later years that people began to wonder how good these icons really were -- even if they'd written brilliant stories during their dashing youth. Of course, technology is a different business. And we are not saying here that these three are tired. It is just that usually a public company has to jump through quite a few hoops on the way to prove itself, and its management. Sales, for one, would be nice. In this case, no sales. And Apple's phenomenal success with the iPod, a product ushered in under Steve Jobs, is a relatively new phenom. People forget Apple was struggling back in the late 1990s. To be fair, Amelio's ouster from Apple may have perhaps been more to do with a cultural misfit. But for these three to be making strategic technology decisions in a world that is vastly different than when they cut their teeth two decades ago, and with so little proof that they can work now as a team, makes us muse.

Posted by Matt Marshall on March 15, 2006 8:19 AM

View article.

See related article, "Watch the SPAC trend."

The IPO gets edgy

2007-05-15T14:58:00.000-07:00

What's trendy on Wall Street? Shell "companies" that go public with no business plan other than to buy an existing brand with shareholders' money, says Fortune's Jennifer Reingold.

By Jennifer Reingold
Fortune senior writer

February 7 2007: 6:48 AM EST

(Fortune Magazine) -- Dov Charney, CEO and founder of American Apparel, has never been much of a traditionalist. He produces his casual clothes in the U.S. when virtually all his competitors offshore them. His ad campaigns look more like nudie mags than the Neiman Marcus catalog. So it should come as no surprise that Charney has managed to take his company public using an edgy technique that, like some of his ideas, is fast becoming trendy.

On Dec. 18, 2006, Charney said he was selling American Apparel to an already-public company called Endeavor Acquisition (Charts) for $384.5 million in restricted stock, cash and debt. Endeavor is a SPAC, or special purpose acquisition company - an entity that has gone public for the sole purpose of buying another company in the future.

According to Dealogic, 87 SPACs have begun trading in the U.S. since the end of 2003, buying some well-known companies like smoothie purveyor Jamba Juice. Last year alone, 40 SPACs worth $3.4 billion were announced, up from $484 million two years earlier.

SPACs are essentially shell companies. They go public with little more to show investors than a management team and an agreement that the money raised will be used to fund an acquisition in a particular sector, such as retail, or in an emerging market like China. Ergo, a SPAC is a roll of the dice.

"Imagine paying $50 to go to a Broadway show, and you have no idea what's behind the curtain," says lawyer Mitchell Littman of Littman Krooks LLP, who works with a lot of SPACs. "You are relying on the fortune and integrity of the management team." Once a deal is completed, the SPAC's managers (who typically receive 20 percent of the public shares as compensation) are free to sell their holdings, usually after a lockup period.

Today's SPAC boom harkens back to the flurry of "blank check" companies that sprang up in the 1980s. Those were widely discredited by a wave of scams in which fraudsters would take a shell company public, announce a merger, pump the stock and then dump it before everyone realized that the hot target company was anything but. Investors have a lot more protection with SPACs, which must hold almost all the money in escrow until a deal is done.

From Charney's perspective, there is no downside to the arrangement. It lets him raise cash relatively quickly, remain the largest shareholder and avoid having to sell other investors on his vision until after his company is already publicly traded.

Media SPACs on the rise

2007-05-15T14:34:00.000-07:00

For media acquisitions, the rise of the 'blank check'

By Richard Siklos

Thursday, April 26, 2007

NEW YORK: It used to be that former U.S. media executives were offered consulting contracts, partnerships at private equity firms or book deals. Now, they are being offered a blank check.

Over the past several months, new shell companies led by former senior executives of companies like Time Warner, ABC, RCN, DirecTV and VNU have raised hundreds of millions of dollars on the stock market in low-profile deals using an obscure but growing financing technique called "special purpose acquisition corporations," or SPACs.

SPACs have been gathering steam over the past two years as an alternative to private equity as Wall Street firms like Deutsche Bank, Citigroup, Merrill Lynch and Lazard have begun underwriting them. The catch in these deals is that investors do not know what their money is going to be spent on when they buy shares - hence the "blank check" designation given by the Securities and Exchange Commission.