SPAC Squeeze Play for Cubbies?

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.

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View related >>> No Bonds for Hammerin' Hank

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

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

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).

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See also: IPO Spotlight: SPAC heyday slows down

PUNK'D SPAC Suffers From Kutch-lash?

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

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."

Read more >>> CNN

Nasdaq-Amex SPAC-down!

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?

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