The SPAC Report - May 2008

Sponsors Hope to Recoup Value, Attorneys Warn of Pitfalls

Liquidating the trust fund is no longer the definitive curtain call for SPACs. Several such companies have made the decision to forge ahead without their escrowed funds, in search of deals, using their shell company status as bait.

So far, four SPACs have attempted to survive after liquidation, one of which, Global Services Partners, has successfully completed a deal with the same company that its shareholders had originally voted down.

Deal Structure No Substitute for Strong Targets

Dealmakers are working hard to change deal structures and attract fundamental investors at the IPO stage in order to improve the dormant SPAC market. Heckmann Corp.'s $625 million purchase of China Water and Drinks could free up investor capital to catalyze these developments.

Heckmann announced on May 20 plans to use $455 million in stock and $170 million in cash to acquire the China-based bottled water company. Several people at investment banks active in the SPAC market are hopeful that the Heckmann purchase will put much-needed capital back in the hands of investors.

Heckmann Corp., a $433 million SPAC, said on May 20 that it agreed to purchase China Water and Drinks for a total consideration of $625 million.

China Water has been trading on the Bulletin Board since securing $30 million in institutional financing led by Pinnacle Group as part of a reverse merger in June 2007. It raised an additional $50 million in convertible notes this January in a deal led by Goldman Sachs.

• Creative SPAC-like Structures Emerge in Stalling Market
• Bank to Unveil New Promote Structure
• Affinity Media Alters Deal Terms, Investors Still Cautious
• New AIM SPAC Brings in Israeli Investor
• GSC Warrants Jump on Deal Announcement
• Heckmann First SPAC to List on NYSE
• Shine Media Hires Bankers to Push Through Merger
• Fortissimo Shareholder Critical of New Deal Valuation
• Hirings & Firings

• SPAC Tracker
• SPAC IPOs in Registration