The SPAC Report - June 2008

Prime Brokers Treat SPACs as Second-Class Investment

Phil Goldstein, founder of hedge fund Bulldog Investors, says the biggest problem facing SPACs isn't being talked about: the difficulty investors face obtaining credit to buy SPAC stocks.

Goldstein spoke on June 4 at The SPAC Conference 2008, hosted in New York by DealFlow Media.

Management Tests Limits with Last Minute Buy-outs

In a market that hasn't been friendly to SPAC IPOs or business combinations, deal designers are taking a harder look at Regulation M and how it could bring additional regulatory scrutiny to acquisitions.

If Securities and Exchange Commission staff unexpectedly decide that Reg M is applicable to part of a transaction, deals could suffer costly delays as players struggle to meet disclosure requirements and assess new liabilities. Reg M governs issuers' actions in securities offerings. Delays are particularly unwelcome this year, when many SPACs have liquidated and Goldman Sachs' recent effort, Liberty Lane Acquisition Corp., fizzled out before its IPO.

Market Punishes Former SPACs and New SPACs Alike

Sources close to SPAC sponsor Terrapin Partners fear that raising funds for its latest two offerings will be difficult on the heels of the firm's previous SPAC acquisitions, which have suffered depressed stock prices.

Terrapin, a Santa Barbara, Calif.-based hedge fund and private equity shop, intends to raise a combined $600 million with Aldabra 3 Acquisition Corp. and Aldabra 4 Acquisition Corp., according to initial registration statements filed with the Securities and Exchange Commission in December. Both are slated to be underwritten by Citi, Lazard Capital Markets, and Pali Capital.

• SPAC Market Shows Signs of Life
• Mergers with Pre-Profit Companies Buck Convention
• New HCM Structure Aims to Align Disparate Interests
• Jazz Sale Ends Poor SPAC Run
• Shareholders Nix Hotels at Home Merger
• Community Bankers Seals the Deal
• Hirings and Firings

• SPAC Tracker
• SPAC IPOs in Registration