SPACs are coming back.
Five SPACs with sports figure leadership have filed amended prospectuses for IPOs overnight, a sign that blank check companies are getting through the revised paperwork necessitated by a Securities and Exchange Commission crackdown that started in April.
Headlining the slate of revised filings is Trine II Acquisition, a Leo Hindery-led SPAC seeking a media business. The Trine II SPAC first filed in February for an IPO. Hindery is a co-founder of the YES Network, the New York regional sports network launched by the Yankees. Trine II’s filing shows the SPAC spent much of the four months since its initial IPO filing reacting to SEC’s guidance that some SPACs need to account for warrants as liabilities on their balance sheet, depending on how the company’s warrant language is constructed. Among the fresh language in the Trine II document: that sponsor warrants will be a $20.8 million liability on the SPAC and that such a cost is an additional risk factor to consider, because target companies may prefer a SPAC where warrants aren’t a liability. Interestingly the SPAC adjusted its unitholder warrant offering, from one-third of a warrant per $10 unit at the IPO to one-quarter of a warrant. Previously, reducing warrants in the unit was seen as aggressive pricing. The first Trine SPAC merged with 3-D printing firm Desktop Metals in December.
The SEC guidance on SPAC warrants coincided with SPAC investors backing away from investing in the businesses, after bad merger deals led to PIPE investors carrying losses on their books. Since that time, the flow of SPAC IPOs has slowed dramatically, with “just” 54 new SPACs filing for IPOs since the SEC crackdown, according to data from SPACalpha, a research firm. That still leaves 637 new blank checks created in 2021. According to the Sportico Sports SPAC Tracker, there are 139 active SPACs either looking for a sports business target or involving the leadership of a sports executive or athlete.
Four other SPACs filed amended returns last night.
Belong Acquisition, featuring media personality and former NFL linebacker Dhani Jones and DraftKings CFO Jason Park as board members, submitted an amended filing for a $150 million IPO. The business seeks a software, e-commerce and/or digital media business. Belong is led by Jennifer Deason, who previously was an executive at various direct-to-consumer businesses. Belong says in the filing it is developing a “scout” network to hunt down deals.
Former tennis pro Grady Burnett and his Macondray Capital Acquisition I seek $250 million in an amended filing to their original May paperwork. The SPAC seeks a software, data and technology, media, telecom (TMT) target. Burnett became a venture capitalist after his sports career and cofounded Bow Capital, a VC firm led by Vivek Ranadivé, a part owner of the Sacramento Kings. Serving as Macondray’s co-CEO, alongside Burnett, is Lance Conn, who was president of Vulcan, the family office of the now-deceased Paul Allen, who owned the Seattle Seahawks and Portland Trail Blazers through Vulcan.
The publicly traded display advertising business Lamar Outdoor is sponsoring its own SPAC, Lamar Partnering, focused on finding a target in the digital advertising arena or similar business. Ian Dallimore, who has specialized in sports marketing and events for Lamar since 2004, is a member of the SPAC’s investment committee. Barry Frey, who led media for the NBA under David Stern, is an independent director. The Lamar SPAC wants to raise $300 million.
Former New York Jets president and NFL executive Neil Glat is an independent director of NewHold Investment II, a SPAC that originally filed for its IPO in March. The blank check seeks $175 million to acquire a company in industrial technology. It’s the same business plan as the first NewHold SPAC, which is closing a merger with Evolv Technologies, an A.I.-powered touchless screening system that seeks to replace airport-style metal detectors.
In addition to the sluggish SPAC IPO market, only a handful of sports SPACs have inked deals in recent months, including Sports Entertainment merging with Super Group and Pittsburgh Penguins owner Ron Burkle creating a European sporting goods retailer through business combinations with his Yucaipa SPAC.
(This story has been corrected in the seventh paragraph to note that Vivek Ranadivé is part-owner of the Sacramento Kings, and not the Golden State Warriors.)