Gensler's SEC Announces Its Presence in SPAC Land

In a big moment for SPACS, the SEC and new Chairman Gary Gensler handed down an $8 million fine as part of a settlement with SPAC Stable Road Acquisition Corp (SRAC) and its target Momentus.
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Yesterday the SEC dropped a bombshell on SPAC Land as it, and new Chairman Gary Gensler, handed down an $8 million fine as part of a settlement with SPAC Stable Road Acquisition Corp (SRAC) and its target Momentus. Momentus' former CEO Mikhail Kokorich was not part of the settlement, and the SEC is continuing litigation against him. 

This is a BIG moment for SPACs. Many will, and should, welcome this as a sign that the SEC will enforce proper regulation around SPACs and ensure a level playing field for all. However, a subset of participants, mostly deal makers, will view this as the start of a closing window of opportunity to take advantage of the unique advantages that SPACs currently have in terms of risk/reward for them.

Specifically on this SEC action, they found that the SPAC, its sponsor SRC-NI, and both CEOs are culpable of misleading investors ahead of their proposed business combination. As part of the findings the SEC alleges that SRAC did not conduct sufficient due diligence on the result of Momentus' in-space test and downplayed the level of national security risk posed by Kokorich.

The order finds that Momentus and Kokorich also misrepresented the extent to which national security concerns involving Kokorich undermined Momentus’s ability to secure required governmental licenses essential to its operations. In addition, the order finds that Stable Road repeated Momentus’s misleading statements in public filings associated with the proposed merger and failed its due diligence obligations to investors

Terms of the settlement include:

- $7 million fine for Momentus
- $1 million fine for Stable Road Acquisition
- $40k fine for Stable Road CEO Brian Kabot
- Forfeiture of 250,000 founder shares for SRAC sponsor SRC-NI
- Option for PIPE investors to cancel their subscriptions

The fallout from this won't be known for some time, but it is clearly 1) a stern warning to other SPACs that the SEC will actually come down hard on SPACs who mislead investors on financial/company projections and take an easy road out on DD, but also can 2) perhaps provide comfort to future SPAC investors that SPACs & sponsors will take more care into future due diligence processes.

SRAC / Momentus Revisions

ICYMI last month, SRAC announced revised merger terms in which they slashed Momentus' forecasts and nearly halved the original proposed valuation of the company from $1.2B to $700M. In addition, they significantly pushed out their target flight plan from 2021 to June 2022.

The market actually responded positively to the news that day (half off for Momentus?) - but the markets clearly aren't responding as positively today. SRAC was down 4.88% today and falling more in after-market trading.

Tuesday's Deal Announcements

Tuesday's deals had mixed results. Ivanhoe Capital (IVAN) fell 4.30% on its announced deal with SES Holdings and CBRE Acquisitions (CBAH) rose 1.12% on its announced deal with Altus Power. 

July SPAC Merger Votes

Both votes on Tuesday passed. LCY had no redemptions and we're waiting for details on AONE. In a bad sign, AONE dropped almost 10% on the day.

Three more votes are set for today, Wednesday the 14th:

Jul 14 | $ 9.08 | SBG - Sandbridge Acquisition Corporation --> OWLET BABY CARE INC.
Jul 14 | $ 10.08 | EMPW - Empower Ltd --> Holley
Jul 14 | $ 9.75 | GXGX - GX Acquisition Corp --> Celularity Inc.

And, the rest of July is packed with merger votes as well:

Jul 15 | $ 10.15 | DCRB - Decarbonization Plus Acquisition Corp --> Hyzon Motors Inc.
Jul 15 | $ 9.83 | NHIC - NewHold Investment Corporation --> Evolv Technology
Jul 16 | $ 10.12 | FGNA - FG New America Acquisition Corp --> OppFi
Jul 19 | $ 10.23 | ANDA - Andina Acquisition Corp. III --> Stryve Foods, LLC
Jul 20 | $ 14.62 | GHVI - Gores Holdings VI Inc --> Matterport, Inc.
Jul 20 | $ 13.88 | PSAC - Property Solutions Acquisition Corp --> Faraday Future
Jul 20 | $ 9.97 | ACND - Ascendant Digital Acquisition Corp --> Beacon Street Group
Jul 20 | $ 9.98 | TWND - Tailwind Acquisition Corp --> QOMPLX, Inc.
Jul 20 | $ 9.97 | RAAC - Revolution Acceleration Acquisition Corp --> Berkshire Grey
Jul 21 | $ 12.43 | THCB - Tuscan Holdings Corp. --> Microvast, Inc.
Jul 21 | $ 9.98 | VCVC - 10X Capital Venture Acquisition Corp --> REE Automotive Ltd.
Jul 21 | $ 12.30 | CMLF - CM Life Sciences Inc --> Sema4
Jul 22 | $ 25.91 | CCIV - Churchill Capital Corp IV --> Lucid Motors
Jul 27 | $ 9.96 | ROCC - Roth CH Acquisition II Co. --> Reservoir Holdings, Inc.
Jul 27 | $ 9.97 | CAP - Capitol Investment Corp V --> States Title Holding, Inc.
Jul 28 | $ 9.99 | NEBC - Nebula Caravel Acquisition Corporation --> Rover
Jul 29 | $ 9.98 | DGNR - Dragoneer Growth Opportunities Corp --> CCC Information Services Inc.
Jul 29 | $ 9.97 | RTPZ - Reinvent Technology Partners Z --> Hippo Enterprises Inc.

SPAC IPOs Holding Up

Despite the general oversupply of SPACs and most pre-deal SPACs being meaningfully below, the latest vintage of SPAC IPOs continue to (mostly) hold their ground around NAV. In part this shouldn't be a surprise as a number are from well regarded / exciting sponsors such as Chamath / Social Capital and Elliott Management

$ 9.93 | GWII - Good Works II Acquisition Corp.
$ 10.01 | GLTA - Galata Acquisition Corp
$ 10.05 | ACRO - Acropolis Infrastructure Acquisition Corp.
$ 10.01 | ALCC - AltC Acquisition Corp.
$ 10.05 | RICO - Agrico Acquisition Corp.
$ 9.96 | FICV - Frontier Investment Corp
$ 10.00 | CORS - Corsair Partnering Corporation
$ 10.10 | GGGV - G3 VRM Acquisition Corp.
$ 10.02 | DRAY - Macondray Capital Acquisition Corp. I
$ 9.97 | DNAD - Social Capital Suvretta Holdings Corp. IV
$ 10.00 | DNAB - Social Capital Suvretta Holdings Corp. II
$ 9.98 | DNAC - Social Capital Suvretta Holdings Corp. III
$ 10.00 | DNAA - Social Capital Suvretta Holdings Corp. I
$ 9.98 | MCAF - Mountain Crest Acquisition Corp. IV
$ 9.93 | THCP - Thunder Bridge Capital Partners IV, Inc.
$ 10.02 | EOCW - Elliott Opportunity II Corp.

Elsewhere in SPAC Land

  • Per Bloomberg, Alex Rodriguez's SPAC, Slam Corp (SLAM) is discussing a potential merger with Italy's Panini Group. The deal for the sports memorabilia company could be valued around $3B.
  • Lucid and CCIV held an investor call and released an updated investor deck. It notes that Lucid Air reservations not total over 10,000 and it reiterated its target for 20k vehicles in 2022.

Tuesday's SPAC Movers

Biggest Gainers

1.99% ~ $ 10.24 | AHAC - Alpha Healthcare Acquisition Corp (Announced)
1.53% ~ $ 9.95 | TIOA - Tio Tech A (Pre-Deal)
1.50% ~ $ 10.15 | DCRB - Decarbonization Plus Acquisition Corp (Announced)
1.32% ~ $ 9.98 | FTCPA - FTAC Parnassus Acquisition Corp. (Pre-Deal)
1.25% ~ $ 9.73 | ADRA - Adara Acquisition Corp. (Pre-Deal)
1.23% ~ $ 9.84 | LHAA - Lerer Hippeau Acquisition Corp (Pre-Deal)
1.23% ~ $ 11.50 | MUDS - Mudrick Capital Acquisition Corporation II (Announced)
1.12% ~ $ 9.75 | VLAT - Valor Latitude Acquisition Corp. (Pre-Deal)
1.12% ~ $ 9.96 | CBAH - CBRE Acquisition Holdings, Inc. (Announced)
1.11% ~ $ 17.35 | RICE - Rice Acquisition Corp. (Announced)
1.02% ~ $ 9.93 | FVT - Fortress Value Acquisition Corp. III (Pre-Deal)
.90% ~ $ 10.08 | TPGS - TPG Pace Solutions Corp. (Pre-Deal)
.90% ~ $ 10.08 | EMPW - Empower Ltd (Announced)
.83% ~ $ 14.62 | GHVI - Gores Holdings VI Inc (Announced)
.83% ~ $ 9.76 | DNZ - D and Z Media Acquisition Corp. (Pre-Deal)
.82% ~ $ 9.83 | NHIC - NewHold Investment Corporation (Announced)

Biggest Losers

-9.76% ~ $ 8.97 | AONE - one (Announced)
-7.17% ~ $ 12.43 | THCB - Tuscan Holdings Corp. (Announced)
-6.78% ~ $ 9.08 | SBG - Sandbridge Acquisition Corporation (Announced)
-5.43% ~ $ 10.97 | VACQ - Vector Acquisition Corp (Announced)
-4.88% ~ $ 11.88 | SRAC - Stable Road Acquisition Corp. (Announced)
-4.35% ~ $ 11.00 | FTCV - FinTech Acquisition Corp. V (Announced)
-4.32% ~ $ 9.75 | GXGX - GX Acquisition Corp (Announced)
-4.30% ~ $ 10.01 | IVAN - Ivanhoe Capital Acquisition Corp (Announced)
-3.74% ~ $ 13.88 | PSAC - Property Solutions Acquisition Corp (Announced)
-3.71% ~ $ 11.67 | TDAC - Trident Acquisitions Corp (Announced)
-3.50% ~ $ 21.08 | RSVA - Rodgers Silicon Valley Acquisition Corp (Announced)
-3.50% ~ $ 25.91 | CCIV - Churchill Capital Corp IV (Announced)
-3.45% ~ $ 12.30 | CMLF - CM Life Sciences Inc (Announced)
-3.38% ~ $ 9.71 | GIW - GigInternational1, Inc. (Pre-Deal)
-2.19% ~ $ 12.94 | FST - FAST ACQ CP (Announced)
-2.15% ~ $ 11.37 | PDAC - Peridot Acquisition Corp (Announced)
-2.12% ~ $ 13.37 | TPGY - TPG Pace Beneficial Finance Corp (Announced)
-1.79% ~ $ 9.87 | FTAA - FTAC Athena Acquisition Corp. (Pre-Deal)
-1.51% ~ $ 9.78 | NGC - Northern Genesis Acquisition Corp. III (Pre-Deal)

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report.)