With no merger in sight, $200m SPAC, The Music Acquisition Corp, units date for shareholder vote to liquidate

The Music Acquisition Company (TMAC) has set the date for shareholders to vote on a proposal to liquidate the corporate’s belief account because the blank-check firm nonetheless has but to merge with a possible goal firm over a yr because it went public.

The particular function acquisition firm (SPAC) will maintain a digital particular assembly of shareholders on Wednesday, November 30, at 10 am Japanese Time. Shareholders as of 5 pm New York Time on October 31 are eligible to attend the assembly.

Shareholders will likely be requested to vote on two proposals together with modifications to the corporate’s amended and restated certificates of incorporation or its “constitution.” Beneath the present constitution, TMAC has to consummate its enterprise mixture on February 5, 2023.

TMAC emerged again in January 2021, when Music Enterprise Worldwide revealed that long-time Geffen Information President Neil Jacobson was plotting a flotation of a brand new music firm within the US.

Jacobson’s blank-check firm, The Music Acquisition Company (TMAC), floated on the New York Inventory Alternate in February final yr below the ticker image TMAC.U, elevating $230 million within the course of.

TMAC.U, fashioned particularly to impact a merger/acquisition within the worlds of each music rights and music tech has been largely quiet since then – one thing that now doesn’t look prone to change within the close to future.

Now, based on a submitting with the Securities Alternate Fee (SEC) within the US, Jacobson’s SPAC has written to its stockholders to hunt approval, by way of a vote, to liquidate early.

The scheduled assembly can even decide whether or not shareholders will approve TMAC’s plan to liquidate its belief account price $230 million. They are going to be voting on modifications to TMAC’s settlement with the corporate’s trustee, Continental Inventory Switch & Belief Co.

If permitted, the corporate will redeem all of its excellent Class A typical shares by the tip of the yr, sooner than the beforehand agreed upon date on February 5, 2023, or the contractual termination date.

Beneath US itemizing guidelines, SPACs that fail to merge with a goal firm inside two years since going public ought to be dissolved and return all funds to buyers.

Since debuting on the NYSE in February, TMAC nonetheless has but to mix with one other entity. TMAC just lately disclosed that its administration has reviewed an undisclosed variety of potential targets, however has “not entered into an settlement to impact a enterprise mixture with any of those potential targets for a wide range of causes”.

The explanations embody the events’ incapability to succeed in a consensus on valuation; a preliminary evaluation of a possible goal firm’s enterprise mannequin, buyer focus, aggressive panorama and dangers to future monetary efficiency; an evaluation of the related goal firm’s capacity to execute its enterprise and monetary plans and develop its enterprise; and various choices obtainable to potential targets like pursuing conventional IPOs or ready for the capital markets to enhance earlier than going public.

The information comes as a report from CNBC, citing new information from SPAC Analysis, notes that 27 SPAC offers, price $12.8 billion, have been liquidated in 2022 to date.

CNBC notes that SPACs have been prompted to ‘shut up store’ resulting from President Biden’s Inflation Discount Act, which imposes a 1% excise tax on inventory ‘buybacks’ after December 31, 2022.

Unsurprisingly, Jacobson’s SPAC additionally cites President Jo Biden’s Inflation Discount Act, and the incoming 1% excise tax on repurchasing inventory, in its submitting.

One other issue that TMAC recognized is the brand new regulatory panorama within the US because the SEC is pushing to reinforce disclosure in mergers involving SPACs and personal working firms.

“Our board of administrators believes that the SEC’s proposed guidelines, if adopted, whether or not within the type proposed or in revised type, could materially enhance the time required to barter and full an preliminary enterprise mixture and will additional impair our capacity to finish an preliminary enterprise mixture” by or earlier than February 2023, TMAC added.

TMAC’s incapability to enact a merger highlights the challenges confronted by SPACs within the present market.

The blank-check firm decided “that it is vitally unlikely that we’d be capable to full a enterprise mixture” after cautious consideration.

TMAC’s shareholders could request the corporate to redeem all or a portion of their shares for money if the constitution modification proposal is permitted, the corporate mentioned.

Holders of the agency’s NYSE-listed items should vote to separate the underlying public shares and public warrants earlier than exercising redemption rights, TMAC added.

Music Enterprise Worldwide