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Colicity Inc. (COLIU) Prices Upsized $300M IPO

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Colicity Inc. announced the pricing of its upsized $300 million IPO this evening and its units are expected to begin trading on the Nasdaq under the symbol “COLIU,” on Wednesday, February 24.

The new company aims to combine with a business that has a defensible position in intellectual property and strong recurring revenue. Colicity is led by Chairman and CEO Craig McCaw, CIO Randy Russell, and CFO and Secretary Steve Ednie.

Total SPAC deal count for 2021 year-to-date is now 169. This offering is expected to close on Friday, February 26.


Goldman Sachs & Co. LLC and PJT Partners LP are acting as the book-running managers of the offering. Winston & Strawn LLP is serving as Issuer’s Counsel with Ropes & Gray LLP serving as Underwriter’s Counsel. WithumSmith+Brown, PC serves as auditor. Continental Stock Transfer & Trust Company is acting as trustee.

Source: https://spacinsider.com/2021/02/24/colicity-inc-prices-300m-ipo/

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SPACs and the SEC: Are the Solutions Worse Than the Perceived Problem?

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Apr 20, 2021 INTEL by Kristi Marvin

For an asset class that had previously struggled to be noticed for almost 20 years, we sure have gotten a lot of attention lately. First it was the SEC’s statement on SPACs vs. IPOs regarding projections and liability risk. Now, in one of the more amazing instances of a solution being worse that the problem, the SEC has deemed warrants a liability rather than an equity. As a result, SPACs have ground to a halt while armies of lawyers, accountants and bankers try to solve the riddle of how to restate financial statements for roughly 800 SPACs. It brings to mind the old exploding whale carcass story.  Stop me if you’ve heard this one before….

Back in 1970, a 45 foot, 8 ton dead whale washed up on the beaches of Oregon. The local citizens decided that the best way to clean up the situation was to blow the whale up with dynamite (yes, this is a true story). Even better, instead of the recommended 20 sticks of dynamite, they decided to use 20 cases of dynamite.

Well, as you can imagine, this “explode the whale solution” was far worse than just leaving it be. On the day of the scheduled blast, the whole town showed up and were asked to watch from a “safe” 1/4 mile distance.  However, when the dynamite was detonated it proceeded to shower all of the townspeople that came out to watch with rotting whale blubber.  And the best part? After the smoke and raining whale guts had cleared, half of the whale was still there. It didn’t even fix the problem. Anyway, the point is, sometimes it’s better to try and not “oversolve”.  Currently, it’s raining whale blubber over at the SEC and I’m sure none of their staff is too pleased about all of the extra work they will now have to do reviewing restated financial statements.

Whales notwithstanding, the other most recent statement from the SEC is in regards to projections and their current hesitancy to allow SPACs to use them.  The main thrust of the argument is that this would be “safer” for the investing public.  Naturally, we thought it would be interesting to see if projections were in fact problematic.

To that point, we looked at all of the SPAC combinations that closed in 2020 and compared their estimated 2020 revenue numbers against their recent 10-K filings to see just how much they were off, if at all.  Interestingly, while putting this together I came across this article from S&P Global that stated only,

16.75% of the index’s member companies that issued quarterly EPS guidance in 2018 went on to report results within their guided range. The percentage of companies with results within their guided range has declined on an annual basis every year since at least 2014.

(This article was written in August of 2019). But, the reason companies were off in their guidance was because they were beating their numbers and the reasons why are to “game the system”.  Per S&P….

“The vast majority of the time, companies beat their guidance, and especially in high-growth sectors like tech and software, doing so has become synonymous with success. In interviews, former CFOs and corporate governance experts described a mix of factors and pressures that drive management teams to undersell their forecasts to curb the repercussions that might come from missing guidance. Companies’ habit of setting beatable targets is widely known and expected, analysts said. But critics of the practice say it has enshrined a custom that ultimately only misleads investors.”

Let’s think about that for a moment. Companies are intentionally misleading the public on their earnings guidance.  Under-selling projections is just as problematic as over-selling too.  I guess the take away is that unless a company absolutely 100% nails their earnings number, they’re screwed. This seems like a really tough ask.

However, what about SPACs? Much has been made about SPACs and their ability to use projections to sell their combinations (versus IPOs, which don’t).  The implication being that SPACs are drastically over-projecting their numbers.  As you’re about to see, that’s actually not the case.

With that in mind, we took a look at the 2020 class of SPAC combinations. Meaning, we looked at all SPACs that had closed their announced mergers in the year 2020 and compared it to their recent 2020 10-K actual revenue numbers. However, a few notes on  the deals included:  66 SPACs completed combinations in 2020.  Of those 66, 13 have not commercialized yet (they are either biotech/pharma and do not have FDA clearance, or had previously projected zero revenue for 2020). Additionally, there were another eight SPACs that were foreign filers, and as such, they are not obligated to file 10-Qs or 10-Ks. They can simply file a 6-K if they want to, but they don’t have to and eight of them haven’t done so yet.

What we were left with is 45 de-SPAC’d companies and as you can see below, the results weren’t that bad. In fact, both the median and the average for the group is in positive territory.  You’ll notice the SPACs that exceeded their projections in green and the ones that missed in red. However, note that those were the ones that fell out the range of 10% positive or negative, which we took it upon ourselves to decide was a fair range of error. No company can be perfect, but a 10% negative or positive measuring post seemed fairest. Additionally, this group was ranked largest to smallest.

As you can see, on average SPACs recorded a value of 48.9% above average revenue results based on announced combination projections.  However, there were some big swings on both ends.  So if we remove both the top and bottom result, the average result is 10.7% above previously stated projections.  Again, we’re still well into positive territory.

However, medians tend to smooth out the outliers, so as you can see, for the 2020 SPACs the median % +/- stated projections comes in at 0.3%.  Nailed it.  And again, if we remove both the top and bottom result, the median is still….0.3%.

As you can see, the near term projections are not unreasonable.  Plus, once a company is public, it is typical to provide refreshed quarterly and yearly guidance.  This guidance is routinely updated because the future is, and should be, a moving target.  Not a static one.  Furthermore, even the SEC recently noted that using projections, “…can also be a key component for boards and other participants in negotiating and understanding the economics – indeed, the fairness – of the transaction.”  

To sum up, the SEC currently has one exploding whale on their hands, do they really want another one? As the saying goes, if ain’t broke, why fix it.

2020-spacs-projections-v2

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://spacinsider.com/2021/04/20/spacs-the-sec-and-the-use-of-projections/

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Roman DBDR Tech Acquisition Corp. (DBDR) to Combine with CompoSecure in $1.2Bn Deal

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Roman DBDR Tech Acquisition Corp. (DBDR) to Combine with CompoSecure in $1.2Bn Deal

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dMY Technology Group, Inc. II (DMYD) Shareholders Approve Genius Sports Deal

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dMY Technology Group, Inc. II (NYSE:DMYD) announced in an 8-K filing that its shareholders have approved its merger with Genius Sports with minimal shares redeemed.

The business combination was nearly unanimously approved by shareholders at a special meeting earlier today. About 77% of shares participated in the vote and only 1,296 were redeemed for cash, removing a negligible sum from dMY II’s trust at $10.00 per share.

This is an encouraging result in a generally down market for SPACs. dMY II has been resilient through the slump, however, never trading lower than $14.35 over the past three months and opening ahead of the vote at $19.00.

The parties are now likely to close the transaction in the coming days, although the filing did not name a specific date. Upon close, the combined company’s shares and warrants are expected to trade on the NYSE under the symbols “GENI” and “GENI.WS”, respectively.

dMY II initially announced the $1.5 billion deal on October 27. London-based Genius Sports supplies sports betting operators with official data and streaming media services and is partnered with about 500 sports organizations including the NBA, Premier League and NCAA.

For full vote tallies, click HERE.


ADVISORS

  • Goldman Sachs & Co. LLC is acting as exclusive financial advisor to dMY II.
  • Oakvale Capital LLP is acting as exclusive financial advisor to GSG.
  • Goldman Sachs & Co. LLC acted as lead placement agent for the PIPE transaction.
  • Credit Suisse Securities (USA) LLC and Oakvale Capital LLP also acted as capital markets advisors and placement agents for the PIPE transaction.
  • Kirkland & Ellis LLP is serving as legal advisor to GSG.
  • White & Case LLP served as legal advisor to dMY II.
  • Goldman Sachs & Co. LLC acted as the sole bookrunner of dMY II’s IPO.
  • Needham & Co. also acted as underwriter.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://spacinsider.com/2021/04/16/dmy-technology-group-inc-ii-shareholders-approve-genius-sports-deal/

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