This practice note discusses 10 practice points that can help you, as counsel to a special purpose acquisition company (SPAC) or its placement agent, execute a private investment in public equity (PIPE) transaction alongside a SPAC business combination transaction. A SPAC is a public shell company that uses proceeds from its initial public offering (ipo) to acquire a private company within a designated timeframe. Following an announcement of a proposed business combination, the SPAC must offer its public investors the option to either redeem their common stock for the original purchase price or to sell their common stock to the SPAC in a tender offer. This redemption option inherently creates uncertainty as to the amount of cash available to the combined company following the initial business combination. spacs often seek to mitigate the redemption concern by issuing new securities to institutional accredited investors in a PIPE transaction that is contingent upon the closing of the initial business combination. The capital raised in the PIPE transaction generally will be used to provide additional capital for the operating company to deploy following the consummation of the business combination. Please see full Publication below for more information.
Source: Top 10 Practice Tips: PIPE Transactions by SPACs
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- Source: https://spacfeed.com/top-10-practice-tips-pipe-transactions-by-spacs-2
