There is a standard set of contracts and documents entered into as part of the creation of PSPC and the PSPC IPO. Some, such as the Incorporation Charter and the Registration Fee Agreement, have similarities in traditional IPOs of operating companies, while others are unique to PSPC. A PSPC goes through the typical IPO process of filing a registration statement with the U.S. Securities and Exchange Commission (“SEC”), clarifying the SEC`s comments, and arranging a roadshow, followed by a firm undertaking subscription. The proceeds of the IPO will be held in an escrow account until it is released to fund the business combination or used to redeem the shares sold as part of the IPO. The costs of the Offer, including the initial portion of the subscription discount, and a modest amount of working capital will be funded by the company or management team that makes up PSPC (the “Sponsor”). Following the IPO, PSPC will seek an acquisition opportunity and negotiate a merger or purchase agreement to acquire a company or assets (referred to as a “business combination”). If PSPC requires additional capital to continue the business combination or pay for other expenses, the proponent may lend additional funds to PSPC. As an acquisition agreement approaches, spaC is often offered promised debt or equity financing, such as.B.

arrange a private public equity investment (“PIPE”) to finance a portion of the purchase price of the business combination, and then publicly announce the acquisition agreement and the committed financing. Following the announcement of the signature, PSPC will conduct a mandatory shareholder voting or tender offer procedure and, in both cases, will offer public investors the right to return their public shares to spaC for a cash amount approximately equal to the IPO price paid. If the business combination is approved by the shareholders (if necessary) and the financing and other conditions set out in the acquisition agreement are met, the business combination will be completed (the so-called “PSPC transaction”) and PSPC and the target company will be combined into a listed operating company. Private equity managers considering sponsoring a PSPC face unique considerations, including the location of the sponsor in the fund structure and whether the fund documents permit the formation of a PSPC. A common question is whether the sponsor should be a holding company of one or more existing funds or a subsidiary of the investment manager. Fund agreements may limit the investment manager`s ability to form a PSPC outside of an existing fund. Alternatively, the types of assets that PSPC is expected to pursue may not be part of the overall investment mandate of an existing fund. In addition, the private equity manager will likely need to consider how to allocate investment opportunities between PSPC and existing funds. The unit price is called a forward price or a contract price. The number of underlying equity securities to be delivered is called the nominal amount.

PSPC and the Sponsor (or an affiliate of a Sponsor) enter into an agreement under which the Sponsor (or the Sponsor`s affiliate) provides PSPC with offices, utilities, administrative support and administrative services for a monthly fee (typically $10,000 per month). Privately supported PSCS often have independent leadership for PSPC, e.B a CEO or President with relevant experience in publicly traded companies and target industries. PSPC`s private equity group and management often negotiate a private agreement (usually included in the proponent`s corporate documents) that addresses, among other things, the amount that each party will fund from venture capital, participation in futures purchase obligations (as described below), and equity acquisition (including incentive equity). Live Oak II raised $253 million in December 2020, and its units, Class A common shares and warrants are listed on the New York Stock Exchange under the symbol “LOKB. U”, “LOKB” or LOKB WS » Live Oak II is a blank check company whose business purpose is to complete a merger, capital exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more companies. Live Oak II is led by an experienced team of managers, operators and investors who have played an important role in the creation and growth of profitable public and private companies, both organically and through acquisitions, to create shareholder value. The team has experience in operating and investing in a variety of industries and brings a wealth of experience as well as valuable expertise and insights. Units sold to the public typically contain a fraction of a warrant to purchase an entire share, while the limited partner purchases entire warrants. More recently, the most common structure has been that units sold as part of the IPO would contain half a warrant, although a third of a warrant is more common in larger IPOs. In any case, only entire mandates may be exercised. Offers of the founding warrants and shares that may be issued during the exercise of the public warrants and founding warrants are not registered at the time of the IPO, but are generally subject to a registration fee agreement entered into at the time of the IPO, which entitles holders of such securities to certain applications and certain “piggyback” registration rights as a result of of the PSPC-transaction. An issuer is not required to buy back the FSA as a stand-alone instrument.

Therefore, the instrument is not redeemable at the level of the FSA, i.e. in disregard of the conditions for the repurchase of the shares and underlying warrants of the municipalities. However, under normal accounting practices, futures contracts issued on redeemable (due) shares are considered redeemable instruments subject to CSA 480. Conclusions: PSPC futures contracts are likely to be considered stand-alone financial instruments linked to shares. ASPs are unlikely to be classified as ASC 480 assets or liabilities. The FSA, which is required to issue warrants duly classified as liabilities, will not be considered to be linked to the Company`s own shares. These ASPs are classified at the recognised fair value of the liability or asset first and thereafter until the date of settlement or expiry of the contract. As part of the initial recognition, reporting companies should allocate the proceeds of the IPO to the FSA classified as a liability and thus reduce the equity income reported in the company`s equity (additional paid-up capital). Questions were raised about how PSPC futures purchase agreements should be accounted for in accordance with U.S. GAAP. The FSA also includes a referral option to purchase additional units at the listed price.

The same price applies to the possible purchase of additional and initial units. The developer`s option to purchase additional units is similar to an over-allotment option. Essentially, this is a written option for additional titles. .