Special Purpose Acquisition
Corporation (SPAC) Overview
The last few months three Greek shipping companies
"went public in the States" by using the Special Purpose
Acquisition Corporation (SPAC) technique: NAVIOS/INTERNATIONAL
SHIPPING ENTERPRISES (Angeliki Frangou),
TRINITY PARTNERS ACQUISITION COMPANY/FREESEAS, INC.
(Gourdomichalis Bros & Ion Vourexakis) and STAR
MARITIME ACQUISITION CORPORATION (Akis Tsiringakis/Petros
What is a Special Purpose Acquisition
Corporation (SPAC) technique?
In comparison an IPO will take a minimum
of five months and can take considerably longer to complete.
Also, the issuer’s costs in an IPO are much higher running
in the US$2 million range excluding investment banking fees.
Corresponding costs for a SPAC are less than US$200.000. Of
considerable importance, with an IPO the issuer doesn’t
know how much will be raised until the deal gets priced at the
end of the process. In an IPO, it is also possible, but rare,
that market conditions can turn adverse and postpone or scuttle
the entire process. With a SPAC the money is already
raised and the valuation set at the outset of the transaction.
Also it is very unlikely that the SPAC investors will vote against
the acquisition if the SPAC Sponsor is recommending it.
Adventure Holdings/Trinity Acquisition
Poseidon Capital located the SPAC and played a central role
in developing their interest and setting the terms of the business
combination with Adventure Holdings.
The SPAC is Trinity Partners Acquisition Inc. Ticker symbols:
TPQCA, TPQCB, TPQCW, TPQCL. Trinity will have a minimum of US$7
million in cash at closing, plus warrants outstanding which
can raise another US$18 million if the share price stays above
a certain level for twenty days out of a thirty day period.
At closing Adventure Holdings will control approx 72% of the
outstanding shares of the combined entity and after exercise
of the warrants their ownership will be reduced to approx. 42%.
In addition to the shares the principals of Adventure Holdings
will own a total of 950.000 share options.
Adventure Holdings (renamed already FREESEAS, INC.) presently
owns three early/mid eighties handy size bulk carriers.
The valuation metrics employed by SPACs are typically based
on a multiple of EBITDA. Enterprise value which is equity value
or market cap plus debt minus cash will likely be valued in
the range of 4-5 X EBITDA. Forward multiples are more relevant
especially in your case. This multiple is somewhat below where
the public market has been valuing shipping equities. This is
to make the acquisition attractive to investors and to develop
momentum in the stock in order to get the warrants exercised.
In addition to the foregoing points we would briefly outline
how we at American Ship Finance Partners expect to cooperate.
First of all, through our U.S. partners we have ready access
to a number of already established SPACs (each one of them having
already raised capital from US$10 Million to US$40 Million plus
warrants). We work with on a retainer plus success fee
basis. Typically a retainer will be 4-6 months at at
least US$10,000 to US$15,000 per month, with a success fee to
be agreed upon based on a percentage of the amount of equity
raised. We also work closely with a number of U.S. law firms
who are experts of the securities practice there and also experts
in this area. Those firms have been instrumental in our involvement
in this area and we would expect that they would be retained
by a prospective client.
International Shipping Enterprises,
Star Maritime Acquisition Corp. (0001328307)
Trinity Partners Acquistion CO Inc. (0001289632)
In order to obtain more info about the above-mentioned
Companies and their statutory filings with the SEC you may visit
which is the official site of the U.S.
Securities and Exchange Commission and fill up the
above Company names into its "Company Name" field.
More information and a consultation may be provided after contacting