DeZwarteRidder schreef op 20 augustus 2021 21:57:
August 19, 2021 09:15 PM Eastern Daylight Time
NEW YORK--(BUSINESS WIRE)--Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH) CEO Bill Ackman today issued the following letter.
August 19, 2021
Dear Pershing Square Tontine Holdings, Ltd. Shareholder,
A purported shareholder filed a lawsuit on August 17th claiming that PSTH has been operating as an illegal investment company because, among other claims, PSTH invested its IPO proceeds in securities (short-term Treasurys and money market funds that own short-term Treasurys). This is of course something all SPACs do as they preserve funds necessary to complete their initial business combinations. As the law professors who brought the case should very well know (as both are securities law experts), holding cash and government securities while seeking a business combination does not make PSTH an illegal investment company, nor does it make any of the hundreds of other SPACs that do the same, illegal investment companies either.
While we believe the lawsuit is meritless, the nature of the suit and our legal system make it unlikely that it can be resolved in the short term. Even if the case were dismissed expeditiously, the plaintiff can then appeal. As a result, the mere existence of the litigation may deter potential merger partners from working with PSTH on a transaction until the lawsuit is finally resolved.
Because the basic issues raised here apply to every SPAC, a successful claim would imply that every SPAC may also be an illegal investment company. As a result, the lawsuit may have a chilling effect on the ability of other SPACs to consummate merger transactions or to engage in IPOs until the litigation is resolved in PSTH’s favor, as the consequences of being deemed an illegal investment company are extremely onerous.
PSTH has about 11 months remaining to enter into a letter of intent with a transaction counterparty for its initial business combination, and six additional months to close that transaction. This period may be extended by up to six months by a vote of PSTH shareholders. While we have been working diligently to identify and close a transaction, and we have begun discussions with potential merger candidates, our ability to complete a transaction in the required time frame has been impaired by the lawsuit.
All is not lost, however. As we have previously disclosed, we have been working on obtaining approval for the launch of Pershing Square SPARC Holdings, Ltd. (“SPARC”). If we are successful in securing SPARC’s approval, and I am confident that we will get it done, we will have a clear path to mitigate the harm that this litigation has and will continue to cause to PSTH shareholders and warrant holders.
Pershing Square SPARC Holdings, Ltd.
We are working to accelerate the launch of Pershing Square SPARC Holdings, Ltd. (“SPARC”), and expect that we will shortly be making a public filing of SPARC’s SEC registration statement. As a reminder, SPARC, which we conceived of months ago and disclosed in connection with the UMG transaction, is a modified opt-in (rather than the current opt-out) SPAC structure where investors in PSTH would receive long-dated, transferable SPARC warrants to acquire common stock in SPARC, which we expect to be traded on the NYSE.
SPARC warrants would give investors the right to invest in SPARC’s future merger transaction at a share price equal to SPARC’s cash net asset value (“NAV”) per share. The Pershing Square Funds will be making a large-co-investment in SPARC on precisely the same terms and at the same time as SPARC warrant holders. The SPARC warrants would not be exercisable, and warrant holders would not need to invest their capital, until SPARC has identified a merger target, completed due diligence, entered into and approved a transaction, and cleared a registration statement with the SEC, which will provide full disclosure on the transaction and the target company.
Originally, SPARC intended to issue the SPARC warrants to PSTH shareholders after PSTH’s initial business combination. In light of this litigation, we expect that SPARC would issue the SPARC warrants as promptly as possible after regulatory approvals are obtained.
While there is no certainty that SPARC will be approved by the SEC, or that the NYSE rule change will be adopted, we are hopeful that SPARC’s favorable investor protection features will facilitate a timely approval. The principal benefit of SPARC is that it would not hold investors’ money while we are looking for a target. This eliminates the substantial opportunity cost of capital that burdens all SPAC investors.
The SPARC warrants will also remove the two-year “shot clock” for a sponsor to consummate a transaction. This reduces the time pressure faced by the sponsor, which provides an incentive for SPAC sponsors to complete transactions before the clock runs out. In a de-SPAC merger transaction, time pressure on the sponsor is the enemy of a good deal for shareholders.
We Intend to Seek Shareholder Approval to Return PSTH’s Cash in Trust If and When SPARC is Approved by the SEC