Canna-Global Acquisition Corp (CNGL) to Distribute $6.148 Per Share in Partial Liquidation
In the latest turn of a long-running saga, Canna-Global Acquisition Corp. (OTC:CNGL) announced this morning that it intends to distribute funds from a partial liquidation, resulting in shareholders receiving $6.14892631 per share between now and 5 pm ET, September 4.
This is obviously far short of $10.15 per share that Canna-Global had in trust at IPO and even shorter of what the pro rata trust balance should be after accruing nearly five years of interest since its November 2021 IPO. But, it is perhaps meant to appease the dwindling patience of investors who have been waiting for their cash while the SPAC remains locked in litigation.
This dispute goes back to June 2024, when Canna-Global was initially halted after it was revealed that EF Hutton had sold the rights to its $8 million deferred underwriting fee to hedge fund Liqueous in exchange for Canna-Global agreeing to issue the fund 1,544,531 newly minted shares, 724,000 of which Liqueous promptly sold into the market.
The move, which would have broken the trust and diluted Canna-Global’s initial investors, is unprecedented in SPACs, although other SPAC teams have faced attempts to access trust funds through bankruptcy proceedings as was recently the case with Financial Strategies (OTC:FXCO).
In the meantime, Canna-Global’s trustee Continental Stock Transfer & Trust has agreed to backstop the 724,000 shares to make investors whole, but the litigation over who should legally be on the hook remains ongoing. Among those cases is a lawsuit by Continental against Canna-Global and its legal counsel Rimon PC over the request to release the shares in the first place.
For its part, Canna-Global concedes in this latest press release that the 724,000 shares, which represent about 39.4% of its public float, were “invalidly issued in breach of the Company’s governing documents”. It continues that the remaining funds owed to shareholders will be distributed once they have been recouped through the legal process.
In the end, getting 61 cents on the dollar right now for the SPAC shares could be a preferable outcome for investors rather than waiting as the wheels of the legal system grind away for the final solution. But, the case remains a cautionary tale and a black eye for SPACs until it is fully resolved.
As a technical matter, Canna-Global has now been moved to SPACInsider‘s “Liquidated” column now that its trust is set to be liquidated and the further steps will play out in a courtroom setting.
