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Lionheart II (LCAP) Declares New Warrants as Form of Dividend
by Marlena Haddad on 2022-05-10 at 5:12pm

Lionheart II (NASDAQ:LCAP) as part of their business combination with MSP Recovery, announced this afternoon that it had declared their dividend in the form of 1,029,000,000 new warrants at $11.50 per share to non-redeeming shareholders.

The issuance of today’s new warrant dividend is conditioned upon the closing of Lionheart II’s previously announced proposed business combination with Medicare billing firm MSP Recovery, LLC, pursuant to the Membership Interest Purchase Agreement, and will be issued on the 10th day following the closing, or on the earliest date reasonably practicable thereafter.

As background, Lionheart II entered into a definitive agreement to combine with medical billing firm MSP Recovery at an enterprise value of $32.6 billion back in July 2021. Lionheart II is financing the deal with its current cash in trust (post-extension vote) of ~$121 million, and has not supplemented this with a PIPE.  The announced warrant dividend pool of 1.029 billion additional warrants to purchase shares at $11.50 within five years, was part of the original announced deal in July.

Each share of outstanding common stock as of the close of business on the date of closing will be entitled to these new warrants in an amount equal to: 1,029,000,000 divided by the aggregate number of shares of outstanding common stock as of the record date less any shares held by any Member or designee who may receive closing equity consideration.

Additionally, the new warrants will be subject to certain anti-dilution adjustments and become exercisable 30 days following the closing, expiring five years from the close.

But, pursuant to the anti-dilution adjustment terms of the agreement, today’s new warrant dividend is expected to cause the exercise price of the existing IPO warrants to decrease to $0.0001 after the new warrant issuance.

The number of warrants that will be distributed is contingent upon the aggregate number of shares that are redeemed in connection with the business combination to act as an incentive amid a time with challenging market conditions and high redemption rates. If no one redeems, each person will receive an estimated 56 warrants.

Lionheart II also announced today that it will be amending its warrant agreement to make existing IPO warrants exercisable 10 days following the close, rather than the current 30 days, and on a cashless basis at the holder’s preference.  However, warrant holders that wish to exercise for cash will need to wait for the S-1 registration statement for the shares underlying the warrants to be declared effective by the SEC.

The company plans to file the registration statement for the shares underlying the new warrants following the closing of the business combination.



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