Crescendo is Putting the Band Back Together. Again!
Crescendo Partners’ Eric Rosenfeld, filed for a $130 million IPO late Tuesday, making Allegro Merger Corp., Rosenfeld’s sixth consecutive SPAC. In addition to an obsessive penchant for musical-term branding, the Allegro team and board seem to have a penchant for each other as well, since all have worked together (with the exception of board member Robert Deluce) on one or more of Rosenfeld’s five prior SPACs. It’s a reunion tour roadshow for sure, but let’s get to the details.
Summary terms include:
- Sector Focus: General / Broad
- $10.00 unit comprised of one share of common stock, one right and one full warrant
- Each right entitles the holder to receive one-twentieth (1/20) of one share
- 100% held in trust ($10.00 per share)
- 21 months to complete an acquisition
- Warrant redemption price: $18.00
- Redemption rights: limitation of 20% of the shares sold in the IPO
- Founders and Cantor Fitzgerald (the Underwriter) to purchase 372,500 private placement units at $10.00 to bring the trust to 100% (Founders – 322,500 units / Cantor – 50,000 units)
- Underwriter fees: 2.0% + 3.5% deferred fee. Cantor Fitzgerald is sole book-runner.
The Rights term is what stands out immediately. 1/20th of one share is the first to deviate from the standard 1/10th of one share. While on the face of it this might seem like a negative, Allegro does balance this by offering a full warrant and a 21 month time period to complete their business combination. Additionally, the limit for shareholders wishing to redeem is at 20% of the shares sold in the offering. More recent SPACs have had limits of 15%.
As for the five prior SPACs that the Crescendo team have completed, I’ve provided a summary below.
| Name | IPO Date | Unit Price | Gross Proceeds (mms) | Acquisition | Acquisition Symbol | Acquisition Current Share Price |
|---|---|---|---|---|---|---|
| Arpeggio Acquisition Corporation | June-04 | $6.00 | $40.8 | Hill International | HIL | $5.60 |
| Rhapsody Acquisition Corporation | Oct-06 | $8.00 | $41.4 | Primoris Services | PRIM | $26.27 |
| Trio Merger Corp. | June-11 | $10.00 | $69.0 | SAExploration | SAEX | $1.41 |
| Quartet Merger Corp. | Nov-13 | $10.00 | $96.6 | Pangaea Logistics | PANL | $3.39 |
| Harmony Merger Corp. | Mar-15 | $10.00 | $115.0 | NextDecade | NEXT | $6.35 |
Primoris is a hit, but the majority are misses.
“Past performance may not be indicative of future results…” Let’s hope that famous warning disclosure at the end of every performance report rings true here. On the whole, this deal looks like it might need some sweetening. Perhaps more at-risk capital from management to over-fund the trust and/or reverting the rights terms to 1/10th of one share will give investors additional comfort.
Lastly, Issuer’s Counsel and Underwriter’s Counsel are Graubard Miller and Ellenoff Grossman & Schole LLP, respectively.
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