This morning the treasury department finally issued guidance around the issue of share buybacks, which has been haunting the capital markets since August when the 1% excise tax was first introduced. And in the nick of time too, since the tax goes into effect in less than week.
To be clear, the purpose of the excise tax was never about SPACs, they just got caught in its crosshairs thanks to the SPAC’s redemption feature. However, for some context around the situation, the 1% excise tax came about as part of the Inflation Reduction Bill that was passed this summer. Senator Kyrsten Sinema, in a last minute change, insisted the tax increase on carried interest for private equity be removed and instead, as a concession, the 1% excise tax on stock buybacks was put in.
On its surface, it appeared to be specifically meant for the typical share buyback you think of when corporations literally buy back their stock. However, all sorts of asset classes were caught up in it and affected such as redeemable preferreds and SPACs since a “redemption” is considered a buyback as well. There was quite a bit of confusion as to its interpretation and so, here we are today with the Treasury Department putting out some much needed guidance for how companies should proceed. However, in typical government fashion, it’s about as clear as a foggy windshield in blizzard.
Nonetheless, it appears that SPACs undergoing a “complete liquidation” will be spared the excise tax. To wit:
Hennessy Capital Investment Corp VI (NASDAQ:HCVI) announced overnight that it plans to adjourn today’s 9 am ET extension vote and reopen it at 3 pm ET this afternoon. This does not technically change the redemption deadline for investors, but those wishing to withdraw their redemption requests may still do so by 2 pm ET today....
Latest SPAC Liquidations: Schultze Special Purpose Acquisition Corp. II Schultze Special Purpose Acquisition Corp. II (SAMA) to Liquidate on October 11, 2023 Schultze Special Purpose Acquisition Corp. II (Nasdaq: SAMA), announced that it will redeem all of the outstanding shares of its Class A common stock effective as of October 11, 2023. The Company expects...
Mercato Partners Acquisition Corporation (NASDAQ:MPRA) announced this afternoon via 8-K that its shareholders have approved its combination with Nuvini at a special meeting held earlier today. With 79.74% of the voting power of the Common Stock participating in the vote, the combination was overwhelmingly approved. 7,975,698 shares were recorded voting for the transaction, while only 38,008...
Home Plate Acquisition Corporation (NASDAQ:HPLT) announced that it adjourned this morning’s extension vote without conducting any business and it will pick things up again at 11 am ET October 2. Shareholders at the meeting are to consider giving Home Plate an extra two and half months to complete a deal, moving its deadline from October...
Below is a daily summary of links to the latest SPAC news and rumors gathered across the web. Law firm Schulte sues SPAC over fees from failed Philippine casino merger U.S. law firm Schulte Roth & Zabel is suing its former client 26 Capital Acquisition Corp to recover more than $1.9 million in legal fees...