SPACInsider Logo
I-AM Capital / Smaaash Release Un-“Settling” News
by Kristi Marvin on 2018-11-30 at 11:07am

I-AM Capital Acquisition Company (IAM), released an 8-K this morning, that contained information within it regarding their shareholder votes results and some very interesting “settlements” with their underwriters.

First up, the results of their vote to complete their business combination with Smaaash Entertainment. At the Special Meeting, holders of 4,448,260 shares of I-AM Capital common stock exercised their right to redeem at a price of $10.2187363 per share, for an aggregate of approximately $45,455,596. Per their most recent 10-Q (as of August 31, 2018), there was $53,119,511 being held in trust prior to the vote, which means the Company was left with roughly just $7.7 million post-combination.

However, if you recall, Polar Asset Management and K2, agreed to sell their shares to I-AM/Smaaash thirty days after the consummation of the Transactions for $11.23 per share, for a total value of $7.97 million.  Keep these numbers in mind while we move on to the next item.

Settlement Agreement

Additionally included in the 8-K was a reference to a Settlement Agreement with I-AM’s underwriter, Maxim Group, and a separate agreement with Chardan.  “Settlement” typically implies some sort of drama, but the specifics are:

“Pursuant to the Settlement Agreement, the Company made a cash payment of $20,000 to Maxim and issued a demand secured promissory note in favor of Maxim in the amount of $1.8 million (the “Note”) to settle the payment obligations of the Company under the underwriting agreement dated August 16, 2017, by and between the Company and Maxim. The Company also agreed to remove the restrictive legends on an aggregate of 52,000 shares of its common stock held by Maxim and its affiliate.”

Furthermore, there is a schedule of payments and interest. Again, per the 8-K:

“The Note accrues interest at 8% per annum from the date of the Note through and including May 20, 2019 and 12% per annum from and including May 21, 2019 through and including August 20, 2019 and 15% per annum from and including August 21, 2019 through and including November 20, 2019. If a late payment occurs and is continuing, the interest rate will be increased to 12% per annum and if from the date of the Note through and including August 20, 2019 and 18% per annum if and from after August 21, 2019. If a late payment remains outstanding for over 48 hours, Maxim may require the Company to redeem all or any part of the Note (“Alternate Payment Amount”) at a redemption price equal to 125% of the Alternate Payment Amount.”

Yikes. Sounds like I-AM/Smaaash balked on the deferred fee and Maxim demanded payment. Furthermore, the separate agreement with Chardan, their other underwriter, involves the Company issuing 208,000 shares as compensation.

All told, this seems like a pretty expensive way to get public, no? Plus, where is all this money going to come from? Well, Smaaash states that, “the Company expects that it will continue to use debt to finance its business and operation.” However, this seems nuts.  Covering all these costs is going to be a massive hurdle.

This is a baptism to the public markets by fire.  Other SPACs should take heed.



Recent Posts
by Kristi Marvin on 2023-03-25 at 12:14pm

Terms Tracker for the Week Ending March 24, 2023 Welcome to our weekly column where we discuss the findings from our IPO terms tracker based on the previous week’s pricings. While this week was relatively quiet on the filings front, we did see March’s second SPAC IPO price with Oak Woods Acquisition Corp’s $50 million...

by Marlena Haddad on 2023-03-24 at 5:40pm

Latest Non-Redemption Agreements: ExcelFin Acquisition Corp. ExcelFin Acquisition Corp. (XFIN) Adds Non-Redemption Agreement In connection with the special meeting of stockholders of ExcelFin Acquisition Corp. (NASDAQ:XFIN) to extend its completion deadline from April 25, 2023 to October 25, 2023, the company and its sponsor, ExcelFin SPAC LLC, entered into a non-redemption agreement with an unaffiliated third party....

by Marlena Haddad on 2023-03-24 at 11:33am

Below is a daily summary of links to the latest SPAC news and rumors gathered across the web.  Latest SPAC News:  Momentus SPAC backers accused of deliberately engineering a catastrophic deal  Momentus SPAC Backers Accused of Hiding Disastrous Deal’s Flaws A Momentus Inc. (NASDAQ:MNTS) investor sued backers of its blank-check merger with a shell company,...

by Nicholas Alan Clayton on 2023-03-24 at 7:20am

DiamondHead Holdings Corp. (NASDAQ:DHHC) announced in an 8-K this morning that its shareholders approved its combination with Great Southern Homes at a special meeting March 23. Only 109,426 shares were redeemed in the connection with the vote, but DiamondHead has seen about 87% redemptions in total across all previous votes, leaving it with about $43.9...

by Nicholas Alan Clayton on 2023-03-24 at 7:05am

Graf Acquisition Corp. IV (NYSE:GFOR) announced that it has signed a non-binding letter of intent to combine with clinical-stage biopharma company NKGen. This announcement is not a pure teaser as Graf IV is not facing an imminent extension vote and currently has until May 25 on its clock. It does, however, signal something of a...

Privacy Policy|Terms Of Use
Copyright © 2023 SPACInsider, Inc. All Rights Reserved