Monday morning, we had yet another new IPO filing with Live Oak Acquisition Corp. (LOAK.U), a $200 million SPAC focused on companies in the financial services, industrial, business services, and real estate sectors. However, since that’s a diverse group of sectors, we’re going to classify that as a “general/broad” focus.
Additionally, Live Oak will be led by Chairman, John P. Amboian, who has spent a significant amount of his career at the asset manager, Nuveen Investments (formerly NYSE: JNC), where he served as Chairman and Chief Executive Officer for almost a decade. Mr. Amobian will be joined by Richard Hendrix, as CEO and Director, having recently served as Chief Executive Officer and Chairman of FBR & Co., which ultimately merged with B. Riley Financial, Inc. (NASDAQ: RILY) in 2017, to become B. Riley FBR.
Interestingly, especially in light of Social Capital Hedosophia filing two new SPACs on the same day on Friday, Live Oak has included the term where the officers and directors agree not to participate in any other SPACs until Live Oak has announced a definitive agreement with a target company. If you haven’t noticed this term yet…
“Each of our officers has agreed not to become a director or officer of any other special purpose acquisition company with a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 24 months after the closing of this offering.”
In general, investors greatly prefer having this term to remove any issues of a team of having a divided focus so that the one SPAC gets all of the attention and resources. Having this term is very much a positive addition.
As for the rest of the terms, this is a standard 100% in trust, 24 months, 1/2 warrant SPAC, with the bonus of a $15 million Indication of Interest (“IOI”) from Live Oak’s “Anchor Investor”, Atalaya Capital. However, the addition of the IOI looks relatively new since it wasn’t included in Live Oak’s previous DRS filing from January 24th (Draft Registration Statement). Although, the DRS also shows the deal was previously a $150 million offering, not the current $200 million, so perhaps the team and bankers thought an extra show of support via an IOI would be helpful given the larger deal size.
Furthermore, while an IOI is not technically binding (meaning they’re not obligated to buy the IOI), Atalaya has agreed that it will “forfeit all of its indirect holdings of founder shares and private placement warrants” if it doesn’t purchase the IOI units. As a result of that language, it’s pretty doubtful Atalaya would walk away from getting their portion of founders shares and warrants. So, this IOI is basically happening.
In summary, in a field crowded with 1/4 warrant SPACs (four of the current nine on file to IPO have 1/4 warrant structures) Live Oak’s half warrant will look relatively attractive. Pricing should be a smooth process.
Summary of terms below:
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