HL Acquisitions Corp: The “Fleece Vest” of SPACs

HL Acquisitions Corp., a SPAC focused on the “hydrocarbon logistics and processing sector” filed for a $42.5 million IPO today. HL Acquisitions is headed by CEO, Jeffrey Schwarz, the co-founder of Metropolitan Capital Advisors, Inc., a New York-based money management firm founded in 1992.

This SPAC is as basic as basic gets. Like the ubiquitous fleece vest worn by every male in finance, it gets the job done, but it’s not sexy. It’s frankly kind of boring.  However, there can be value in boring so let’s get to the terms….

Summary of terms are as follows:

• Focus:  Hydrocarbon logistics and processing industry
• 100% held in trust ($10.00 per share)
• $10.00 unit comprised of:  one ordinary share, one right and one redeemable warrant
• Warrant redemption threshold: equals or exceeds $18.00 (cash or cashless exercise)
• 18 months to complete an acquisition 
• Limitation on redemption rights:  NONE as of the initial S-1
• Sponsor purchase of private placement warrants at $1.00 per warrant
• Underwriting fees: 2.5% / 4.0% business combination marketing agreement

[Yawn….]  The absence of a limitation on redemption rights seems to stand out the most and mirrors the Twelve Seas recent S-1 filing.  Both HL and Twelve Seas are being underwritten by Earlybird and have the same lawyers – Graubard Miller and Ellenoff Grossman & Schole, so this is probably intentional and not an omission.  However, it’s a little risky and institutions that routinely invest in SPACs can (and have) take advantage of this absence.

So is this structure enough to get the deal done?  It will most likely need some additional at-risk capital.  101% or 102% in trust, but as is, it’s a run-of-the-mill SPAC… a fleece vest.

EarlyBirdCapital is sole book-runner.  Graubard Miller and Ellenoff Grossman & Schole LLP are Issuer’s Counsel and Underwriter’s Counsel, respectively.