Anzu Special Acquisition Corp. I (ANZU) Engages Insurance Agent to Cover 1% Excise Tax
by Kristi Marvin on 2023-02-21 at 8:28am

In the ongoing 1% excise tax battle, Anzu Special Acquisition Corp I (Nasdaq: ANZU) dropped a supplement to its extension vote proxy this morning. Anzu is holding its previously adjourned extension vote at 9:30AM (ET) today to extend its completion deadline six months from March 4, 2023 up to September 4, 2023.

Anzu’s previously scheduled extension votes were adjourned due to language in its previous proxies stating that it planned to set aside 1% of interest for the tax in the event of a liquidation, thereby reducing the current trust value by $0.10. Investors were obviously not happy about that and it became a real possibility that the extension would be voted down. As a result, the meeting was adjourned so Anzu could come up with a different solution.

Today, Anzu filed that solution, which is to sign an agreement with an insurance agent to cover the tax liability, but only in the event of a liquidation in the calendar year 2023 and only if the extension amendment is passed.

This does mean that the redemption value for shareholders is now $10.17, and not $10.07, at today’s extension vote. But, there are some caveats.  For any shareholders that do not redeem at today’s vote and stay in the deal, they must bank on a deal closing (and not a liquidation) that occurs in calendar year 2023 and no later. However, this is barring any additional engagements with the insurance carrier to cover calendar year 2024.

However, today’s solution presents a bit of game theory again. The choices are: vote yes to ensure the extension vote is passed and protect the $10.17 redemption value or, vote no causing a liquidation and receive only $10.07.  Obviously, investors are going to vote yes.  However, this doesn’t address what happens with redemptions at the vote and the resulting trust value post-vote.

For redemptions, the choice becomes: redeem now and get $10.17 per share or, do not redeem and hope that the deal closes in 2023 and doesn’t liquidate. In the latter scenario, if Anzu does liquidate or close in 2024, the redemption value is reduced $0.10. That’s a tough bet.

As they say, a bird in the hand is worth two in the bush, so today’s vote will most likely be on the high side as far as redemptions since investors will probably prefer the locked-in $10.17 now.  However, it also means the extension vote will most certainly be approved. That means Anzu will get additional time to complete a deal, but a lot less cash to work with. Having said that, redemptions have been high regardless.  The result would probably not be that much different no matter what the roadmap looks like.

Nonetheless, engaging an insurance agent to cover the excise tax is a novel solution for cash strapped sponsors. We’ll have to watch and see if additional SPAC teams pick up this playbook and follow suit.

 

 

Recent Posts
by Kristi Marvin on 2025-05-07 at 12:13pm

Tariffs, Trade Routes, and Tech: Freightos’ View from the Cargo Frontlines 2025 is shaping up to be a wild year for global trade, and few companies have a vantage point on the impacts of every-changing tariff policy quite like digital cargo-booking platform Freightos (NASDAQ:CRGO). This week, we catch up with Freightos CEO Zvi Schreiber. He shares...

by Nicholas Alan Clayton on 2025-05-07 at 11:38am

NMP (NASDAQ:NMPU) has filed for a $100 million SPAC to conduct a broad search for a target, leveraging its team’s past consultancy work. The new SPAC’s units are set to contain one right to a 1/5 share. That is more generous to investors than the unit structure for Maxim Group’s other new SPAC filing this...

by Nicholas Alan Clayton on 2025-05-07 at 8:25am

At the SPAC of Dawn Futures are green ahead of the Fed Chair Jerome Powell’s highly anticipated press conference at 2:30 pm ET today following two days of Federal Reserve meetings. Several other Fed members are expected to speak on Friday, but any news on rate changes is likely to come out of today’s speech,...

by Nicholas Alan Clayton on 2025-05-06 at 4:38pm

Dune Acquisition Corporation II (NASDAQ:IPODU) announced the pricing of its $125 million IPO and its units are expected to begin trading on the Nasdaq under the symbol “IPODU”, Wednesday, May 7, 2025. The new SPAC aims expects to conduct a broad search for a combination target, but is interested in companies that are in the...

by Nicholas Alan Clayton on 2025-05-06 at 3:27pm

Oyster Enterprises II (NASDAQ:OYSEU) has filed for a $200 million SPAC to pursue a broad investment thesis, but one informed by the way that AI is shaking up industries. The new SPAC has units each containing one right to a 1/10 share and it will have 24 months to initially complete a business combination without...

logo

Copyright © 2025 SPACInsider, Inc. All Rights Reserved