A tie-up with a blank check valued the firm at more than $600M. It didn’t shake off the pessimism surrounding SPAC mergers. Hence, the Nasdaq debut of a Japanese producer of $555,000 flying motorcycles was a flop.
Aerwins Technologies made a public deal with Pono Capital Corp – a specialized acquisition firm. Aerwins was halted after falling 59% from Pono’s closing price on Friday. The stock has had a volatile stretch recently after the Bloomberg News report that the merger would boost it last week.
How is the deal structured?
Pono Capital and Aerwins Technologies have committed to a standby equity purchase agreement with Yorkville Advisors Global. It will sell up to $100M in shares to investors. As a growing number of redemptions leave newly public businesses with a fraction of their expected resources, so-called committed equity facilities are becoming attractive.
Aerwins’ stock price has gone up and down a lot in the last few days. There are only 200,000. Most Pono investors chose to get cash instead of shares. If investors don’t like the merger or just want to recover their money, stock redemptions allow them to return shares for cash.
Pono is part of a broader industry black mark
Pono raised $115M in August 2021. After that, it merged with Benuvia Inc. – a cannabinoid drug developer. However, just over five months into an engagement agreement, they called the “wedding” off last year.
The industry has suffered from investor concern about SPACs and the businesses they IPO. From the plethora of pre-revenue enterprises that went public via the vehicle during its heyday, many experts predicted sponsors’ attention to shift to cash-generating corporations.
Just a third of the roughly 400 companies that merged with a SPAC is currently trading below $2 per share, barely a fraction of the $10 mark at which the blank-check firms want to achieve public liquidity. The De-SPAC Index, a collection of more speculative former SPACs, has plummeted by 54% in the last year and is down by one-third of its original value.
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