The SEC has declared that Pershing Square SPARC Holdings, Ltd’s registration statement is effective. The company is targeting companies looking to raise at least $1.5bn of capital – that could be for private companies looking to list and provide an exit to founders and/or companies looking for additional equity capital.
Pershing Square believes that this process will avoid much of the costs and risks associated with a traditional IPO. Pershing Square Holdings (PSH) and other affiliated funds will act as cornerstone investors in the transaction at a fixed price – taking up between $250m and $3.5bn of stock.
Pershing Square SPARC Holdings plans to issue 61,111,111 SPARs (special purpose acquisition rights) – which they say are best understood as short-term options to purchase common stock in the soon-to-be public company at the same price at which affiliates of the Pershing Square funds are buying stock in the company. The SPARs will be available for trading for 20 business days at which time they can be exercised or they will expire worthless.
Holders of Pershing Square Tontine Holdings (which include PSH) are getting one SPAR for every four shares of PSTH Class A common stock owned, 50m in total. Holders of Pershing Square Tontine Holdings warrants get SPARs on a one for two basis, 11,111,111 in total.
The SPARs will have a minimum exercise price of $10.00 per share.
Investors can learn more about SPARC by reading SPARC’s registration statement which can be found here https://www.sec.gov/edgar/browse/?CIK=1895582.
[QD comment: after the frustration of not getting a deal done with Pershing Square Tontine Holdings, this is great news. Bill Ackman is upbeat about the prospects for this structure.]
PSH : Pershing Square gets approval for SPARC