Investors are due to decide this evening (Wednesday) if they’ll give Irish-backed investment vehicle North Atlantic Acquisition Corporation an extra six months to complete a deal with $400m (€369m) of cash it raised two years ago.
Even if it secures the approval from shareholders, North Atlantic Acquisition Corporation (NAAC) will face an unenviable challenge in sealing a transaction within the narrow window, given the complexities associated with dealmaking.
NAAC is a so-called special purpose acquisition company (Spac).
Such vehicles flooded onto the market in recent years when rock-bottom interest rates forced investors to hunt for returns for their cash piles.
But Spacs have firmly fallen out of favour since then.
NAAC’s current deadline for cementing a deal is Thursday. A virtual meeting on Wednesday evening – originally due to be held on Tuesday – will seek to extend that deadline to July 26.
“The company encourages its shareholders to vote in favour of the proposal to amend its charter to extend the date by which the company has to complete a business combination from January 26, 2023 to July 26, 2023,” notes a circular to shareholders.
NAAC was co-founded by its chief executive, Gary Quin. He is a former vice-chairman at Credit Suisse.
Another key co-founder is Irish businessman Patrick Doran. He sold his Dublin-based packaging company Americk in 2016 to Spanish group Saica. He then established Woodberry Capital, a private investment firm.
NAAC, which is listed on New York’s Nasdaq, planned to merge last year with US-based tech business Telesign, which is owned by Belgian mobile phone company Proximus.
That deal valued Telesign at more than $1.7bn including cash from NAAC. Proximus would have retained a 66pc stake in Telesign. NAAC shareholders would have owned 22pc of the merged entity, while 4.9pc would have been split between NAAC’s founders.
That would have made for a huge payday for founders including Mr Quin and Mr Doran, who stumped up just $25,000 for their founding shares.
They control 20pc of the total outstanding shares in NAAC.
The deal collapsed last summer, however.
As part of their 20pc holding, NAAC founders have more than 7.1 million placement warrants that were purchased for $10.7m.
Both the warrants and the founding shares would be worthless if a business combination is not consummated in time and a deadline extension is not secured.
If a time extension is agreed to by shareholders on Wednesday, the Spac founders will make aggregate contributions totalling $12.5m between January and July this year to keep bankrolling NAAC.
While the Spac might have a fresh deal in the pipeline, even having six months to consummate it could be difficult.
