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Ackman plans to return funds to his $4 billion SPAC’s investors

PUBLISHED ON 2021-08-21 02:29:00 EST Shubhangi

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Billionaire hedge-fund investor Bill Ackman is planning to return funds to the investors of his $4 billion blank-check company as it faced several setbacks since its launch last year.

Last week, a lawsuit was filed against his blank-check company, Pershing Square Tontine Holdings Ltd., questioning the legality of the SPAC.

Ackman, in a letter posted on website of Pershing Square Tontine, called the lawsuit meritless but said it hurt the chances of finding a deal for the company.

“While we have been working diligently to identify and close a transaction, and we have begun discussions with potential merger candidates, our ability to complete a transaction in the required time frame has been impaired by the lawsuit,” Ackman said in the letter. 

At 10:02 a.m. on Friday, shares of Pershing Square Tontine fell 1.1% to $19.77 in New York. For the first time on Thursday, the company’s shares were trading below $20—its initial public offering price.

Ackman also said that he would return the fund to the blank-check company’s investors if the U.S. Securities and Exchange Commission approves his SPARC or special purpose acquisition rights company.

On approval, investors would receive $20 in cash and one SPARC warrant for each share. Unlike a SPAC, a SPARC wouldn’t require investors to contribute capital until a target is identified. It would also eliminate the need to find a deal within the two-year period typically required with a SPAC. 

Ackman on Friday said in a tweet that the goal of SPARC is to eliminate PSTH’s opportunity cost of capital for shareholders by enabling the return of cash in trust while preserving the option value of investing in our next deal at cost.

“If you find yourself in a leaky boat, often times you are better off switching boats than patching leaks to complete the mission,” he wrote on Twitter.

(With inputs from Bloomberg)

Picture Credits: Associated Press

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