Ackman plans to return funds to his $4 billion SPAC’s investors
By Shubhangi on Aug 21, 2021 | 03:31 AM IST
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