To the extent that SPAC contacts and documents do not end on their terms, they are often amended as part of the SPAC transaction. For example, the option agreement can be changed by a vote of the holders of a warrant, the registration agreement can be replaced by a creditor`s agreement in shares, charters and statutes are often changed, etc. During a traditional IPO, the sponsor and directors and executives sign a 180-day freeze agreement from the time the IPO prices are set. In the case of a SPAC PPI, the normal blocking runs for up to one year from the conclusion of the SPAC transaction, subject to early termination if the common shares act above a fixed price (usually $12.00 per share) for 20 days out of 30 from 150 days after the closing of the SPAC transaction. The purchase price paid by the sponsor for the founding guarantees represents the sponsor`s “venture capital” in the SPAC and is calculated as an amount equal to the pre-insurance rebate (usually 2% of the gross proceeds of the IPO) more generally $2 million to cover the offer costs and working capital after the IPO. For this amount, the sponsor buys founders at a price of $1.50, $1.00 or $0.50 per warrant, depending on whether each unit sold in the IPO contains 1/3, 1/2 or 1 public action bulletin.  In addition to the settlement guarantees acquired during the IPO, most PACSs envisage that, as part of the SPAC transaction, an additional $1.5 million may be issued to the sponsor if all loans are converted by the sponsor to SPAC. The sponsor and all other founding shareholders generally agree, at the time of the IPO, to choose all the founding shares they held and all public shares acquired for the benefit of the SPAC transaction during or after the IPO. As a result, at least 20% of SPAC`s outstanding shares will be required to vote in favour of a transaction, with only 37.5% of the public shares needed to obtain a majority and approve the transaction. SPAC and the sponsor enter into an agreement under which the sponsor acquires the guarantee of creation. The purchase price is financed one business day before the close of the IPO and again one working day before the end of the green shoe exercise.
Similarly, we continue to advise clients when negotiating forward purhase agreements with potential SPAC sponsors. Given that there remains an important selling point for the new SPAC CPIs, we anticipate that third-party investors willing to engage in such advance sales contracts will continue to have access to the economy at the sponsor level, either through the awarding of founding shares, private placement guarantees or by a SPAC sponsor.