SPAC question.

Amun Ra

Amun Ra

I was watching the latest episode of Billions last night and there was this part where Mafee and Dollar Bill put a big chunk(or maybe all of their money) into an SPAC. The plan was the SPAC was going to be used to buy up real estate, but some politics and stuff got involved and it was looking like they wouldn't be able to close on the real estate and suddenly they were panicked they would "lose everything"

How is that possible? I mean, I don't know much about SPACs, but if they can't find a deal, doesn't the money thats left over go back to the shareholders? How could someone lose everything in an SPAC when a deal doesn't close? I get they could lose a little bit in fees that were spent to try to close the deal, but everything on an unclosed real estate deal? What am I missing because the show Billions usually doesn't get trading THAT wrong, so I'm thinking maybe I got something wrong, but I don't see where.
 
Robert Morse said:
You can lose everything, if you are the company being acquired by the SPAC and the they do not buy you, and you depended on the funds to operate.
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When companies are acquired isn't there some kind of walk away fee?
 
Robert Morse said:
You can lose everything, if you are the company being acquired by the SPAC and the they do not buy you, and you depended on the funds to operate.
More...

But the SPAC can't lose, right? Like if the SPAC finds a company they want to acquire, but then the deal falls apart, all the people that invested money in the SPAC still get all or most of their money back, don't they?
 
Amun Ra said:
But the SPAC can't lose, right? Like if the SPAC finds a company they want to acquire, but then the deal falls apart, all the people that invested money in the SPAC still get all or most of their money back, don't they?
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I don't know. I thought a SPAC was a shell co with a bank account that traded like a stock in hopes of acquiring something. My question was more in how merger deals work.
 
When SPACs are formed, any funds raised are held in a trust account. Usually a SPAC as a limited time period (usually 2 years) in which to enact a reverse merger (aka business combination) and, if that doesn't happen, then funds are returned to shareholders.

Review the IPO document of the SPAC to determine exactly what they are proposing and the liquidation provisions if that doesn't occur within the timeframe specified.

SEC has a lot more on SPACs here:
https://www.sec.gov/oiea/investor-a...t-you-need-know-about-spacs-investor-bulletin
 
NorgateData said:
When SPACs are formed, any funds raised are held in a trust account. Usually a SPAC as a limited time period (usually 2 years) in which to enact a reverse merger (aka business combination) and, if that doesn't happen, then funds are returned to shareholders.

Review the IPO document of the SPAC to determine exactly what they are proposing and the liquidation provisions if that doesn't occur within the timeframe specified.

SEC has a lot more on SPACs here:
https://www.sec.gov/oiea/investor-a...t-you-need-know-about-spacs-investor-bulletin
More...


This is exactly what I understood too, but that show last night threw me for a loop that maybe there was something I didn't understand. Maybe they just got it wrong on purpose because it made it sound more dramatic if they had something to lose.
 
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