The Kew Media Group is determined to become the sixth member of a rather select group, those that have filed documentation to raise capital for a special purpose acquisition company — and have been successful in receiving support from investors.
This week the issuer filed a new prospectus for a $70 million offering of Class A Restricted Voting Units with each unit consisting of a share plus half a share purchase warrant. Each unit will be priced at $10.
TD Securities, Cantor Fitzgerald & Co. and National Bank Financial are in charge of rounding up the buyers.
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Kew Media Group, which was the seventh SPAC to try and raise capital, has been there before. In November 2015, it filed a preliminary prospectus to raise $70 million again via an offering of restricted voting units. The idea was to find an acquisition over the next two years and bring it to a shareholder vote.
While the issuer wasn’t limited to a particular industry or geographic region for its so-called qualifying acquisition, given the interests of the founders and sponsors, the plan was to focus on targets that operate primarily in the “entertainment industry and/or related sectors” in North America and the U.K.
Three months later, the issuer filed an amended and restated preliminary prospectus that “amended and restated” the original Nov. 5 2015 prospectus. An amended filing was required because after three months the original document goes stale – meaning the issuer needs to update the financial statements to keep the document live.
That amended document ran out in early May. So this week the issuer filed a new preliminary prospectus. The amount that the issuer wants to raise stays the same ($70 million); the fees remain the same ($0.60 per share), as do the underwriters and the objectives. The only real difference between the new and the original is different shareholders’ equity: back in November 2015, shareholders’ equity on a pro forma basis after giving effect to the offering was set to be negative $970,000. With the new document the shareholders equity on the same basis is set to be negative $630,000.
Calls to Kew Media seeking a comment weren’t returned. A securities lawyer, who has worked on SPACs and written on the matter, said that Kew Media was required to file a new preliminary prospectus — rather than an amendment to the amended prospectus — because of the OSC. “There is a maximum of 180 days and then you have to start again,” he said.
If Kew Media is able to raise the $70 million of equity capital, then it will join the other five successful SPACs to have raised capital: Dundee Acquisition Corp., INFOR Acquisition Corp. Alignvest Acquisition Corp., Acasta Enterprises Inc., and Gibraltar Growth. Those five have raised more than $1 billion.
There was a sixth SPAC: last September Avingstone Acquisition Corp. filed a preliminary prospectus for a $110 million offering. It was seeking opportunities in “hospitality businesses and related real estate with strong growth potential, opportunities for operational improvement and in most cases an existing platform to pursue new market expansion.”
Last December it filed an amended prospectus, a move that kept its offering shelf ready. But in early March it withdrew its offer.
While five issuers have raised capital, none of the SPACs have found an acquisition target that through discussions has advanced to such a stage that it could be put to shareholders.