Dozens of SPACs May Lose Exchange Listing
By David Feldman at 23 February, 2009, 8:14 am
DealFlow Media’s SPAC Wire today reported dire news for about 40 SPACs. They have received notices from the NYSE Afternext (formerly the American Stock Exchange) that if they do not hold their required annual shareholder meetings, in most cases with a plan submitted by March 10, 2009 and implemented by August, they may lose their listing on the exchange and have to move trading to the OTC Bulletin Board. In the past the Amex was pretty lenient about letting the meeting get delayed.
The big question, of course, is whether the SPACs want to spend the money to call and hold a shareholder meeting when their very survival may be at risk. Also, some SPAC sponsors and underwriters may worry about shareholders expressing concerns and maybe even trying to oust management.
The exchange listings are helpful to get the SPAC public since it avoids state regulation of the SPAC’s IPO. Once a merger happens with a change in control, however, if control in fact changes, the exchange requires a brand new initial listing application. So while there is clearly marketing benefit to having an Afternext listing, any company that merges with a SPAC trading on the OTC Bulletin Board presumably can move up to a higher exchange quickly.
Hang in there SPACs!
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