Anzu Special Acquisition Corp I (NASDAQ:ANZU) announced in an 8-K this morning that it has entered into extension support agreements effectively backstopping up to 3,311,894 shares through its February 28 extension vote.

Holders of these shares are to inform Anzu three business days prior to the vote (today) how many of these shares they intend to redeem. For every 100,000 shares these investors still hold on the other end of the vote, Anzu’s sponsor will distribute to them 20,000 promote shares (0.1%) up to a maximum of 80,000.

As such, these investors will max out this inducement by not redeeming 400,000 shares, but they have agreed to vote all shares in favor of the extension. That is a meaningful distinction in this case.

There is typically little drama around extension votes themselves, but Anzu has set up a bit of game theory for itself in the upcoming vote by originally being one of the few SPACs insisting on not paying for potential excise tax liabilities from sponsor funds outside of the SPAC’s trust. It updated its stance this week by announcing that it had tapped an insurance agent to cover the taxes, but only if it liquidates in 2023 and only if this extension is passed.

With that change, Anzu’s redemption rate jumps up from $10.07 to $10.17 for this vote. Shareholders will still get this rate if Anzu closes a deal later this year, but any other scenario including a close or liquidation in 2024 would potentially see the cash per share drop again.

Nonetheless, the situation is more friendly to investors than before when shareholders may have considered the option of voting against an extension and forcing an early liquidation over the excise tax issue.

Anzu does have a non-binding letter of intent (LOI) for a $150 million deal with medical device company Envoy Medical and would potentially have the time to close this if the extension of its deadline from March 4 to September 30 passes. This LOI requires the SPAC to have at least $40 million in its trust in order for it to close.

There could also well be more agreements to come. Anzu has adjourned this extension meeting twice and announced new terms following each postponement. It only has three business days left after the new February 28 meeting date before its deadline hits.