This morning the treasury department finally issued guidance around the issue of share buybacks, which has been haunting the capital markets since August when the 1% excise tax was first introduced. And in the nick of time too, since the tax goes into effect in less than week.
To be clear, the purpose of the excise tax was never about SPACs, they just got caught in its crosshairs thanks to the SPAC’s redemption feature. However, for some context around the situation, the 1% excise tax came about as part of the Inflation Reduction Bill that was passed this summer. Senator Kyrsten Sinema, in a last minute change, insisted the tax increase on carried interest for private equity be removed and instead, as a concession, the 1% excise tax on stock buybacks was put in.
On its surface, it appeared to be specifically meant for the typical share buyback you think of when corporations literally buy back their stock. However, all sorts of asset classes were caught up in it and affected such as redeemable preferreds and SPACs since a “redemption” is considered a buyback as well. There was quite a bit of confusion as to its interpretation and so, here we are today with the Treasury Department putting out some much needed guidance for how companies should proceed. However, in typical government fashion, it’s about as clear as a foggy windshield in blizzard.
Nonetheless, it appears that SPACs undergoing a “complete liquidation” will be spared the excise tax. To wit:
L Catterton Asia (NASDAQ:LCAA) announced this morning that it has upsized the committed financing in its combination with EV sports car maker Lotus to $870 million in total. The latest fuel injection comes in the form of $750 million in convertible notes and PIPE commitments under so far undisclosed terms. Counted purely as a PIPE,...
At the SPAC of Dawn SPAC closing timelines can always be somewhat unpredictable, but PROOF I (NYSE:PACI) has the opportunity today to vie for a recent speed record today. It announced a combination with private aviation firm Volato 118 days ago on August 2 and its shareholders are set to vote to approve the combination...
Dune Acquisition Corporation (NASDAQ:DUNE) announced in an 8-K today that it has once again modified its agreement with sustainable energy firm Global Hydrogen. This amendment marks a reduction in Global Hydrogen’s equity value from $48 million to $43 million, alongside an increase in the available shares of common stock that is for the Global Gas Corporation...
At the SPAC of Dawn After mixed signals for the consumer sector earlier this month, initial Black Friday sales numbers have shown that Americans were not too stuffed for a shopping spree this year. Shoppers bagged between $9.8 billion and $10 billion in goods online, depending on one’s preferred source, either of which would be...
Terms Tracker for the Week Ending November 24, 2023 Welcome to our weekly column where we discuss the findings from our IPO terms tracker based on the previous week’s pricings. This being the Thanksgiving holiday week, we are thankful for a lot of things, but mostly that 2023 is almost over. It’s been a rough...