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Tuscan Holdings Corp. Files for $200M SPAC IPO
by Kristi Marvin on 2019-02-13 at 11:11pm

Another new SPAC filing!  

Wedneday evening, Tuscan Holdings Corp. (THCBU), debuted their $200 million SPAC focused on the cannabis industry and will be led by Stephen Vogel, as Chairman and CEO.  Mr. Vogel is currently the President of Twelve Seas Investment Company, a $207 million SPAC focused on the Pan-Eurasian region, and was formerly Executive Chairman of Forum Merger Corporation.

This SPAC’s terms stand out for a number of reasons. As you can see below, it’s a 100% in trust, 21 month, 1 share + 1 warrant SPAC. However, you will also notice that Tuscan added the Crescent Term, but with a threshold of $9.50.  Right now, of the five deals we have on file, all of them have included the Crescent Term and all of them, except Tuscan, have used a threshold, so far, of $9.20. Plus, EarlyBirdCapital is participating in the private placement purchase of warrants (the at-risk capital) for 100,000 units of the total 535,000 units total.  That’s a $1 million purchase.

However, what’s most interesting about Tuscan is the promote.  SPACs typically see management purchase a promote that is 20% of the total offering for a nominal fee of $25,000.  Sometimes, when underwriters participate in the at-risk private placement purchase, management will issue the underwriters some of the promote shares to compensate.  However, in Tuscan’s case, SPAC management is still receiving a 20% promote, but EarlyBird will be receiving 250,000 “Representative Shares”, that they also paid a nominal $25,000 for, instead. This is essentially a roundabout way of issuing additional promote-like shares to the underwriters.  Tuscan is not including the Representative Shares in their calculation of the 20% promote shares, but if we were to lump them in anyway for practical purposes, the Tuscan promote is really 20.8%.

Is an extra 0.8% significant? Well, not really. It’s just interesting that EarlyBird had to pay $25,000 for their representative shares and the Sponsors were not willing to give up 250,000 of their 5,000,000 promote shares (without over-allotment) to their underwriters who are willing to take on approximately 20% of the Sponsor at-risk capital.  To be clear, EarlyBird is not a sponsor of Tuscan Holdings. They are just sponsor-like without actually being a sponsor.

Regardless, we now have five SPACs on file to IPO and all should happen before the end of the quarter.  That means we are on track for (at a minimum) 11 SPACs for the first quarter. That also means, we are on track to at least come close to last year’s level of 46 SPACs.  However, in all likelihood, it’s looking like we’ll exceed that number but, it’s still early in the year.  Anything can happen.

Summary of terms below:

Tuscan Terms 2-13-19

EarlyBirdCaptial, Inc. is sole book-running manager and I-Bankers Securities, Inc. is co-manager.
Graubard Miller and Ellenoff Grossman & Schole LLP are issuer’s counsel and underwriter’s counsel, respectively.


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