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Not true. Remember we are only talking about shares issued and cash received. The warrants are not involved. The price per share is .679 cents
Thank you NorCalTommy. I am using the numbers straight from the S4 so the others won't get confused.
It is a simple calculation. simple truth
It is incorrect to state that the merger is for .89 cents per share when it is really .679 cents.
The S-4 clearly shows how many shares will be issued.
Together with the 335,487,636 NioCorp Common Shares issuable to the holders of GX Class A Shares, including the Advisor Share Issuances, the 83,871,907 NioCorp Common Shares issuable upon exchange of the Second Merger Class B Shares and the 175,199,102 NioCorp Common Shares issuable upon exercise of the NioCorp Assumed Warrants, up to an aggregate of 594,558,645 NioCorp Common Shares may be issuable in connection with the Transactions representing 213% of NioCorp’s total outstanding Common Shares, prior to the Transactions, on a non-diluted basis.
That is a valid point. If I could edit my post I would remove the reference to "Mark says".
With all respect, if the deal is such a good investment for niobf shareholders why hasn't the stock moved up since the merger announcement? Why isn't money pouring in on the buy side? In fact everyone is jumping in on the gxiiw side moving the warrants up from .10 to .70
I hope that is true. But this year the average for spac redemptions is something around 50 to 80%
https://www.businesswire.com/news/home/20220630005918/en/ICR-the-Leading-SPAC-Communications-and-Advisory-Firm-Publishes-Q2-2022-SPAC-Market-Update
Redemption trends in the first half 2022 remained the focal point of SPACs, target companies and the institutional market. Redemption rates have increased from 11% in Q1 2021 to 85% in Q1 2022, and improved slightly to 79% in Q2 2022. It has become increasingly challenging for SPACs and target companies to raise PIPE funding so teams are evaluating different financial structures to raise capital.
I thought we would not get results until FS is out in spring. As everyone else I have no idea really. My point was 2 weeks in June. Now the story is changed could be 4-8 months or whatever.
All we can do is evaluate the potential and the risks.
More doubt: We need to look at a possible outcome of this deal - that about half of gxii redeems their shares instead. That would mean only half the cash.
It would also double the negative effect of the founders class B shares. Right now they will be getting 83 million shares. That doesn't change. They get the 83 million shares whether Niocorp receives $300 million or even $150 million. I will add this outcome to my chart later.
Now if we only get $150 million less $15 million in fees for total of $135 million we will obviously still be looking for cash. Yorkville will not be able to make up the difference.
That is not true. Read the warrant agreement. Spac public warrants are not cashless unless the company approves it later.
Yes, however $115,000,000 raised from warrants divided by 175 million new shares issued from warrants is about .66 a share. No matter how we slice it we can not escape the spac founders getting their huge piece of niocorp. Mark and gxii are trying to hide the facts, very clever, but the S4 does show a shareholder vote will be needed for 594 million new shares, that added to the 279 million OS comes to a very large number (not counting the yorkville etc). Much bigger than Walter's prediction of a total around 400 mil.
Putz that is a great question for Mark. I hope someone asks him on Thursday.
Why did we cut a lowball equity deal before getting the REE results?
It appears Mark sold out the existing shareholders. But why?
In June we all anticipated demo results. It was thought 2 weeks of continuous testing we would have our results. But then nothing. What we did get after those 2 weeks was Mark signing an NDA with GXII. Now Mark says we won't see any test results until the spring. What is really going on here?
Yes that is great news. I am always pleased to remember the glory days of the Cornhuskers.
With the Governor present, will be great exposure in the media for Niocorp and even better to have his support of a great economic project for Nebraska.
Here is what I don't like about spacs. The class A shares cash out, or redeem at $10, leaving the merger company with little of the promised money and reliance on the PIPE.
The article below is worth the read and a excellent summary of the dangers.
https://www.institutionalinvestor.com/article/b1y1r55twc3vn6/SPACs-Are-Sputtering-Desperate-New-Terms-Could-Send-Them-Into-a-Death-Spiral
SPACs Are Sputtering. Desperate New
Terms Could Send Them Into a Death Spiral.
By Michelle Celarier May 16, 2022
When law professors Michael Ohlrogge and Michael Klausner first started studying special purpose acquisition companies four years ago, they were stunned by what they found. Looking at companies that had merged with SPACs in 2017 and 2018, the valuations were so terrible that the professors wondered why anyone would resort to going public via a SPAC.
But the professors were quickly disabused of their study’s conclusions. “Everybody told us, ‘Oh, no. The 2015 IPOs, the 2017, 2018 mergers — everybody knows those were the bad ones. Now they’re different,’” recalls Ohlrogge, an assistant professor at New York University School of Law.
So the professors threw out all their work and collected a whole new batch of data based on 2019 and 2020 SPACs — but their bottom-line conclusion wasn’t any different.
SPACs are a complicated, opaque investment structure in which sponsors raise money in an initial public offering — creating what’s known as a blank-check company — and then go out and find a company to buy with that box of cash. To accomplish this task, they offer the IPO investors an incredible deal: a money-back guarantee on their initial $10-per-unit investment, including shares and warrants plus interest. The sponsors themselves skim a lot off the top, taking 20 percent of the IPO units for a nominal fee.
Ohlrogge and Klausner, a professor at Stanford Law School, discovered that these costs quickly added up: The dilution from warrants issued in the IPO, along with virtually free shares for sponsors and banking fees for both the IPO and the merger that ended up being two to three times higher for a SPAC than for a traditional IPO, all ate into the amount of cash the companies had once the merger happened. Because the companies passed on these costs to the remaining shareholders, the companies ended up with about 40 percent less cash than they started with.
“And then they’re trying to turn a profit for their investors when they’re starting 40 percent in the hole,” Ohlrogge explains. “That’s just really hard to do, and there’s just very few sponsors who can surmount that on a regular basis.”
The stock prices bear out the analysis. More than 300 companies that have gone public via SPAC mergers since the start of 2018 have averaged a loss of about 33 percent from the IPO price of the SPAC, versus an average loss of 2 percent for the 1,000 other companies that chose to go public through a traditional IPO as of mid-April, according to Renaissance Capital, which tracks IPOs. Compared with the S&P 500, which gained more than 50 percent during that time, the SPAC numbers are little short of a disaster.
But in October 2020, when the professors published their study — “A Sober Look at SPACs” — the stocks of SPACs were soaring even before the sponsors found targets. Few would listen to the criticisms.
“People were like, ‘Oh, no. The ones you analyzed, everybody knows those were the bad ones. It was obvious. But now they’re good,’” Ohlrogge told Institutional Investor in a recent interview.
Investment bankers, investors, and SPAC sponsors all sang the same refrain: “It’s different this time.”
To be sure, SPACs had previously been a murky backwater of finance; they were known as the vehicles through which second-tier private equity companies dumped their dodgy holdings into the market by offering IPO investors — mostly hedge fund buyers known as the SPAC Mafia — free money in the form of easily redeemable shares and warrants. Following the financial crisis of 2008 — which halted SPAC issuance for a few years — the Securities and Exchange Commission decided to let IPO investors vote for the prospective merger even if they wanted to cash out, at which point they could get all their money back, with interest, and keep their warrants.
Ohlrogge and Klausner weren’t the only people trying to sound the alarm about the structural weaknesses of the SPAC model. Pershing Square Capital CEO Bill Ackman, who launched the world’s largest SPAC with $4 billion in July 2020, criticized SPACs’ free sponsor shares as “egregious” and said he would take none. He also changed the terms of his SPAC’s warrants to entice investors to stick around, limiting the warrants’ potential for dilution.
Short-sellers also recognized trouble was brewing. Hindenburg Research founder Nate Anderson became famous in September 2020 for his truck-rolling-down-a-hill video exposé of electric-truck maker Nikola — the first big SPAC short during the boom and one that was followed by criminal charges against founder Trevor Milton, who has pled not guilty.
“SPACs have always been an inferior way to go public. But they are a quick way to go public,” says Anderson, who went on to target five other so-called deSPACs — postmerger SPAC targets. They include Clover Health Investments, Lordstown Motors, DraftKings, Pure Cycle, and Tecnoglass. “There is still an extensive number of companies that are trading at multibillion-dollar valuations that are worth nothing at all,” Anderson notes.
But such warnings were largely ignored as the new crop of SPACs were sponsored by top-notch Wall Street players like hedge funds and venture capital and private equity mavens. The list of brand names is practically endless, including people like former Goldman Sachs CEO Gary Cohen and former Citigroup banker Michael Klein; investing pros Barry Sternlicht and Bill Foley; tech superstars Reid Hoffman and Chamath Palihapitiya; hedge funds Pershing Square, Starboard Value, Glenview Capital, and Third Point; and private equity funds Apollo Global Management, KKR, TPG Capital, and Fortress Investment Group.
Big banks like Citigroup, Credit Suisse, and Goldman Sachs were suddenly topping the SPAC underwriting league tables, while multibillion-dollar hedge funds Millennium Management, Magnetar, and Citadel became some of the biggest investors in SPAC IPOs. Institutional investors Fidelity, BlackRock, and T. Rowe Price were also moving heaven and earth to get allocations into PIPEs — private investments in public equities — which supplied the additional capital required for SPACs to consummate their merger deals, especially when many IPO investors redeemed.
Surely the combination of all this smart money would make SPACs better. But it didn’t. A few months after Ohlrogge and Klausner suggested taking a “sober look” at SPACs, the bubble began to burst. Instead of recognizing that the analysis was spot-on, however, SPAC participants had another answer. “Now I’ve had people tell me like, ‘Oh, everybody knows that the late-2020 and early-2021 SPACs are the bad ones. It was just too much optimism and too bubbly. Now they’re good,’” Ohlrogge recalls.
“There’s no limit to how many times people can make this claim,” he adds, sighing.
The SPAC model has always been an ingenious, if complicated, way to convince investors and companies alike to hop aboard the gravy train, and now sponsors (and their bankers) are coming up with creative ways to keep it chugging along. But Ohlrogge says some of the new features are only making things worse.
“They have the potential to turn into a death spiral for SPACs.”
Like meme stocks and crypto, SPAC mania was driven in part by a torrent of cheap capital that became available during the Covid-19 pandemic. That mania peaked in mid-February 2021 with the announcement of the merger of electric-car company Lucid Group with Klein’s fourth Churchill Capital SPAC. The heavily hyped deal, like several others, quickly fell from its lofty heights as predeal forecasts were slashed. Lucid is now under investigation by the SEC for financial projections made in connection with the merger, but it remains one of the few deSPACs that is trading above its $10 IPO price. Lucid is now about $16 per share, though that’s still a steep fall from the $52.90 per share at the February 14 close, when rumors of the merger came out. Lucid says it is cooperating with the probe.
Although the Lucid deal was the apex of SPAC froth, the SPAC downturn picked up momentum a little more than a month later with the demise of Bill Hwang’s Archegos Capital Management, which last month was indicted for fraud in federal court, along with Hwang. According to Peter Hébert, co-founder of venture capital firm Lux Capital, when Archegos blew up in late March, “prime brokers started to rein in risk, and that drained liquidity from the traditional SPAC players. It also happened to coincide with a peak insanity, when two people and a dog were basically declaring a SPAC and raising money.” (Lux is an investor in nine companies that merged with SPACS and, like so many, are trading below their offering prices. Two other companies in which Lux has invested have SPAC deals pending.)
Today the SPAC market is in disarray, as redemptions, regulations, and ruin mount. In 2022 there have been only 67 SPAC IPOs, raising some $11.6 billion, compared with 613 raising $162.5 billion last year. As of late April, SPAC sponsors were canceling their planned IPOs at a furious rate, with Bloomberg reporting that some 62 SPACs that were slated to raise more than $17 billion have nixed those plans. Since its peak in June 2021, the deSpac Index was down more than 70 percent as of May 10.
One reason: SPAC investors who can vote for the merger deals but sell out on the announcements and get their money back are doing just that. Redemptions in 2020 averaged 80 percent and are now at about 90 percent, according to market sources.
“High redemptions say the deal is not attractively priced,” says one long-term SPAC investor at a family office. “In the majority of SPACs, the valuations are not sustainable outside of the SPAC conference room where the SPAC target, sponsors, accountants, and lawyers and bankers are high-fiving each other.”
He bemoans that “every day a deal closes, the stock just goes straight down.” For a recent example, he points to ECP Environmental Growth Opportunities’ deal with Fast Radius. When it was finalized in February, more than 90 percent of the SPAC’s IPO investors redeemed and the stock quickly went from $10 to under $1 per share.
Consider what has happened to the SPACs sponsored by LinkedIn founder Reid Hoffman and tech entrepreneur Mark Pincus. Their Reinvent Technology Partners has launched four SPACs, only three of which have closed. The first went public in September 2020 — as the boom was getting underway. When it agreed to merge with Joby Aviation on August 10, 2021, 62 percent of the IPO’s initial investors elected to redeem their shares. When the second one, with Hippo Insurance, closed on August 2, some 84 percent of shareholders wanted out. Hippo’s stock now trades around $1.60; Joby Aviation is below $6. The most recent deal, with Aurora Innovation, closed in November and trades below $4. More than 77 percent of its IPO investors opted to redeem.
The rising level of redemptions leaves the funding for the merger deals almost entirely up to PIPEs. “The PIPEs are a foundational cornerstone of a successful SPAC deal. If you find institutions to validate the transaction and its valuation, then any other investors may choose to leverage that due diligence to get comfortable with committing capital to it,” explains Ben Kwasnick, founder of SPAC Research, which tracks the market.
But there isn’t enough money coming in from PIPE deals to fill the hole. This year, PIPEs have raised only about $2.8 billion, compared with almost $14 billion in the peak month of February 2021, according to data provider SPACInsider. Fidelity, which has done $32.2 billion in PIPE investments in the past three years, made its last one in October, and BlackRock, which committed $24 billion to PIPEs during the same time period, did its last in July. Those two firms account for more than 60 percent of the $88.1 billion of PIPE money that has been raised in the past three years, according to SPACInsider.
PIPE investors have also been losing money. Last year, Michael Cembalest, chairman of market and investment strategy for J.P. Morgan Asset Management, tracked the shifting returns for different classes of SPAC investors, and the numbers for PIPE investors weren’t pretty. Although some now are getting big discounts, PIPE investors historically paid $10 per share — but without the redemption rights of the IPO investor. And by August of last year, PIPE investors were in the red (down a median 3 percent) on the commitments they had made since January 2019, compared with a median gain of 30 percent by mid-March of 2021. Cembalest hasn’t updated his numbers, but market participants confirm that PIPE investors have continued to lose money this year.
Those investors have “sold out virtually everything,” says Lux Capital’s Hébert, who argues that is because they have viewed SPACs as an asset class. Without these investors, deals aren’t getting done, which means that some 600 SPACs out of about 1,000 that have gone public since 2020 and raised a total of $257 billion in their IPOs are frantically looking for partners. “There is definitely an air of desperation out there,” he says. Lux Capital raised its own SPAC but has yet to find a deal and may decide to liquidate it.
Lux would be in good company, as at least half of these still-searching SPACs are expected to liquidate and return capital to investors this year. One high-profile one could be Ackman’s $4 billion Pershing Square Tontine Holdings, which has yet to announce a deal with a merger partner after its plans to take a stake in the IPO spin-off of Universal Music Group from Vivendi was nixed by the SEC last summer. Tontine’s 24-month time period to reach an agreement with a merger partner ends in late July, and litigation and proposed SEC rules make it unlikely Tontine will extend the time frame.
“There are a handful of people who will ultimately hand back money because they were unable to get a deal done,” says Hébert. “We have our reputation to uphold. And if there is not a good deal to be done, well, God damn it, we’re not going to do it.”
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In retrospect, Social Capital founder Chamath Palihapitiya, at one point known as the king of SPACs, did more than any other single person to make the case for taking a speculative tech company public via a SPAC instead of the traditional IPO — a shift in the SPAC world that vastly inflated the bubble.
Palihapitiya took his first SPAC public in September 2017 with little fanfare. Twenty-two months later, he was running out of time to find a merger partner before he would have to return the cash he had raised — $690 million. So in July 2019, his SPAC agreed to merge with Richard Branson’s Virgin Galactic, a loss-making pie-in-the-sky venture. It would become the first publicly traded company whose business plan was to send tourists to space.
Virgin Galactic went public on October 28, 2019, and only 23 percent of the original IPO’s shareholders opted to redeem. Those that stuck around initially did well: By February of the next year, the stock was trading over $33 per share — more than triple the $10 per share for the IPO. The rocket emoji symbolizing it became a favorite among the Reddit crowd of retail investors who began to surge into SPACs both pre– and post–merger announcements.
The Virgin Galactic frenzy, coinciding with triumphs by Elon Musk’s SpaceX and Jeff Bezos’s Blue Origin, would send the stock soaring past $55 per share last year — before it fell off a cliff when Palihapitiya sold his stock, pocketed $200 million, and then resigned as chairman. The company’s premerger financial projections were not borne out, triggering investor lawsuits, and the stock now trades under $7 per share. But its performance isn’t the worst of the lot of so-called space deals. Since the Virgin Galactic deal, eight other space companies have gone public via SPACs; their stock prices now average $5.05 per share.
It isn’t difficult to figure out why Palihapitiya glommed on to the SPAC model. As a venture capitalist, he was always looking for exits for companies at his Social Capital VC fund. SPACs had a singular advantage. In a SPAC merger transaction, companies could make all sorts of financial projections about the future, unlike in traditional IPOs, as Palihapitiya bragged on Twitter. That was extremely helpful for the unicorns of the VC world, which had more vision than income or — in some cases — revenues.
“What happened was these high-growth innovative companies said, ‘Wait a second. If I go public with a traditional IPO, I can’t talk about the future. I’ve got all these restrictions,’” says Mark Yusko, founder and chief investment officer of Morgan Creek Capital Management. “‘Hey, there’s this new thing where I can make forward-looking statements. I can talk about my vision for the future. I don’t have to have ten years of operating history.’”
A believer in the virtue of SPACs, Morgan Creek last February launched a SPAC exchange-traded fund, which holds both premerger and deSPAC names. It has fallen by about 60 percent since then, although Yusko argues that many of these companies, like Amazon before them, will eventually fulfill their promise.
But skeptics like short-seller Anderson disagree. “The chart for almost every postmerger SPAC resembles a pump-and-dump,” he says. “I don’t think that’s an accident. We’ve seen several SPACs go public, then immediately rug-pull their own outrageous projections. These were companies that often had zero revenue, that were projecting outrageous kinds of metrics, projecting to completely dominate industries within years or create brand-new industries that would disrupt entire economic ecosystems. It was a rush of garbage flooding the public markets.”
Take, for example, Hindenburg’s most famous SPAC short: Nikola, which peaked at $65.90 soon after its merger with VectoIQ Acquisition Corp. was completed in June 2020. Nikola’s alleged sketchiness notwithstanding, the electric-vehicle SPAC boom continued, culminating in more than a dozen electric-vehicle–related SPAC deals. Aside from Lucid, most of those have also been a disaster for investors, with a current average share price of $6.62, according to SPACInsider. (Nikola is now trading around $6 per share.)
Another of Anderson’s targets was Clover Health, which had merged with one of Palihapitiya’s Social Capital SPACs. It is now under investigation by both the Justice Department and the SEC. Investors are suing Palihapitiya and Clover for misleading them ahead of the merger, and the stock is under $3. (Clover Health and Palihapitiya have denied wrongdoing.)
So far, Palihapitiya has launched IPOs for six SPACs, plus four others with hedge fund Suvretta Capital. Out of the ten SPACS, however, four have yet to find a merger partner and two other pending deals haven’t closed yet. Those that have deSPAC’ed — Virgin Galactic, Opendoor Technologies, Clover Health, and Sofi — are all trading more than 40 percent below the initial $10 IPO price.
If the hype that made such deals attractive early last year has died down, one argument in favor of SPACs is that they are suffering the same fate as all other growth companies. Yusko is quick to point out that SPACs have done better than Cathie Wood’s Ark Innovation ETF, which is down more than 70 percent since the peak in February 2021.
But regulators have also had a hand in popping the bubble. Last spring, the SEC signaled it was going to crack down on the perceived ability of companies merging with SPACs to make forward projections without suffering any legal consequences. Because these deals were considered mergers, SPAC sponsors, target companies, and their advisers believed they were protected by the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995, which limits the ability of investors to sue over financial projections.
IPOs do not have that safe-harbor protection, so they do not make forward-looking financial projections in their prospectuses or for 40 days after shares start trading.
One of the toughest provisions of the new SPAC rules unveiled by the SEC in March would not only end that safe-harbor provision for SPACs, it would also make all of the actors — sponsors, companies, and advisers — liable for false claims made in the deSPAC transactions, just as they are for IPOs. As a result, three top underwriters — Citigroup, Goldman Sachs, and Credit Suisse — appear to have cooled on the business.
Last month, Bloomberg reported that Citigroup has “paused” the underwriting of SPAC IPOs pending clarification of the new SEC rules regarding potential legal risks. Citigroup was the book runner for almost $30 billion in SPACs in 2021, making it the top underwriter that year. It handled 108 of the year’s IPOs for a 14 percent market share, according to SPAC Research. This year it has done only five, raising a little more than $1 billion.
Credit Suisse, the top SPAC underwriter in 2020, has underwritten only one SPAC in 2022. The Swiss bank has formed an internal committee to look at all SPACs, which would then have to be reviewed by the firm’s investment banking committee and the new “tactical deSPAC committee,” notes an individual familiar with the effort.
He says that in the bank’s only 2022 SPAC deal in the U.S., for Investcorp India on May 9, Credit Suisse took no deferred underwriting fees, as a result of concerns over potential liability for the deSPAC transactions. Typically, underwriters take 2 percent on the front end — the IPO — and an additional 3.5 percent when the merger transaction is completed.
Fears about liability are also leading Goldman Sachs, the second-ranked SPAC underwriter in 2021, to exit the market, according to Bloomberg. This year, it has underwritten only two deals, according to SPAC Research.
Citigroup and Goldman did not respond to requests for comment, and Credit Suisse declined to comment.
But though the SEC’s hard line may help stem the flood of shoddy SPACs, it seems unlikely to solve the structural problems that beset the entire sector — which are getting even worse.
NYU professor Ohlrogge is still somewhat baffled by the SPAC phenomenon. “I did my PhD in finance and financial engineering, and I taught derivative pricing for five years. It gets you into this notion of efficient markets,” he explains. “But then studying SPACs has completely shattered my illusions of any notion of perfectly, or even close to perfectly efficient markets, because there’s just so much craziness that has persisted for so long with them.”
To some players, however, the SPAC market seems perfectly rational. First there are the sponsors. Because they pay only $25,000 for 20 percent of the IPO shares, doing a deal — any deal — is profitable unless the merged company goes bankrupt.
And last year, the sponsor returns were wild.
In March 2021, when Cembalest looked at SPAC returns, he found that the sponsors had raked in a median 468 percent return since January 2019, even after accounting for all their concessions, forfeitures, and vesting. By August, that number had gone down to 284 percent — still an almost unheard-of gain on a risk-free trade.
Then there are the IPO investors — the so-called SPAC Mafia, or SPAC arb players. They certainly appear to be rational players. From January 2019 to mid-2021, they made a median 16 percent return, according to Cembalest’s calculations. In fact, their gains were the same in August 2021 as in March of that year.
“It was almost like free money to buy the unit and sell the announcement,” says the family office investor. The SPAC yield, he notes, is still greater than the 10-year Treasury bond. “Why buy government bonds when you can just flip SPACs?”
What’s perhaps most astonishing is that to keep the SPAC machine humming, the terms for these investors — as well as for PIPE investors — have only become more lucrative, according to Ohlrogge and Klausner.
“SPACs have been evolving recently in ways that make them even more expensive vehicles to take companies public, and thus in ways that will likely lead to even worse returns for shareholders who hold their shares through SPAC mergers,” the academics wrote in a new paper published in March.
Ohlrogge and Klausner found, for example, that to lure PIPE investors, an increasing number of SPAC sponsors are letting these institutional investors buy in at steep discounts, typically $8 per share. More-complex and opaque terms for private investments make it even harder to know what they are paying — and how much it will end up costing other shareholders in the end.
The professors highlight a deal by Yellowstone Acquisition for Sky Harbour that had an “equity prepaid forward transaction.” The bottom line is that the investor is loaned money by the company to buy its shares, and if the price of the stock falls below $5 in the 18 months following the merger, the investor doesn’t have to repay it. The deal closed on January 25, almost 90 percent of the shareholders redeemed, and the stock is currently trading around $8 per share.
More-lucrative warrant terms are also being used to entice IPO investors, and the traditional 24-month time frame to find a deal is being shortened to as little as a year, according to the professors.
Another relatively new effort they point to includes overfunding SPAC trust accounts by placing additional funds in them. Instead of $10 per share, the trust accounts now have $10.20, making them still more lucrative for those who paid $10 per share and redeemed, getting $10.20 instead.
But it’s something of a vicious cycle, which could lead to the downward spiral Ohlrogge envisions. Because the sponsors are typically repaid for the overfunding, he explains, “they drain even more value out of the SPAC and they have the potential then to lead to even worse returns for the SPAC at the time of the merger, which then could require even more generous benefits [to be] paid to the IPO-stage investors.”
Says Ohlrogge: “They need to find more ways to entice the IPO-stage investors to buy in, and that’s what they’re doing.” At least they’re trying.
SPAC warrants are usually all the same. Exercise price at $11.50 and company redemption at .01 when the stock is above $18.00. They are not cashless.
Draftkings did it immediately when the requirements were met.
https://www.globenewswire.com/news-release/2020/05/27/2039288/0/en/DraftKings-Announces-Redemption-of-Public-Warrants.html
DraftKings Announces Redemption of Public Warrants
BOSTON, May 27, 2020 (GLOBE NEWSWIRE) -- DraftKings Inc. (Nasdaq: DKNG) today announced that it will redeem all of its outstanding public warrants to purchase shares of DraftKings’ Class A common stock that were issued under the Warrant Agreement, dated as of May 10, 2019 (the “Warrant Agreement”), by and among Diamond Eagle Acquisition Corp. and Continental Stock Transfer & Trust Company, as warrant agent and transfer agent (as assigned to and assumed by DraftKings and Computershare Trust Company, N.A., a federally chartered trust company, and Computershare Inc., a Delaware corporation (collectively, “Computershare”), as warrant agent and transfer agent, pursuant to that certain Assignment and Assumption Agreement, dated as of April 23, 2020), and that remain outstanding following 5:00 p.m. New York City time on June 26, 2020 for a redemption price of $0.01 per warrant. Warrants that were issued under the Warrant Agreement in a private placement and held by the founders of Diamond Eagle Acquisition Corp. and former shareholders of DraftKings Inc., a Delaware corporation, are not subject to this redemption.
Under the terms of the Warrant Agreement, DraftKings is entitled to redeem all of such outstanding public warrants if the reported closing price of DraftKings’ Class A common stock is at least $18.00 per share on each of twenty trading days within a thirty trading day period. This share price performance requirement was satisfied as of May 21, 2020.
Computershare, in its capacity as warrant agent, has delivered a notice of redemption to each of the registered holders of such outstanding public warrants on behalf of DraftKings.
All such public warrants may be exercised by the holders thereof until 5:00 p.m. New York City time on June 26, 2020 to purchase fully paid and non-assessable shares of Common Stock underlying such warrants, at the exercise price of $11.50 per share.
Any such public warrants that remain unexercised following 5:00 p.m. New York City time on June 26, 2020 will be void and no longer exercisable, and the holders of those public warrants will be entitled to receive only the redemption price of $0.01 per warrant.
The shares of Class A common stock underlying such public warrants have been registered by DraftKings under the Securities Act of 1933, as amended, and are covered by a registration statement filed on Form S-1 with, and declared effective by, the Securities and Exchange Commission (Registration No. 333-238051).
Questions concerning redemption and exercise of such public warrants can be directed to Georgeson, 1290 Avenue of the Americas, 9th Floor, New York, NY 10104, telephone number 866-219-9786.
I agree that it opens the door to chaos.
Of the 15,666,667 warrants, 10,000,000 are public and 5,666,667 are private (founder's warrants) If exercised they will add up to 175,199,102 new shares.
The 10,000,000 public warrants GXIIW are not cashless. There are exceptions where the company could make them cashless. They can also be redeemed for .01 when niobf reaches 1.60 for 20 days (18.00 / 11.1829212 )
Of course the 5,666,667 private warrants are cashless. They can not be redeemed. They get the full 5 years of life after the merger.
GX Warrant Agreement
https://www.sec.gov/Archives/edgar/data/1826669/000121390021017023/ea138188ex4-1gxacquisit2.htm
My Chart was right all along.
From Niobf S4:
https://www.sec.gov/Archives/edgar/data/1512228/000153949722001757/n2574-x57_s4.htm
"Together with the 335,487,636 NioCorp Common Shares issuable to the holders of GX Class A Shares, including the Advisor Share Issuances, the 83,871,907 NioCorp Common Shares issuable upon exchange of the Second Merger Class B Shares and the 175,199,102 NioCorp Common Shares issuable upon exercise of the NioCorp Assumed Warrants, up to an aggregate of 594,558,645 NioCorp Common Shares may be issuable in connection with the Transactions representing 213% of NioCorp’s total outstanding Common Shares, prior to the Transactions, on a non-diluted basis."
The S-4 contains a timeline of negotiations of the merger:
The following chronology summarizes the key meetings and events that led to the signing of the Business Combination Agreement. The following chronology does not purport to catalogue every conversation among representatives of GX, NioCorp and other parties.
On March 22, 2021, GX completed its initial public offering (the “IPO”). Prior to the consummation of the IPO, neither GX, nor anyone on its behalf, contacted any prospective target business or had any substantive discussions, formal or otherwise, with respect to a transaction with GX.
From the date of GX’s IPO through the signing of the letter of intent (“LOI”) with NioCorp on July 31, 2022 (which is described in more detail below), GX’s management team, along with representatives of GX’s capital markets advisors, Cantor and BTIG, contacted, and/or were contacted by, a number of individuals and entities with respect to business combination opportunities.
As part of this process, GX’s management team considered and evaluated 61 potential acquisition targets in a wide variety of industry sectors, including six companies in the critical minerals or rare earths industry. GX’s management team also researched potential targets that would be positioned favorably in Environmental, Social and Governance categories and had discussions with investment bankers and consultants that had relevant expertise in these areas in an effort to find potential targets. From the date of GX’s IPO through July 31, 2022, GX entered into non-disclosure agreements with 42 of those potential acquisition targets (including NioCorp), and submitted non-binding indications of interest or presented potential terms to 14 potential acquisition targets following evaluation of, and discussions with, each such potential acquisition target.
Of the 14 potential acquisition targets that received indications of interest or that GX presented potential terms to, GX’s management team engaged in significant discussions with 12 of these targets (including NioCorp). These discussions included significant due diligence and/or detailed discussions with the senior executives and/or shareholders of each of the 12 targets. In addition to NioCorp, GX entered into an LOI with one other potential acquisition target, as further described below. GX did not pursue a potential transaction with the other acquisition targets for a variety of factors, including (a) the inability to reach mutually acceptable terms including valuation, (b) GX’s determination that each business did not represent a transaction that would be as favorable to stockholders due to a combination of factors such as business prospects, liquidity, strategy, management team, transaction structure and likelihood of execution, and (c) the decisions of such potential acquisition targets to pursue potential alternative transactions.
From the summer of 2021 into the spring of 2022, GX engaged in discussions with one of those potential acquisition targets. Company A is an Israeli company operating in the technology sector. On June 30, 2021, GX entered into an NDA with Company A, following which GX began receiving confidential information thereunder. Over an approximately eight-month period, GX’s management team held discussions with Company A’s management team. In August 2021, the parties signed a non-binding LOI that outlined certain key terms for a potential transaction and included exclusivity covenants binding on the parties. After a period of due diligence and negotiations, this LOI was amended to reflect new terms in February 2022, including the extension of exclusivity for a SPAC transaction. However, after further discussions, the parties were unable to come to a definitive agreement, as Company A did not want to move forward given the general economic and market conditions. As such, discussions were terminated in April 2022.
Between April 2022 and July 2022, GX entered into 10 NDAs with targets for a potential business combination, including with NioCorp.
Between May 2022 and July 2022, GX continued to explore and evaluate acquisition opportunities and made non-binding indications of interest or presented potential terms to three targets for a potential business combination, including to NioCorp.
During this time, GX continued to pursue opportunities in the critical minerals and rare earths industry and researched various potential targets in the space. In June 2022, Messrs. Arthur Baer and Jordan Bloom of GX’s management team attended a metals and mining industry conference, during which Mr. Baer met with three potential targets in the industry, and Mr. Jordan Bloom met with one such potential target. In addition, Mr. Baer identified and contacted a fourth target in the critical minerals space, and Messrs. Jay Bloom, Dean Kehler, Michael Maselli, Baer and Jordan Bloom of GX’s management team met telephonically with this potential target. One of the critical minerals industry targets that Mr. Baer met with in June 2022 subsequently met with Messrs. Kehler and Baer at GX’s corporate office to discuss such target’s pursuit of critical mineral opportunities and the opportunity for a business combination with GX. None of the conversations resulted in signing a nondisclosure agreement (“NDA”) or LOI or pursuing a business combination with these potential targets.
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On June 29, 2022, Mr. Baer of GX was introduced to Mr. Mark Smith of NioCorp.
On July 6, 2022, Messrs. Jay Bloom, Kehler, Maselli, Baer and Jordan Bloom held an introductory meeting via videoconference with Mr. Smith of NioCorp. Mr. Smith provided a non-confidential overview of the NioCorp business and GX’s management team provided background on GX, its principals and the potential benefits of a transaction with GX.
Also on July 6, 2022, GX executed an NDA with NioCorp, following which GX began receiving confidential information thereunder.
In July 2022, GX’s management team and NioCorp’s management team held several telephonic and videoconference meetings to discuss the rationale for a transaction between GX and NioCorp. During these calls, NioCorp’s management team provided an overview of NioCorp’s business, including its operations and its financing needs, both for current operations and to develop the Elk Creek Project.
On July 7, 2022, NioCorp provided GX’s management team with access to an electronic data room containing certain information about NioCorp and the Elk Creek Project. Between July 7, 2022 and July 18, 2022, GX’s management team reviewed the information, sent questions to and requested additional documents from NioCorp’s management team, which were subsequently provided or made available to GX’s management team.
On July 13, 2022, Messrs. Baer and Maselli held a videoconference meeting with representatives of Cantor to discuss NioCorp as a potential business combination target and receive input from a capital markets perspective on a potential transaction.
Also on July 13, 2022, Mr. Baer contacted NioCorp’s management team via email to schedule a follow-up due diligence session to discuss due diligence items, including near-term financing needs of NioCorp, the SPAC process and NioCorp’s corporate structure.
On July 18, 2022, Messrs. Jay Bloom, Kehler, Maselli, Baer and Jordan Bloom held a videoconference meeting with Messrs. Smith, Scott Honan and Neal Shah of NioCorp’s management team, to discuss the possibility of a transaction between GX and NioCorp and to discuss certain due diligence items provided to GX in connection with its evaluation of such a transaction.
At this time, GX decided to pursue discussions with NioCorp regarding a potential transaction because of GX’s view that, among other things, NioCorp represented a compelling opportunity in light of its strong management team and growth profile, established public market valuation, trading and shareholder base and status as a public company with Public Company Accounting Oversight Board (“PCAOB”) audited financials. Compared to NioCorp, GX and its advisors did not consider the other alternative acquisition targets that GX evaluated to date to be as compelling when taking into consideration their business prospects, strategy, management teams, likelihood of execution, and valuation considerations.
On July 22, 2022, GX’s management team presented to NioCorp’s management team a proposal deck that discussed the possibility of a business combination and certain preliminary terms for such transaction. The presentation deck indicated a total value of NioCorp of $255 million (assuming no cash and debt), which includes all NioCorp stock options and warrants based on the treasury stock method. The presentation deck also provided that the Sponsor would place 2.5 million GX Founder Shares on contingency subject to price vesting of $12.00 per share. The proposal contemplated certain potential financing transactions the parties could pursue, including a private investment in public equity (“PIPE”), redemption backstop facilities and other potential equity financing facilities. The proposal contemplated that entry into these financing transactions would not be a condition to consummating a business combination transaction but would generate liquidity after the closing of the business combination. The proposal also contemplated that the transaction would be announced without any cash condition or financing sources that were not arranged at the time of announcement.
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On July 23, 2022, representatives of GX delivered to representatives of NioCorp an initial draft of the LOI for a potential business combination, which provided for, among other things, (a) the economic terms of the potential business combination, such as determining NioCorp’s value on an enterprise value basis, no minimum cash condition and no contingencies on arranging any potential financing facilities, (b) one potential transaction structure in which NioCorp would acquire GX, (c) exclusivity terms providing that NioCorp would be restricted for 90 days after execution of the LOI from pursuing other competing opportunities and that GX would be restricted from pursuing such opportunities only once definitive transaction documents were executed, (d) a proposal that 2.5 million GX Founder Shares would be subject to vesting during the first ten years following the business combination based on a vesting price of $12.00 per share, (e) no survival of either party’s representations, warranties or pre-closing covenants and no post-closing indemnification obligations on the part of either party, and (f) board of directors considerations, under which GX may designate two members to the surviving company’s board.
On July 25, 2022, Mr. Baer met telephonically with Mr. Smith to discuss the LOI and the potential business combination. Later that day, representatives of GX delivered to representatives of NioCorp a list of additional due diligence questions, as the parties continued to discuss a potential transaction.
On July 26, 2022, Messrs. Jay Bloom, Kehler, Maselli, Baer and Jordan Bloom held a videoconference meeting with Messrs. Smith, Honan and Shah to review the additional due diligence materials provided.
On July 27, 2022, Mr. Baer met telephonically with Mr. Smith to discuss the progress of GX’s due diligence and the potential terms of the transaction.
On July 28, 2022, representatives of NioCorp delivered to representatives of GX a revised LOI, which provided for, among other things, (a) mutual exclusivity terms preventing either party from pursuing other competing opportunities for a period of 30 days following execution of the LOI, (b) a NioCorp valuation remaining at $255 million based on enterprise value, (c) a proposal that 5,000,000 GX Founder Shares would be subject to vesting during the first ten years following the business combination based on vesting prices of $15.00 (50% of such shares) and $20.00 (50% of such shares), (d) a term that up to all GX Founder Shares would be subject to forfeiture depending on the amount of GX stockholder redemptions or cash available at Closing, (e) an undefined amount of minimum cash to be delivered at Closing, (f) board of directors considerations, under which GX may designate two members to the surviving company’s board, subject to satisfaction of a minimum cash condition, and (g) a term that the plan to implement a potential redemption backstop or committed equity financing facilities would not be a closing condition, but GX would use its best efforts to have a PIPE deal committed simultaneously with entering into the definitive agreements and in place as of Closing.
On July 29, 2022, Messrs. Jay Bloom, Kehler, Maselli, Baer and Jordan Bloom held a videoconference meeting with Messrs. Smith, Honan and Shah and legal and financial advisors to NioCorp. During that meeting, GX presented a revised LOI to NioCorp, consisting of, among other things, (a) a mutual exclusivity period of 60 days following execution of the LOI, (b) a term that 2.0 million GX Founder Shares would be subject to vesting based on vesting prices of $12.00 (50% of such shares) and $15.00 (50% of such shares), (c) a term that up to 1.5 million GX Founder Shares would be subject to forfeiture depending on cash available at Closing and the availability of certain financing facilities that could be accessed after Closing, (d) no minimum cash condition to closing the transaction, (e) a term that the parties would pursue certain financing alternatives, including a redemption backstop facility or a committed equity facility, and would consider a PIPE transaction, but none would be a condition of entering into a definitive transaction or Closing, and (f) the economic valuation of NioCorp at $255 million enterprise value remained the same as in the prior drafts of the LOI.
Also on July 29, 2022, Mr. Baer had further conversations with Mr. Smith to discuss the terms of the transaction, and later that day, representatives of NioCorp delivered to GX a further revised draft of the LOI. The economic terms of the transaction were unchanged, but the LOI noted that the treatment of the GX Founder Shares and the minimum cash condition were subject to discussion between Mr. Smith and representatives of GX.
Also on the evening of July 29, 2022, after GX received the further revised LOI from representatives of NioCorp, Mr. Baer and Mr. Smith continued conversations about certain open items in connection with the potential Transactions, including the treatment of the GX Founder Shares and the minimum cash condition.
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On July 30, 2022, representatives of GX delivered to representatives of NioCorp a further revised LOI, consisting of similar economics, but which provided, among other things, that (a) 1.5 million GX Founder Shares would be subject to vesting prices of $12.00 (50% of such shares) and $15.00 (50% of such shares) and (b) 2.75 million GX Founder Shares would be subject to forfeiture based on cash available at Closing or the availability of certain financing facilities that could be accessed after Closing.
Between July 6, 2022 and July 30, 2022, GX’s management team continued to meet with other prospective targets for a potential business combination and presented terms to two other companies.
On July 31, 2022, representatives of GX delivered to representatives of NioCorp a proposed final version of the non-binding LOI, including a high-level summary of transaction structure with respect to a potential business combination. The LOI contemplated, among other terms, a pre-money valuation of NioCorp of $255 million enterprise value including stock options and warrants valued on a treasury stock method basis. The LOI also provided for the restructuring of certain of the GX Founder Shares held by the Sponsor such that (a) 1,500,000 shares would become vested in two equal tranches at such time as NioCorp achieved a trading price exceeding $12.00 and $15.00, respectively, for any 20 trading days within any 30-trading day period before the tenth anniversary of the consummation of the transactions (subject to certain limited exceptions), (b) up to 2,750,000 GX Founder Shares would become subject to forfeiture in the event the amount of cash available at Closing and financing facilities available to access after Closing were less than $100,000,000, and (c) all shares owned by GX’s and NioCorp’s management teams, the GX Board and the NioCorp Board would be subject to customary post-Closing lock-up arrangements. The LOI did not provide for a minimum cash condition and did not contemplate a PIPE investment as a condition to entering into the Business Combination Agreement. The LOI provided for a 60-day exclusivity period, subject to extension.
In the evening on July 31, 2022, the NioCorp Board, joined by NioCorp management and representatives of Saxon Weber Ltd (“SWI Partners”), Jones Day, U.S. legal counsel to NioCorp (“Jones Day”) and Blake, Cassels & Graydon LLP, Canadian legal counsel to NioCorp (“Blakes”), held a special videoconference meeting. At this meeting, members of the NioCorp management team provided an update on the status of the proposed Transactions. Following a presentation by the representatives of Blakes regarding the fiduciary duties of the NioCorp Board, representatives of Jones Day summarized the proposed tax structure and discussed the general terms of the proposed non-binding LOI. Representatives of SWI Partners then led a discussion on the economic terms and enterprise valuation of NioCorp at $255 million, including the potential dilutive effect of the transactions. SWI Partners had been engaged on behalf of NioCorp in 2017 to assist in broader project financing efforts. Following discussion among the NioCorp Board, NioCorp management, Jones Day, Blakes and SWI Partners, the NioCorp Board approved the execution of the LOI.
Also on July 31, 2022, GX and NioCorp executed the LOI.
Over the course of the exclusivity period and leading up to the signing of the Business Combination Agreement, representatives of each of GX and NioCorp had multiple conversations on a broad list of topics related to the terms of the transaction documentation and diligence matters in connection with the transaction. Also during this period, representatives of Cantor held multiple teleconference meetings to discuss business and financial due diligence matters with representatives of each of GX and NioCorp.
On August 1, 2022, GX’s management team met telephonically with representatives of Cantor to provide an update on the business combination.
Also on August 1, 2022, GX’s management team and NioCorp’s management team met telephonically for a kickoff call to discuss the continued due diligence process and the plan for legal counsels for both parties to negotiate transaction documents and representatives of GX delivered to representatives of NioCorp an additional due diligence request list, including requests to meet in person and visit the Elk Creek Project site in Nebraska.
On August 2, 2022, representatives of each of Skadden, Arps, Slate, Meagher and Flom, LLP, legal counsel of GX (“Skadden”), and Jones Day met telephonically to discuss approach with respect to legal due diligence and transaction documentation.
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Also on August 2, 2022, representatives of each of GX, NioCorp, Skadden and Jones Day met via videoconference to discuss the potential transaction, including, among other things, team involvement, transaction structure, and the process for drafting, negotiating and executing transaction documentation.
On August 3, 2022, Messrs. Maselli, Baer, and Jordan Bloom attended in person and Messrs. Jay Bloom and Kehler met via teleconference for a due diligence meeting at NioCorp’s corporate office in Centennial, Colorado. Messrs. Smith, Honan, and Shah were in attendance from NioCorp.
Also on August 3, 2022, representatives of Jones Day sent to representatives of Skadden a proposed step plan outlining proposed transaction structuring alternatives.
On August 4, 2022, Messrs. Maselli and Baer and Mr. Honan visited the Elk Creek Project area in Nebraska.
In August 2022, representatives of each of GX and NioCorp continued with their due diligence process, including calls with key potential NioCorp partners and service providers, and representatives of each of Skadden and Jones Day worked on preparing draft transaction documentation.
On August 5, 2022, representatives of Skadden shared a due diligence request list for NioCorp with representatives of Jones Day and, on August 8, 2022, representatives of Jones Day shared a due diligence request list for GX with representatives of Skadden.
On August 8, 2022, representatives of each of Jones Day, Blakes, Skadden and Stikeman Elliot LLP, Canadian counsel to GX (“Stikeman”), met telephonically to further discuss the transaction structure, documentation drafting and diligence process.
On August 9, 2022, representatives of NioCorp granted access to an electronic data room to representatives of Skadden and Stikeman for purposes of reviewing legal due diligence information regarding NioCorp. From August 8, 2022 through September 25, 2022, the date the Business Combination Agreement was signed, various representatives of each of GX and Skadden conducted due diligence of NioCorp through document review, written requests and responses among the parties, and several telephonic conferences with representatives of NioCorp and Jones Day, covering various areas, including, but not limited to, commercial operations, financial results, labor and employment matters, real estate, environmental and regulatory matters, intellectual property, information technology and data security, and litigation, legal compliance and general corporate matters.
In the evening on August 17, 2022, the NioCorp Board, joined by NioCorp management and representatives of SWI Partners, Jones Day and Blakes, held a special videoconference meeting. At this meeting, members of the NioCorp management team provided an update on the status of the proposed Transactions and the view of NioCorp management that the terms of the proposed Transactions should include a minimum cash condition intended to cover expenses incurred in connection with the completion of the Transactions. Representatives of SWI Partners, supported by Jones Day and Blakes, then led a discussion of the minimum cash condition and how it could be structured. Following discussion among the NioCorp Board, NioCorp management, Jones Day, Blakes, and SWI Partners, the Board authorized Mr. Smith to negotiate the minimum cash condition with GX.
On August 19, 2022, Mr. Smith notified representatives of GX that, upon further evaluation, NioCorp would require a minimum cash condition to enter into a business combination.
Between August 19, 2022 and August 22, 2022, representatives of each of GX and NioCorp further discussed the plan with respect to transaction financing, transaction expenses and the operational cash needs of the combined company upon consummation of the business combination.
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On August 22, 2022, representatives of Skadden delivered to representatives of Jones Day a draft amendment to the non-binding LOI, which contemplated, among other things, (a) the inclusion in the Business Combination Agreement of a closing condition for the benefit of NioCorp requiring a $15,000,000 minimum amount of available cash as of Closing, subject to certain adjustments in the event Sponsor forfeited or transferred any GX Founder Shares to reduce cash expenses (b)?certain revisions to the treatment of the GX Founder Shares in the Transactions, including (i) removal of the GX Founder Share forfeiture in the event available cash at Closing and facilities available to access after Closing do not exceed $100,000,000 and (ii) revision of the post-Closing vesting of GX Founder Shares, now applicable to 3,150,000 GX Founder Shares in two equal tranches at such time as NioCorp achieved a trading price exceeding $12.00 and $15.00, respectively, for any 20 trading days within any 30-trading day period during the ten year period following the Closing, and (c) the potential forfeiture of certain GX Founder Shares in the event Cantor or BTIG agreed to accept a portion of their advisor fees in stock rather than cash. The parties exchanged and discussed further refined drafts of the LOI amendment from August 22, 2022 through August 25, 2022.
On August 24, 2022, NioCorp engaged GenCap Mining Advisory Ltd. (“GenCap”), an independent valuation firm, to assist the NioCorp Board with their evaluation of the proposed Transactions.
On August 24, 2022, representatives of NioCorp delivered to representatives of GX an initial draft of the presentation containing information about NioCorp and the proposed Transactions to be used by GX and NioCorp in presentations to certain of GX’s and NioCorp’s securityholders and other persons (the “Investor Presentation”). The parties exchanged and discussed further revised drafts of the Investor Presentation from August 24, 2022 through September 25, 2022.
On August 25, 2022, GX and NioCorp executed the LOI amendment, and representatives of each of Skadden and DLA Piper LLP, legal counsel to Cantor (“DLA”), discussed the due diligence process and deliverables.
On August 26, 2022, representatives of Jones Day delivered to representatives of each of Skadden and Stikeman an initial draft of the Business Combination Agreement. The draft provided for, among other things, a provision enabling the NioCorp Board to change its recommendation to the NioCorp Shareholders and enabling NioCorp to terminate the Business Combination Agreement, in each case, to accept a “superior proposal.”
On August 29, 2022, representatives of each of Skadden, Stikeman, Jones Day and Blakes met via videoconference to further discuss, among other things, the transaction structure and certain open items contained in the initial draft of the Business Combination Agreement, including in connection with the need for transaction Closing certainty and the provisions permitting NioCorp to entertain alternative proposals following entry into the Business Combination Agreement.
Also on August 29, 2022, representatives of Skadden delivered to representatives of each of Jones Day and Blakes an initial draft of the Sponsor Support Agreement, pursuant to which, among other things, the Sponsor and certain of its directors and officers would agree (a) to waive certain anti-dilution rights set forth in the GX Charter that may result from the Transactions, (b) not to transfer any of their respective GX Founder Shares and warrants of GX prior to the Closing, subject to limited exceptions, (c)?to vote in favor of the adoption of the Business Combination Agreement and the Transactions contemplated thereby at the GX Stockholder Meeting, (d) not to redeem or elect to cause GX to redeem any of their respective securities in connection with the Transactions, and (e) with respect to certain GX Founder Shares (and the NioCorp Common Shares issued in exchange therefor pursuant to the Exchange Agreement) (the “Earnout Shares”), not to transfer such Earnout Shares, subject to limited exceptions, until the NioCorp Common Shares achieve a trading price exceeding certain dollar thresholds set forth in the Sponsor Support Agreement, in each case, subject to the terms and conditions contemplated by the Sponsor Support Agreement. The parties exchanged and discussed further refined drafts of the Sponsor Support Agreement from August 29, 2022 through September 25, 2022.
Also on August 29, 2022, representatives of Skadden delivered to representatives of each of Jones Day and Blakes an initial draft of the Exchange Agreement, pursuant to which, among other things, the Sponsor would, following the Closing, have the right to exchange its GX Founder Shares for NioCorp Common Shares (or, at the election of GX (which, at the time of any such election, will be a subsidiary of NioCorp), for cash), subject to the terms and conditions contemplated by the Exchange Agreement. The parties exchanged and discussed further refined drafts of the Exchange Agreement from August 29, 2022 through September 25, 2022.
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On August 30, 2022, representatives of Yorkville Advisors Global, LP (“Yorkville”) delivered to representatives of GX initial drafts of the non-binding term sheets, by and among GX, NioCorp and Yorkville, for the standby equity purchase agreement and the unsecured convertible debenture (the “Yorkville Financing Term Sheets”), which are two separate financing packages that, if funded, could provide NioCorp additional capital to help advance the Elk Creek Project.
On August 31, 2022, representatives of each of Skadden, Stikeman, Jones Day and Blakes met telephonically to refine the transaction structure.? Later on August 31, 2022, representatives of Jones Day delivered to representatives of Skadden an updated step plan reflecting the changes resulting from such discussion.
On September 1, 2022, representatives of Skadden delivered to representatives of each of Jones Day and Blakes a revised draft of the Business Combination Agreement, which provided for, among other things, (a) removing the provisions providing that the Sponsor will automatically be deemed to have forfeited certain of its GX Founder Shares that were subject to vesting thresholds for no consideration, (b) revising the transaction expenses provisions so that after the Closing, NioCorp will pay any outstanding transaction expenses incurred by the parties accrued before and through the Closing and not paid prior to Closing, (c) requiring NioCorp and GX to use reasonable best efforts to obtain the requisite votes of shareholders (or take related actions such as soliciting proxies) to approve the resolutions necessary to effectuate the Transactions, (d) removing the termination right of each party for a failure by the other party to close if all conditions have been satisfied, subject to a five-day cure period, (e) liability in the event of a termination as a result of fraud and willful and material (as opposed to deliberate) breach of the Business Combination Agreement, (f) removing GX’s obligation to deliver to NioCorp an allocation schedule listing GX shareholders as of the Closing, the number of GX shares they hold and the number of NioCorp shares such holders are entitled to receive, (g) removing the provisions enabling the NioCorp Board to change its recommendation to the NioCorp Shareholders and NioCorp to terminate the Business Combination Agreement to accept a “superior proposal”, and (h) certain revisions to the contemplated transaction structure and to the scope of the parties’ respective representations, warranties, covenants and closing conditions.
On September 5, 2022, GX and Scalar executed an NDA, following which Scalar began receiving confidential information thereunder.
On September 6, 2022, representatives of Jones Day delivered to representatives of each of Skadden and Stikeman a revised draft of the Business Combination Agreement, which provided for, among other things, (a) the provisions enabling the NioCorp Board to change its recommendation to the NioCorp Shareholders and NioCorp to terminate the Business Combination Agreement to accept a “superior proposal,” subject to a five business day right to match period granted to GX and payment of a termination fee to GX in the event of a termination by NioCorp to enter into a “superior proposal,” and (b) further revisions to the contemplated transaction structure and to the scope of the parties’ respective representations, warranties, covenants and closing conditions.
Also on September 6, 2022, representatives of Jones Day delivered to representatives of each of Skadden and Stikeman a revised draft of the Exchange Agreement, which provided for, among other things, the termination of the Sponsor’s ability to exercise its exchange right after seven years, at which point the Sponsor would be required to exchange any remaining unexchanged shares for NioCorp Common Shares.
Also on September 6, 2022, representatives of Jones Day delivered to representatives of each of Skadden and Stikeman a revised draft of the Sponsor Support Agreement, which provided for, among other things, the Sponsor forfeiting or otherwise agreeing not to exercise its voting and dividend rights in respect of the Earnout Shares.
Also on September 6, 2022, GX and Cantor executed an engagement letter which provided that, among other things, Cantor would act as a capital markets advisor to GX in connection with the potential transaction between GX and NioCorp. In addition, on September 6, 2022, GX and Cantor executed a fee reduction agreement which provided that, among other things, in the event GX elects to consummate the business combination, (a) Cantor would forfeit $5,500,000 of the aggregate $10,500,000 deferred underwriting commissions payable to Cantor pursuant to the underwriting agreement between GX and Cantor, dated as of March 17, 2021, and (b) the remainder of such deferred underwriting commissions would be payable to Cantor as (i) a non-refundable cash fee of $2,000,000 on the Closing Date of the business combination and (ii) a non-refundable fee of $3,000,000 in common stock of the post-business combination entity (which may be satisfied in whole or in part via open-market purchases of GX public shares prior to Closing, followed by payment of all or the applicable portion of the fee amount in cash on the Closing Date).
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On September 7, 2022, representatives of Jones Day delivered to representatives of Skadden a form of employment agreement, restrictive covenant agreement and letter notice for certain NioCorp executives, including Messrs. Shah, Honan and Jim Sims, which the parties subsequently negotiated through September 25, 2022.
On September 8, 2022, representatives of Skadden delivered to representatives of each of Jones Day and Blakes a revised draft of the Business Combination Agreement, which provided for, among other things, (a) a no-shop covenant in which NioCorp must cease any ongoing discussions and cannot solicit proposals for alternative transactions with any party other than GX and its representatives, (b) certain “fiduciary out” provisions enabling NioCorp to change its recommendation to shareholders to adopt the Business Combination Agreement and/or terminate the Business Combination Agreement to accept a “superior proposal,” subject to a (i) termination fee payable by NioCorp to GX in the event of a termination (A) for a NioCorp Board change in recommendation, (B) to accept a superior proposal or for a failure to obtain the NioCorp shareholder approval, (C) if any proposal for an alternative acquisition was conveyed to NioCorp or made public before termination and then NioCorp enters into an agreement with respect to or consummates an alternative acquisition within one year following termination, or (D) due to a NioCorp breach of the no-shop covenant, (ii) a separate termination fee payable by NioCorp to GX in the event of certain willful material breaches of the Business Combination Agreement, and (iii) an additional expense reimbursement payable by NioCorp to GX in the event either termination fee became payable under the Business Combination Agreement, and (c) certain revisions to the scope of the parties’ respective representations, warranties, covenants and closing conditions.
Also on September 8, 2022, representatives of Skadden delivered to representatives of each of Jones Day and Blakes a revised draft of the Sponsor Support Agreement, which provided that, among other things, the holders of Earnout Shares would be entitled to vote such Earnout Shares and receive dividends or other distributions in respect of such Earnout Shares.
Also on September 8, 2022, representatives of Skadden delivered to representatives of Jones Day and Blakes a revised draft of the Exchange Agreement, which provided for, among other things, a termination date that is the later of (a) ten years following the date of the Exchange Agreement and (b) the date that is one year after the last vesting share vests pursuant to the Sponsor Support Agreement.
Also on September 8, 2022, representatives of Skadden delivered to representatives of Jones Day an initial draft of the amended and restated registration rights and lock-up agreement (the “Registration Rights and Lock-Up Agreement”) pursuant to which, among other things, NioCorp is obligated to file a shelf registration statement to register the resale of certain securities of NioCorp held by certain pre-Closing shareholders of GX, the Sponsor, NioCorp and the directors, officers and certain affiliates of NioCorp (the “Holders”) after the Closing. The Registration Rights and Lock-Up Agreement also provides the Holders with certain “demand” and “piggy-back” registration rights, subject to certain requirements and customary conditions.
On September 9, 2022, representatives of each of NioCorp, Jones Day and Skadden held a videoconference meeting during which representatives of NioCorp answered due diligence questions from GX with respect to NioCorp.
Also on September 9, 2022, representatives of Skadden delivered to representatives of each of Jones Day and Blakes revised drafts of the Yorkville Financing Term Sheets.
On September 10, 2022, representatives of Skadden shared with representatives of Jones Day initial drafts of the second and third amended and restated certificate of incorporation of GX, as the surviving company in the mergers (the “GX Certificate of Incorporation”) and the amended and restated bylaws of GX (the “GX Bylaws”). The parties finalized the GX Bylaws on September 16, 2022, as well as exchanged and discussed further refined drafts of the GX Certificate of Incorporation from September 10, 2022 to September 25, 2022.
Also on September 10, 2022, representatives of each of Jones Day and Skadden met telephonically and via videoconference to discuss certain open issues contained in the revised drafts of the transaction documentation.
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On September 11, 2022, representatives of Jones Day delivered to representatives of each of Skadden and Stikeman further revised drafts of the Business Combination Agreement, Sponsor Support Agreement and Exchange Agreement, memorializing the parties’ discussion during the September 10, 2022 teleconference call on certain open issues of such agreements.
Also on September 11, 2022, representatives of Jones Day shared with representatives of Skadden a revised draft of the Registration Rights and Lock-Up Agreement, pursuant to which, among other things, NioCorp may not make any person or entity who acquires NioCorp Common Shares after the execution date a party to the Registration Rights and Lock-Up Agreement (each such person or entity, an “Additional Holder”) and provisions related to Additional Holders were removed. Representatives of each of Jones Day, Skadden and Stikeman exchanged and discussed further revised drafts of the Registration Rights and Lock-Up Agreement from September 11, 2022 through September 25, 2022.
On September 12, 2022, GX and Scalar executed an engagement letter, which provided that Scalar would assist the GX Board with their evaluation of the proposed Transactions.
During the morning of September 12, 2022, the GX Board held a videoconference meeting, which was attended by representatives from GX’s management team and Skadden. Mr. Kehler provided an update on the transaction process and an overview of the results of business and financial due diligence investigation of NioCorp by GX’s management team. Messrs. Baer and Maselli then provided an overview of the status of the negotiations with respect to the Yorkville Financing Term Sheets and remaining open items under discussion among the parties, including transaction structuring. Representatives of Skadden discussed with the GX Board its fiduciary duties under applicable law. During the course of the meeting, the GX Board discussed and considered NioCorp’s business and the terms of the proposed Transactions. Following the presentations by Skadden and GX’s management team and discussions among GX Board members, the GX Board determined to hold subsequent meetings as the transaction progressed to receive updates on open items and due diligence issues with respect to NioCorp and the Transactions.
Also on September 12, 2022, representatives of Skadden delivered to representatives of Jones Day a revised draft of the Sponsor Support Agreement, which provided that, among other things, the holders of vesting shares would be entitled to vote such vesting shares and receive dividends or other distributions in respect of such vesting shares. On this date, representatives of Skadden also shared with representatives of Jones Day a revised draft of the Exchange Agreement, which contemplated, among other things, a proposed approach of no end date for the exercise of the exchange right under the Exchange Agreement.
Also on September 12, 2022, representatives of Jones Day shared with representatives of Skadden an initial draft of the NioCorp Support Agreement, by and among GX, NioCorp and certain NioCorp shareholders (the “NioCorp Support Agreement”), pursuant to which such NioCorp shareholders agreed, in their capacity as shareholders of NioCorp only (and not in any other capacity) among other things, to vote in favor of (a) the issuance of the NioCorp securities issuable in connection with the Transactions, (b) an amendment to the articles of NioCorp, as amended effective January 27, 2015, to comply with applicable listing requirements of Nasdaq, and (c) any other proposals that are necessary to effectuate the Transactions.
During the evening on September 12, 2022, the NioCorp Board, joined by representatives of Jones Day, Blakes and GenCap held a special videoconference meeting. At this meeting, NioCorp management provided an update regarding the status of the negotiations related to the transaction and, in particular, with respect to the Yorkville financing transactions. Following this update, representatives of Blakes discussed with the NioCorp Board its fiduciary duties in respect of the transaction and, in particular, addressed considerations related to the following provisions of the Business Combination Agreement: (a) a no-shop covenant in which NioCorp would cease any ongoing discussions and could not solicit alternative acquisition proposals from third parties or provide nonpublic information to, or participate in discussions or negotiations with, third parties regarding alternative acquisition proposals, subject to customary exceptions related to proposals received by NioCorp that constitute a “superior proposal”; and (b) certain “fiduciary out” provisions that would enable NioCorp to change its recommendation to NioCorp Shareholders to adopt the Business Combination Agreement and/or terminate the Business Combination Agreement to accept a “superior proposal,” subject to a termination fee payable by NioCorp to GX in the event of certain terminations. Jones Day provided an update regarding the structuring of the transaction, the minimum cash condition and provisions related to the vesting and forfeiture of the GX Founder Shares and the Exchange Ratio. Thereafter, representatives of GenCap provided an update regarding their financial analysis of the proposed Transactions and the fairness opinion that it would provide upon the completion of its procedures.
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During the week of September 12, 2022 leading up to the signing of the Business Combination Agreement and other transaction documentation on September 25, 2022, the parties continued to negotiate and to exchange additional revisions of the various transaction documents and certain material terms thereof, including, among other things, (a) refining the exchange ratio mechanic, negotiating the “fiduciary out” provisions in connection with NioCorp’s ability to accept a “superior proposal” and determining termination fees in the Business Combination Agreement, (b) further discussing the end date for the exercise of the exchange right and further refining the scope of the parties’ respective covenants in the Exchange Agreement, (c) contemplating the permitted transfers and obligations in the NioCorp Support Agreement, and (d) refining the vesting, voting and dividend provisions in the Sponsor Support Agreement and the GX Certificate of Incorporation. During this period, the parties also finalized the Yorkville Financing Term Sheets, and NioCorp and its representatives engaged in discussions with representatives of Lind Global Asset Management III, LLC (“Lind”) regarding Lind providing its consent to, and waiving certain notice provisions and rights related to, the proposed Transactions under that certain Convertible Security Funding Agreement, dated February 16, 2021, between NioCorp and Lind (as amended from time to time, the “CSFA,” and such consent and waiver, the “Lind Consent”).
On September 14, 2022, representatives of each of Jones Day and Skadden held a telephonic meeting to discuss the remaining open items between the parties regarding the Business Combination Agreement and other transaction documentation.
On September 16, 2022, representatives of each of GX and NioCorp further discussed open issues related to the Sponsor Support Agreement, including the calculation of the vesting prices of the Earnout Shares and the appropriate calculation based on the exchange ratio. The parties discussed the matter between the afternoon of September 16, 2022 through September 18, 2022. GX agreed to adjust its vesting share prices to $13.42 and $16.77 per share (based on GX share prices prior to any exchange into NioCorp shares), respectively.
On the afternoon of September 18, 2022, the GX Board held a videoconference meeting, which was attended by representatives from each of GX’s management team and Skadden. Mr. Kehler provided an update on the transaction process since the last GX Board meeting on September 12, 2022. Representatives of Skadden discussed with the GX Board the GX Board’s fiduciary duties under applicable law and reviewed in detail with the GX Board the proposed terms of the draft Business Combination Agreement and other transaction documents, including a discussion of the remaining open issues. Mr. Baer then provided an overview of the status and proposed terms of the Yorkville Financing Term Sheets, as well as the open items and process to finalize such financing. Mr. Baer also discussed the status of the Lind Consent. Following the presentations by Skadden and GX’s management team and discussions among GX Board members, the GX Board determined to hold subsequent meetings as the transaction progressed to receive updates on any open items and due diligence issues with respect to the Transactions.
During the week of September 19, 2022 leading up to the signing of the Business Combination Agreement and other transaction documentation on September 25, 2022, members of NioCorp management and representatives from Lind, together with their respective legal counsels, negotiated and settled the terms of the Lind Consent, which included the following principal terms: (i) the consent of Lind to the Transactions and Yorkville financing transactions, including all actions taken by NioCorp as set out in the Business Combination Agreement to permit the completion of the Transactions; (ii) the consent of Lind to NioCorp’s expected Nasdaq listing and the consolidation of the NioCorp Common Shares in order to meet the minimum listing requirements thereof; (iii) the waiver of Lind of its participation right for up to 15% of the total offering in the proposed standby equity purchase agreement between NioCorp and Yorkville; and (iv) the waiver of Lind of certain restrictive covenants in the CSFA.
As consideration for entering into the Lind Consent, Lind received, amongst other things: (i) the right to receive payment of $500,000, which will be reduced to $200,000 if the Transactions have not been consummated on or before April 30, 2023; (ii) an extension of its existing participation rights under the CSFA in future financings of NioCorp for a further two year period, subject to certain exceptions as well as an extension of such participation rights beyond the additional two year period if Yorkville or any affiliate is a party to any such applicable transaction; and (iii) the right to receive additional warrants if on the date that is eighteen months following consummation of the Transactions, the closing trading price of the NioCorp Common Shares on the TSX or such other stock exchange on which such shares may then be listed, is less than C$1.00, subject to adjustments.
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On the morning of September 25, 2022, the parties and their advisors finalized the Business Combination Agreement and other transaction documentation. On September 25, 2022, the GX Board held a videoconference meeting, which was attended by representatives from each of GX’s management team, Scalar and Skadden. Representatives of Skadden discussed with the GX Board the GX Board’s fiduciary duties and provided an update on the course of negotiations on the key open issues since the GX Board meeting on September 18, 2022. Representatives of Skadden and GX’s management team then described the legal and economic terms of the Lind Consent to the GX Board. Representatives of Scalar then reviewed with the GX Board Scalar’s financial analysis of the proposed Transactions, and Scalar rendered to the GX Board an oral opinion, which was subsequently confirmed in writing as of September 25, 2022, that as of the date of such opinion, and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the consideration to be received by the holders of GX Class A Shares pursuant to the Transactions is fair, from a financial point of view, to such holders. Representatives of Skadden then discussed with the GX Board a draft set resolutions approving the proposed Transactions. Following discussion among the GX Board, GX’s management team and GX’s advisors, the GX Board unanimously declared that the Business Combination Agreement and the Transactions contemplated thereby were advisable and in the best interests of GX and its stockholders, approved the form, terms and provisions of, and the Transactions contemplated by, the Business Combination Agreement and the related transaction documentation, and authorized GX to enter into the Business Combination Agreement and the other transaction documents and perform each of its obligations thereunder.
Later on September 25, 2022, the NioCorp Board held a videoconference meeting, which was attended by representatives from each of NioCorp’s management team, Jones Day, Blakes and GenCap. Members of NioCorp’s management team provided an update on the status of the proposed Transactions with GX and representatives of Jones Day presented detailed summaries of the terms of the transaction and explained the resolution of the material issues that had been open at the time of the prior board meeting. Representatives of Blakes provided a summary of the resolution of the Lind Consent and provided an update on the status of the non-binding Yorkville terms sheets related to the proposed financing. Representatives of GenCap then reviewed with the NioCorp Board its financial analysis of the proposed Transactions, and GenCap rendered to the NioCorp Board an oral opinion, which was subsequently confirmed in writing as of September 25, 2022, as of the date of its opinion and based upon and subject to the factors, assumptions, considerations, limitations and other matters set forth in GenCap’s written opinion, that the Transactions (including the Exchange Ratio) are fair, from a financial point of view, to the NioCorp Shareholders. At the conclusion of these discussions representatives of Blakes reviewed the matters proposed to be approved by the NioCorp Board in connection with the Transactions. Following discussion, the NioCorp Board unanimously resolved (i) that the Transactions are fair to the NioCorp Shareholders, (ii) that the Transactions and entering into of the Business Combination Agreement and the Ancillary Agreements contemplated thereby are in the best interests of NioCorp, and (iii) to recommend to the NioCorp Shareholders that they vote in favor of all matters related to the Transactions.
Following the meeting of the NioCorp Board and the meeting of the GX Board, the parties executed the Business Combination Agreement and related transaction documentation.
On the morning of September 26, 2022, prior to the commencement of trading of NioCorp Common Shares on the TSX and GX shares on Nasdaq, the parties issued a press release announcing the execution of the Business Combination Agreement and the Yorkville Financing Term Sheets. In addition, each of GX and NioCorp filed a Current Report on Form 8-K with the SEC announcing the execution of the Business Combination Agreement.
They will trade on nasdaq for 5 years after the merger. If niocorp trades like it did the last 5 years well they will be out of the money, but on the other hand...
Great work. Also when China REEs are not welcome in the US we will have to multiply your numbers by 10!
In addition, at the merger any GXIIW warrants will exchange into Niocorp warrants and you will be able to trade them on the NASDAQ. They will be adjusted for any reverse split that occurs and can be exercised after 30 days from the merger provided their listing is approved timely.
Closing Conditions
The consummation of the Transaction is subject to the satisfaction or waiver of certain customary closing conditions contained in the Business Combination Agreement, including, among other things, (i) obtaining required approvals of the Transaction and related matters by the respective shareholders of NioCorp and GXII, (ii) the effectiveness of the registration statement, (iii) receipt of approval for listing the NioCorp Common Shares to be issued in connection with the Transaction on Nasdaq, (iv) receipt of approval for listing the NioCorp Warrants on Nasdaq, (v) receipt of approval from the TSX with respect to the issuance and listing of the Common Shares issuable in connection with the Transaction, (vi) that NioCorp and its subsidiaries (including GXII, as the surviving company of the Second Merger) will have at least $5,000,001 of net tangible assets upon the consummation of the Transaction and after payment of underwriters’ fees or commissions, (vii) that, at Closing, NioCorp and its subsidiaries (including GXII, as the surviving company of the Second Merger) will have received cash in an amount equal to or greater than $15,000,000 in connection with the Transaction, subject to certain adjustments, and (viii) the absence of any injunctions enjoining or prohibiting the consummation of the Business Combination Agreement.
Also mentioned in the last 10Q
NOTE 9. WARRANTS
Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) 30 days after the consummation of a Business Combination or (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.
I will vote yes also. As Walter said if this financing fell through there is no alternative.
See my post 85082
With all shares and warrants exchanged the price comes to .72
With cash received at about $400 million instead of $285 million.
This was never the viewpoint before but now it seems to be the only way possible to move forward. Hmm
"Truth is, NioCorp would not qualify on their own, even with a bump up on share price with REE test and economic results to move to NASDAQ"
My post 85082 should be stickied
My table shows all the shares and warrants if exercised.
https://investorshub.advfn.com/secure/priv.aspx?r=https%3a%2f%2finvestorshub.advfn.com%2fuimage%2fuploads%2f2022%2f10%2f20%2fpttbrniobf_chart2.jpg
I recommend everyone use their own common sense. Only wish Mark would have also. Yes the mine will get built but who will own it?
As Putz has confirmed, it is foolish holding old niobf shares
At .33 per gxiiw / 11.1829212 your cost per niobf is .03
For .03 you get all the upside of niobf and your risk is limited
All this is proof that Mark has done a poor job looking out for existing shareholders.
The .89 per share is not an accurate number. Mark used this number but it is misleading. He did it on purpose. Notice how he never addressed the dilution situation. If he did he would be required to use the truth.
How does he get to .89? 2 ways.
1. Mark only uses the GXII class A shares in his calculation. He ignores the class B shares, and ignores the private/public warrants.
2. Mark's calculation uses $300 million cash without subtracting $15 million in fees. We are only receiving an estimated $285 million.
Here is how he gets to .89
GXII Class A: 30,000,000 x 11.1829212 = 335,487,636 niobf shares
$300,000,000 / 335,487,636 = .894
What is the correct price? I calculate .74
and this does not include all the class B shares or any warrants.
All the class B shares should be used, but my calculation only uses the vested class B shares, of which there are 4,350,000:
vested GXII Class B: 4,350,000 x 11.1829212 = 48,645,707 niobf shares
Now adding the converted class A and B with the correct cash amount:
335,487,636 + 48,645,707 = 384,133,343
$285,000,000 / 384,133,343= .74
I believe the warrants are good for 5 years after the merger.
3.2 Duration of Warrants
" five (5) years after the date on which the Company completes its initial Business Combination"
https://www.sec.gov/Archives/edgar/data/1826669/000121390021017023/ea138188ex4-1gxacquisit2.htm
After the merger the warrants shall be registered with Sec within 30 days and then you could sell them on nasdaq
Gxiiw warrants have a current exercise price of $11.50
After the merger gxiiw will become Niobf warrants with exercise price of $1.02
11.5 / 11.1829212
= 1.028353844
Rounded down to $1.02
Former GX Company Warrant shall be equal to (x) the number of shares of GX Common Stock subject to the applicable GX Warrant multiplied by (y) the Exchange Ratio; and (C) the per share exercise price for the Company Common Shares issuable upon exercise of such GX Former Company Warrant shall be equal to (x) the per share exercise price for the GX Common Shares subject to the applicable GX Warrant, as in effect immediately prior to the Exchange Time, divided by (y) the Exchange Ratio, rounding the resulting exercise price down to the nearest whole cent
You support the deal but then recommend buying gxii over Niobf.
That just proves the point that Mark sold existing shareholders stock on the cheap.
From the gxii 10k
"Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at an exercise price of $11.50 per share (see Note 9).
"
But we want the share price to go up. But you're saying not if it means warrants get exercised. Hmmm quite the pickle.
Well they are getting 2/3 the equity so they will get 2 seats on the board of directors. They have no mining experience. They are financiers filthy rich.
Niocorp is good to go and do not have to resubmit anything. Remember niocorp is the surviving company.
Stock prices usually gravitate towards the deal price.
Those shares are listed as class B earnout shares; their exercise price converts to $1.20 and $1.50 respectively.
They are fully paid for.
My chart goes down the line assuming Niobf advances to $1.50 and all shares & warrants are exchanged.
Updated my chart. The cost per share is cumulative as you go down the chart.
If the merger was today with the price at .90 the earnout shares and the warrants would not be in play. The vested shares would merge, the OS would be at 663,219,224 with an average cost to gxii of .74
I updated the additional cash of $114,065,796 coming in for the public warrants. My example is for a niobf stock price of $1.50 At that point the cost per share did improve from yesterday's chart of .48 to .72
I will correct my chart to include money received for the warrants. However class B shares or sponsors shares will bring no new money to niocorp.