FAQ’s

 

Q: Why should a company choose New Providence as a sponsor?

A: New Providence, with UBS O’Connor as part of the management company, is an institutionally supported sponsor with a depth of knowledge in the consumer industry and a successful track record of closing SPACs.

Q: What is a SPAC solving?

A: A SPAC is a publicly traded vehicle with its only asset being cash. When a partner company merges with a SPAC, it is guaranteed to close and does this in a shortened time frame. The combined companies also have an opportunity to raise additional capital to address specific needs. A SPAC is a solution for an IPO which is more disruptive and has limited capital raising options, volatile pricing, and uncertain timing.

Q: What’s our requirement for SPAC II?

A: An ideal partner company for SPAC II would have an accomplished management team, a high-quality product offering, and a defensible market position. The partnering company would also be operating in a large addressable market and have identified a way to grow faster than the market average.

Q: How does New Providence feel about the SEC rule?

A: The SEC proposed rules largely focus on financial projections, which have fewer implications for quality companies. While there are many distinctions between a SPAC and a traditional IPO, as the SPAC is already a public company when it identifies a partner company it is treated as an acquisition. In doing so, it could provide much more information regarding future expectations of the business. The SEC is focused on the quality of these forecasts, and good businesses with historical results that validate management’s forecasts should not be impacted.

Q: How real is cash in trust?

A: The amount of cash in Trust that remains after the business combination will always be directly correlated to both the quality of the business as well as the price of the announced merger. It should be noted that a PIPE, as well as other equity-linked and debt securities, have always been used with SPACs to increase the amount of capital at closing and with greater certainty.

Q: Why is SPAC II focused on the CPG sector?

A: We believe a SPAC should bring strategic value beyond the capital, and to accomplish that we have assembled a group of individuals with accomplished backgrounds in many consumers related businesses. Further, management’s support of a business, together with UBS O’Connor, increases the validation of any transaction to the market.

Q: What is a SPAC (special purpose acquisition company)? 

A: A SPAC is a publicly traded company whose only asset is cash. This structure has been used for over 50-years, with the more structured SPAC product for approximately 25-years. As a SPAC is already publicly traded, it represents a viable alternative for a company looking to go public as any transaction is a merger and therefore guarantees a closing.

Q: How do we feel about companies geographically?

A: While we are agnostic to a partner company’s geographic presence, it will need some measurable activity within the US, or at least a serious effort to expand into the US which will be catalyzed by listing there.

Q: Why should a company choose a SPAC over an IPO?

A: Partnering with a SPAC brings several identifiable advantages. One key differentiator, and a real consideration in the current market environment, is to provide certainty of closing. SPACs also have a shorter timeframe and can provide tailored capital sourcing to meet any company’s financing needs. Further, while an IPO is an individual process for any company, partnering with a SPAC can also include knowledge of, and assistance with, public company requirements.

Q: How would private companies benefit by choosing the SPAC process?

A: A private company partnering with a SPAC is almost identical to an IPO process in that the ultimate result is a public listing. The benefits are more unique in that a SPAC dramatically decreases the timeline, risk and associated distraction when compared to a traditional IPO. A SPAC also has flexibility as to the allocation of proceeds between acquiring existing shares, referred to as a secondary, or raising capital through a primary issuance, typically used for capital and business investment or debt paydown.

Q: What does an attractive financial profile look like?

A: An attractive financial profile would include a history of growth, profitability, and attractive margins while operating in a large addressable market. Further, the partnering company ideally has a market position that will allow us to gain a greater market share than other market participants.  

Q: How would SPACs work in a volatile market after the fed rate hikes?

A: Macroeconomic conditions have resulted in the most difficult IPO market in 20 years. Currently, 137 companies are filed to go public hoping to raise $22 billion. Until the economic outlook, inflation and interest rates settle, this number will only grow. As a result, a SPAC is a great way to take a company public with certainty that can benefit from a timely public listing.

Q: Why SPACs?

A: A SPAC has certain advantages over other liquidity opportunities, notably becoming public in a relatively short timeframe and providing surety of closing. 

While the SPAC market continues to evolve, it is still one of the best vehicles for a private company to become public largely through certainty and timing, which can occur in a period as short as 90-days.