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WRLH/WRLH - WL Ross Corp


Yours Truly
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This is Wilbur Ross' new SPAC vehicle used to purchased turnaround and distressed companies and will be starting off with $400 mil in capital.

 

Per the S1 filings, Ross will own 20% of shares outstanding in the new vehicle whereas the other 3 employees will own less than 1%.

 

We are a newly organized blank check company incorporated on March 24, 2014 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with respect to identifying any business combination target.

 

While we may pursue an acquisition opportunity in any business industry or sector, we intend to capitalize on the ability of our management team to identify, acquire and operate a business that is experiencing underperformance or distress, operating in an industry undergoing a period of dislocation, as members of our management did in the banking and auto industries and/or is involved in a structurally complex or special situation, which we call value-oriented investment opportunities. Companies experience underperformance or distress for various reasons, including due to cost mismanagement, weak relationships with organized labor groups, poorly strategized market positioning, capital investment misallocation, capital structure inefficiencies and ineffective management teams. Industries undergo periods of dislocation due to demand and supply imbalances, an inability to fulfill capital needs, cyclical factors, political and/or regulatory disturbances and inefficient competitive dynamics between market participants. Businesses involved in structurally complex or special situations often have unique, idiosyncratic risks requiring expertise in order to be evaluated properly and require bespoke, solution-providing transaction structures and complex negotiations between multiple parties. Our management team has in the aggregate over 70 years of experience investing in value-oriented investment opportunities, and we intend to focus on industries or sectors that offer value-oriented investment opportunities. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination.

 

We believe that our management team is well positioned to identify a value-oriented investment opportunity in the marketplace and that our contacts and transaction sources, ranging from owners and directors of private and public companies, private equity funds, investment bankers, attorneys, accountants and business brokers across various sectors will allow us to generate attractive acquisition opportunities. Our management team is led by Wilbur L. Ross, Jr., our Chairman and Chief Executive Officer, who has 17 years of experience in the private equity industry and 24 years of prior experience in the restructuring financial advisory industry. Over the course of his career, Mr. Ross and his team have invested in approximately 135 portfolio companies across four continents, deploying approximately $10 billion of invested capital. Mr. Ross is the only individual who has been elected to both the Private Equity Hall of Fame and the Turnaround Management Association Hall of Fame.

 

 

This will be an intersting one to keep an eye on given Ross' track record and for those interested in investing in 'owner-operator' type companies.

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I've never liked the SPAC setup as a hybrid PE concept that in effect limits the headline risk to the sponsoring fund if things don't turn out so well. While Mr. Ross will pony up the cash for 20% and provide some semblance of level-headedness to the other managers ... you have to ask yourself why he isn't willing to fund the other 80%? Why not go to some institutions and fund that 80% with a handful of Pension Funds or Foundations? Surely easier and simpler than doing a SPAC?

 

The other 3 employees won't hold much stock but it may be that they are Wilbur's deal team anyways. Their rewards will come in form of salary (which continuously draws down capital needed for making a deal) and/or an expected large bonus when a deal can be done (whether a straight up cash bonus, or a permanent manager's salary that will be linked to the size of the deal).

 

Generally SPACs are a conflict in my eyes, for if you don't have the right managers they can just draw salary and twiddle their thumbs until capital is returned (at a loss) to investors, or they push hard for a mega-deal which is usually going to be a PE-style leveraged bet. It's really a bet on how good these managers are at finding and identifying value, however it's a concentrated bet because this is a one-time one-deal fund, so you are all-in.

 

I think SPACs have made sense in the past when they trade at discounts to capital and there is a probability bet that they will expire and distribute most of that remaining capital back to investors. I think some on this board probably made some money by spreading their bets among all the discounted SPACs. However at listing, it seems a little too much like gambling on the past results of a specific person or team. I'd rather watch and wait and if the environment for a deal isn't right, you could see this trade at a discount to capital. That might be a more opportune time to consider an investment. Otherwise, why not search for a deal of your own and not pay somebody else to invest for you.

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Yours Truly, can you change the thread title? You've got the R and L backwards - it should be WLRH/WLRHW.

 

you have to ask yourself why he isn't willing to fund the other 80%? Why not go to some institutions and fund that 80% with a handful of Pension Funds or Foundations? Surely easier and simpler than doing a SPAC?

 

SPACs give more optionality than private funds. They let you do larger cash + share deals. If it gets cheap he can buy more shares, if it gets expensive he can sell shares.

 

The fund might target European financials. He was on Squawk Box today. Why I'm ready to invest more in Europe: http://www.cnbc.com/id/101737841

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why do it? these are money grabs available to high reputation sponsors, late in bull markets....

 

In March 2014, our sponsor purchased an aggregate of 14,375,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.002 per share.

 

Our sponsor has committed, pursuant to a written agreement, to purchase an aggregate of 20,000,000 private placement warrants (or 22,400,000 if the over-allotment option is exercised in full), each exercisable to purchase one-half of one share of our common stock at $5.75 per half share, at a price of $0.50 per warrant ($10,000,000 in the aggregate or $11,200,000 in the aggregate if the over-allotment option is exercised in full) in a private placement that will occur simultaneously with the closing of this offering

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  • 5 months later...
  • 1 month later...

does anyone have an idea what his track record is? can't seem to find too much on his history.

 

I heard Pabrai speak highly about him a while ago but nothing concrete.

 

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does anyone have an idea what his track record is? can't seem to find too much on his history.

 

I heard Pabrai speak highly about him a while ago but nothing concrete.

 

Probably lumpy, but great:

 

According to Prem Watsa who did an introduction for Ross in a April 2014 speech, Wilbur's annual rate of return since 1997 is an incredible 44%.

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@Obtuse, best way to think about this is a cash equivalent if you are running a small enough account to get liquidity.

 

We bought at 9.8 or so, so we got a 2% return on a cash position assuming we sell it back at $10. Of course it went to $11 which was nuts (it also went down to $9.3 or so at one point in October but came up pretty quickly).

 

So yes if you are buying it as a core position that might not have a very good return, if you are buying for a cash equivalent (I know a lot of you are holding a lot of cash) it can make sense if you can get it for less than $10. It dropped down below a couple of days ago and we were able to pick some up. In the meantime it will probably trade around....who knows. 

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according to the chattering classes, WLRH will be used to pick off some distressed oil assets, which is why it has traded above $10 as the price of oil has come down.

 

I would think given the carnage there are likely be more than a few interesting opportunities for Ross in the oil patch.

 

essentially WLRH is a free (assuming you buy below $10) option on a great distressed investor finding a way to make money on the oil carnage.

 

 

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according to the chattering classes, WLRH will be used to pick off some distressed oil assets, which is why it has traded above $10 as the price of oil has come down.

 

I would think given the carnage there are likely be more than a few interesting opportunities for Ross in the oil patch.

 

essentially WLRH is a free (assuming you buy below $10) option on a great distressed investor finding a way to make money on the oil carnage.

 

Wilbur's investing record on Oil and Gas has not been that great. Check out XCO for example.  :)

In general Oil and Gas sector is a very tough sector.

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The honest answer is that we have no idea what he will buy. We probably also don't know his whole history of investing in O&G...certainly XCO is glaring but who knows about other times when he did well that we don't know about.

 

He's a billionaire who has generally made very good investments. If he does a deal WLRH likely rises, no idea how much, but if it falls we can always sell it back for $10 although there is some opportunity cost waiting for the deal to close when you can turn the shares back in.

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  • 1 month later...

I was chatting with an analyst at wl ross. he confirmed that their average results from all the funds/vehicles were in the 40% range last year. closest I was able to get to a published result on their track record.

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I was chatting with an analyst at wl ross. he confirmed that their average results from all the funds/vehicles were in the 40% range last year. closest I was able to get to a published result on their track record.

 

Nice!

 

He's got until December to announce a deal for this thing. At this point, it becomes an extremely cheap call option on whatever deal he may announce and the future results of such deal. There have even been points in time where you were making a modest return by buying that option. It will definitely be an interest 10 months watching this thing.

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I was chatting with an analyst at wl ross. he confirmed that their average results from all the funds/vehicles were in the 40% range last year. closest I was able to get to a published result on their track record.

 

Nice!

 

He's got until December to announce a deal for this thing. At this point, it becomes an extremely cheap call option on whatever deal he may announce and the future results of such deal. There have even been points in time where you were making a modest return by buying that option. It will definitely be an interest 10 months watching this thing.

 

If he fails to announce a deal and decide to return capital, how much will we get back per share? I think there is a service fee to pay right?

 

His investment record is great but he still has failed ones like XCO. He said he is looking at the oil and gas sector right now so I hope it is not another XCO.

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