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SPAC Merger Arbitrage


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I am starting a thread to capitalize on potential SPAC Merger opportunities that provide skewed risk/reward ratio in terms of Warrants or Rights or the Stock itself.

 

Here are a few.

 

LIBY - Write-up on VIC, SPAC with an Energy company that has potential, Warrants @ $0.11

 

ERES - Combining with a Abacus Life, Life insurance company, Warrants @ $0.20

 

ACAX - Merging with HWH International, Warrants @ $0.040

 

FEXD - Merger with Rana Financial & Mobitech, Warrants @ $0.055

 

JWAC - Combining with Chijet Motor Company, Rights @ $0.0899 , 8 to 1. This merger has high probability of going through, Chijet was in a merger agreement with another SPAC that fell through, since it fell through, this is a new merger with decreased valuation.

 

PAFO - Merging with Caravelle Group Co., Ltd, which is an Ocean Technology and Shipping Company, Rights @ $0.4100

 

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Yes, the warrants can 10x, also if the writeup on VIC about LIBY is true, it can even yield much more than that. All the SPACs listed above either have their own specific write-up, or a mentioned in VIC. 

 

https://valueinvestorsclub.com/idea/SILVER_CREST_ACQU_CORP_-REDH/0667062517

 

The above write-up had a list of many SPACs

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Good luck.  Make sure the deals would still close if basically everyone redeems their shares at trust value (which I would expect to happen).  I assume the rights are worthless if no deal is consumated but I am not familiar with any of the tickers you listed.  Also there does not appear to be liquidity / trading volume for some of those securities.  If they don't trade, or have very wide bid/ask spreads, you might find it difficult to execute a hypothetical trade in the real world.  If the deals end up closing, consider the possibility that the current price of the Rights may be telegraphing an expected future share price for the post deal shares.

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I would also be careful if the play requires you to maintain a short through this redemption period. You have no idea what the borrow fee might be or the chance of a forced buy-in if you lose the short locate. Last year people were specifically targeting high redemption SPACs for short squeezes. They crash in the end but that may not matter. It wasn't exactly the same, but I remember the pain of having to close a NKLA short above $50 because the borrow fee was almost 1000%.

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A general question for those in the know, a lot of SPACs are filing for early liquidation/ to move their liquidation date before Dec 2022, so that there will be no additional 1% tax and to protect shareholder money since the new Excise Tax bill has been passed and will come into effect in 2023. How much of this, do you guys think is to avoid litigation later on than to really liquidate, if the shareholders vote against liquidation, only they will held responsible if there is no deal? What are your thoughts on this?

Edited by whatstheofficerproblem
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On 11/22/2022 at 11:40 AM, whatstheofficerproblem said:

I don't know if I did the right thing, but I just bought 130k of OSTRW. Randy Smith better call me today.

 

What's the idea here?  I'm assuming you bought 130,000 warrants and not $130,000 worth of warrants (which doesn't look possible).  So you spend like a hundred dollars and it becomes worthless when the SPAC liquidates?  Am I missing the point?  This looks like a zero.

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Yep that's it, cost me $70ish. I don't think Alden Global now suddenly wants to give up on the SPAC, rather, they only want to protect themselves from litigation in regards with the new excise bill, their PRE 14A mentions in the forward looking statements that their plan to liquidate might change depending on, 'our expectations around the performance of a prospective target business or businesses' which leads me to believe they do have acquisition targets in mind. it also mentions, 'our ability to draw from the support and expertise of Alden Global' and 'potential to obtain additional financing to complete initial business combination'. From the $1.5M that Alden Global had agreed to give OSTR, they have already withdrawn $1M, not to mention the sponsors are set to lose a lot money if the company liquidates. Not to mention that Alden has already put more than $30M of their money on the table here + the sponsors have most of their risk capital in warrants which they bought at value of $1.00/warrant which would become worthless should their be liquidation.

Edited by whatstheofficerproblem
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The reason I think it is just to avoid litigation is that, all the SPACs that have asked for liquidation after August 16, when the bill was passed, is the same, literally a copy and paste about how they think it will be better to liquidate before 2023 due to the 1% tax, and most of their meetings are in December. It looks as if these SPACs are just rolling through the motion than actually wanting to liquidate. The ones that liquidated kept their 'forward-looking' statements relatively small as though they want to liquidate, in the case of OSTR, there is huge BUT, it implies they have targets in mind and that they might be able to get an extension/more financial support from Alden Global.

Edited by whatstheofficerproblem
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21 minutes ago, whatstheofficerproblem said:

Wow.. Can someone let me know what the actual hell happened today? The price of OSTRW jumped to $0.0065 from $0.0004? Insider activity? What was that? Volume spiked to 500k+

 

I wouldn't read too much into a brief spike caused by less than $1,500 in buy orders, followed by what looks to be on its way to a complete reversal of the price move.  Anyone could move this thing a thousand percent with their bar mitzvah money.

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