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The Music Acquisition Corp. (TMAC.U) is seeking shareholder approval to liquidate its trust early.
The SPAC doesn’t have a completion deadline until February 5, 2023, but the board believes market conditions make it unlikely to secure a business combination before then. A 1% excise tax on domestic corporations repurchasing stock is the main reason for seeking early liquidation.
“While not free from doubt, absent any further guidance, there is significant risk that the Excise Tax will apply to any redemptions of our public shares after December 31, 2022, including redemptions made if we are unable to consummate a business combination by or before the Original Termination Date.”
“The application of the Excise Tax to any redemptions we make after December 31, 2022 could potentially reduce the per-share amount that our public stockholders would otherwise be entitled to receive,” the proxy statement from TMAC reads.
TMAC will hold a special meeting in November seeking shareholder approval to amend the charter to change its termination date to one before December 31.
If the amendment is approved, TMAC will cease all operations immediately after the shareholder meeting and promptly complete redemptions. The NYSE has delisted warrants of TMAC while trading of the stock continues.
“NYSE Regulation has determined that the company’s warrants are no longer suitable for listing based on ‘abnormally low’ price levels, pursuant to Section 802.01D of the Listed Company Manual. The Company also disclosed in the Preliminary Proxy that there will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless upon liquidation of the trust account,” the NYSE statement reads.
The SPAC market appears to be the latest casualty of Wall Street, following the ICO explosion for crypto in 2017. SPAC Insider reports at least fourteen other SPAC to have a shareholder vote to move up their completion deadline to liquidate early.
The Music Acquisition Company announced its $200 million IPO in February 2021. It is led by Chairman and CEO Neil Jacobson and COO Todd Lowen, with the goal of combining with a business within the music industry that has long-standing relationships in place.