Independent VTAC shareholders redeem nearly all capital, approve 17Live combination
Vivienne Tay &
Raphael Lim
VERTEX Technology Acquisition Corp ’s (VTAC) shareholders will redeem close to two-thirds of the share capital of the special-purpose acquisition company (Spac). They have approved the Spac’s business combination with e-commerce streaming company 17Live.
Shareholders have exercised their redemption right for some 26 million shares as at the redemption record date, which amounts to about 62.5 per cent of the company’s issued share capital of 41.6 million shares, VTAC said in a statement on Friday (Dec 1).
Excluding the holdings from two VTAC shareholders – Vertex Co-Investment Fund (Vertex SPV) and Venezio Investment – which had committed not to redeem their shares, the redemption rate would be 87.9 per cent.
These entities collectively held 12 million shares.
VTAC’s sponsor Vertex Venture Holdings and Venezio are Temasek-linked entities.
Apart from Vertex SPV and Venezio, the other entity that had a substantial direct interest in VTAC was Income Insurance, which held 2.6 million shares.
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Fullerton Fund Management, an indirect subsidiary of Temasek, had entered into a cornerstone agreement with VTAC during the initial public offering (IPO). Income Insurance, a client of Fullerton, was the registered holder of the shares.
If all the holdings by Temasek-linked entities are excluded from the calculation – and assuming Income Insurance was also not among the redeeming shares – the redemption rate goes up to 96.3 per cent.
In a separate statement, VTAC also said the business combination with 17Live was passed at an extraordinary general meeting on Dec 1 with a vote of 95.5 per cent in favour. A total of 28.8 million shares were represented in the vote.
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The vote percentage was similar for the other resolutions at the EGM excepting resolutions relating to the issue of new shares for executives and employees. Those resolutions garnered a lower 73.1 per cent in favour.
The redemption rate and EGM from independent shareholders are in line with recommendations from research houses that assessed the merits of the deal.
Last month, Phillip Securities recommended that investors fully redeem their shares in VTAC at the redemption price range of S$5 to S$5.02.
The research house, which was appointed by the Securities Investors Association (Singapore) or Sias to provide independent research, noted that revenue for 17Live has been declining since 2021, dragged by falling active users and weaker average spending.
It added that financial targets for the issuance of earnout shares include Ebitda (earnings before interest, taxes, depreciation and amortisation) declining an estimated 14 per cent on year in the second half of 2023, and total revenue declining 12 per cent on year in FY2023.
Research firm Beansprout, also appointed by Sias, recommended that shareholders redeem and sell their warrants as well, as the acquisition value appeared high, and near-term prospects were muted.
Apart from capital from non-redeeming shareholders, the Spac also has new private investment in public equity (Pipe) investors entering at the business-combination stage.
Last month, VTAC announced that it will raise a Pipe round to raise some S$3 million in gross proceeds. The S$3 million raised is less than earlier illustrations for S$10 million in Pipe financing, when the deal with 17Live was first announced.
It said that non-redeeming shareholders who hold the remaining 15.6 million shares in the Spac will be entitled to additional warrants. Excluding Vertex SPV, those who hold the remaining 9.6 million shares as at the record date will be entitled to special bonus NRS shares.
To minimise dilution arising from the executive incentive scheme and the special bonus scheme, the sponsor agreed to waive its right to the allotment and issuance of 6.3 million promote shares to Vertex SPV.
The maximum number of promote shares the sponsor is entitled to before Apr 30, 2026, stands at 6.8 million shares, based on the level of redemption, VTAC said.
The Spac suspended the trading of its shares on Nov 28. Its counter last traded at S$4.79 on Nov 24.
Through the business combination with VTAC and the Pipe placement, 17Live is expected to receive about S$80.9 million in funding. Post-combination, the newly renamed 17Live Group will be listed on the Singapore Exchange with effect from Dec 8, 2023.
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