Vertex SPAC received limited waiver from rules that freeze post-merger share disposals

TOP executives at special purpose acquisition company (SPAC) Vertex Technology Acquisition Corp (VTAC) will be exempted from some rules on selling off their shares after the planned acquisition of a target company, the board disclosed on Monday (Jan 17).

The SPAC - which is expected to start trading units on the Singapore Exchange (SGX) this week - has updated its preliminary prospectus and clarified in a bourse filing that it will not be made to comply with certain listing rules that include moratorium requirements for dealing in securities bought on the secondary market by the sponsor, the management team, and their associates.

According to the filing, VTAC received a waiver of certain rules that restrict its founding shareholders and management, as well as their associates, from transferring or disposing of their interests for a moratorium period immediately after the "de-SPAC" business combination. The waiver also applies to controlling shareholders of the resulting company, their associates, and executive directors who own stakes of at least 5 per cent.

The waiver came as "there is sufficient alignment of interest achieved" in how the sponsor's securities in the SPAC will be converted to shares in the resulting company, the board said in its statement.

It added: "In other jurisdictions, moratorium requirements subsequent to the initial business combination are not imposed by regulations or law and are usually determined as a function of market forces and are subject purely to commercial negotiations between involved parties."

In the SPAC model, an investment vehicle - here, VTAC, which is sponsored by Temasek-backed Vertex Holdings - goes public with the aim of merging with a suitable company. Initial public offering proceeds are put in escrow, pending the sponsor's acquisition of a target. 

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But VTAC added on Monday that it plans to invest escrowed funds in Singapore government bonds and treasury bills, and bills issued by the Monetary Authority of Singapore (MAS).

The board noted that the assets can be held in either cash or permitted investments taking the form of investment grade-rated short-dated securities as a cash equivalent.

The Singapore government bonds and treasury bills and MAS bills "each meet the requirement of liquidity (as they can be liquidated through a sale in the secondary market) and are backed by a AAA-rated sovereign or issued by the Singapore central bank", it told the bourse.

VTAC this month became the first SPAC to register its final prospectus with the MAS. It will issue 11.8 million units at S$5 apiece, including a public offering of 600,000 units in Singapore. Each unit comprises 1 share and 0.3 of a warrant per share as well as a right to 0.2 of a warrant per share. (See Amendment note)

Trading in the units is expected to begin on Jan 20, while the shares and warrants will start trading separately on Mar 7.

Correction note: An earlier version of this article stated that each unit comprises 1 share and 0.3 of a warrant per share. The article has been corrected to reflect that it also includes a right to 0.2 of a warrant per share.