Law Street Media

SEC Attacks SPACs

Washington DC, USA - January 13, 2018: US United States Securities and Exchange Commission SEC entrance architecture modern building sign, logo, american flag, looking up sky, glass windows reflection

As the SEC launches a salvo of regulations against special purpose acquisition companies (SPACs), New Era Helium Corp. announced the company would be going public via a SPAC acquisition. The deal values the pre-money company at $90 million is expected to close during the first half of this year. New Era Helium plans to list on NASDAQ.

New Helium is “an exploration and production (E&P) company that sources helium produced in association with the production of natural gas reserves in North America,” according to the deal’s press release. “ This transaction creates an aggregation model for upstream helium and positions the company as one of the first helium companies to list on a major exchange.”

The SPAC boom of the second half of 2020 and throughout 2021 slowed to an anemic trickle during 2022-2023. When the historically-low interest rates that accompanied the pandemic flooded the market with cash, investors turned to SPACs in search of returns. Companies, in turn, seized the opportunity to go public while sidestepping the rigors and delays of a traditional initial public offering. But with quickly increasing interest rates alongside greater regulatory scrutiny and a volatile market, SPAC activity plummeted in 2022 and into 2023.

Source: Wall Street Journal

While 86 SPAC IPOs raised $13.4 billion in 2022, those figures dropped for just 29 SPAC IPOs raising $3.7 billion in 2023. According to Ernst & Young, there were 140 active SPACs seeking a acquisition as of December 2024. SPACs must liquidate and return outstanding cash to investors if they have not completed a deal within a certain time period, (typically two years). With few appealing targets available, many SPACs have wound down over 2023 and will continue to do so during 2024 – especially in light of the SEC’s latest move.

Source: Boardroom Alpha

The SEC may have put the nail in the SPAC’s coffin. The Commission voted 3-2 on Wednesday to adopt rules aimed at increasing disclosure and making SPAC deals more like typical IPOs – thereby removing much of the allure of SPACs.

“The proposed new rules and amendments would require, among other things, additional disclosures about SPAC sponsors, conflicts of interest, and sources of dilution,” according to the SEC’s press release. “They also would require additional disclosures regarding business combination transactions between SPACs and private operating companies, including disclosures relating to the fairness of these transactions.” The rules are scheduled to take effect in 5 months.

According to DealPulse’s M&A database, which harnesses both AI and attorneys to digest the granular deal points of each publicly-announced transaction over $25 million, New Era Helium is advised by law firm Sichenzia Ross Ference Kesner LLP, and the SPAC, Roth CH Acquisition V Co., is advised by Loeb & Loeb LLP.


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