Bloomberg reports that One Championship is working with Goldman Sachs and Credit Suisse in seeking a listing in the U.S. via a special purpose acquisition company (SPAC).
One Championship, which is based in Singapore, has wanted to make inroads into the U.S. for some time now. It has aired telecasts on TNT although with no events in the U.S. as of yet.
A special purpose acquisition company is a shell corporation listed on a stock exchange with the purpose of acquiring a private company. Thus, it would not have to go through much of the standard IPO process. Typically, 85% to 100% of the proceeds raised in the IPO for the SPAC are held in trust to be used for the merger or acquisition. The SPAC has a window in which it must complete the transaction or will be forced to dissolve.
As outlined by John Nash in a recent piece on Bloody Elbow, One Championship losses are hitting new levels. The financials obtained by Nash reflect losses despite the fact ONE has touted the company being valued at $1 billion.
Payout Perspective:
SPACs have grown in popularity in the past year and many of them have been centered around sports properties. Known as ‘blank check’ ventures since the purpose is to raise capital for the company to buy, 35 sports-related SPACS have been formed in2021 and have raised or want to raise $9.1 billion according to Sportico. SPACs give great deference to the sponsors to find an acquisition. The catch is that there is a timeline to do it and shareholders could demand their original capital back if they do not like the proposed target. The benefit of the SPAC is that the company would not have to go on a ‘road show’ to promote it to potential institutional investors that may pick apart their plan. This factor may behoove ONE Championships if its finances come into question. While it has been backed by major investors, issues about its losses and future revenues should be a concern as it solicits the public to invest in its SPAC.
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