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A so-called “blank check company” launched last year by Indianapolis-based Emmis Corp. is liquidating without making any purchases, the latest sign that the once-hot market for such deals has cooled.
Monument Circle Acquisition Corp. announced Tuesday it will wind up operations before the end of the year and redeem shares at a pro rata portion of the funds in the trust account. It did not say what percentage of the total investments it expected to return.
Monument Circle is known as a special-purpose acquisition company, or SPAC, which was set up to acquire one or more businesses and merge with them as a way to take those companies public.
The company had raised $251 million in its initial public offering in January 2021, and has been on the hunt since then for companies to buy. But with the market cooling, it was unable to close any deals before its Jan. 19, 2023, deadline.
“The SPAC environment changed dramatically from the time we started the process nearly two years ago,” Kate Snedeker, a spokeswoman, told IBJ in an email. “Like many SPACs that went public in early 2021, we were unable to find a suitable merger partner, so we elected to cease operations and focus on other endeavors.”
The market for SPAC deals has cooled considerably in recent months as the economy and stock market have slowed. So far in 2022, there have been 48 SPAC liquidations, and another 40 are planned for before the end of the year, according to data by SPAC Research, as reported in The Wall Street Journal.
The CEO of Monument Circle is Jeffrey Smulyan, who is also CEO of Indianapolis-based Emmis Corp., a media company which has been shedding operations, including four Indianapolis radio stations and Indianapolis Monthly magazine this year.
Emmis announced the formation of Monument Circle in December 2020 with high hopes, saying it would focus on businesses in the media, technology, sports and entertainment sectors.
The board and C-suite of Monument Circle was made up primarily of Emmis executives.
Monument Circle went public as an independent company early last year and traded on the Nasdaq market under the ticker MON. Shares were trading Wednesday midday at $10.26, up about 2%, and slightly higher than the IPO price of $10. With the liquidation, the shares are expected to stop trading in coming days.
Monument Circle had a market capitalization of about $320 million.
On Dec. 14, Monument Circle shareholders approved four measures, including liquidation of the company. The vote for liquidation was 22.2 million shares for, and 240,816 shares against, according to an 8-K Form filed today by Monument Circle.
As of Sept. 30, Monument Circle has $251.4 million in assets and $10.2 million in liabilities. Large investors include Periscope Capital, Marshall Wace, Corbin Capital Partners and Aristeia Capital.
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Watching Emmis is starting to feel like watching Magic Johnson at the end of his career
Per SEC rules, SPACs have two years to close deals and use funds. Otherwise, the funds must be returned. It looks this SPAC has hit the deadline and thus must disband. This is happening the majority, if not most, of the SPACs presently open.
What does not help is that earlier successful SPAC investment have not tended to do well.