SPAC Developments Ramping Into Year-End (KWIC, TWO, UEI, ARR, AXG, NLX, BPW, TLB, URX)

By Douglas A. McIntyre Updated Mar 10, 5:51PM EDT · Published Dec 14, 9:52AM EST

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To close out the year, SPACs are pumping out deals one after another. However, as of late, some blank checks have not fared as well, and the NASDAQ and OTC Bulletin Board could become increasingly populated with blank checks’ targets that are elbowed from the AMEX. SPACupdate.com will follow up soon with our picks for the best—and worst—blank check mergers of 2009. Two Harbors Investment Corp. (AMEX: TWO), Kennedy-Wilson Inc. (AMEX: KWIC), Ultimate Escapes Inc. (AMEX: UEI), ARMOUR Residential REIT Inc. (ARR), Atlas Acquisition Co. (AMEX: AXG), Overture Acquisition Co. (AMEX: NLX), BPW Acquisition Co. (AMEX: BPW), and United Refining Energy (AMEX: URX) all have key developments taking place right now and into year-end.

Two real estate deals brought public through SPACs wasted no time putting capital to use. Two Harbors Investment Corp. (AMEX: TWO) just put 95% of its capital to use, completing last week a deal for nearly $500 million to purchase residential mortgage backed securities and related investments. Kennedy-Wilson Inc. (AMEX: KWIC) spent a little less, and set up a joint venture with private equity firm Siguler Guff to buy up to $108 million in distressed condominium projects nationwide.

One SPAC that completed a merger with a real estate angle drifted off course and ran aground; Ultimate Escapes Inc. (AMEX: UEI) was notified by AMEX officials that the company, brought public by the Secure America Acquisition blank check, will be de-listed for failing to maintain mandatory shareholder minimums. If the de-listing goes through, the vacation rental property company will trade on the OTCBB.

ARMOUR Residential REIT Inc. (ARR) joined Ultimate Escapes, the company reported late Friday. The REIT was given a de-listing notification and has applied to trade on the NASDAQ, according to ARMOUR’s statement. ARMOUR was brought public by Enterprise Acquisition Co.

Atlas Acquisition Co. (AMEX: AXG) has an $840 million deal to provide a Santa Barbara, Calif., company with a capital injection. Koosharem Corp., a HR and staffing services firm, which operates Select Staffing, is looking to retire $200 million in debt. Standard & Poor’s Ratings Services lowered Koosharem Corp.’s corporate credit rating to CCC from B-. Koosharem is carrying about $540 million in debt, the September 2009 S&P report stated. The SPAC already wants to trade its shares for outstanding warrants—instead of buying them back, it is offering slightly less than one share for every 12 warrants.

Overture Acquisition Co. (AMEX: NLX) is working to bring a subsidiary of Jefferson National Life Insurance Co. public, the SPAC announced. The target will contribute to buybacks of close to 25% of Overture’s shares to get its deal done; the SPAC looks to overcome a 30% redemption threshold and get its merger completed by Jan. 30, 2010. Overture aims to reinsure a portion of Jefferson National Life’s annuity policies by forming an entity in Bermuda.

Both Atlas and Overture have investment vehicles controlled by Israel Englander with big stakes in their warrants; the Englander funds have substantial stakes in both SPACs, so it will be in the investor’s interest that—should he not outright vote for the AXG and NLX deals—his stakes are at least sold to affiliates of each SPAC.

BPW Acquisition Co. (AMEX: BPW) is structuring a unique deal with women’s clothing retailer Talbots (NYSE: TLB) in which the SPAC will merge into the NYSE-listed entity while it simultaneously uses capital to oust its majority equity holder. Under the terms of the deal, BPW will merge into Talbots and the retailer will simultaneously accept a $200 million credit facility from GE Capital to buy out majority shareholder AEON Inc. The SPAC is looking to trade for half of its outstanding warrants with shares of the company post-merger on a 10-for-1 basis.

United Refining Energy (AMEX: URX) saw its deal with Chaparral Energy terminated by shareholders who refused to sell shares back to the SPAC; there currently is no timetable for its liquidation.

For more on these deals, and other blank check news, please visit www.SPACupdate.com.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.