Avingstone abandons its plan to become a SPAC, withdraws amended prospectus

The ranks of would-be special purpose acquisition companies within the Canadian market have been reduced by one with the news that Avingstone Acquisition Corp. has “withdrawn” its prospectus.

The scorecard now reads this way: filings have been made for seven SPACs, five have raised capital; the first is still in the market and one has been withdrawn. SPACs are new to Canada but well-known south of the order.

They follow a well-worn path: an organization takes the initiative to create a SPAC; capital is raised from the public and put into escrow; over the next two years the management team then seeks an acquisition target that is then put to the shareholders for any vote. If either no target is found or if the proposed transaction is voted down investors obtain cash with just a little interest payment. 5 SPACs, which have closed their offerings, have risen a lot more than $1 billion. None of the five have proposed a transaction.

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Originally, Avingstone filed an initial prospectus last September letting it raise $110 million. The issuer planned to concentrate “on hospitality and related property opportunities in the Americas and Europe.” In terms of an acquisition target Avingstone planned to focus on seeking out “businesses and assets by having an enterprise value which range from $250 million to a lot more than $500 million.”

Last November it filed an amended prospectus, moving that kept the original prospectus current C all part of the hope of bringing the offering to promote if and when markets improved. So on March 7 Avingstone reported that it had withdrawn the amended prospectus.

The final SPAC, the Kew Media Group Inc. continues to be hanging around: it filed a preliminary prospectus last November looking to raise $70 million; recently it filed an amended prospectus which gave it a further 3 months to decide what it wants to do.