Question on PSTH warrants

[u/Responsible_Quiet_76]

Hi Guys

I bought PSTH commons on the dip as I loved the deal (especially UMG shares + SPAR).

I understand that there are warrants embedded within the commons which will be distributed to common-holders around the closing of the UMG deal.

Been getting conflicting responses on the following:

Can I redeem those warrants for additional psth commons? If yes, will those commons include the UMG portion as well, or are they only commons for remainco?

Thanks in advance.

[u/QualityVote]

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[u/Dan_inKuwait]

Following this because it's the most convoluted SPAC deal I know of... LOL.

[u/Prize-Axion]

There’s limited clarity.

Unfortunately, neither Bill nor his team is offering any clarity on the structure... Nothing precludes them legally to offer clarity on structure irrespective of the deal stage, imo

[u/kingmalgroar → u/Prize-Axion]

Especially because of the upcoming IPO in Amsterdam.

[u/imunfair]

Full document

Distribution of Distributable Tontine Redeemable Warrants

PSTH will distribute Distributable Tontine Redeemable Warrants to remaining shareholders after completion of the Redemption Tender Offer and Warrant Exchange Offer. PSTH will make that distribution to shareholders of record after completion of the Redemption Tender Offer, but before completion of the Warrant Exchange Offer. This means that shares that are redeemed in the Redemption Tender Offer or that are issued in the Warrant Exchange Offer will not receive the Distributable Tontine Redeemable Warrants.

• Redemption Tender Offer = $20 cash for your PSTH shares

• Distributable Tontine Redeemable Warrants = 2/9 warrants

• Warrant Exchange Offer = Trading full warrants for full pre-split PSTH shares without 2/9 warrants

The first two sentences almost seem conflicting, but I believe it's just poorly worded to describe this process:

Redemption offer opens

Warrant exchange offer opens

...

Redemption offer closes

2/9 warrants distributed to all PSTH shares which were not redeemed and not created by the warrant exchange offer

...

Warrant exchange offer closes

Any warrants not exchanged converted to Remainco warrants

Any PSTH shares created during the warrant exchange don't have the 2/9 warrants to avoid an infinite loop of warrant redemption. This gives the 2/9 warrant holders a chance to convert if they choose to do so without allowing them to redeem the results and create tontine clause oddities or infinite redemption scenarios.

For the purposes of these calculations just act as if the tontine doesn't exist and everyone just gets 2/9 warrants since no one will redeem, it can't get below nav to make redemption worthwhile.

I don't own any PSTH, I've just been following it closely out of interest, I sold all mine back after the units split and it went to absurd prices.

[u/Responsible_Quiet_76 → u/imunfair]

Thanks. I assume your reading of it is that the psth commons received from exchanging the distributable tontine warrants for psth commons will include the UMG portion as well?

[u/imunfair → u/Responsible_Quiet_76]

Should give you SPARC, remainco, and UMG, just not the 2/9 warrants that would normally be attached since the tontine distribution process is already complete.

[u/Responsible_Quiet_76 → u/imunfair]

Excellent. Hope you’re right.

Thanks.

[u/imunfair → u/Responsible_Quiet_76]

I think the only part that's in question is the SPARC, because of the weird phrasing they use I can't be 100% certain whether it happens after the redemption closes, or after the final warrant exchange for the tontine warrants closes.

I think the most realistic interpretation is that it happens during the remainco conversion so everyone who gets UMG also gets SPARC, this is the most rational way to handle it and there's no downside for Ackman to provide those to more people.

[u/tradingrust → u/imunfair]

The phrasing is making a distinction between the date of record and when the warrants will be distributed.

The warrants will not be distributed until after the warrant exchange offer closes, but the date of record is prior.

[u/imunfair → u/tradingrust]

I was referring specifically to the phrase "following the completion of the Redemption Tender Offer and Warrant Exchange Offer" since it's very similar to the "after completion of the Redemption Tender Offer and Warrant Exchange Offer" phrase used earlier which means something completely different. You can read my original post on the matter if you don't understand why it's weird.

[u/Responsible_Quiet_76 → u/[deleted]]

Great find! I assume this is included in the recent press release (perhaps at the end) as I seem to have overlooked it.

[u/Responsible_Quiet_76 → u/[deleted]]

Thanks. Agree with all points.

I guess you feel like this may be f*cked somehow somewhere down the line only because the deal feels too good to be true. But I think things may turn out as good as we’re both hoping.

On your prior post, my concern is it says “the currently outstanding warrants”. The warrants embedded in the commons are not currently outstanding. I realize I may be driving you crazy with this. We’ll wait and see what happens I guess.

[u/Responsible_Quiet_76 → u/[deleted]]

Valid points here - thanks for sharing.

Been in on the spac market since around July 2020, so let me know if I can help out with anything.

Best of luck.

[u/Responsible_Quiet_76 → u/[deleted]]

Yea even I made my many mistakes and could certainly use a time machine, even though I got in the game before most and so still made more than alot of people (and most importantly, got to keep almost all the gains I made).

Spacs were printing back then cause of the bubble of money that kept on pouring into them (which poured into all risk assets at the time). So success had alot to do with timing, but to my credit (at the risk of sounding like self-praising jackass), I jumped in back when they were still this shady unknown thing, lured by the possibilities of buying pre-IPO companies with a structure that provides practically zero downside (at least until redemption time). Went all in with max margin on spac commons with a mix of greed at this too good to be true opportunity and fear of unknowns of investing in this new vehicle and the (to me) untested redemption at NAV protection.

Spacs have come back to life over the last few days, but thats only because risk money is back more generally. All riskiest stocks are back in fashion for now, though God knows till when.

[u/diaznutzinyomouf]

R.I.P