In a letter to the shareholders of the largest SPAC to ever hit the market, billionaire fund manager Bill Ackman said on Thursday he will pursue a relaunch of Pershings, following a lawsuit filed this week by an investor.
The lawsuit against Pershing Square Holdings (PSTH) was filed by former US Securities and Exchange (SEC) commissioner Robert Jackson and John Morley, a law professor at Yale. They have claimed that Ackman’s SPAC has been operating as an illegal investment company by investing in securities while not being registered properly with regulators.
The lawsuit, which Ackman called “meritless”, has, he admitted, caused his blank-check company “harm” nonetheless. He said: “our ability to complete a transaction in the required time frame has been impaired by the lawsuit.”
This, he argued in the letter to shareholders, was because the litigation is unlikely to be resolved quickly and Pershings has just 11 months left to find a company to finalise a merger before it must return the capital of $4bn (£2.9bn) collected from investors.
Ackman said “the mere existence of the litigation may deter potential merger partners” from working on a merger with Pershings until the lawsuit is completely resolved.
SPACs usually have two years to find a target to take public.
But the new vehicle proposed by Ackman, a special purpose acquisition rights company or “SPARC”, would enable him to continue to look for deals without a strict deadline for a merger – though regulators still need to approve plans for the vehicle.
The SPARC relaunch is “a modified opt-in (rather than the current opt-out) SPAC structure where investors in PSTH would receive long-dated, transferable SPARC warrants to acquire common stock in SPARC, which we expect to be traded on the NYSE,” said Ackman.
Ackman said a public filing of SPARC’s SEC registration statement will be made shortly.