1/ SPAC 101: Some investors have expressed concerned about a new warrant feature in some recent SPACs such as $IPOE and $SBE. You may be familiar with the table below from a SPAC S-1 filing.

2/ This new feature allows sponsors to redeem warrants if the stock is trading at/above $10, which differs from the standard requirement that a stock trade at/above $18 for 20 out of 30 consecutive trading days. This enables sponsors to eliminate warrant overhang more easily.

3/ Before the introduction of this warrant redemption feature (referred to as "make-whole" redemption), if the stock traded below $18 the only way an issuer could reduce the warrant overhang was to make a tender offer for the warrants (like in $LFAC/Landsea), which of course…

4/ …is voluntary for warrant holders. Under the make-whole redemption, if warrant holders choose a cashless exercise, the number of shares issuable is determined by the warrant table, which is less compared to a cash exercise.

5/ In choosing a cashless exercise, the warrant holder is giving up some economics for the convenience of not having to put up capital and the company gets an added benefit of less dilution.

6/ To be clear, it is the warrant holders choice to elect either a cash or cashless exercise. #spacs

7/ One more thing, $SBE has some funky stuff of its own. Like the issuer can force a cashless exercise, however that's only when they are redeeming warrants for cash (vs. stock). It appears what you get in that scenario is the difference between exercise price $11.50 and ...

8/ ... "fair market value" which is the 10-day volume weighted average price. $SBE sponsor really made this one complicated.

9/ All of these SPACs are bespoke in design and always changing with new “innovations”, so make sure you understand the docs.