Real estate mogul Sam Zell has decided to dissolve the special purpose acquisition company backed by his Equity Group Investments and return the money it raised to the SPAC's investors after it failed to close any deals.
It comes as SPACs, also known as "blank check" companies, have had a tough year as inflation and interest rate hikes have shaken up the capital markets. In 2021, there were 613 SPAC listings after 248 in 2020, according to Nasdaq. This year, fewer than 75 SPACs have had an initial public offering, according to SPAC Analytics.
Last week, David Simon, chairman, CEO and president of Simon Property Group, resigned as chairman of Simon Property Group Acquisition Holdings. His son Eli Simon, who serves as the Simon SPAC's CEO, replaced his father as chairman.
In the case of Equity Distribution Acquisition Corp., or EDAC, the SPAC said it plans to stop trading its shares and redeem them next month. EDAC added it would "cease all operations except for the purpose of winding up" on Sept. 16, according to a filing with the Securities and Exchange Commission.
"The company did not find an opportunity within the period required by its Amended and Restated Certificate of Incorporation ... that aligned with its business goals," EDAC added.
Zell, who has founded several real estate investment trusts and is chairman of Equity Group, is founder and chairman of the Equity Distribution SPAC. Bill Galvin, who previously served as president and CEO of Equity Group's Anixter before Wesco acquired it in 2020, is CEO of EDAC.
Chicago-based EDAC expects the redemption price for Class A common stock to be $10.01 per share.
An Equity Group Investments spokesperson did not immediately respond to an inquiry from CoStar News about whether Equity Distribution had any employees of its own that would be affected by closing the SPAC.
"The Redemption Amount will be paid on September 19, 2022, to the beneficial owners of public shares held in street name without any required action on their part," EDAC said in the SEC filing.
Zell launched Equity Distribution Acquisition Corp. in July 2020, with plans to raise about $300 million from its initial public offering. As of June 30, it had assets of nearly $415 million and liabilities of the same amount, according to its latest quarterly report filed with the SEC.
Equity Distribution planned to pursue acquisition and merger targets in any industry, but it intended to initially focus on identifying prospective businesses in the North American industrial sector, the company said in its IPO filing.
EDAC said there would be no redemption rights or liquidating distributions with respect to its warrants, "which will expire worthless."
It also said the company’s sponsor, directors and members of its management team "have waived their rights to liquidating distributions with respect to all founder shares held by them."