Starting this thread as ALTU has a meeting coming up to approve the extension on June 10th. They have a signed LOI (letter of intent) from earlier this year and have just delayed the extension vote from June 7th to June 10th (supposedly to get enough votes to approve the extension vote).
Warrants are currently at ATL at $0.06 which suggests that people think the most likely outcome is liquidation.
Two possible longshot plays here:
Buy the warrants with the anticipation that they will get enough votes for the deadline extension (which should raise the price) and/or announce a DA with a company before the meeting. This would be in the target company’s best interests as it would reduce redemptions.
Wait for the redemption numbers and if they’re extremely high (95% +) buy some 10c calls as we would have another ESSC/THCA situation where we have an optionable low float.
These are very high risk plays and if the spac gets liquidated (which is looking very likely) you will lose 100%.
Looks like warrants was the correct play here. Spiked as high as $.30 on news that ALTU has secured a non-redemption agreement with shareholders representing 1.25 million shares. This likely means that an ESSC/THCA situation is not going to happen. On the bright side, the sponsor paying money out of their own pocket to cut down redemptions means that the trust is not likely to be liquidated soon.
I didn’t do warrants, but both 7.5c (bought at 2.50-2.55, selling at 2.75+) and 10c (bought at 0.05, selling now at 0.25-0.30) turned out to be great plays as well. Cheers.
Bearish fact: Share price has gotten knocked back to 10.15-10.20.
Bullish fact: Share price has gone from 9.96 to 10.42 and back down to current on only 338,000 volume, suggesting that redemptions may have been high. The bid-ask spread is also pretty consistent at 5 cents or more, which is substantial when the share price is so close to NAV.
Speaking of which, do we know what NAV was for the redemptions on this extension vote? That can help guess at how likely high redemptions are.
However, on April 26-27 there was a big jump in OI on the June 10c. Perhaps this was a front-load in preparation of a pump and dump, or there was other news surrounding this date. I’m not sure. Just be careful of a rugpull.
That’s encouraging, as there has been almost no volume above $10 until today. No more than 10,000 or so shares were sold (prior to today) above $10.
Keep in mind that the sponsor has been very vocal about the fact that they have a merger target in mind and are hoping to drop a DA soon, however. That would potentially prevent some holders (especially retail) from redeeming.
There was a DD on r/spacs. I think they were expecting a DA before the extension since ALTU had a signed LOI. Their reasoning was that the team would try to announce a DA before the extension vote to limit redemptions. Might be the reason for the volume in April.
Looks like the total premiums sold are not substantial, which is potentially a good fact, suggesting that the calls were retail BTO and not funds buying up the float to sell covered calls (with knowledge that they won’t redeem).
The pricing on the warrants suggests there wasn’t much optimism for a potential DA. Warrants were priced with liquidation being the most likely outcome. Also, the sponsors not adding any money to the trust probably didn’t help. Most people probably expected another TACA.
Given the sponsor is paying out $165,000 out of their own pocket (see calculations below) to extend the spac I doubt they will announce liquidation soon.
Calculated as: $.033 per share per month x 4 months until deadline x 1.25 million shares in non-redemption agreement gives us $165,000
See more details here: 14A - SEC EDGAR
At a glance, this appears to be another BREZ. I’m not sure how a FPA guarantees a high redemption number, and why people are so desperate to get into these plays without having confirmation. Regardless, these things tend to generate hype and could be an easy target for some quick scalps. Good luck to those in this one, I look forward to seeing how it pans out.
BREZ was largely front-run by retail with huge 10c OI being built before the last redemption date, suggesting funds were buying the float to sell cheap covered calls. BREZ also had multiple days of millions of volume with some price action above the redemption price before the last redemption date, suggesting many arb funds who would have otherwise redeemed were instead selling (likely to retail) at above-NAV prices.
This had barely any OI and never traded above NAV until after the redemption date.
The reality is you can’t really judge the play until you know the redemption numbers, which is anyone’s guess. (I don’t necessarily buy the logic that the reason they did the FPA is because they knew redemptions would be 95+%.)
But to suggest ALTU is similar BREZ is not accurate. This has a lot more positive indicators.
