Interest in many special purpose acquisition companies (SPACs) has waned over the past two years. Following an incredible surge in interest around the peak of meme mania in 2020 and 2021, various blank-check companies saw their valuations plummet as investors shifted their focus to more defensive assets. That said, one of the SPACs that’s in focus for many investors today is Revelstone Capital (NASDAQ:RCOC), with RCAC stock rocketing 90% higher at the time of writing on some interesting news.
This surge comes as a direct result of the company canceling its shareholder meeting. This meeting was set for today to approve the company’s merger with Set Jet, a private jet charter program. The company noted in its release that it also intends to “withdraw” from the merger, at least for now:
“…withdraw from consideration by the stockholders of the Company the proposals set forth in the Company’s definitive proxy statement/prospectus initially filed by RCAC with the SEC on December 13, 2023 (the “Proxy Statement/Prospectus”) in connection with the proposed business combination (the “Business Combination”) with Set Jet, Inc. (“Set Jet”), until a new special meeting has been scheduled. As a result of the cancellation, redemption requests submitted for RCAC’s shares of Class A common stock will not be accepted.”
That’s a lot to take in, so let’s dive into what this means for investors.
RCAC Stock Surges As It Cancels Another Shareholder Vote
On its face, this deal may seem appealing. Set Jet provides a membership service to individuals looking to fly private, allowing travelers to “buy a seat, not the jet.” Given the surge in experiential consumption since the pandemic, one might think that investors would jump at this merger, and by all accounts, the market liked the deal, which was announced in July all the way up until Christmas.
However, a crash to around $5 per share last week has hampered the stock. Part of the reason for this decline may be concerns around redemptions and the total amount of cash in Revelstone’s account. According to recent reports, as of June 30, $36.8 million was held in trust within Revelstone accounts, with an additional $18 million in private placement funds and a total of $18 million in PIPE financing available to complete the $80 million deal.
It’s unclear what exactly caused this meeting to be canceled, but Revelstone did note that “the conditions to closing of the business combination have not been satisfied.” Further, the announcement that the company will not accept redemption requests suggests this SPAC is looking to conserve cash and potentially secure additional financing to get this deal done, or pursue another deal.
Notably, today’s rise brings RCAC stock back above its cash value level, so with a redemptions hold, this is a stock that may not see as much volatility from here.
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On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
