Maker of $555,000 Flying Motorbike Sinks After SPAC-Deal Debut

(Bloomberg) — The Nasdaq debut of a Japanese maker of $555,000 flying motorbikes was a dud after its tie-up with a blank check that valued the company at more than $600 million failed to shake off the gloom surrounding SPAC mergers.

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Aerwins Technologies Inc., which went public in a deal with Pono Capital Corp., a special purpose acquisition company, fell 59% from the price Pono closed at on Friday, triggering a pair of halts. The meltdown extends a volatile stretch for the shares that soared last week on a Bloomberg News report that the deal would be approved.

As part of the deal, Pono and Aerwins have a pact with Yorkville Advisors Global for a standby equity purchase agreement that would allow it to sell up to $100 million in shares. So-called committed equity facilities have become popular after a growing number of redemptions have left newly public companies with a fraction of the resources they anticipated.

Nearly 99% of Pono investors opted to swap their shares for cash, making Aerwins the latest low-float stock to see wild swings as less than 200,000 shares remain. Stock redemptions allow investors to return shares for cash if they don’t like the merger or simply wish to recoup their investment.

Pono, which raised $115 million in August 2021, had a merger with cannabinoid drug developer Benuvia Inc. called off last year less than five months after the deal was announced.

Investor skepticism surrounding SPACs and the companies they take public has been a black mark on the industry. Many specialists expected sponsors to shift their focus to cash-generating firms, from the bevy of pre-revenue companies that went public through the vehicle during its heydey.

The De-SPAC Index, a basket of more speculative former SPACs, has spiraled 54% in the past year and one-third of the roughly 400 companies that merged with a SPAC are now trading below $2 a share, just a fraction of the $10 mark at which the blank-check companies typically aim to go public.