Lucid Motors is set to close a merger that will give the Saudi electric vehicle start-up $ 4.5 billion in new capital. But the deal is being delayed, in part, by spam filters.
The California startup is merging with a Special Purpose Acquisition Company, or SPAC, called Churchill Capital IV, already listed on the New York Stock Exchange. For the merger to be completed, Churchill shareholders must approve a number of proposals that define the terms of the merger. That vote was supposed to close today, but Churchill extended the deadline to Friday because too few shareholders approved a key proposal.
There are several possible reasons. The first is the spam filter problem. To participate in this vote, shareholders receive a specific code. It is possible, Churchill Chairman Michael Klein said in a call with investors Thursday that some shareholders have yet to vote because those codes went straight to spam.
“It should have been mailed or emailed to all shareholders. I know it’s technical. And I know some of those emails might have gone to your spam folder or some other way. But it is essential and important to vote and to have the tools to vote, ”he declared. “I need to remind you to check your email and check your spam. “
The other reasons have more to do with the madness of the stock market over the past couple of years. Churchill announced the merger in February, and in the months since, its shares have been one of the most traded PSPCs on the market. Part of this comes from people who truly believe in Lucid Motors and its potential in the growing electric vehicle market. But since the start of the pandemic, there has been a huge influx of “retail traders,” ordinary people buying and selling stocks on apps like Robinhood. Much like GameStop and AMC, the more popular Churchill action became, the more it could seem like a good way to make money.
Since many of these retail traders are new to the stock market, they are less likely to understand the vagaries of PSPC mergers. It is very good; most people had never heard of PSPCs before they took off last year. But if they just bought what they thought were hot stocks, they might not even know about the vote in the first place.
“We welcome all new shareholders,” Klein said Thursday. “However, we need you to participate in the electoral process. In particular, if you are participating from new trading platforms, new applications that do not necessarily point you clearly to a voting service, we need your vote.
Lucid Motors CEO Peter Rawlinson made a similar plea. “I want to be very clear about this. I need you to vote for proposal two, ”he said. “It doesn’t matter if you are tall or short. Every investor vote counts, we’re all in it. So whether you are a Robinhood trader or manage your portfolio through a traditional brokerage house, please vote.
Finally, since apps like Robinhood have eased the burden of trading on the stock market, retail traders are more likely to turn around and sell the stocks they buy instead of holding them through the merger. And that can make it difficult for companies to know who owns their shares.
State-owned companies use third-party services called “proxy attorneys” which are supposed to keep an eye on shareholders so that they can be contacted when it’s time to vote on company business. But it has become more difficult because so many people trade in PSPC stocks, said an employee of a company that recently merged with PSPC. The edge. This person said that the spreadsheet their company received from the agent was full of disconnected numbers or old AOL email accounts. Even when the company was able to track down the shareholder to ask them to vote, there was a good chance that person had already sold their shares to someone else.
Klein and Rawlinson said they still expected the merger to be completed on Friday and Lucid Motors to take Churchill’s place as a company listed on the New York Stock Exchange. And while they’re not the first to run into issues trying to muster enough shareholders to approve a PSPC merger, the $ 4.5 billion investment at stake makes this last-minute delay a bit more precarious. .