Investors abandon Momentus SPAC deal
EL PASO, Texas – Investors representing more than half of the money in a fundraising round as space transport company Momentus merges with a special purpose acquisition company (SPAC) have abandoned the deal when the opportunity has been offered to them by a settlement with the Security and Trade Commission.
In a July 16 filing with the SECStable Road Acquisition Corporation, the SPAC merging with Momentus, said it had complied with terms of a settlement with the SEC announced on July 13, offering investors who have participated in a private equity investment (PIPE) the possibility of withdrawing without penalty.
When Stable Road announced the merger with Momentus in October 2020, the deal included a concurrent PIPE cycle, which is common in PSPC mergers to increase the amount of capital raised beyond the proceeds of PSPC itself. In the case of the Momentus deal, $ 172.5 million came from the Stable Road proceeds, while $ 175 million would come from the PIPE funding round.
In its July 16 filing with the SEC, Stable Road said investors who accounted for $ 118 million of the $ 175 million raised in the PIPE round had terminated their deals. The file did not indicate which investors had decided to withdraw from the transaction.
Stable Road said investors who decided to stay in PIPE changed their deals to create a net gain of $ 5.3 million. Six new investors, also unidentified on the record, joined PIPE, adding $ 47.75 million to the round. That brought the total to $ 110 million, just under two-thirds of PIPE’s initial round. These investors will also receive warrants to purchase an equal amount of Momentus shares at a later date.
SEC settlement that gave PIPE investors the option to drop out resulted from allegations Momentus made false claims about its technology maturity and national security concerns about its co-founder and former CEO Russian, Mikhail Kokorich, as well as Stable Road’s failure to do due diligence. The settlement included $ 7 million in penalties against Momentus and $ 1 million against Stable Road.
Companies are moving forward with the merger and taking action to put these national security concerns behind them. Momentus announced on July 14 that it has hired John Rood as its new CEO, effective August 1. Rood was an executive at Lockheed Martin and Raytheon who served as Under Secretary of Defense for Policy from 2018-2020. Dawn Harms, who has served as Acting Managing Director since January, will return to her original position within the company as Director of Revenue.
In a company statement, Rood said he looked forward to “leading the company into a new chapter in which we take the necessary steps to address concerns previously expressed by the Department of Defense through a strong implementation of the recent national security agreement with the US government. . “Momentus finalized this deal in June to address security concerns that have delayed its launches.
Momentus updated its board on June 16, officially adding Rood to a board that includes Brian Kabot, general manager of Stable Road, and former Canadian astronaut Chris Hadfield. The company also added Kimberly Reed, former president of Ex-Im Bank, to the board; Mitch Kugler, Managing Partner at Haystack Strategy Partners LLC; and Linda Reiners, former vice president of strategic enterprises at Lockheed Martin. A seventh member of the board will be a “security director” approved by the Committee on Foreign Investment in the United States, a condition of the national security agreement.
Momentus and Stable Road confirmed in an amended S-4 registration statement filed with the SEC on July 19 that Stable Road will hold a shareholders meeting on August 11 to vote in favor of the merger with Momentus.