Two more providers that went community by SPAC mergers have declared they will restate economic statements as a outcome of new regulatory guidance on accounting by SPACs.
The guidance issued by the U.S. Securities and Trade Commission last thirty day period resolved how SPACs really should account for the warrants that they usually difficulty as part of initial community choices.
In accordance to Looking for Alpha, the SEC “threw the SPAC sector into turmoil” by indicating that “in some situations, unique reason acquisition providers really should account for the warrants as liabilities alternatively than as fairness in the SPAC. That could require lots of SPACs to restate previous economic statements, and also make accounting a lot more challenging and highly-priced heading forward.”
On Friday, snack maker Simply just Fantastic Foods turned the most current SPAC to announce a restatement, declaring it had been accounting for warrants as fairness beneath a fixed accounting product.
Consistent with the SEC guidance, the organization now intends to restate economic statements “such that the warrants are accounted for as liabilities and marked-to-sector just about every reporting time period.”
As a outcome, Simply just Fantastic reported, it expects to recognize an incremental legal responsibility on its equilibrium sheet of $one hundred ten million to $a hundred thirty million for the quarter finished Feb. 27, 2021.
Simply just Good’s restatement came three days immediately after electric powered pickup truck maker Lordstown Motors reported it would restate its statements for the yr finished Dec. 31, 2020, for comparable good reasons.
“The restatement pertains to the accounting cure for community and non-public placement warrants that were being remarkable at the time of the business enterprise mix with DiamondPeak Holdings” in Oct 2020, Lordstown reported in a information launch.
Looking for Alpha reported the SEC’s shift had taken the wind out of the SPAC increase that began last yr when a file 248 SPACs went community.
Other SPACs that have restated their final results consist of Social Money Hedosophia Holdings, Northern Genesis Acquisition, QuantumScape, Virgin Galactic, and DraftKings.