Endangered SPAC? Public Trading Path for Plus Could Be in Jeopardy

Signs are flashing red for the business combination of autonomous trucking software developer Plus getting to the finish line of its $3.3 billion SPAC merger with Hennessy Capital Acquisition Corp. V.

A Sept. 27 Securities and Exchange Commission filing by HCIC HCIC

declares it unlikely the merger will conclude by the "outside date" of Nov. 8. Plus will not comment on the timing of the closing of the business combination.

Competitor Aurora Innovation expects to conclude its SPAC business combination with Reinvent Technology Partners Y RTPY on Nov. 4, and Embark Trucks plans to begin public trading following a business combination with Northern Genesis Acquisition Corp. NGAB on Nov. 9.

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Two press releases this month from Plus make no mention of its SPAC merger. A spokeswoman said Plus was following the pattern of other SPACs and avoiding "five pages of legal disclaimers."

Previous releases, including a planned Sept. 27 release on delivery of PlusDrive supervised autonomous truck software to First Auto Works in China, mentioned the planned merger in the lead. That release, provided under embargo, was delayed two days, to Sept. 29.

Asked whether the delay had anything to do with China's technology crackdown, Plus said the timing was "not ideal" and that additional material was planned.  

Potential restructuring

The Sept. 27 HCIC filing suggested otherwise while not naming China.

"In light of recent developments in the regulatory environment outside of the United States, Plus and HCIC are discussing a potential restructuring of the SPAC merger and business combination."

Hennessy raised $345 million during an initial public offering in January. An additional $150 million was raised from funds participating in a private investment in public equity (PIPE). Plus would get about $500 million if the business combination concludes as originally planned. The merger terms were amended June 19.

Without a business combination, there is no SPAC, and investors presumably would be able to get back the $10 per share they invested. 

"While HCIC intends to work in good faith with Plus and its shareholders … there can be no assurance that the parties will be able to agree upon such a restructuring or that the Business Combination will be successfully consummated."

Securites and Exchange commission 8-K filing signed by HCIC CFO Nicholas Petruska

Plus had about $800 million raised from mostly Chinese companies before the merger, including significant ownership from Full Truck Alliance Ltd., a Chinese freight-matching service.

Full Truck Alliance YMM had two of its apps removed from China app stores in July for a review of data security, another way of describing a crackdown on Chinese companies trading in the U.S. As of this week, Full Truck Alliance appears to be back in the good graces of the Chinese government.

Chinese jitters?

Despite a deal to provide PlusDrive software retrofits to 1,000 Amazon trucks with the possibility that Amazon could get a warrant to purchase up to 20% of Plus, the Cupertino, California-based company increasingly is viewed as operating primarily in China, where FAW is its manufacturing joint venture partner and is doing factory installations of PlusDrive.

The Plus spokeswoman declined to say how many PlusDrive retrofits had been delivered to Amazon.

"While HCIC intends to work in good faith with Plus and its shareholders … there can be no assurance that the parties will be able to agree upon such a restructuring and amendment or …  that the Business Combination (as so amended) will be successfully consummated," HCIC said in its 8-K filing signed by CFO Nicholas Petruska.

Hennessy is a serial SPAC investor. It has brought four companies public via SPAC, including flatbed, specialized transportation and logistics company Daseke Inc. DSKE; school bus maker Blue Bird Corp. BLBD; and most recently electric vehicle maker Canoo GOEV, which is subject of a wide-ranging SEC investigation.

‘Army of lawyers and bankers'

The heavy Chinese ownership of Plus — prompting a Sept. 29 SEC F-4 registration filing on foreign investment — may attract the attention of the Committee on Foreign Investment in the U.S. (CFIUS).

"We cannot speculate on what CFIUS or any other government agency wants to do or not want to do," Plus CEO David Liu told FreightWaves in July. "We have an army of lawyers and bankers behind us looking into these situations, and I can tell you now, at the moment, we are very compliant with all the regulations out there.

"Will there be future problems? We'll deal with them whenever they come up. Geopolitically, it is quite complicated."

Plus competitor TuSimple Holdings TSP, which went public in April via a traditional initial public offering, is still negotiating with CFIUS over structural issues that date to its incorporation in the Cayman Islands before moving to San Diego.

Related articles:

Plus delivering autonomous systems in China after equipping Amazon trucks in US

Amazon could acquire 20% of Plus for buying $150M of autonomous systems

Plus scores SPAC deal as Wall Street sizes up TuSimple prospects

Click for more FreightWaves articles by Alan Adler.

Image Sourced from Pixabay