Business Context and Reporting Period
This Form 8-K, filed by Cohen & Company Inc. on September 11, 2020, reports events occurring on September 8, 2020. The filing details the completion of the initial public offering (IPO) of INSU Acquisition Corp. II (the "SPAC"), a blank check company sponsored by Cohen & Company, LLC, a subsidiary of the registrant.
Key Financial Metrics
- IPO Gross Proceeds: $230,000,000 from the sale of 23,000,000 units at $10.00 per unit.
- Private Placement Proceeds: $5,400,000 total ($4,525,000 from Insurance Acquisition Sponsor II, LLC and $875,000 from underwriter Cantor Fitzgerald & Co.).
- Trust Account Funding: $230,000,000 deposited, including approximately $9,800,000 in deferred underwriting commissions.
- Outstanding Shares: 31,386,667 shares of SPAC Common Stock immediately post-IPO.
- Founder Shares: 7,846,667 shares held collectively by Insurance Acquisition Sponsor II, LLC and Dioptra Advisors II, LLC.
- Debt and Liquidity: A $75,000 loan for IPO expenses was repaid in full at closing. An additional commitment exists for up to $750,000 in interest-free loans for operating expenses, repayable only upon a successful business combination.
Material Changes and Transaction Details
The primary material event is the successful IPO of the SPAC, which included the full exercise of a 3,000,000 unit over-allotment option. The SPAC has 18 months to consummate a business combination; otherwise, it must liquidate and redeem public shares. The filing establishes a new administrative services agreement where the SPAC will pay the Operating LLC $20,000 per month for office space and administrative support.
Outlook, Risks, and Contingencies
- Liquidation Risk: If no business combination occurs within 18 months, the SPAC will cease operations, and placement units will expire worthless.
- Trust Account Restrictions: Funds in the trust account are generally locked until a business combination is completed or a redemption event occurs, except for interest withdrawals to pay taxes.
- Indemnification: Insurance Acquisition Sponsor II, LLC has agreed to indemnify the SPAC for third-party claims that might reduce the trust account balance below $10.00 per share.
- Lock-up Provisions: Placement units are non-transferable for 30 days after a business combination. Founder shares have tiered vesting schedules based on stock price performance post-combination.
Investor Verification Checklist
- Verify the exact amount of deferred underwriting commissions held in the trust account.
- Confirm the specific terms of the 18-month deadline for the initial business combination.
- Review the vesting conditions for the 7,846,667 founder shares, specifically the price thresholds ($12.00, $13.50, $15.00, $17.00).
- Assess the financial capacity of the Operating LLC and its affiliates to fund the additional $750,000 loan commitment if required.
- Examine the Administrative Services Agreement for potential conflicts of interest regarding the $20,000 monthly fee.