Business Context and Reporting Period
This Form 8-K, filed on March 22, 2019, by Cohen & Company Inc. (the "Company"), reports the completion of the initial public offering (IPO) of Insurance Acquisition Corp. (the "SPAC"), a blank check company sponsored by Cohen & Company, LLC, a majority-owned subsidiary of the Company. The SPAC is seeking to effect a business combination with one or more target businesses.
Key Financial Metrics
- Gross IPO Proceeds: $150,650,000 from the sale of 15,065,000 units at $10.00 per unit.
- Over-Allotment Exercise: Underwriters exercised the full option to purchase 1,965,000 additional units.
- Private Placement Proceeds: $3,750,000 from the sale of 375,000 placement units to Insurance Acquisition Sponsor, LLC at $10.00 per unit.
- Outstanding Shares: 20,653,333 shares of Common Stock issued and outstanding immediately following the IPO.
- Debt and Loans: A $200,000 loan for IPO expenses was repaid in full at closing. The Operating LLC committed to an additional $750,000 interest-free loan for operating expenses, repayable only if a business combination is consummated.
- Administrative Costs: The SPAC agreed to pay the Operating LLC $10,000 per month for administrative services.
Material Changes and Events
The primary material event is the successful closing of the SPAC's IPO and the full exercise of the over-allotment option. The filing details the capital structure, including the issuance of founder shares (5,103,333 shares) held by the sponsor entities and the specific terms of the placement units, which differ from public units regarding redemption rights and transferability.
Outlook, Risks, and Contingencies
- Time Limit: The SPAC must consummate a business combination within 18 months of the IPO, or it will cease operations and liquidate.
- Liquidation Terms: If no business combination occurs, proceeds from the trust account will be used to redeem IPO shares. Placement warrants will expire worthless, and the $750,000 operating loan will not be repaid from trust funds.
- Indemnification: The Operating LLC has agreed to indemnify the SPAC against third-party claims that could reduce the trust account balance below $10.00 per share.
- Lock-Up Periods: Placement units are non-transferable until 30 days after a business combination. Founder shares are subject to vesting schedules based on the closing price of the Common Stock post-combination.
Investor Verification Checklist
- Verify the total amount of funds currently held in the SPAC's trust account.
- Confirm the status of the 45-day over-allotment option and the final number of units sold.
- Review the specific terms of the $750,000 working capital loan and its repayment conditions.
- Monitor the 18-month deadline for consummating a business combination.
- Check for any waivers or claims against the trust account that might trigger the indemnification agreement.