Canadian retail structured products stalwarts Gordon McMillan and Andrew McKay have formed special-purpose acquisition company (Spac) Tailwind to raise US$100-million in the US via 12.5m units, an apparent first for a Canadian issuer.
Tailwind defines itself as a ‘blank check development stage company’. Its filing says it was formed “for the purpose of acquiring… one or more financial service businesses,” though it claims to have no specific business combination under consideration. Neither McMillan nor McKay have so far been prepared to comment.
Gordon McMillan was an original founder of retail structured products manufacturer Triax Capital, which was acquired by First Asset International. McMillan and colleagues including Andrew McKay then formed structured products and VC company Skylon Capital, which was ultimately purchased by CI Financial. The pair then formed another structured products provider Fairway Asset Management, which was acquired by Jovian Funds last year.
Other Tailwind directors were chosen for their extensive relationships within the financial services and include former Altamira Investment Management president and current Jovian Capital Corp chief executive Philip Armstrong, former AIM Canada chief executive Robert Hain, and Genuity Capital Markets principal Robert Penteliuk.
Tailwind’s units will consist of a common share plus a warrant. The units will trade for about 90 days and then separate into the two component parts: the warrant is not exercisable for one year and confers the right to purchase another share at US$6 per share. It expires in 2011.
Under the terms of the Spac, Tailwind's initial business combination must be with one or more targets whose fair market value is at least equal to 80% of its net assets at the time of the acquisition. (It can issue either debt or equity for a target that would require more than 80% of its net assets.) The firm has 18 months to complete an acquisition or capital is effectively turned to investors via a trust, and it will, in any case, wind down within 24 months unless a majority of its shareholders vote to extend its existence in perpetuity.
In addition to the public offering, Parkwood Holdings – owned by McMillan, McKay and JovFunds Management – is buying 4.7 million warrants at US$1 each on the same terms as those in the public offering.
