Hyliion (HYLN) Debuts on the NYSE – What Happens Next?

Oct 2, 2020 08:48 EDT
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Hyliion (NYSE:HYLN) has finally debuted on the New York Stock Exchange (NYSE) following its merger with the Special Purpose Acquisition Company (SPAC), Tortoise Acquisition. Given the substantial retail and institutional interest in the stock, it is hardly surprising that Hyliion shares are considerably volatile today, currently down over 5 percent in the pre-market.

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Bear in mind that the merger between Hyliion – a company that designs and develops hybrid suspension systems and electrified powertrain solutions for Heavy Duty Class 8 trucks – and Tortoise Acquisition was announced back in June. However, the closure of this merger deal was marked by dramatic upheaval. As an illustration, during a special meeting of the Tortoise Acquisition shareholders, convened on the 28th of September to formally approve the business combination, all proposals except the third one – the Director Classification Charter Proposal – were approved. Accordingly, the meeting was reconvened on the 30th of September where the pertinent proposal was again rejected. Nonetheless, as the business combination proposal had already been approved by the shareholders of Hyliion and Tortoise Acquisition, the deal was formally closed on the 1st of October:

As a refresher, Tortoise Acquisition was forced to reveal additional material information on the 24th of September in order to neutralize “unmeritorious disclosure claims” made via a lawsuit. Through a Form 8-K filed with the U.S. Securities and Exchange Commission (SEC), Tortoise Acquisition had incorporated 6 key changes to its original proxy statement.

This brings us to the crux of the matter. Tortoise Acquisition’s existing shares – as well as those awarded to Hyliion during the course of this merger – have now started trading on the stock exchange under a new ticker symbol – HYLN. Accordingly, Tortoise Acquisition’s Class A common shares and public warrants that traded under the symbols, SHLL and SHLL WS, have now started trading under the symbols, HYLN and HYLN WS, respectively. Moreover, the combined company has adopted the name Hyliion Holdings Corp.

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Bear in mind that each public warrant entitles its holder to purchase 1 Class A common share of Hyliion at a price of $11.50 per share. These warrants will become exercisable 30 days after the merger achieves closure and the exercise window will remain open for 5 years from the date of closure. However, once these warrants become exercisable, Hyliion may redeem these securities for cash by issuing a notice 30 days in advance. For this to occur though, the following condition must be met:

“[The redemption will occur] if, and only if, the reported last sale price of the Class A Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption to the warrant holders.”

In another caveat, detailed by Tortoise Acquisition in its prospectus, all outstanding warrants may be redeemed for Hyliion’s Class A common shares 90 days after these warrants become exercisable. Again, 30-day advance notice will be issued in the case of such an eventuality which will have to meet the following condition:

“[This redemption will occur] if, and only if, the last sale price of our Class A Common Stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which we send the notice of redemption to the warrant holders.”

Readers and concerned shareholders should peruse these conditions, set by Tortoise Acquisition in its proxy statement, by going to the pages 207 and 208 of this document.

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