House firm Momentus receives SPAC merger approval following SEC settlement

Artist’s impression of a Momentus Vigoride transfer vehicle deploying a satellite in orbit.

Momentum

Space company Momentus will go public on the Nasdaq later this week, a month after the Securities and Exchange Commission’s allegations that it misled investors were resolved.

Stable Road Acquisition Corp, a special purpose vehicle for acquisitions, or SPAC, announced on Wednesday that its merger with Momentus has been approved by shareholders. While just over half of Stable Road’s shareholders voted in favor of the merger, 97% voted in favor of closing the deal.

Stable Road’s shares will be converted into Momentus shares on Friday, with the company’s ticker changing from “SRAC” to “MNTS”.

Stable Road stock fell 2.6% in trading on Wednesday, closing at $ 10.20 per share. Stable Road noted that public shareholders have requested redemptions of about 20% of the company’s outstanding shares – an unusually high amount for a company going public, given that redemptions are typically low after a SPAC merger is complete single-digit percentage range or less.

A SPAC raises money from investors through an IPO and then uses the money to buy a private company and take it public.

Stable Road stock is down nearly 43% so far this year, compounded by Momentus’ belated missions and the pressured departure of Momentus founder and former CEO Mikhail Kokorich. The company also had to cut its valuation in half, from $ 1.1 billion to $ 567 million. Finally, Stable Road was also charged by the SEC with falsifying the results of a prototype test of spacecraft in July 2019.

SEC Chairman Gary Gensler stressed that his lawsuit against Momentus and Stable Road “illustrates the risks associated with SPAC transactions, as those who can make significant profits from a SPAC merger conduct inadequate due diligence and mislead investors.”

“The fact that Momentus lied to Stable Road does not release Stable Road from its failure to exercise due diligence to protect shareholders,” Gensler added in a statement.

Stable Road and Momentus agreed to pay the total of over $ 8 million in fees and penalties. Former CEO Kokorich, who allegedly left the country, has not resigned himself to the SEC.

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