![]() Even though the Sponsor held less than 25% of Gig3’s pre-merger equity and voting power, the court concluded that the Sponsor controlled Gig3 because, as is typical of SPAC sponsors, it controlled all aspects of the Company from creation until the de-SPAC merger. The court held that the de-SPAC merger with Old Lightning was a conflicted controller transaction. The court held that the plaintiff pled facts supporting two independent grounds for reviewing the merger under entire fairness. Sponsor-controller and entire fairness.Key Aspects of the Motion To Dismiss Ruling ![]() The defendants’ move to dismiss these claims was denied. Approximately 98% of stockholders voted in favor of the merger, with 28% redeeming.Īfter closing, New Lightning saw its stock price crater, and litigation followed. The Company issued a proxy statement in connection with the Gig3 stockholder vote on the merger, which also contained disclosures about stockholders’ redemption rights. According to the court, Nomura and Oppenheimer, Gig3’s IPO bookrunners, were also hired to serve as Gig3’s financial advisors, but they were not asked to provide a fairness opinion on the merger. Katz and his wife “dominated” the Company’s negotiations with Old Lightning. (Old Lightning), an electric vehicle manufacturer, as the merger target. He also appointed Gig3’s initial directors and officers, which included his wife and four other directors with ties to himself and other Gig3 entities.įollowing the IPO, Gig3’s officer and directors identified Lightning eMotors Inc. Katz, through the Sponsor, effectively ran Gig3, including serving as its executive chairman, secretary, president and CEO. The Company’s Sponsor was controlled by the defendant and alleged “serial founder of SPACs” Avi Katz. Gig3’s sponsor, GigAcquisitions3 (the Sponsor), was issued “founder’s shares” for $25,000 (amounting to about 20% of Gig3’s post-IPO equity), which could not be redeemed, lacked liquidation rights and were also subject to a lock-up. (Gig3 or the Company) - now Lightning eMotors, Inc.
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