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> Originally, this payment was not due until a Valuation Date of March 28, 2026, but the company received notice from Sandia that this date had been accelerated

> Originally, this payment was not due until a Valuation Date of March 28, 2026, but the company received notice from Sandia that this date had been accelerated to October 8, 2024. So the company had to shut down and terminate almost all of the employees... Does anyone have context or can someone explain how payment dates can be arbitrarily accelerated?

JumpCrisscross 2y ago
> can someone explain how payment dates can be arbitrarily accelerated? It's never arbitrary. When a company sells stock it has a fiduciary obligation to its shareholders. With a loan, however, the relationship is adversarial. (EDIT: this is a loan disguised as a stock sale, so what I say below technically doesn't apply.) A common clause in loan documents is acceleration [1]. The most common trigger for acceleration is default; the easiest way to do this is not make payments. But there are other requirements in a loan, called covenants [2], that a borrower must adhere to. (Think: a mortgage requiring you maintain insurance.) If a borrower breaches a covenant, the loan is in technical default and the lender may accelerate. There is a third possibility, the callable loan [3], but that wouldn't make sense here. (When you deposit money with a bank, you're lending it money on callable terms.) [1] https://www.investopedia.com/terms/a/acceleration-clause.asp https://www.investopedia.com/terms/a/acceleration-clause.asp [2] https://en.wikipedia.org/wiki/Loan_covenant https://en.wikipedia.org/wiki/Loan_covenant [3] https://corporatefinanceinstitute.com/resources/commercial-lending/call-loan/ https://corporatefinanceinstitute.com/resources/commercial-l...
metaphor 2y ago
Context is described in Zapata's 8-K filing[1]. [1] https://www.sec.gov/Archives/edgar/data/1843714/000095017024114391/ck0001843714-20241007.htm https://www.sec.gov/Archives/edgar/data/1843714/000095017024...
- JumpCrisscross 2y ago
  Huh. So Sandia gave Zapata cash in exchange for shares to be delivered no later than March 2026. Sandia had the right to demand its cash back if Zapata's stock fell below $1/share. (Simplifying.) The stock fell below $1. Sandia exercised its right. Simple enough. Clever way to deny the borrower interest deduction in exchange for giving the lender long-term capital gains. I've been out of the game for too long to understand why one would structure a loan this way. Poor man's convert? EDIT: I'm struggling to understand this. Sandia gave Zapata cash in exchange for future delivery of shares, the number of shares to be based on the future price of the shares. Also, if the price goes down, they get their money back. So far, we have puttable shares. But the put amount is "a cash amount equal to $1,250,000 (less the number of any Unregistered Shares) multiplied by the volume weighted daily VWAP," which makes no sense, because you're taking a dollar amount, subtracting a number of shares, and multiplying it by a per share price. I assume the underlying agreement knows how to do basic dimensions. (Also, VWAP means volume-weighted average price, so whoever drafted these defined terms is a numpty.) EDIT2: Oh, it's a SPAC. They already had debt [1]. The agreement still looks overly complicated [2]. Given it's a SPAC it's safe to default to the assumption that any inexplicable financial engineering is solely devoted to putting money in sponsors' pockets. EDIT3: Love that on page 6 the font randomly changes. [1] https://www.sec.gov/Archives/edgar/data/1843714/000119312524085161/d13242dex1024.htm https://www.sec.gov/Archives/edgar/data/1843714/000119312524... [2] https://www.sec.gov/ix?doc=/Archives/edgar/data/0001843714/000119312524085161/d13242d8k.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/0001843714/0...
  - BarbaraBessolo 2y ago
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- wokwokwok 2y ago
  > date specified by Sandia after the VWAP Price (as defined in the Forward Purchase Agreement) for 20 trading days during a 30 consecutive trading day-period has fallen below $1.00 per share (a “VWAP Trigger Event”). > Because a VWAP Trigger Event has occurred, Sandia has the right, but not the obligation, to accelerate the term of the Forward Purchase Agreement at any time ie. The share price tanked below $1 and that was the condition. Lookup ZPTA; the price has been below $1 for 6 months. Presumably the announcements recently did not excite investors and they pulled the plug.
  - seanhunter 2y ago
    And for additional context, VWAP in this setting means "Volume-Weighted Average Price" (ie the average price of the transactions in some time window weighted by their quantity) https://en.wikipedia.org/wiki/Volume-weighted_average_price https://en.wikipedia.org/wiki/Volume-weighted_average_price
    - JumpCrisscross 2y ago
      Which makes their use of "volume weighted daily VWAP" ambiguous between a typo or an integrated VWAP, e.g. volume weight each day's VWAP to come up with a period VWAP.
      - seanhunter 2y ago
        It's been a while so I'm a bit rusty on this and it's hard to google for, but usually when you have "volume vwap" it means "vwap in volume time", ie something like say my order is for 100 shares, then vvwap is the volume-weighted average price over the time taken on average to execute 100 shares. In this case, as you say, the "daily vwap" is the vwap over the day each day, and then they are using the volume on each day to make a vwap of those over the longer period. I think. This is the kind of thing where when I was in securities the documentation would usually include the formula to disambiguate.
        BarbaraBessolo 2y ago
deleted 2y ago
[deleted]
pixiemaster 2y ago
usually: - missed payments on interests - failed positive guidance on going-concern - missed intermediate milestones (b2b contracts basically give you any possibilities legally wise)
BarbaraBessolo 2y ago
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BarbaraBessolo 2y ago
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JumpCrisscross 2y ago

> can someone explain how payment dates can be arbitrarily accelerated? It's never arbitrary. When a company sells stock it has a fiduciary obligation to its shareholders. With a loan, however, the relationship is adversarial. (EDIT: this is a loan disguised as a stock sale, so what I say below technically doesn't apply.) A common clause in loan documents is acceleration [1]. The most common trigger for acceleration is default; the easiest way to do this is not make payments. But there are other requirements in a loan, called covenants [2], that a borrower must adhere to. (Think: a mortgage requiring you maintain insurance.) If a borrower breaches a covenant, the loan is in technical default and the lender may accelerate. There is a third possibility, the callable loan [3], but that wouldn't make sense here. (When you deposit money with a bank, you're lending it money on callable terms.) [1] https://www.investopedia.com/terms/a/acceleration-clause.asp https://www.investopedia.com/terms/a/acceleration-clause.asp [2] https://en.wikipedia.org/wiki/Loan_covenant https://en.wikipedia.org/wiki/Loan_covenant [3] https://corporatefinanceinstitute.com/resources/commercial-lending/call-loan/ https://corporatefinanceinstitute.com/resources/commercial-l...

metaphor 2y ago

Context is described in Zapata's 8-K filing[1]. [1] https://www.sec.gov/Archives/edgar/data/1843714/000095017024114391/ck0001843714-20241007.htm https://www.sec.gov/Archives/edgar/data/1843714/000095017024...

JumpCrisscross 2y ago
Huh. So Sandia gave Zapata cash in exchange for shares to be delivered no later than March 2026. Sandia had the right to demand its cash back if Zapata's stock fell below $1/share. (Simplifying.) The stock fell below $1. Sandia exercised its right. Simple enough. Clever way to deny the borrower interest deduction in exchange for giving the lender long-term capital gains. I've been out of the game for too long to understand why one would structure a loan this way. Poor man's convert? EDIT: I'm struggling to understand this. Sandia gave Zapata cash in exchange for future delivery of shares, the number of shares to be based on the future price of the shares. Also, if the price goes down, they get their money back. So far, we have puttable shares. But the put amount is "a cash amount equal to $1,250,000 (less the number of any Unregistered Shares) multiplied by the volume weighted daily VWAP," which makes no sense, because you're taking a dollar amount, subtracting a number of shares, and multiplying it by a per share price. I assume the underlying agreement knows how to do basic dimensions. (Also, VWAP means volume-weighted average price, so whoever drafted these defined terms is a numpty.) EDIT2: Oh, it's a SPAC. They already had debt [1]. The agreement still looks overly complicated [2]. Given it's a SPAC it's safe to default to the assumption that any inexplicable financial engineering is solely devoted to putting money in sponsors' pockets. EDIT3: Love that on page 6 the font randomly changes. [1] https://www.sec.gov/Archives/edgar/data/1843714/000119312524085161/d13242dex1024.htm https://www.sec.gov/Archives/edgar/data/1843714/000119312524... [2] https://www.sec.gov/ix?doc=/Archives/edgar/data/0001843714/000119312524085161/d13242d8k.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/0001843714/0...
- BarbaraBessolo 2y ago
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wokwokwok 2y ago
> date specified by Sandia after the VWAP Price (as defined in the Forward Purchase Agreement) for 20 trading days during a 30 consecutive trading day-period has fallen below $1.00 per share (a “VWAP Trigger Event”). > Because a VWAP Trigger Event has occurred, Sandia has the right, but not the obligation, to accelerate the term of the Forward Purchase Agreement at any time ie. The share price tanked below $1 and that was the condition. Lookup ZPTA; the price has been below $1 for 6 months. Presumably the announcements recently did not excite investors and they pulled the plug.
- seanhunter 2y ago
  And for additional context, VWAP in this setting means "Volume-Weighted Average Price" (ie the average price of the transactions in some time window weighted by their quantity) https://en.wikipedia.org/wiki/Volume-weighted_average_price https://en.wikipedia.org/wiki/Volume-weighted_average_price
  - JumpCrisscross 2y ago
    Which makes their use of "volume weighted daily VWAP" ambiguous between a typo or an integrated VWAP, e.g. volume weight each day's VWAP to come up with a period VWAP.
    - seanhunter 2y ago
      It's been a while so I'm a bit rusty on this and it's hard to google for, but usually when you have "volume vwap" it means "vwap in volume time", ie something like say my order is for 100 shares, then vvwap is the volume-weighted average price over the time taken on average to execute 100 shares. In this case, as you say, the "daily vwap" is the vwap over the day each day, and then they are using the volume on each day to make a vwap of those over the longer period. I think. This is the kind of thing where when I was in securities the documentation would usually include the formula to disambiguate.
      - BarbaraBessolo 2y ago

deleted 2y ago

[deleted]

pixiemaster 2y ago

usually: - missed payments on interests - failed positive guidance on going-concern - missed intermediate milestones (b2b contracts basically give you any possibilities legally wise)

BarbaraBessolo 2y ago

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BarbaraBessolo 2y ago

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