SPAC boom over, NYSE moves to delist warrants of Schorsch-backed company

The exchange said the warrants weren't suitable for listing because of their extremely low pricing.

The Nicholas Schorsch-backed SPAC — the leisure business-focused G&P Acquisition Corp. — hit a snag last month when the New York Stock Exchange said it was delisting the company’s warrants, which were to be used to acquire shares of Class A common stock in the company, because of extremely low pricing.

“NYSE Regulation has determined that the company’s warrants are no longer suitable for listing based on ‘abnormally low’ price levels,” according to a statement by the Big Board.

G&P Acquisition Corp., with the ticker GAPA, said in an Oct. 28 filing with the Securities and Exchange Commission that the warrants failed to pass muster with the New York Stock Exchange’s trading rules and that it did not intend to appeal the Big Board’s ruling.

The company’s CEO, Brendan O’Donnell, did not return a call Tuesday morning to comment. Schorsch, the former nontraded real estate investment trust czar, is chairman of the company.

Shares of G&P Acquisition Corp. are listed on the NYSE and were trading at $10.06 Tuesday morning.

SPACs, or special purpose acquisition companies, were investment darlings during the Covid-19 pandemic, but the boom has crashed of late. SPACs are publicly traded shell companies that raise money from investors with the expectation of acquiring specific target businesses. Warrants allow investors to buy the company’s shares at a pre-set price.

But SPAC investors have turned leery of taking their companies public right now because they could easily be caught in the downdraft of the current stock market selloff, pushing share price valuations well below the $10 per share level at which many are priced.

In February 2021, G&P Acquisition Corp. registered a $200 million securities offering with the SEC, with the intention of selling 20 million shares at $10 each. The company’s plan was to invest in leisure-oriented businesses and the craft brewing, automotive and distribution sectors. Investors in the G&P acquisition SPAC shares also received half a warrant, exercisable at $11.50.

From 2010 to 2015, Schorsch was one of the most visible faces in the retail securities industry, with his partnership, American Realty Capital, raising close to $20 billion from retail investors who bought shares of a variety of ARC-branded nontraded REITs and alternative investments.

In 2019, Schorsch reached a $7 million personal settlement with the SEC stemming from charges that ARC, Schorsch and a partner wrongfully obtained millions of dollars in connection with REIT mergers that were managed by ARC, also known as AR Capital. In total, Schorsch, ARC and the partner paid a $60 million settlement to the SEC.