Going Public in Difficult Times - A Case Study on the Iridium Space SPAC

Abstract: This case study finds that a special purpose acquisition company (SPAC) was utilized by Iridium Communications (Iridium) as alternative equity financing when all other options had been eliminated. SPACs present certain problems with warrants and dilution, but they are flexible in structure. The quality of the firm determines the SPAC returns, with low quality firms showing wealth-transfer qualities. In Iridium's case, when examining long-term returns, the SPAC was very successful due to the strong operational capabilities of the firm and the successful completion of its satellite project. The main conclusion to be derived, then, is that SPACs can be particularly useful to firms in need of financing in the absence of alternatives.