Exclusive: ThinkMarkets IPO partner FG Acquisition confirms cash reduced from $118M to just $2M

Exclusive: ThinkMarkets IPO partner FG Acquisition confirms cash reduced from $118M to just $2M

FNG Exclusive… Further to our exclusive report back in July that FG Acquisition Corp (TSE:FGAA.U), the special purpose acquisition company (or SPAC) which has agreed to merge with Retail FX and CFDs broker ThinkMarkets, had seen a mass redemption event whereby virtually all of FG’s public shareholders elected to redeem their shares for cash instead of going ahead with the ThinkMarkets merger, FNG has now learned from regulatory filings made in Canada that FG’s coffers have indeed been nearly emptied from the redemption.

According to the filings, FG Acquisition’s “Funds Held in Escrow” fell from USD $118.7 million at June 30, 2023, to just under $2.5 million as at September 30, 2023.

ThinkMarkets IPO background

In mid May 2023 FG Acquisition and ThinkMarkets announced their intention to merge, in a deal that would effectively bring ThinkMarkets public on the Toronto Stock Exchange at a valuation of USD $160 million. The transaction would have seen FG’s public class A shareholders own a 43.3% interest in the combined company, while ThinkMarkets’ shareholders would get 53.4%. The SPAC sponsors behind FG Acquisition, led by financier Larry G. Swets Jr., would receive the remaining 3.3%.

However in early July 11,398,742 FG class A shares (out of about 11.5 million shares in total) were deposited by FG public shareholders back to the company, and were redeemed by FG at a price of approximately USD $10.21 per share – meaning that FG returned about $116.3 million in cash to its shareholders, who elected to get their money back from FG instead of going ahead with the transaction with ThinkMarkets, as was their right. The redemption effectively emptied FG’s coffers, leaving FG as a publicly traded shell with virtually no cash. (The $2.5 million remaining basically represents interest earned on the Funds Held in Escrow before they were returned to shareholders).

The mass redemption by FG shareholders came on the heels of an FNG Exclusive report that ThinkMarkets had piled up debt and losses in the tens of million of dollars over the previous two years (2021-2022), while its auditors had issued a “going concern” warning for parent company Think Financial Group Holdings Limited in Australia.

ThinkMarkets IPO moving forward

While FG Acquisition formally withdrew its preliminary prospectus related to the merger with ThinkMarkets earlier this month, it has still indicated its intention to go ahead with the ThinkMarkets deal.

In order to go ahead with the transaction, FG is facing an already-once-extended deadline of November 30 (i.e. next Thursday) to come up with at least $10 million in fresh capital, or else the merger with ThinkMarkets will be called off, unless the deadline is re-extended.

We will continue to follow this story as it unfolds.