Tailwind Financial, Inc. [TNF], a special purpose acquisition company, has agreed to merge with Canada’s troubled Allen-Vanguard Corp. in a deal that will recapitalize and reduce the debt burden of Allen-Vanguard, the companies said yesterday.
The merged company will be called Allen Vanguard Corp. and will be listed on the New York Stock Exchange’s Alternext U.S. market.
Under the transaction Tailwind will use the proceeds of its $100 million initial public stock offering in 2007 to invest in Allen-Vanguard.
Allen-Vanguard makes jamming equipment to defeat improvised explosive devices, remotely operated vehicles used for bomb disposal, search and detection equipment, blast mitigation, and chemical, biological, radiological and nuclear decontamination systems and sprays.
The company lost over $400 million in its most recent fiscal year, mostly due to non-cash write offs related to acquisitions, following a $14 million net loss in 2007.
“New capital from the Tailwind transaction and concurrent rights offering will enable us to reduce our long-term debt in the timeframe required by our lenders,” David Luxton, Allen-Vanguard’s president and CEO, said in a statement. “This will allow management and the board to focus on important global business opportunities following the progress that we have made since last summer to improve the company’s operating profit through cost restructuring and building a strong revenue pipeline.
The deal is expected to close in mid-April.
Special purpose acquisition companies are created to allow a number of investors to pool their resources to invest in a private equity type transaction.