SPAC TIME: Will NextNav be a Washout or Success?

Posted on 06/12/2021

On June 9, 2021, Duluth, Georgia-based Spartacus Acquisition Corporation agreed to take Sunnyvale, California-based NextNav public. Upon closing of the business combination, the combined company will be named NextNav Inc., and its common stock and warrants will be listed on the Nasdaq under the ticker symbol “NN” and “NNW”, respectively. Gross proceeds of up to US$ 408 million from the business combination are expected to be used to fuel growth in its current businesses, continue to build NextNav’s next generation GPS platform, expand products one of which is already deployed in 4,400 cities, and to expand its land-based radio positioning and timing network. Beyond its technology and intellectual property, NextNav owns a one-of-a-kind portfolio of nationwide spectrum licenses for 2.4 billion MHz-PoPs of 900 MHz spectrum.

The transaction reflects a pro forma enterprise valuation for NextNav of approximately US$ 900 million and a pro forma market capitalization of approximately $1.2 billion, assuming no SPAC redemptions.

NextNav did show any actual revenue in 2020, but estimated US$ 2 million in revenue for 2021 in its presentation in the SEC filing. NextNav Chairman, Gary Parsons is the founder of XM Satellite Radio.

All current NextNav equity holders will roll the entirety of their existing equity holdings into the combined company. The transaction is expected to provide up to approximately $408 million in gross proceeds, comprised of Spartacus’ approximately $203 million of cash held in trust (assuming no redemptions) and the US$ 205 million fully committed common stock PIPE financing (the “PIPE Investment”). New PIPE investors include Koch Strategic Platforms, a subsidiary of the Koch Investments Group, funds managed by Fortress Investment Group, LLC, Ophir Asset Management, Woody Creek Capital Management and Quantlab Disruptive Technologies, Iridian Asset Management LLC, and Sponsor of Spartacus.

Founded as Commlabs Inc. in 2007, NextNav was launched to address the inherent limitations of the current GPS offering. NextNav had raised over US$ 160 million from firms like Columbia Capital, Australia’s Future Fund, Telcom Ventures, Goldman Sachs (GS Investment Strategies, LLC), New Enterprise Associates (NEA), Oak Investment Partners, and Fortress Investment Group.

Sources of Funds
Cash in Trust: US$ 203 million
PIPE: US$ 205 million
Target rollover equity: US$ 750 million

PJT Partners is acting as sole financial advisor, and Hogan Lovells US LLP is acting as legal advisor to NextNav. B. Riley Securities is acting as sole financial and capital markets advisor to Spartacus. K&L Gates LLP is acting as legal counsel to Spartacus.

B. Riley Securities and PJT Partners are acting as joint placement agents with respect to the private placement. Kirkland & Ellis LLP is acting as placement agent counsel.

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