Robert L. Johnson, chairman of The RLJ Companies and founder of Black Entertainment Television (BET), announced earlier this week that RLJ Acquisition, Inc. actively began its search for a business combination following its successful initial public offering. RLJ Acquisition, Inc. is a special purpose acquisition company (“SPAC”), also known as a blank-check company, a publicly traded vehicle that raised gross proceeds of $143.75 million. This act takes on expanded significance given that Johnson is the first African-American to complete a SPAC raise.
“I am very excited about the SPAC raise and believe that the demand from the investors, up from our initial target of $125 million to $143 million, demonstrates their belief in our financial track record, the quality of our management team, and our ability to deliver superior value to our shareholders,” said Johnson. “We are actively seeking to invest the capital from the SPAC in a privately held company that can benefit from the opportunity to partner with me and the RLJ Acquisition management team and to have a quick entree into the public market to take advantage of immediate liquidity and growth capital,” he continued. “We also have a strong board of directors [including William S. Cohen, former secretary of defense] who will help us identify and oversee the company that we choose to invest in,” he concluded.
In an arena where investors such as Ron Burkle are heavily lauded and covered by the media, Johnson continues to demonstrate his ability to attract and manage capital and create value for his investors as he has done with ventures including (RLJ Development, LLC/Urban Lodging Funds), a privately-held real estate investment company; RLJ-McLarty-Landers Automotive Holdings, LLC, the nation’s largest minority-owned automotive group consisting of 26 automotive franchises and three Harley-Davidson motorcycle dealerships; and RLJ Western Asset Management, LLC, a $2.8 billion fund designated by the U.S. Department of the Treasury to purchase mortgage backed securities through the Public Private Investment Program (PPIP). RLJ Acquisition marks the second time Johnson has successfully taken a company public. In 1991, Johnson took BET public making BET the first African-American company to be publicly traded on the New York Stock Exchange.
According to Todd N. Dumas, a senior vice-president at Citi Alternative Investments, this action by Johnson is very significant. “Special purpose acquisition companies suffered some severe setbacks in late 2008 and 2009, after many blank-check companies were rejected and liquidated by shareholders,” Dumas explains. “The successful IPO of RLJ Acquisition, Inc. represents a significant vote of confidence in Mr. Johnson’s proven ability to attract and manage capital and create value for his investors. Perhaps more importantly, it represents a significant vote of confidence in the strategic vision of Mr. Johnson to execute acquisitions on target companies in undiscovered or underserved urban markets. As the first African-American to take a SPAC public, Mr. Johnson has once again positioned himself as the progenitor of African-American business activity and opened the door for the next generation of minority deal makers to tap into mainstream capital markets.” One may also hope that Johnson’s business development will help create a beneficial ripple effect by creating financial support for other appropriate Black-owned businesses, investment mentorship programs created by Johnson for African-Americans and more.
RLJ Acquisition intends to use the net proceeds from the offering to acquire one or more operating businesses through a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination as described in the prospectus.
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