|Shares Out. (in M):||19||P/E||0||0|
|Market Cap (in $M):||177||P/FCF||0||0|
|Net Debt (in $M):||-145||EBIT||0||0|
|Borrow Cost:||General Collateral|
Wisekey is the best investment opportunity of my lifetime. Just kidding, it’s a raging short. But you might conclude it truly is the best investment you’ve ever seen after flipping through their most recent investor presentation.
This is a SPAC, which means it’s predisposed to blowing up. I still don’t understand how SPACs exist. In a world of gimmicky investment products, I’m not sure there is anything as demonstrably failure-prone as these things. The sponsors of this SPAC (Garnero Group Acquisition Co – GGAC) are a bunch of Brazilian guys no one has ever heard of. The one catch here is that the deal still hasn’t been approved by GGAC shareholders, although these things usually are. Borrow is tight in the meantime, so you’ll have to wait for the deal to close to put on the short.
On October 30, GGAC announced its intention to acquire a company called Wisekey, with an expected closing sometime 1Q15. GGAC’s advisor on the deal was EarlyBirdCapital (EBC), a firm familiar to many people who have successfully shorted SPAC’s. EBC also took GGAC public and will receive a $4.6m fee if the deal closes. Prior to the acquisition, GGAC had 20.1m shares outstanding and $144m in cash. To pay for the 93% of Wisekey they are acquiring, GGAC is issuing 14.5m shares and paying $15m cash to Wisekey owners and another $6.5m for various fees. The structure is somewhat unusual for a SPAC since they’re spending so little cash, opting to issue shares instead. I suspect it’s to protect themselves from receiving redemptions. Ignoring warrants (there are 9m with a $10 strike), Wisekey will have a share count of 34.6m and $123m cash, so a market cap of $340m and an EV of $217m.
What is Wisekey? Actually, let me correct myself, the proper spelling of the company is “WIS@key”, but we’ll just stick with Wisekey for now. Truthfully, I can’t figure out what this company does, their website and the IR decks are mostly buzzword-laden gibberish that talk about cybersecurity and digital protection in extremely vast, ambiguous terms. They have several products that really don’t make much sense.
WISecurity is basically a domain registry for protected website.
WISeID appears to be some sort of Dropbox-like storage product.
WISfans, which is an app for sports teams to, umm, share stuff.
WISeAuthentic is something that, like, ensures that your luxury watch is real, or something.
On top of all this, they own a bunker inside a Swiss mountain. Or at least they purport to…no pictures of the place exist.