The Deal Reports: Abacus Closes De-SPAC with East Resources

Abacus Settlements LLC has closed its business combination with East Resources Acquisition Co. (ERES).

Abacus Life Inc., the new name for East Resources, is set to begin trading on Nasdaq on July 5 under the ticker “ABL”.

Shareholders approved the merger by 10.8 million votes in support of the proposal to 12,070 opposed on Thursday, June 29, according to a Monday, July 3, filing with the Securities and Exchange Commission.

East Resources, a Boca Raton, Fla.-based special purpose acquisition company, and Abacus announced the completion of the business combination in a press release on Monday.

“We believe we are well-positioned to accelerate and execute our growth strategy as a results of this business combination,” Abacus CEO Jay Jackson stated. “The capital raised in connection with this transaction, along with our new access to the public markets, will allow us to continue to scale and expand our market leading portfolio of life settlement services and specialty insurance products.”

Terry Pegula, chairman, CEO and president of East Resources, who also owns the National Football League’s Buffalo Bills with his wife, Kim: stated: “The highly experienced management team at Abacus has positioned the Company to not only be a market leader, but to be highly scalable with the potential for consistent financial performance, giving us confidence that they will deliver long-term value to stockholders. We look forward to continuing to support them moving forward.”

The Abacus post-transaction enterprise value was estimated at $618 million if no ERES public stockholders sought redemptions.

As part of the business combination, company members were to receive $531 million in new shares.

The final number of redemptions wasn’t disclosed in the latest SEC filing, although Jackson expected the number to be filed shortly.

East Resources reported in a June 14 filing that about 31.7 million in shares had been redeemed, including 24.8 million shares on July 2022 and about 6.9 million shares in January.

However, the sponsor and East Resources directors and officers agreed to waive their redemption rights in connection with the business combination for any Class A shares they hold. As of the June 13 proxy, the sponsor, including East Resources directors, officers and initial stockholders, owned about 75% of the stock.

About $29.6 million in funds remained in the trust account on June 13.

Jackson said he was not alarmed by the number of redemptions.

“We knew that there would be significant redemptions because the SPAC pivoted from oil and gas to a financial-services acquisition,” he said.

“The redemptions didn’t have an impact on our company,” Jackson added. “We’re cash positive today.”

He said the Pegula family will remain as an investor in the company for the next two years, saying “they’re long-term investment minded with significant experience in alternative assets.”

Jackson said he believes the exposure offered by a publicly traded company will raise the profile of the life settlements and benefit the entire industry.

East Resources originally planned to raise up to $300 million and was looking for an acquisition in the energy industry. It raised $345 million in its July 2020 initial public offering.

Abacus, an Orlando, Fla.-based life settlement provider that ranks No. 2 in terms of transactions, expects the post-combination company to enter into a $50 million credit facility with Owl Rock Capital Corp. (ORCC).

The credit agreement would be for an initial term loan of $25 million and a delayed-draw term loan of $25 million that would be issued from 90 to 120 days after the credit facility closes.

This is the second time that Owl Rock has offered a credit facility in the life settlement market. It first offered a facility to GWG Holdings Inc. to help it emerge from a Chapter 11 bankruptcy case, along with an option for a $610 stalking-horse bid for purchase of GWG’s life settlement portfolio. GWG ultimately replaced the facility with a $630 million credit agreement from Obra Capital Inc.

Aviditi Advisors was the exclusive strategic and financial adviser to East Resources and Latham & Watkins LLP served as its counsel. Locke Lord LLP was Abacus’s counsel.