Stable Road Acquisition Corp. (SRAC) shares lost 11.20% in after-hours on Tuesday, July 13, 2021, and closed at $10.55. Earlier SRAC’s stock declined 4.88% to close Tuesday’s morning session at $11.88. SRAC shares have risen 21.60% over the last 12 months, and they have moved down 13.47% in the past week. Over the past three months, the stock has gained 7.41%, while over the past six months, it has shed 24.33%.
Let’s see was there any recent news or development behind its loss on Tuesday?
SPAC merger with space firm Momentus facing tough hurdles
The acquisition of Momentus Inc. has been distributed a serious blow by the U.S. Securities and Exchange Commission, which accused both entities of misleading shareholders just weeks before investors were slated to vote on the deal.
The U.S. SEC sued Stable Road Acquisition Corp and Momentus over allegations that the target firm lied about its technology including a false claim that its propulsion system had been “successfully tested” in space. The misleading statement was also repeated by the Stable Road in public filings.
Upcoming legal battles
Both companies may face more legal actions and lawsuits in the coming days over the same issue and recently on July 13, 2021, Shareholder Rights Law Firm Johnson Fistel, LLP, announced its investigation on potential claims against Stable Road Acquisition Corp.
The merger announcement
In October 2020, Momentus agreed to go public through a merger with Stable Road for an enterprise value of about $1.2 billion, a price that was later revised lower to $700 million.
Stable Road got more time from its shareholders to complete the merger
On May 13, 2021, Stable Road Acquisition Corp narrowly secured enough votes to avoid being dissolved and will have more time to finalize the regulatory process in its merger with Momentus.
The SPAC had 66.2% of shareholders vote in support of the extension, which sets the vote to approve the deal on August 13, Stable Road said Thursday. That satisfied the requirement of 65% support from shareholders.
The Company’s stockholders approved a proposal to extend the deadline from May 13, 2021, to August 13, 2021, to complete the proposal.
Momentus resolved a key issue about its proposed merger
On May 14, 2021, Momentus Inc received a draft National Security Agreement (NSA) from the Committee on Foreign Investment in the United States (CFIUS). The draft NSA specifies CFIUS’s proposed requirements to resolve its national security concerns about the foreign ownership and control of Momentus.
With this agreement, a key issue that has delayed the completion of Momentus’ proposed merger with Stable Road Acquisition Corp has been resolved.
Conclusion
On Tuesday the SRAC stock faced negativity after SEC fined the company over misleading information about its merger with Momentus. Following the news, Stable Road fell more than 10% in after-market trading on July 13, 2021.
