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IGI restates 2020 and 2021 financial statements over SEC SPAC ruling

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IGI Holdings has restated its financial statements for 2020 and 2021 due to a statement issued by the US Securities and Exchange Commission (SEC) in relation to the treatment of special purpose acquisition company (SPAC) warrant instruments.

As a result, the carrier’s net income will reduce by $4.4mn for the 2020 year, and total liabilities will increase by $13.6mn. The total equity as of the end of 2020 will decrease by $13.6mn.

The restatement of the consolidated financial statements will not impact the company’s liquidity.

Warrants are typically issued as part of SPAC deals, providing the option to buy further securities at a pre-determined price.

IGI went public on the Nasdaq last year in a $390mn reverse merger with SPAC Tiberius, amid a boom in blank-cheque activity in the US.

IGI has 12.75 million public warrants and 4.5 million private warrants outstanding, none of which have been exercised or redeemed since they were originally issued.

The IGI warrants were recorded as equity instruments in the company’s results, but subsequent dialogue with the SEC determined the warrants should have been recorded as liabilities.

The SEC issued a statement on 12 April regarding the accounting treatment of warrant instruments issued by SPACs.

Chairman and CEO Wasef Jabsheh said: “IGI is one of several hundred US public companies to restate or revise their financial statements as a result of the SEC’s staff statement on warrant accounting for SPACs.

“This restatement does not impact the financial strength of IGI. We do not anticipate the restatement to impact our previously communicated core operating income and core operating earnings per share.”

He added that the business was confident about the positive momentum it had achieved since going public in 2020.

The SEC’s concerns over SPAC accounting have led hundreds of the vehicles to restate their financials.

According to Audit Analytics and Bloomberg Law, more than 500 have done so this year.

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