A troubled SPAC plans to buy iRocket for $400M but it already returned most of its cash

In a surprising move, Innovative Rocket Technologies Inc. (iRocket) is set to join forces with BPGC Acquisition Corp., a special purpose acquisition company (SPAC) founded by former Commerce Secretary Wilbur Ross, in a bid to go public. The deal, valued at $400 million, is slated for completion in the fourth quarter of this year, despite the SPAC's significantly reduced cash reserves. Having initially raised $345 million in its IPO back in March 2021, BPGC Acquisition Corp. has seen its trust account shrink drastically. A September 2024 filing with the U.S. Securities and Exchange Commission revealed that the SPAC was left with just $30.5 million after returning much of its funds to shareholders due to the inability to find an acquisition target by the designated deadline. Just 16 days later, the situation worsened, with an additional $28.8 million redeemed, leaving the trust with a mere $1.6 million, or 0.5% of its original amount. In a bid to extend its time frame, the remaining shareholders, primarily the SPAC's sponsors, agreed to push the deadline for finding a target to March 2026. iRocket, once a promising name in the small launch startup sector, has only managed to secure a few million in venture funding since its establishment in 2018. The firm has yet to conduct any test flights of its Shockwave launch vehicle and faces stiff competition from better-funded rivals like Stoke Space and Firefly. As of 2023, iRocket claims that its Shockwave vehicle can handle payloads ranging from 300 to 1,500 kg. However, the market is becoming increasingly crowded, with established players like Firefly’s Alpha and Rocket Lab’s Electron already successfully launching customer payloads. To remain viable, iRocket must demonstrate its capability for full reusability, quick refurbishment, and rapid response times—an ambitious set of goals given the current landscape. iRocket currently employs just four individuals, excluding board members, and has secured contracts, including an $18 million deal with the Air Force Research Lab and a $1.8 million agreement with the Space Force. Despite multiple attempts to gain clarity, a PR firm representing both iRocket and the SPAC has declined to comment on the situation. BPGC Acquisition Corp. has not had a smooth journey either. Previously known as Ross Acquisition Corp II, it attempted to take biopharma company Aprinoia Therapeutics public in January 2023 but abandoned the effort eight months later. Following this failure, the New York Stock Exchange initiated delisting proceedings against the SPAC last March. With its current cash reserves, iRocket's existing shareholders may need to rely on securing a substantial investment from private equity investors to see any return on their equity in this challenging transaction.