Sunlight Financial Holdings $8 Million Stockholder Settlement

An $8 million settlement was reached to resolve claims that defendants associated with Spartan Acquisition Corp. II impaired stockholders’ redemption rights through allegedly misleading disclosures surrounding the SPAC merger that created Sunlight Financial Holdings.

Outline:

Spartan Acquisition Corp. II agreed to merge with Legacy Sunlight in 2021. Stockholders later challenged the information provided before they decided whether to redeem their shares or remain invested in the transaction. The lawsuit alleges that defendants made materially misleading disclosures concerning the merger, Sunlight’s business, and the value of Spartan shares. The parties agreed to resolve the claims for $8 million.

Timeline:

• November 30, 2020: Spartan Acquisition Corp. II completed an IPO of 34.5 million units at $10.00 per unit.

• January 23, 2021: Spartan entered into a business combination agreement with Legacy Sunlight under which Legacy Sunlight would merge into a Spartan subsidiary and Spartan would become Sunlight Financial Holdings.

• June 21, 2021: Spartan filed its merger proxy, which described the proposed transaction and informed public stockholders that they could redeem their shares for $10.00 per share before the merger.

• July 6, 2021: Spartan’s redemption deadline expired after stockholders elected to redeem 19,227,063 shares.

• July 8, 2021: Spartan stockholders voted to approve the merger with Legacy Sunlight.

• July 9, 2021: The merger closed and Spartan became Sunlight Financial Holdings.

• July 11, 2023: Stockholders filed a class action alleging that defendants impaired redemption rights through misleading merger disclosures and breached fiduciary duties.

Background:

Spartan Acquisition Corp. II was formed as a SPAC focused on acquiring a business in the North American energy sector. In November 2020, Spartan raised approximately $345 million through an IPO of 34.5 million units priced at $10.00 each, with public stockholders receiving the right to redeem their shares before a business combination.

In January 2021, Spartan agreed to merge with Legacy Sunlight. Before stockholders voted on the deal, Spartan issued a merger proxy describing the transaction and informing investors that they could redeem their shares for $10.00 each. More than 19.2 million shares were ultimately redeemed before the merger was approved and completed in July 2021.

The plaintiffs allege that the merger proxy did not give stockholders an accurate picture of the transaction. According to the lawsuit, the proxy provided misleading explanations for why Spartan pursued the merger, contained unrealistically optimistic financial projections for Legacy Sunlight, and allegedly gave the impression that Spartan had meaningfully considered other merger partners.

The lawsuit also alleges that stockholders were not adequately informed about Legacy Sunlight’s supply-chain and labor-shortage problems. Plaintiffs further claim that Spartan represented its shares as being worth $10.00 while the SPAC actually held less than $10.00 in net cash per share, allegedly affecting investors’ ability to make an informed decision about whether to redeem their shares.

The defendants deny that the merger proxy was materially misleading and maintain that stockholders had sufficient information about the transaction. They also dispute that the challenged disclosures caused Sunlight’s later stock-price decline, arguing that other factors, including increases in interest rates, affected the company’s trading price.

After two mediation sessions and continued negotiations, the parties agreed to resolve the stockholder claims for $8 million in cash.

What Can Investors Expect Now?

An $8 million settlement was reached to resolve claims that defendants associated with Spartan Acquisition Corp. II impaired stockholders’ redemption rights through allegedly misleading disclosures surrounding the SPAC merger that created Sunlight Financial Holdings.

If you were damaged due to this situation, you can file for a payout and get your share of the settlement. You can check if you are eligible and other details in the FAQ section.