He may have retired from Hicks, Muse, Tate & Furst (now HM Capital Partners), but Tom Hicks just can't stay away from the big money investment game. Instead of building another private equity firm to go after lots of deals, he is out to raise 400 million bucks in a publicly traded (American Stock Exchange, no symbol yet selected) "blank check" company, Hicks Acquisition Company I Inc., which will go out and try to hit a home run with a single initial investment. It's the same sort of venture as the blank check company, formerly called Coconut Palm Acquisition Corp., which now is the primary investor in Equity Media Holdings. There is no indication that Hicks will be going after a media investment, although he has plenty of experience in the field, nor any indication that he won't target media. The structure of such a blind pool is to raise money and then hunt for the best company possible to invest in.
Hicks was raised in a radio family (his father owned a station in Beaumont-Port Arthur, TX) and he and his brothers have owned numerous stations over the years. As the head of Hicks, Muse, he took the firm into creating the Chancellor and Capstar groups, both of which merged into Clear Channel. In television, Hicks, Muse remains to this day the biggest investor in LIN Television, which was recently put up for sale. The private equity firm made numerous Latin American media investments, but also lots of investments far removed from media. Stetson Hats, for example.
Shares in Hicks Acquisition will be sold for 10 bucks each, with no indication yet of when the IPO will take place. Citi is the only underwriter listed thus far.
SmartMedia observation: This is definitely a high-risk investment. The prospectus even points out that of the 99 blank check companies formed to date, only 24 have closed deals and 22 have deals pending, while five have failed and returned their cash (minus some charges) to investors. "Accordingly, there are approximately 48 blank check companies with more than 4.6 billion in trust that are seeking to carry out a business plan similar to our business plan," the prospectus notes – and that's not counting more blank check companies in the IPO pipeline. And since this is Hicks Acquisition Co. I, we're guessing that Hicks may be planning a repeat performance if his first blank check company hits a home run.
For investors who buy the IPO, this is a bet on Tom Hicks and some other folks you may recognize. Eric C. Neuman, who was a key player in the Hicks, Muse media investments, is back as Sr. VP. One of the directors is Brian Mulroney, formerly Prime Minister of Canada. Tom Hicks is well connected on Wall Street, in politics (the current occupant of the White House is one of his best buds), in pro sports (as a team owner) and in other arenas. It's a pretty good bet that Hicks Acquisition is not going to be left out in the cold and have to return 9.75 to each shareholder for not finding a deal to invest in within the prescribed 24 months.