SINGAPORE - Units of three Singapore Exchange (SGX) special purpose acquisition companies (Spacs) will undergo detachment this month.

This occurs when Spac units split into shares and fractional warrants.

The three Spacs - Vertex Technology Acquisition Corporation (VTAC), Pegasus Asia and Novo Tellus Alpha Acquisition (NTAA) - listed in January and will be the first batch of detachments on the SGX. VTAC and Pegasus units detach on March 7, and NTAA units on March 14.

Here are six things to know about Spac detachments:

1. What is a Spac detachment event?

Spac detachment occurs typically on the 45th calendar day from a firm's listing date. This is when Spac units separate into individually traded Spac shares and warrants.

The last day of trading for Spac units, which comprise one share and a fractional warrant each, is one business day prior to detachment.

Shareholders who sell their Spac units on the day before detachment will not be eligible to receive Spac shares and warrants.

Unit-holder accounts will be credited with Spac shares and warrants two business days after the detachment date.

The stock codes for the Spac share and Spac warrant may be different from that of the Spac unit.

Similar to other corporate actions like rights issues, investors should trade only if they are aware of the quantity of Spac shares and warrants they have been allocated.

2. When will the Spac units split?

The detachment date usually falls on the 45th calendar day from the listing date. If the 45th calendar day falls on a weekend or public holiday, detachment will be on the next business day.

While all three Spacs, which are currently listed on the SGX mainboard, will automatically detach on their respective dates, this may not be the case for future Spacs - they may offer optional detachment and the dates of detachment can also vary.

3. How many shares and warrants will I get for every Spac unit?

A Spac unit comprises one Spac share and a fractional warrant. The fraction of a warrant that comes with one unit of one Spac may differ from the fraction of a warrant for another.

VTAC Spac units comprise 0.3 of a warrant, while Pegasus and NTAA units comprise 0.5 of a warrant.

4. What happens with fractional warrants that cannot be combined after the detachment date?

After detachment, fractional warrants that cannot be combined into whole warrants will be disregarded.

Only whole warrants can be traded.

For example, if an investor has 35 VTAC Spac units, there are not enough units to form whole warrants. On detachment date, the Spac units will separate into 35 Spac shares and 10 warrants, with 0.5 of a warrant disregarded.

If an investor wants to hold whole warrants, enough Spac units must be held so that detachment results in whole warrants being issued.

5. Where can I check how many shares and warrants I have?

Before the crediting date, unit holders will be able to see their Spac units in their Central Depository account holdings. Two business days after the detachment date, they will see Spac shares and warrants credited in the account, and Spac units debited from the account.

6. When can the whole warrants be exercised?

The whole warrants can typically be exercised within 30 days after de-Spac, or the merger between the Spac and a target company, is completed, up to its warrant expiry date.

The expiry date is usually five years after the completion of the business combination. For some Spacs, the exercise period may be 30 days after de-Spac or 12 months from the Spac's initial public offering.

The warrant holder may elect to use cash to exercise and convert the warrants into shares - typically at a 1:1 ratio - during the exercise period.

During the warrant exercise period, the sponsors may potentially call for warrant redemption.

• More information on Spacs can be accessed from here