OTR Acquisition Corp (NASDAQ: OTRA) shares are trading higher Wednesday after the company filed a Form 8-K with the U.S. Securities and Exchange Commision. The move appears to be related to the high number of investors who opted for redemptions.
According to the filing, holders of an aggregate of 9,769,363 shares of the company's stock have redeemed their shares in connection with the proposed business combination with Comera Life Sciences.
There were 10,447,350 shares in total before redemptions. Only 677,987 shares were subject to redemption but not redeemed.
Special purpose acquisition companies, or SPACs, often have redemption rights, which give investors the right to sell their shares back to the acquisition company for net asset value.
The redemption of SPAC shares reduces the amount of outstanding shares which also leads to a decline in the amount of shares available to short. As a result, high redemption rates can often induce short squeezes.
OTR Acquisition expects the business combination to occur on or before May 19.
See Also: 'We Faced Unexpectedly High Costs': Why Target (NYSE:TGT) Shares Are Falling Today
OTR Price Action: OTR Acquisition shares were up 6.92% at $10.98 at time of publication.
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