๐๐ Marblegate Delays Taxi Medallion Stock Market Listing (Again)
Marblegate, large investor in NYC taxi medallions, has delayed publicly listing its medallion-related holdings (again). Did Mayor Adams, Deputy Mayor Joshi & TLC Chair Do, mess up their bet?
In March, we reported Marblegate Asset Management, a Greenwich, Connecticut-based investment firm, was preparing to publicly list its sizeable taxi medallion-related holdings on the NASDAQ (Nasdaq Stock Market). The โdistressedโ investment firm, led by Andrew Milgram, started buying NYC yellow cab medallions and medallion-backed loans before the pandemic, from 2017 to early 2020.
The investment company has plans to list its holdings through Marblegate Acquisition Corporation, a publicly-traded โblank checkโ company GATE (GATE 0.00%โ ), known as a special purpose acquisition company (โSPACโ). The idea being that Marblegate would effectively publicly list its taxi medallion-related assets via merging the entity that holds its yellow cab assets with the SPAC. Itโs similar to an initial public offering (IPO) or โtaking a company publicโ.
In early July, Marblegate bought itself more time to publicly list its medallion-related holdings, by successfully extending the merger compliance deadline by 6 months from July 5, 2023 to January 5, 2024. Based on SEC filings, Marblegate indicated that it planned to close the transaction in Q3 2023 (ending September 30, 2023).
During the pandemic era, Marblegate was a key player in the City and federal government-backed debt restructuring that saved the NYC taxi medallion industry from a major financial crisis, which would have likely resulted in thousands of TLC-licensed drivers filing for bankruptcy protection.
As a reminder, the debt restructuring, known as the MRP/MRP+, only applied to individual owner-drivers and smaller fleets (6 taxi medallions or less). Marblegate, whose financial exposure seems to be mostly related to loans backed by medallions, helped deliver permanent debt relief to many NYC taxi drivers and small businesses in exchange for a one-time $30,000 cash payment and City loan guarantee, among other things (see videos below).
Marblegateโs portfolio is thought to include hundreds of NYC taxi medallions, thousands of loans collateralized (secured) by medallions and potentially a taxi garage management entity. Based on our research, we believe the taxi garage management entity might be Septuagint Solutions, an entity that Marblegateโs Milgram sits on the board of. Interestingly, Septuagint, Queens Medallion Leasing (QML) and Marblegate seem to have significantly contributed to the newly opened Taxi Clubhouse in Manhattan (we encourage all drivers to check out the Clubhouse!).
In its SEC filings, Marblegate markets its yellow cab-related assets and business as providing โspecialized financing solutions to the regulated mobility sector, with a geographic focus on the NYC taxi marketโ. We believe Marblegateโs total investment in the NYC taxi medallion industry, since 2017, is over $400 million.
Delay #1
While Marblegate missed its Q3 2023 goal, there were signs that Marblegate was actively testing the market ahead of a listing, including holding an auction on September 28th for ten of its NYC taxi medallion assets (NYC taxi medallions that were backed by Marblegate-controlled loans and/or directly owned medallions). This was likely an exercise to show investors a market for taxi medallions existed and to get an up to date market price to inform a valuation for their holdings.
The two videos below (each one is ~17 minutes) provide helpful transaction detail, context and background related to the September 28th auction.
Remember, this all happened before October 18th, when, in a shock announcement (discussed below), the TLC reinstated the EV exemption to the FHV License Pause (a/k/a TLC Plate Cap). That decision, which weโve spoken about at length, fundamentally changed the market. Not only were medallion valuations impacted, but it likely spooked many potentially interested parties who lost confidence in the City and TLCโs commitment to protecting the yellow cab industry.
Impact of New EV TLC Plates
In the second video above (published on September 28th), at 6:35 and at 17:53, we mentioned/warned that the TLCโs inability to provide clear guidance on their plans regarding new TLC Plates would impact NYCโs taxi medallion market. For example, a lack of TLC guidance or any policy mistakes would likely cause many drivers and investors to hesitate investing in NYC taxi medallions.
On October 18th, Mayor Eric Adams, along with Deputy Mayor Meera Joshi and TLC Chair David Do, announced the full reinstatement of the electric vehicle (EV) exemption to the the TLC Plate Cap. This was a shock announcement, never previously mentioned or discussed. The entire NYC for-hire transportation industry is now defined by that reckless decision.
Although the New York Taxi Workers Alliance (NYTWA) successfully got a New York State Supreme Court judge to issue an order that temporarily stopped the issuance of new EV TLC Plates, even a several day delay created for-hire vehicle supply chaos. Close to 10,000 (not a typo) *new* TLC Plate applications were submitted, before the judgeโs order went into effect. A final ruling is yet to be made, but should come shortly.
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Weโve covered, along with our friends at NYC Taxi News, the City and TLCโs October 18th decision. The long story short: itโs caused a lot of confusion in the taxi medallion industry. It has also likely scared away a lot of investors. While driver-owners are still buying medallions, the prices seem to keep dropping (not good for existing owners and lenders) and the number of drivers interested in switching to/testing out yellow cabs seems to have decreased (i.e., why buy a taxi medallion, when one can just buy an EV and get a โfreeโ TLC Plate ๐คท).
Based on our research, taxi medallion prices have already fallen between 5% to 10%, since the October 18th announcement. As mentioned in the videos above, the City loan guarantee on restructured taxi medallion debt was agreed to at $170,000 medallion valuation. That also should give one a sense of how far taxi medallion prices continue to fall from what were already depressed valuations.
Delay #2. Are Adams, Joshi & Do To Blame?
It seems to be one crisis, after another, for the yellow cab industry, often the result of reckless, counteractive and counterintuitive City and TLC policies . At this point, one genuinely wonders whether the City & TLC want to kill the taxi medallion? An asset that once upon a time raised hundreds of millions for the City budget.
As for Marblegateโs listing, the investment firm has once again extended the deadline to list their taxi medallion related-assets to October 2024.
Mayor Adams, Deputy Mayor (+ former TLC Chair) Joshi and current TLC Chair Do are not fully to blame for Marblegateโs extension amendment. However, weโre fairly certain Wall Street investors will hesitate to invest in the NYC taxi medallion industry if these policymakers remain in charge or do not clearly communicate and make policies that support the yellow cab industry.
Time will tell.
As always, let us know your thoughts in the comments section below or by emailing us at info@automarketplace.com.
AutoMarketplace NYC covers the for-hire transportation industry and automotive news. Check out AutoMarketplace on YouTube โถ๏ธ
NYC and the TLC screwed Marblegate (and screw is really a kinder word for the f-word) like itโs nobodyโs business but that was the chance you take when you deal with NYC and possibly a very corrupt mayor. I doubt youโll ever see an IPO up of them. Marblegate should sue NYC, TLC , and the major players and sue big.
I really like what NYC did with Marblegate! Nothing personal, only business. NYC did same thing with Yellow Industry back in 2013-2014. Many people live was destroyed by NYC. Marblegate just another hedge funds scumbags. I wish Marblegate will be destroyed by NYC !