SPAC Deal to take Surf Air Public as it plans for hybrid electric aircraft.

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Surf Air Mobility Corp. – the membership-based private plane operator, has agreed to merge with a blank-check company in a deal that will give the company a market value of about $1.42 billion.

The deal will help the company move forward with its expansion plans which included a fleet of hybrid electric aircraft.

Surf Air said it entered a contract with two companies, magniX and AeroTec, to develop hybrid and fully electric power trains for new and existing Grand Caravans.

The company will merge with Tuscan Holdings Corp. II and will provide up to $467 million in gross proceeds, including committed capital from investors including iHeartMedia and Partners For Growth along with an equity revolver from Global Emerging Markets – according to a statement provided by the company.

That includes a private investment in public equity, or PIPE, raised in advance by the company rather than the SPAC, as would be typical, said Surf Air Chief Executive Officer Sudhin Shahani.

Based at the Hawthorne airport near Los Angeles, Surf Air offers scheduled flights on turboprop aircraft among cities throughout the U.S., according to its website.

“The time is right for our mission and what we’re doing,” Shahani said in an interview, adding that travelers have come to prefer small airports during the coronavirus pandemic. “We’ve grown 50% last year to this year.”

Almost two years ago, Surf Air secured the funding commitment from Global Emerging Markets Group that it could tap when it went public. The deal with GEM was unusual because SPACs and not their targets — typically take the lead role in raising any additional funds.