NEW YORK (Reuters Breakingviews) - When CIIG Merger, a special purpose acquisition company, recently announced a deal to buy UK electric van company Arrival, the executives behind the transaction made some bold statements. The UK-based company projected it would make $1 billion in revenue by 2024 despite having none now. Four years is an eternity in a rapidly changing transportation world. But, still, the SPAC is putting a $5.4 billion valuation on the company, which investors will have to approve. A loophole in Securities and Exchange Commission regulations may lend a helping hand. SPACs are increasingly becoming an alternative to the traditional initial public offering process. They raise money from public investors, then later use the pot of cash to buy companies through negotiated transactions. The process eliminates the stress of a roadshow, adds certainty, and over the past several months has disrupted traditional listings, otherwise cornered by investment banks. ADVERTISEMENT But fee structures often enrich managers simply for buying companies, rather than good ones that are ready for public consumption at the right price. Investors – at least those who initially own shares in the SPAC – often go along with transactions, too, because they receive warrants that can become more valuable when a deal is complete. Lately SPACs have been leaning on the use of projections, which can grease the wheels for companies in high growth areas. They may not make much money now, but they are promising, and they can glean investor cash if they can tell their story. Arrival is one of many electric vehicle-related companies that have hit up SPACs. ADVERTISEMENT A legal nuance is giving them this advantage. Companies that have established filings with the SEC are protected under “safe harbor” provisions, established as part of the Private Securities Litigation Reform Act of 1995. This regulation shields management from liability when making financial projections in good faith. But companies going public through an IPO, without track records with public investors or the SEC, are not protected by this provision. While the companies SPACs buy don’t have a public history, the shell companies do, and so they use this history as a way to be protected under safe harbor. These tactics could be tested. A recent lawsuit was brought against Waitr, a food delivery business bought by a SPAC in 2018, claiming it misled investors about its prospects. For now, though, SPAC managers are going out with their best future foot forward. BREAKINGVIEWS Reuters Breakingviews is the world"s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time. Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors. MORE FROM REUTERS