☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Altimar Acquisition Corporation
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
40 West 57th Street
33rd Floor
New York, NY 10019
399 Park Avenue, | New York, | NY | 10022 | ||||||||
(address of principal executive offices) |
Registrant’s telephone number, including area code: (212) 287-6767
code)
Title of each class | Trading
| Name of each exchange on which registered | ||||||||||||
New York Stock Exchange | ||||||||||||||
Warrants to purchase Class A | New York Stock Exchange | |||||||||||||
Securities registered pursuant to Section 12(g) of the Act:
None
No
oNo
oLarge accelerated filer | ☒ | Accelerated filer | ☐ | ||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | ||||||||||||||
Emerging growth company |
The Registrant’s Units began trading on the New York Stock Exchange on October 23, 2020 and the Registrant’s shares of Class A ordinary shares began separate trading on the New York Stock Exchange on December 14, 2020.
$4.1 billion. As of December 31, 2020,February 16, 2022, there were 27,500,000 Class A ordinary shares, $0.0001 par value, and 6,875,000404,919,411 of the registrant’s shares of Class B ordinaryA common stock outstanding, 674,766,200 shares $0.0001 par value, issuedof the registrant’s Class C common stock outstanding and 319,132,127 of the registrant’s Class D common stock outstanding.
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Item 1A. | ||||||||||||
Item 5. | ||||||||||||
Item 10. | ||||||||||||
F-1 |
Assets Under Management or AUM | Refers to the assets that we manage, and are generally equal to the sum of (i) net asset value (“NAV”); (ii) drawn and undrawn debt; (iii) uncalled capital commitments; and (iv) total managed assets for certain Real Estate products. | |||||||||||
our BDCs | ||||||||||||
| Refers to our business development companies, as regulated under the Investment Company Act of 1940, as amended: Owl Rock Capital Corporation (NYSE: ORCC) (“ORCC”), Owl Rock Capital Corporation II (“ORCC II”), Owl Rock Capital Corporation III (“ORCC III”), Owl Rock Technology Finance Corp. (“ORTF”), Owl Rock Technology Finance Corp. II (“ORTF II”), Owl Rock Core Income Corp. (“ORCIC”) and Owl Rock Technology Income Corp. (“ORTIC”). | |||||||||||
Blue Owl, the Company, the firm, we, us, and our | Refers to the Registrant and its consolidated subsidiaries. | |||||||||||
Blue Owl Carry | Refers to Blue Owl Capital Carry LP. | |||||||||||
Blue Owl GP | Refers collectively to Blue Owl Capital Holdings GP LLC and Blue Owl Capital GP LLC, which are directly or indirectly wholly owned subsidiaries of the Registrant that hold the Registrants interests in the Blue Owl Operating Partnerships. | |||||||||||
Blue Owl Holdings | Refers to Blue Owl Capital Holdings LP. | |||||||||||
Blue Owl Operating Group | Refers collectively to the Blue Owl Operating Partnerships and their consolidated subsidiaries. | |||||||||||
Blue Owl Operating Group Units | Refers collectively to a unit in each of the Blue Owl Operating Partnerships. | |||||||||||
Blue Owl Operating Partnerships | Refers to Blue Owl Carry and Blue Owl Holdings, collectively. | |||||||||||
Blue Owl Securities | Refers to Blue Owl Securities LLC (formerly, Owl Rock Capital Securities LLC). | |||||||||||
Business Combination | Refers to the transactions contemplated by the Business Combination Agreement, which were completed on May 19, 2021. | |||||||||||
Business Combination Agreement or BCA | Refers to the agreement dated as of December 23, 2020 (as the same has been or may be amended, modified, supplemented or waived from time to time), by and among Altimar Acquisition Corporation, Owl Rock Capital Group LLC, Owl Rock Capital Feeder LLC, Owl Rock Capital Partners LP and Neuberger Berman Group LLC. | |||||||||||
Business Combination Date | Refers to May 19, 2021. | |||||||||||
Class A Shares | Refers to the Class A common stock, par value $0.0001 per share, of the Registrant. | |||||||||||
Class B Shares | Refers to the Class B common stock, par value $0.0001 per share, of the Registrant. | |||||||||||
Class C Shares | Refers to the Class C common stock, par value $0.0001 per share, of the Registrant. | |||||||||||
Class D Shares | Refers to the Class D common stock, par value $0.0001 per share, of the Registrant. | |||||||||||
Class E Shares | Refers to the Class E common stock, par value $0.0001 per share, of the Registrant. | |||||||||||
Direct Lending | Refers to our Direct Lending products, which offer private credit solutions to middle-market companies through four investment strategies: diversified lending, technology lending, first lien lending and opportunistic lending. Direct Lending products are managed by the Owl Rock division of Blue Owl. | |||||||||||
Dyal Capital | Refers to the Dyal Capital Partners business, which was acquired from Neuberger Berman Group LLC in connection with the Business Combination, and is now a division of Blue Owl. | |||||||||||
Fee-Paying AUM or FPAUM | Refers to the AUM on which management fees are earned. For our BDCs, FPAUM is generally equal to total assets (including assets acquired with debt but excluding cash). For our other Direct Lending products, FPAUM is generally equal to NAV or investment cost. FPAUM also includes uncalled committed capital for products where we earn management fees on such uncalled committed capital. For our GP Capital Solutions products, FPAUM for the GP minority equity investments strategy is generally equal to capital commitments during the investment period and the cost of unrealized investments after the investment period. For GP Capital Solutions’ other strategies, FPAUM is generally equal to investment cost. For Real Estate, FPAUM is generally based on total assets (including assets acquired with debt). | |||||||||||
Financial Statements | Refers to our consolidated and combined financial statements included in this report. | |||||||||||
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GP Capital Solutions | Refers to our GP Capital Solutions products, which primarily focus on acquiring equity stakes in, or providing debt financing to, large, multi-product private equity and private credit platforms through three existing and one emerging investment strategies: GP minority equity investments, GP debt financing, professional sports minority investments and co-investments and structured equity. GP Capital Solutions products are managed by the Dyal Capital division of Blue Owl. | |||||||
NYSE | Refers to the New York Stock Exchange. | |||||||
Oak Street | Refers to the investment advisory business of Oak Street Real Estate Capital, LLC that was acquired on December 29, 2021, and is now a division of Blue Owl. | |||||||
Oak Street Acquisition | Refers to the acquisition of Oak Street completed on December 29, 2021. | |||||||
Owl Rock | Refers collectively to the combined businesses of Owl Rock Capital Group LLC (“Owl Rock Capital Group”) and Blue Owl Securities LLC (formerly, Owl Rock Capital Securities LLC), which was the predecessor of Blue Owl for accounting and financial reporting purposes. References to the Owl Rock division refer to Owl Rock Capital Group and its subsidiaries that manage our Direct Lending products. | |||||||
Partner Manager | Refers to alternative asset management firms in which the GP Capital Solution products invest. | |||||||
Part I Fees | Refers to quarterly performance income on the net investment income of our BDCs and similarly structured products, subject to a fixed hurdle rate. These fees are classified as management fees throughout this report, as they are predictable and recurring in nature, not subject to repayment, and cash-settled each quarter. | |||||||
Part II Fees | Generally refers to fees from our BDCs and similarly structured products that are paid in arrears as of the end of each measurement period when the cumulative aggregate realized capital gains exceed the cumulative aggregate realized capital losses and aggregate unrealized capital depreciation, less the aggregate amount of Part II Fees paid in all prior years since inception. Part II Fees are classified as realized performance income throughout this report. | |||||||
Principals | Refers to our founders and senior members of management who hold, or in the future may hold, Class B Shares and Class D Shares. Class B Shares and Class D Shares collectively represent 90% of the total voting power of all shares. | |||||||
Real Estate | Refers, unless context indicates otherwise, to our Real Estate products, which primarily focus on providing investors with predictable current income, and potential for appreciation, while focusing on limiting downside risk through a unique net lease platform. Real Estate products are managed by the Oak Street division of Blue Owl. | |||||||
Registrant | Refers to Blue Owl Capital Inc. | |||||||
SEC | Refers to the U.S. Securities and Exchange Commission. | |||||||
Tax Receivable Agreement or TRA | Refers to the Amended and Restated Tax Receivable Agreement, dated as of October 22, 2021, as may be amended from time to time by and among the Registrant, Blue Owl Capital GP LLC, the Blue Owl Operating Partnerships and each of the Partners (as defined therein) party thereto. |
the potential adverse impact of the COVID-19 pandemic on our business;
the outcome of litigation related to or arising out of the proposed Blue Owl Business Combination;
our ability to complete the proposed Blue Owl Business Combination;
our expectations around the performance of the combined business following the proposed Blue Owl Business Combination;
our success in retaining or recruiting, or changes required in, our officers, key employees or directors following the consummation of the proposed Blue Owl Business Combination;
our public securities’ potential liquidity and trading;
the lack of a market for our securities;
the use of proceeds not held in the trust account or available to us from interest income on the trust account balance;
the trust account not being subject to claims of third parties; or
our financial performance.
The forward-looking statements contained in this annual report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number ofvarious risks, uncertainties (some of which are beyond our control) or other assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, butSome of these factors are not limited to, those factors described under the headingheadings “Item 1A. Risk Factors.Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” ShouldThese factors should not be construed as exhaustive and should be read in conjunction with the risk factors and other cautionary statements that are included in this report and in our other periodic filings. If one or more of these or other risks or uncertainties materialize, or should any ofif our underlying assumptions prove to be incorrect, our actual results may vary in material respectsmaterially from those projectedindicated in these forward-looking statements. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Therefore, you should not place undue reliance on these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake noany obligation to publicly update or revisereview any forward-looking statements, statement, whether as a result of new information, future eventsdevelopments or otherwise, except as required by law.
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ReferencesAlso posted on our website in the “Investor Relations—Governance” section is the charter for our Audit Committee, as well as our Corporate Governance Guidelines and Code of Business Conduct governing our directors, officers and employees. Information on or accessible through our website is not a part of or incorporated into this report (the “Annual Report”)or any other SEC filing. Copies of our SEC filings or corporate governance materials are available without charge upon written request to “we,” “us”Blue Owl Capital Inc., 399 Park Avenue, 38th Floor, New York, New York 10022, Attention: Office of the Secretary. Any materials we file with the SEC are also publicly available through the SEC’s website (www.sec.gov).
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Introduction
We are
Blue Owl AUM: $94.5 billion FPAUM: $61.4 billion | ||||||||||||||
Direct Lending Products AUM: $39.2 billion FPAUM: $32.0 billion | GP Capital Solutions Products AUM: $39.9 billion FPAUM: $21.2 billion | Real Estate Products AUM: $15.4 billion FPAUM: $8.2 billion | ||||||||||||
Diversified Lending Commenced 2016 AUM: $25.8 billion FPAUM: $21.6 billion | GP Minority Equity Commenced 2010 AUM: $38.7 billion FPAUM: $20.4 billion | Net Lease Commenced 2009 AUM: $15.4 billion FPAUM: $8.2 billion | ||||||||||||
Technology Lending Commenced 2018 AUM: $7.9 billion FPAUM: $6.9 billion | GP Debt Financing Commenced 2019 AUM: $1.0 billion FPAUM: $0.7 billion | |||||||||||||
First Lien Lending Commenced 2018 AUM: $3.5 billion FPAUM: $2.3 billion | Professional Sports Minority Investments Commenced 2021 AUM: $0.2 billion FPAUM: $0.2 billion | |||||||||||||
Opportunistic Lending Commenced 2020 AUM: $2.0 billion FPAUM: $1.2 billion |
MUTUAL RESPECT | EXCELLENCE | CONSTRUCTIVE DIALOGUE | ONE TEAM | |||||||||||||||||
BLUE OWL’S CORE VALUES |
Our executive offices are located at 40 West 57th Street, 33rd Floor, New York, NY 10019 and our telephone number is (212) 287-6767. Our corporate website address is atac.altimaracquisition.com. Our website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this Annual Report. You should not rely on any such information in making your decision whether to invest in our securities.
Investment Company History
On September 1, 2020, the Sponsor paid $25,000, or approximately $0.001 per share, to cover certain of our offering and formation costs in consideration of 8,625,000 Class B ordinary shares, par value $0.0001. Prior to the initial investment in the Company of $25,000 by the Sponsor, the Company had no assets, tangible or intangible.
On October 27, 2020, we consummated the initial public offering (the “Initial Public Offering”) of 25,000,000 units (the “Units”).Act. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $250,000,000. The Company granted the underwriters in the Initial Public Offering (the “Underwriters”) a 45-day option to purchase up to 3,750,000 additional Units to cover over-allotments. On November 5, 2020, the Underwriters partially exercised the over-allotment option in full and purchased an additional 2,500,000 Units, generating gross proceeds of $25,000,000.
Simultaneously with the consummation of the Initial Public Offering, we consummated the private placement of an aggregate of 4,666,667 warrants, each exercisable to purchase one share of the Company’s Class A ordinary shares for $11.50 per share (“Private Placement Warrants”), to the Sponsor at a price of $1.50 per Private Placement Warrant, generating total proceeds of $7,000,000. In connection with the Underwriters’ exercise of their over-allotment option (the “Over-allotment Option”), the Sponsor purchased an additional 333,333 Private Placement Warrants, generating gross proceeds to the Company of $500,000. The $275,000,000 in gross proceeds received from the Initial Public Offering and the Private Placement Warrants was placed in a trust account (the “Trust Account”). The balance of the Trust Account at December 31, 2020 was $275,038,028.
On December 11, 2020, we announced that, commencing December 14, 2020, holders of the Units may elect to separately trade the Class A ordinary shares and the warrants included in the Units. Those Units not separated continued to trade on The New York Stock Exchange (the “NYSE”) under the symbol “ATAC.U” and the Class A ordinary shares and warrants that were separated trade under the symbols “ATAC” and “ATAC W,” respectively. No fractional warrants were issued upon separation of the Units and only whole warrants trade.
Recent Developments
On December 23, 2020, we announced that we had entered into a definitive business combination agreement with Owl Rock Capital Group (“Owl Rock”) and the Dyal Capital Partners (“Dyal”) division of Neuberger Berman Group LLC (“Neuberger”) to form Blue Owl Capital Inc. (“Blue Owl”), a publicly-traded alternative asset management firm that would have over $45.0 billion in assets under management (such business combination, the “Blue Owl Business Combination”). Pursuant to the proposed Blue Owl Business Combination, Altimar, which currently holds $275 million in cash in its Trust Account, will combine with Blue Owl at an estimated $12.5 billion pro forma equity value.
The cash consideration for the Business Combination will be funded through a combination of cash from Altimar and proceeds from the proposed PIPE Financing (as defined below) to occur immediately prior to the closing of the proposed Blue Owl Business Combination (the “Closing”). The transaction is expected to close in the first half of 2021, subject to customary closing conditions as further described in the Business Combination Agreement which is filed as Exhibit 2.1 to this Annual Report.
In connection with the Closing of the proposed Blue Owl Business Combination, Altimar will change its jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and will redomesticate as a corporation under the laws of the State of Delaware, upon which Altimar will change its name to Blue Owl Capital Inc. (such change in jurisdiction, the “Domestication”). The Closing of the proposed Blue Owl Business Combination is subject to certain conditions, including, among other things: (i) the approval of the proposed Blue Owl Business Combination and other matters by Altimar’s shareholders; (ii) if required, the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and receipt of certain additional regulatory approvals; (iii) the approval of the stockholdersresponsibilities of each of Owl Rock Capital Corporation, Owl Rock Capital Corporation II, Owl Rock Capital Corporation III, Owl Rock Technology Finance Corp. and Owl Rock Core Income Corp. (the “Owl Rock BDCs”) of such Owl Rock BDC’s entry into a new investment advisory agreement containing substantially the same economic terms as the existing investment advisory agreement with its Owl Rock investment adviser; (iv) the approval of matters related to the proposed Blue Owl Business Combination by the limited partners and/or advisory committees for each of Dyal Funds I-V and Dyal Financing Fund and each of the other Owl Rock Funds (excluding certain managed accounts and co-investment vehicles where consent will be sought but not required); (v) the completion of the Domestication by Altimar in accordance with Section 388 of the Delaware General Corporation Law and the Companies Law (2020 Revision) of the Cayman Islands; (vi) the cash proceeds from the Trust Account established for the purpose of holding the net proceeds of Altimar’s Initial Public Offering, net of any amounts paid to Altimar’s shareholders that exercise their redemption rights in connection with the proposed Blue Owl Business Combination, plus the aggregate proceeds of the PIPE Financing (as defined below) equaling no less than $1,300,000,000 at the Closing (the “Minimum Proceeds Condition”) (provided that in the case of Altimar, the Minimum Proceeds Condition is that the PIPE Investment has been funded in an amount not less than $750,000,000); (vii) covenant and representation and warranty bring down conditions; (viii) the absence of a material adverse effect on the respective parties; (ix) continued employment of the key principals; and (x) the listing of Blue Owl Class A common stock to be issued in the proposed Blue Owl Business Combination on the New York Stock Exchange. To the extent permitted by law, the conditions in the Business Combination Agreement may be waived by the parties thereto.
In connection with entering into the Business Combination Agreement, Altimar, Owl Rock and Neuberger entered into subscription agreements (as amended from time to time, the “Subscription Agreements”), each dated as of December 23, 2020, with certain institutional and other accredited investors (the “PIPE Investors”), pursuant to which,board include, among other things, approving our advisory contract with our BDC; approving certain service providers; determining the PIPE Investors party thereto agreed to purchase an aggregate of 150,000,000 shares of Class A common stock immediately prior to the Closing at a cash purchase price of $10.00 per share (the “PIPE Financing”). The Subscription Agreements contain customary representations, warranties, covenants and agreements of Altimarvaluation and the PIPE Investorsmethod for valuing assets; and monitoring transactions involving affiliates and; approving certain co-investment transactions. The advisory contracts with each of our BDCs may be terminated by the shareholders or directors of such BDC on not more than 60 days’ notice, and are subject to customary closing conditions (including,annual renewal by each respective BDC’s board of directors after an initial two-year term.
Corporate Information
We are an “emerging growth company,” as definedwhich maintains registrations in Section 2(a)many states, and is a member of theFINRA. As a broker-dealer, Blue Owl Securities Act of 1933, as amended, or the Securities Act, as modifiedis subject to regulation and oversight by the Jumpstart Our Business Startups ActSEC and state securities regulators. In addition, FINRA, a self-regulatory organization that is subject to oversight by the SEC, promulgates and enforces rules governing the conduct of, 2012, orand examines the JOBS Act. As such, we are eligibleactivities of, its member firms. Due to take advantage of certain exemptions from various reporting requirements that are applicablethe limited authority granted to other public companies that areBlue Owl Securities in its capacity as a broker-dealer, it is not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securitiescertain regulations covering trade practices among broker-dealers and the pricesuse and safekeeping of our securities may be more volatile.
In addition, Section 107customers’ funds and securities. As a registered broker-dealer and member of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of thea self-regulatory organization, Blue Owl Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the Initial Public Offering, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A ordinary shares that is, held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
Initial Business Combination
Altimar’s Memorandum and Articles of Association and NYSE rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable) at the time of our signing a definitive agreement in connection with our initial business combination. Our board of directors will make the determination ashowever, subject to the fair market value of our initial business combination. If our board of directors is not able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects.
As of December 23, 2020, the date of the execution of the definitive agreement for the Blue Owl Business Combination, the balance of the Trust Account was approximately $265,405,000 (excluding the $9,621,893 deferred underwriting commissions and taxes payable on the income earned on the Trust Account) and 80% thereof represents approximately $212,324,000. In reaching its conclusion that the proposed Blue Owl Business Combination meets the 80% asset test, our Board used as a fair market value the enterprise value of approximately $12.15 billion, which was implied based on the terms of the transactions agreed to by the parties in negotiating the definitive agreement for the proposed Blue Owl Business Combination. The enterprise value consists of an implied equity value for Dyal (prior to the proposed Blue Owl Business Combination) of approximately $6,682,500,000 and an implied equity value for Owl Rock (prior to the proposed Blue Owl Business Combination) of approximately $5,467,500,000 and an assumed $350 million ofSEC’s uniform net debt. In determining whether the enterprise value described above represents the fair market value of the Dyal and Owl Rock businesses, the Altimar Board considered all of the factors described in the section of the Proxy Statement captioned “Altimar’s Board of Directors’ Reasons for Approval of the Business Combination” and the fact that the purchase price for these businesses was the result of an arm’s length negotiation. As a result, the Altimar Board concluded that the fair market value of Blue Owl was significantly in excess of 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account).
Facilities
We currently maintain our executive offices at 40 West 57th Street, 33rd Floor, New York, NY 10019. The cost for our use of this space is included in the $10,000 per month fee we will pay to an affiliate of our Sponsor for office space, administrative and support services. We consider our current office space adequate for our current operations.
Employees
We currently have two executive officers. These individuals are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed the proposed Blue Owl Business Combination. The amount of time they will devote in any time period will vary based on the stage of the business combination process we are in. We do not intend to have any full-time employees prior to the completion of the proposed Blue Owl Business Combination.
Periodic Reporting and Financial Information
We have registered our Units, Class A ordinary shares and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirementscapital rule. Rule 15c3-1 of the Exchange Act, this Annual Report contains financial statements auditedwhich specifies the minimum level of net capital a broker-dealer must maintain and reported on by our independent registered public accountants.
We will provide shareholders with audited financial statementsalso requires that a significant part of a broker-dealer’s assets be kept in relatively liquid form.
We are required to evaluate our internal control procedures for the fiscal year ending December 31, 2021 as required by the Sarbanes-Oxley Act. OnlyBlue Owl Capital Singapore Pte. Ltd. (“Blue Owl Singapore”), an entity organized and operating in Singapore assist in the event we are deemed to be a large accelerated filer or an accelerated filermarketing and no longer qualify as an emerging growth company, will we be required to complydistribution of Blue Owl funds in the Asia-Pacific region. Blue Owl HK is registered with the independent registered public accounting firm attestation requirement on our internal control over financial reporting.
We are a Cayman Islands exempted company. Exempted companies are Cayman Islands companies conducting business mainly outside the Cayman IslandsHong Kong Securities & Futures Commission. Blue Owl Capital Canada ULC (“Blue Owl Canada”) is an entity organized and as such, are exempted from complying with certain provisions of the Companies Law. As an exempted company, we have applied for and received a tax exemption undertaking from the Cayman Islands government that,operating in accordance with Section 6 of the Tax Concessions Law (2018 Revision) of the Cayman Islands, for a period of 20 years from the date of the undertaking, no law which is enactedCanada whose employees assist in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations will apply to us or our operationsmarketing and in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax will be payable (i) on or in respect of our shares, debentures or other obligations or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital by us to our shareholders or a paymentBlue Owl funds in Canada.
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our Initial Public Offering, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A ordinary shares that are held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares held by non-affiliates exceeds $250 million as of the prior June 30 or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the prior June 30.
Legal Proceedings
There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such.
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An investmentsecurities involvesproducts and our products’ investments operate and could potentially negatively impact us, our products or our products’ investments.high degreeparticularly adverse impact on transportation, hospitality, tourism, commercial real estate, entertainment and other industries, including industries in which certain of risk. You should consider carefullyour products, borrowers, Partner Managers and their respective investments operate and invest. The effects of COVID-19 have led to significant volatility and it is uncertain how long this volatility will continue. As COVID-19 continues to spread, particularly as new variants, including the Delta and Omicron variants, continue to emerge, the potential effects, including a global, regional or other economic recession, are increasingly uncertain and difficult to assess. This uncertainty has been exacerbated by issues with the availability and acceptance of vaccines both in the United States and globally. The continued spread of the virus globally could lead to a protracted world-wide economic downturn, the effects of which could last for some period after the pandemic is controlled and/or abated.described below, together withincluding risks related to the other information contained in this Annual Report, before making a decisionongoing spread of COVID-19 (including the Delta and Omicron variants) and efforts to invest in our securities. If anymitigate the spread and deployment of vaccines. However, the rapid development and fluidity of the following events occur, our business, financial conditionsituation precludes any prediction as to its ultimate impact on us. If the spread and operating results may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.SUMMARY RISK FACTORSSome of the factors that could materially and adversely affectrelated mitigation efforts continue, our business, financial condition, results of operations and cash flows include, but are not limited to,could be materially adversely affected. The impact of COVID-19 could have the following:General Risk FactorsWe are a recently incorporated company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.Because we are incorporated under the lawseffect of heightening many of the Cayman Islands, youother risk factors described herein.face difficulties in protecting your interests, and your ability to protect your rights throughreduce the U.S. federal courts may be limited.Our sponsor controls a substantial interest in us and thus may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support.
General Risks Related to Initial Business Combinations
Our shareholders may not be afforded an opportunity to vote onvalue or hamper the performance of the investments made by our proposed initial business combination, which means we may complete our initial business combination even though a majority of our shareholders do not support such a combination.
Theproducts or impair the ability of our public shareholdersproducts to exercise redemption rights with respectraise or deploy capital, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition.
The requirement that we consummate an initial business combination within 24 months after the closing of the Initial Public Offering may give potential target businesses leverage over us in negotiating a business combinationcontrol and may limitaffect the time we have in which to conduct due diligence on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our shareholders.
Our search for a business combination,level and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the coronavirus (COVID-19) outbreakvolatility of credit and securities prices and the statusliquidity and value of debtfund investments, and equity markets.
Wewe and our products may not be able to consummateor may choose not to manage our exposure to these conditions. The extent and impact of any sanctions imposed in connection with the escalation of hostilities between Russia and Ukraine may cause additional financial market volatility and impact the global economy as the situation continues to evolve.
You will not have any rights or interests in fundsenter into investment advisory agreements whereby we generally receive base management fees from the Trust Account, except underinception of such fund through the liquidation of such fund or for most of our GP Capital Solutions products for a set period. Non-BDC Direct Lending products have a base management fee that is typically based on a percentage of gross asset value (which includes the portion of such investments purchased with leverage), whereas our GP Capital Solutions products have a management fee that is initially a set percentage of capital committed by investors, and then, following a step down event for a Dyal Capital fund (generally either the end of the investment period or, for certain limited circumstances. Therefore,funds, when the fund’s commitments become substantially invested or drawn), is adjusted to liquidate your investment, you maya lower percentage of the fund’s cost of unrealized investments, subject to impairment losses for certain funds. Following the management fee step down event, the management fee we receive will be forcedreduced when a fund realizes investments or in certain cases when there are permanent changes to sell your public shares or warrants, potentially at a loss.
Wethe cost basis of unrealized investments. While those funds are not required to obtainrealize assets as of any date, there is an opinion fromobligation to explore liquidity strategies with respect to a fund, and should a liquidity strategy event occur prior to the management fee end date, it could cause a reduction in the amount of management fees we are otherwise entitled to receive. Further, any realization of assets will be within the control of certain of our employees who own an independent accounting or investment banking firm,interest in a portion of the carried interest that does not belong to us and consequently, youwho may have an incentive to effect a realization earlier than one otherwise would expect had carried interest not been applicable.
Risks Relatedinterest, including in connection with the allocation of investments among our BDCs and/or our affiliated investment funds pursuant to the ProposedCo-investment Exemptive Order or otherwise.
Allocation of costs and expenses among our funds and between our funds and applicable management companies
If the conditionsGP Minority Equity Investment funds (“Dyal Equity Funds”). Those Dyal Equity Funds are generally allocated an amount equal to their pro rata allocation of BSP Expenses based on the relative number of Partner Managers in which investments are held from time to time by each of those funds; provided that the amount of BSP Expenses borne by a particular Dyal Equity Fund is subject to certain caps specified in its respective governing documents. In addition, Dyal Fund V provides for a minimum payment for BSP Expenses, which to the extent such minimum exceeds Dyal Fund V’s otherwise allocable share of such expenses, reduces the amounts of BSP Expenses borne by the other Dyal Equity Funds. It is expected that any successor fund to Dyal Fund V would similarly share in BSP Expenses.
Pre-existingExisting and future relationships between participants in the proposed Blue Owl Business Combinationor among our Partner Managers, our products and the related transactions or their affiliateslimited partners could give rise to actual or perceived conflicts of interest in connection with the proposed Blue Owl Business Combination.
If the sale of some or all of the PIPE Securities fails to close and sufficient shareholders exercise their redemption rights in connection with the proposed Blue Owl Business Combination, Altimar may lack sufficient funds to consummate the proposed Blue Owl Business Combination.
If the proposed Blue Owl Business Combination is consummated, Altimar’s shareholders will experience dilution.
The Domestication may result in adverse tax consequences for holders of Altimar ordinary shares and warrants, including public shareholders exercising redemption rights.
The grant of registration rights to our shareholders, holdersCertain of our Private Placement Warrants and PIPE Investors and the future exercise of such rights may adversely affect the market price of our Class A common stock.
General Risk Factors
We are a recently incorporated company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a recently exempted company, incorporated under the laws of the Cayman Islands with no operating results, and we did not commence operations until obtaining funding through the Initial Public Offering. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination with one or more target businesses. If we fail to complete our initial business combination, we will never generate any operating revenues.
Past performance by HPS, our management team or either of their respective affiliates may not be indicative of future performance of an investment in us.
Information regarding performance is presented for informational purposes only. Any past experience or performance of HPS Investment Partners, LLC (“HPS”), an affiliate of our Sponsor, our management team or either of their respective affiliates is not a guarantee of either (i) our ability to successfully identify and execute a transaction or (ii) success with respect to any business combination that we may consummate. You should not rely on the historical record of HPS, our management team or either of their respective affiliates as indicative of the future performance of an investment in us or the returns we will, or are likely to, generate going forward. Our management team has no experience in operating special purpose acquisition companies. In addition, HPS advises funds and accounts which have investment mandates that overlap with ours and therefore may compete for investment opportunities with us, and HPS will not be obligated to present any investment opportunities to us over the funds and accounts it manages. Senior management of HPS will spend a vast majority, if not substantially all, of their business time on their other duties, including to the investment management clients of HPS.
We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to “emerging growth companies” or “smaller reporting companies,” this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our Class A ordinary shares held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares held by non-affiliates exceeds $250 million as of the prior June 30 or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the prior June 30. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate a business combination, require substantial financial and management resources, and increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31, 2021. Only in the event we are deemed to be a large accelerated filer or an accelerated filer and no longer qualify as an emerging growth company, will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with which we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.
We are an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within the U.S. upon our directors or executive officers, or enforce judgments obtained in the U.S. courts against our directors or officers.
Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Law (as the same may be supplemented or amended from time to time) and the common law of the Cayman Islands. We are also subject to the federal securities laws of the U.S. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the U.S. In particular, the Cayman Islands has a different body of securities laws as compared to that of the U.S., and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a federal court of the U.S.
We have been advised by Maples and Calder, our Cayman Islands legal counsel, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the U.S. predicated upon the civil liability provisions of the federal securities laws of the U.S. or any state and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the U.S. or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the U.S., the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be, in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a U.S. company.
Provisions in our amended and restated memorandum and articles of association may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A ordinary shares and could entrench management.
Our amended and restated memorandum and articles of association contain provisions that may discourage unsolicited takeover proposals that shareholders may consider to be in their best interests. These provisions will include a staggered board of directors, the ability of the board of directors to designate the terms of and issue new series of preference shares, and the fact that prior to the completion of our initial business combination only holders of our Class B ordinary shares, which have been issued to our Sponsor, are entitled to vote on the appointment of directors, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Cyber incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of HPS and third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early-stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial loss.
Since only holders of our founder shares will have the right to vote on the appointment of directors, the NYSE may consider us to be a “controlled company” within the meaning of the NYSE rules and, as a result, we may qualify for exemptions from certain corporate governance requirements.
Only holders of our founder shares will have the right to vote on the appointment of directors. As a result, the NYSE may consider us to be a “controlled company” within the meaning of the NYSE corporate governance standards. Under the NYSE corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirements that:
we have a board that includes a majority of “independent directors,” as defined under the rules of the NYSE;
we have a compensation committee of our board that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
we have a nominating and corporate governance committee of our board that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
We do not intend to utilize these exemptions and intend to comply with the corporate governance requirements of the NYSE, subject to applicable phase-in rules. However, if we determine in the future to utilize some or all of these exemptions, you will not have the same protections afforded to shareholders of companies that are subject to all of the NYSE corporate governance requirements.
The NYSE may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
Our Units, Class A ordinary shares and warrants are currently listed on the NYSE. Although after giving effect to the Initial Offering Public we meet, on a pro forma basis, the minimum initial listing standards set forth in the NYSE listing standards, our securities may not be listed on the NYSE in the future or prior to our initial business combination. In order to continue listing our securities on the NYSE prior to our initial business combination, we must maintain certain financial, distribution and share price levels, such as a minimum market capitalization (generally $50,000,000) and a minimum number of holders of our securities (generally 300 public holders). Additionally, our Units will not be traded after completion of our initial business combination and, in connection with our initial business combination, we will be required to demonstrate compliance with the NYSE initial listing requirements, which are more rigorous than the NYSE continued listing requirements, in order to continue to maintain the listing of our securities on the NYSE. For instance, our share price would generally be required to be at least $4.00 per share, our total market capitalization would be required to be at least $200.0 million, the aggregate market value of publicly held shares would be required to be at least $100.0 million and we would be required to have at least 400 round lot shareholders. We may not be able to meet those listing requirements at that time, especially if there are a significant number of redemptions in connection with our initial business combination.
If the NYSE delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
a limited availability of market quotations for our securities;
reduced liquidity for our securities;
a determination that our Class A ordinary shares are a “penny stock” which will require brokers trading in our Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
a limited amount of news and analyst coverage; and
a decreased ability to issue additional securities or obtain additional financing in the future.
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our Units, Class A ordinary shares and warrants are listed on the NYSE, our Units, Class A ordinary shares and warrants qualify as covered securities under the statute. Although the states are preempted from regulating the sale of covered securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on the NYSE, our securities would not qualify as covered securities under the statute and we would be subject to regulation in each state in which we offer our securities.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination, and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial business combination, and results of operations.
Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
If we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover some or all amounts received by our shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, thereby exposing themselves and our company to claims, by paying public shareholders from the Trust Account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offense and may be liable for a fine of $18,292.68 and imprisonment for five years in the Cayman Islands.
We may be a passive foreign investment company, or “PFIC,” which could result in adverse U.S. federal income tax consequences to U.S. investors.
If we are a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder (as defined in the section of our IPO prospectus captioned “Taxation—U.S. Federal Income Tax Considerations-General”) of our Class A ordinary shares or warrants, the U.S. Holder may be subject to adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. Our PFIC status for our current and subsequent taxable years may depend on whether we qualify for the PFIC start-up exception. Depending on the particular circumstances, the application of the start-up exception may be subject to uncertainty, and there cannot be any assurance that we will qualify for the start-up exception. Accordingly, there can be no assurances with respect to our status as a PFIC for our current taxable year or any
subsequent taxable year. Our actual PFIC status for any taxable year, however, will not be determinable until after the end of such taxable year. Moreover, if we determine we are a PFIC for any taxable year, upon written request, we will endeavor to provide to a U.S. Holder such information as the Internal Revenue Service (“IRS”) may require, including a PFIC Annual Information Statement, in order to enable the U.S. Holder to make and maintain a “qualified electing fund” election, but there can be no assurance that we will timely provide such required information, and such election would be unavailable with respect to our warrants in all cases. We urge U.S. investors to consult their tax advisors regarding the possible application of the PFIC rules.
We are dependent upon our executive officers and directors, and their loss could adversely affect our ability to operate.
Our operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe that our success depends on the continued service of our officers and directors, at least until we have completed our initial business combination. In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating their time among various business activities, including identifying potential business combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or executive officers.
The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.
Our Sponsor controls a substantial interest in us and thus may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support.
As of December 31, 2020, our Sponsor owned 20% of our issued and outstanding ordinary shares. Accordingly, it may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support, including amendments to our amended and restated memorandum and articles of association. If our Sponsor purchases additional securities, this would increase its control. Other than as previously disclosed by us, neither our Sponsor nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional securities. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our Class A ordinary shares. In addition, our board of directors, whose members were appointed by our Sponsor, is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being appointed in each year. We may not hold an annual general meeting to appoint new directors prior to the completion of our initial business combination, in which case all of the current directors will continue in office until at least the completion of the business combination. If there is an annual general meeting, as a consequence of our “staggered” board of directors, only a minority of the board of directors will be considered for appointment and our Sponsor, because of its ownership position, will control the outcome, as only holders of our Class B ordinary shares will have the right to vote on the appointment of directors and to remove directors prior to our initial business combination. Accordingly, our Sponsor will continue to exert control at least until the completion of our initial business combination. In addition, we have agreed not to enter into a definitive agreement regarding an initial business combination without the prior consent of our Sponsor.
We may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 50% of the then-outstanding public warrants. As a result, the exercise price of the warrants could be increased, the exercise period could be shortened and the number of Class A ordinary shares purchasable upon exercise of a warrant could be decreased, all without approval of each warrant affected.
Our warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the
consent of at least 50% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash, shorten the exercise period or decrease the number of Class A ordinary shares or Class A common stock, as applicable, purchasable upon exercise of a warrant.
We may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to holders of warrants, thereby making such warrants worthless.
We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last sale price of our Class A ordinary shares or Class A common stock, as applicable, equals or exceeds $18.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) on each of 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which notice of such redemption is given. We will not redeem the warrants unless an effective registration statement under the Securities Act covering the Class A ordinary shares or Class A common stock, as applicable, issuable upon exercise of the warrants is effective and a current prospectus relating to those Class A ordinary shares or Class A common stock, as applicable, is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force holders thereof to (i) exercise warrants and pay the exercise price therefor at a time when it may be disadvantageous for such holder to do so, (ii) sell warrants at the then-current market price when such holder might otherwise wish to hold warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of such warrants. None of the Private Placement Warrants will be redeemable by us so long as they are held by their initial purchasers or their permitted transferees.
In addition, we may redeem warrants after they become exercisable for Class A ordinary shares or common stock, as applicable, determined based on the redemption date and the fair market value of our Class A ordinary shares or common stock, as applicable. Any such redemption may have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when the warrants are “out-of-the-money,” in which case holders thereof would lose any potential embedded value from a subsequent increase in the value of the Class A ordinary shares or common stock, as applicable, had such warrants remained outstanding.
General Risks Related to Initial Business Combinations
Our shareholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination even though a majority of our shareholders do not support such a combination.
We may choose not to hold a shareholder vote before we complete our initial business combination if the business combination would not require shareholder approval under applicable law or stock exchange listing requirements. For instance, if we were seeking to acquire a target business where the consideration we were paying in the transaction was all cash, we would typically not be required to seek shareholder approval to complete such a transaction. Except for as required by applicable law or stock exchange listing requirements, the decision as to whether we will seek shareholder approval of a proposed business combination or will allow shareholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek shareholder approval. Accordingly, we may complete our initial business combination even if holders of a majority of our issued and outstanding ordinary shares do not approve of the business combination we complete.
Your only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash.
At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of any target businesses. Since our board of directors may complete a business combination without seeking shareholder approval, public shareholders may not have the right or opportunity to vote on the business
combination, unless we seek such shareholder approval. Accordingly, your only opportunity to affect the investment decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public shareholders in which we describe our initial business combination.
The ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with a target.
We may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. If too many public shareholders exercise their redemption rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 either prior to or upon consummation of an initial business combination (so that we do not then become subject to the SEC’s “penny stock” rules). Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 either prior to or upon consummation of an initial business combination or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination and may instead search for an alternative business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us.
The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure.
At the time we enter into an agreement for our initial business combination, we will not know how many shareholders may exercise their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If a large number of shares are submitted for redemption, we may need to restructure the transaction to reserve a greater portion of the cash in the Trust Account or arrange for additional third-party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection with an initial business combination. The per share amount we will distribute to shareholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and, after such redemptions, the amount held in trust will continue to reflect our obligation to pay the entire deferred underwriting commissions.
The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial business combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful is increased. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the funds in the Trust Account until we liquidate the Trust Account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares may trade at a discount to the pro rata amount per share in the Trust Account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your shares in the open market.
The requirement that we consummate an initial business combination within 24 months after the closing of the Initial Public Offering may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our shareholders.
Any potential target business with which we enter into negotiations concerning a business combination will be aware that we must consummate an initial business combination within 24 months from the closing of the Initial Public Offering. Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination with that particular target business, we may be unable to complete our initial business combination with any target business. This risk will increase as we get closer to the time frame described above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
Our search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the coronavirus (COVID-19) outbreak and the status of debt and equity markets.
The pandemic, together with resulting voluntary and U.S. federal and state and non-U.S. governmental actions, including, without limitation, mandatory business closures, public gathering limitations, restrictions on travel and quarantines, has meaningfully disrupted the global economy and markets. Although the long-term economic fallout of the COVID-19 pandemic is difficult to predict, it has and is expected to continue to have ongoing material adverse effects across many, if not all, aspects of the regional, national and global economy. The COVID-19 pandemic has resulted, and a significant outbreak of other infectious diseases could result, in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and the business of any potential target business with which we consummate a business combination could be materially and adversely affected. The extent to which the COVID-19 pandemic impacts our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by the COVID-19 pandemic or other matters of global concern continue for an extensive period of time, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely affected.
In addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by the COVID-19 pandemic and other events, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all.
We may not be able to consummate an initial business combination within 24 months after the closing of the Initial Public Offering, in which case we would cease all operations, except for the purpose of winding up, and we would redeem our public shares and liquidate.
We may not be able to find a suitable target business and consummate an initial business combination within 24 months after the closing of the Initial Public Offering. Our ability to complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets, and the other risks described herein. For example, the outbreak of COVID-19 continues to grow both in the U.S. and globally and, while the extent of the impact of the outbreak on us will depend on future developments, it could limit our ability to complete our initial business combination, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, the outbreak of COVID-19 may negatively impact businesses we may seek to acquire. If we have not consummated an initial business combination within such applicable time period, we will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously
released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. Our amended and restated memorandum and articles of association provide that, if we wind up for any other reason prior to the consummation of our initial business combination, we will follow the foregoing procedures with respect to the liquidation of the Trust Account as promptly as reasonably possible but not more than 10 business days thereafter, subject to applicable Cayman Islands law. In either such case, our public shareholders may receive only $10.00 per public share, or less than $10.00 per public share, on the redemption of their shares, and our warrants will expire worthless.
If we seek shareholder approval of our initial business combination, our Sponsor, directors, executive officers, advisors and their affiliates may elect to purchase public shares or warrants, which may influence a vote on a proposed business combination and reduce the public “float” of our Class A ordinary shares or public warrants.
If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our Sponsor, directors, executive officers, advisors or their affiliates may purchase public shares or warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination, although they are under no obligation to do so. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the Trust Account will be used to purchase public shares or warrants in such transactions.
In the event that our Sponsor, directors, executive officers, advisors or their affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of any such transaction could be to (1) vote in favor of the business combination and thereby increase the likelihood of obtaining shareholder approval of the business combination, (2) reduce the number of public warrants outstanding or vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination or (3) satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible. In addition, if such purchases are made, the public “float” of our Class A ordinary shares or public warrants may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
If a shareholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We will comply with the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our compliance with these rules, if a shareholder fails to receive our proxy solicitation or tender offer materials, as applicable, such shareholder may not become aware of the opportunity to redeem its shares. In addition, the proxy solicitation or tender offer materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures that must be complied with in order to validly redeem or tender public shares. In the event that a shareholder fails to comply with these procedures, its shares may not be redeemed.
You will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
Our public shareholders will be entitled to receive funds from the Trust Account only upon the earliest to occur of: (i) our completion of an initial business combination, and then only in connection with those Class A ordinary shares that such shareholder properly elected to redeem, subject to the limitations described herein; (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of the Initial Public Offering or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares; and (iii) the redemption of our public shares if we have not consummated an initial business within 24 months from the closing of the Initial Public Offering, subject to applicable law and as further described herein. Public shareholders who redeem their Class A ordinary shares in connection with a shareholder vote described in clause (ii) in the preceding sentence shall not be entitled to funds from the Trust Account upon the subsequent completion of an initial business combination or liquidation if we have not consummated an initial business combination within 24 months from the closing of the Initial Public Offering, with respect to such Class A ordinary shares so redeemed. In no other circumstances will a public shareholder have any right or interest of any kind in the Trust Account. Holders of warrants will not have any right to the proceeds held in the Trust Account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
If we seek shareholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of shareholders are deemed to hold in excess of 15% of our Class A ordinary shares, you will lose the ability to redeem all such shares in excess of 15% of our Class A ordinary shares.
If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated memorandum and articles of association provide that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in the Initial Public Offering, which we refer to as the “Excess Shares,” without our prior consent. However, we would not be restricting our shareholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially at a loss.
Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we have not consummated our initial business combination within the required time period, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
We expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and entities are well established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted
with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, we are obligated to offer holders of our public shares the right to redeem their shares for cash at the time of our initial business combination in conjunction with a shareholder vote or via a tender offer. Target companies will be aware that this may reduce the resources available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination. If we have not consummated our initial business combination within the required time period, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
If the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants not being held in the Trust Account are insufficient to allow us to operate for the 24 months following the closing of the Initial Public Offering, it could limit the amount available to fund our search for a target business or businesses and our ability to complete our initial business combination, and we will depend on loans from our Sponsor, its affiliates or members of our management team to fund our search and to complete our initial business combination.
Of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, only approximately $1,000,000 is available to us initially outside the Trust Account to fund our working capital requirements. We believe that the funds available to us outside of the Trust Account, together with funds available from loans from our Sponsor, its affiliates or members of our management team will be sufficient to allow us to operate for at least the 24 months following the closing of the Initial Public Offering; however, we cannot assure you that our estimate is accurate, and our Sponsor, its affiliates or members of our management team are under no obligation to advance funds to us in such circumstances. Of the funds available to us, we expect to use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
If we are required to seek additional capital, we would need to borrow funds from our Sponsor, its affiliates, members of our management team or other third parties to operate or we may be forced to liquidate. Neither our Sponsor, members of our management team nor their affiliates are under any obligation to us in such circumstances. Any such advances may be repaid only from funds held outside the Trust Account or from funds released to us upon completion of our initial business combination. Up to $2,000,000 of such loans may be convertible into warrants of the post-business combination entity at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our Sponsor, its affiliates or members of our management team as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account. If we have not consummated our initial business combination within the required time period because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. Consequently, our public shareholders may only receive an estimated $10.00 per public share, or possibly less, on our redemption of our public shares, and our warrants will expire worthless. See “ If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per share redemption amount received by shareholders may be less than $10.00 per public share” and other risk factors herein.
Subsequent to our completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and the price of our securities, which could cause you to lose some or all of your investment.
Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues with a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any holders who choose to retain their securities following the business combination could suffer a reduction in the value of their securities. Such holders are unlikely to have a remedy for such reduction in value.
If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per share redemption amount received by shareholders may be less than $10.00 per public share.
Our placing of funds in the Trust Account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers, prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our public shareholders, such parties may not execute such agreements, or even if they execute such agreements, they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third-party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third-party that has not executed a waiver if management believes that such third-party’s engagement would be significantly more beneficial to us than any alternative.
Examples of possible instances where we may engage a third-party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our public shares, if we have not consummated an initial business combination within 24 months from the closing of the Initial Public Offering, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per share redemption amount received by public shareholders could be less than the $10.00 per public share initially held in the Trust Account, due to claims of such creditors. Pursuant to the letter agreement (which is an exhibit to this Annual Report), our Sponsor has agreed that it will be liable to us if and to the extent any claims by (A) a third-party (other than our independent auditors) for services rendered or products sold to us or (B) a prospective target business with which we have discussed entering into a transaction agreement, reduce the amounts in the Trust Account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account if less than $10.00 per public share due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn to pay our tax obligations, provided that such liability will not apply to any claims by a third-party or prospective target business that executed a waiver of any and all rights to seek access to the Trust Account. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third -party, our Sponsor will not be responsible to the extent of any liability for such third-party claims.
However, we have not asked our Sponsor to reserve for such indemnification obligations, nor have we independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations, and we believe that our Sponsor’s only assets are securities of our Company. Therefore, we cannot assure you that our Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for our initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
The securities in which we invest the proceeds held in the Trust Account could bear a negative rate of interest, which could reduce the interest income available for payment of taxes or reduce the value of the assets held in trust such that the per share redemption amount received by shareholders may be less than $10.00 per share.
The gross proceeds of the Initial Public Offering and certain proceeds from the sale of the Private Placement Warrants, in the amount of $275,000,000, are held in an interest-bearing Trust Account. The proceeds held in the Trust Account may only be invested in direct U.S. Treasury obligations having a maturity of 185 days or less, or in certain money market funds which invest only in direct U.S. Treasury obligations. While short-term U.S. Treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the U.S. In the event of very low or negative yields, the amount of interest income (which we may withdraw to pay income taxes, if any) would be reduced. In the event that we are unable to complete our initial business combination, our public shareholders are entitled to receive their pro rata share of the proceeds held in the Trust Account, plus any interest income. If the balance of the Trust Account is reduced below $250,000,000 as a result of negative interest rates, the amount of funds in the Trust Account available for distribution to our public shareholders may be reduced below $10.00 per share.
Our directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to our public shareholders.
In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account if less than $10.00 per public share due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn to pay our tax obligations, and our Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our Sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to our public shareholders may be reduced below $10.00 per public share.
We may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
We have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the Trust Account and to not seek recourse against the Trust Account for any reason whatsoever (except to the extent they are entitled to funds from the Trust Account due to their ownership of public shares). Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the Trust Account or (ii) we consummate an initial business combination. Our obligation to indemnify our officers and directors may discourage shareholders from bringing a lawsuit against our officers
or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our shareholders. Furthermore, a shareholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
If, after we distribute the proceeds in the Trust Account to our public shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, a bankruptcy or insolvency court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.
If, after we distribute the proceeds in the Trust Account to our public shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy or insolvency laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy or insolvency court could seek to recover some or all amounts received by our shareholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public shareholders from the Trust Account prior to addressing the claims of creditors.
If, before distributing the proceeds in the Trust Account to our public shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the per share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the Trust Account to our public shareholders, we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy or insolvency law, and may be included in our bankruptcy or insolvency estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy or insolvency claims deplete the Trust Account, the per share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
restrictions on the nature of our investments; and
restrictions on the issuance of securities;
each of which may make it difficult for us to complete our initial business combination.
In addition, we may have imposed upon us burdensome requirements, including:
registration as an investment company with the SEC;
adoption of a specific form of corporate structure; and
reporting, recordkeeping, voting, proxy and disclosure requirements and other rules and regulations that we are currently not subject to.
In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and complete a business combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the Trust Account may only be invested in U.S. “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. Treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. The Trust Account is intended as a holding place for funds pending the earliest to occur of either: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of the Initial Public Offering or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares; or (iii) absent our completing an initial business combination within 24 months from the closing of the Initial Public Offering, our return of the funds held in the Trust Account to our public shareholders as part of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete a business combination. If we have not consummated our initial business combination within the required time period, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
If we have not consummated an initial business combination within 24 months from the closing of the Initial Public Offering, our public shareholders may be forced to wait beyond such 24 months before redemption from our Trust Account.
If we have not consummated an initial business combination within 24 months from the closing of the Initial Public Offering, the proceeds then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), will be used to fund the redemption of our public shares, as further described herein. Any redemption of public shareholders from the Trust Account will be effected automatically by function of our amended and restated memorandum and articles of association prior to any voluntary winding up. If we are required to wind up, liquidate the Trust Account and distribute such amount therein, pro rata, to our public shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of the Companies Law. In that case, investors may be forced to wait beyond 24 months from the closing of the Initial Public Offering before the redemption proceeds of our Trust Account become available to them, and they receive the return of their pro rata portion of the proceeds from our Trust Account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless, prior thereto, we consummate our initial business combination or amend certain provisions of our amended and restated memorandum and articles of association, and only then in cases where investors have sought to redeem their Class A ordinary shares. Only upon our redemption or any
liquidation will public shareholders be entitled to distributions if we do not complete our initial business combination and do not amend certain provisions of our amended and restated memorandum and articles of association. Our amended and restated memorandum and articles of association provide that, if we wind up for any other reason prior to the consummation of our initial business combination, we will follow the foregoing procedures with respect to the liquidation of the Trust Account as promptly as reasonably possible but not more than 10 business days thereafter, subject to applicable Cayman Islands law.
We may not hold an annual general meeting until after the consummation of our initial business combination.
In accordance with the NYSE corporate governance requirements, we are not required to hold an annual general meeting until one year after our first fiscal year end following our listing on the NYSE. There is no requirement under the Companies Law for us to hold annual or extraordinary general meetings to appoint directors. Until we hold an annual general meeting, public shareholders may not be afforded the opportunity to appoint directors and to discuss Company affairs with management. Our board of directors is divided into three classes with only one class of directors being appointed in each year and each class (except for those directors appointed prior to our first annual general meeting) serving a three-year term.
Holders of Class A ordinary shares will not be entitled to vote on any appointment of directors we hold prior to our initial business combination.
Prior to our initial business combination, only holders of our founder shares will have the right to vote on the appointment of directors. Holders of our public shares will not be entitled to vote on the appointment of directors during such time. In addition, prior to our initial business combination, holders of a majority of our founder shares may remove a member of the board of directors for any reason. Accordingly, you may not have any say in the management of our Company prior to the consummation of an initial business combination.
We are not registering the Class A ordinary shares issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except on a cashless basis and potentially causing such warrants to expire worthless.
We are not registering the Class A ordinary shares issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed that, as soon as practicable, but in no event later than 20 business days after the closing of our initial business combination, we will use our commercially reasonable efforts to file with the SEC a registration statement covering the issuance of such shares, and we will use our commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of our initial business combination and to maintain the effectiveness of such registration statement and a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current, complete or correct, or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the Securities Act in accordance with the above requirements, we will be required to permit holders to exercise their warrants on a cashless basis, in which case the number of Class A ordinary shares that you will receive upon cashless exercise will be based on a formula subject to a maximum amount of shares equal to 0.361 Class A ordinary shares per warrant (subject to adjustment). However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding the above, if our Class A ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, but we will use our commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. Exercising the warrants on a
cashless basis could have the effect of reducing the potential “upside” of the holder’s investment in our Company because the warrant holder will hold a smaller number of Class A ordinary shares upon a cashless exercise of the warrants it holds. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws and no exemption is available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the Class A ordinary shares included in the units. There may be a circumstance where an exemption from registration exists for holders of our Private Placement Warrants to exercise their warrants while a corresponding exemption does not exist for holders of the public warrants included as part of units sold in the Initial Public Offering. In such an instance, our Sponsor and its permitted transferees (which may include our directors and executive officers) would be able to exercise their warrants and sell the ordinary shares underlying their warrants while holders of our public warrants would not be able to exercise their warrants and sell the underlying ordinary shares. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying Class A ordinary shares for sale under all applicable state securities laws. As a result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise their warrants.
The warrants may become exercisable and redeemable for a security other than the Class A ordinary shares, and you will not have any information regarding such other security at this time.
In certain situations, including if we are not the surviving entity in our initial business combination, the warrants may become exercisable for a security other than the Class A ordinary shares. As a result, if the surviving company redeems your warrants for securities pursuant to the warrant agreement, you may receive a security in a company of which you do not have information at this time. Pursuant to the warrant agreement, the surviving company will be required to use commercially reasonable efforts to register the issuance of the security underlying the warrants within 20 business days of the closing of an initial business combination.
The grant of registration rights to our Sponsor may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of our Class A ordinary shares.
Pursuant to an agreement entered into at the closing of the Initial Public Offering, our Sponsor and its permitted transferees can demand that we register the resale of the Class A ordinary shares into which founder shares are convertible, the Private Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants, and warrants that may be issued upon conversion of working capital loans and the Class A ordinary shares issuable upon conversion of such warrants. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A ordinary shares. In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude. This is because the shareholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our securities that is expected when the securities owned by our Sponsor or its permitted transferees are registered for resale.
Involvement of members of our management and companies with which they are affiliated in civil disputes and litigation, governmental investigations or negative publicity unrelated to our business affairs could materially impact our ability to consummate an initial business combination.
Members of our management team and companies with which they are affiliated have been, and in the future will continue to be, involved in a wide variety of business affairs, including transactions, such as sales and purchases of businesses, and ongoing operations. As a result of such involvement, members of our management and companies with which they are affiliated in have been, and may in the future be, involved in civil disputes, litigation, governmental investigations and negative publicity relating to their business affairs. Any such claims, investigations, lawsuits or negative publicity may be detrimental to our reputation and could negatively affect our ability to identify and complete an initial business combination in a material manner and may have an adverse effect on the price of our securities.
We are not required to obtain an opinion from an independent accounting or investment banking firm and, consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our shareholders from a financial point of view.
Unless we complete our initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that the price we are paying is fair to our shareholders from a financial point of view. If no opinion is obtained, our shareholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our proxy solicitation or tender offer materials, as applicable, related to our initial business combination.
We may issue additional Class A ordinary shares or preference shares to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. We may also issue Class A ordinary shares upon the conversion of the founder shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated memorandum and articles of association. Any such issuances would dilute the interest of our shareholders and likely present other risks.
Our amended and restated memorandum and articles of association authorize the issuance of up to 500,000,000 Class A ordinary shares, par value $0.0001 per share, 50,000,000 Class B ordinary shares, par value $0.0001 per share, and 5,000,000 preference shares, par value $0.0001 per share. The Class B ordinary shares will automatically convert into Class A ordinary shares (which such Class A ordinary shares delivered upon conversion will not have any redemption rights or be entitled to liquidating distributions from the Trust Account if we fail to consummate an initial business combination) at the time of our initial business combination or earlier at the option of the holders thereof as described herein and in our amended and restated memorandum and articles of association.
We may issue a substantial number of additional Class A ordinary shares or preference shares to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. We may also issue Class A ordinary shares in connection with our redeeming the warrants or upon conversion of the Class B ordinary shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions as set forth herein. However, our amended and restated memorandum and articles of association provide, among other things, that prior to or in connection with our initial business combination, we may not issue additional shares that would entitle the holders thereof to (i) receive funds from the Trust Account or (ii) vote on any initial business combination or on any other proposal presented to shareholders prior to or in connection with the completion of an initial business combination. These provisions of our amended and restated memorandum and articles of association, like all provisions of our amended and restated memorandum and articles of association, may be amended with a shareholder vote. The issuance of additional ordinary or preference shares:
may subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded our Class A ordinary shares;
could cause a change in control if a substantial number of Class A ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carryforwards, if any, and could result in the resignation or removal of our present officers and directors;
may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us;
may adversely affect prevailing market prices for our units, Class A ordinary shares and/or warrants; and
may not result in adjustment to the exercise price of our warrants.
Unlike some other similarly structured blank check companies, our Sponsor will receive additional Class A ordinary shares if we issue shares to consummate an initial business combination.
The founder shares will automatically convert into Class A ordinary shares (which such Class A ordinary shares delivered upon conversion will not have any redemption rights or be entitled to liquidating distributions from the Trust Account if we fail to consummate an initial business combination) at the time of our initial business combination or earlier at the option of the holders thereof at a ratio such that the number of Class A ordinary shares issuable upon conversion of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of ordinary shares issued and outstanding upon completion of the Initial Public Offering, plus (ii) the total number of Class A ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial business combination, excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be issued, to any seller in the initial business combination and any Private Placement Warrants issued to our Sponsor, any of its affiliates or any members of our management team upon conversion of working capital loans. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one-to-one. This is different than some other similarly structured blank check companies in which the initial shareholders will only be issued an aggregate of 20% of the total number of shares to be outstanding prior to the initial business combination.
We may reincorporate in another jurisdiction, such as Delaware, in connection with our initial business combination and such reincorporation may result in taxes imposed on shareholders.
We may, in connection with our initial business combination and subject to requisite shareholder approval under the Companies Law, reincorporate in the jurisdiction in which the target company or business is located or in another jurisdiction. The transaction may require a shareholder or warrant holder to recognize taxable income in the jurisdiction in which the shareholder or warrant holder is a tax resident or in which its members are resident if it is a tax transparent entity. We do not intend to make any cash distributions to shareholders or warrant holders to pay such taxes.
Shareholders or warrant holders may be subject to withholding taxes or other taxes with respect to their ownership of us after the reincorporation.
After our initial business combination, it is possible that a majority of our directors and officers will live outside the U.S. and all of our assets will be located outside the U.S.; therefore investors may not be able to enforce federal securities laws or their other legal rights.
It is possible that after our initial business combination, a majority of our directors and officers will reside outside of the U.S. and all of our assets will be located outside of the U.S. As a result, it may be difficult, or in some cases not possible, for investors in the U.S. to enforce their legal rights, to effect service of process upon all of our directors or officers or to enforce judgments of U.S. courts predicated upon civil liabilities and criminal penalties on our directors and officers under U.S. laws.
Our ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
Our ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. We believe that our success depends on the continued service of our key personnel, at least until we have consummated our initial business combination. None of our officers are required to commit any specified amount of time to our affairs and, accordingly, they will have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. If our officers’ and directors’ other business affairs require them to devote more substantial amounts of time to their other business activities, it could limit their ability to devote time to our affairs and could have a negative impact on our ability to consummate our initial business combination. In addition, we do not have employment agreements with, or key-man insurance on the life of, any of our officers. The unexpected loss of the services of our key personnel could have a detrimental effect on us.
The role of our key personnel after our initial business combination, however, remains to be determined. Although some of our key personnel may serve in senior management or advisory positions following our initial business combination, it is likely that most, if not all, of the management of the target business will remain in place. These individuals may be unfamiliar with the requirements of operating a public company which could cause us to have to expend time and resources helping them become familiar with such requirements. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination, and a particular business combination may be conditioned on the retention or resignation of such key personnel. These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our key personnel may be able to remain with our Company after the completion of our initial business combination only if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination. Such negotiations also could make such key personnel’s retention or resignation a condition to any such agreement. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business. In addition, pursuant to an agreement entered into prior to the closing of the Initial Public Offering, our Sponsor, upon and following consummation of an initial business combination, is entitled to nominate three individuals for appointment to our board of directors, as long as the Sponsor holds any securities covered by the registration and shareholder rights agreement.
The officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The loss of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our initial business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place.
Our executive officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for a business combination and their other businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Each of our executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers and board members for other entities. If our executive officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination.
Our officers and directors presently have, and any of them in the future may have, additional, fiduciary or contractual obligations to other entities, including another blank check company, and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses or entities. Each of our officers and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity, subject to his or her fiduciary duties under Cayman Islands law. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us, subject to their fiduciary duties under Cayman Islands law.
In addition, HPS, an affiliate of our Sponsor, our Sponsor, officers and directors are and may in the future become affiliated with other blank check companies that may have acquisition objectives that are similar to ours. They may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to such other blank check companies prior to its presentation to us, subject to our officers’ and directors’ fiduciary duties under Cayman Islands law. Our amended and restated memorandum and articles of association provide that, to the fullest extent permitted by applicable law: (i) no individual serving as a director or an officer shall have any duty, except to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us; and (ii) we renounce any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for any director or officer, on the one hand, and us, on the other.
Our executive officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into a business combination with a target business that is affiliated with our Sponsor, our directors or executive officers, although we do not intend to do so, or we may acquire a target business through an Affiliated Joint Acquisition with one or more affiliates of HPS and/or one or more investors in funds managed by HPS. Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
The personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our shareholders’ best interest. If this were the case, it would be a breach of their fiduciary duties to us as a matter of Cayman Islands law and we or our shareholders might have a claim against such individuals for infringing on our shareholders’ rights.
We may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated with our Sponsor, executive officers, directors or initial shareholders which may raise potential conflicts of interest.
In light of the involvement of our Sponsor, executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our Sponsor, executive officers, directors or initial shareholders. Our directors also serve as officers and board members for other entities. HPS and our Sponsor, officers and directors may sponsor, form or participate in other blank check companies similar to ours during the period in which we are seeking an initial business combination. Such entities may compete with us for business combination opportunities. HPS and our Sponsor, officers and directors are not currently aware of any specific opportunities for us to complete our initial business combination with any entities with which they are affiliated, and there have been no substantive discussions concerning a business combination with any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria and guidelines for a business combination, and such transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions regarding the fairness to our Company from a financial point of view of a business combination with one or more domestic or international businesses affiliated with our Sponsor, executive officers, directors or initial shareholders, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our public shareholders as they would be absent any conflicts of interest.
Moreover, we may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity affiliated with HPS and/or one or more investors in funds managed by HPS. Any such parties may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by making a specified future issuance to any such parties.
Since our Sponsor, executive officers and directors will lose their entire investment in us if our initial business combination is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination.
On September 1, 2020, our Sponsor paid $25,000, or approximately $0.001 per share, to cover certain offering and formation costs in consideration of 8,625,000 Class B ordinary shares, par value $0.0001. Prior to the initial investment in the Company of $25,000 by the Sponsor, the Company had no assets, tangible or intangible. On October 21, 2020, our Sponsor effected a surrender of 1,437,500 founder shares to the Company for no consideration, resulting in a decrease in the total number of Class B ordinary shares outstanding from 8,625,000 to 7,187,500 such that the total number of founder shares represented 20% of the total number of ordinary shares outstanding upon completion of the Initial Public Offering. On October 19, 2020, our Sponsor transferred 25,000 Class B ordinary shares to each of our independent directors. These shares were not subject to forfeiture. The per share price of the founder shares was determined by dividing the amount contributed to the Company by the number of founder shares issued. The founder shares will be worthless if we do not complete an initial business combination. Simultaneously with the consummation of the Initial Public Offering, we consummated the private placement of an aggregate of 4,666,667 Private Placement Warrants, to the Sponsor at a price of $1.50 per Private Placement Warrant, generating total proceeds of $7,000,000. In connection with the Underwriters’ exercise of their Over-allotment Option, the Sponsor purchased an additional 333,333 Private Placement Warrants. If we do not consummate an initial business within 24 months from the closing of the Initial Public Offering, the Private Placement Warrants will expire worthless. The personal and financial interests of our executive officers and directors may influence their motivation in identifying and selecting a target business combination, completing an initial business combination and influencing the operation of the business following the initial business combination. This risk may become more acute as the 24-month anniversary of the closing of the Initial Public Offering nears, which is the deadline for our consummation of an initial business combination.
We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our shareholders’ investment in us.
Although we have no commitments as of the date of this Annual Report to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur substantial debt to complete our initial business combination. We and our officers have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the Trust Account. As such, no issuance of debt will affect the per share amount available for redemption from the Trust Account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;
our inability to pay dividends on our Class A ordinary shares;
using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
Our management may not be able to maintain control of a target business after our initial business combination. Upon the loss of control of a target business, new management may not possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our initial business combination so that the post-business combination company in which our public shareholders own shares will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-business combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-business combination company owns 50% or more of the voting securities of the
target, our shareholders prior to our initial business combination may collectively own a minority interest in the post-business combination company, depending on valuations ascribed to the target and us in the business combination. For example, we could pursue a transaction in which we issue a substantial number of new Class A ordinary shares in exchange for all of the outstanding capital stock, shares or other equity interests of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new Class A ordinary shares, our shareholders immediately prior to such transaction could own less than a majority of our outstanding Class A ordinary shares subsequent to such transaction. In addition, other minority shareholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the Company’s shares than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain control of the target business.
We may seek business combination opportunities with a high degree of complexity that require significant operational improvements, which could delay or prevent us from achieving our desired results.
We may seek business combination opportunities with large, highly complex companies that we believe would benefit from operational improvements. While we intend to implement such improvements, to the extent that our efforts are delayed or we are unable to achieve the desired improvements, the business combination may not be as successful as we anticipate.
To the extent we complete our initial business combination with a large complex business or entity with a complex operating structure, we may also be affected by numerous risks inherent in the operations of the business with which we combine, which could delay or prevent us from implementing our strategy. Although our management team will endeavor to evaluate the risks inherent in a particular target business and its operations, we may not be able to properly ascertain or assess all of the significant risk factors until we complete our business combination. If we are not able to achieve our desired operational improvements, or the improvements take longer to implement than anticipated, we may not achieve the gains that we anticipate. Furthermore, some of these risks and complexities may be outside of our control and leave us with no ability to control or reduce the chances that those risks and complexities will adversely impact a target business. Such combination may not be as successful as a combination with a smaller, less complex organization.
We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination with which a substantial majority of our shareholders do not agree.
Our amended and restated memorandum and articles of association do not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 either prior to or upon consummation of an initial business combination (so that we do not then become subject to the SEC’s “penny stock” rules). As a result, we may be able to complete our initial business combination even though a substantial majority of our public shareholders do not agree with the transaction and have redeemed their shares or, if we seek shareholder approval of our initial business combination and do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our Sponsor, officers, directors, advisors or their affiliates. In the event the aggregate cash consideration we would be required to pay for all Class A ordinary shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, all Class A ordinary shares submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated memorandum and articles of association or governing instruments in a manner that will make it easier for us to complete our initial business combination that our shareholders may not support.
In order to effectuate a business combination, blank check companies have, in the recent past, amended various provisions of their charters and governing instruments, including their warrant agreements. For example, blank check companies have amended the definition of business combination, increased redemption thresholds, extended the time to consummate an initial business combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. Amending our amended and restated memorandum and articles of association requires at least a special resolution of our shareholders as a matter of Cayman Islands law, meaning the approval of holders of at least two-thirds of our ordinary shares who attend and vote at a general meeting of the Company, and amending our warrant agreement will require a vote of holders of at least 50% of the public warrants and, solely with respect to any amendment to the terms of the Private Placement Warrants or any provision of the warrant agreement with respect to the Private Placement Warrants, 50% of the number of the then outstanding Private Placement Warrants. In addition, our amended and restated memorandum and articles of association require us to provide our public shareholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of the Initial Public Offering or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares. To the extent any of such amendments would be deemed to fundamentally change the nature of any of the securities offered through this registration statement, we would register, or seek an exemption from registration for, the affected securities.
The provisions of our amended and restated memorandum and articles of association that relate to the rights of holders of our Class A ordinary shares (and corresponding provisions of the agreement governing the release of funds from our Trust Account) may be amended with the approval of a special resolution which requires the approval of the holders of at least two-thirds of our ordinary shares who attend and vote at a general meeting of the Company, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend our amended and restated memorandum and articles of association to facilitate the completion of an initial business combination that some of our shareholders may not support.
Some other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including those which relate to the rights of a company’s shareholders, without approval by a certain percentage of the company’s shareholders. In those companies, amendment of these provisions typically requires approval by between 90% and 100% of the company’s shareholders. Our amended and restated memorandum and articles of association provide that any of its provisions related to the rights of holders of our Class A ordinary shares (including the requirement to deposit proceeds of the Initial Public Offering and the private placement of warrants into the Trust Account and not release such amounts except in specified circumstances, and to provide redemption rights to public shareholders as described herein) may be amended if approved by special resolution, meaning holders of at least two-thirds of our ordinary shares who attend and vote at a general meeting of the Company, and corresponding provisions of the trust agreement governing the release of funds from our Trust Account may be amended if approved by holders of at least 65% of our ordinary shares; provided that the provisions of our amended and restated memorandum and articles of association governing the appointment or removal of directors prior to our initial business combination may only be amended by a special resolution passed by not less than two-thirds of our ordinary shares who attend and vote at our general meeting which shall include the affirmative vote of a simple majority of our Class B ordinary shares. Our Sponsor and its permitted transferees, if any, who will collectively beneficially own, on an as-converted basis, 20% of our Class A ordinary shares will participate in any vote to amend our amended and restated memorandum and articles of association and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our amended and restated memorandum and articles of association which govern our pre-business combination behavior more
easily than some other blank check companies, and this may increase our ability to complete a business combination with which you do not agree. Our shareholders may pursue remedies against us for any breach of our amended and restated memorandum and articles of association.
Our Sponsor, executive officers and directors have agreed, pursuant to agreements with us, that they will not propose any amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of the Initial Public Offering or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares, unless we provide our public shareholders with the opportunity to redeem their Class A ordinary shares upon approval of any such amendment at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our income taxes, if any, divided by the number of the then-outstanding public shares. Our shareholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies against our Sponsor, executive officers or directors for any breach of these agreements. As a result, in the event of a breach, our shareholders would need to pursue a shareholder derivative action, subject to applicable law.
We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination. If we have not consummated our initial business combination within the required time period, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
Although we believe that the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants will be sufficient to allow us to complete our initial business combination, because we have not yet selected any prospective target business we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants prove to be insufficient, either because of the size of our initial business combination, the depletion of the available net proceeds in search of a target business, the obligation to redeem for cash a significant number of shares from shareholders who elect redemption in connection with our initial business combination or the terms of negotiated transactions to purchase shares in connection with our initial business combination, we may be required to seek additional financing or to abandon the proposed business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. The current economic environment may make it difficult for companies to obtain acquisition financing. To the extent that additional financing proves to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. If we have not consummated our initial business combination within the required time period, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless. In addition, even if we do not need additional financing to complete our initial business combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or shareholders is required to provide any financing to us in connection with or after our initial business combination.
We may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 50% of the then-outstanding public warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of our Class A ordinary shares purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder for the purpose of (i) curing any ambiguity or correcting any mistake, including to conform the provisions of the warrant agreement to the description of the
terms of the warrants and the warrant agreement set forth in our Initial Public Offering prospectus, or defective provision (ii) amending the provisions relating to cash dividends on ordinary shares as contemplated by and in accordance with the warrant agreement or (iii) adding or changing any provisions with respect to matters or questions arising under the warrant agreement as the parties to the warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the registered holders of the warrants, provided that the approval by the holders of at least 50% of the then-outstanding public warrants is required to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding public warrants approve of such amendment and, solely with respect to any amendment to the terms of the Private Placement Warrants or any provision of the warrant agreement with respect to the Private Placement Warrants, 50% of the number of the then outstanding Private Placement Warrants. Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then-outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash, shorten the exercise period or decrease the number of Class A ordinary shares purchasable upon exercise of a warrant.
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem the outstanding public warrants at any time prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of our Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption and provided that certain other conditions are met. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. As a result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise the warrants. Redemption of the outstanding warrants could force you to (i) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, we expect would be substantially less than the market value of your warrants. None of the Private Placement Warrants will be redeemable by us so long as they are held by our Sponsor or its permitted transferees.
In addition, we have the ability to redeem the outstanding public warrants at any time prior to their expiration, at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that the closing price of our Class A ordinary shares equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption and provided that certain other conditions are met, including that holders will be able to exercise their warrants prior to redemption for a number of Class A ordinary shares determined based on the redemption date and the fair market value of our Class A ordinary shares. The value received upon exercise of the warrants (1) may be less than the value the holders would have received if they had exercised their warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the warrants, including because the number of ordinary shares received is capped at 0.361 Class A ordinary shares per warrant (subject to adjustment) irrespective of the remaining life of the warrants. None of the Private Placement Warrants will be redeemable by us as so long as they are held by our Sponsor or its permitted transferees.
Because we must furnish our shareholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses.
The federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the U.S. of America, or GAAP, or international
financial reporting standards as issued by the International Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (U.S.), or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
Risks Related to the Proposed Blue Owl Business Combination
Our Sponsor has agreed to vote in favor of the proposed Blue Owl Business Combination, regardless of how our public shareholders vote.
Unlike some other blank check companies in which the initial shareholders agree to vote their shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business combination, the Sponsor has agreed to vote all its Class A ordinary shares and Class B ordinary shares in favor of all of the Shareholder Approvals, including the Business Combination Proposal. In addition, pursuant to the Forfeiture and Support Agreement, dated December 23, 2020, the Sponsor has agreed to vote all of its Class A ordinary shares and Class B ordinary shares (i) in favor of the Shareholder Proposals 1-7 (including the Advisory Charter Proposals) (ii) against any action, proposal, transaction or agreement that could reasonably be expected to result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Business Combination Agreement; and (iii) against (A) any proposal or offer from any Person concerning (1) a merger, consolidation, liquidation, recapitalization, share exchange or other business combination transaction involving the Company, or (2) the issuance or acquisition of shares of capital stock or other equity securities of the Company (other than as contemplated or permitted by the Business Combination Agreement); and (B) any action, proposal, transaction or agreement that would reasonably be expected to impede the fulfillment of the Company’s conditions under the Business Combination Agreement or change in any manner the voting rights of any class of shares of the Company (including any amendments to the Company’s governing documents, other than in connection with the Domestication or as otherwise contemplated by the Business Combination Agreement). As of December 31, 2020, our initial shareholders own approximately 20.0% of our total outstanding ordinary shares. As of December 31, 2020, the Sponsor owns approximately 19.36% of the issued and outstanding ordinary shares.
If the conditions to the Business Combination Agreement are not met, we may not be able to consummate the proposed Blue Owl Business Combination.
Even if the Business Combination Agreement is approved by the shareholders of Altimar, specified conditions must be satisfied or waived before the parties to the Business Combination Agreement are obligated to complete the proposed Blue Owl Business Combination, including, among other things, certain required approvals and consents. Altimar and Blue Owl may not satisfy all of the closing conditions in the Business Combination Agreement. If the closing conditions are not satisfied or waived, the proposed Blue Owl Business Combination will not occur, or will be delayed pending later satisfaction or waiver, and such delay may cause Altimar and Blue Owl to each lose some or all of the intended benefits of the proposed Blue Owl Business Combination. If we do not obtain the required consents related to our funds and such condition is waived, this may result in a loss of future revenue for Blue Owl. For more information related to the foregoing, including a discussion of the risks associated with the target entities in the proposed Blue Owl Business Combination, please refer to the Proxy Statement.
Some of Altimar’s officers and directors may have conflicts of interest that may influence or have influenced them to support or approve the proposed Blue Owl Business Combination without regard to your interests or in determining whether Blue Owl is appropriate for Altimar’s initial business combination.
The personal and financial interests of Altimar’s Sponsor, officers and directors may influence or have influenced their motivation in identifying and selecting a target for the proposed Blue Owl Business Combination, their support for completing the proposed Blue Owl Business Combination and the operation of Blue Owl following the consummation of the proposed Blue Business Combination.
Altimar’s Sponsor and independent directors own 6,675,000 and 200,000 Class B ordinary shares, respectively, which were initially acquired prior to Altimar’s IPO for an aggregate purchase price of $0.001 per share and Altimar’s directors and officers have pecuniary interests in such ordinary shares through their ownership interest in the Sponsor. In addition, the Sponsor purchased an aggregate of 5,000,000 Private Placement Warrants, each exercisable for one ordinary share of Altimar at $11.50 per share, for a purchase price of $7,500,000, or $1.50 per warrant. Altimar’s Amended and Restated Memorandum and Articles of Association require Altimar to complete an initial business combination (which will be the Business Combination should it occur) within 24 months from the closing of the IPO, or October 27, 2022 (unless Altimar submits and its shareholders approve an extension of such date). If the proposed Blue Owl Business Combination is not completed and Altimar is forced to wind up, dissolve and liquidate in accordance with the Amended and Restated Memorandum and Articles of Association, the 6,675,000 and 200,000 Class B ordinary shares currently held by Altimar’s Sponsor and independent directors, respectively, and the Private Placement Warrants held by the Sponsor and/or the independent directors will be worthless (as the holders have waived liquidation rights with respect to such ordinary shares).
Altimar’s Sponsor, directors and officers, and their respective affiliates have incurred significant out-of-pocket expenses in connection with performing due diligence on suitable targets for business combinations and the negotiation of the proposed Blue Owl Business Combination. At the Closing of the proposed Blue Owl Business Combination, Altimar’s Sponsor, directors and officers, and their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on Altimar’s behalf such as identifying potential target businesses and performing due diligence on suitable targets for business combinations. If an initial business combination is not completed prior to October 27, 2022, Altimar’s Sponsor, directors and officers, or any of their respective affiliates will not be eligible for any such reimbursement.
Pre-existing relationships between participants in the proposed Blue Owl Business Combination and the related transactions or their affiliates could give rise to actual or perceived conflicts of interest in connection with the proposed Blue Owl Business Combination.
Certain of the participants in the proposed Blue Owl Business Combination and the PIPE Financing or their affiliates have pre-existing relationships that could give rise to conflicts of interest in connection with the proposed Blue Owl Business Combination and related transactions. For example:
Dyal Fund IV has a passive minority equity interest in an affiliate of HPS, which is an affiliate of the Sponsor. Although Dyal Fund IV does not have a direct interest in Altimar, the interest in an affiliate of HPS could give rise to conflicts of interest in connection with the Sponsor’s approval of the proposed Blue Owl Business Combination, for example, by influencing the Sponsor to accept less attractive terms than in a transaction with an unrelated third-party.
Certain of the PIPE Investors (including one of the lead PIPE Investors), have interests in or are affiliated with investors in Owl Rock, the Owl Rock funds and/or the Dyal funds, as well as certain other contractual relationships with Owl Rock, Dyal and/or their respective funds. In addition, each of Dyal Fund IV and Dyal Fund V has a passive minority equity interest in an affiliate of one of the PIPE Investors. Such PIPE Investors have different considerations when choosing to make their investment, as a successful transaction may facilitate liquidity on their existing positions. Although no such arrangements exist, such investors may also hope that such investments will provide opportunities for influence or more favorable economic terms on their fund investments, which could impact the overall Owl Rock portion of the Blue Owl business. There is no guarantee such investors will continue to maintain their fund investments.
Certain of Dyal’s partner managers,GP Capital Solutions products’ Partner Managers directly or through their investment funds, own securities in Blue Owl Rock or its subsidiaries. Additionally, Dyal Fund IV has a passive minority equity interest in Owl Rock Feeder and will therefore becomebecame an indirect equityholder in Blue Owl upon consummation of the proposedBusiness Combination. As a result, Dyal Fund IV will, to the extent it holds shares of Blue Owl, Business Combination.
The exercise of Altimar’s directors’ and executive officers’ discretion in agreeingis required to changes or waiversact in the termsbest interests of its shareholders or investors. In certain circumstances, a BDC or fund may be required to take actions that may be adverse to the proposed Blue Owlinvestments owned by funds managed by Partner Managers, which could adversely affect our relationships with the Partner Managers, or potentially impact the value of a GP Capital Solutions product’s investment in such Partner Manager. As a result, although we believe that the Business Combination has enhanced our ability to source investment opportunities for our BDCs and funds through, among other things, our enhanced relationships with Partner Managers, it also may result in additional conflicts of interest.
In the period leading upPartner Manager for fair value as determined under the relevant investment agreement. A forced sale of a Partner Manager interest may reduce the amount of fees we receive with respect to the closingapplicable GP Capital Solutions product, and any reduction in information may impede our ability to supervise our funds’ investments. Further, the affiliation may hinder the GP Capital Solutions products’ ability to make future investments in Partner Managers who are in the same space and who may consider Blue Owl a competitor, including follow-on investments in existing Partner Managers and investments with new Partner Managers.
NYSE under the symbol “OWL.” However, we cannot assure you that an active trading market for our Class A significant portionShares will be sustained. Accordingly, we cannot assure you of the likelihood that an active trading market for our Class A Shares will be maintained, the liquidity of any trading market, your ability to sell your Class A Shares when desired or the prices that you may obtain for your shares.
Sales of a substantial number of shares of the Class A common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of the Class A common stock. Upon completion of the proposed Blue Owl Business Combination, based on the pro forma assumptions set forth in the Proxy Statement, the PIPE Investors will own approximately 64.1% of the outstanding shares of the Class A common stock of Blue Owl assuming no Altimar public shareholders redeem their Class A ordinary shares in connection with the Business Combination or approximately 72.6% of the outstanding Class A ordinary shares assuming that 27.5 million Class A ordinary shares (being our estimate of the maximum number of Class A ordinary shares that could be redeemed in connection with the Business Combination in order to satisfy the closing conditions contained in the Business Combination Agreement) are redeemed in connection with the proposed Blue Owl Business Combination. While the PIPE Investors will agree, and will continue to be subject, to certain restrictions regarding the transfer of the Class A common stock, these shares may be sold after the expiration of the applicable lock-up restrictions. We may file one or more registration statements prior to or shortly after the closing of the proposed Blue Owl Business Combination to provide for the resale of such shares from time to time. As restrictions on resale end and the registration statements are available for use, the market price of the Class A common stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.
If the sale of some or all of the PIPE Securities fails to close and sufficient shareholders exercise their redemption rights in connection with the proposed Blue Owl Business Combination, Altimar may lack sufficient funds to consummate the proposed Blue Owl Business Combination.
In connection with the signing of the Business Combination Agreement, Altimar entered into Subscription Agreements with the PIPE Investors which provide for the purchase of an aggregate of 150,000,000 shares of Class A common stock (the “PIPE Securities”) in a private placement to close concurrently with, and contingent upon, the closing of the Business Combination, for a purchase price of $10.00 per share, or an aggregate of $1,500,000,000.
These purchases will be made regardless of whether any Class A ordinary shares are redeemed by Altimar’s public shareholders. The proceeds from the sale of PIPE Securities will be part of the proposed Blue Owl Business Combination consideration. In addition, prior to giving effect to the exercise of any redemption rights, the Trust Account has $275,000,000, plus accrued interest since the completion of the Altimar IPO. However, if the sale of the PIPE Securities does not close by reason of the failure by some or all of the PIPE Investors to fund the purchase price for their PIPE Securities, for example, and a sufficient number of holders of Class A ordinary shares exercise their redemption rights in connection with the proposed Blue Owl Business Combination, we may lack sufficient funds to consummate the proposed Blue Owl Business Combination. Additionally, the PIPE Investors’ obligations to purchase the PIPE Securities are subject to termination prior to the closing of the sale of the PIPE Securities by mutual written consent of Altimar, Owl Rock Group, Neuberger and each of the PIPE Investors, or if the proposed Blue Owl Business Combination is not consummated on or before October 23, 2021. The PIPE Investors’ obligations to purchase the PIPE Securities are subject to fulfillment of customary closing conditions, including that the proposed Blue Owl Business Combination must be consummated substantially concurrently with, and immediately following, the purchase of PIPE Securities. In the event of any such failure to fund, any obligation is so terminated or any such condition is not satisfied and not waived, we may not be able to obtain additional funds to account for such shortfall on terms favorable to us or at all. Any such shortfall would also reduce the amount of funds that we have available for working capital of Blue Owl. While the PIPE Investors represented to us that they have sufficient funds to satisfy their obligations under the respective Subscription Agreements, we have not obligated them to reserve funds for such obligations. The Business Combination Agreement includes a minimum condition to Owl Rock’s and Neuberger’s respective obligations to consummate the proposed Blue Owl Business Combination that at least $1,300,000,000 in available cash is available to Altimar from the PIPE Investment including any cash remaining in the Trust Account after giving effect to any exercise of redemption rights by Altimar’s shareholders. In addition, the Business Combination Agreement includes a condition to Altimar’s obligation to consummate the proposed Blue Owl Business Combination, that Altimar consummates the sale of at least $750,000,000 in PIPE Securities.
Subsequent to the completion of the proposed Blue Owl Business Combination, Blue Owl may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition and its share price, which could cause you to lose some or all of your investment.
Altimar cannot assure you that the due diligence Altimar has conducted on Blue Owl will reveal all material issues that may be present with regard to Blue Owl, or that factors outside of Altimar’s or Blue Owl’s control will not later arise, and the Business Combination Agreement does not generally provide for indemnification of Blue Owl in respect of historical liability or with respect to Owl Rock’s or Dyal’s respective businesses. As a result of unidentified issues or factors outside of Altimar’s or Blue Owl’s control, Blue Owl may be forced to later write-down or write-off assets, restructure operations, or incur impairment or other charges that could result in reporting losses. Even if Altimar’s due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with the preliminary risk analysis conducted by Altimar. Even though these charges may be non-cash items that would not have an immediate impact on Blue Owl’s liquidity, the fact that Blue Owl reports charges of this nature could contribute to negative market perceptions about Blue Owl or its securities. In addition, charges of this nature may cause Blue Owl to violate leverage or other covenants to which it may be subject. Accordingly, any shareholders who choose to remain shareholders following the proposed Blue Owl Business Combination could suffer a reduction in the value of their shares from any such write-down or write-offs.
If the proposed Blue Owl Business Combinated is consummated. Altimar’s shareholders will experience dilution.
Following the consummation of the proposed Blue Owl Business Combination, Altimar’s public shareholders will own approximately 2.0% of the fully diluted common equity of Blue Owl (assuming that no shares of Altimar’s Class A ordinary shares are elected to be redeemed by Altimar’s public shareholders). If any shares of Class A ordinary shares are redeemed in connection with the proposed Blue Owl Business Combination, the percentage of Blue Owl’s fully diluted common equity held by the current public shareholders of Altimar will decrease relative to the percentage held if none of the Class A ordinary shares are redeemed. To the extent that any of the outstanding warrants are exercised for shares of Class A common stock, Altimar’s public shareholders may experience substantial dilution.
Altimar has not obtained an opinion from an independent investment banking firm or another independent firm and consequently, you may have no assurance from an independent source that the terms of the proposed Blue Owl Business Combination are fair to Altimar from a financial point of view.
The Altimar Board did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the proposed Blue Owl Business Combination. Altimar is not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or from another independent firm that the price it is paying is fair to Altimar from a financial point of view. In analyzing the proposed Blue Owl Business Combination, the Altimar board of directors and Altimar’s management conducted due diligence on Blue Owl and researched the industry in which Blue Owl operates and concluded that the proposed Blue Owl Business Combination was in the best interest of its shareholders. Accordingly, Altimar’s shareholders will be relying solely on the judgment of the Altimar board of directors in determining the value of the proposed Blue Owl Business Combination, and the Altimar board of directors may not have properly valued such business. The lack of a third-party valuation or fairness opinion may also lead an increased number of shareholders to vote against the proposed Blue Owl Business Combination or demand redemption of their shares, which could potentially impact our ability to consummate the proposed Blue Owl Business Combination.
During the pendency of the proposed Blue Owl Business Combination, Altimar will not be able to solicit, initiate or take any action to facilitate or encourage any inquiries or the making, submission or announcement of, or enter into a business combination with another party because of restrictions in the Business Combination Agreement. Furthermore, certain provisions of the Business Combination Agreement will discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Business Combination Agreement.
During the pendency of the proposed Blue Owl Business Combination, Altimar will not be able to enter into a business combination with another party because of restrictions in the Business Combination Agreement. Furthermore, certain provisions of the Business Combination Agreement will discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Business Combination Agreement, in part because of the inability of the Altimar Board to change its recommendation in connection with the proposed Blue Owl Business Combination. The Business Combination Agreement does not permit our Board of Directors to change, withdraw, withhold, qualify or modify, or publicly propose to change, withdraw, withhold, qualify or modify its recommendation in favor of adoption of the Shareholder Proposals.
Certain covenants in the Business Combination Agreement impede the ability of Altimar to make acquisitions or complete certain other transactions pending completion of the proposed Blue Owl Business Combination. As a result, Altimar may be at a disadvantage to its competitors during that period. In addition, if the proposed Blue Owl Business Combination is not completed, these provisions will make it more difficult to complete an alternative business combination following the termination of the Business Combination Agreement due to the passage of time during which these provisions have remained in effect.
Because Altimar is incorporated under the laws of the Cayman Islands, in the event the proposed Blue Owl Business Combination is not completed, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.
Because Altimar is currently incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests and your ability to protect your rights through the U.S. federal courts may be limited prior to the Domestication. Altimar is currently an exempted company under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within the U.S. upon Altimar’s directors or officers, or enforce judgments obtained in the U.S. courts against Altimar’s directors or officers.
Until the Domestication is effected, Altimar’s corporate affairs are governed by the Amended and Restated Memorandum and Articles of Association, the Cayman Islands Companies Act and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of Altimar’s directors under the laws of the Cayman Islands are to a large extent governed
by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of Altimar’s shareholders and the fiduciary responsibilities of its directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the U.S. In particular, the Cayman Islands has a different body of securities laws as compared to that of the U.S., and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a federal court of the U.S.
The courts of the Cayman Islands are unlikely (i) to recognize or enforce against Altimar judgments of courts of the U.S. predicated upon the civil liability provisions of the federal securities laws of the U.S. or any state and (ii) in original actions brought in the Cayman Islands, to impose liabilities against Altimar predicated upon the civil liability provisions of the federal securities laws of the U.S. or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the U.S., the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be, in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
The public shareholders of Altimar may have more difficulty in protecting their interests in the face of actions taken by management, members of the Altimar Board or controlling shareholders than they would as public shareholders of a U.S. company.
The Domestication may result in adverse tax consequences for holders of Altimar ordinary shares and warrants, including public shareholders exercising redemption rights.
U.S. holders (as defined in “U.S. Federal Income Tax Considerations—U.S. Holders” in the Proxy Statement) may be subject to U.S. federal income tax as a result of the Domestication. It is intended that the Domestication qualify as a reorganization within the meaning of Section 368(a)(1)(F) of the Code for U.S. federal income tax purposes. However, due to the absence of direct guidance on the application of Section 368(a)(1)(F) to a statutory conversion of a corporation holding only investment-type assets such as Altimar, this result is not entirely clear.
Assuming the Domestication qualifies as a reorganization under Section 368(a)(1)(F) of the Code, U.S. holders of Altimar ordinary shares will be subject to Section 367(b) of the Code, and as a result:
a U.S. holder of Altimar ordinary shares whose Altimar ordinary shares have a fair market value of less than $50,000 on the date of the Domestication should not recognize any gain or loss and generally should not be required to include any part of Altimar’s earnings in income pursuant to the Domestication;
a U.S. holder of Altimar ordinary shares whose Altimar ordinary shares have a fair market value of $50,000 or more on the date of the Domestication, but who on the date of the Domestication owns (actually and constructively) less than 10% of the total combined voting power of all classes of Altimar ordinary shares entitled to vote and less than 10% of the total value of all classes of Altimar ordinary shares will generally recognize gain (but not loss) with respect to the Domestication, as if such U.S. holder exchanged its Altimar ordinary shares for Blue Owl common stock in a taxable transaction. As an alternative to recognizing gain, such U.S. holders may file an election to include in income as a dividend the “all earnings and profits amount” (as defined in Treasury Regulations Section 1.367(b)- 2(d)) attributable to their Altimar ordinary shares, provided certain other requirements are satisfied. Altimar does not expect that Altimar’s cumulative earnings and profits will be material at the time of Domestication; and
a U.S. holder of Altimar ordinary shares who on the date of the Domestication owns (actually and constructively) 10% or more of the total combined voting power of all classes of Altimar ordinary shares entitled to vote or 10% or more of the total value of all classes of Altimar ordinary shares will generally be required to include in income as a dividend the “all earnings and profits amount” (as defined in Treasury Regulations Section 1.367(b)-2(d)) attributable to its Altimar ordinary shares. Any such U.S. holder that is a corporation may, under certain circumstances, effectively be exempt from taxation on a portion or all of the deemed dividend pursuant to Section 245A of the Code. Altimar does not expect that Altimar’s cumulative earnings and profits will be material at the time of the Domestication.
Furthermore, if the Domestication qualifies as a reorganization under Section 368(a)(1)(F) of the Code, a U.S. holder of Altimar ordinary shares or warrants may, in certain circumstances, still recognize gain (but not loss) upon the exchange of its Altimar ordinary shares or warrants for Blue Owl common stock or warrants under the PFIC rules of the Code. Proposed Treasury Regulations with a retroactive effective date have been promulgated under Section 1291(f) of the Code which generally require that a U.S. person who disposes of stock of a PFIC (including for this purpose exchanging Altimar warrants for Blue Owl warrants) must recognize gain equal to the excess, if any, of the fair market value of the Blue Owl common stock or warrants received in the Domestication and the U.S. holder’s adjusted tax basis in the corresponding Altimar ordinary shares or warrants surrendered in exchange therefor, notwithstanding any other provision of the Code. Because Altimar is a blank check company with no current active business, we believe that it is likely that Altimar is classified as a PFIC for U.S. federal income tax purposes. As a result, these proposed Treasury Regulations, if finalized in their current form, would generally require a U.S. holder of Altimar ordinary shares or warrants to recognize gain on the exchange of such shares or warrants for Blue Owl common stock or warrants, unless such U.S. holder has made certain tax elections with respect to such U.S. holder’s Altimar ordinary shares. A U.S. holder cannot currently make the aforementioned elections with respect to such U.S. holder’s Altimar warrants. Any such gain would be taxed as ordinary income and an interest charge would apply based on complex rules designed to offset the tax deferral to such U.S. holder on the undistributed earnings, if any, of Altimar. It is not possible to determine at this time whether, in what form, and with what effective date, final Treasury Regulations under Section 1291(f) of the Code will be adopted.
Additionally, the Domestication may cause non-U.S. holders (as defined in “Material U.S. Federal Income Tax Considerations—Non-U.S. Holders” in the Proxy Statement) to become subject to U.S. federal withholding taxes on any dividends paid in respect of such non-U.S. holder’s Blue Owl common stock after the Domestication.
Furthermore, because the Domestication will occur immediately prior to the redemption of U.S. holders that exercise redemption rights, U.S. holders exercising redemption rights will be subject to the potential tax consequences of the Domestication.
The tax consequences of the Domestication are complex and will depend on a holder’s particular circumstances. All holders are strongly urged to consult their tax advisors for a full description and understanding of the tax consequences of the Domestication, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws.
In connection with the proposed Blue Owl Business Combination, the Sponsor, initial shareholders, directors, executive officers, advisors and their affiliates may elect to purchase shares or public warrants from public shareholders of Altimar, which may influence a vote on the proposed Blue Owl Business Combination and reduce the public “float” of our Class A ordinary shares.
In connection with the proposed Blue Owl Business Combination, the Sponsor, initial shareholders, directors, executive officers, advisors or heir affiliates may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of the proposed Blue Owl Business Combination, although they are under no obligation to do so. However, other than as expressly stated
herein, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the Trust Account will be used to purchase shares or public warrants in such transactions.
In the event that the Sponsor, initial shareholders, directors, executive officers, advisors or their affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of any such purchases of shares would be to vote such shares in favor of the proposed Blue Owl Business Combination and thereby increase the likelihood of obtaining shareholder approval of the proposed Blue Owl Business Combination or to satisfy the Minimum Proceeds Condition, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants would be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with the proposed Blue Owl Business Combination. Any such purchases of our securities may result in the completion of the proposed Blue Owl Business Combination that may not otherwise have been possible. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
In addition, if such purchases are made, the public “float” of our Class A ordinary shares or public warrants and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
There is no guarantee that a shareholder’s decision whether to redeem its shares for a pro rata portion of the Trust Account will put the shareholder in a better future economic position.
We can give no assurance as to the price at which a shareholder may be able to sell its Class A common stock in the future following the completion of the proposed Blue Owl Business Combination or any alternative business combination. Certain events following the consummation of any initial business combination, including the proposed Blue Owl Business Combination, may cause an increase in our share price, and may result in a lower value realized now than a shareholder of Blue Owl might realize in the future had the shareholder not redeemed its shares. Similarly, if a shareholder does not redeem its shares, the shareholder will bear the risk of ownership of the Class A common stock after the consummation of the proposed Blue Owl Business Combination, and there can be no assurance that a shareholder can sell its shares in the future for a greater amount than the redemption price set forth in the Proxy Statement. A shareholder should consult the shareholder’s own financial advisor for assistance on how this may affect its individual situation.
If a shareholder fails to receive notice of our offer to redeem our Class A ordinary shares in connection with the proposed Blue Owl Business Combination, such shares may not be redeemed.
We will comply with the proxy rules when conducting redemptions in connection with the Business Combination. Despite our compliance with these rules, if a shareholder fails to receive our proxy solicitation, such shareholder may not become aware of the opportunity to redeem its shares. In addition, the proxy solicitation that we furnish to holders of our Class A ordinaryShares may be unable to resell their shares in connection withat or above their purchase price, if at all. Some of the Business Combination describesfactors that could negatively affect the various procedures that must be complied with in order to validly redeem or tender Class A ordinary shares. In the event that a shareholder fails to comply with these procedures, its shares may not be redeemed.
If you or a “group” of shareholders are deemed to hold in excess of 15%price of our Class A ordinaryShares or result in fluctuations in the price or trading volume of shares you will lose the ability to redeem all such shares in excess of 15% of our Class A ordinary shares.
The Amended and Restated Memorandum and ArticlesShares include:
sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete the proposed Blue Owl Business Combination. As a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially at a loss.
If third parties bring claims against us, the proceeds held•speculation in the Trust Account could be reduced and the per share redemption amount received by shareholders may be less than $10.00 per share.
Our placingpress or investment community;
Upon redemptiontrading of our Class A ordinary shares, if we are unable to complete the initial business combination within the prescribed time frame,Shares;
Our directors may decide not to enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to our public shareholders.
In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per share held in the Trust Account as of the date of the liquidation of the Trust Account if less than $10.00 per share due to reductions in the value of the trust assets, in each case less taxes payable, and the Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against the Sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against the Sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to our public shareholders may be reduced below $10.00 per share.
You may only be able to exercise your public warrants on a “cashless basis” under certain circumstances and, if you do so, you will receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash.
The warrant agreement provides that in the following circumstances holders of warrants who seek to exercise their warrants will not be permitted to do so for cash and will, instead, be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act: (i) if the Class A common stock issuable upon exercise of the warrants is not registered under the Securities Act in accordance with the terms of the warrant agreement; (ii) if we have so elected and the Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of “covered securities” under Section 18(b)(1) of the Securities Act; and (iii) if we have so elected and we call the public warrants for redemption. If you exercise your public warrants on a cashless basis, you would pay the warrant exercisemarket price by surrendering all of the warrants for that number of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of Class A common stock underlying the warrants, multiplied by the excess of the “fair market value” of our Class A Shares, regardless of Blue Owl’s actual operating performance.
The grant of registration rights to our shareholders, holders of our Private Placement Warrants and PIPE Investors and the future exercise of such rightsus may adversely affect the market price of our Class A common stock.
UponShares or otherwise dilute all other shareholders.
Our warrants may have an adverse effect onreduce the market price of our Class A common stock.
WeShares or both. Upon liquidation, holders of such debt securities and preferred shares, if issued, warrantsand lenders with respect to purchase 8,333,333other borrowings would receive a distribution of our available assets prior to the holders of our Class A ordinary shares as part of the units offeredShares. Debt securities convertible into equity could be subject to adjustments in the IPO and, simultaneously with the closing of the IPO, we issued in a private placement an aggregate of 4,666,667 Private Placement Warrants, each exercisable to purchase one Class A ordinary share at $11.50 per share.
Subsequently, we issued and sold an additional 2,500,000 unitsconversion ratio pursuant to the underwriter’s over-allotment option at a price of $10.00 per unit and sold an additional 333,333 private warrants. Upon the Domestication, the warrants will entitle the holders to purchase shares of Class A common stock of Blue Owl. Such warrants, when exercised, willwhich certain events may increase the number of equity securities issuable upon conversion. Preferred shares, if issued, and outstandingcould have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our Class A common stockShares. Our decision to issue securities in any future offering will depend on market conditions and reduceother factors beyond our control, which may adversely affect the value of the Class A common stock.
Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate the proposed Blue Owl Business Combination, require substantial financialamount, timing and management resources, and increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31, 2021. Only in the event we are deemed to be a large accelerated filer or an accelerated filer and no longer qualify as an emerging growth company will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. Following the proposed Blue Owl Business Combination, we will be required to assure that we are in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacynature of our internal controls. The development of the internal control system to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete the proposed Blue Owl Business Combination as well as impose obligations on Blue Owl following the proposed Blue Owl Business Combination.
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We currently maintain our
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Item 4. Mine Safety Disclosures. |
None.
Not applicable.
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“street name” through banks or broker-dealers. report.Information.Our units,for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.ordinary sharescommon stock trades on the NYSE under the symbol “OWL.” Prior to May 19, 2021 and warrants arebefore the completion of the Business Combination, the Class A common stock of Altimar Acquisition Corporation traded on the NYSE under the symbols “ATAC.U,ticker symbol “ATAC.” “ATAC” and “ATAC-W,” respectively.Although of Recordare a larger number of beneficial owners, at December 31, 2020, there was one holder of record of our units, one holder of record of our separately traded Class A ordinary shares and twowere 37 holders of record of our separately traded warrants.DividendsWe have not paid any cash dividends on our ordinary shares to date and do not intend to pay cash dividends prior to the completion of the proposed Blue Owl Business Combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition. The payment of any cash dividends will be within the discretion of our board of directors. In addition, our board of directors is not currently contemplating andClass A common stock. This does not anticipate declaring any cash dividendsinclude the number of shareholders that hold shares in the foreseeable future. Further, if we incur any future indebtedness, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.None.Recent SalesUnregistered Securities; UseDecember 31, 2021, relating to the 2021 Omnibus Equity Incentive Plan (“2021 Equity Incentive Plan”) pursuant to which equity securities of Proceeds from Registered OfferingsOn October 27,the Company are authorized for issuance:Number of Securities to be Exercised of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Compensation Plans (Excluding Securities Reflected in Column (a)) Plan Category (a) (b) (c) Equity compensation plans approved by security holders (1) 44,303,816 — 51,115,613 Equity compensation plans not approved by security holders — — — Total 44,303,816 — 51,115,613 consummated our Initial Public Offering of 25,000,000 Units. On November 9, 2020,merged in connection with the Underwriters’ electionBusiness Combination), and that dividends were reinvested.partially exercise their Over-allotment Option, we sold an additional 2,500,000 Units.be indicative of future performance. The Units sold inperformance graph shall not be deemed “soliciting material” or to be “filed” with the Initial Public Offering and the partial exerciseSEC for purposes of Section 18 of the Over-allotment Option generated total gross proceedsExchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of $275,000,000. Goldman Sachs & Co. LLC acted as sole book-running manager. The securities sold in the Initial Public Offering were registeredour filings under the Securities Act or the Exchange Act.December 14, 2020 December 31, 2020 December 31, 2021 Blue Owl $100 $112 $147 S&P 500 Index $100 $103 $133 Dow Jones U.S. Asset Managers Index $100 $104 $147 Registration Statement on Form S-1 (No. 333-249368).variety of factors, including legal requirements, price and economic and market conditions. The Registration Statement was declared effective byrepurchase program may be changed, suspended or discontinued at any time and will terminate upon the SEC on October 22, 2020.Simultaneously with the consummationearlier of the Initial Public OfferingMay 19, 2022 and the partial exercisepurchase of all shares available under the Over-allotment Option, we consummated a private placementrepurchase program. No shares have been repurchased through the date of 4,666,667 Private Placement Warrants to our Sponsor at a pricethis filing.Item 6.Selected Financial Data.We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our auditedthe consolidated and combined financial statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K.arecompleted our transition to a blank checkpublicly traded company, incorporated in the Cayman Islands on August 20, 2020 formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar business combination with one or more businesses. We intend to effectuate our business combination using cash derived from the proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, our shares, debt or asuccessful combination of cash, shares and debt.We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a business combination will be successful.Recent DevelopmentsOn December 23, 2020, we entered into a Business Combination Agreement, by and among the Company, Owl Rock and the Dyal Capital, Partners (“Dyal”) divisionrecord level of Neuberger Berman Group LLC to form Blue Owl Capital Inc. (“Blue Owl”), a publicly-traded alternative asset management firm that would haveAUM and FPAUM, over $45.0$1.0 billion in assets under management.Pursuant to the transaction, the Company, which currently holds $275 million in cash in its Trust Account, will combine with Blue Owl at an estimated $12.5 billion pro forma equity value. Cash proceeds in connection with the transaction will be funded through a combination of the Company’s cash in its Trust Account and a $1.5 billion fully committed, common stock private placement of our common equity at $10.00 per share.The transaction is expected to closeraised in the first half of 2021, subject to customary closing conditions as further described indebt markets and closed out the Business Combination Agreement which is filed as Exhibit 2.1 to this Annual Report.Results of OperationsWe have neither engaged in any operations nor generated any operating revenues to date. Our only activities from inception through December 31, 2020 were organizational activities and those necessary to prepare for the Initial Public Offering, and identify a target for our business combination, and activities in connection with the proposed Blue Owl Business Combination. We do not expect to generate any operating revenues until after the completion of our initial business combination. We expect to generate non-operating income in the form of interest income on marketable securities held after the Initial Public Offering. We expect that we will incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for expenses in connection with completing the initial business combination (including the proposed Blue Owl Business Combination).
For the period from August 20, 2020 (inception) through December 31, 2020, we had a net loss of $261,631, which consists of operating and formation costs of $299,659 offset by interest earned on marketable securities held in the Trust Account of $38,028.
Liquidity and Capital Resources
On October 27, 2020, we consummated the Initial Public Offering of 25,000,000 Units at a price of $10.00 per Unit, generating gross proceeds of $250,000,000. Simultaneouslyyear with the closing of the Initial Public Offering, we consummatedOak Street Acquisition.
Year Ended December 31, | |||||||||||||||||||||||
(dollars in thousands) | 2021 | 2020 | |||||||||||||||||||||
Net Loss Attributable to Blue Owl Capital Inc. (After May 19, 2021) / Owl Rock (Prior to May 19, 2021) | $ | (376,171) | $ | (77,831) | |||||||||||||||||||
Fee-Related Earnings(1) | $ | 451,684 | $ | 36,408 | |||||||||||||||||||
Distributable Earnings(1) | $ | 427,322 | $ | 12,219 |
On November 9, 2020, we sold an additional 2,500,000 Units for total gross proceeds of $25,000,000most comparable measure in accordance with GAAP, see
Blue Owl AUM: $94.5 billion FPAUM: $61.4 billion | ||||||||||||||
Direct Lending Products AUM: $39.2 billion FPAUM: $32.0 billion | GP Capital Solutions Products AUM: $39.9 billion FPAUM: $21.2 billion | Real Estate Products AUM: $15.4 billion FPAUM: $8.2 billion | ||||||||||||
Diversified Lending Commenced 2016 AUM: $25.8 billion FPAUM: $21.6 billion | GP Minority Equity Commenced 2010 AUM: $38.7 billion FPAUM: $20.4 billion | Net Lease Commenced 2009 AUM: $15.4 billion FPAUM: $8.2 billion | ||||||||||||
Technology Lending Commenced 2018 AUM: $7.9 billion FPAUM: $6.9 billion | GP Debt Financing Commenced 2019 AUM: $1.0 billion FPAUM: $0.7 billion | |||||||||||||
First Lien Lending Commenced 2018 AUM: $3.5 billion FPAUM: $2.3 billion | Professional Sports Minority Investments Commenced 2021 AUM: $0.2 billion FPAUM: $0.2 billion | |||||||||||||
Opportunistic Lending Commenced 2020 AUM: $2.0 billion FPAUM: $1.2 billion |
Year Ended December 31, 2021 | Year Ended December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | Direct Lending | GP Capital Solutions | Real Estate | Total | Direct Lending | GP Capital Solutions | Real Estate | Total | |||||||||||||||||||||||||||||||||||||||
Beginning Balance | $ | 27,101 | $ | 26,220 | $ | — | $ | 53,321 | $ | 18,636 | $ | 23,001 | $ | — | $ | 41,637 | |||||||||||||||||||||||||||||||
Acquisition | — | — | 15,362 | 15,362 | — | 2,130 | — | 2,130 | |||||||||||||||||||||||||||||||||||||||
New capital raised | 4,163 | 4,466 | — | 8,629 | 4,160 | — | — | 4,160 | |||||||||||||||||||||||||||||||||||||||
Change in debt | 7,325 | — | — | 7,325 | 4,458 | — | — | 4,458 | |||||||||||||||||||||||||||||||||||||||
Distributions | (848) | (579) | — | (1,427) | (779) | (1,104) | — | (1,883) | |||||||||||||||||||||||||||||||||||||||
Change in value | 1,486 | 9,799 | — | 11,285 | 626 | 2,193 | — | 2,819 | |||||||||||||||||||||||||||||||||||||||
Ending Balance | $ | 39,227 | $ | 39,906 | $ | 15,362 | $ | 94,495 | $ | 27,101 | $ | 26,220 | $ | — | $ | 53,321 |
Year Ended December 31, 2021 | Year Ended December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | Direct Lending | GP Capital Solutions | Real Estate | Total | Direct Lending | GP Capital Solutions | Real Estate | Total | |||||||||||||||||||||||||||||||||||||||
Beginning Balance | $ | 20,862 | $ | 17,608 | $ | — | $ | 38,470 | $ | 15,278 | $ | 17,546 | $ | — | $ | 32,824 | |||||||||||||||||||||||||||||||
Acquisition | — | — | 8,203 | 8,203 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
New capital raised / deployed | 10,598 | 3,700 | — | 14,298 | 5,766 | 353 | — | 6,119 | |||||||||||||||||||||||||||||||||||||||
Distributions | (824) | (96) | — | (920) | (764) | (291) | — | (1,055) | |||||||||||||||||||||||||||||||||||||||
Change in value | 1,393 | — | — | 1,393 | 582 | — | — | 582 | |||||||||||||||||||||||||||||||||||||||
Ending Balance | $ | 32,029 | $ | 21,212 | $ | 8,203 | $ | 61,444 | $ | 20,862 | $ | 17,608 | $ | — | $ | 38,470 |
MoIC | IRR | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | Year of Inception | AUM | Capital Raised (1) | Invested Capital (2) | Realized Proceeds (3) | Unrealized Value (4) | Total Value | Gross (5) | Net (6) | Gross (7) | Net (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Diversified Lending | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ORCC | 2016 | $ | 14,515 | $ | 6,006 | $ | 6,006 | $ | 1,901 | $ | 5,938 | $ | 7,839 | 1.39x | 1.30x | 12.1 | % | 9.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||
ORCC II (9) | 2017 | $ | 2,633 | $ | 1,387 | $ | 1,360 | $ | 246 | $ | 1,360 | $ | 1,606 | NM | 1.18x | NM | 7.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||
ORCC III | 2020 | $ | 3,497 | $ | 1,702 | $ | 1,653 | $ | 64 | $ | 1,668 | $ | 1,732 | NM | NM | NM | NM | ||||||||||||||||||||||||||||||||||||||||||||||||
ORCIC | 2020 | $ | 3,996 | $ | 1,584 | $ | 1,577 | $ | 31 | $ | 1,581 | $ | 1,612 | NM | NM | NM | NM | ||||||||||||||||||||||||||||||||||||||||||||||||
Technology Lending | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ORTF | 2018 | $ | 7,084 | $ | 3,187 | $ | 3,187 | $ | 230 | $ | 3,531 | $ | 3,761 | 1.23x | 1.18x | 18.6 | % | 14.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||
First Lien Lending (10) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Owl Rock First Lien Fund Levered | 2018 | $ | 2,960 | $ | 1,161 | $ | 813 | $ | 101 | $ | 848 | $ | 949 | 1.21x | 1.17x | 11.2 | % | 8.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Owl Rock First Lien Fund Unlevered | 2019 | $ | 150 | $ | 137 | $ | 6 | $ | 141 | $ | 147 | 1.11x | 1.08x | 5.6 | % | 3.8 | % |
Followingcalculating Gross IRR, the Initial Public Offering,expense support provided to the partial exercisefund would be impacted when assuming a performance excluding management fees (including Part I Fees) and Part II Fees, and therefore is not meaningful for ORCC II.
MoIC | IRR | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | Year of Inception | AUM | Capital Raised | Invested Capital (2) | Realized Proceeds (3) | Unrealized Value (4) | Total Value | Gross (5) | Net (6) | Gross (7) | Net (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GP Minority Equity (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dyal Fund I | 2011 | $ | 930 | $ | 1,284 | $ | 1,248 | $ | 583 | $ | 697 | $ | 1,280 | 1.17 | x | 1.03 | x | 3.5 | % | 0.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Dyal Fund II | 2014 | $ | 2,681 | $ | 2,153 | $ | 1,846 | $ | 421 | $ | 2,087 | $ | 2,508 | 1.48 | x | 1.36 | x | 12.5 | % | 9.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Dyal Fund III | 2015 | $ | 8,359 | $ | 5,318 | $ | 3,241 | $ | 2,493 | $ | 4,231 | $ | 6,724 | 2.48 | x | 2.07 | x | 32.3 | % | 24.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Dyal Fund IV | 2018 | $ | 14,244 | $ | 9,041 | $ | 4,076 | $ | 2,178 | $ | 6,142 | $ | 8,320 | 2.44 | x | 2.04 | x | 146.5 | % | 96.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Dyal Fund V | 2020 | $ | 6,724 | $ | 5,826 | $ | 593 | $ | — | $ | 1,321 | $ | 1,321 | NM | NM | NM | NM |
MoIC | IRR | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | Year of Inception | AUM | Capital Raised | Invested Capital (2) | Realized Proceeds (3) | Unrealized Value (4) | Total Value | Gross (5) | Net (6) | Gross (7) | Net (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Lease (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Oak Street Real Estate Capital Fund IV | 2017 | $ | 1,358 | $ | 1,250 | $ | 1,239 | $ | 911 | $ | 821 | $ | 1,732 | 1.52x | 1.40x | 26.1 | % | 20.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Oak Street Real Estate Capital Net Lease Property Fund | 2019 | $ | 5,669 | $ | 3,161 | $ | 1,732 | $ | 126 | $ | 1,972 | $ | 2,098 | 1.21x | 1.21x | 21.3 | % | 20.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Oak Street Real Estate Capital Fund V | 2020 | $ | 3,818 | $ | 2,500 | $ | 637 | $ | 108 | $ | 747 | $ | 855 | NM | NM | NM | NM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Oak Street Asset-Backed Securitization (9) | 2020 | $ | 3,001 | $ | 2,716 | $ | 258 | $ | 16 | $ | 296 | $ | 312 | NM | NM | NM | NM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
the Dyal Acquisition, prior year amounts are not comparable to current year amounts or expected future trends. Dyal Capital’s results of operations are included from the Business Combination Date.
AtYear Ended December 31, 2020
Year Ended December 31, | |||||||||||||||||||||||
(dollars in thousands) | 2021 | 2020 | $ Change | ||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Management fees, net (includes Part I Fees of $150,370 and $34,404) | $ | 667,935 | $ | 194,906 | $ | 473,029 | |||||||||||||||||
Administrative, transaction and other fees | 150,037 | 54,909 | 95,128 | ||||||||||||||||||||
Realized performance income | 5,906 | — | 5,906 | ||||||||||||||||||||
Total Revenues, Net | 823,878 | 249,815 | 574,063 | ||||||||||||||||||||
Expenses | |||||||||||||||||||||||
Compensation and benefits | 1,496,988 | 240,731 | 1,256,257 | ||||||||||||||||||||
Amortization of intangible assets | 113,889 | — | 113,889 | ||||||||||||||||||||
General, administrative and other expenses | 140,268 | 67,811 | 72,457 | ||||||||||||||||||||
Total Expenses | 1,751,145 | 308,542 | 1,442,603 | ||||||||||||||||||||
Other Loss | |||||||||||||||||||||||
Net losses on investments | (3,526) | — | (3,526) | ||||||||||||||||||||
Net losses on retirement of debt | (17,636) | — | (17,636) | ||||||||||||||||||||
Interest expense | (27,275) | (23,816) | (3,459) | ||||||||||||||||||||
Change in TRA liability | (13,848) | — | (13,848) | ||||||||||||||||||||
Change in warrant liability | (43,670) | — | (43,670) | ||||||||||||||||||||
Change in earnout liability | (834,255) | — | (834,255) | ||||||||||||||||||||
Total Other Loss | (940,210) | (23,816) | (916,394) | ||||||||||||||||||||
Loss Before Income Taxes | (1,867,477) | (82,543) | (1,784,934) | ||||||||||||||||||||
Income tax benefit | (65,211) | (102) | (65,109) | ||||||||||||||||||||
Consolidated and Combined Net Loss | (1,802,266) | (82,441) | (1,719,825) | ||||||||||||||||||||
Net loss attributable to noncontrolling interests | 1,426,095 | 4,610 | 1,421,485 | ||||||||||||||||||||
Net Loss Attributable to Blue Owl Capital Inc. | $ | (376,171) | $ | (77,831) | $ | (298,340) |
Year Ended December 31, | |||||||||||||||||||||||||||||
(dollars in thousands) | 2021 | 2020 | |||||||||||||||||||||||||||
FRE revenues | $ | 785,901 | $ | 233,310 | |||||||||||||||||||||||||
FRE expenses | (330,256) | (201,512) | |||||||||||||||||||||||||||
Net (income) loss allocated to noncontrolling interests included in Fee-Related Earnings | (3,961) | 4,610 | |||||||||||||||||||||||||||
Fee-Related Earnings | $ | 451,684 | $ | 36,408 | |||||||||||||||||||||||||
Distributable Earnings | $ | 427,322 | $ | 12,219 |
Year Ended December 31, | |||||||||||||||||||||||||||||
(dollars in thousands) | 2021 | 2020 | |||||||||||||||||||||||||||
Direct Lending Products | |||||||||||||||||||||||||||||
Diversified lending | $ | 348,363 | $ | 140,153 | |||||||||||||||||||||||||
Technology lending | 66,089 | 42,052 | |||||||||||||||||||||||||||
First lien lending | 15,185 | 12,335 | |||||||||||||||||||||||||||
Opportunistic lending | 3,993 | 366 | |||||||||||||||||||||||||||
Management Fees, Net | 433,630 | 194,906 | |||||||||||||||||||||||||||
Administrative, transaction and other fees | 106,973 | 38,404 | |||||||||||||||||||||||||||
FRE Revenues - Direct Lending Products | 540,603 | 233,310 | |||||||||||||||||||||||||||
GP Capital Solutions Products | |||||||||||||||||||||||||||||
GP minority equity investments | 233,505 | — | |||||||||||||||||||||||||||
GP debt financing | 10,215 | — | |||||||||||||||||||||||||||
Professional sports minority investments | 477 | — | |||||||||||||||||||||||||||
Management Fees, Net | 244,197 | — | |||||||||||||||||||||||||||
Administrative, transaction and other fees | 1,101 | — | |||||||||||||||||||||||||||
FRE Revenues - GP Capital Solutions Products | 245,298 | — | |||||||||||||||||||||||||||
Total FRE Revenues | $ | 785,901 | $ | 233,310 |
Year Ended December 31, | |||||||||||||||||||||||||||||
(dollars in thousands) | 2021 | 2020 | |||||||||||||||||||||||||||
FRE compensation and benefits | $ | (255,626) | $ | (137,197) | |||||||||||||||||||||||||
FRE general, administrative and other expenses | (74,630) | (64,315) | |||||||||||||||||||||||||||
Total FRE Expenses | $ | (330,256) | $ | (201,512) |
Year Ended December 31, | |||||||||||||||||||||||||||||
(dollars in thousands) | 2021 | 2020 | |||||||||||||||||||||||||||
GAAP Loss Before Income Taxes | $ | (1,867,477) | $ | (82,543) | |||||||||||||||||||||||||
Net (income) loss allocated to noncontrolling interests included in Fee-Related Earnings | (3,961) | 4,610 | |||||||||||||||||||||||||||
Strategic Revenue-Share Purchase consideration amortization | 9,892 | — | |||||||||||||||||||||||||||
Realized performance compensation | 2,067 | — | |||||||||||||||||||||||||||
Equity-based compensation | 1,205,336 | 90,525 | |||||||||||||||||||||||||||
Capital-related compensation | 1,416 | — | |||||||||||||||||||||||||||
Amortization of intangible assets | 113,889 | — | |||||||||||||||||||||||||||
Transaction Expenses | 56,218 | — | |||||||||||||||||||||||||||
Interest expense | 27,275 | 23,816 | |||||||||||||||||||||||||||
Realized performance income | (5,906) | — | |||||||||||||||||||||||||||
Net losses on investments | 3,526 | — | |||||||||||||||||||||||||||
Net losses on early retirement of debt | 17,636 | — | |||||||||||||||||||||||||||
Change in TRA liability | 13,848 | — | |||||||||||||||||||||||||||
Change in warrant liability | 43,670 | — | |||||||||||||||||||||||||||
Change in earnout liability | 834,255 | — | |||||||||||||||||||||||||||
Fee-Related Earnings | 451,684 | 36,408 | |||||||||||||||||||||||||||
Realized performance income | 5,906 | — | |||||||||||||||||||||||||||
Realized performance compensation | (2,067) | — | |||||||||||||||||||||||||||
Interest expense | (27,275) | (23,816) | |||||||||||||||||||||||||||
Taxes and TRA payments | (926) | (373) | |||||||||||||||||||||||||||
Distributable Earnings | 427,322 | 12,219 | |||||||||||||||||||||||||||
Interest expense | 27,275 | 23,816 | |||||||||||||||||||||||||||
Taxes and TRA payments | 926 | 373 | |||||||||||||||||||||||||||
Fixed assets depreciation and amortization | 665 | 673 | |||||||||||||||||||||||||||
Adjusted EBITDA | $ | 456,188 | $ | 37,081 |
Year Ended December 31, | |||||||||||||||||||||||||||||
(dollars in thousands) | 2021 | 2020 | |||||||||||||||||||||||||||
GAAP Revenues | $ | 823,878 | $ | 249,815 | |||||||||||||||||||||||||
Strategic Revenue-Share Purchase consideration amortization | 9,892 | — | |||||||||||||||||||||||||||
Realized performance income | (5,906) | — | |||||||||||||||||||||||||||
Administrative and other fees | (41,963) | (16,505) | |||||||||||||||||||||||||||
FRE Revenues | $ | 785,901 | $ | 233,310 |
Year Ended December 31, | |||||||||||||||||||||||||||||
(dollars in thousands) | 2021 | 2020 | |||||||||||||||||||||||||||
GAAP Compensation and Benefits | $ | 1,496,988 | $ | 240,731 | |||||||||||||||||||||||||
Realized performance compensation | (2,067) | — | |||||||||||||||||||||||||||
Equity-based compensation | (1,204,119) | (90,525) | |||||||||||||||||||||||||||
Capital-related compensation | (1,416) | — | |||||||||||||||||||||||||||
Administrative and other expenses | (33,760) | (13,009) | |||||||||||||||||||||||||||
FRE Compensation and Benefits | $ | 255,626 | $ | 137,197 |
Year Ended December 31, | |||||||||||||||||||||||||||||
(dollars in thousands) | 2021 | 2020 | |||||||||||||||||||||||||||
GAAP General, Administrative and Other Expenses | $ | 140,268 | $ | 67,811 | |||||||||||||||||||||||||
Transaction Expenses | (56,218) | — | |||||||||||||||||||||||||||
Equity-based compensation | (1,217) | — | |||||||||||||||||||||||||||
Administrative and other expenses | (8,203) | (3,496) | |||||||||||||||||||||||||||
FRE General, Administrative and Other Expenses | $ | 74,630 | $ | 64,315 |
At December 31, 2020, we had cash of $928,766 held outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily for activities necessary to consummate an initial business combination.
In order to fund working capital deficiencies or finance transaction costsJanuary 2022 in connection with an initial business combination, our Sponsor or an affiliaterevenues collected at the start of the quarter. In February, we increased the capacity of our Sponsor or certain of our officersRevolving Credit Facility, and directors may, but are not obligated to, loan us funds as may be required. If we complete an initial business combination, we may repay such loaned amounts out of the proceedsdate of this filing, we have $715.0 million available under the Trust Account releasedRevolving Credit Facility, which is available for general corporate purposes. In February 2022, we also issued the $400.0 million 2032 Notes, providing additional liquidity for general corporate purposes, including to us. Infund future strategic acquisitions or related transactions and growth initiatives.
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business.Blue Owl Operating Group. We may need to obtain additional financing eitherincur debt to completefinance payments under the TRA to the extent the Blue Owl Operating Group does not distribute cash to Registrant or Blue Owl GP in an amount sufficient to meet our initial business combinationobligations under the TRA.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets orthe Business Combination as liabilities which would be considered off-balance sheet arrangementsin our consolidated and combined statements of financial condition, as of December 31, 2020. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee of $10,000 for office space, secretarial, and administrative support services provided to the Company. We began incurring these fees on October 22, 2020 and will continue to incur these fees monthly until the earlier of the completion of an initial business combination and the Company’s liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $9,625,000 in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event of a change in control, warrant holders have the ability to demand cash settlement from us. In addition, we have the option to cash settle outstanding warrants when certain criteria is met, as described in Note 2 to our Financial Statements. To the extent we have insufficient cash on hand or that we complete an initialopt to, we may rely on debt or equity financing to facilitate these transactions in the future if needed.
relevant partnership will give rise to taxable income for its partners. Generally, Tax Distributions will be computed based on our estimate of the taxable income of the relevant partnership allocable to a partner multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, New York State and New York City income tax rates prescribed for an individual or corporate resident in New York City (taking into account certain assumptions set forth in the relevant partnership agreements). Tax Distributions will be made only to the extent distributions from the Blue Owl Operating Partnerships for the relevant year were otherwise insufficient to cover the estimated assumed tax liabilities.
Year Ended December 31, | |||||||||||||||||||||||
(dollars in thousands) | 2021 | 2020 | $ Change | ||||||||||||||||||||
Net cash provided by (used in): | |||||||||||||||||||||||
Operating activities | $ | 281,658 | $ | 5,234 | $ | 276,424 | |||||||||||||||||
Investing activities | (1,598,872) | (652) | (1,598,220) | ||||||||||||||||||||
Financing activities | 1,348,151 | (295) | 1,348,446 | ||||||||||||||||||||
Net Change in Cash and Cash Equivalents | $ | 30,937 | $ | 4,287 | $ | 26,650 |
The preparationEstimates
Class A Ordinary Shares Subjectperiod in which the changes occur. See Note 9 to Possible Redemption
We accountour Financial Statements for additional details.
Net Loss per Ordinary Share
We apply the two-class method in calculating earnings per share. Net income per ordinary share, basic and diluted for Class A redeemable ordinary shares is calculated by dividing the interest income earned on the Trust Account by the weighted average number of Class A redeemable ordinary shares outstanding since original issuance. Net loss per ordinary share, basic and diluted for Class B non-redeemable ordinary shares is calculated by dividing the net loss, less income attributable to Class A redeemable ordinary shares, by the weighted average number of Class B non-redeemable ordinary shares outstanding for the periods presented.
Recent Accounting Pronouncements
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, wouldhad various significant unobservable inputs. The assumptions used have a material effectimpact on the valuation of these grants, and include our best estimate of expected volatility, expected holding periods and appropriate discounts for lack of marketability. The higher the expected volatility, the higher the compensation expense taken each period for these grants. The higher the expected holding periods and discount for lack of marketability, the lower the compensation expense taken each period for these grants. See Note 8 to our Financial Statements for additional details.
aboutAbout Market RiskWeRisk.a smaller reporting company as defined by Rule 12b-2generally based on the fair value of the Exchange Actgross assets held by such products, and therefore changes in the fair value of those assets impacts the management fees we earn in any given period. These management fees will be increased (or reduced) in direct proportion to the effect of changes in the market value of our investments in the related funds. The proportion of our management fees that are based on fair value is dependent on the number and types of investment funds in existence and the current stage of each fund’s life cycle. Management fees from our GP Capital Solutions and Real Estate products, however, are generally based on capital commitments or investment cost, and therefore management fees are not requiredmaterially impacted by changes in fair values of the underlying investments held by those products. To the extent that management fees are calculated based on investment cost of the product’s investments, the amount of fees that we may charge will increase or decrease from the effect of changes in the cost basis of the product’s investments, including potential impairment losses.provideminimize our risk of exposure by limiting to reputable financial institutions the information otherwise required undercounterparties with which we enter into financial transactions. As of December 31, 2021 and 2020, we had cash balances with financial institutions in excess of Federal Deposit Insurance Corporation insured limits. We seek to mitigate this item.exposure by monitoring the credit standing of these financial institutions.
DataThisData.appears following Item 15required by this item is incorporated by reference to the Financial Statements, including the report thereon dated February 28, 2022, of KPMG LLP, our independent registered public accounting firm (PCAOB ID 185) set forth in the F-pages of this Report and is included herein by reference.report.
Disclosure.Disclosure
registered accounting firm to attest to the effectiveness of our internal control over financial reporting for our Annual Report for the year ending December 31, 2022.Disclosureareand procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed with the objective of ensuringto ensure that information required to be disclosed by us in our reports filedthat we file or submit under the Exchange Act such as this Report, is recorded, processed, summarized and reported within the time periodperiods specified in the SEC’sSEC rules and forms. Disclosure controls are also designed with the objective of ensuringforms, and that such information is accumulated and communicated to our management, including the chiefour principal executive officer and chiefprincipal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2020, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of December 31, 2020, our disclosure controls and procedures were effective.We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. DisclosureAny controls and procedures, no matter how well conceiveddesigned and operated, can provide only reasonable not absolute, assurance thatof achieving the objectivesdesired objectives.Controls OverControl over Financial ReportingThisForm 10-K does not includeMay 19, 2021. Prior to the Business Combination, we were a reportspecial purpose acquisition company formed for the purpose of management’seffecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar business combination with one or more businesses. As a result, previously existing internal controls are no longer applicable or comprehensive enough as of the assessment regardingdate as our operations prior to the Business Combination were insignificant compared to those of the consolidated entity post-Business Combination. The design of internal control over financial reporting for the Company post-Business Combination has required and will continue to require significant time and resources from management and other personnel. As a result, management was unable, without incurring unreasonable effort or expense to conduct an attestation reportassessment of our independent registered public accounting firm dueinternal control over financial reporting as of December 31, 2021. Accordingly, we are excluding management's report on internal control over financial reporting pursuant to a transition period established by rulesSection 215.02 of the SEC Division of Corporation Finance's Regulation S-K Compliance & Disclosure Interpretations. We have not engaged an independent registered accounting firm to perform an audit of our internal control over financial reporting for newlyany period reported in our consolidated and combined financial statements. We expect our independent public companies.werehas been no changeschange in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of under the Exchange Act) during the most recent fiscal quarter ended December 31, 2021 that havehas materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.
Item 10. Directors, Executive |
Our officers, directors and directors are as follows:
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Tom Wasserman — Chairman and Chief Executive Officer. Tom Wasserman serves as our Chairman and Chief Executive Officer. Mr. Wasserman also currently serves as a Managing Director at HPS Investment Partners, LLC where he heads the Growth Equity group. Mr. Wasserman has served as a member of the board of directors of Trine Acquisition Corp. since its initial public offering in March 2019 until its business combination with Desktop Metal in December 2020. Since January 2021, Mr. Wasserman has served as the Chief Executive Officer and Chairman of the board of directors of Altimar II and Altimar III respectively. Mr. Wasserman has worked within TMT (including prior to his transition to HPS) since 1999. Mr. Wasserman’s current board roles include serving as a director of BT One Phone Limited, OnePhone Holding AB, Revolt Media and TV Holdings, LLC, and CAST Holdings LLC. Mr. Wasserman served as Chairman of Hibernia Networks (sold to GTT Communications). Mr. Wasserman began his career at Donaldson, Lufkin and Jenrette in the investment banking division. He has a BA in Business Administration from the University of Michigan where he graduated with distinction.
We believe Mr. Wasserman is well qualified to serve as a member of our board of directors due to his significant investment experience and vast network of relationships.
Wendy Lai—Chief Financial Officer. Wendy Lai serves as our Chief Financial Officer. Ms. Lai is a Managing Director at HPS Investment Partners, where she leads the corporate finance, regulatory capital compliance, and technology transformation of financial systems. Prior to joining HPS in 2016, Ms. Lai was a Senior Vice President at Blackstone, where she oversaw accounting of registered investment advisors, corporate consolidation, and financial reporting functions. Ms. Lai worked for PricewaterhouseCoopers as the Senior Manager, where she managed the audit engagements of hedge funds and Fortune 500 insurance companies. Since January 2021, Ms. Lai has served as the Chief Financial Officer of Altimar II and Altimar III respectively. She holds MBA in Finance from Columbia University and a BA in Economics from Tufts University.
Kevin Beebe—Director. Kevin Beebe serves as a member of our board of directors. Since November 2007, Mr. Beebe has been President and Chief Executive Officer of 2BPartners, LLC, a partnership that provides strategic, financial and operational advice to private equity firms and companies in the technology and telecom industries. From 1998 to 2007 he was Group President of Operations at ALLTEL Corporation, a publicly traded telecommunications services company. From 1996 to 1998, Mr. Beebe served as Executive Vice President of Operations for 360° Communications Co., a publicly traded wireless communications company. From 1983 to 1995, Mr. Beebe served in various management roles at ATT, Southwestern Bell and United Telecom/Sprint.
Currently, Mr. Beebe serves on the board of directors for Skyworks Solutions, Inc. (currently as the chair of the Nominating and Governance Committee and previously as a member of the Audit and Compensation Committees), a publicly traded semiconductor company, SBA Communications (currently as a member of the Audit and Compensation Committees and previously as a member of the Nominating and Governance Committee), a
publicly traded wireless tower and service company, Frontier Communications (currently as a member of the Finance, Audit and Compensation Committees), a publicly traded local, long distance and broadband service provider, Altimar II, a publicly traded blank check company sponsored by an affiliate of HPS, Nextel Holdings, a private company holding the remaining Nextel International assets, Syniverse Technologies (currently as the Chair of Nominating and Governance Committee and as a member of Compensation Committee), Logix Communications, a private broadband service provider, and DartPoints Holding Company LLC, an operator of edge colocation data centers. Mr. Beebe has also been named as a director nominee in connection with Altimar III’s initial public offering. In addition, Mr. Beebe is a founding partner of Astra Capital, a private equity firm focused on mid-market tech/telecom investment opportunities.
Mr. Beebe also serves on the Board of Trustees of Caron Treatment Centers, as Chair of Caron’s Florida Advisory Board, and on the Naples Community Hospital Board of Trustees. Mr. Beebe holds a Bachelor of Arts in Economics from Kutztown University in Pennsylvania and a Master of Arts in Economics from Bowling Green State University in Ohio. He also completed the Executive Business Administration Program at Columbia University in New York.
Kevin Beebe is well-qualified to serve on our Board of Directors due to his extensive industry and investment experience.
Payne Brown—Director. Payne Brown serves as a member of our board of directors. Mr. Brown currently serves as the President of THINK450, the for-profit innovation engine of the National Basketball Players Association. Prior to becoming President of THINK450 he was the Managing Partner of Econet Media Partners. Prior to this, Mr. Brown was Managing Director at Highbridge Principal Strategies (“Highbridge”), an alternative investment management organization, where he focused on media opportunities in the private equity group. Mr. Brown joined Highbridge in 2012 and led the firm’s investment into REVOLT TV, a multimedia platform. He currently serves on REVOLT’S board and chairs the compensation committee. Mr. Brown also served as the Chief of Staff to the interim owner of the Los Angeles Clippers in 2014. Prior to joining Highbridge in 2012 Mr. Brown was Vice President of Strategic Initiatives and a corporate officer at Comcast Corporation and also served as a strategic advisor to Comcast senior leadership, crisis manager, and negotiations expert during Comcast Corporation’s acquisition of NBCUniversal from 2009 to 2011. Prior to joining Comcast in 1998, Mr. Brown spent three years practicing law at Helmke, Beams, and Boyer. He also served as an assistant prosecutor for the State of Indiana, and as the Director of Public Safety for the city of Fort Wayne, Indiana. He served on the Fort Wayne Community Schools school board for eight years, presiding as President of the board for two years.
Mr. Brown serves on the board of directors of Altimar II and is the chair of the Nominating Committee and the chair of the Compensation Committee. Mr. Brown has also been named as a director nominee in connection with Altimar III’s initial public offering. Mr. Brown also serves on the boards of directors of HireQuest Inc. and Revolt Media and is a member of both companies’ compensation committees. Mr. Brown has previously served on a number of boards, including the Philadelphia Urban League, Project Home, and on the Board of Advisors for the Philadelphia Chapter of the National Association for Multi-Ethnicity in Communications (NAMIC). He has served as an advisor to The HistoryMakers, TV One, the American Black Film Festival, and the Black Filmmaker Foundation. Mr. Brown has also served as a retained strategic advisor to Comcast Corporation. Mr. Brown received a J.D. from George Washington University and a B.S. in Management from Purdue University.
Mr. Brown is well-qualified to serve on our Board of Directors due to his extensive industry experience.
Richard M. Jelinek — Director. Richard M. Jelinek serves as a member of our board of directors. Mr. Jelinek is Managing Director at Czech One Capital Partners and an active healthcare investor and executive. Previously, Mr. Jelinek was executive vice president, enterprise modernization and integration at CVS Health. He led the integration efforts related to the CVS Health and Aetna merger as well as the broad scale infrastructure modernization activities. Mr. Jelinek has held senior leadership roles within payor, provider and private equity organizations including working as an operating partner at Advent International over his 25-year career. Previously, Mr. Jelinek served as executive vice president of enterprise strategy and head of Aetna’s local markets and national accounts operations. For 19 years of his career, Mr. Jelinek served in a variety of executive leadership roles at UnitedHealth Group and a predecessor company, including CEO of OptumHealth and CEO of the company’s Medicaid, Medicare Advantage and Emerging Businesses Group.
Mr. Jelinek is a member of the Young Presidents’ Organization and a founding advisory board member for the Griffith Leadership Center at the University of Michigan School of Public Health. He currently is a member of the board of directors of HealthEdge and previously served on the board of directors of Cotiviti, Sutter Health, Redbrick Health, the Minnesota Children’s Museum and The Long Term Care Group. In addition, Mr. Jelinek serves on the board of directors of Altimar II and is chair of the Audit Committee and a member of the Compensation Committee. Mr. Jelinek has also been named as a director nominee in connection with Altimar III’s initial public offering. Mr. Jelinek holds a master’s degree in health services administration and an MBA from the University of Michigan, as well as a bachelor’s degree in business administration from the University of Southern California.
Mr. Jelinek is well-qualified to serve on our Board of Directors due to his extensive industry and investment experience.
Roma Khanna — Director. Roma Khanna serves as a member of our board of directors. Ms. Khanna is a content innovator, executive and entrepreneur. From 2017 to 2020 Ms. Khanna was the chief executive officer at REVOLT Media and TV, responsible for leading strategy and operations of the real-time, multi-platform brand and network, reporting directly to the Chairman, Sean Combs, and the Board. She remained on as Advisor to the Board after she chose to step down as chief executive officer.
From 2011 through 2015, Ms. Khanna was President of Metro-Goldwyn-Mayer Studios (“MGM”) Television Group and Digital where she oversaw creative development and production as well as worldwide TV and digital distribution for branded channels. Under Ms. Khanna’s leadership, MGM Television developed and delivered several critically acclaimed award-winning series, including “The Handmaid’s Tale” to Hulu, “Fargo” to FX and “Vikings” to HISTORY. Prior to joining MGM, Ms. Khanna served as President, Universal Networks International & Digital Initiatives, with NBC Universal. While at NBC Universal, Ms. Khanna oversaw and grew NBC Universal’s portfolio of international television channels, including the Syfy Channel, 13th Street, Universal Channel, Hallmark Channel, Divatv and Movies24 brands, as well as the Digital Initiatives division. Ms. Khanna has also served as Senior Vice President, Content and Co-Head of Television for CHUM Limited in Canada. Ms. Khanna began her career in digital media with Snap Media and in music at Sony Music Canada.
Ms. Khanna serves as a board member of the Canadian Film Centre and sits on the commercial committee of BAFTA and the advisory board for the Peabody Awards. Since November 2020, Ms. Khanna has also served as the Executive Chairman of HiddenLight Productions Limited. In addition, Ms. Khanna serves on the board of directors of Altimar II and is a member of the Nominating Committee. Ms. Khanna has also been named as a director nominee in connection with Altimar III’s initial public offering. Ms. Khanna has received The Euro 50 award from Eurodata and was the first recipient of Reed MIDEM’s “MIPCube Media Architect of the Future Award” for her pioneering work in the use of new digital platforms. Ms. Khanna earned a bachelor of science from the University of Toronto, a J.D. from the University of Detroit, a bachelor of law from the University of Windsor, and an MBA from York University-Schulich School of Business.
Ms. Khanna is well-qualified to serve on our Board of Directors due to her extensive industry experience.
John Kim—Director. John Kim serves as a member of our board of directors. Mr. Kim is Founder and Managing Partner of Brewer Lane Ventures. Prior to founding Brewer Lane Ventures, Mr. Kim was President and Chief Investment Officer of New York Life Insurance Company.
As a career investor, Mr. Kim started New York Life Ventures in 2012. Previously, he held CEO roles in other insurance, retirement and asset management firms including Prudential Retirement, CIGNA Retirement and Investment Services, and Aeltus Investment Management, a subsidiary of VOYA.
Mr. Kim is currently a board director at four insurtech startups — Powerlytics, Socotra, Avibra and Ladder Life Insurance. Additionally, he is on the board of trustees of Eversource, New England’s largest energy delivery company and a national leader in clean energy, on the board of directors of Franklin Resources, a global investment organization, and was previously on the board of FiServ, a global provider of financial services technology. Mr. Kim received a bachelor’s degree from the University of Michigan and an MBA from the University of Connecticut.
Mr. Kim is well-qualified to serve on our Board of Directors due to his extensive investment and board experience.
Michael Rubenstein — Director. Mr. Rubenstein serves as a member of our board of directors. He is an entrepreneur and executive who played a key role in building AppNexus, which was acquired by AT&T in 2018, and DoubleClick, which was acquired by Google in 2008. Mr. Rubenstein specializes in marketplace strategy, win-win partnerships, developing talent, and building high-performing go-to-market organizations that create global impact.
At AT&T, he served as President of AppNexus, a Xandr company, where he oversaw go-to-market for the company’s digital ad platform. Prior to AT&T, Mr. Rubenstein spent nearly a decade as President and Board member at AppNexus, and was a chief architect of the company’s growth from startup to a leader in programmatic advertising. Prior to joining AppNexus, Mr. Rubenstein founded and served as General Manager of DoubleClick Ad Exchange, a leading marketplace for programmatic advertising, after joining DoubleClick through the acquisition of Toronto-based martech startup FloNetwork, later re-branded DARTmail.
Mr. Rubenstein serves on the board of directors of Altimar II and is a member of the Audit and Nominating Committees. Mr. Rubenstein has also been named as a director nominee in connection with Altimar III’s initial public offering. Mr. Rubenstein also serves on the board of directors for Estrella Broadcasting, Inc. Mr. Rubenstein has also served on non-profit Boards, including the Interactive Advertising Bureau and Global Cities (a Bloomberg Philanthropy). Mr. Rubenstein regularly speaks at business conferences and schools, and actively advises and invests in the next generation of entrepreneurial ventures. He holds a bachelor’s degree from McGill University and an MBA from Columbia Business School.
Mr. Rubenstein is well-qualified to serve on our Board of Directors due to his extensive industry experience.
Vijay Sondhi — Director. Vijay Sondhi serves as a member of our board of directors. Mr. Sondhi is the CEO of NMI. He is an accomplished fintech executive and investor. Mr. Sondhi ran Visa’s CyberSource and Authorize.net businesses, was head of Visa corporate strategy and launched Visa’s flagship One-Market Innovation Center. He served as chief financial officer for three private equity and venture-backed companies spanning a wide variety of fintech solutions, including ERP accounting, point-of-sale systems, hospitality reservations and billing, plus financial document management, where he raised private capital, executed merger and acquisition transactions and oversaw an initial public offering. Mr. Sondhi’s executive career includes senior roles with Oracle-Micros, OpenText-IXOS and SAP. He serves on the boards of Verifone and Tangem and is a senior advisor to Token.io. In addition, Mr. Sondhi serves on the board of directors of Altimar II and is a member of the Compensation Committee. Mr. Sondhi has also been named as a director nominee in connection with Altimar III’s initial public offering.
Mr. Sondhi earned an MBA in finance from Columbia University and a Bachelor of Science degree in computer science from The University of British Columbia.
Mr. Sondhi is well-qualified to serve on our Board of Directors due to his extensive industry and investment experience.
Michael Vorhaus — Director. Michael Vorhaus serves as a member of our board of directors. Mr. Vorhaus currently severs as a member of the board of directors of Perion Network (Nasdaq: PERI). In addition, Mr. Vorhaus serves on the board of directors of Altimar II and is a member of the Audit Committee. Mr. Vorhaus has also been named as a director nominee in connection with Altimar III’s initial public offering. Starting December of 2018, Mr. Vorhaus founded Vorhaus Advisors and is CEO of the firm. From 1994 to November 2018, he was in a variety of positions at Frank N. Magid Associates, Inc., a research-based strategic consulting firm. From 1994 to 2008, Mr. Vorhaus served as its Senior Vice President and Managing Director and from 2008 to 2018 he served as the President of Magid Advisor, a unit of Magid Associates. From 2013 to 2014, Mr. Vorhaus served as a director of Grow Mobile. In 1987, he founded Vorhaus Investments.
Mr. Vorhaus holds a B.A. in Psychology from Wesleyan University and completed the Management Development Program at the University of California, Berkeley’s Haas School of Business.
Mr. Vorhaus is well-qualified to serve on our Board of Directors due to his extensive industry experience.
Number and Terms of Office of Officers and Directors
Our board of directorsCorporate Governance.
Prior to the completion of an initial business combination, any vacancy on the board of directors may be filled by a nominee chosen by holders of a majority of our founder shares. In addition, prior to the completion of an initial business combination, holders of a majority of our founder shares may remove a member of the board of directors for any reason.
Our Sponsor, upon and following consummation of an initial business combination, will be entitled to nominate three individuals for appointment to our board of directors, as long as the Sponsor holds any securities covered by the registration and shareholder rights agreement.
Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our amended and restated memorandum and articles of association as it deems appropriate. Our amended and restated memorandum and articles of association provide that our officers may consist of one or more chairman of the board, chief executive officer, president, chief financial officer, vice presidents, secretary, treasurer and such other offices as may be determined by the board of directors.
Director Independence
The NYSE listing standards require that a majority of our board of directors be independent. Our board of directors has determined that each of Mr. Beebe, Mr. Brown, Mr. Jelinek, Ms. Khanna, Mr. Kim, Mr. Rubenstein, Mr. Sondhi and Mr. Vorhaus is “independent directors” as defined in the NYSE listing standards. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Executive Officer and Director Compensation
None of our executive officers or directors have received any cash compensation for services rendered to us. Commencing on the date that our securities are first listed on the NYSE through the earlier of consummation of our initial business combination and our liquidation, we will reimburse an affiliate of our Sponsor for office space, secretarial and administrative services provided to us in the amount of $10,000 per month. In addition, our Sponsor, executive officers and directors, or their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made by us to our Sponsor, executive officers or directors, or their affiliates. Any such payments prior to an initial business combination will be made using funds held outside the Trust Account. Other than quarterly audit committee review of such reimbursements, we do not expect to have any additional controls in place governing our reimbursement payments to our directors and executive officers for their out-of-pocket expenses incurred in connection with our activities on our behalf in connection with identifying and consummating an initial business combination. Other than these payments and reimbursements, no compensation of any kind, including finder’s and consulting fees, will be paid by the Company to our Sponsor, executive officers and directors, or their respective affiliates, prior to completion of our initial business combination.
After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All of these fees will be fully disclosed to shareholders, to the extent then known, in the definitive Proxy Statement furnished to our shareholders in connection with a proposed initial business combination. We have not established any limit onfor the amount2021 Annual Meeting of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be known at the time of the proposed initial business combination, because the directors of the post-combination business will be responsible for determining executive officer and director compensation. Any compensationStockholders to be paid to our executive officers will be determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board of directors.
We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements to remain with us after our initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment.
Committees of the Board of Directors
Our board of directors has three standing committees: an audit committee, a nominating committee and a compensation committee. Subject to phase-in rules and a limited exception, the rules of the NYSE and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors. Subject to phase-in rules and a limited exception, the rules of the NYSE require that the compensation committee and the nominating committee of a listed company be comprised solely of independent directors.
Audit Committee
Mr. Beebe, Mr. Rubenstein and Mr. Vorhaus serve as members of our audit committee. Our board of directors has determined that each of Mr. Beebe, Mr. Rubenstein and Mr. Vorhaus are independent under the NYSE listing standards and applicable SEC rules. Under the NYSE listing standards and applicable SEC rules, all the directors on the audit committee must be independent. Each member of the audit committee is financially literate and our board of directors has determined that each of Mr. Beebe and Mr. Vorhaus qualifies as an “audit committee financial expert” as defined in applicable SEC rules.
The audit committee is responsible for:
meeting with our independent registered public accounting firm regarding, among other issues, audits, and adequacy of our accounting and control systems;
monitoring the independence of the independent registered public accounting firm;
verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law;
inquiring and discussing with management our compliance with applicable laws and regulations;
pre-approving all audit services and permitted non-audit services to be performed by our independent registered public accounting firm, including the fees and terms of the services to be performed;
appointing or replacing the independent registered public accounting firm;
determining the compensation and oversight of the work of the independent registered public accounting firm (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies;
monitoring compliance on a quarterly basisfiled with the termsSecurities and Exchange Commission within 120 days of the Initial Public Offering and, if any noncompliance is identified, immediately taking all action necessary to rectify such noncompliance or otherwise causing compliance with the terms of the Initial Public Offering; and
reviewing and approving all payments made to our existing shareholders, executive officers or directors and their respective affiliates. Any payments made to members of our audit committee will be reviewed and approved by our board of directors, with the interested director or directors abstaining from such review and approval.
Nominating Committee
The members of our nominating committee are Mr. Brown, Ms. Khanna and Mr. Kim, and Mr. Brown serves as chairman of the nominating committee. Under the NYSE listing standards, we are required to have a nominating committee composed entirely of independent directors. Our board of directors has determined that each of Mr. Brown, Ms. Khanna and Mr. Kim is independent.
The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors. The nominating committee considers persons identified by its members, management, shareholders, investment bankers and others.
Guidelines for Selecting Director Nominees
The guidelines for selecting nominees, which are specified in a charter adopted by us, provide that persons to be nominated:
should have demonstrated notable or significant achievements in business, education or public service;
should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and
should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the shareholders.
The nominating committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the board of directors. The nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The nominating committee does not distinguish among nominees recommended by shareholders and other persons.
Compensation Committee
The members of our compensation committee are Mr. Brown, Mr. Jelinek and Mr. Sondhi, and Mr. Brown serves as chairman of the compensation committee.
Under the NYSE listing standards, we are required to have a compensation committee composed entirely of independent directors. Our board of directors has determined that each of Mr. Brown, Mr. Jelinek and Mr. Sondhi is independent. We have adopted a compensation committee charter, which details the principal functions of the compensation committee, including:
reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;
reviewing and approving the compensation of all of our other Section 16 executive officers;
reviewing our executive compensation policies and plans;
implementing and administering our incentive compensation equity-based remuneration plans;
assisting management in complying with our proxy statement and Annual Report disclosure requirements;
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees;
producing a report on executive compensation to be included in our annual proxy statement; and
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser.
However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by the NYSE and the SEC.
Compensation Committee Interlocks and Insider Participation
None of our executive officers currently serves, and in the past year has not served, as a member of the compensation committee of any entity that has one or more executive officers serving on our board of directors.
Code of Ethics
We have adopted a Code of Ethics applicable to our directors, officers and employees. A copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.
Conflicts of Interest
Under Cayman Islands law, directors and officers owe the following fiduciary duties:
duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole;
duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose;
directors should not improperly fetter the exercise of future discretion;
duty to exercise powers fairly as between different sections of shareholders;
duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests; and
duty to exercise independent judgment.
In addition to the above, directors also owe a duty of care which is not fiduciary in nature. This duty has been defined as a requirement to act as a reasonably diligent person having both the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and the general knowledge skill and experience of that director.
As set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of their position. However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors. This can be done by way of permission granted in the amended and restated memorandum and articles of association or alternatively by shareholder approval at general meetings.
HPS and certain of our officers and directors presently have, and any of them in the future may have additional, fiduciary and contractual duties to other entities. As a result, if any of HPS or our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, then, subject to their fiduciary duties under Cayman Islands law, he or she will need to honor such fiduciary or contractual obligations to present such business combination opportunity to such entity, before we can pursue such opportunity. If these other entities decide to pursue any such opportunity, we may be precluded from pursuing the same. However, we do not expect these duties to materially affect our ability to complete the proposed Blue Owl Business Combination. Our amended and restated memorandum and articles of association provide that, to the fullest extent permitted by applicable law: (i) no individual serving as a director or an officer shall have any duty, except to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us; and (ii) we renounce any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for any director or officer, on the one hand, and us, on the other.
HPS and its affiliates manage a number of funds, separate accounts and other investment vehicles (the “HPS Funds”). HPS Funds may compete with us for acquisition opportunities. If these HPS Funds decide to pursue any such opportunity or have existing investments in the issuer of such opportunity, we may be precluded from pursuing such opportunities. In addition, investment ideas generated within HPS, including by any director affiliated with HPS, may be suitable for both us and for a current or future HPS Fund and, in such a case, will be directed to such HPS Fund rather than to us. Neither HPS nor, subject to their fiduciary duties under Cayman Islands law, any members of our management team who are also employed by HPS have any obligation to present us with any opportunity for a potential business combination of which they become aware. HPS and/or members of our management team, in their capacities as officers, directors or employees of HPS or in their other endeavors, may choose to present potential business combinations to the related entities described above, current or future HPS Funds, or third parties, before they present such opportunities to us.
In addition, we may be limited in our ability to make investments and to sell existing investments because HPS may have material, non-public information regarding the issuers of the applicable securities or as a result of an existing investment by HPS. We may acquire a target from or, in which, one or more HPS Funds have an existing investment (or makes an investment at the same time or subsequently) at a different or overlapping level of the target’s capital structure, creating a potential conflict between our position and the applicable HPS Funds’ position
especially in the event of a bankruptcy. HPS, HPS employees and HPS Funds may also have or make investments in, establish or serve on the boards of, businesses that compete with, provide services to, transact with, or otherwise have significant business relationships with the businesses we invest or seek to invest in. We may also forego an attractive investment opportunity as a result of an existing investment in the target or a competitor of the target by HPS, an HPS Fund or principals or employees of HPS, or to otherwise mitigate any conflict of interest or the perception of any conflict of interest.
HPS and our Sponsor, officers, and directors may sponsor, form or participate in other blank check companies similar to ours during the period in which we are seeking an initial business combination. Any such companies may present additional conflicts of interest in pursuing an acquisition target, particularly in the event there is overlap among investment mandates. We do not currently expect that any such other blank check company would materially affect our ability to complete the proposed Blue Owl Business Combination. However, an affiliate of HPS has sponsored and Mr. Wasserman and most of our officers and directors are actively engaged in Altimar II, a SPAC that completed its initial public offering in February 2021, and Altimar III, a SPAC that is in the process of completing its initial public offering as of the date of this Annual Report. Altimar II and Altimar III may each pursue initial business combination targets in any business or industries with a focus on TMT, Healthcare, Financial Services/Financial Technology and Consumer and each has until 24 months after the completion of its initial public offering to do so (absent an extension in accordance with its respective memorandum and articles of association). In addition, HPS and our Sponsor, officers, and directors are not required to commit any specified amount of time or resources to our affairs and, accordingly, will have conflicts of interest in allocating management time and resources among various business activities, including identifying potential business combinations and monitoring the related due diligence.
Below is a table summarizing the entities to which our executive officers and directors currently have fiduciary duties, contractual obligations or other material management relationships
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If any of the above executive officers or directors becomes aware of a business combination opportunity which is suitable for any of the above entities to which he or she has current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity.
Potential investors should also be aware of the following other potential conflicts of interest:
Our executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time. We do not intend to have any full-time employees prior to the completion of our initial business combination. Each of our executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers are not obligated to contribute any specific number of hours per week to our affairs.
Our Sponsor subscribed for founder shares and has purchased Private Placement Warrants as part of the Initial Public Offering.
Our Sponsor and each member of our management team have entered into an agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and public shares held by them in connection with (i) the completion of our initial business combination, and (ii) a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of the Initial Public Offering or during any extension period or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares. Additionally, our Sponsor has agreed to waive its rights to liquidating distributions from the Trust Account with respect to its founder shares if we fail to complete our initial business combination within the prescribed time frame. If we do not complete our initial business combination within the prescribed time frame, the Private Placement Warrants will expire worthless. Except as described herein, our Sponsor and our directors and executive officers have agreed not to transfer, assign or sell any of their founder shares until the earliest of (A) one year after the completion of our initial business combination and (B) subsequent to our initial business combination, (x) if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, share exchange or other similar transaction that results in all of our public shareholders having the right to exchange their
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Our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors is included by a target business as a condition to any agreement with respect to our initial business combination. In addition, HPS and our Sponsor, officers and directors may sponsor, form or participate in other blank check companies similar to ours during the period in which we are seeking an initial business combination. Any such companies may present additional conflicts of interest in pursuing an acquisition target, particularly in the event there is overlap among investment mandates.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our Sponsor, HPS, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our Sponsor or any of HPS or our officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that such initial business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
Furthermore, in no event will our Sponsor or any of our existing officers or directors, or their respective affiliates, be paid by us any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the completion of our initial business combination. Further, commencing on the date our securities are first listed on the NYSE, we will also reimburse an affiliate of our Sponsor for office space, secretarial and administrative services provided to us in the amount of $10,000 per month.
We cannot assure you that any of the above mentioned conflicts will be resolved in our favor.
If we seek shareholder approval, we will complete our initial business combination only if we obtain the approval of an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at a general meeting. In such case, our Sponsor and each member of our management team have agreed to vote their founder shares and public shares in favor of our initial business combination.
Limitation on Liability and Indemnification of Officers and Directors
Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against willful default, willful neglect, civil fraud or the consequences of committing a crime. Our amended and restated memorandum and articles of association provide for indemnification of our officers and directors to the maximum extent permitted by law, including for any liability incurred in their capacities as such, except through their own actual fraud, willful default or willful neglect. We will enter into agreements with our directors and officers to provide contractual indemnification in addition to the indemnification provided for in our amended and restated memorandum and articles of association. We have purchased a policy of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors.
Our officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account, and have agreed to waive any right, title, interest or claim of any kind they may have in the future as a result of, or arising out of, any services provided to us and will not seek recourse against the trust account for any reason whatsoever (except to the extent they are entitled to funds from the trust account due to their ownership of public shares). Accordingly, any indemnification provided will only be able to be satisfied by us if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination.
Our indemnification obligations may discourage shareholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our shareholders. Furthermore, a shareholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
We believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.
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None of our executive officers or directors have received any cash compensation for services rendered to us. Commencing on the date that our securities are first listed on the NYSE through the earlier of consummation of our initial business combination and our liquidation, we will reimburse an affiliate of our Sponsor for office space, secretarial and administrative services provided to us in the amount of $10,000 per month. In addition, our Sponsor, executive officers and directors, or their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made
After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All of these fees will be fully disclosed to shareholders, to the extent then known, in the definitive Proxy Statement furnished to our shareholders in connection with a proposed initial business combination. We have not established any limit onfor the amount2021 Annual Meeting of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be known at the time of the proposed initial business combination, because the directors of the post-combination business will be responsible for determining executive officer and director compensation. Any compensationStockholders to be paid to our executive officers will be determined, or recommended tofiled with the boardSecurities and Exchange Commission within 120 days of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board of directors.
We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements to remain with us after our initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business, but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment.
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each person known by us to be the beneficial owner of more than 5% of our issued and outstanding ordinary shares;
each of our executive officers and directors that beneficially owns ordinary shares; and
all our executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the SEC. To our knowledge, each person named in the table below has sole voting and investment power with respect to all of our ordinary shares beneficially owned by them, except as otherwise set forth in the notes to the table and pursuant to applicable community property laws. Unless otherwise indicated, the address of each person named in the table is c/o Altimar Acquisition Corporation, 40 West 57th Street, 33rd Floor, New York, NY 10019.
Ordinary Shares Beneficially Owned | ||||||||
Number | Percent(2) | |||||||
Directors and Executive Officers: (1) | ||||||||
Kevin Beebe | 25,000 | * | ||||||
Payne Brown | 25,000 | * | ||||||
Rick Jelinek | 25,000 | * | ||||||
Roma Khanna | 25,000 | * | ||||||
John Kim | 25,000 | * | ||||||
Wendy Lai | — | — | % | |||||
Michael Rubenstein | 25,000 | * | ||||||
Vijay Sondhi | 25,000 | * | ||||||
Michael Vorhaus | 25,000 | * | ||||||
Tom Wasserman | — | — | % | |||||
All directors and executive officers as a group (10 persons) | 200,000 | * | ||||||
5% Stockholders: | ||||||||
Altimar Sponsor, LLC (our sponsor) (3) | 6,675,000 | 19.36 | % | |||||
Linden Capital L.P. (4) | 2,000,000 | 7.3 | % | |||||
Senator Investment Group LP (5) | 1,420,000 | 5.16 | % | |||||
Point72 Asset Management, L.P. (6) | 1,400,000 | 5.1 | % | |||||
Luxor Capital Partners, LP (7) | 1,918,828 | 6.98 | % |
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Transfers of Founder Shares and Private Placement Warrants
The founder shares and Private Placement Warrants and any Class A ordinary shares issued upon conversion or exercise thereof are each subject to transfer restrictions pursuant to lock-up provisions in the agreement entered into by our Sponsor and management team. Our Sponsor and each member of our management team have agreed not to transfer, assign or sell any of their founder shares until the earliest of (a) one year after the completion of our initial business combination and (b) subsequent to our initial business combination, (x) if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination or (y) the date on which we complete a liquidation, merger, share exchange or other similar transaction that results in all of our public shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property. The Private Placement Warrants and the respective Class A ordinary shares underlying such warrants are not transferable or salable until 30 days after the completion of our initial business combination. The foregoing restrictions are not applicable to transfers (a) to our officers or directors, any affiliates or family members of any of our officers or directors, any members or partners of our Sponsor or their affiliates, any affiliates of our Sponsor, or any employees of such affiliates, or any funds or accounts advised by our Sponsor or its affiliates; (b) in the case of an individual, by gift to a member of one of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate family, an affiliate of such person or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with the consummation of a business combination at prices no greater than the price at which the founder shares, Private Placement Warrants or Class A ordinary shares, as applicable, were originally purchased; (f) by virtue of our Sponsor’s organizational documents upon liquidation or dissolution of our Sponsor; (g) to the Company for no value for cancellation in connection with the consummation of our initial business combination; (h) in the event of our liquidation prior to the completion of our initial business combination; or (i) in the event of our completion of a liquidation, merger, share exchange or other similar transaction which results in all of our public shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property subsequent to our completion of our initial business combination; provided, however, that in the case of clauses (a) through (f) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions and the other restrictions contained in the letter agreement.
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On September 1, 2020, the Sponsor paid $25,000, or approximately $0.001 per share,
As more fully discussed elsewhere in this Annual Report, if any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity. Our officers and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. We may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity to which an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by making a specified future issuance to any such entity.
We currently maintain our executive offices at 40 West 57th Street, 33rd Floor, New York, NY 10019. The cost for our use of this space is included in the $10,000 per month fee we pay to an affiliate of our Sponsor for office space, administrative and support services. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
No compensation of any kind, including finder’s and consulting fees, will be paid to our Sponsor, officers and directors, or their respective affiliates, for services rendered prior to or in connection with the completion of an initial business combination. However, these individuals will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made by us to our Sponsor, officers, directors or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
Prior to the consummation of our Initial Public Offering, our Sponsor agreed to loan us up to $300,000 to be used for a portion of the expenses of the Initial Public Offering. The loan was repaid upon the closing of the Initial Public Offering out of the offering proceeds not held in the Trust Account.
In addition, in order to finance transaction costs in connection with an intended initial business combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete an initial business combination, we may repay such loaned amounts out of the proceeds of the trust account released to us. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $2,000,000 of such loans may be convertible into warrants at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants, including as to exercise price, exercisability and exercise period. The terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our Sponsor, its affiliates or our management team as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
After our initial business combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to our shareholders, to the extent then known, in the definitive Proxy Statement as applicable, furnishedfor the 2021 Annual Meeting of Stockholders to our shareholders. Itbe filed with the Securities and Exchange Commission within 120 days of December 31, 2021.
We have entered into a registration and shareholder rights agreement pursuant to which our Sponsor will be entitled to certain registration rights with respect to the Private Placement Warrants, the warrants issuable upon conversion of working capital loans (if any) and the Class A ordinary shares issuable upon exercise of the foregoing and upon conversion of the founder shares, and, upon consummation of our initial business combination, to nominate three individuals for appointment to our board of directors, as long as the Sponsor holds any securities
covered by the registration and shareholder rights agreement, which is filed as Exhibit 10.9 to this Annual Report. We will bear the expenses incurred in connection with the filingSecurities and Exchange Commission within 120 days of any such registration statements.
Policy for Approval of Related Party Transactions
The audit committee of our board of directors has adopted a charter, providing for the review, approval and/or ratification of “related party transactions,” which are those transactions required to be disclosed pursuant to Item 404 of Regulation S-K as promulgated by the SEC, by the audit committee. At its meetings, the audit committee shall be provided with the details of each new, existing, or proposed related party transaction, including the terms of the transaction, any contractual restrictions that the Company has already committed to, the business purpose of the transaction, and the benefits of the transaction to the Company and to the relevant related party. Any member of the committee who has an interest in the related party transaction under review by the committee shall abstain from voting on the approval of the related party transaction, but may, if so requested by the chairman of the committee, participate in some or all of the committee’s discussions of the related party transaction. Upon completion of its review of the related party transaction, the committee may determine to permit or to prohibit the related party transaction.
Item 14. Principal Accountant Fees and Services.
The firm of WithumSmith+Brown, PC, or Withum, acts as our independent registered public accounting firm. The following is a summary of fees paid to Withum for services rendered.
Audit Fees. During the period from August 20, 2020 (inception) through December 31, 2020, fees for our independent registered public accounting firm were approximately $70,555 for the services Withum performed in connection with our Initial Public Offering, review2021.
Audit-Related Fees. During the period from August 20, 2020 (inception) through December 31, 2020, our independent registered public accounting firm did not render assurance and related services related to the performance10-K Summary.
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Exhibit Number | Description | ||||||||
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None.
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We hereby file or incorporate by reference as part of this Annual Report the exhibits listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates or on the SEC website at www.sec.gov.
Exhibit Number | Description | |||||||
10.6+ | ||||||||
10.25*+ | ||||||||
21.1* | ||||||||
23.1* | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1* | ||||||||
32.2* | ||||||||
101* | Interactive data files pursuant to Rule 405 of Regulation S-T, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated and Combined Statements of Financial Condition as of December 31, 2021 and December 31, 2020, (ii) the Consolidated and Combined Statements of Operations for the years ended December 31, 2021, 2020 and 2019, (iii) the Consolidated and Combined Statements of Changes in Shareholders’ Equity (Deficit) for the years ended December 31, 2021, 2020 and 2019, (iv) the Consolidated and Combined Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019, and (v) the Notes to the Consolidated and Combined Financial Statements | |||||||
104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
+ | Indicates a management or compensatory plan | |||||||
* Filed herewith.
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KNOW ALL BY THESE PRESENTS, that each of the undersigned constitutes and appoints each of Tom Wasserman and Wendy Lai, each acting alone, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for such person and in his or her name, place and stead, in any and all capacities, to sign this annual report on Form 10-K (including amendments thereto), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that any such attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
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By: | /s/
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Alan Kirshenbaum | |||||||||||||
Chief |
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Name | Title | |||||||||
/s/
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Douglas I. Ostrover | ||||||||||
/s/ Marc S. Lipschultz | Co-President and Director | |||||||||
Marc S. Lipschultz | ||||||||||
/s/ Michael Rees | Co-President and Director | |||||||||
Michael Rees | ||||||||||
/s/ Alan Kirshenbaum | Chief Financial Officer | |||||||||
Alan Kirshenbaum | (Principal Financial Officer and Principal Accounting Officer) | |||||||||
/s/
| Director | |||||||||
Claudia Holz | ||||||||||
/s/
| Director | |||||||||
Andrew S. Komaroff | ||||||||||
/s/
| Director | |||||||||
Craig W. Packer | ||||||||||
/s/
| Director | |||||||||
Stacy Polley | ||||||||||
/s/
| Director | |||||||||
Sean Ward | ||||||||||
/s/
| Director | |||||||||
Dana Weeks | ||||||||||
/s/
| Director | |||||||||
Marc Zahr | ||||||||||
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ALTIMAR ACQUISITION CORPORATION
Page | ||||||||
Report of Independent Registered Public Accounting Firm | ||||||||
Consolidated and Combined Statements of Financial | ||||||||
Consolidated and Combined Statements of Operations for the years ended December 31, 2021, 2020 and 2019 | ||||||||
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for the years ended December 31, 2021, 2020 and 2019 | ||||||||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Altimar Acquisition Corporation
accounting principles.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated and combined financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated and combined financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated and combined financial statements. We believe that our audits provide a reasonable basis for our opinion.
KPMG LLP
2016.
ALTIMAR ACQUISITION CORPORATION
DECEMBER 31, 2020
ASSETS | ||||
Current assets | ||||
Cash | $ | 928,766 | ||
Prepaid expenses | 349,388 | |||
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Total Current Assets | 1,278,154 | |||
Cash and marketable securities held in Trust Account | 275,038,028 | |||
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TOTAL ASSETS | $ | 276,316,182 | ||
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LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
Current liabilities | ||||
Accrued expenses | $ | 93,136 | ||
Accrued offering costs | 48,965 | |||
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Total Current Liabilities | 142,101 | |||
Deferred underwriting fee payable | 9,625,000 | |||
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Total Liabilities | 9,767,101 | |||
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Commitments and Contingencies | ||||
Class A ordinary shares subject to possible redemption, 26,154,908 shares at $10.00 per share | 261,549,080 | |||
Shareholders’ Equity | ||||
Preference shares, $0.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding | — | |||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 1,345,092 shares issued and outstanding (excluding 26,154,908 shares subject to possible redemption) | 135 | |||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 6,875,000 shares issued and outstanding | 688 | |||
Additional paid-in capital | 5,260,809 | |||
Accumulated deficit | (261,631 | ) | ||
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Total Shareholders’ Equity | 5,000,001 | |||
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 276,316,182 | ||
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Consolidated and Combined Statements of Financial Condition
December 31, 2021 | December 31, 2020 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 42,567 | $ | 11,630 | |||||||
Due from related parties | 224,576 | 92,698 | |||||||||
Operating lease assets | 86,033 | — | |||||||||
Strategic Revenue-Share Purchase consideration, net | 495,322 | — | |||||||||
Deferred tax assets | 635,624 | 800 | |||||||||
Intangible assets, net | 2,611,411 | — | |||||||||
Goodwill | 4,132,245 | — | |||||||||
Other assets, net | 38,620 | 16,469 | |||||||||
Total Assets | $ | 8,266,398 | $ | 121,597 | |||||||
Liabilities | |||||||||||
Debt obligations, net | $ | 1,174,167 | $ | 356,386 | |||||||
Accrued compensation | 155,606 | 207,957 | |||||||||
Operating lease liabilities | 88,480 | — | |||||||||
Deferred tax liabilities | 48,962 | — | |||||||||
TRA liability (includes $111,325 and $— at fair value) | 670,676 | — | |||||||||
Warrant liability, at fair value | 68,798 | — | |||||||||
Earnout liability | 143,800 | — | |||||||||
Accounts payable, accrued expenses and other liabilities | 68,339 | 58,415 | |||||||||
Total Liabilities | 2,418,828 | 622,758 | |||||||||
Commitments and Contingencies (Note 11) | 0 | 0 | |||||||||
Shareholders’ Equity (Deficit) | |||||||||||
Members’ deficit prior to the Business Combination | — | (507,687) | |||||||||
Class A Shares, par value $0.0001 per share, 2,500,000,000 and none authorized, 404,919,411 and none issued and outstanding | 40 | — | |||||||||
Class C Shares, par value $0.0001 per share, 1,500,000,000 and none authorized, 674,766,200 and none issued and outstanding | 67 | — | |||||||||
Class D Shares, par value $0.0001 per share, 350,000,000 and none authorized, 319,132,127 and none issued and outstanding | 32 | — | |||||||||
Additional paid-in capital | 2,160,934 | — | |||||||||
Accumulated deficit | (497,506) | — | |||||||||
Total Shareholders’ Equity Attributable to Blue Owl Capital Inc. | 1,663,567 | — | |||||||||
Shareholders’ equity attributable to noncontrolling interests | 4,184,003 | 6,526 | |||||||||
Total Shareholders’ Equity (Deficit) | 5,847,570 | (501,161) | |||||||||
Total Liabilities and Shareholders’ Equity (Deficit) | $ | 8,266,398 | $ | 121,597 |
ALTIMAR ACQUISITION CORPORATION
FOR THE PERIOD FROM AUGUST 20, 2020 (INCEPTION) THROUGH DECEMBER
Year Ended December 31, | |||||||||||||||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||
Management fees, net (includes Part I Fees of $150,370, $34,404 and $11,515) | $ | 667,935 | $ | 194,906 | $ | 123,957 | |||||||||||||||||||||||
Administrative, transaction and other fees | 150,037 | 54,909 | 66,893 | ||||||||||||||||||||||||||
Realized performance income | 5,906 | — | — | ||||||||||||||||||||||||||
Total Revenues, Net | 823,878 | 249,815 | 190,850 | ||||||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||
Compensation and benefits | 1,496,988 | 240,731 | 111,773 | ||||||||||||||||||||||||||
Amortization of intangible assets | 113,889 | — | — | ||||||||||||||||||||||||||
General, administrative and other expenses | 140,268 | 67,811 | 51,710 | ||||||||||||||||||||||||||
Total Expenses | 1,751,145 | 308,542 | 163,483 | ||||||||||||||||||||||||||
Other Loss | |||||||||||||||||||||||||||||
Net losses on investments | (3,526) | — | — | ||||||||||||||||||||||||||
Net losses on retirement of debt | (17,636) | — | — | ||||||||||||||||||||||||||
Interest expense | (27,275) | (23,816) | (6,662) | ||||||||||||||||||||||||||
Change in TRA liability | (13,848) | — | — | ||||||||||||||||||||||||||
Change in warrant liability | (43,670) | — | — | ||||||||||||||||||||||||||
Change in earnout liability | (834,255) | — | — | ||||||||||||||||||||||||||
Total Other Loss | (940,210) | (23,816) | (6,662) | ||||||||||||||||||||||||||
Loss Before Income Taxes | (1,867,477) | (82,543) | 20,705 | ||||||||||||||||||||||||||
Income tax benefit | (65,211) | (102) | 240 | ||||||||||||||||||||||||||
Consolidated and Combined Net Loss | (1,802,266) | (82,441) | 20,465 | ||||||||||||||||||||||||||
Net loss attributable to noncontrolling interests | 1,426,095 | 4,610 | 2,493 | ||||||||||||||||||||||||||
Net Loss Attributable to Blue Owl Capital Inc. (After May 19, 2021) / Owl Rock (Prior to May 19, 2021) | $ | (376,171) | $ | (77,831) | $ | 22,958 | |||||||||||||||||||||||
May 19, 2021 through December 31, 2021 | |||||||||||||||||||||||||||||
Net Loss Attributable to Class A Shares | $ | (450,430) | |||||||||||||||||||||||||||
Net Loss per Class A Share | |||||||||||||||||||||||||||||
Basic | $ | (1.27) | |||||||||||||||||||||||||||
Diluted | $ | (1.34) | |||||||||||||||||||||||||||
Weighted-Average Class A Shares | |||||||||||||||||||||||||||||
Basic(1) | 354,949,067 | ||||||||||||||||||||||||||||
Diluted | 1,315,186,416 |
Formation and operational costs | $ | 299,659 | ||
|
| |||
Loss from operations | (299,659 | ) | ||
Other income: | ||||
Interest earned on marketable securities held in Trust Account | 38,028 | |||
|
| |||
Net Loss | $ | (261,631 | ) | |
|
| |||
Weighted average shares outstanding of Class A redeemable ordinary shares | 27,000,000 | |||
|
| |||
Basic and diluted net income per share, Class A | $ | 0.00 | ||
|
| |||
Weighted average shares outstanding of Class B non-redeemable ordinary shares | 6,518,595 | |||
|
| |||
Basic and diluted net loss per share, Class B | $ | (0.05 | ) | |
|
|
2021, were 9,191,642 RSUs that have vested but have not been settled in Class A Shares. These RSUs do not participate in dividends until settled in Class A Shares. See Note 13.
ALTIMAR ACQUISITION CORPORATION
FOR THE PERIOD FROM AUGUST 20, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
Balance — August 20, 2020 (inception) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Issuance of Class B ordinary shares to Sponsor | — | — | 7,187,500 | 719 | 24,281 | — | 25,000 | |||||||||||||||||||||
Sale of 27,500,000 Units, net of underwriting discounts and offering costs | 27,500,000 | 2,750 | — | — | 259,282,962 | — | 259,285,712 | |||||||||||||||||||||
Sale of 5,000,000 Private Placement Warrants | — | — | — | — | 7,500,000 | — | 7,500,000 | |||||||||||||||||||||
Forfeiture of Founder Shares | — | — | (312,500 | ) | (31 | ) | 31 | — | — | |||||||||||||||||||
Class A ordinary shares subject to possible redemption | (26,154,908 | ) | (2,615 | ) | — | — | (261,546,465 | ) | — | (261,549,080 | ) | |||||||||||||||||
Net loss | — | — | — | — | — | (261,631 | ) | (261,631 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance — December 31, 2020 | 1,345,092 | $ | 135 | 6,875,000 | $ | 688 | $ | 5,260,809 | $ | (261,631 | ) | $ | 5,000,001 | |||||||||||||||
|
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|
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|
|
Blue Owl Capital Inc. | |||||||||||||||||||||||||||||
Consolidated and Combined Statements of Changes in Shareholders’ Equity (Deficit) | |||||||||||||||||||||||||||||
(Prior to May 19, 2021, Owl Rock) | |||||||||||||||||||||||||||||
(Dollars in Thousands, Except Per Share Data) | |||||||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||||||||||||||
Members’ Deficit Prior to the Business Combination | |||||||||||||||||||||||||||||
Beginning balance | $ | (507,687) | $ | (352,756) | $ | (69,916) | |||||||||||||||||||||||
Contributions | — | — | 13,435 | ||||||||||||||||||||||||||
Distributions | (103,143) | (77,100) | (319,233) | ||||||||||||||||||||||||||
Comprehensive income (loss) prior to the Business Combination Date | 74,259 | (77,831) | 22,958 | ||||||||||||||||||||||||||
Transfer of predecessor members’ deficit to additional paid-in capital and noncontrolling interests | 536,571 | — | — | ||||||||||||||||||||||||||
Ending Balance | $ | — | $ | (507,687) | $ | (352,756) | |||||||||||||||||||||||
Class A Shares Par Value | |||||||||||||||||||||||||||||
Beginning balance | $ | — | $ | — | $ | — | |||||||||||||||||||||||
Impact of the Business Combination | 32 | — | — | ||||||||||||||||||||||||||
Share issuance in connection with Strategic Revenue-Share Purchase | 3 | — | — | ||||||||||||||||||||||||||
Settlement of Earnout Securities | 1 | — | — | ||||||||||||||||||||||||||
Class C Shares and Common Units exchanged for Class A Shares | 4 | — | — | ||||||||||||||||||||||||||
Ending Balance | $ | 40 | $ | — | $ | — | |||||||||||||||||||||||
Class C Shares Par Value | |||||||||||||||||||||||||||||
Beginning balance | $ | — | $ | — | $ | — | |||||||||||||||||||||||
Impact of the Business Combination | 63 | — | — | ||||||||||||||||||||||||||
Settlement of Earnout Securities | 6 | — | — | ||||||||||||||||||||||||||
Class C Shares and Common Units exchanged for Class A Shares | (4) | — | — | ||||||||||||||||||||||||||
Class C Shares issued as consideration related to the Oak Street Acquisition | 2 | — | — | ||||||||||||||||||||||||||
Ending Balance | $ | 67 | $ | — | $ | — | |||||||||||||||||||||||
Class D Shares Par Value | |||||||||||||||||||||||||||||
Beginning balance | $ | — | $ | — | $ | — | |||||||||||||||||||||||
Impact of the Business Combination | 29 | — | — | ||||||||||||||||||||||||||
Settlement of Earnout Securities | 3 | — | — | ||||||||||||||||||||||||||
Ending Balance | $ | 32 | $ | — | $ | — | |||||||||||||||||||||||
Class E Shares Par Value | |||||||||||||||||||||||||||||
Beginning balance | $ | — | $ | — | $ | — | |||||||||||||||||||||||
Impact of the Business Combination | 1 | — | — | ||||||||||||||||||||||||||
Settlement of Earnout Securities | (1) | — | — | ||||||||||||||||||||||||||
Ending Balance | $ | — | $ | — | $ | — |
Blue Owl Capital Inc. | |||||||||||||||||||||||||||||
Consolidated and Combined Statements of Changes in Shareholders’ Equity (Deficit) | |||||||||||||||||||||||||||||
(Prior to May 19, 2021, Owl Rock) | |||||||||||||||||||||||||||||
(Dollars in Thousands, Except Per Share Data) | |||||||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||||||||||||||
Additional Paid-in Capital | |||||||||||||||||||||||||||||
Beginning balance | $ | — | $ | — | $ | — | |||||||||||||||||||||||
Transfer of predecessor Owl Rock members’ deficit to additional paid-in capital and noncontrolling interests | (138,133) | — | — | ||||||||||||||||||||||||||
Cash proceeds from the Business Combination | 1,738,478 | — | — | ||||||||||||||||||||||||||
Offering costs related to the Business Combination | (126,309) | — | — | ||||||||||||||||||||||||||
Allocation of cash proceeds to warrant liability | (25,128) | — | — | ||||||||||||||||||||||||||
Allocation to earnout liability for Class E Shares issued in connection with the Business Combination | (83,949) | — | — | ||||||||||||||||||||||||||
Deferred taxes recognized in the Business Combination | 504,551 | — | — | ||||||||||||||||||||||||||
TRA liability recognized in the Business Combination | (359,388) | — | — | ||||||||||||||||||||||||||
Reallocation between additional paid-in capital and noncontrolling interests related to the Business Combination | (325,222) | — | — | ||||||||||||||||||||||||||
Share issuance in connection with Strategic Revenue-Share Purchase | 455,020 | — | — | ||||||||||||||||||||||||||
Offering costs related to share issuance in connection with Strategic Revenue-Share Purchase | (687) | — | — | ||||||||||||||||||||||||||
Exercise of warrants | 2 | — | — | ||||||||||||||||||||||||||
Equity-based compensation | 331,926 | — | — | ||||||||||||||||||||||||||
Settlement of Earnout Securities | 198,704 | — | — | ||||||||||||||||||||||||||
Acquisition of noncontrolling interests | (74,684) | — | — | ||||||||||||||||||||||||||
Deferred taxes on capital transactions subsequent to the Business Combination | 164,741 | — | — | ||||||||||||||||||||||||||
TRA liability recognized on capital transactions subsequent to the Business Combination | (195,795) | — | — | ||||||||||||||||||||||||||
Reallocation between additional paid-in capital and noncontrolling interests due to changes in Blue Owl Operating Group ownership subsequent to the Business Combination | 96,807 | — | — | ||||||||||||||||||||||||||
Ending Balance | $ | 2,160,934 | $ | — | $ | — | |||||||||||||||||||||||
Accumulated Deficit | |||||||||||||||||||||||||||||
Beginning balance | $ | — | $ | — | $ | — | |||||||||||||||||||||||
Cash dividends declared on Class A Shares | (47,076) | — | — | ||||||||||||||||||||||||||
Comprehensive loss following the Business Combination Date | (450,430) | — | — | ||||||||||||||||||||||||||
Ending Balance | $ | (497,506) | $ | — | $ | — | |||||||||||||||||||||||
Total Shareholders' Equity Attributable to Blue Owl Capital Inc. | $ | 1,663,567 | $ | — | $ | — | |||||||||||||||||||||||
Shareholders’ Equity Attributable to Noncontrolling Interests | |||||||||||||||||||||||||||||
Beginning balance | $ | 6,526 | $ | 2,259 | $ | (2,689) | |||||||||||||||||||||||
Transfer of predecessor Owl Rock members’ deficit to additional paid-in capital and noncontrolling interests | (398,438) | — | — | ||||||||||||||||||||||||||
Common Units issued as consideration related to the Dyal Acquisition | 4,285,359 | — | — | ||||||||||||||||||||||||||
Acquisition of noncontrolling interests in the Blue Owl Operating Group in connection with the Business Combination | (491,956) | — | — | ||||||||||||||||||||||||||
Allocation to earnout liability for Seller Earnout Units issued in the Business Combination | (160,540) | — | — | ||||||||||||||||||||||||||
Reallocation between additional paid-in capital and noncontrolling interests related to the Business Combination | 325,222 | — | — | ||||||||||||||||||||||||||
Common Units issued as consideration related to the Oak Street Acquisition | 329,767 | — | — | ||||||||||||||||||||||||||
Equity-based compensation | 1,026,020 | — | — | ||||||||||||||||||||||||||
Settlement of Earnout Securities | 1,126,828 | — | — | ||||||||||||||||||||||||||
Acquisition of noncontrolling interests | (222,370) | — | — | ||||||||||||||||||||||||||
Contributions | 15,734 | 9,831 | 8,460 | ||||||||||||||||||||||||||
Distributions | (135,244) | (954) | (1,019) | ||||||||||||||||||||||||||
Reallocation between additional paid-in capital and noncontrolling interests due to changes in Blue Owl Operating Group ownership subsequent to the Business Combination | (96,810) | — | — | ||||||||||||||||||||||||||
Comprehensive income (loss) | (1,426,095) | (4,610) | (2,493) | ||||||||||||||||||||||||||
Ending Balance | $ | 4,184,003 | $ | 6,526 | $ | 2,259 | |||||||||||||||||||||||
Total Shareholders' Equity | $ | 5,847,570 | $ | (501,161) | $ | (350,497) | |||||||||||||||||||||||
Blue Owl Capital Inc. | |||||||||||||||||||||||||||||
Consolidated and Combined Statements of Changes in Shareholders’ Equity (Deficit) | |||||||||||||||||||||||||||||
(Prior to May 19, 2021, Owl Rock) | |||||||||||||||||||||||||||||
(Dollars in Thousands, Except Per Share Data) | |||||||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||||||||||||||
Cash Dividends Paid per Class A Share | $ | 0.13 | $ | — | $ | — | |||||||||||||||||||||||
Number of Class A Shares | |||||||||||||||||||||||||||||
Beginning balance | — | — | — | ||||||||||||||||||||||||||
Impact of the Business Combination | 320,005,258 | — | — | ||||||||||||||||||||||||||
Shares issued in connection with Strategic Revenue-Share Purchase | 29,701,013 | — | — | ||||||||||||||||||||||||||
Settlement of Earnout Securities | 14,990,864 | — | — | ||||||||||||||||||||||||||
Class C Shares and Common Units exchanged for Class A Shares | 40,222,143 | — | — | ||||||||||||||||||||||||||
Exercise of warrants | 133 | — | — | ||||||||||||||||||||||||||
Ending Balance | 404,919,411 | — | — | ||||||||||||||||||||||||||
Number of Class C Shares | |||||||||||||||||||||||||||||
Beginning balance | — | — | — | ||||||||||||||||||||||||||
Impact of the Business Combination | 628,380,707 | — | — | ||||||||||||||||||||||||||
Settlement of Earnout Securities | 60,533,306 | — | — | ||||||||||||||||||||||||||
Class C Shares and Common Units exchanged for Class A Shares | (40,222,143) | — | — | ||||||||||||||||||||||||||
Common Units issued as consideration for Oak Street Acquisition | 26,074,330 | — | — | ||||||||||||||||||||||||||
Ending Balance | 674,766,200 | — | — | ||||||||||||||||||||||||||
Number of Class D Shares | |||||||||||||||||||||||||||||
Beginning balance | — | — | — | ||||||||||||||||||||||||||
Impact of the Business Combination | 294,656,373 | — | — | ||||||||||||||||||||||||||
Settlement of Earnout Securities | 24,475,754 | — | — | ||||||||||||||||||||||||||
Ending Balance | 319,132,127 | — | — | ||||||||||||||||||||||||||
Number of Class E Shares | |||||||||||||||||||||||||||||
Beginning balance | — | — | — | ||||||||||||||||||||||||||
Impact of the Business Combination | 14,990,864 | — | — | ||||||||||||||||||||||||||
Settlement of Earnout Securities | (14,990,864) | — | — | ||||||||||||||||||||||||||
Ending Balance | — | — | — |
ALTIMAR ACQUISITION CORPORATION
FOR THE PERIOD FROM AUGUST 20, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
Cash Flows from Operating Activities: | ||||
Net loss | $ | (261,631 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Payment of formation costs in exchange for issuance of Class B ordinary shares | 5,000 | |||
Interest earned on marketable securities held in Trust Account | (38,028 | ) | ||
Changes in operating assets and liabilities: | ||||
Prepaid expenses | (349,388 | ) | ||
Accrued expenses | 93,136 | |||
|
| |||
Net cash used in operating activities | (550,911 | ) | ||
|
| |||
Cash Flows from Investing Activities: | ||||
Investment of cash in Trust Account | (275,000,000 | ) | ||
|
| |||
Net cash used in investing activities | (275,000,000 | ) | ||
|
| |||
Cash Flows from Financing Activities: | ||||
Proceeds from sale of Units, net of underwriting discounts paid | 269,500,000 | |||
Proceeds from sale of Private Placement Warrants | 7,500,000 | |||
Proceeds from promissory note – related party | 5,000 | |||
Repayment of promissory note – related party | (99,890 | ) | ||
Payments of offering costs | (425,433 | ) | ||
|
| |||
Net cash provided by financing activities | 276,479,677 | |||
|
| |||
Net Change in Cash | 928,766 | |||
Cash – Beginning | — | |||
|
| |||
Cash – Ending | $ | 928,766 | ||
|
| |||
Non-Cash Investing and Financing Activities: | ||||
Offering costs included in accrued offering costs | $ | 48,965 | ||
|
| |||
Offering costs paid directly by Sponsor from proceeds of issuance of Class B ordinary shares | $ | 20,000 | ||
|
| |||
Offering costs paid through promissory note – related party | $ | 94,890 | ||
|
| |||
Initial classification of Class A ordinary shares subject to possible redemption | $ | 261,805,710 | ||
|
| |||
Change in value of Class A ordinary shares subject to possible redemption | $ | (256,630 | ) | |
|
| |||
Deferred underwriting fee payable | $ | 9,625,000 | ||
|
|
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
Cash Flows from Operating Activities | |||||||||||||||||
Consolidated and combined net (loss) income | $ | (1,802,266) | $ | (82,441) | $ | 20,465 | |||||||||||
Adjustments to reconcile consolidated and combined net loss to net cash from operating activities: | |||||||||||||||||
Amortization of intangible assets | 113,889 | — | — | ||||||||||||||
Equity-based compensation | 1,205,336 | — | — | ||||||||||||||
Depreciation and amortization of fixed assets | 665 | 673 | 829 | ||||||||||||||
Amortization of debt discounts and deferred financing costs | 1,868 | 787 | 225 | ||||||||||||||
Amortization of investment discounts and premiums | 1,692 | — | — | ||||||||||||||
Non-cash lease expense | 1,974 | — | — | ||||||||||||||
Net losses on retirement of debt | 17,636 | — | — | ||||||||||||||
Net losses on investments, net of dividends | 3,583 | — | — | ||||||||||||||
Change in TRA liability | 13,848 | — | — | ||||||||||||||
Change in warrant liability | 43,670 | — | — | ||||||||||||||
Change in earnout liability | 834,255 | — | — | ||||||||||||||
Deferred income taxes | (66,138) | (475) | 159 | ||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||
Due from related parties | (105,376) | (49,824) | (12,407) | ||||||||||||||
Strategic Revenue-Share Purchase consideration | (40,997) | — | — | ||||||||||||||
Other assets, net | (2,095) | (9,747) | 2,060 | ||||||||||||||
Accrued compensation | 92,742 | 135,108 | 39,295 | ||||||||||||||
Accounts payable, accrued expenses and other liabilities | (32,628) | 11,153 | (6,562) | ||||||||||||||
Net Cash Provided by Operating Activities | 281,658 | 5,234 | 44,064 | ||||||||||||||
Cash Flows from Investing Activities | |||||||||||||||||
Purchase of fixed assets | (5,261) | (652) | (1,173) | ||||||||||||||
Purchase of investments | (328,797) | — | — | ||||||||||||||
Proceeds from investment sales and maturities | 314,052 | — | — | ||||||||||||||
Cash consideration paid for Dyal Acquisition and Oak Street Acquisition, net of cash acquired | (1,578,866) | — | — | ||||||||||||||
Proceeds from promissory note | — | (30,000) | — | ||||||||||||||
Repayments of promissory note | — | 30,000 | — | ||||||||||||||
Net Cash Used in Investing Activities | (1,598,872) | (652) | (1,173) | ||||||||||||||
Cash Flows from Financing Activities | |||||||||||||||||
Cash proceeds from the Business Combination | 1,738,603 | — | — | ||||||||||||||
Offering costs related to the Business Combination | (126,309) | — | — | ||||||||||||||
Acquisition of noncontrolling interests in the Blue Owl Operating Group in connection with the Business Combination | (491,956) | — | — | ||||||||||||||
Acquisition of noncontrolling interests | (297,054) | — | — | ||||||||||||||
Proceeds from debt obligations | 1,390,296 | 240,547 | 344,944 | ||||||||||||||
Debt issuance costs | (17,864) | (594) | (4,151) | ||||||||||||||
Repayments of debt obligations, including retirement costs | (577,835) | (171,458) | (83,590) | ||||||||||||||
Contributions from members prior to the Business Combination | — | 9,264 | 20,042 | ||||||||||||||
Dividends paid on Class A Shares | (47,076) | — | — | ||||||||||||||
Distributions to members prior to the Business Combination | (103,144) | (78,054) | (320,252) | ||||||||||||||
Contributions from noncontrolling interests | 15,734 | — | — | ||||||||||||||
Distributions to noncontrolling interests | (135,244) | — | — | ||||||||||||||
Net Cash Provided by (Used in) Financing Activities | 1,348,151 | (295) | (43,007) | ||||||||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 30,937 | 4,287 | (116) | ||||||||||||||
Cash and cash equivalents, beginning of period | 11,630 | 7,343 | 7,459 | ||||||||||||||
Cash and Cash Equivalents, End of Period | $ | 42,567 | $ | 11,630 | $ | 7,343 | |||||||||||
Supplemental Information | |||||||||||||||||
Cash paid for interest | $ | 25,009 | $ | 23,231 | $ | 2,697 | |||||||||||
Cash paid for income taxes | $ | 4,353 | $ | 142 | $ | 359 |
ALTIMAR ACQUISITION CORPORATION
DECEMBER 31, 2020
NOTE
operating and reportable segment. This single reportable segment reflects how the chief operating decision makers allocate resources and assess performance under the Company’s “one-firm approach,” which includes operating collaboratively across product lines, with predominantly a single expense pool.
The Company is not limited to a particular industry or sector As further discussed in Note 2, for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such,both the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of December 31, 2020, the Company had not commenced any operations. All activity for the period from August 20, 2020 (inception) through December 31, 2020 relates to the Company’s formationAltimar Merger and the initial public offering (“Initial Public Offering”), whichDyal Acquisition, Owl Rock was deemed to be the acquirer for accounting purposes. Therefore, the predecessor to Blue Owl is described below, identifying“Owl Rock,” a target company for a Business Combination, activities in connection with the proposed acquisitioncombined carve-out of Owl Rock Capital Group LLC and Blue Owl Securities LLC (formerly, Owl Rock Capital Securities LLC) (“Securities”). See Note 3 for additional information.
The registration statement for the Company’s Initial Public Offering was declared effective on October 22, 2020. On October 27, 2020, the Company consummated the Initial Public Offering of 25,000,000 units (the “Units” and, with respectissued warrants to thepurchase Class A ordinary shares included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $250,000,000 which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 4,666,667 warrants (the “Private Placement Warrants”)Shares at a price of $1.50$11.50 per share. The warrants expire five years from the Business Combination Date. A portion of the outstanding warrants are held by the sponsor of Altimar (“Private Placement WarrantWarrants”) and the remaining warrants are held by other third-party investors (“Public Warrants”). The Company generally may redeem all Public Warrants for $0.01 per warrant if the Company’s Class A Share price equals or exceeds $18.00 per share. If the Company’s Class A Share price is greater than $10.00 per share but less than $18.00 per share, the Company generally may redeem all Public Warrants for $0.10 per warrant. In each case, any redemptions require a 30-day notice to the warrant holders, during which time the holders may elect to exercise their warrants, and such redemptions must be done for not less than all of the outstanding Public Warrants. Holders may elect to exercise their warrants on a cashless basis.
December 31, 2021 | ||||||||
Class A Shares | 404,919,411 | |||||||
Class C Shares | 674,766,200 | |||||||
Class D Shares | 319,132,127 | |||||||
RSUs | 21,059,443 | |||||||
Warrants | 14,159,248 |
Following the closing8. Incentive Units are held indirectly through Blue Owl Management Vehicle LP on behalf of the Initial Public OfferingIncentive Unit Grantees. A vested Incentive Unit may convert into a Common Unit upon becoming economically equivalent on October 27, 2020, an amount of $250,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Unitsa tax basis to a Common Unit. Once vested, Incentive Unitholders are entitled to distributions in the Initial Public Offeringsame amount per unit as declared on GP Units and the saleCommon Units. Unvested Incentive Unitholders generally are not entitled to distributions; however, consistent with other Blue Owl Operating Group Units (other than Oak Street Earnout Units), unvested Incentive Units receive taxable income allocations that may subject holders to tax liabilities. As a result, Incentive Unitholders (consistent with other Blue Owl Operating Group Units other than Oak Street Earnout Units) may receive tax distributions on unvested units to cover a portion or all of the Private Placement Warrants was placed in a trust account (the “Trust Account”), and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earliest of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below.
On November 5, 2020, the underwriters elected to partially exercise their over-allotment option for which the Company consummated the sale of an additional 2,500,000such tax liabilities.
Total transaction costs amounted to $15,714,288, consisting of $5,500,000 of underwriting fees, $9,625,000 of deferred underwriting feesBlue Owl Operating Partnerships that had the same Class E Triggering Events, forfeiture provisions and $589,288 of other offering costs.
The Company’s management has broad discretiondistribution restrictions as the Class E Shares. In connection with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The stock exchange listing rules require that the Business Combination, must be with onerecipients of Earnout Securities had the option of selecting either Class E Shares or more operating businesses or assets withSeller Earnout Units. For recipients that elected to receive Class E Shares, a fair market valuecorresponding number of Seller Earnout Units were indirectly held by the Registrant. As of December 31, 2021, there were no Seller Earnout Units remaining outstanding.
The Company will provide the holders of the publicconverted Common Units (30,266,653 Class C Shares and 12,237,877 Class D Shares).
Units | December 31, 2021 | |||||||
GP Units | 404,919,411 | |||||||
Common Units | 993,898,327 | |||||||
Incentive Units | 23,244,373 | |||||||
Oak Street Earnout Units | 26,074,330 |
ALTIMAR ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 and, if the Company seeks shareholder approval, it receives an ordinary resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the Company. If a shareholder vote is not required and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination. If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Shareholder may elect to redeem their Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against a proposed Business Combination.
Notwithstanding the foregoing, if the Company seeks shareholder approval of the Business Combination and the Company does not conduct redemptions pursuant to the tender offer rules, a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public Shares without the Company’s prior written consent.
The Sponsor has agreed (a) to waive its redemption rights with respect to any Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Memorandum and Articles of Association (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity, unless the Company provides the Public Shareholders with the opportunity to redeem their Public Shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the Trust account and not previously released to pay taxes, divided by the number of then issued and outstanding Public Shares.
The Company will have until October 27, 2022 to consummate a Business Combination (the “Combination Period”). However, if the Company has not completed a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned and not previously released to us to pay our taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish the rights of the Public Shareholders as shareholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining Public Shareholders and its Board of Directors, liquidate and dissolve, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
The Sponsor has agreed to waive its rights to liquidating distributions from the Trust Account with respect to the Founder Shares it will receive if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor or any of its respective affiliates acquire Public Shares, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period, and in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per sharefair value of the net assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).
In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below the lesser of (1) $10.00 per Public Share and (2) the actual amount per Public Share held in the Trust Accountacquired as of the closing date of the liquidation of the Trust Account, if less than $10.00 per Public Share, due to reductions in the value of trust assets, in each case net of the interest that may be withdrawn to pay taxes. This liability will not apply to any claims by a third party who executed a waiver of anyrespective acquisition, and all rights to seek access to the Trust Account andoperating results for each acquired business are included starting as to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the
ALTIMAR ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
“Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”).
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dateseach respective date. See Note 3 for public or private companies,additional information regarding the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Acquisitions.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible thatearnout liability; (iv) the estimate of future taxable income, which impacts the effect of a condition, situation or set of circumstances that existed at the daterealizability and carrying amount of the Company’s deferred income tax assets; and (v) the qualitative and quantitative assessments of whether impairments of acquired intangible assets and goodwill exist. Inherent in such estimates and judgements relating to future cash flows, which include the Company’s interpretation of current economic indicators and market valuations, and assumptions about the Company’s strategic plans with regard to its operations. While management believes that the estimates utilized in preparing the consolidated and combined financial statements which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, theare reasonable and prudent, actual results could differ significantlymaterially from those estimates.
the Strategic Revenue-Share Purchase, and therefore determined that the consideration paid to the customers represents a reduction of the transaction price (i.e., a reduction to revenue). Accordingly, the total consideration paid was recorded within Strategic Revenue-Share Purchase consideration in the Company’s consolidated statements of financial condition and is being amortized as a reduction of management fees, net in the Company’s consolidated statements of operations. See Note 6 for additional information.
At December 31, 2020,connection with the Dyal Acquisition to the former owners of Dyal Capital who are not part of the continuing management team were treated as contingent consideration and not considered indexed to the Company’s equity. Similarly, Earnout Securities issued to certain former owners of Owl Rock were not considered indexed to the Company’s equity. These Earnout Securities were accounted for as liabilities carried at fair value, with changes in fair value included within change in earnout liability in the Company’s consolidated and combined statements of operations. Earnout Securities issued to certain employees in connection with the Business Combination were treated as compensation for post-combination employment services and accounted for as equity-based compensation. As a result of the Class E Triggering Events, the Earnout Securities were settled in 2021.
Class A Ordinary Shares Subjectcertain products. The Company recognizes carried interest only to Possible Redemption
the extent that it is not probable that a significant reversal will occur for amounts recognized. Generally carried interest is earned after a return of all contributions and may be subject to a preferred return to investors; however, the Company is able to catch-up amounts subject to the preferred return in certain cases. Substantially all of the carried interest generated by the Company’s products is allocable to investors, including certain related parties, in vehicles in which the Company does not have a controlling financial interest, and therefore is not included in the Company’s consolidated and combined financial statements.
ALTIMAR ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
uncertain events not solely withinSee Note 8 for additional information on the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. equity-based compensation plans.
Deferred Offering Costs
Offering costs consist of legal, accountingassets and other expenses incurred throughliabilities are measured at the balance sheet date thatusing enacted income tax rates expected to apply to taxable income in the years the temporary differences are directlyexpected to reverse. The Company offsets deferred income tax assets and liabilities for presentation in its consolidated and combined statements of financial condition when such assets and liabilities are within the same taxpayer and related to the Initial Public Offering. Offering costs amounting to $15,714,288 were charged to shareholders’ equitysame taxing jurisdiction.
Income Taxes
ASC Topic 740 prescribescarryback or carryforward periods under the enacted tax law in the applicable tax jurisdiction. A valuation allowance is established when management determines, based on available information, that it is more-likely-than-not that deferred income tax assets will not be realized. Significant judgment is required in determining whether a recognition threshold and a measurement attribute forvaluation allowance should be established, as well as the financial statement recognition and measurementamount of such valuation allowance.
(dollars in thousands) | ||||||||
Consideration | ||||||||
Equity consideration(1) | $ | 4,285,359 | ||||||
Cash consideration(2) | 973,457 | |||||||
Tax receivable agreement(3) | 101,645 | |||||||
Earnout Securities(3) | 246,788 | |||||||
Total Consideration | $ | 5,607,249 | ||||||
Net Identifiable Assets Acquired and Goodwill | ||||||||
Assets acquired: | ||||||||
Due from related parties | $ | 13,442 | ||||||
Intangible assets: | ||||||||
Investment management agreements | 1,859,900 | |||||||
Investor relationships | 291,400 | |||||||
Trademarks | 66,700 | |||||||
Total intangible assets | 2,218,000 | |||||||
Deferred tax asset | 29,770 | |||||||
Other assets, net | 2,096 | |||||||
Total assets acquired | 2,263,308 | |||||||
Liabilities assumed: | ||||||||
Accrued compensation | 7,376 | |||||||
Deferred tax liability | 170,753 | |||||||
Accounts payable, accrued expenses and other liabilities | 41,352 | |||||||
Total liabilities assumed | 219,481 | |||||||
Net Identifiable Assets Acquired | $ | 2,043,827 | ||||||
Goodwill(4) | $ | 3,563,422 |
(dollars in thousands) | ||||||||
Consideration | ||||||||
Equity consideration(1) | $ | 329,767 | ||||||
Cash consideration(2) | 609,820 | |||||||
Earnout consideration(3) | 143,800 | |||||||
Total Consideration | $ | 1,083,387 | ||||||
Net Identifiable Assets Acquired and Goodwill | ||||||||
Assets acquired: | ||||||||
Cash and cash equivalents | $ | 4,411 | ||||||
Due from related parties | 13,060 | |||||||
Operating lease assets | 1,001 | |||||||
Intangible assets: | ||||||||
Investment management agreements | 323,300 | |||||||
Investor relationships | 157,400 | |||||||
Trademarks | 26,600 | |||||||
Total intangible assets | 507,300 | |||||||
Other assets, net | 198 | |||||||
Total assets acquired | 525,970 | |||||||
Liabilities assumed: | ||||||||
Operating lease liabilities | 1,001 | |||||||
Deferred tax liabilities | 8,587 | |||||||
Accounts payable, accrued expenses and other liabilities | 1,818 | |||||||
Total liabilities assumed | 11,406 | |||||||
Net Identifiable Assets Acquired | $ | 514,564 | ||||||
Goodwill(4) | $ | 568,823 |
(dollars in thousands) | ||||||||||||||||||||||||||
Oak Street Earnouts | Quarterly Management Fee Trigger | Earliest Date Trigger May Occur | Cash | Units | ||||||||||||||||||||||
Contingent consideration: | ||||||||||||||||||||||||||
First Oak Street Earnout | $22 million | January 1, 2023 | $ | 81,250 | — | |||||||||||||||||||||
Second Oak Street Earnout | $28 million | January 1, 2024 | 82,875 | — | ||||||||||||||||||||||
Compensation: | ||||||||||||||||||||||||||
First Oak Street Earnout | $22 million | January 1, 2023 | 43,484 | 13,037,165 | ||||||||||||||||||||||
Second Oak Street Earnout | $28 million | January 1, 2024 | 48,358 | 13,037,165 | ||||||||||||||||||||||
Total | $ | 255,967 | 26,074,330 |
(dollars in thousands) | |||||||||||||||||||||||
December 31, 2021 | Useful Life (in years) | Remaining Weighted-Average Amortization Period as of December 31, 2021 | |||||||||||||||||||||
Investment management agreements | $ | 2,183,200 | 1.0 | - | 20.0 | 13.4 years | |||||||||||||||||
Investor relationships | 448,800 | 10.0 | - | 13.0 | 10.7 years | ||||||||||||||||||
Trademarks | 93,300 | 7.0 | - | 7.0 | 6.6 years | ||||||||||||||||||
Total Intangible Assets | 2,725,300 | ||||||||||||||||||||||
Less: accumulated amortization | (113,889) | ||||||||||||||||||||||
Total Intangible Assets, Net | $ | 2,611,411 |
(dollars in thousands) | ||||||||
Period | Amortization | |||||||
2022 | $ | 247,593 | ||||||
2023 | 227,296 | |||||||
2024 | 227,919 | |||||||
2025 | 224,946 | |||||||
2026 | 213,389 | |||||||
Thereafter | 1,470,268 | |||||||
Total | $ | 2,611,411 |
(dollars in thousands) | |||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||
Maturity Date | Aggregate Facility Size | Outstanding Debt | Amount Available | Net Carrying Value | Average Interest Rate | ||||||||||||||||||||||||||||||
2031 Notes | 6/10/2031 | $ | 700,000 | $ | 700,000 | $ | — | $ | 684,154 | 3.13 | % | ||||||||||||||||||||||||
2051 Notes | 10/7/2051 | 350,000 | 350,000 | — | 337,013 | 4.13 | % | ||||||||||||||||||||||||||||
Revolving Credit Facility | 12/7/2024 | 640,000 | 153,000 | 487,000 | 153,000 | 1.86 | % | ||||||||||||||||||||||||||||
Total | $ | 1,690,000 | $ | 1,203,000 | $ | 487,000 | $ | 1,174,167 |
December 31, 2020 | |||||||||||||||||||||||||||||||||||
Maturity Date | Aggregate Facility Size | Outstanding Debt | Amount Available | Net Carrying Value | Average Interest Rate | ||||||||||||||||||||||||||||||
Prior Revolving Credit Facility #1 | 2/28/2022 | $ | 105,000 | $ | 92,895 | $ | 10,377 | $ | 92,522 | 4.35 | % | ||||||||||||||||||||||||
Prior Revolving Credit Facility #2 | 8/20/2021 | 22,000 | 17,365 | 4,635 | 17,303 | 4.40 | % | ||||||||||||||||||||||||||||
Term Loan | 10/25/2029 | 250,000 | 250,000 | — | 246,561 | 7.86 | % | ||||||||||||||||||||||||||||
Total | $ | 377,000 | $ | 360,260 | $ | 15,012 | $ | 356,386 |
an undrawn commitment fee rate of 0.15% to 0.40% of the daily amount of available revolving commitment. The Revolving Credit Facility contains customary events of defaults, as well as a financial covenant generally providing for a maximum net leverage ratio of 3.5 to 1. The net leverage ratio is generally calculated as the ratio of total consolidated debt less unrestricted cash and cash equivalents (up to $300.0 million) to the trailing 12-month consolidated EBITDA (each as defined in the agreement).
(dollars in thousands) | ||||||||||||||||||||||||||||||||
Lease Cost | Year Ended December 31, 2021 | |||||||||||||||||||||||||||||||
Operating lease cost | $ | 7,930 | ||||||||||||||||||||||||||||||
Short term lease cost | 286 | |||||||||||||||||||||||||||||||
Net Lease Cost | $ | 8,216 |
Supplement Lease Cash Flow Information | Year Ended December 31, 2021 | |||||||||||||||||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||||||||||||||||||
Operating cash flows for operating leases | $ | 5,956 | ||||||||||||||||||||||||||||||
Right-of-use assets obtained in exchange for lease obligations: | ||||||||||||||||||||||||||||||||
Operating leases | $ | 78,677 | ||||||||||||||||||||||||||||||
Lease Term and Discount Rate | December 31, 2021 | |||||||||||||
Weighted-average remaining lease term: | ||||||||||||||
Operating leases | 10.2 years | |||||||||||||
Weighted-average discount rate: | ||||||||||||||
Operating leases | 3.1 | % | ||||||||||||
Future Maturity of Operating Lease Payments | Operating Leases | |||||||||||||
2022 (1) | $ | 1,199 | ||||||||||||
2023 | 12,672 | |||||||||||||
2024 | 10,062 | |||||||||||||
2025 | 9,964 | |||||||||||||
2026 | 9,799 | |||||||||||||
Thereafter | 61,957 | |||||||||||||
Total Lease Payments | 105,653 | |||||||||||||
Imputed interest | (17,173) | |||||||||||||
Total Lease Liabilities | $ | 88,480 |
Year Ended December 31, | |||||||||||||||||||||||||||||
(dollars in thousands) | 2021 | 2020 | 2019 | ||||||||||||||||||||||||||
Direct Lending Products | |||||||||||||||||||||||||||||
Diversified lending | $ | 348,363 | $ | 140,153 | $ | 87,268 | |||||||||||||||||||||||
Technology lending | 66,089 | 42,052 | 24,706 | ||||||||||||||||||||||||||
First lien lending | 15,185 | 12,335 | 11,983 | ||||||||||||||||||||||||||
Opportunistic lending | 3,993 | 366 | — | ||||||||||||||||||||||||||
Management Fees, Net | 433,630 | 194,906 | 123,957 | ||||||||||||||||||||||||||
Administrative, transaction and other fees | 131,461 | 54,909 | 66,893 | ||||||||||||||||||||||||||
Realized performance income | 5,906 | — | — | ||||||||||||||||||||||||||
Total GAAP Revenues - Direct Lending Products | 570,997 | 249,815 | 190,850 | ||||||||||||||||||||||||||
GP Capital Solutions Products | |||||||||||||||||||||||||||||
GP minority equity investments | 233,505 | — | — | ||||||||||||||||||||||||||
GP debt financing | 10,215 | — | — | ||||||||||||||||||||||||||
Professional sports minority investments | 477 | — | — | ||||||||||||||||||||||||||
Strategic Revenue-Share Purchase consideration amortization | (9,892) | — | — | ||||||||||||||||||||||||||
Management Fees, Net | 234,305 | — | — | ||||||||||||||||||||||||||
Administrative, transaction and other fees | 18,576 | — | — | ||||||||||||||||||||||||||
Total GAAP Revenues - GP Capital Solutions Products | 252,881 | — | — | ||||||||||||||||||||||||||
Total GAAP Revenues | $ | 823,878 | $ | 249,815 | $ | 190,850 |
Net Income (Loss) Per Ordinary Share
Netfees, realized performance income (loss) per share is computed by dividing net loss by the weighted average number of ordinary shares outstanding for the period, excluding ordinary shares subject to forfeiture. The calculation of diluted income (loss) per share does not consider the effectand administrative, transaction and other fees receivable and unearned management fees. Substantially all of the warrants issuedamounts receivable are collected during the following quarter. A liability for unearned management fees is generally recognized when management fees are paid to the Company in connection withadvance. The entire change in unearned management fees shown below relates to amounts recognized as revenues in the (i) Initial Public Offering, (ii)current year period. Management fees, realized performance income and administrative, transaction and other fees receivable are included within due from related parties and unearned management fees are included within accounts payable, accrued expenses and other liabilities in the exerciseCompany’s consolidated and combined statements of financial condition.
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2021 | 2020 | |||||||||
Management Fees Receivable | |||||||||||
Beginning balance | $ | 78,586 | $ | 32,473 | |||||||
Ending balance | $ | 168,057 | $ | 78,586 | |||||||
Administrative, Transaction and Other Fees Receivable | |||||||||||
Beginning balance | $ | 9,876 | $ | 8,667 | |||||||
Ending balance | $ | 19,535 | $ | 9,876 | |||||||
Realized Performance Income Receivable | |||||||||||
Beginning balance | $ | — | $ | — | |||||||
Ending balance | $ | 10,496 | $ | — | |||||||
Unearned Management Fees | |||||||||||
Beginning balance | $ | 11,846 | $ | — | |||||||
Ending balance | $ | 10,299 | $ | 11,846 |
The Company’s consolidated statements of operations includesover a presentationweighted-average period of income (loss) per share for ordinary shares subject12 years, which represents the average period over which the related customer revenues are expected to possible redemptionbe recognized.
(dollars in thousands) | Strategic Revenue-Share Purchase Consideration | |||||||||||||||||||
December 31, 2020 | $ | — | ||||||||||||||||||
Consideration paid | 505,214 | |||||||||||||||||||
Amortization | (9,892) | |||||||||||||||||||
December 31, 2021 | $ | 495,322 |
(dollars in thousands) | December 31, 2021 | December 31, 2020 | |||||||||
Fixed assets, net: | |||||||||||
Leasehold improvements | $ | 6,692 | $ | 2,133 | |||||||
Furniture and fixtures | 1,631 | 1,612 | |||||||||
Computer hardware and software | 1,968 | 1,286 | |||||||||
Accumulated depreciation and amortization | (2,340) | (1,675) | |||||||||
Fixed assets, net | 7,951 | 3,356 | |||||||||
Investments (includes $1,311 and $— at fair value and $8,522 and $5 of investments in the Company’s products) | 12,143 | 2,678 | |||||||||
Prepaid expenses | 8,496 | 874 | |||||||||
Deferred transaction costs | 347 | 8,255 | |||||||||
Other assets | 9,683 | 1,306 | |||||||||
Total | $ | 38,620 | $ | 16,469 |
Oak Street Acquisition, the Company has agreed to contingently issue 26,074,330 Common Units upon achieving the Oak Street Triggering Events described in Note 3. These Oak Street Earnout Units were granted to certain sellers that are subject to ongoing employment arrangements with the Company, and are therefore being accounted for as equity-based compensation grants subject to performance vesting conditions that are probable of occurring.
For the Period from August 20, 2020 (inception) Through December 31, 2020 | ||||
Redeemable Class A Ordinary Shares | ||||
Numerator: Earnings allocable to Redeemable Class A Ordinary Shares | ||||
Interest Income | $ | 38,028 | ||
|
| |||
Net Earnings | $ | 38,028 | ||
Denominator: Weighted Average Redeemable Class A Ordinary Shares | ||||
Redeemable Class A Ordinary Shares, Basic and Diluted | 27,000,000 | |||
Earnings/Basic and Diluted Redeemable Class A Ordinary Shares | $ | 0.00 | ||
Non-Redeemable Class A and B Ordinary Shares | ||||
Numerator: Net Loss minus Redeemable Net Earnings | ||||
Net Loss | $ | (261,631 | ) | |
Redeemable Net Earnings | $ | (38,028 | ) | |
|
| |||
Non-Redeemable Net Loss | $ | (299,659 | ) | |
Denominator: Weighted Average Non-Redeemable Class B Ordinary Shares | ||||
Non-Redeemable Class B Ordinary Shares, Basic and Diluted | 6,518,595 | |||
Loss/Basic and Diluted Non-Redeemable Class B Ordinary Shares | $ | (0.05 | ) |
ALTIMAR ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
operations. As of December 31, 2020, basic2021, no RSUs have been settled in cash or Class A Shares.
Year Ended December 31, | |||||||||||||||||||||||||||||
(dollars in thousands) | 2021 | 2020 | 2019 | ||||||||||||||||||||||||||
Included within compensation and benefits: | |||||||||||||||||||||||||||||
Common Units | $ | 1,121,139 | $ | — | $ | — | |||||||||||||||||||||||
Seller Earnout Units | 63,031 | — | — | ||||||||||||||||||||||||||
Oak Street Earnout Units | — | — | — | ||||||||||||||||||||||||||
Incentive Units | 13,469 | — | — | ||||||||||||||||||||||||||
RSUs | 6,480 | — | — | ||||||||||||||||||||||||||
Included within general, administrative and other expenses | |||||||||||||||||||||||||||||
Incentive Units | 1,066 | — | — | ||||||||||||||||||||||||||
RSUs | 151 | — | — | ||||||||||||||||||||||||||
Equity-Based Compensation Expense | $ | 1,205,336 | $ | — | $ | — | |||||||||||||||||||||||
Corresponding tax benefit | $ | 123 | $ | — | $ | — |
ConcentrationCompany’s unvested equity-based compensation awards for the year ended December 31, 2021.
Common Units | Seller Earnout Units | Oak Street Earnout Units | |||||||||||||||||||||||||||||||||
Number of Units | Weighted-Average Grant Date Fair Value Per Unit | Number of Units | Weighted-Average Grant Date Fair Value Per Unit | Number of Units | Weighted-Average Grant Date Fair Value Per Unit | ||||||||||||||||||||||||||||||
December 31, 2020 | — | $ | — | — | $ | — | — | $ | — | ||||||||||||||||||||||||||
Granted | 132,808,673 | 9.00 | 11,608,004 | 5.43 | 26,074,330 | 12.53 | |||||||||||||||||||||||||||||
Vested | (132,808,673) | 9.00 | (11,608,004) | 5.43 | — | — | |||||||||||||||||||||||||||||
Forfeited | — | — | — | — | — | — | |||||||||||||||||||||||||||||
December 31, 2021 | — | $ | — | — | $ | — | 26,074,330 | $ | 12.53 |
Incentive Units | RSUs | ||||||||||||||||||||||
Number of Units | Weighted-Average Grant Date Fair Value Per Unit | Number of Units | Weighted-Average Grant Date Fair Value Per Unit | ||||||||||||||||||||
December 31, 2020 | — | $ | — | — | $ | — | |||||||||||||||||
Granted | 23,294,373 | 13.87 | 12,022,943 | 13.92 | |||||||||||||||||||
Modified from liability award | — | — | 9,050,000 | 10.00 | |||||||||||||||||||
Vested | (163,528) | 14.56 | (10,941,339) | 10.75 | |||||||||||||||||||
Forfeited | (50,000) | 14.02 | (13,500) | 14.02 | |||||||||||||||||||
December 31, 2021 | 23,080,845 | 13.87 | 10,118,104 | $ | 13.84 |
Financial instrumentsDyal Capital were entitled to receive rights to distributions of certain future profits (the “Profit Interest Units”) that potentiallywere subject to certain forfeiture conditions. Immediately preceding the CompanyBusiness Combination, the forfeiture conditions of the Profit Interest Units were modified to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceedeliminate any future service requirements and were replaced with Common Units on the Federal Depository Insurance Coverage of $250,000.Business Combination Date. The Company has not experienced losses on this account and management believesrecognized a one-time non-cash equity-based compensation expense of $1.1 billion related to the Company is not exposedreplacement award, which represents the fair value under GAAP of the replacement awards (excluding the portion attributable to significant risks on such account.
Fair Value of Financial Instruments
the Profit Interest Units prior to the Business Combination, which was included as equity consideration in Note 3). The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the Company’s balance sheet, primarily due to their short-term nature.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effectCommon Units replacement award was based on the Company’s financial statements.
NOTE 3 — INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold 27,500,000 Units, at a purchase price of $10.00 per Unit, inclusive of 2,500,000 Units sold to the underwriters on November 9, 2020 upon the underwriters’ election to partially exercise their over-allotment option. Each Unit consists of one Class A ordinary share and one-third of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitlesShare price on the holder to purchase one Class A ordinary share at an exercise price of $11.50 per whole share (see Note 7).
NOTE 4 — PRIVATE PLACEMENT
Simultaneouslytransaction date with the closingapplication of a 10% discount for lack of marketability.
NOTE 5 — RELATED PARTY TRANSACTIONS
Founder Shares
On September 1, 2020, the Sponsor paid $25,000 to cover certain offering and formation costs of the Company in consideration for 8,625,000 Class B ordinary shares (the “Founder Shares”). On October 21, 2020, the Sponsor effectuated a surrender of 1,437,500 Class B ordinary shares to the Company for no consideration, resulting in a decrease in the total number of Class B ordinary shares outstanding from 8,625,000 to 7,187,500. On October 19, 2020, the Sponsor transferred 25,000 Founder Shares to each of the Company’s independent directors. These shares shall not be subject to forfeiture in the event the underwriters’ overallotment option is not exercised. The Founder Shares included an aggregate of up to 312,500 shares that were subject to forfeiture as a result of the underwriters’ election to partially exercise their over-allotment option, so that the number of Founder Shares would equal 20% of the Company’s issued and outstanding ordinary shares after the Initial Public Offering. All share and per-share amounts have been retroactively restated to reflect the share transactions.approximately 3 years. As a result of the underwriters’ election to partially exercise their over-allotment option on November 5, 2020, a total of 625,000 Founder Shares are no longer subject to forfeiture. On December 7, 2020, the option to exercise the remaining over-allotment balance expired and 312,500 Founder Shares were forfeited, resultingClass E Triggering Events in an aggregate of 6,875,000 Founder Shares issued and outstanding.
ALTIMAR ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earliest of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which2021, the Company completes a liquidation, merger, share exchange or other similar transaction that results inrecognized all of the Public Shareholders havingcompensation expense related to the right to exchange their Class A ordinary shares for cash, securities or other property.
Administrative Support Agreement
The Company agreed, commencing on October 22, 2020 through the earlier of the Company’s consummation of a Business CombinationSeller Earnout Units and its liquidation, to pay an affiliate of the Sponsor a total of $10,000 per month for office space, secretarial and administrative support. For the period from August 20, 2020 (inception) through December 31, 2020, the Company incurred $20,000 in fees for these services, of which such amount is included in accrued expenses in the accompanying balance sheetno unamortized expense remained as of December 31, 2020.
Promissory Note — Related Party
On September 1, 2020, the Company issued an unsecured promissory note (the “Promissory Note”) to the Sponsor, pursuant to which the Company could borrow up to an aggregate principal amount of $300,000. 2021.
Related Party Loans
In order to finance transaction costs in connection$326.6 million, with a Business Combination,weighted average amortization period of 2 years.
NOTE 6 — COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 global pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, its results of operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Registration and Shareholders Rights
Pursuant to a registration and shareholders rights agreement entered into on October 22, 2020, the holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans) will be entitled to registration rights. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to completion of a Business Combination. However, the registration and shareholder rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lockup period. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
ALTIMAR ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
Underwriting Agreement
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $9,625,000 in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Business Combination Agreement
On December 23, 2020, the Company entered into a definitive business combination agreement (the “Business Combination Agreement”), by and among the Company, Owl Rock, and the Dyal Capital Partners (“Dyal”) division of Neuberger Berman Group LLC to form Blue Owl Capital Inc. (“Blue Owl”), a publicly-traded alternative asset management firm that would have over $45.0 billion in assets under management.
Pursuant to the transaction, the Company, which currently holds $275 million in cash in its Trust Account, will combine with Blue Owl at an estimated $12.5 billion pro forma equity value. Cash proceeds in connection with the transaction will be funded through a combination of the Company’s cash in its Trust Account and a $1.5 billion fully committed, common stock private investment in common equity at $10.00 per share.
The transaction will be consummated subject to the deliverables and provisions as further described in the Business Combination Agreement.
NOTE 7 — SHAREHOLDERS’ EQUITY
Preference Shares — The Company is authorized to issue 5,000,000 preference shares with a par value of $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At December 31, 2020, there were no preference shares issued or outstanding.
Class A Ordinary Shares — The Company is authorized to issue 500,000,000 Class A ordinary shares, with a par value of $0.0001 per share. Holders of Class A ordinary shares are entitled to one vote for each share. At December 31, 2020, there were 1,345,092 Class A ordinary shares issued or outstanding, excluding 26,154,908 Class A ordinary shares subject to possible redemption.
Class B Ordinary Shares — The Company is authorized to issue 50,000,000 Class B ordinary shares, with a par value of $0.0001 per share. Holders of the Class B ordinary shares are entitled to one vote for each share. At December 31, 2020, there were 6,875,000 Class B ordinary shares issued and outstanding.
Only holders of the Class B ordinary shares will have the right to vote on the election of directors prior to the Business Combination. Holders of Class A ordinary shares and Class B ordinary shares will vote together as a single class on all other matters submitted to a vote of shareholders, except as required by law.
The Class B ordinary shares will automatically convert into Class A ordinary shares at the time of a Business Combination or earlier at the option of the holders thereof at a ratio such that the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of ordinary shares issued and outstanding upon completion of the Initial Public Offering, plus (ii) the total number of Class A ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of a Business Combination, excluding Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be issued, to any seller in a Business Combination and any Private Placement Warrants issued to the Sponsor, its affiliates or any member of the Company’s management team upon conversion of Working Capital Loans. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one-to-one.
Warrants — Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) one year from the closing of the Initial Public Offering. The Public Warrants will expire five years from the completion of a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A ordinary shares underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable and the Company will not be obligated to issue a Class A ordinary share upon exercise of a warrant unless the Class A ordinary share issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
ALTIMAR ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
The Company has agreed that as soon as practicable, but in no event later than 20 business days, after the closing of a Business Combination, it will use its commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of a Business Combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed, as specified in the warrant agreement; provided that if the Class A ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but the Company will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption, but the Company will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption of warrants when the price per Class A ordinary share equals or exceeds $18.00. Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described with respect to the Private Placement Warrants):
in whole and not in part;
at a price of $0.01 per warrant;
upon a minimum of 30 days’ prior written notice of redemption; and
if, and only if, the reported closing price of the Company’s Class A ordinary shares equals or exceeds $18.00 per share (as adjusted) for any 20 trading days within a 30-trading day period ending three trading days prior to the date on which the Company sends the notice of redemption to the warrant holders.
If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00. Once the warrants become exercisable, the Company may redeem the outstanding warrants:
in whole and not in part;
|
if, and only if, the last reported sale price (the “closing price”) of the Company’s Class A ordinary shares equals or exceeds $10.00 per Public Share (as adjusted) for any 20 trading days within the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders; and
if the closing price of the Class A ordinary shares for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.
If and when the Public Warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
The exercise price and number of ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuance of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company has not completed a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
ALTIMAR ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposesgranted Incentive Units in connection with the closing of athe Business Combination, (excluding any forward purchase securities)as well as other compensation-related grants. The Company also converted various previously existing deferred cash compensation awards, which resulted in the reclassification of $5.3 million of previously accrued compensation liability to equity on the conversion date. The remaining fair value of the replacement awards will be expensed over the remaining service period.
The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable (except as described above under “Redemption of Warrants when the price per Class A ordinary share equals or exceeds $10.00”) so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable under all redemption scenarios by the Company and exercisable by such holders on the same basis as the Public Warrants.
NOTE 8 — FAIR VALUE MEASUREMENTS
remaining service period.
The Company classifies its U.S. Treasury and equivalent securities as held-to-maturity in accordance with ASC Topic 320 “Investments—Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying balance sheet and adjusted for the amortization or accretion of premiums or discounts.
At December 31, 2020, assets held in the Trust Account were comprised of $737 in cash and $275,037,291 in U.S. Treasury securities. During the year ended December 31, 2020, the Company did not withdraw any interest income from the Trust Account.
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of December 31, 2021. The Company did not have any assets or liabilities measured at fair value on a recurring basis as of December 31, 2020.
December 31, 2021 | ||||||||||||||||||||||||||
(dollars in thousands) | Level I | Level II | Level III | Total | ||||||||||||||||||||||
Investments, at Fair Value | ||||||||||||||||||||||||||
Corporate bonds | $ | — | $ | 1,311 | $ | — | $ | 1,311 | ||||||||||||||||||
Liabilities, at Fair Value | ||||||||||||||||||||||||||
TRA liability | $ | — | $ | — | $ | 111,325 | $ | 111,325 | ||||||||||||||||||
Warrant liability | 43,048 | — | 25,750 | 68,798 | ||||||||||||||||||||||
Earnout liability | — | — | 143,800 | 143,800 | ||||||||||||||||||||||
Total Liabilities, at Fair Value | $ | 43,048 | $ | — | $ | 280,875 | $ | 323,923 |
(dollars in thousands) | Level III Liabilities | |||||||||||||||||||||||||
TRA Liability | Warrant Liability | Earnout Liability | Total | |||||||||||||||||||||||
Beginning balance | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Issuances | 101,645 | 9,131 | 635,077 | 745,853 | ||||||||||||||||||||||
Settlements | — | — | (1,325,532) | (1,325,532) | ||||||||||||||||||||||
Net losses | 9,680 | 16,619 | 834,255 | 860,554 | ||||||||||||||||||||||
Ending Balance | $ | 111,325 | $ | 25,750 | $ | 143,800 | $ | 280,875 | ||||||||||||||||||
Change in net unrealized losses on liabilities still recognized at the reporting date | $ | 9,680 | $ | 16,619 | $ | — | $ | 26,299 |
(dollars in thousands) | Fair Value | Valuation Technique | Significant Unobservable Inputs | Input | Impact to Valuation from an Increase in Input | |||||||||||||||||||||||||||||||||||||||
TRA liability | $ | 111,325 | Discounted cash flow | Discount rate | 10 | % | Decrease | |||||||||||||||||||||||||||||||||||||
Warrant liability | 25,750 | Monte Carlo simulation | Volatility | 26 | % | Increase | ||||||||||||||||||||||||||||||||||||||
Earnout liability | 143,800 | Monte Carlo simulation | Revenue volatility | 38 | % | Increase | ||||||||||||||||||||||||||||||||||||||
Discount rate | 15 | % | Decrease | |||||||||||||||||||||||||||||||||||||||||
Total Liabilities, at Fair Value | $ | 280,875 |
(dollars in thousands) | Year Ended December 31, | ||||||||||||||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||||||||||||||
Current Income Tax Expense (Benefit) | |||||||||||||||||||||||||||||
U.S. federal | $ | — | $ | — | $ | — | |||||||||||||||||||||||
State and local | 716 | 359 | 81 | ||||||||||||||||||||||||||
Foreign | 211 | 14 | — | ||||||||||||||||||||||||||
927 | 373 | 81 | |||||||||||||||||||||||||||
Deferred Income Tax Expense (Benefit) | |||||||||||||||||||||||||||||
U.S. federal | (43,905) | — | — | ||||||||||||||||||||||||||
State and local | (22,232) | (475) | 159 | ||||||||||||||||||||||||||
Foreign | (1) | — | — | ||||||||||||||||||||||||||
(66,138) | (475) | 159 | |||||||||||||||||||||||||||
Total Income Tax Expense (Benefit) | |||||||||||||||||||||||||||||
U.S. federal | (43,905) | — | — | ||||||||||||||||||||||||||
State and local | (21,516) | (116) | 240 | ||||||||||||||||||||||||||
Foreign | 210 | 14 | — | ||||||||||||||||||||||||||
$ | (65,211) | $ | (102) | $ | 240 |
Year Ended December 31, | |||||||||||||||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||||||||||||||
Statutory rate(1) | 21.00 | % | 4.00 | % | 4.00 | % | |||||||||||||||||||||||
Income passed through to noncontrolling interest holders | -14.95 | % | — | % | — | % | |||||||||||||||||||||||
State and local income taxes | 0.98 | % | -3.73 | % | 0.10 | % | |||||||||||||||||||||||
Non-deductible compensation expense | -3.54 | % | -0.08 | % | -3.28 | % | |||||||||||||||||||||||
Other | — | % | -0.07 | % | 0.34 | % | |||||||||||||||||||||||
Total Effective Rate | 3.49 | % | 0.12 | % | 1.16 | % |
(dollars in thousands) | December 31, 2021 | December 31, 2020 | |||||||||
Deferred Tax Assets | |||||||||||
Basis difference in subsidiaries | $ | 439,826 | $ | 69 | |||||||
Tax receivable agreement | 158,616 | — | |||||||||
Net operating losses | 36,500 | 180 | |||||||||
Other | 2,057 | 551 | |||||||||
Deferred Tax Assets | $ | 636,999 | $ | 800 | |||||||
Goodwill and intangible assets | 47,924 | — | |||||||||
Other | 2,413 | — | |||||||||
Deferred Tax Liabilities | $ | 50,337 | $ | — |
(dollars in thousands) | Potential Payments Under the Tax Receivable Agreement | |||||||
2022 | $ | — | ||||||
2023 | 44,059 | |||||||
2024 | 47,486 | |||||||
2025 | 56,735 | |||||||
2026 | 47,642 | |||||||
Thereafter | 595,661 | |||||||
Total Payments | $ | 791,583 | ||||||
Less adjustment to fair value for contingent consideration | (120,907) | |||||||
Total TRA Liability | $ | 670,676 |
(dollars in thousands) | December 31, 2021 | December 31, 2020 | |||||||||
Management fees | $ | 168,057 | $ | 78,586 | |||||||
Realized performance income | 10,496 | — | |||||||||
Administrative fees and other expenses paid on behalf of the Company’s products and other related parties | 46,023 | 14,112 | |||||||||
Due from Related Parties | $ | 224,576 | $ | 92,698 |
Basic | Diluted | ||||||||||
Class A Shares | Included | Included | |||||||||
Class B Shares | N/A - None outstanding | N/A - None outstanding | |||||||||
Class C Shares and Class D Shares | Excluded Non-economic voting shares of the Registrant | Excluded Non-economic voting shares of the Registrant | |||||||||
Vested RSUs(1) | Included Contingently issuable shares | Included Contingently issuable shares | |||||||||
Unvested RSUs | Excluded | Included Treasury stock method | |||||||||
Warrants | Excluded | Included Treasury stock method(4) | |||||||||
Potentially Dilutive Instruments of the Blue Owl Operating Group: | |||||||||||
Vested Common and Incentive Units | Excluded | Included If-converted method(5) | |||||||||
Unvested Incentive Units | Excluded | Included The Company first applies the treasury stock method to determine the number of units that would have been issued, then applies the if-converted method to the resulting number of units(5) | |||||||||
Oak Street Earnout Units(2) | Excluded | Excluded Performance condition not satisfied as of year end | |||||||||
Earnout Securities(3) | Excluded | Included Market condition satisfied as of year end If-converted method(5) |
For the Period from May 19, 2021 to December 31, 2021 | Net Loss Attributable to Class A Shareholders | Weighted-Average Class A Shares Outstanding | Loss Per Class A Share | Weighted-Average Number of Antidilutive Instruments | |||||||||||||||||||
(dollars in thousands, except per share amounts) | |||||||||||||||||||||||
Basic | $ | (450,430) | 354,949,067 | $ | (1.27) | ||||||||||||||||||
Effect of dilutive instruments: | |||||||||||||||||||||||
Unvested RSUs | — | — | 1,702,275 | ||||||||||||||||||||
Warrants | — | — | 14,159,364 | ||||||||||||||||||||
Vested Common and Incentive Units | (1,306,873) | 960,237,349 | — | ||||||||||||||||||||
Unvested Incentive Units | — | — | 6,743,015 | ||||||||||||||||||||
Oak Street Earnout Units | — | — | 344,594 | ||||||||||||||||||||
Earnout Securities | — | — | 50,881,018 | ||||||||||||||||||||
Diluted | $ | (1,757,303) | 1,315,186,416 | $ | (1.34) |
ALTIMAR ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
Held-To-Maturity | Level | Amortized Cost | Gross Holding Loss | Fair Value | ||||||||||||
December 31, 2020 U.S. Treasury Securities (Mature on 04/29/2021) | 1 | $ | 275,037,291 | $ | (6,186 | ) | $ | 275,031,105 | ||||||||
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NOTE 9 — SUBSEQUENT EVENTS
subject to repurchase by the Company at a repurchase price in cash equal to 101% of the aggregate principal amount repurchased plus any accrued and unpaid interest. The 2032 Notes also provide for customary events of default and acceleration.
F-16