Note 5. Commitments and ContingenciesNOTE 5.COMMITMENTS AND CONTINGENCIES
Forward Purchase Agreement
On June 30, 2021, the Company entered into a forward purchase agreement (the “Forward Purchase Agreement”) with affiliates of Corsair Capital LLC (the “Forward Purchasers”), pursuant to which the Forward Purchasers agreed to purchase in the aggregate, up to 10,000,000 Units, with each Unit consisting of 1 Class A ordinary share and one-third of one warrant to purchase 1 Class A ordinary share at $11.50 per share, subject to adjustment, at a purchase price of $10.00 per Unit, in private placements to occur concurrently, and only in connection with, the closing of the initial Partnering Transaction. The obligations of the investors under the Forward Purchase Agreement will not depend on whether any Class A ordinary shares are redeemed by the Public Shareholders. The obligations of such investors to purchase the forward purchase securities are subject to the approval, prior to the Company entering into a definitiveagreement for the initial Partnering Transaction, of their respective investment committees and the Forward Purchase Agreement contains customary closing conditions. The Forward Purchase Agreement is not a firm commitment by either party to the agreement. The proceeds from the sale of forward purchase securities, if any, may be used as part of the consideration to the sellers in the initial Partnering Transaction, expenses in connection with the initial Partnering Transaction or for working capital in the post-transaction company.
Registration and Shareholder Rights
The holders of the Founder Shares, Performance Shares, Forward Purchase Securities, Private Placement Warrants and private placement 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 private placement warrants may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares and the Performance Shares) will bewere entitled to registration rights pursuant to a registration rights agreement to be signed prior to or onupon the effective date of the ProposedInitial Public Offering, requiring the Company to register such securities for resale. The holders of these securities are entitled to make up to three3 demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the Partnering Transaction. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Risks
Pursuant to the Forward Purchase Agreement, the Company expects to agree to use its reasonable best efforts (i) to file within 30 days after the closing of the initial Partnering Transaction a registration statement with the SEC for a secondary offering of the forward purchase shares and Uncertaintiesthe forward purchase warrants (and underlying Class A ordinary shares), (ii) to cause such registration statement to be declared effective promptly thereafter but in no event later than 60 days after the initial filing, (iii) to maintain the effectiveness of such registration statement until the earliest of (A) the date on which the Forward Purchasers or its assignees cease to hold the securities covered thereby and (B) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act and (iv) after such registration statement is declared effective, cause the Company to conduct firm commitment underwritten offerings, subject to certain limitations. In addition, the Forward Purchase Agreement provides for certain “piggy-back” registration rights to the holders of forward purchase securities to include their securities in other registration statements filed by the Company.
Management continues to evaluate
Underwriting Agreement
The Company granted the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could haveunderwriters a negative effect on the Company’s financial position, results of its operations and close of the Proposed Offering and/or search for a partner candidate company, the specific impact is not readily determinable as of45-day option from the date of these financial statements.the final prospectus relating to the Initial Public Offering to purchase up to 3,750,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On July 15, 2021, the underwriters purchased an additional 3,090,000 Option Units pursuant to the partial exercise of the over-allotment option. The financial statements do not include any adjustments that might resultOption Units were sold at an offering price of $10.00 per Unit, generating additional gross proceeds to the Company of $30,900,000.
Except for the 1,000,000 Units purchased by certain parties in the Initial Public Offering, the underwriters were entitled to an underwriting discount of $0.20 per unit, or $5.4 million in the aggregate, paid upon the closing of the Initial Public Offering and exercise of the over-allotment option.
In addition, $0.35 per unit, or approximately $9.8 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the outcomeamounts held in the Trust Account solely in the event that the Company completes a Partnering Transaction, subject to the terms of this uncertainty.the underwriting agreement.
Note
NOTE 6. Derivative Warrant LiabilitiesCLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION
The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events. The Company is authorized to issue 380,000,000 Class A ordinary shares with a par value of $0.0001 per share. Holders of the Company’s Class A ordinary shares are entitled to one vote for each share. As of March 31,September 30, 2021, there were no warrants28,090,000 Class A ordinary shares outstanding subject to possible redemption.
The Class A ordinary shares subject to possible redemption reflected on the condensed balance sheet is reconciled on the following table:
| Gross proceeds | | $ | 280,900,000 | |
| Less: | | | | |
| Fair value of Public Warrants at issuance | | | (9,082,433 | ) |
| Offering costs allocated to Class A ordinary shares subject to possible redemption | | | (15,555,759 | ) |
| Plus: | | | | |
| Accretion on Class A ordinary shares subject to possible redemption amount | | | 24,638,192 | |
| Class A ordinary shares subject to possible redemption | | $ | 280,900,000 | |
NOTE 7. SHAREHOLDERS’ DEFICIT
Preference Shares-The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share. As of September 30, 2021, there are 0 preference shares issued or outstanding. No
Class A Ordinary Shares-The Company is authorized to issue 380,000,000 Class A ordinary shares with a par value of $0.0001 per share. As of September 30, 2021, there were 28,090,000 Class A ordinary shares issued and outstanding, which were all subject to possible redemption and have been classified as temporary equity (see Note 6).
Class F Ordinary Shares-The Company is authorized to issue 50,000,000 Class F ordinary shares with a par value of $0.0001 per share. As of September 30, 2021, the Company had 1,404,500 Class F ordinary shares issued and outstanding, which amounts have been adjusted to reflect the share exchange and share surrenders as discussed in Note 4.
The Class F ordinary shares will automatically convert into Class A ordinary shares concurrently with or immediately following the consummation of the Partnering Transaction on a one-for-one basis, subject to adjustment, for share splits, share dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares or equity-linked securities are issued or deemed issued in connection with the Partnering Transaction, the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 5% of the total number of as-converted Class A ordinary shares outstanding after such conversion (including the forward purchase securities), including 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 Partnering Transaction; provided that such conversion of Founder Shares into Class A ordinary shares will never occur on a less than one-for-one basis.
For so long as any Class F ordinary shares remain outstanding, the Company may not, without the prior vote or written consent of the holders of a majority of the Class F ordinary shares then outstanding, voting separately as a single class, amend, alter or repeal any provision of the Company’s Amended and Restated Memorandum and Articles of Association, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Class F ordinary shares. Any action required or permitted to be taken at any meeting of the holders of Class F ordinary shares may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of the outstanding Class F ordinary shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all Class F ordinary shares were present and voted.
Class B Ordinary Shares-The Company is authorized to issue 1,000,000 Class B ordinary shares with a par value of $0.0001 per share. As of September 30, 2021, there were 250,000 Class B ordinary shares and issued and outstanding, which amounts have been adjusted to reflect the share exchange as discussed in Note 4.
On the last day of each fiscal year following the completion of a Partnering Transaction (and, with respect to any year in which the Company has a change of control or in which the Company liquidates, dissolves or winds up, on the business day immediately prior to such event instead of on the last day of such fiscal year), 25,000 Class B ordinary shares will automatically convert into Class A ordinary shares (“conversion shares”), as follows:
| • | If the price per share of Class A ordinary shares has not exceeded $10.00 for 20 out of 30 consecutive trading days at any time following completion of the Partnering Transaction, the number of conversion shares for any fiscal year will be 2,500 Class A ordinary shares. |
| • | If the price per share of Class A ordinary shares exceeded $10.00 for 20 out of any 30 consecutive trading days at any time following completion of the Partnering Transaction, then the number of conversion shares for any fiscal year will be the greater of: |
| o | 20% of the increase in the price of one Class A share, year-over-year but in respect of the increase above the relevant “price threshold” (as defined below), multiplied by the number of Class A ordinary shares outstanding at the close of the Partnering Transaction, excluding those Class A ordinary shares received by the Sponsor through the Class F ordinary shares, divided by the annual volume weighted average price of Class A ordinary shares for such fiscal year (the “annual VWAP”) and |
| o | 2,500 Class A ordinary shares. |
| • | The increase in the price of Class A ordinary shares will be based on the annual VWAP for the relevant fiscal year, it being understood that with respect to the 10th fiscal year following the Partnering Transaction the conversion calculation [for the remaining 25,000 Performance Shares], the calculation described in the immediately preceding bullet will be based on the greater of (i) the annual VWAP for such fiscal year and (ii) the volume-weighted average price of Class A ordinary shares over the last 20 trading days for such fiscal year. |
For purposes of the foregoing calculations, the “price threshold” will initially equal $10.00 for the first fiscal year following completion of the Partnering Transaction and will thereafter be adjusted at the beginning of each subsequent fiscal year to be equal to the greater of (i) the annual VWAP for the immediately preceding fiscal year and (ii) the price threshold for the preceding fiscal year.
For so long as any Class B ordinary shares remain outstanding, including prior to the Partnering Transaction, in connection with the Partnering Transaction, or following the Partnering Transaction, the Company may not, without the prior vote or written consent of the holders of a majority of the Performance Shares then outstanding, voting separately as a single class, (A) amend, alter or repeal any provision in the Company’s Amended and Restated Memorandum and Articles of Association, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Class B ordinary shares, (B) change the Company’s fiscal year, (C) increase the number of directors on the board, (D) pay any dividends or effect any split on any of the Company’s capital stock, (E) adopt any shareholder rights plan, (F) acquire any entity or business with assets at a purchase price greater than 10% or more of the Company’s total assets or (G) issue any Class A ordinary shares in excess of 20% of the Company’s then outstanding Class A ordinary shares or that would otherwise require a shareholder vote pursuant to the rules of the stock exchange on which the Class A ordinary shares are then listed.
NOTE 8.WARRANTS
In connection with the Initial Public Offering and over-allotment, 9,363,333 Public Warrants and 5,412,000 Private Placement Warrants were issued as of September 30, 2021.
NaN fractional warrants will be issued upon separation of the units and only whole warrants will trade. Each whole warrant entitles the registered holder to purchase one1 share of Class A ordinary shares at a price of $11.50 per share, subject to adjustment, as discussed below, at any time commencing 30 days after the completion of a Partnering Transaction, provided in each case that the Company has an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement) and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. The Company has agreed that as soon as practicable, but in no event later than fifteen (15) business days after the closing of the Partnering Transaction, the Company will use its commercially reasonable efforts to file with the SEC a post-effective amendment to the registration statement, of which this quarterly report forms a part of a new registration statement for the registration, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the warrants. The Company will use its commercially reasonable efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the sixtieth (60th) business day after the closing of the Partnering Transaction, 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. Notwithstanding the above, 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 elect,elects, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it 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.
The warrants will expire five years after the completion of the Partnering Transaction, or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the Partnering Transaction, including the forward purchase shares, at an issue price or effective issue price of less than $9.20 per share of Class A ordinary shares (with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Partnering Transaction on the date of the consummation of the Partnering Transaction (net of redemptions), and (z) the volume weighted average trading price of the Class A ordinary shares during the 20 trading day period starting on the trading day after the day on which the Company consummates the Partnering Transaction (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 110% of the higher of the Market Value and the $15.00 redemption price trigger described below will be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Partnering Transaction, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
The Company may also redeem the Public Warrants, in whole and not in part, at a price of $0.01 per warrant:
at any time while the warrants are exercisable,
| • | at any time while the warrants are exercisable, |
upon a minimum of 30 days’ prior written notice of redemption,
| • | upon a minimum of 30 days’ prior written notice of redemption, |
| • | if, and only if, the last sales price of the Class A ordinary shares equals or exceeds $15.00 per share for any 20 trading days within a 30 trading day period (the “30-day trading period”) ending three business days before the Company sends the notice of redemption, and |
| • | if, and only if, there is a current registration statement in effect with respect to the Class A ordinary shares underlying such warrants commencing five business days prior to the 30-day trading period and continuing each day thereafter until the date of redemption. |
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
In no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Partnering Transaction within the Partnering 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 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.
NOTE 9. FAIR VALUE MEASUREMENTS
The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2021, by level within the fair value hierarchy:
| Description | | Quoted Prices in Active
Markets
(Level 1)
| | | Significant Other
Observable Inputs
(Level 2)
| | | Significant Other
Unobservable Inputs
(Level 3) | |
Assets:
| | | | | | | | | |
Investments held in Trust Account - U.S. Treasury Securities
| | $
| 280,928,228
| | | $
| 0 | | | $
| 0 | |
Liabilities:
| | | | | | | | | | | | |
Derivative warrant liabilities - Public warrants
| | $
| 7,116,133
| | | $
| 0
| | | $
| 0
| |
Derivative warrant liabilities - Private placement warrants
| | $
| 0
| | | $
| 0
| | | $
| 4,167,240
| |
Transfers to/from Levels 1, 2 and 3 are recognized at the beginning of the reporting period. The estimated fair value of the Public Warrants was transferred from a Level 3 measurement to a Level 1 measurement, when the Public Warrants were separately listed and traded in August 2021. There were 0 other transfers between Levels in the three months ended September 30, 2021.
Level 1 assets include investments in U.S. government securities. The Company will accountuses inputs such as actual trade data, benchmark yields, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments.
For periods where no observable traded price is available, the fair value of the Public Warrants has been estimated using a Monte Carlo simulation and of the Private Placement Warrants has been estimated using a Black-Scholes option pricing model. For periods subsequent to the detachment of the Public Warrants from the Units, the fair value of the Public Warrants is based on the observable listed price for such warrants. For the three months ended September 30, 2021 and for the 13,333,333 warrants to be issued in connection withperiod from January 1, 2021 (commencement of operations) through September 30, 2021, the Proposed Offering (the 8,333,333 warrants includedCompany recognized gain on the unaudited condensed statements of operations resulting from a decrease in the unitsfair value of liabilities of approximately $3.1 million presented as change in fair value of derivative warrant liabilities on the accompanying unaudited condensed statements of operations.
The estimated fair value of the Public and the 5,000,000 private placement warrants, assuming the underwriters’ over-allotment option is not exercised) in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability duePrivate Placement Warrants, prior to the existencePublic Warrants being traded in an active market, was determined using Level 3 inputs. Inherent in a Monte Carlo simulation and a Black-Scholes option pricing model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of provisions whereby adjustmentsits warrants based on implied volatility from the Company’s traded warrants and from historical volatility of select peer companies ordinary shares that match the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the exercise priceexpected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on a variable that is not anthe historical rate, which the Company anticipates remaining at zero.
The following table provides quantitative information regarding Level 3 fair value measurements input toat their measurement dates:
| | | At initial issuance
| | | As of September 30, 2021
| |
Exercise price
| | $ | 11.50 | | | $ | 11.50 | |
Stock price
| | $ | 9.67 | | | $ | 9.85 | |
Volatility
| | | 16.0 | % | | | 12.5 | % |
Term (years)
| | | 5.5 | | | | 5.5 | |
Risk-free rate
| | | 0.89 | % | | | 1.06 | % |
Dividend yield
| | | 0.0 | % | | | 0.0 | % |
The change in the fair value of a “fixed-for-fixed” option and the existence of the potential for net cash settlementderivative liabilities, measured using Level 3 inputs, for the warrantholders (but not all shareholders) in the event of a tender offer.
The accounting treatment of derivative financial instruments requires that the Company record a derivative liability upon the closing of the Proposed Offering. Accordingly, the Company will classify each warrant as a liability at its fair valuethree months ended September 30, 2021 and the warrants will be allocated a portion of the proceeds from the issuance of the Units equal to its fair value determined by the Monte Carlo simulation. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events duringfor the period the warrants will be reclassifiedfrom January 1, 2021 (commencement of operations) through September 30, 2021, is summarized as of the date of the event that causes the reclassification.follows:
Note 7. Shareholder’s EquityDerivative warrant liabilities at January 1, 2021
| | $
| 0 | |
Issuance of Public and Private Warrants
| | | 14,386,193 | |
Transfer of Public Warrants to Level 1
| | | (9,082,433 | ) |
Change in fair value of derivative warrant liabilities
| | | (1,136,520 | ) |
Derivative warrant liabilities at September 30, 2021 (unaudited)
| | $
| 4,167,240 | |
Preference Shares—The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share. At March 31, 2021, there are no preference shares issued or outstanding.
Class A Ordinary Shares—The Company is authorized to issue 380,000,000 Class A ordinary shares with a par value of $0.0001 per share. As of March 31, 2021, there were no Class A ordinary shares issued or outstanding.
Class F Ordinary Shares—The Company is authorized to issue 50,000,000 Class F ordinary shares with a par value of $0.0001 per share. As of March 31, 2021, the Company had 1,437,500 Class F ordinary shares issued which amounts have been adjusted to reflect the share exchange and share surrenders as discussed in Note 4. Of the 1,437,500 Class F ordinary shares outstanding, up to 187,500 shares will be forfeited depending on the extent to which the underwriters’ over-allotment is exercised. The Class F ordinary shares will be entitled to (together with the Class B ordinary shares) a number of votes representing 20% of the Company’s outstanding ordinary shares prior to the completion of the Partnering Transaction.
The Class F ordinary shares will automatically convert into Class A ordinary shares concurrently with or immediately following the consummation of the Partnering Transaction on a one-for-one basis, subject to adjustment, for share splits, share dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares or equity-linked securities are issued or deemed issued in connection with the Partnering Transaction, the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 5% of the total number of as-converted Class A ordinary shares outstanding after such conversion (including the forward purchase securities), including 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 Partnering Transaction; provided that such conversion of Founder Shares into Class A ordinary shares will never occur on a less than one-for-one basis.
For so long as any Class F ordinary shares remain outstanding, the Company may not, without the prior vote or written consent of the holders of a majority of the Class F ordinary shares then outstanding, voting separately as a single class, amend, alter or repeal any provision of the Company’s certificate of incorporation, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Class F ordinary shares. Any action required or permitted to be taken at any meeting of the holders of Class F ordinary shares may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of the outstanding Class F ordinary shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all Class F ordinary shares were present and voted.
Class B Ordinary Shares—The Company is authorized to issue 1,000,000 Class B ordinary shares with a par value of $0.0001 per share. As of March 31, 2021, there were 250,000 Class B ordinary shares and issued and outstanding, which amounts have been adjusted to reflect the share exchange as discussed in Note 4.
On the last day of each fiscal year following the completion of a Partnering Transaction (and, with respect to any year in which the Company has a change of control or in which the Company liquidates, dissolves or winds up, on the business day immediately prior to such event instead of on the last day of such fiscal year), 25,000 Class B ordinary shares will automatically convert into Class A ordinary shares (“conversion shares”), as follows:
If the price per share of Class A ordinary shares has not exceeded $10.00 for 20 out of 30 consecutive trading days at any time following completion of the Partnering Transaction, the number of conversion shares for any fiscal year will be 2,500 Class A ordinary shares.
If the price per share of Class A ordinary shares exceeded $10.00 for 20 out of any 30 consecutive trading days at any time following completion of the Partnering Transaction, then the number of conversion shares for any fiscal year will be the greater of:
| o | 20% of the increase in the price of one Class A share, year-over-year but in respect of the increase above the relevant “price threshold” (as defined below), multiplied by the number of Class A ordinary shares outstanding at the close of the Partnering Transaction, excluding those Class A ordinary shares received by the Sponsor through the Class F ordinary shares, divided by the annual volume weighted average price of Class A ordinary shares for such fiscal year (the “annual VWAP”) and
|
| o | 2,500 Class A ordinary shares.
|
The increase in the price of Class A ordinary shares will be based on the annual VWAP for the relevant fiscal year, it being understood that with respect to the 10th fiscal year following the Partnering Transaction the conversion calculation for the remaining 25,000 Performance Shares, the calculation described in the immediately preceding bullet will be based on the greater of (i) the annual VWAP for such fiscal year and (ii) the volume-weighted average price of Class A ordinary shares over the last 20 trading days for such fiscal year.
For purposes of the foregoing calculations, the “price threshold” will initially equal $10.00 for the first fiscal year following completion of the Partnering Transaction and will thereafter be adjusted at the beginning of each subsequent fiscal year to be equal to the greater of (i) the annual VWAP for the immediately preceding fiscal year and (ii) the price threshold for the preceding fiscal year.
For so long as any Class B ordinary shares remain outstanding, including prior to the Partnering Transaction, in connection with the Partnering Transaction, or following the Partnering Transaction, the Company may not, without the prior vote or written consent of the holders of a majority of the Performance Shares then outstanding, voting separately as a single class, (A) amend, alter or repeal any provision the amended and restated certificate of incorporation, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Class B ordinary shares, (B) change the Company’s fiscal year, (C) increase the number of directors on the board, (D) pay any dividends or effect any split on any of the Company’s capital stock, (E) adopt any shareholder rights plan, (F) acquire any entity or business with assets at a purchase price greater than 10% or more of the Company’s total assets or (G) issue any Class A shares in excess of 20% of the Company’s then outstanding Class A shares or that would otherwise require a shareholder vote pursuant to the rules of the stock exchange on which the Class A shares are then listed.
Note 8. Subsequent EventsNOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to May 20, 2021, the date that thecondensed financial statements were issued. Based upon this review, except as noted above regarding the Initial Public Offering and with respect to the restatements described in Note 2, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements except as noted below..
Subsequent to March 31, 2021, the Company borrowed approximately $23,000, for a total20
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
In this report, unless otherwise stated, references to “we,” “us,” “our” or “the company” refer to Corsair Partnering Corporation The following discussion should be read in conjunction with our financial statements and the notes thereto included elsewhere in this quarterly reportCautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q.
This report contains10-Q/A includes forward-looking statements regarding our planswithin the meaning of Section 27A of the Securities Act of 1933, as amended, and objectives for future operations. OurSection 21E of the Exchange Act. We have based these forward-looking statements include, but are not limited to, statements regardingon our current expectations beliefs, intentions and strategies regarding the future and projections forecasts or other characterizations ofabout future events. This information involvesThese forward-looking statements are subject to known and unknown risks, uncertainties and other factors, some of which are beyond our control, whichassumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by anysuch forward-looking statements. In some cases, you can identify forward-looking statements by use of the wordsterminology such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “believe,“continue,” “intend” or “project” or the negative of these wordssuch terms or other variations on these wordssimilar expressions. Factors that might cause or comparable terminology. Our actual results could differ materially fromcontribute to such a discrepancy include, but are not limited to, those expressed or implied by the forward-looking statements as a result of various factors.described in our other SEC filings.
We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us as of the date hereof. We assume no obligation to update any such forward-looking statements, except as may be required by applicable securities laws.
Overview
We are a newly organized companyCorsair Partnering Corporation (the “Company”) was incorporated on December 29, 2020 as a Cayman Islands exempted company andon December 29, 2020. The Company was formed for the purpose of effectingidentifying a company to partner with in order to effectuate a merger, share capital exchange, asset acquisition, share purchase, reorganization or similar partnering transaction with one or more businesses which we refer(“Partnering Transaction”). The Company may pursue a Partnering Transaction in any business or industry but expect to asfocus on a “partnering transaction.”,business where the Company believes its strong network, operational background, and changed our namealigned economic structure will provide the Company with a competitive advantage. The Company has not generated revenue to “Corsair Partnering Corporation” on January 9, 2021. We intenddate.
The Company’s management has broad discretion with respect to complete anthe specific application of the net proceeds of its initial public offering (the “Proposed“Initial Public Offering”) and useas it is described below, although substantially all of the net proceeds therefromof the Initial Public Offering are intended to effect such transaction and fund related operations. On March 8, 2021, pursuantbe generally applied toward completing a Partnering Transaction. Furthermore, there is no assurance that the Company will be able to the Securities Act of 1933, as amended (the “Securities Act”), we filedsuccessfully complete a Partnering Transaction.
The registration statement for the Company’s Initial Public Offering was declared effective on Form S-1 (File No. 333-254003)June 30, 2021. On July 6, 2021, the Company consummated its Initial Public Offering of 25,000,000 units (the “Form S-1 Registration Statement”)“Units” and, with respect to the offering of up to 40,250,000 units (including 5,250,000 units subject to the underwriter’s option to purchase additional units) of the company, with each unit comprised of (i) one Class A ordinary share and (ii) one-third of one warrant to purchase one of our Class A ordinary shares included in the Units being offered, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $250.0 million, and incurring offering costs of approximately $14.4 million, of which approximately $8.8 million and approximately $481,000 was for deferred underwriting commissions (see Note 5) and offering costs allocated to derivate warrant liabilities, respectively. On July 15, 2021, the underwriters purchased an additional 3,090,000 Units (the “Option Units”) pursuant to the partial exercise of the over-allotment option. The Form S-1 Registration StatementOption Units were sold at an offering price of $10.00 per Unit, generating additional gross proceeds to the Company of $30.9 million. The Company incurred additional offering cost of approximately $1.7 million in connection with the over-allotment, of which approximately $1.1 million was declared effective by the Securitiesfor deferred underwriting commissions and Exchange Commission on March 23, 2021.approximately $55,000 was offering costs allocated to derivative warrant liabilities.
On May 7, 2021, we filedSimultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 5,000,000 warrants (each, a post-effective amendment“Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant to the Form S-1 Registration Statement which, among other things, changedSponsor, generating proceeds of $7.5 million (see Note 4).
Upon the termsclosing of the Proposed Offering to an offering of up to 25,000,000 units (or 28,750,000 if the underwriters’ option to purchase additional units is exercised), with each unit consisting of one Class A ordinary share and one-third of one redeemable warrant to purchase one Class A ordinary share. To date, we have not engaged in any business operations, other than organizational activities and activities related to the Proposed Offering. The Proposed Offering has not been consummated as of the date hereof as a result of adverse market conditions.
We have not selected any specific partnering candidate and we have not, nor has anyone on our behalf, engaged in any substantive discussions directly or indirectly, with any partnering candidate with respect to a partnering transaction with us. We intend to effectuate our partnering transaction using cash from the proceeds of the ProposedInitial Public Offering and the private placementPrivate Placement, $250.0 million ($10.00 per Unit) of private placement warrants, the net proceeds of the sale of our sharesthe Units in connection with our partnering transaction (pursuant to forward purchase agreements or backstop agreements we expect to enter into following the consummationInitial Public Offering and of the Proposed Offering or otherwise), shares issued to the owners of the partnering candidate, debt issued to bank or other lenders or the owners of the partnering candidate, or a combination of the foregoing.
Results of Operations and Known Trends or Future Events
We have neither engaged in any business operations nor generated any operating revenues to date. Our entire activity since inception has been to prepare for our Proposed Offering and to seek to remove our securities from registration. We do not currently generate any operating revenues and do not expect to engage in any significant business operations that will provide operating revenues or expensesPrivate Placement Warrants in the future.
As indicatedPrivate Placement were placed in a trust account (“Trust Account”), located in the accompanying financial statements, at March 31, 2021, we had $25,100, in cashUnited States and a working capital deficit of $546,966.
Liquidity and Capital Resources
Our liquidity needs have been satisfied to date through a payment of $25,000 from our sponsor to cover for certain offering costs in exchange for the issuance of the founder shares and the performance shares to our sponsor and up to $300,000 in loans available from our sponsor.
We estimate that the net proceeds from the sale of the units in the Proposed Offering and the sale of the private placement warrants for an aggregate purchase price of $257,500,000 (or $295,750,000 if the underwriters’ over-allotment option is exercised in full), after deducting offering expenses of approximately $1,500,000 and underwriting commissions of $5,000,000 (or $5,750,000 if the underwriters’ over-allotment option is exercised in full) will be approximately $251,000,000 (or approximately $288,500,000 if the underwriters’ over-allotment option is exercised in full). $250.0 million (or $287.5 million if the underwriters’ over-allotment option is exercised in full) will be held in the trust account. The proceeds held in the trust account will be invested only in U.S. government treasury obligations withUnited States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (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. government treasury obligations. obligations, until the earlier of: (i) the completion of a Partnering Transaction and (ii) the distribution of the Trust Account as described below.
The remaining approximately $1,000,000 will not beCompany must complete a Partnering Transaction with one or more partner candidate businesses having an aggregate fair market value of at least 80% of the net assets held in the trust account. InTrust Account (excluding the event that our offering expenses exceed our estimatetaxes payable on the income earned on the Trust Account) at the time of $1,500,000, we may fund such excess with fundsthe agreement to enter into the initial Partnering Transaction. However, the Company will only complete a Partnering Transaction if the post-transaction company owns or acquires 50% or more of the voting securities of the partner candidate or otherwise acquires a controlling interest in the partner candidate sufficient for it not to be heldrequired to register as an investment company under the Investment Company Act.
The Company’s Amended and Restated Memorandum and Articles of Association provides that, other than the withdrawal of interest earned on the funds that may be released to the Company for withdrawals to pay taxes including income and franchise taxes and to withdraw up to $100,000 in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely,dissolution expenses in the event that the offering expenses are less than our estimate of $1,500,000,Company does not complete the amount of funds we intend to be held outsidePartnering Transaction within the trust account would increase by a corresponding amount.
We intend to use substantially allPartnering Period (as defined below), none of the funds held in the trust account,Trust Account will be released until the earlier of: (i) the completion of the Partnering Transaction; (ii) the redemption of any of the Public Shares by its holders (the “Public Shareholders”) properly tendering Public Shares in connection with a shareholder vote to amend certain provisions of the Company’s Amended and Restated Memorandum and Articles of Association prior to a Partnering Transaction or (iii) the redemption of 100% of the Public Shares if the Company does not complete a Partnering Transaction within the Partnering Period (defined below).
The Company, after signing a definitive agreement for a Partnering Transaction, will either (i) seek shareholder approval of the Partnering Transaction at a meeting called for such purpose in connection with which Public Shareholders may seek to redeem their Public Shares, regardless of whether they vote for or against the Partnering Transaction or do not vote at all, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the initial Partnering Transaction, including any amounts representing interest earned on the trust account to complete our initial partnering transaction. We may make permitted withdrawals from the trust account. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our partnering transaction, the remaining proceedsfunds held in the trust accountTrust Account and not previously released to the Company to pay its taxes, or (ii) provide the Public Shareholders with the opportunity to sell their shares to the Company by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to commencement of the tender offer, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes. As a result, such ordinary shares subject to possible redemption were recorded at redemption amount and classified as temporary equity, in accordance with FASB, ASC 480, “Distinguishing Liabilities from Equity.” The amount in the Trust Account was initially at $10.00 per Public Share. The decision as to whether the Company will seek shareholder approval of the Partnering Transaction or will allow shareholders to sell their shares in a tender offer will be usedmade by the Company, solely in its discretion, and will be based on a variety of factors such as working capital to finance the operationstiming of the partnering candidatetransaction and whether the terms of the transaction would otherwise require the Company to seek shareholder approval. If the Company seeks shareholder approval, it will complete its Partnering Transaction only if a majority of the outstanding ordinary shares voted are voted in favor of the Partnering Transaction. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001 immediately prior to or candidates, makeupon consummation of the Company’s initial Partnering Transaction. In such case, the Company would not proceed with the redemption of its Public Shares and the related Partnering Transaction, and instead may search for an alternate Partnering Transaction.
The Company will only have 24 months (or 27 months if the Company has executed a letter of intent, agreement in principle or definitive agreement for the Partnering Transaction within 24 months) from the closing of the Initial Public Offering to complete its initial Partnering Transaction (the “Partnering Period”). If the Company does not complete a Partnering Transaction within this period of time (and shareholders do not approve an amendment to the Amended and Restated Memorandum and Articles of Association to extend this date), it 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 the public shares, at a per-share price, payable in cash, of $10.00, 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 the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and in all cases subject to the other acquisitionsrequirements of applicable law.
The holders of the Founder Shares (as defined in Note 4) immediately prior to the Initial Public Offering entered into a letter agreement with the Company, pursuant to which they agreed to (i) waive their redemption rights with respect to any Founder Shares and pursue our growth strategies.Public Shares they hold in connection with the completion of the Partnering Transaction, (ii) waive their redemption rights with respect to any Founder Shares and Public Shares they hold in connection with a shareholder vote to approve an amendment to the Company’s Amended and Restated Memorandum and Articles of Association, to modify the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company has not consummated a Partnering Transaction within the Partnering Period or with respect to any other material provisions relating to shareholders’ rights or pre-Partnering Transaction activity and (iii) waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares they hold if the Company fails to complete the Partnering Transaction within 24 months of the Partnering Period (although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete the Partnering Transaction within the Partnering Period).
Pursuant to the letter agreement, the Sponsor (as defined in Note 1) agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or Partnering Transaction agreement, reduce the amount of funds 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, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply 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.
Prior to the completionPartnering Transaction or the liquidation, the Company agreed to pay the Sponsor up to $15,000 per month for office space, administrative support and other services provided to members of our partnering transaction, wethe Company’s management team. In addition, the Sponsor, officers and directors, or any of their respective affiliates will have availablebe reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable Partnering Transactions. The audit committee will review on a quarterly basis all payments that were made by the Company to us the approximately $1,000,000 of proceedsSponsor, officers or directors, or the Company’s or their affiliates. Any such payments prior to an initial Partnering Transaction will be made from funds held outside the trust account. We will use these fundsTrust Account. As of September 30, 2021, the Company had approximately $44,000 in due to primarily identifyrelated party for such expense reimbursement, which is included in the accrued expenses in the condensed balance sheet.
Liquidity and evaluate partnering candidates, perform business due diligenceCapital Resources
As of September 30, 2021, the Company had approximately $1,054,000 in its operating bank account and a working capital of approximately $1.5 million.
The Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $25,000 from related parties to cover for certain expenses on prospective partnering candidates, travel tothe Company’s behalf in exchange for issuance of Founder Shares and Performance Shares (as defined in Note 4), a loan from the offices, plants or similar locationsSponsor under the Note (as defined in Note 4) of prospective partnering candidates or their representatives or owners, review corporate documentsapproximately $231,000, and material agreementsan advance from the Sponsor of prospective partnering candidates,$750,000 to be used in case the over-allotment option was exercised in full by the underwriters. The Company repaid the Note balance of approximately $231,000 on July 6, 2021. Subsequent to the consummation of the Initial Public Offering, the Company’s liquidity has been satisfied through the net proceeds from the consummation of the Initial Public Offering and structure, negotiate and complete a partnering transaction.
We do not believe we will need to raise additional funds following the Proposed OfferingPrivate Placement held outside of the Trust Account. In addition, in order to meet the expenditures required for operating our business prior to our partnering transaction. However, if our estimates of the costs of identifying a partnering candidate, undertaking in-depth due diligence and negotiating a partnering transaction are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our partnering transaction. In order to fund working capital deficiencies or finance transaction costs in connection with an intended partnering transaction, our sponsora Partnering Transaction, the Sponsor or an affiliate of our sponsorthe Sponsor, or certain of ourthe Company’s officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our partnering transaction, we would repay such loaned amounts. Inprovide the eventCompany Working Capital Loans (as defined in Note 4). As of September 30, 2021, there were no amounts outstanding under any Working Capital Loan.
Based on the foregoing, management believes that our partnering transaction does not close, we may use a portionthe Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the working capitalconsummation of a Partnering Transaction or one year from this filing. Over this time period, the Company will be using the funds 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 $1,500,000 of such loans may be convertible into private placement warrants of the post partnering transaction entityTrust Account for paying existing accounts payable, identifying and evaluating prospective initial Partnering Transaction candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Partnering Transaction.
Results of Operations
Our entire activity from January 1, 2021 (commencement of operations) through September 30, 2021 was in preparation for our formation and the Initial Public Offering, and since the Initial Public Offering, our search for a Partnering Transaction. We will not be generating any operating revenues until the closing and completion of our initial Partnering Transaction.
For the three months ended as of September 30, 2021, we had net income of approximately $2,232,000, which consisted of a non-cash gain of approximately $3,103,000 for the change in fair value of derivative warrant liabilities, and approximately $28,000 of income from investments held in the Trust Account, offset by approximately $363,000 of general and administrative expenses, and approximately $535,000 in offering costs associated with derivative warrant liabilities.
For the period from January 1, 2021 (commencement of operations) through September 30, 2021, we had net income of approximately $2,188,000, which consisted of a non-cash gain of approximately $3,103,000 for the change in fair value of derivative warrant liabilities, and approximately $28,000 of income from investments held in the Trust Account, offset by approximately $408,000 of general and administrative expenses, and approximately $535,000 in offering costs associated with derivative warrant liabilities.
Contractual Obligations
Forward Purchase Agreement
On June 30, 2021, the Company entered into a forward purchase agreement (the “Forward Purchase Agreement”) with affiliates of Corsair Capital LLC (the “Forward Purchasers”), pursuant to which the Forward Purchasers agreed to purchase in the aggregate, up to 10,000,000 Units, with each Unit consisting of one Class A ordinary share and one- third of one warrant to purchase one Class A ordinary share at $11.50 per share, subject to adjustment, at a purchase price of $1.50$10.00 per Unit, in private placement warrant atplacements to occur concurrently, and only in connection with, the optionclosing of the lender (which unitsinitial Partnering Transaction. The obligations of the investors under the Forward Purchase Agreement will immediately split intonot depend on whether any Class A ordinary shares are redeemed by the Public Shareholders. The obligations of such investors to purchase the forward purchase securities are subject to the approval, prior to the Company entering into a definitive agreement for the initial Partnering Transaction, of their respective investment committees and warrants).the Forward Purchase Agreement contains customary closing conditions. The Forward Purchase Agreement is not a firm commitment by either party to the agreement. The proceeds from the sale of Forward Purchase Securities, if any, may be used as part of the consideration to the sellers in the initial Partnering Transaction, expenses in connection with the initial Partnering Transaction or for working capital in the post-transaction company.
Registration Rights
The holders of the Founder Shares, Performance Shares, Forward Purchase Securities, Private Placement Warrants and private placement warrants wouldthat may be identical toissued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants, and private placement warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares and the Performance Shares) were entitled to our sponsor.registration rights pursuant to a registration rights agreement signed upon the effective date of the Initial Public Offering, requiring the Company to register such securities for resale. The termsholders of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such loans, if any,securities. In addition, the holders have not been determined and no written agreements existcertain “piggy-back” registration rights with respect to such loans. Priorregistration statements filed subsequent to the completion of our partnering transaction, we do not expectthe Partnering Transaction. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Pursuant to seek loansthe Forward Purchase Agreement, in the event of a sale, if any, of the Forward Purchase Securities, the Company expects to agree to use its reasonable best efforts (i) to file within 30 days after the closing of the initial Partnering Transaction a registration statement with the SEC for a secondary offering of the forward purchase shares and the forward purchase warrants (and underlying Class A ordinary shares), (ii) to cause such registration statement to be declared effective promptly thereafter but in no event later than 60 days after the initial filing, (iii) to maintain the effectiveness of such registration statement until the earliest of (A) the date on which the Forward Purchasers or its assignees cease to hold the securities covered thereby and (B) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act and (iv) after such registration statement is declared effective, to cause the Company to conduct firm commitment underwritten offerings, subject to certain limitations. In addition, the Forward Purchase Agreement provides for certain “piggy-back” registration rights to the holders of forward purchase securities to include their securities in other registration statements filed by the Company.
Underwriting Agreement
The Company granted the underwriters a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 3,750,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On July 15, 2021, the underwriters purchased an additional 3,090,000 Option Units pursuant to the partial exercise of the over-allotment option. The Option Units were sold at an offering price of $10.00 per Unit, generating additional gross proceeds to the Company of $30,900,000.
Except for the 1,000,000 Units purchased by certain parties other than our sponsorin the Initial Public Offering, the underwriters were entitled to an underwriting discount of $0.20 per unit, or an affiliate$5.4 million in the aggregate, paid upon the closing of our sponsor as we do not believe third partiesthe Initial Public Offering and exercise of the over-allotment option.
In addition, $0.35 per unit, or approximately $9.8 million in the aggregate, will be willingpayable to loan such funds and providethe underwriters for deferred underwriting commissions. 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 waiver against any and all rightsPartnering Transaction, subject to seek access to funds in our trust account.
We expect our primary liquidity requirements during that period to include approximately $400,000 for legal, accounting, due diligence, travel and other expenses associated with structuring, negotiating and documenting potential partnering transactions; $150,000 for legal and accounting fees related to regulatory reporting requirements; $75,000 for NYSE continued listing fees and approximately $80,000 for general working capital that will be used for miscellaneous expenses and reserves. We may also pay up to $15,000 per month to an affiliate of our sponsor for office space, secretarial and administrative services provided to members of our management team.
These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a partnering candidate or as a down payment or to fund a “no-shop” provision (a provision designed to keep partnering candidates from “shopping” around for transactions with other companies or investors on terms more favorable to such partnering candidates) with respect to a particular proposed partnering transaction, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a partnering candidate, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the specific partnering transactionunderwriting agreement.
Critical Accounting Policies and Estimates
This management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the amountdisclosure of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could resultcontingent assets and liabilities in our unaudited condensed financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not having sufficient funds to continue searching for,readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conducting due diligence with respect to, prospective partnering candidates. conditions. We have identified the following as our critical accounting policies:
Derivative Warrant Liabilities
We do not believeuse derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued share purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The Public Warrants and the Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, we will need to raise additional funds following recognize the Proposed Offering in order to meetwarrant instruments as liabilities at fair value and adjusts the expenditures required for operating our business. However, if our estimatescarrying value of the costs of identifying a partnering candidate, undertaking in-depth due diligence and negotiating a partnering transactioninstruments to fair value at each reporting period until they are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our partnering transaction.
Moreover, we may need to obtain additional financing to complete our partnering transaction, either because the transaction requires more cash than is available from the proceeds held in our trust account or because we become obligated to redeem a significant number of our public shares upon completionexercised. The initial fair value of the partnering transaction, in which case we may issue additional securities or incur debtPublic Warrants issued in connection with the Initial Public Offering were estimated using a Monte-Carlo simulation model. The fair value of the Public Warrants as of September 30, 2021 is based on observable listed prices for such partnering transaction. If we dowarrants. The fair value of the Private Placement Warrants as of September 30, 2021 is determined using Black-Scholes option pricing model. The determination of the fair value of the warrant liability may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not completereasonably expected to require the use of current assets or require the creation of current liabilities.
Class A Ordinary Shares Subject to Possible Redemption
We account for our partnering transaction because we doClass A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not have sufficient funds availablesolely within our control) are classified as temporary equity. At all other times, Class A ordinary shares is classified as shareholders’ equity. Our Class A ordinary shares feature certain redemption rights that are considered to us, we will be forcedoutside of our control and subject to cease operations and liquidate the trust account. In addition, followingoccurrence of uncertain future events. Accordingly, 28,090,000 Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of our partnering transaction, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.condensed balance sheet.
Off-balanceUnder ASC 480-10-S99, we have elected to recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal the redemption value at the end of the reporting period. This method would view the end of the reporting period as if it were also the redemption date of the security. Effective with the closing of the Initial Public Offering (including exercise of the over-allotment option), we recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit.
Net Income Per Ordinary Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” We have three classes of shares, which are referred to as Class A ordinary shares, Class B ordinary shares, and Class F ordinary shares. Income and losses are shared pro rata between the three classes of shares. Net income (loss) per ordinary share is calculated by dividing the net income (loss) by the weighted average shares of ordinary shares outstanding for the respective period.
The calculation of diluted net income (loss) per ordinary share does not consider the effect of the warrants issued in connection with the Initial Public Offering (including exercise of the over-allotment option) and the Private Placement to purchase an aggregate of 14,775,333 Class A ordinary shares in the calculation of diluted income (loss) per ordinary share, because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income (loss) per ordinary share is the same as basic net income (loss) per share for the three months ended September 30, 2021 and for the period from January 1, 2021 (commencement of operations) through September 30, 2021. Accretion associated with the redeemable Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
We have considered the effect of Class F ordinary shares that were excluded from the weighted average number as they were contingent on the exercise of over-allotment option by the underwriters. Since the contingency was satisfied, the Company included these shares in the weighted average number as of the beginning of the interim period to determine the dilutive impact of these shares.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
Off-Balance Sheet Arrangements
As of March 31,September 30, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As such, our unaudited condensed financial statements may not be comparable to companies that comply with public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the unaudited condensed financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
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,.item.
None.