Acquisition Plans and Financial Risks - The company expects to incur significant costs in pursuit of its acquisition plans and may not have sufficient funds outside the trust account to operate until at least the Extended Date[86]. - The requirement for the target business to have a fair market value equal to at least 80% of the trust account balance may limit the number of potential acquisition targets[97]. - The company is not obligated to obtain an independent valuation for the business it acquires, relying instead on the judgment of its board of directors[98]. - The potential for write-downs or impairments post-acquisition could negatively impact the company's financial condition and shareholder value[90]. - The company may need to rely on loans from its sponsor or management team to fund its operations if external financing is insufficient[88]. - The company may incur substantial debt to complete the initial business combination, which could adversely affect its leverage and financial condition[109]. - The lack of diversification from completing a single business combination may expose the company to significant economic, competitive, and regulatory risks[110]. - The company may face additional risks if it attempts to complete business combinations with multiple prospective targets simultaneously, which could hinder operations and profitability[111]. - If the company cannot complete its initial business combination by the Extended Date, public shareholders may face delays in redeeming their shares[91]. - The company anticipates that the investigation and negotiation for each target business will require substantial management time and costs, which may not be recoverable if the business combination is not completed[100]. Shareholder Redemption and Value - If the initial business combination is not completed, public shareholders may receive approximately 10.30 per share upon liquidation of the trust account, and warrants will expire worthless[100]. - The trust account funds may be subject to third-party claims, potentially reducing the per-share redemption amount below 10.30[200]. - Shareholders could be held liable for claims by third parties against the company to the extent of distributions received upon redemption of their shares, which could be viewed as unlawful payments if the company is unable to pay its debts[201]. Operational and Legal Risks - The company may pursue acquisition opportunities with early-stage or financially unstable businesses, which could introduce significant operational risks[96]. - If the company completes a business combination with a large complex business, it may encounter numerous operational risks that could delay or prevent the desired results[114]. - If the company acquires a business located outside of the United States, it may face additional legal and operational risks that could negatively impact its operations[120]. - The company may face significant challenges and costs in managing cross-border business operations, which could negatively impact financial and operational performance[122]. - The legal systems in many countries where the company operates may be unpredictable and underdeveloped, adversely affecting operations and financial condition[125]. - Uncertainty in international economic and political relationships, including tariffs and regulatory changes, could materially affect the ability to identify and consummate business combinations[131]. Governance and Control Issues - The company may not maintain control of a target business post-acquisition, potentially leading to challenges in management and operations[132]. - The absence of a specified maximum redemption threshold may allow the company to complete business combinations that a majority of shareholders do not support[137]. - Provisions in the company's amended articles may inhibit takeovers, potentially limiting share price appreciation and entrenching management[138]. - The company may seek to amend its constitutional documents to facilitate business combinations, which could occur without broad shareholder support[139]. - The company has a provision allowing amendments to its memorandum and articles of association with a two-thirds majority vote, which is a lower threshold compared to many blank check companies[142]. - Initial shareholders collectively own 20% of the total founder shares and Class A ordinary shares, which may facilitate amendments to the company's governing documents[143]. Financial Instruments and Market Risks - The company issued 7,666,666 warrants as part of its initial public offering and an additional 8,900,000 private placement warrants, which could affect the market price of Class A ordinary shares[150]. - Changes in the value of the company's warrants, classified as liabilities, may lead to fluctuations in financial results and impact the market price of Class A ordinary shares[151]. - The company may redeem outstanding public warrants at a price of 18.00 for any 20 trading days within a 30 trading-day period[173]. - Holders of public warrants may be required to exercise their warrants on a "cashless basis," resulting in fewer Class A ordinary shares received upon exercise[176]. - The company may issue additional Class A ordinary shares upon the conversion of founder shares at a ratio greater than one-to-one, potentially diluting existing shareholders[182]. - The grant of registration rights to sponsors may adversely affect the market price of Class A ordinary shares and complicate the initial business combination process[184]. - Significant dilution of equity interest for investors in the initial public offering could occur if a substantial number of Class A ordinary shares are issued[185]. Management and Personnel Risks - The company is dependent on a small group of key personnel, including the CEO and CFO, for operations and success in completing the initial business combination[187]. - The ability to successfully effect the initial business combination is reliant on the efforts of key personnel, some of whom may join the target business post-combination[188]. - Conflicts of interest may arise as executive officers and directors allocate their time between the company and other business endeavors[190]. - The company has not adopted a policy to prevent directors and officers from having financial interests in transactions, which may lead to conflicts of interest[193]. - The personal and financial interests of directors and officers may influence their motivation in selecting a target business, potentially affecting shareholder interests[194]. Regulatory and Compliance Challenges - The company must comply with Sarbanes-Oxley Act requirements, which may increase the time and costs associated with completing an acquisition[159]. - The company is classified as an "emerging growth company," which allows it to take advantage of certain exemptions from disclosure requirements, potentially making its securities less attractive to investors[205]. - The company has not opted out of the extended transition period under the JOBS Act, which may complicate comparisons of its financial statements with those of other public companies[206]. - The company is a "smaller reporting company," allowing it to provide only two years of audited financial statements, which may hinder comparisons with other public companies[207]. - Changes in laws or regulations could adversely affect the company's ability to negotiate and complete its initial business combination[208]. - If deemed an investment company under the Investment Company Act, the company would face burdensome compliance requirements and may abandon efforts to complete a business combination[210]. Listing and Market Risks - The company is currently listed on Nasdaq, but there is no assurance that it will maintain this listing prior to its initial business combination, which requires compliance with more rigorous initial listing requirements[165]. - If the company's securities are delisted from Nasdaq, they may be quoted on an over-the-counter market, leading to reduced liquidity and trading activity[170]. - The company may face reduced liquidity for its securities if they are classified as "penny stocks," which would impose stricter trading rules[167]. - The independent registered public accounting firm's report expresses substantial doubt about the company's ability to continue as a going concern, raising concerns about liquidity and potential mandatory liquidation[214].
Cartesian Growth II(RENE) - 2024 Q4 - Annual Report