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Cartesian Growth II(RENE) - 2023 Q4 - Annual Report
RENECartesian Growth II(RENE)2024-03-20 01:05

Financial Viability and Risks - The company expects that the funds available outside of the trust account will be sufficient to operate until at least the Extended Date, but cannot assure the accuracy of this estimate[76]. - The company anticipates incurring significant costs in pursuit of acquisition plans, and may need to rely on loans from affiliates to fund operations[78]. - The company may not have sufficient funds to continue operations if it cannot secure additional financing or loans from affiliates[78]. - The company may incur substantial debt to complete the initial business combination, which could adversely affect its leverage and financial condition[97]. - The independent registered public accounting firm's report expresses substantial doubt about the company's ability to continue as a going concern[193]. - If the company does not consummate a business combination by the Extended Date, there will be a mandatory liquidation and subsequent dissolution[193]. Shareholder Redemption and Liquidation - If the initial business combination is not completed, public shareholders may receive approximately 10.30pershareorlessuponliquidationofthetrustaccount[76].−IfthecompanycannotcompletetheinitialbusinesscombinationbytheExtendedDate,publicshareholdersmayfacedelaysinredemptionfromthetrustaccount[81].−Ifthecompanyfailstolocateasuitabletargetbusiness,itmaybeforcedtoliquidate,resultinginshareholdersreceivinglessthan10.30 per share or less upon liquidation of the trust account[76]. - If the company cannot complete the initial business combination by the Extended Date, public shareholders may face delays in redemption from the trust account[81]. - If the company fails to locate a suitable target business, it may be forced to liquidate, resulting in shareholders receiving less than 10.30 per share[86]. - The trust account funds may be subject to third-party claims, potentially reducing the per-share redemption amount below 10.30[175].−Ifthetrustaccountisreducedduetoclaims,thecompanymaynotbeabletocompletetheinitialbusinesscombination,affectingshareholderreturns[176].−Publicshareholdersareentitledtoreceivetheirpro−ratashareofproceedsheldinthetrustaccount,plusanyinterestincome,netoftaxespaidorpayable[178].−Ifthecompanyfilesforbankruptcyafterdistributingproceeds,acourtmayseektorecoverthoseproceedsfromshareholders[180].AcquisitionStrategyandRisks−Thetargetbusinessmusthaveafairmarketvalueequaltoatleast8010.30[175]. - If the trust account is reduced due to claims, the company may not be able to complete the initial business combination, affecting shareholder returns[176]. - Public shareholders are entitled to receive their pro-rata share of proceeds held in the trust account, plus any interest income, net of taxes paid or payable[178]. - If the company files for bankruptcy after distributing proceeds, a court may seek to recover those proceeds from shareholders[180]. Acquisition Strategy and Risks - The target business must have a fair market value equal to at least 80% of the funds in the trust account at the time of the definitive agreement, which may limit potential acquisition opportunities[86]. - The company may enter into a business combination with early-stage or financially unstable companies, which could introduce significant operational risks[85]. - The company may seek complex business combinations requiring significant operational improvements, which could delay achieving desired results[104]. - There is a risk that the company may pursue a business combination with a private company about which little information is available, leading to unexpected profitability outcomes[103]. - The lack of diversification from completing a single business combination may expose the company to numerous economic, competitive, and regulatory risks[100]. - The company may face increased costs and risks if attempting to complete multiple business combinations simultaneously, potentially impacting profitability[102]. Governance and Control - The company is not required to obtain an independent valuation for the target business, relying instead on the judgment of its board of directors[87]. - The founder shares will equal 20% of the total number of ordinary shares issued upon completion of the initial public offering, differing from typical blank check company structures[88]. - 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[130]. - 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[129]. - The company may not maintain control of the target business post-combination, potentially impacting management effectiveness[120]. - Shareholders may not have the opportunity to vote on director appointments until after the initial business combination, limiting their influence on management[141]. Regulatory and Compliance Issues - The company is classified as an "emerging growth company," which allows it to take advantage of certain exemptions from disclosure requirements[184]. - The company may remain a smaller reporting company until the market value of its ordinary shares held by non-affiliates exceeds 250 million or annual revenues exceed 100million[186].−Thereisariskthatthecompanycouldbedeemedanunregisteredinvestmentcompany,whichwouldimposecomplianceburdensandpotentiallyleadtoliquidation[188].−Thecompanyhasnotadoptedapolicytopreventconflictsofinterestamongdirectorsandofficersregardingbusinesscombinations[172].−ThemanagementteammayneedtofamiliarizeitselfwithU.S.securitieslawspost−businesscombination,whichcouldleadtoregulatoryissues[115].−CompliancewiththeSarbanes−OxleyActmayincreasethetimeandcostsassociatedwithcompletinganacquisitionduetotheneedforadequateinternalcontrols[143].MarketandEconomicConditions−Increasedcompetitionamongspecialpurposeacquisitioncompaniesmaymakeattractivetargetsscarceranddriveupcosts[117].−Themarketforthecompany′ssecuritiesmaynotfullydeveloporbesustained,adverselyaffectingliquidityandpriceduetovariousgeopoliticalandeconomicconditions[151].−ThecompanymayfaceregulatoryscrutinyfromstatesecuritiesregulatorsifitisnolongerlistedonNasdaq,whichcouldhinderthesaleofitssecurities[150].−Changesinthemarketfordirectorsandofficersliabilityinsurancecouldcomplicatethenegotiationofinitialbusinesscombinations[121].FinancialInstrumentsandShareDilution−Thecompanyhasissued8,900,000privateplacementwarrants,eachexercisableforoneClassAordinaryshareat100 million[186]. - There is a risk that the company could be deemed an unregistered investment company, which would impose compliance burdens and potentially lead to liquidation[188]. - The company has not adopted a policy to prevent conflicts of interest among directors and officers regarding business combinations[172]. - The management team may need to familiarize itself with U.S. securities laws post-business combination, which could lead to regulatory issues[115]. - Compliance with the Sarbanes-Oxley Act may increase the time and costs associated with completing an acquisition due to the need for adequate internal controls[143]. Market and Economic Conditions - Increased competition among special purpose acquisition companies may make attractive targets scarcer and drive up costs[117]. - The market for the company's securities may not fully develop or be sustained, adversely affecting liquidity and price due to various geopolitical and economic conditions[151]. - The company may face regulatory scrutiny from state securities regulators if it is no longer listed on Nasdaq, which could hinder the sale of its securities[150]. - Changes in the market for directors and officers liability insurance could complicate the negotiation of initial business combinations[121]. Financial Instruments and Share Dilution - The company has issued 8,900,000 private placement warrants, each exercisable for one Class A ordinary share at 11.50 per share, which will be worthless if a business combination is not completed[94]. - 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 attractiveness of the company as an acquisition target[136]. - The company is authorized to issue up to 200,000,000 Class A ordinary shares, which may significantly dilute existing shareholders' equity interests if additional shares are issued[161]. - The company may issue additional Class A ordinary shares under an employee incentive plan after the initial business combination, which could further dilute shareholder interests[160]. - Changes in the value of the company's warrants, classified as liabilities, may lead to material fluctuations in financial results and affect the market price of Class A ordinary shares[137]. - The company may face difficulties in completing an initial business combination if it issues additional shares at a price below $9.20, which would adjust the exercise price of the warrants[139]. Operational Challenges - The company may face challenges in enforcing legal rights if it completes a business combination with a foreign entity, potentially leading to significant losses[110]. - Managing cross-border operations can be costly and complex, negatively impacting financial and operational performance[111]. - The company may migrate to a different jurisdiction, which could complicate tax implications for shareholders and affect the enforcement of agreements[113]. - Legal systems in many countries may be unpredictable and corrupt, adversely affecting operations and financial condition[114]. - Currency fluctuations could diminish the target business's success in international markets, affecting financial results[116]. Key Personnel and Management - The company is dependent on a small group of key personnel, and their unexpected departure could adversely affect operations[166]. - Successful completion of the initial business combination relies on key personnel, and loss of such personnel could impact post-combination profitability[167]. - Key personnel may negotiate compensation agreements with target businesses, potentially leading to conflicts of interest[168]. - Executive officers and directors may have conflicts of interest due to their involvement in other business activities[169].