Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On April 12, 2021, the Staff of the Securities and Exchange Commission (the
"SEC") released a statement (the "SEC Statement") informing market participants
that warrants issued by special purpose acquisition companies ("SPACs") may
require classification as a liability of the entity measured at fair value, with
changes in fair value each period reported in earnings. TPG Pace Beneficial
Finance Corp. (the "Company," "we" or "our") has previously classified its
private placement warrants and public warrants (collectively, the "warrants") as
equity and classified certain forward purchase agreements ("FPAs") as equity
based upon the Company's conclusion that the financial instruments to be issued
in accordance with the agreements were equity classified. The Company has
re-evaluated its accounting for the warrants and FPAs and in consultation with
its advisors concluded that the warrants and the FPAs should be
liability-classified and measured at fair value, with changes in fair value each
period reported in earnings (the "Warrant Accounting"). As part of the
re-evaluation referred to above and in consultation with its advisors, the
Company also re-evaluated its accounting for its Class A ordinary shares,
$0.0001 par value (the "Class A Shares"), and concluded that the Company's
issued and outstanding Class A Shares should be classified within temporary
equity pursuant to Accounting Standards Codification ("ASC") 480-10 rather than
partially as temporary equity and partially as permanent equity (the "Temporary
Equity Accounting"). In addition, the Company is evaluating certain other
disclosures as part of the re-evaluation referred to above (together with the
Warrant Accounting and the Temporary Equity Accounting, the "Accounting
Matters").
On May 3, 2021, the Board of Directors of the Company (the "Board"), in
consultation with management of the Company and upon the recommendation of the
Audit Committee of the Board, determined as a result of the Accounting Matters
that the Company's previously issued audited financial statements as of
October 9, 2020, and as of and for the year ended December 31, 2020, should no
longer be relied upon and, with respect to such financial statements as of and
for the year ended December 31, 2020 (the "Restatement Date/Period"), should be
restated.
With respect to the Warrant Accounting, the Company noted that the SEC Statement
discussed "certain features of warrants issued in SPAC transactions" that "may
be common across many entities." The SEC Statement indicated that when one or
more of such features is included in a warrant, the warrant "should be
classified as a liability measured at fair value, with changes in fair value
each period reported in earnings." Following consideration of the guidance in
the SEC Statement, while the terms and quantum of the warrants and FPAs as
described in the Prospectus have not changed, the Company concluded the warrants
and FPAs do not meet the conditions to be classified in equity and instead, the
warrants and the FPAs meet the requirement under ASC 815, under which the
Company should record the warrants and the FPAs as liabilities on the Company's
balance sheet.
With respect to the Temporary Equity Accounting, the Company noted that because
it is certain that its Class A Shares will be redeemed or become redeemable and
no exceptions in ASC 480-10-S99-3A apply, the Class A Shares (1) must be
classified within temporary equity in the Company's financial statements and
(2) are subject to the subsequent measurement guidance in ASC 480-10-S99-3A.
The Company intends to file restated financial statements as of and for the
Restatement Date/Period in an amendment (the "Amended 10-K") to its Annual
Report on Form 10-K for the year ended December 31, 2020, originally filed with
the SEC on March 24, 2021, reflecting revisions resulting from the Accounting
Matters. The Company engaged an independent valuation expert to value the
warrants and the FPAs as of October 7, 2020 and December 31, 2020, and is
working diligently to file the Amended 10-K as soon as practicable. The
adjustments to the financial statement items for the Restatement Date/Period
will be set forth through expanded disclosure in the financial statements
included in the Amended 10-K, including further describing the restatement and
its impact on previously reported amounts. In addition, the Company is
reassessing its previous conclusions regarding the effectiveness of its
disclosure controls and procedures.
The Company's management and the Audit Committee have discussed the matters
disclosed in this Item 4.02 with the Company's independent registered public
accounting firm, KPMG LLP.
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