References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Austerlitz Acquisition Corporation II. References to our
"management" or our "management team" refer to our officers and directors,
references to the "Sponsor" refer to Austerlitz Acquisition Sponsor, LP I. The
following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the unaudited condensed
financial statements and the notes thereto contained elsewhere in this Quarterly
Report. Certain information contained in the discussion and analysis set forth
below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" that are not
historical facts and involve risks and uncertainties that could cause actual
results to differ materially from those expected and projected. All statements,
other than statements of historical fact included in this Quarterly Report
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. Words such as
"expect," "believe," "anticipate," "intend," "estimate," "seek" and variations
and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future
performance, but reflect management's current beliefs, based on information
currently available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and results
discussed in the forward-looking statements. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of the Company's Annual Report on Form 10-K for the year ended
December 31, 2021 and in any of the Company's subsequent SEC filings. The
Company's securities filings can be accessed on the EDGAR section of the SEC's
website at www.sec.gov. Except as expressly required by applicable securities
law, the Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
Overview
We are a blank check company incorporated on January 5, 2021 as a Cayman Islands
exempted company for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar Business Combination with
one or more businesses. We intend to effectuate a Business Combination using
cash from the proceeds of our IPO and the Private Placement, the proceeds of the
sale of our shares in connection with a Business Combination, shares issued to
the owners of the target, debt issued to bank or other lenders or the owners of
the target, or a combination of the foregoing.
The registration statement for our IPO was declared effective on February 25,
2021. On March 2, 2021, we completed our IPO of 138,000,000 Units sold to the
public, including the issuance of 18,000,000 Units as a result of the
underwriter's exercise in full of its over-allotment option, at the price of
$10.00 per Unit, generating gross proceeds of $1,380,000,000. Each Unit consists
of one Class A ordinary share of the Company and one-fourth of one redeemable
warrant. Each whole Public Warrant entitles the holder to purchase one Class A
ordinary share at an exercise price of $11.50 per share, subject to adjustment.
Simultaneously with the closing of our IPO, we completed the sale to Cannae
Holdings, LLC of an aggregate of 19,733,333 Private Placement Warrants at a
price of $1.50 per Private Placement Warrant, generating gross proceeds of
approximately $29,600,000. Each Private Placement Warrant is exercisable for one
Class A ordinary share at a price of $11.50 per share, subject to adjustment.
The proceeds from the Private Placement were added to the net proceeds from the
IPO held in the Trust Account.
Following our IPO, the full exercise of the over-allotment option and the
Private Placement, a total of $1,380,000,000 was placed in the Trust Account. We
incurred $28,359,571 in transaction costs, including $27,600,000 of underwriting
fees and $759,571 of other offering costs.
The Company's management has broad discretion with respect to the specific
application of the net proceeds of the IPO and the sale of the Private Placement
Warrants, although substantially all of the net proceeds are intended to be
applied generally toward consummating a Business Combination. There is no
assurance that the Company will be able to complete a Business Combination
successfully. The Company must complete its initial Business Combination with
one or more target businesses that together have a fair market value equal to at
least 80% of the net assets held in the Trust Account (excluding any deferred
underwriting commissions held in the Trust Account) at the time the Company
signs a definitive agreement in connection with a Business Combination. The
Company will only complete a Business Combination if the post-Business
Combination company owns or acquires 50% or more of the issued and outstanding
voting securities of the target or otherwise acquires a controlling interest in
the target business sufficient for it not to be required to register as an
investment company under the Investment Company Act of 1940, as amended.
18
--------------------------------------------------------------------------------
Table of Contents
On October 3, 2022, the Company filed a preliminary proxy statement to redeem
the Public Shares through a tender offer and amend its March 2, 2023 expiration
date to the chosen date of the shareholder meeting for which proxies are being
solicited. Upon approval by the Company's shareholders of the proposals set
forth in the proxy statement, the Company would redeem the Public Shares and
begin liquidation proceedings. The Sponsors believe that consummation of a
suitable business combination is highly improbable, and it is therefore in
shareholders' best interests to return the cash held in the Trust Account to
shareholders within calendar 2022 rather than wait for expiration in 2023. The
Company will be dissolved subsequent to the return of the cash in trust to our
shareholders. On October 28, 2022, the Company filed the related definitive
proxy statement. See Note 10 to our condensed consolidated financial statements
included in Item 1 of Part I of this Quarterly Report for further discussion.
The COVID-19 pandemic has caused difficult market and economic conditions
globally since its outbreak in 2020, and the full impact of the COVID-19
pandemic continues to evolve. The impact of the COVID-19 outbreak on our results
of operations, financial position and cash flows will depend on future
developments, including resurgences and variants of the virus that causes
COVID-19, as well as efforts to reduce its spread, such as travel bans and other
restrictions. These developments and the impact of the COVID-19 outbreak on the
financial markets and the overall economy are highly uncertain and cannot be
predicted. If the financial markets and/or the overall economy continue to be
impacted for an extended period, our ability to complete our initial Business
Combination may be materially adversely affected due to significant governmental
measures to contain the COVID-19 pandemic or treat its impact, including travel
restrictions, the shutdown of businesses and quarantines, among others, which
may limit our ability to have meetings with potential investors or affect the
ability of a potential target company's personnel, vendors and service providers
to negotiate and consummate our initial Business Combination in a timely manner.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities since inception have been organizational activities, those
necessary to prepare for our IPO and, after completing our IPO, identifying a
target company for a Business Combination. We do not expect to generate any
operating revenues until after completion of a Business Combination. We may
generate non-operating income in the form of interest income on marketable
securities held in the Trust Account. We incur expenses as a result of being a
public company (for legal, financial reporting, accounting and auditing
compliance), as well as expenses as we conduct due diligence on prospective
Business Combination candidates. Additionally, we recognize non-cash gains and
losses related to changes in recurring fair value measurements of our Warrant
liabilities at each reporting period.
For the nine months ended September 30, 2022, we had net income of $52,852,775,
which consists of $795,891 in general and administrative expenses, which were
more than offset by non-cash gains of $53,648,666 related to changes in the fair
value of the warrants and forward purchase agreement. For the period from
January 5, 2021 (Inception) through September 30, 2021, we had net income of
$27,271,303, which consisted of $572,659 in general and administrative costs,
$5,000 of formation costs, $3,181,372 related to transaction costs allocated to
derivative warrant liabilities, which were more than offset by non-cash gains of
$31,030,334 related to changes in the fair value of the warrants and forward
purchase agreement,
For the three months ended September 30, 2022, we had net income of $5,858,586,
which consists of $274,414 in general and administrative costs, which were more
than offset by non-cash gains of $6,133,000 related to changes in the fair value
of the warrants and forward purchase agreement. For the three months ended
September 30, 2021, we had net income of $13,293,819, which consisted of
$322,515 in general and administrative expenses which was more than offset by
non-cash gains of $13,616,334 related to changes in the fair value of the
warrants and forward purchase agreement.
Liquidity and Capital Resources
As of September 30, 2022, we had cash of $955 outside of the Trust Account. We
intend to use the funds held outside the Trust Account primarily to fund working
capital and pay third-party service providers for services rendered to the
Company.
As of September 30, 2022, we had cash of $690,000,000 held in the Trust Account.
We intend to redeem our outstanding Class A ordinary shares (the "Public
Shares") for the cash held in the Trust Account prior to December 31, 2022. The
Company expires by its terms on March 2, 2023, however, the Company has filed a
preliminary proxy statement to amend the March 2, 2023 expiration date to the
date of the shareholders meeting for which proxies are being solicited. The
Sponsors believe that consummation of a suitable merger is highly improbable,
and it is therefore in shareholders' best interests to return the cash held in
the Trust Account within calendar year 2022 rather than wait for expiration in
2023.
For the nine months ended September 30, 2022, cash used by operating activities
was $258,411 and is primarily attributable to the payment of expenses.
For the period from January 5, 2021 (Inception) through September 30, 2021, cash
used by operating activities was $870,335 and is primarily attributable to the
payment of expenses.
The Company had no cash flow from investing or financing activities in the nine
months ended September 30, 2022.
19
--------------------------------------------------------------------------------
Table of Contents
For the period from January 5, 2021 through September 30, 2021, net cash used in
investing activities was $1,380,000,000, which consisted of $1,380,000,000
investment of cash into the trust account. Net cash provided by financing
activities of $1,381,200,859 was attributable to $388,152 for the repayment of
the promissory note to a related party, and was offset by $408,153 of advances
from a related party, $1,351,580,858 of proceeds from the sale of Units, net of
deferred underwriting discounts paid, and $29,600,000 of proceeds from the sale
of the Private Placement Warrants.
See discussion under the header "Liquidity and Going Concern Consideration" in
Note 1 and in Note 10 to our unaudited condensed financial statements included
in Item 1 of Part I of this Quarterly Report for discussion of the Company's
plan to return the cash held in the Trust Account to shareholders and
management's consideration of the Company's ability to continue as a going
concern.
Off-Balance Sheet Financing Arrangements
We had no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 2022 or December 31, 2021. We
do not participate in transactions that create relationships with unconsolidated
entities or financial partnerships, often referred to as variable interest
entities. We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay an
affiliate of our sponsor a monthly fee up to $5,000 for office space and
administrative support services. We began incurring these fees on March 2, 2021
and will continue to incur these fees monthly until the earlier of the
completion a Business Combination and our liquidation.
Critical Accounting Estimates
The preparation of condensed financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the period reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting estimates
effecting our financial statements:
Warrant and Forward Purchase Liabilities
The Company accounts for the Warrants and Forward Purchase Agreement ("FPA") as
either equity-classified or liability-classified instruments based on an
assessment of the specific terms of the Warrants and FPA and the applicable
authoritative guidance in ASC 480 and ASC Topic 815, Derivatives and Hedging
("ASC 815"). The assessment considers whether the Warrants and FPA are
freestanding financial instruments pursuant to ASC 480, meet the definition of a
liability pursuant to ASC 480, and meet all of the requirements for equity
classification under ASC 815, including whether the Warrants and FPA are indexed
to the Company's own ordinary shares and whether the warrant holders could
potentially require "net cash settlement" in a circumstance outside of the
Company's control, among other conditions for equity classification. This
assessment, which requires the use of professional judgment, is conducted at the
time of issuance of the Warrants and execution of the FPA and as of each
subsequent quarterly period end date while the Warrants and FPA are outstanding.
For issued or modified instruments such as warrants and forward purchases of
equity that meet all of the criteria for equity classification, such instruments
are required to be recorded as a component of additional paid-in capital at the
time of issuance. For issued or modified instruments that do not meet all the
criteria for equity classification, such instruments are required to be recorded
as liabilities at their initial fair value on the date of issuance, and each
balance sheet date thereafter. Changes in the estimated fair value of
liability-classified instruments are recognized as a non-cash gain or loss on
the unaudited condensed statements of operations.
The Company accounts for the Warrants and FPA in accordance with ASC 815-40
under which the Warrants and FPA do not meet the criteria for equity
classification and must be recorded as assets or liabilities. The assets and
liabilities for the Warrants and FPA are included in Warrant liability and
Forward purchase agreement asset or liability, respectively, on the balance
sheets as of September 30, 2022 and December 31, 2021.
See Note 8 to our unaudited condensed financial statements included in Item 1 of
Part I of this Quarterly Report for further discussion of the pertinent items of
the Warrants and Note 9 for further discussion of the methodology used to
determine the fair value of the Company's assets or liabilities for the Warrants
and FPA.
20
--------------------------------------------------------------------------------
Table of Contents
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in
accordance with the guidance in ASC 480. Class A ordinary shares subject to
mandatory redemption are classified as a liability instrument and is measured at
fair value. Conditionally redeemable ordinary shares (including 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 solely
within our control) are classified as temporary equity. At all other times,
ordinary shares are classified as shareholders' equity. Our Class A ordinary
shares feature certain redemption rights that are considered to be outside of
our control and subject to occurrence of uncertain future events. Accordingly,
the Class A ordinary shares subject to possible redemption are presented as
temporary equity, outside of the shareholders' equity section of our condensed
balance sheets.
Net Income (Loss) per Ordinary Share
The Company has three classes of shares, one for each of its Class A, Class B,
and Class C ordinary shares. Income and losses are shared pro rata between the
three classes of shares. Net income per ordinary share is computed by dividing
net income by the weighted average number of ordinary shares outstanding during
the period. Refer to Note 2 to our unaudited condensed financial statements
included in Item 1 of Part I of this Quarterly Report for further discussion of
the calculation of our net income per share.
Recently Issued Accounting Pronouncements
Refer to Note 2 to our unaudited condensed financial statements included in Item
8 of this Quarterly Report for discussion of management's consideration of
recently issued accounting pronouncements.
© Edgar Online, source Glimpses
AUSTERLITZ ACQUISITION CORPORATION II 
