LEVERE HOLDINGS CORP. References to the "Company," "our," "us" or "we" refer to
Overview
We are a blank check company incorporated as a
The registration statement for our initial public offering, or IPO, was declared effective onMarch 18, 2021 . OnMarch 23, 2021 , we consummated the IPO of 25,000,000 Units (as defined below), at$10.00 per Unit, generating gross proceeds of$250.0 million . The Company granted the Underwriters in the IPO, or the Underwriters, a 45-day option to purchase up to 3,750,000 additional Units to cover over-allotments, if any. OnMarch 31, 2021 , the Underwriters partially exercised the over-allotment option and purchased an additional 2,128,532 Units, generating an aggregate of gross proceeds of approximately$21.3 million . Each Unit consists of one Class A ordinary share, and one-third of one redeemable warrant to purchase one Class A ordinary share, or a Public Warrant, at a price of$11.50 per whole share, or the "Units" and, with respect to the Class A ordinary shares included in the Units sold, or the Public Shares. We incurred transaction costs for the IPO and over-allotment of approximately$15.6 million , inclusive of approximately$9.5 million in deferred underwriting commissions.
Simultaneously with the closing of the IPO, we consummated the private placement
of 4,666,667 warrants at a price of
Upon the closing of the IPO and exercise of the over-allotment option, and the simultaneous Private Placements, approximately$271.3 million ($10.00 per Unit) of the net proceeds were placed in a trust account, or Trust Account, located inthe United States withContinental Stock Transfer & Trust Company acting as trustee, and invested only inU.S. "government securities," within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, or the Investment Company Act, having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7promulgated under the Investment Company Act, which invest only in directU.S. government treasury obligations, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
If we have not completed a Business Combination within 24 months from the
closing of the IPO, we 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, equal to the aggregate amount then on deposit in the
Trust Account, including interest earned on the funds held in the Trust Account
and not previously released to us to pay its taxes (less up to
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Results of Operations
For the three months ended
For the six months ended
For the three months ended
For the period from
Our business activities from inception to
Liquidity, Capital Resources and Going Concern
As of
Our liquidity needs up to
The Company is within 12 months of its mandatory liquidation as of the time of
filing this Quarterly Report on
Form10-Q.In
connection with the Company's assessment of going concern considerations in
accordance with FASB's Accounting Standards Update ("ASU")
2014-15,
"Disclosures of Uncertainties about an Entity's Ability to Continue as a Going
Concern," management has determined that if the Company is unable to raise
additional funds to alleviate liquidity needs then the Company will cease all
operations except for the purpose of liquidating. The liquidity condition and
date for mandatory liquidation and subsequent dissolution raise substantial
doubt about the Company's ability to continue as a going concern one year from
the date that these financial statements are issued. No adjustments have been
made to the carrying amounts of assets or liabilities should the Company be
unable to continue as a going concern. The Company intends to complete the
Business Combination before the mandatory liquidation date of March 23, 2023 .
Our unaudited condensed financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to continue as a going concern.
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Contractual Obligations
As of
The underwriters of the IPO are entitled to a deferred underwriting commission
of 3.5% of the gross proceeds of the IPO and over-allotment, or
Critical Accounting 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
Warrants Liability
We evaluated the Warrants in accordance with ASC 815-40 and concluded that a provision in the Warrant Agreement, datedMarch 23, 2021 , by and between us andContinental Stock Transfer & Trust Company related to certain tender or exchange offers as well as provisions that provided for potential changes to the settlement amounts dependent upon the characteristics of the holder of the warrant, precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815-40 and are not eligible for an exception from derivative accounting, the Warrants are recorded as derivative liabilities on our Balance Sheet and measured at fair value at inception (on the date of the IPO) and at each reporting date in accordance with ASC 820, "Fair Value Measurement", with changes in fair value recognized in our Statement of Operations in the period of change.
Convertible Promissory Note
We account for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free-standing derivative financial instruments.
We review the terms of convertible debt issued to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.
Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense.
We assessed the provisions of the Convertible Promissory Note under ASC 470-20.
The derivative component of the obligation is initially valued and classified as
a derivative liability. The conversion option was valued using a Monte Carlo
simulation model, which is considered to be a Level 3 fair value measurement.
The conversion option liability is not recorded as of
Offering Costs Associated with the Initial Public Offering
We comply with the requirements of the ASC 340-10-S99-1, "Other Assets and Deferred Costs." Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the IPO that were directly related to the IPO. Offering costs are allocated to the separable financial instruments issued in the IPO based on a relative fair value basis, compared to total proceeds received. Offering costs associated with Warrant liabilities are expensed as incurred, presented as non-operating expenses in our Statement of Operations. Offering costs associated with the Class A ordinary shares were charged to shareholders' equity upon the completion of the IPO. Transaction costs of the IPO, including the partial exercise of the over-allotment, amounted to$15,622,172 , of which$618,405 were allocated to expense associated with the Warrant liability.
Ordinary Shares Subject to Possible Redemption
All of the Class A ordinary shares sold as part of the Units in the IPO contain
a redemption feature which allows for the redemption of such public shares in
connection with our liquidation, if there is a shareholder vote or tender offer
in connection with the initial Business Combination and in connection with
certain amendments to our charter. In accordance with
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We recognize changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary share to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary share are affected by charges against additional paid in capital and accumulated deficit.
Net Income Per Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260, Earnings Per Share. Net income per share is computed by dividing net income by the weighted average number of ordinary shares outstanding during the period. We have two classes of shares, Class A ordinary shares and Class B ordinary shares. Earnings and losses are shared pro rata between the two classes of shares. We have not considered the effect of warrants sold in the IPO and the Private Placements to purchase 13,993,314 ordinary shares in the calculation of diluted net income per share, since the exercise of the warrants is contingent upon the occurrence of future events. As a result, diluted net income per ordinary share is the same as basic net income per ordinary share for the period presented.
Our statement of operations applies the two-class method in calculating net income per share. Basic and diluted net income per ordinary share for Class A ordinary shares and Class B ordinary shares is calculated by dividing net income attributable to us by the weighted average number of Class A ordinary shares and Class B ordinary shares outstanding, allocated proportionally to each class of shares.
Recent Accounting Pronouncements
InAugust 2020 , the FASB issued ASU2020-06, Debt-Debt with Conversion and Other Options (Subtopic470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU2020-06"), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The Company adopted ASU2020-06onJanuary 1, 2021 . Adoption of the ASU did not impact the Company's financial position, results of operations or cash flows.
Our management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying unaudited condensed financial statements.
Emerging Growth Company and Smaller Reporting Company Status
As an emerging growth company, or EGC, under the Jumpstart Our Business Startups
Act of 2012, or JOBS Act, we may delay the adoption of certain accounting
standards until such time as those standards apply to private companies. Other
exemptions and reduced reporting requirements under the JOBS Act for EGCs
include presentation of only two years of audited financial statements in a
registration statement for an IPO, an exemption from the requirement to provide
an auditor's report on internal controls over financial reporting pursuant to
Section 404(b) of the Sarbanes-Oxley Act of 2002, an exemption from any
requirement that may be adopted by the
In addition, the JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an EGC to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected not to "opt out" of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we can adopt the new or revised standard at the time private companies adopt the new or revised standard and may do so until such time that we either (1) irrevocably elect to "opt out" of such extended transition period or (2) no longer qualify as an emerging growth company. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
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We are also a "smaller reporting company," as defined in the Exchange Act of 1934, or the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company, in which case we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.
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