The following discussion summarizes the significant factors affecting the
operating results, financial condition, liquidity and capital resources of Post
Holdings Partnering Corporation. This discussion should be read in conjunction
with the financial statements under Item 8 of this report and the "Cautionary
Statement On Forward-Looking Statements" on page 1.
OVERVIEW
We are a blank check company incorporated in Delaware on January 27, 2021 for
the purpose of effecting a merger, share exchange, asset acquisition, share
purchase, reorganization or similar partnering transaction with one or more
businesses that we have not yet identified (a "Partnering Transaction"). We are
an emerging growth company and, as such, we are subject to all of the risks
associated with emerging growth companies.
On May 28, 2021, we consummated the initial public offering of 30,000,000 units
(the "Units"). Each Unit consists of one share of Series A common stock, $0.0001
par value per share (the "Series A common stock" and such shares, the "Public
Shares") and one-third of one redeemable warrant (the "Public Warrants"). Each
whole Public Warrant will entitle the holder to purchase one share of Series A
common stock at an exercise price of $11.50 per share, subject to adjustment.
The Units were sold at an offering price of $10.00 per Unit, generating total
gross proceeds of $300,000,000. The Units began trading on the New York Stock
Exchange (the "NYSE") under the ticker symbol "PSPC.U" on May 26, 2021. As of
July 16, 2021, holders of the Units could elect to separately trade their shares
of Series A common stock and Public Warrants, with the shares of Series A common
stock and the Public Warrants listed on the NYSE under the symbols "PSPC" and
"PSPC WS", respectively.
On June 3, 2021, we issued an additional 4,500,000 Units (the "Over-Allotment
Units") pursuant to the underwriters' exercise in full of their over-allotment
option in connection with the initial public offering. The Over-Allotment Units
were priced at $10.00 per Over-Allotment Unit, generating total gross proceeds
of $45,000,000. The term "IPO" as used herein generally refers to the
consummation of the initial public offering on May 28, 2021 and the
underwriters' exercise in full of their over-allotment option on June 3, 2021.
We incurred offering costs in connection with the IPO of $17,887,856, of which
$10,675,000 was for deferred underwriting commissions.
On May 28, 2021, in conjunction with the closing of the initial public offering,
we consummated the private sale of 1,000,000 Private Placement Units (the
"Private Placement Units") at a purchase price of $10.00 per Private Placement
Unit to our sponsor, PHPC Sponsor, LLC (the "Sponsor"), generating total gross
proceeds of $10,000,000. Concurrently with the sale of the Over-Allotment Units,
the Sponsor purchased an additional 90,000 Private Placement Units for total
gross proceeds of $900,000. Each Private Placement Unit consists of one share of
Series A common stock ("the "Private Placement Shares") and one-third of one
warrant, each whole warrant entitling the Sponsor to purchase one share of
Series A common stock at an exercise price of $11.50 per share (the "Private
Placement Warrants"). The term "Private Placement" as used herein generally
refers to the consummation of the private sale of Private Placement Units on May
28, 2021 and the private sale of Private Placement Units in conjunction with the
sale of the Over-Allotment Units on June 3, 2021.
Of the gross proceeds received from the IPO and Private Placement, $345,000,000
(or $10.00 per Unit sold in the IPO) was deposited in a trust account (the
"Trust Account") located in the United States (the "U.S.") with Continental
Stock Transfer & Trust Company acting as trustee.
Our Sponsor, executive officers and directors (the "initial stockholders")
agreed not to propose an amendment to our amended and restated certificate of
incorporation that would modify the substance or timing of our obligation to
provide holders of our Public Shares the right to have their shares redeemed in
connection with a Partnering Transaction or to redeem 100% of our Public Shares
if we do not complete a Partnering Transaction within 24 months from the closing
of our IPO, or May 28, 2023, or 27 months, or August 28, 2023, following an
agreement in principle event, which means we have executed a letter of intent,
agreement in principle or definitive agreement for a Partnering Transaction
within 24 months from the closing of the IPO but have not completed the
Partnering Transaction within such 24-month period (such 24-month or 27-month
period, the "Combination Period") or with respect to any other provision
relating to the rights of holders of Public Shares (the "Public Stockholders"),
unless we provide the Public Stockholders with the opportunity to redeem their
shares of Series A common stock in conjunction with any such amendment.
We expect to continue to incur significant costs in the pursuit of a Partnering
Transaction. We cannot assure you that our plans to complete a Partnering
Transaction will be successful.
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RESULTS OF OPERATIONS
As of December 31, 2021, we had not commenced any operations. All activity for
the period from January 27, 2021 (inception) through December 31, 2021 relates
to our formation and IPO, and from the IPO date relates to our search for
potential target businesses. We will not generate any operating revenue until
after the completion of our Partnering Transaction, at the earliest. We incur
general and administrative expenses through operating as a blank check company.
We generate other income in the form of interest income from the proceeds
derived from our IPO, and non-operating unrealized gains and losses related to
derivative instruments initially recorded at the IPO date.
For the period beginning January 27, 2021, the inception date of the Company,
and ending December 31, 2021, we had net earnings of $7,488,319, which consisted
of a $9,707,400 gain on derivative warrant liabilities and $13,507 of income on
investments held in the Trust Account, offset by $2,232,588 of general and
administrative expenses. General and administrative expenses included
professional fees, offering costs associated with derivative warrant
liabilities, franchise taxes and fees related to the services agreement with
Post.
Changes in the fair value of derivative warrant liabilities recognized in the
Statement of Operations were primarily due to market factors largely driven by
changes in the fair value of the underlying shares of the warrants.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2021, we had working capital of $2,426,458, which included
$2,444,148 of cash in our operating bank account.
Our liquidity needs prior to the closing of the IPO were satisfied through a
payment of $25,000 from the Sponsor to purchase 11,500,000 shares of Series F
common stock, $0.0001 par value per share (the "Founder Shares") and the loan of
$213,424 from the Sponsor under an unsecured promissory note, which was repaid
in full on May 28, 2021. On April 8, 2021, the Sponsor surrendered 2,875,000
Founder Shares to the Company for no consideration resulting in an aggregate of
8,625,000 Founder Shares outstanding. Subsequent to the closing of the IPO, our
liquidity has been satisfied through the proceeds from the IPO and Private
Placement not held in the Trust Account. In addition, in order to finance
transaction costs in connection with a Partnering Transaction, the Sponsor or an
affiliate of the Sponsor, or certain of our officers and directors, may, but are
not obligated to, provide us with working capital loans. As of December 31,
2021, there were no amounts outstanding under any working capital loans.
Based on the foregoing, we believe that we will have sufficient working capital
and borrowing capacity from the Sponsor or an affiliate of the Sponsor, or
certain of our officers and directors, to meet our needs through the earlier of
the consummation of a Partnering Transaction or one year from this filing. Over
this time period, we will use these funds for paying existing accounts payable,
identifying and evaluating prospective Partnering Transaction candidates,
performing due diligence on prospective target businesses, paying for travel
expenditures, selecting the target business to merge with or acquire, and
structuring, negotiating and consummating the Partnering Transaction.
We do not have any long-term debt obligations, finance lease obligations,
operating lease obligations, purchase obligations or long-term liabilities.
On May 28, 2021, we entered into a services agreement that provided that,
commencing on the date that our securities were first listed on the NYSE through
the earlier of consummation of the Partnering Transaction and our liquidation,
we agreed to pay Post Holdings, Inc. ("Post") $40,000 per month for office space
and administrative and support services provided to members of our management
team.
The underwriters are entitled to underwriting discounts and commissions of
$16,775,000, of which $6,100,000 was paid at the closing of the IPO and
$10,675,000 was deferred. The deferred underwriting commissions will be paid to
the underwriters upon the consummation of the Partnering Transaction subject to
the terms of the underwriting agreement.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of our financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America ("GAAP") requires us 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 periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Derivative Financial Instruments
We account for our warrants in accordance with the guidance contained in
Accounting Standards Codification ("ASC") Topic 815, "Derivatives and Hedging,"
under which the warrants do not meet the criteria for equity treatment and must
be
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recorded as liabilities. Accordingly, we classify our warrants as liabilities at
their fair value and adjust the warrants to fair value at each reporting period.
The Public Warrants were initially measured at fair value using a Monte Carlo
simulation at their original issuance and subsequently measured using their
quoted market price once they became actively traded on the NYSE during the
third quarter of fiscal 2021. The fair value of the Private Placement Warrants
was determined using a Black-Scholes Pricing Model using observable and
unobservable market data as the significant inputs (risk free rate, dividend
yield and volatility).
Series A Common Stock Subject to Possible Redemption
We account for our Series A common stock subject to possible redemption in
accordance with the guidance in ASC Topic 480, "Distinguishing Liabilities from
Equity" ("ASC 480"). Conditionally redeemable Series A common stock (including
shares of Series A common stock 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) is classified as temporary
equity. At all other times, Series A common stock is classified as stockholders'
equity. Our Series A common stock features certain redemption rights that are
considered to be outside of our control and subject to the occurrence of
uncertain future events. Accordingly, as of December 31, 2021, 34,500,000 shares
of Series A common stock subject to possible redemption were presented at
redemption value as temporary equity, outside of stockholders' equity on our
Balance Sheet.
Net Earnings (Loss) per Share
Basic and diluted earnings (loss) per share of Series A common stock subject to
possible redemption (the "redeemable common stock") and the Series A common
stock and Series F common stock not subject to possible redemption
(collectively, the "non-redeemable common stock") are presented separately under
the two-class method. Basic earnings (loss) per share is based on the average
number of shares outstanding during the periods presented for the redeemable
common stock and non-redeemable common stock. Net earnings is allocated between
the redeemable common stock and non-redeemable common stock based on the
weighted-average shares outstanding during the periods presented. The redeemable
common stock is measured at its redemption value each period. As allowed for
within ASC 480, we have made an election to treat the portion of the
remeasurement adjustment that exceeds fair value as an adjustment to income
available to holders of shares of redeemable common stock and to income
available to holders of shares of non-redeemable common stock for basic and
diluted earnings (loss) per share. Diluted earnings (loss) per share is based on
the average number of shares of redeemable common stock and non-redeemable
common stock used for the basic earnings per share calculation, adjusted for the
dilutive effect of warrants, if any, using the "treasury stock" method. In
addition, net earnings (loss) for diluted earnings per share is adjusted for the
after-tax impact of changes to the fair value of derivative warrant liabilities,
to the extent it is dilutive. We have not considered the effect of the warrants
sold in the IPO and the Private Placement to purchase an aggregate 11,863,333
shares of Series A common stock in the calculation of diluted earnings (loss)
per share, since the exercise of the warrants into shares of Series A common
stock is contingent upon the occurrence of future events. See Note 6 within
"Notes to Financial Statements" for the calculation of basic and diluted
earnings (loss) per share of redeemable common stock and non-redeemable common
stock.
RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS
See Note 3 within "Notes to Financial Statements" for a discussion regarding
recently issued and adopted accounting standards.
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