M3-Brigade Acquisition V Corp.(MBAVU) - 2024 Q4 - Annual Report

Part I Business M3-Brigade Acquisition V Corp. is a blank check company formed to complete a business combination within 24 months of its August 2024 IPO - The company is a blank check company formed for business combinations, established by executives from M3 Partners and Brigade Capital Management[21][22] - Management has prior SPAC experience, including M III Acquisition Corp. which merged with IEA (acquired by MasTec for $1.1 billion) and M3-Brigade Acquisition III Corp. with Greenfire Resources in a $950 million transaction[23] Initial Public Offering (IPO) Details | Metric | Value | | :--- | :--- | | IPO Date | August 2, 2024 | | Units Offered | 28,750,000 (including full over-allotment) | | Price per Unit | $10.00 | | Gross Proceeds | $287,500,000 | | Amount Placed in Trust Account | $288,937,500 ($10.05 per Unit) | - The company must complete an initial business combination within 24 months of IPO closing or liquidate and redeem all public shares[61] - The target's fair market value must be at least 80% of Trust Account assets, with the company acquiring a controlling interest of 50% or more voting securities[33][35] Risk Factors The company faces significant risks related to business combination completion, post-combination operations, foreign markets, management, and its securities Risks Related to the Business Combination Process Key risks involve completing a combination without shareholder vote, the 24-month deadline, intense competition, and external market volatility - The company may complete an initial business combination without a shareholder vote, limiting shareholder influence to redemption rights[73][76] - The 24-month business combination deadline grants targets negotiating leverage and may limit due diligence time[82] - External events like geopolitical unrest, pandemics, and market volatility may materially affect the search for and consummation of a target transaction[86][87][123] - Significant competition from other SPACs and private equity groups could increase acquisition costs or prevent finding a suitable target[100][169] Risks Related to the Post-Business Combination Company Post-combination risks include asset write-downs, key personnel resignations, and potential loss of management control over the target business - The company may incur asset write-downs or impairment charges post-combination, negatively impacting financial condition and stock price[170] - A minority interest for original shareholders post-combination could lead to a loss of management control over the target business[172] - Target company management may lack public company experience, negatively impacting post-combination profitability and operations[173] Risks of Acquiring and Operating a Foreign Business Acquiring a foreign business introduces risks like currency fluctuations, complex tax and legal systems, political instability, and enforcement challenges - Acquiring a non-U.S. target introduces risks including currency fluctuations, complex tax/legal systems, tariffs, political instability, and cultural differences[178][180] - Reincorporation into another jurisdiction post-combination could result in adverse tax consequences for shareholders and warrant holders[182] - Operating in countries with unpredictable legal systems may hinder enforcement of rights, leading to significant business losses[191][194] Risks Related to the Management Team Management's other commitments and financial incentives create potential conflicts of interest regarding time allocation and target selection - Officers and directors are not full-time, leading to potential conflicts of interest and limited time for business combination efforts[201] - Management's obligations to other entities may lead to business opportunities being presented elsewhere first[202] - Sponsor, officers, and directors face total loss of investment if no business combination occurs, creating a conflict of interest regarding deal completion[144][147] Risks Related to Securities Securities risks include Nasdaq delisting, significant dilution from founder shares, limited shareholder rights, and warrant redemption or amendment - The company's securities may be delisted from Nasdaq for failing to meet listing requirements, reducing liquidity and trading[210] Illustrative Dilution of Public Shares | Metric | Value | | :--- | :--- | | Public Shareholders' Investment per Share | $10.00 | | Sponsor's Investment per Founder Share | $0.004 | | Initial Implied Value per Public Share | $9.78 | | Implied Value per Share Post-Combination (Illustrative) | $7.83 | | Decrease from Initial Implied Value | ~19.95% | - As a Cayman Islands company, investors may face difficulty protecting interests or enforcing U.S. court judgments against the company or its management[220][221][222] - Warrant terms may be amended with 50% holder approval, potentially adversely affecting other holders[232] General Risk Factors General risks include PFIC classification, reduced disclosure as an emerging growth company, and substantial doubt about going concern status - The company may be classified as a Passive Foreign Investment Company (PFIC), leading to adverse U.S. federal income tax consequences for investors[254] - As an emerging growth company, the company utilizes disclosure exemptions, potentially making its securities less attractive[258] - Management has substantial doubt about the company's going concern ability due to no operating history and mandatory liquidation if no business combination occurs[267][270] Unresolved Staff Comments The company reports no unresolved staff comments from the Securities and Exchange Commission - There are no unresolved staff comments[271] Cybersecurity As a blank check company, cybersecurity risks stem from third-party reliance, with oversight provided by the board of directors - The company has no direct cybersecurity threats but relies on third-party digital technologies and their security measures[272] - No dedicated cybersecurity personnel or processes exist; oversight falls under the board of directors' general risk oversight[272] Properties The company does not own or lease properties, utilizing executive office space provided by an M3 Partners affiliate at no cost - The company maintains executive offices at 1700 Broadway, New York, NY, provided by M3 Partners at no cost[273] Legal Proceedings As of December 31, 2024, no material litigation or governmental proceedings were pending against the company or its management - To management's knowledge, no material litigation was pending against the company as of December 31, 2024[274] Mine Safety Disclosures This item is not applicable to the company's business - Not applicable[275] Part II Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Information on the company's Nasdaq-listed securities, record holders, and dividend policy, with no dividends paid to date Market Information | Security | Symbol | | :--- | :--- | | Units | MBAVU | | Class A Ordinary Shares | MBAV | | Warrants | MBAVW | - As of December 31, 2024, there was one holder of record for most securities and three for Private Placement Warrants[278] - The company has not paid cash dividends and does not intend to prior to an initial business combination[279] Reserved This item is reserved and contains no information Management's Discussion and Analysis of Financial Condition and Results of Operations The blank check company reported $5.2 million net income from Trust Account interest, with $294.6 million in trust and $821,188 cash as of December 31, 2024 Results of Operations (For the period from March 12, 2024 to December 31, 2024) | Metric | Value (USD) | | :--- | :--- | | Interest Earned on Trust Account | $5,679,743 | | General and Administrative Costs | ($453,416) | | Net Income | $5,226,327 | Liquidity and Capital Resources (as of December 31, 2024) | Item | Value (USD) | | :--- | :--- | | Cash (Working Capital) | $821,188 | | Investments Held in Trust Account | $294,617,243 | - The Sponsor may provide up to $1,500,000 in Working Capital Loans, convertible into private placement warrants at $1.00 per warrant[292] - The company has no off-balance sheet arrangements, long-term debt, or capital lease obligations[294][295] Quantitative and Qualitative Disclosures about Market Risk Disclosure is not required as the company qualifies as a smaller reporting company - Disclosure is not required as the company qualifies as a smaller reporting company[300] Financial Statements and Supplementary Data This section refers to the company's audited financial statements and related notes, included after Item 15 - The company's financial statements are included by reference and appear after Item 15 of the report[300] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None reported[301] Controls and Procedures Management concluded disclosure controls were effective as of December 31, 2024, with no material changes to internal controls reported - The CEO and CFO concluded the company's disclosure controls and procedures were effective as of December 31, 2024[303] - A management report on internal control over financial reporting is not included due to the transition period for newly public companies[304] Other Information The company reports no other information - None[306] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable[307] Part III Directors, Executive Officers and Corporate Governance Details leadership, governance, and board composition, highlighting management's experience, committee structures, and potential conflicts of interest Directors and Executive Officers | Name | Position | | :--- | :--- | | Mohsin Y. Meghji | Executive Chairman of the Board of Directors | | Matthew Perkal | Chief Executive Officer and Director | | Eric Greenhaus | Chief Financial Officer | | Chris Chaice | Executive Vice President | | Charles Garner | Executive Vice President and Secretary | | Fred Arnold | Director | | Benjamin Fader-Rattner | Director | - The board has two independent directors out of four total members, with plans to appoint more for Nasdaq compliance[317] - The company established Audit and Compensation Committees, both with independent directors, and Mr. Arnold chairs the Audit Committee as a financial expert[319][320][321] - Significant conflicts of interest exist due to officers' and directors' other fiduciary duties and the company's renunciation of corporate opportunities[336][341] Executive Compensation No cash compensation has been paid to executive officers or directors, though out-of-pocket expenses are reimbursed - No executive officers or directors have received cash compensation for services rendered to the company[345] - Sponsor, executive officers, and directors are reimbursed for out-of-pocket expenses incurred on the company's behalf[345] - Post-business combination, remaining directors or management may receive fees, but no current arrangements exist[346] Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters Details beneficial ownership of ordinary shares as of March 25, 2025, with the Sponsor owning 20% of total voting power Beneficial Ownership as of March 25, 2025 | Beneficial Owner | Approximate Percentage of Total Voting Power | | :--- | :--- | | M3-Brigade Sponsor V LLC | 20.0% | | All officers and directors as a group (8 individuals) | 20.0% | | Magnetar Financial LLC | 8.5% | | The Goldman Sachs Group, Inc. | 6.9% | | Picton Mahoney Asset Management | 6.5% | | Ramya Rao | 6.5% | | Polar Asset Management Partners Inc. | 6.5% | | First Trust Merger Arbitrage Fund | 5.7% | | MM Asset Management Inc. | 5.5% | | HGC Investment Management Inc | 5.2% | | AQR Capital Management, LLC | 5.2% | Certain Relationships and Related Transactions, and Director Independence Describes related party transactions, including Sponsor's purchase of founder shares and private placement warrants, and potential working capital loans - On March 15, 2024, the Sponsor purchased 7,187,500 founder shares for $25,000, or approximately $0.004 per share[353] - The Sponsor and Cantor Fitzgerald & Co. purchased 8,337,500 Private Placement Warrants at $1.00 per warrant concurrently with the IPO[358] - Founder shares are subject to a lock-up period, generally ending one year post-combination, with early release if stock price reaches $12.00[356] - The Sponsor or affiliates may loan up to $1,500,000 for working capital, convertible into private placement warrants at $1.00 per warrant[364] Principal Accountant Fees and Services Details fees paid to WithumSmith+Brown, PC, with audit fees of approximately $114,000 for the period ending December 31, 2024 Accountant Fees (Period from March 12, 2024 to December 31, 2024) | Fee Category | Amount (USD) | | :--- | :--- | | Audit Fees | ~$114,000 | | Audit-Related Fees | $0 | | Tax Fees | $0 | | All Other Fees | $0 | - The audit committee pre-approves all auditing and permitted non-audit services performed by the company's auditors[369] Part IV Exhibits, Financial Statement Schedules Lists documents filed as part of the Form 10-K, including financial statements and an index of key exhibits - The report includes an index of financial statements and schedules, with all schedules omitted as information is contained elsewhere[370] - A list of exhibits is provided, including key agreements like the Underwriting Agreement, Warrant Agreement, and Letter Agreement[371][373] Financial Statements Balance Sheet As of December 31, 2024, total assets were $295.8 million, with $294.6 million in trust, and a shareholders' deficit of $12.9 million Balance Sheet Highlights (as of December 31, 2024) | Category | Amount (USD) | | :--- | :--- | | Assets | | | Cash | $821,188 | | Investments held in Trust Account | $294,617,243 | | Total Assets | $295,809,536 | | Liabilities & Shareholders' Deficit | | | Deferred underwriting fee payable | $13,400,000 | | Total Liabilities | $14,127,705 | | Class A ordinary shares subject to possible redemption | $294,617,243 | | Total Shareholders' Deficit | ($12,935,412) | | Total Liabilities and Shareholders' Deficit | $295,809,536 | Statement of Operations For the period ending December 31, 2024, the company reported $5.23 million net income, primarily from Trust Account interest Statement of Operations (March 12, 2024 - December 31, 2024) | Line Item | Amount (USD) | | :--- | :--- | | General and administrative costs | (453,416) | | Interest earned on investments held in Trust Account | 5,679,743 | | Net income | 5,226,327 | | Basic and diluted net income per ordinary share, Class A | $0.24 | | Basic and diluted net income per ordinary share, Class B | $0.24 | Statement of Cash Flows Financing activities provided $290.3 million, investing used $288.9 million, resulting in an ending cash balance of $821,188 Cash Flow Summary (March 12, 2024 - December 31, 2024) | Activity | Net Cash Flow (USD) | | :--- | :--- | | Net cash used in operating activities | (502,887) | | Net cash used in investing activities | (288,937,500) | | Net cash provided by financing activities | 290,261,575 | | Net Change in Cash | 821,188 | Notes to Financial Statements Notes detail SPAC organization, accounting policies, IPO, private placement warrants, related party transactions, commitments, and share information - The company has 24 months from its August 2, 2024 IPO to complete a business combination or face liquidation and fund return to shareholders[407][411] - Underwriters are entitled to a deferred underwriting fee of $13,400,000, payable upon initial Business Combination completion[405][463] - Class A ordinary shares subject to redemption are temporary equity, recorded at approximately $10.25 per share, totaling $294,617,243 as of December 31, 2024[434][435]