IPO and Fundraising - The company completed its Initial Public Offering (IPO) on May 13, 2024, raising gross proceeds of $287.5 million from the sale of 28,750,000 units at a price of $10.00 per unit[19]. - The company also sold 7,000,000 private placement warrants at $1.00 each, generating an additional $7 million in gross proceeds[20]. - Offering costs incurred in connection with the IPO were approximately $20.27 million, including deferred underwriting commissions of about $13.69 million[22]. - The company has approximately $900,000 available outside the Trust Account for working capital requirements following the Initial Public Offering[71]. Business Combination Strategy - The company intends to target businesses with an enterprise valuation between $1.0 billion and $5.0 billion for its initial business combination[26]. - The company plans to utilize net proceeds from the IPO primarily for completing an initial business combination, which must have a fair market value of at least 80% of the net assets held in the Trust Account[23]. - The company aims to acquire businesses that demonstrate strong demand for their products or services and operate in markets with limited competition[27]. - The strategy includes seeking companies with significant growth potential through acquisitions and strategic transactions, targeting platforms for accelerated growth and shareholder value enhancement[31]. - The company intends to focus on acquiring businesses that are compliant and have established financial controls, ensuring readiness for public entity regulatory requirements[31]. - The company has not yet selected a business combination target and has not initiated substantive discussions with any potential targets[30]. Time Constraints and Redemption Rights - The company has 24 months from the IPO closing to complete a business combination, or it will redeem all outstanding public shares[25]. - Public shareholders may have limited opportunities to affect investment decisions regarding potential business combinations, primarily through redemption rights[44]. - If the initial business combination is not completed within the required time, public shareholders may receive approximately $10.00 per share or less upon redemption[66]. - If too many public shareholders exercise their redemption rights, the company may not meet the closing conditions for a business combination, potentially leading to an unsuccessful transaction[46]. - The company may seek to extend the 24-month period for completing a business combination, requiring approval from at least two-thirds of shareholders[52]. Risks and Challenges - Intense competition is expected from established entities with more resources and industry knowledge, which may limit the company's ability to acquire sizable target businesses[36]. - The ongoing geopolitical instability, particularly the Russia-Ukraine conflict and the Israel-Hamas conflict, could adversely affect the company's ability to complete a business combination due to increased market volatility and decreased liquidity[53]. - Recent increases in inflation could lead to price volatility in publicly traded securities, complicating the completion of a business combination[60]. - The company faces risks related to public health crises, such as COVID-19, which could hinder its ability to conduct due diligence and negotiate transactions[58]. - The company may face challenges in completing its initial business combination due to limited financial resources compared to competitors[66]. - The market for directors and officers liability insurance has become less favorable, potentially increasing costs for the company[72]. Governance and Approval Process - Initial shareholders, directors, and officers have agreed to vote in favor of the initial business combination, potentially facilitating the approval process[41]. - The initial business combination requires approval from both Co-Chairmen and a majority of the board of directors, including independent directors[43]. - Amendments to the company's memorandum and articles of association require approval from at least two-thirds of ordinary shares attending and voting at a general meeting, which is a lower threshold compared to other blank check companies[133]. - The company must furnish shareholders with financial statements of the target business, which may limit the pool of potential targets due to compliance with federal proxy rules[148]. Financial Structure and Shareholder Interests - The company has authorized the issuance of up to 200,000,000 Class A ordinary shares, with 171,250,000 available for issuance as of December 31, 2024[106]. - The issuance of additional Class A ordinary shares or preference shares may dilute the interests of existing shareholders[107]. - The potential issuance of additional Class A ordinary shares upon exercise of warrants could dilute the value of shares issued to complete a business combination[145]. - The company may incur substantial debt to complete a business combination, which could adversely affect its financial condition[124]. - The company may require additional financing to complete its initial business combination, and failure to secure such financing could adversely affect the target business's growth[135]. Conflicts of Interest - Conflicts of interest may arise if the company engages in business combinations with entities affiliated with its sponsors or directors[112]. - The potential for conflicts of interest exists among co-sponsors, directors, and officers, which may misalign their interests with public shareholders[120]. - The company has not adopted a policy to prohibit directors and officers from having financial interests in target businesses, which may lead to conflicts of interest[172]. - Directors and officers may have affiliations with other entities engaged in similar business activities, leading to potential conflicts in business opportunity presentations[169]. Legal and Regulatory Considerations - The company has filed a Registration Statement on Form 8-A with the SEC, making it subject to Exchange Act rules and regulations[35]. - The initial business combination may be subject to regulatory review and approval, including scrutiny from the Committee on Foreign Investment in the United States (CFIUS)[202]. - The company may be classified as a passive foreign investment company (PFIC), which could result in adverse U.S. federal income tax consequences for U.S. investors[196]. - The company may face potential limitations on pursuing certain target companies due to CFIUS jurisdiction and foreign ownership issues[204]. Operational Considerations - The management team may face additional burdens and risks when pursuing a company with operations outside of the United States for the initial business combination, including due diligence challenges and foreign exchange rate fluctuations[150]. - Special considerations for cross-border business combinations include managing operations, compliance with local regulations, and potential currency redemption rules[151]. - Key personnel from the target business may resign after the initial business combination, negatively impacting operations and profitability[160]. - The company may incur significant costs in pursuit of acquisition plans, impacting its ability to operate for at least 24 months post-IPO[70]. Trust Account and Financial Stability - The Trust Account is intended to hold funds until the completion of the initial business combination or redemption of public shares[88]. - The company’s trust account funds are held in U.S. government treasury obligations or money market funds, which may be subject to risks affecting financial institutions[206]. - If third-party claims reduce the Trust Account funds below $10.00 per public share, shareholders may receive less than this amount upon redemption[77]. - The company may need to reserve a portion of cash in the Trust Account to meet closing conditions, which could limit its ability to optimize capital structure[46]. Miscellaneous - The company is classified as an "emerging growth company" and may take advantage of exemptions from certain disclosure requirements, potentially making its securities less attractive to investors[198]. - The company may be considered a "controlled company" under Nasdaq rules, which could exempt it from certain corporate governance requirements[201]. - The company has provisions in its memorandum and articles of association that may inhibit takeovers, potentially limiting the price investors are willing to pay for its shares[191]. - The company lacks plans or arrangements for a business combination, which may hinder its ability to generate operating revenues[193].
GP-ACT III Acquisition Corp.(GPAT) - 2024 Q4 - Annual Report