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 acquisitions and strategic transactions to achieve significant scale and enhance shareholder value, targeting companies with strong management teams[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 acquisition strategy emphasizes companies with a clear public market story, compelling economic models, and long-term growth potential, leveraging the benefits of being a public entity[31]. - The company views itself as a disciplined, valuation-centric investor, aiming to acquire companies at appropriate valuations relative to industry comparables[31]. - The initial business combination must involve operating businesses or assets with a fair market value of at least 80% of the assets held in the trust account[33]. - The company plans to structure the initial business combination to acquire 100% of the target business, but may consider less than 100% under certain conditions[34]. Timeline and Approval Requirements - The company has 24 months from the IPO closing to complete a business combination, or it will redeem all outstanding public shares at a price equal to the amount in the Trust Account[25]. - The initial business combination will require approval from the board of directors and a majority of independent directors, ensuring rigorous oversight[43]. - The company may complete a business combination without seeking shareholder approval, limiting public shareholders' ability to influence the decision[44]. - Initial shareholders and directors have agreed to vote in favor of the initial business combination, potentially facilitating the approval process[41]. - The company must complete its initial business combination within 24 months from the closing of the Initial Public Offering, or it will cease operations and redeem public shares at a price of $10.00 per share or less[50]. Risks and Challenges - The ongoing geopolitical instability, particularly the Russia-Ukraine conflict and the Israel-Hamas tensions, could adversely affect the company's ability to identify and consummate a business combination[53]. - If a significant number of public shareholders exercise their redemption rights, it may hinder the company's ability to complete the most desirable business combination or optimize its capital structure[46]. - Recent increases in inflation in the United States may lead to price volatility in publicly traded securities, complicating the business combination process[60]. - The company faces risks related to market volatility and liquidity due to geopolitical tensions, which could impact potential target companies[59]. - The requirement for a minimum cash amount at closing may increase the probability of an unsuccessful business combination[47]. - The company may need to restructure transactions if more shares are submitted for redemption than initially expected, potentially leading to dilutive equity issuances[46]. - If the initial business combination is unsuccessful, shareholders may have to wait for liquidation to redeem their shares, potentially suffering material losses[47]. - 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]. - Increased competition from other special purpose acquisition companies (SPACs) may make it more difficult to find attractive targets for business combinations[67]. Financial and Regulatory Considerations - The company is exempt from certain SEC rules related to blank check companies, allowing a longer period to complete its initial business combination[64]. - The SEC adopted new rules on January 24, 2024, requiring additional disclosures related to SPAC business combinations, which may increase costs and time needed for negotiations[91]. - If deemed an investment company under the Investment Company Act, the company may face burdensome compliance requirements that could hinder its ability to complete business combinations[89]. - The company may incur significant costs in pursuit of acquisition plans, impacting its ability to operate for at least 24 months post-IPO[70]. - The company may face mandatory or voluntary CFIUS review for proposed business combinations, which could limit the pool of potential targets and delay transactions[204]. - The company may face regulatory review and approval requirements for its initial business combination, which could ultimately prohibit the transaction[202]. - The company may be classified as a passive foreign investment company (PFIC), leading to adverse U.S. federal income tax consequences for U.S. investors[196]. Shareholder and Governance Issues - 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 equity interest of public investors[109]. - Initial shareholders beneficially own 20% of the issued and outstanding ordinary shares, allowing them to control the appointment of the board of directors prior to the initial business combination[137]. - Amendments to the company's memorandum and articles of association require approval from at least two-thirds of ordinary shares attending a general meeting, which is a lower threshold compared to other blank check companies[133]. - The company may seek to amend its articles of association to extend the period for completing an initial business combination beyond 24 months, requiring a two-thirds majority approval from shareholders[94]. - The company may incur costs related to the registration of a significant number of securities, which could adversely affect the market price of Class A ordinary shares[98]. - 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 may face difficulties in protecting investor interests due to its incorporation under the laws of the Cayman Islands[185]. Operational and Management Risks - The company has no operating history and no operating revenues, making it difficult to evaluate its ability to achieve business objectives[193]. - 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 fluctuations[150]. - Key personnel from the target business may resign after the initial business combination, negatively affecting operations[160]. - A majority of directors and officers may reside outside the United States, complicating enforcement of legal rights for U.S. investors[161]. - Management's unfamiliarity with U.S. securities laws could lead to regulatory issues post-combination[162]. - Conflicts of interest may arise as directors and officers allocate time between multiple business endeavors, potentially hindering the completion of the initial business combination[167]. - Directors and officers may have affiliations with other entities engaged in similar business activities, leading to conflicts in presenting business opportunities[169]. Market and Economic Conditions - Economic and political conditions in the country of operation could adversely affect business prospects and demand in certain industries[155]. - Adverse developments in the financial services industry could negatively impact the company’s financial condition and operating results[206]. - The company may face limitations on pursuing certain target companies due to foreign ownership issues, affecting its competitiveness with other special purpose acquisition companies[204].
GP-ACT III Acquisition Corp.(GPATU) - 2024 Q4 - Annual Report