Cartesian Growth II(RENE) - 2025 Q4 - Annual Report

Acquisition Plans and Financial Risks - The company expects to incur significant costs in pursuit of its acquisition plans and may depend on loans from affiliates to fund operations if IPO proceeds are insufficient [81]. - The target business must have a fair market value equal to at least 80% of the funds in the trust account at the time of the definitive agreement execution, which may limit potential acquisition targets [91]. - The company is not required to obtain an independent valuation of the target business, relying instead on the judgment of its board of directors to determine fair market value [92]. - The company may seek acquisition opportunities with early-stage or financially unstable businesses, which could expose it to volatile revenues and operational risks [90]. - The company has not yet selected a specific target business, making it difficult to evaluate the merits or risks associated with potential acquisitions [86]. - The company may incur substantial debt to complete the initial business combination, which could adversely affect its leverage and financial condition [102]. - The lack of diversification from completing a single business combination may expose the company to significant economic, competitive, and regulatory risks [103]. - The company may face increased costs and risks if attempting to complete multiple business combinations simultaneously [104]. - Pursuing a business combination with a private company may result in limited information, potentially leading to an acquisition that is less profitable than expected [105]. - If the initial business combination involves a foreign entity, the company may face additional risks related to legal enforcement and jurisdiction [113]. - The company may face challenges in managing cross-border operations, which could negatively impact financial and operational performance due to higher costs and complexities [115]. - Economic and political uncertainties, including tariffs and regulatory changes, could materially affect the ability to identify potential targets and the financial performance of those targets [123]. - The company may face challenges in obtaining additional financing for its initial business combination, which could lead to restructuring or abandonment of the transaction [139]. Shareholder Redemption and Liquidation - If the initial business combination is not completed by the Extended Date, public shareholders may receive approximately $10.30 per share or less upon liquidation of the trust account [82]. - If the company cannot complete the initial business combination, it may be forced to liquidate, and shareholders could receive less than $10.30 per share [89]. - The company anticipates that if the initial business combination is not completed, public shareholders may receive approximately $10.30 per share upon liquidation of the trust account [94]. - The company’s public shareholders may face delays in redemption if the initial business combination is not consummated by the Extended Date [85]. - If the initial business combination is not consummated, the founder shares will be worthless, while public shareholders will receive a pro rata distribution from the trust account [101]. - Claims against the company could reduce the per-share redemption amount received by shareholders, potentially below $10.30 per share [182]. - If the trust account funds are reduced due to claims, the amount available for public shareholders could be less than initially expected [184]. - Public shareholders may only receive funds from the trust account under specific circumstances, potentially leading to losses if they need to liquidate their investment [181]. Corporate Governance and Control - The company has a provision allowing amendments to its memorandum and articles of association with a two-thirds majority vote, which is a lower threshold than many blank check companies that require 90%-100% approval [134]. - Initial shareholders collectively own 20% of the total founder shares and Class A ordinary shares, which may facilitate amendments to the company's governing documents [135]. - The absence of a specified maximum redemption threshold may allow the company to complete business combinations that a majority of shareholders do not support [129]. - Provisions in the company's amended articles may inhibit takeovers, potentially limiting share prices and entrenching management [130]. - The company may not maintain control of a target business post-combination, potentially leading to challenges in management and operations [124]. Financial Instruments and Market Conditions - The company has issued 8,900,000 private placement warrants, each exercisable for one Class A ordinary share at $11.50 per share [98]. - The company issued 7,666,666 warrants as part of its IPO and an additional 8,900,000 private placement warrants, which could affect the attractiveness of the company as an acquisition vehicle [142]. - Changes in the fair value of warrants, now classified as liabilities, may lead to material fluctuations in financial results and affect the market price of Class A ordinary shares [143]. - The company may have difficulties completing an initial business combination if it needs to issue additional shares at a price below $9.20, which would adjust the exercise price of the warrants [145]. - The company may issue additional Class A ordinary shares, potentially diluting existing shareholders' interests and affecting market prices [169]. - The grant of registration rights to sponsors may complicate the completion of the initial business combination and adversely affect the market price of Class A ordinary shares [170]. Legal and Regulatory Risks - The company is incorporated in the Cayman Islands, which may limit shareholders' ability to protect their rights through U.S. federal courts [151]. - The rights of shareholders and fiduciary responsibilities of directors are governed by Cayman Islands law, which differs from U.S. laws and may affect shareholder actions [152]. - The company may face challenges in protecting public shareholders' interests compared to U.S. companies due to legal limitations in the Cayman Islands [156]. - Changes in laws or regulations could adversely affect the company's business operations and its ability to complete a business combination [193]. - If deemed an investment company under the Investment Company Act, the company would face burdensome compliance requirements and may abandon efforts to complete a business combination [194]. - The company has instructed the trustee to liquidate securities in the Trust Account to mitigate the risk of being classified as an investment company, which may reduce the amount available to shareholders upon liquidation [196]. - The company may be classified as a passive foreign investment company (PFIC), which could lead to adverse U.S. federal income tax consequences for U.S. investors [198]. Management and Operational Risks - The management team's past performance is not indicative of future success in identifying suitable business combinations [171]. - The company's operations depend on a small group of executives, and their departure could adversely affect operations [172]. - The company's ability to successfully complete its initial business combination depends on the efforts of key personnel, whose loss could negatively impact operations and profitability [173]. - Key personnel may negotiate employment agreements that could create conflicts of interest in selecting target businesses [174]. - Executive officers and directors are not required to commit full time to the company's affairs, which may limit their ability to complete the initial business combination [175]. - Conflicts of interest may arise as executive officers and directors could be affiliated with other entities engaged in similar business activities [176]. - The personal and financial interests of directors and officers may influence their motivation in identifying and selecting target businesses [180]. Cybersecurity and Operational Concerns - Cyber incidents or attacks could lead to information theft, operational disruption, and financial loss, as the company may not have sufficient resources to protect against such vulnerabilities [200]. - The independent registered public accounting firm's report expresses substantial doubt about the company's ability to continue as a "going concern" due to liquidity concerns and the potential for mandatory liquidation [199]. Emerging Growth Company Status - The company is classified as an emerging growth company, which may make its securities less attractive to investors [189]. - The company is classified as an "emerging growth company" and may take advantage of certain exemptions from reporting requirements, which could affect the attractiveness of its securities to investors [190]. - The company has not opted out of the extended transition period under the JOBS Act, allowing it to adopt new or revised financial accounting standards at the same time as private companies [191]. - As a "smaller reporting company," the company can provide only two years of audited financial statements and will maintain this status until certain market value or revenue thresholds are exceeded [192].