IPO and Fundraising - The company completed its initial public offering on August 17, 2021, raising gross proceeds of $276 million from the sale of 27,600,000 units at $10.00 per unit[24]. - A private placement of 11,360,000 warrants was executed simultaneously with the IPO, generating an additional $8.52 million[25]. - The total proceeds from the IPO and private placement were placed in a trust account, amounting to $276 million[26]. - Additional private placements of 3,680,000 warrants were completed on August 4, 2022, and February 15, 2023, raising a total of $5.52 million[27]. - The company has $266,340,000 available for a business combination after paying $9,660,000 in deferred underwriting fees[52]. - The amount in the trust account as of December 31, 2022, was approximately $10.26 per public share, which will be the redemption price for shareholders[74]. - The company held $1,235,676 outside the trust account as of December 31, 2022, to fund working capital requirements[146]. - The company may seek to raise additional funds through private offerings of debt or equity for its initial business combination[56]. - The company may need to reserve cash in the trust account to meet closing conditions for business combinations, which could limit available funds for acquisitions[123]. - If the net proceeds from the initial public offering and private placement warrants are insufficient, the company may need to rely on loans from sponsors or management to fund its search for a business combination[145]. Business Combination Strategy - The company aims to identify and complete a business combination with a target in the industrials sector that has significant growth potential and/or value creation opportunities[32]. - The acquisition criteria include targeting middle-market businesses with an enterprise value greater than $1 billion[36]. - The company seeks businesses with strong competitive positions and established management teams to facilitate growth and operational efficiency[42]. - The initial business combination must involve a target with a fair market value equal to at least 80% of the net assets held in the trust account[41]. - The company may focus its search for an initial business combination in a single industry, which could limit diversification and expose it to specific economic and regulatory risks[60]. - The company may complete its initial business combination with a single target business or multiple targets, but this could lead to a lack of diversification and increased operational risks[191]. - The company may pursue acquisition opportunities with early-stage or financially unstable businesses, exposing it to volatile revenues and operational risks[180]. - The company may seek acquisition opportunities in industries outside of its management's expertise, which could lead to significant risk factors not being adequately assessed[178]. Shareholder Rights and Redemption - Shareholders may redeem their Class A ordinary shares either through a general meeting or a tender offer upon completion of the initial business combination[75]. - The company will only redeem public shares if net tangible assets are at least $5,000,001 immediately prior to or upon consummation of the initial business combination[83]. - A public shareholder can redeem no more than 15% of the shares sold in the initial public offering without prior consent[84]. - If public shareholders tender more shares than the company has offered to purchase, the tender offer will be withdrawn and the initial business combination will not be completed[83]. - If the initial business combination is not approved, public shareholders who elected to redeem their shares will not be entitled to redeem for a pro rata share of the trust account[91]. - The redemption price for public shares will be equal to the aggregate amount in the trust account divided by the number of outstanding public shares[93]. - If too many public shareholders exercise their redemption rights, the company may not meet the minimum net tangible asset requirement of $5,000,001, preventing the completion of a business combination[122]. - If the company fails to complete its initial business combination, public shareholders may receive less than $10.00 per share upon redemption[127]. Operational Risks and Challenges - The company may incur losses from costs related to identifying and evaluating prospective target businesses that do not result in completed combinations[57]. - The ongoing COVID-19 pandemic may adversely affect the company's ability to conduct due diligence and negotiate business combinations, impacting overall market conditions[131]. - The company faces intense competition from other entities seeking similar business combinations, which may limit its ability to acquire sizable target businesses[108]. - The company may face challenges in completing a desirable business combination due to the potential for a large number of shares being redeemed, which could limit available cash for the transaction[123]. - The company may struggle to compete effectively in a highly competitive environment with larger incumbents[222]. - There is a reliance on proprietary technology, and any failure could disrupt operations[222]. - The company may face challenges in attracting and retaining customers, impacting overall performance[222]. - Members of the management team may face governmental investigations and civil litigation related to past affiliations, which could detract from the search for an initial business combination[175]. Regulatory and Compliance Issues - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements[47]. - The company will remain a smaller reporting company until specific market value and revenue thresholds are met[51]. - The decision to seek shareholder approval for the initial business combination is at the company's discretion, which may lead to combinations without majority public shareholder support[118]. - The company must complete its initial business combination by August 17, 2023, or it will cease operations and redeem public shares at a price of $10.00 per share[127]. - The SEC proposed rules on March 30, 2022, may materially affect the company's ability to negotiate and complete its business combination, potentially increasing costs and time involved[161]. - If deemed an investment company under the Investment Company Act, the company may face burdensome compliance requirements and restrictions on its activities, hindering its ability to complete the initial business combination[162]. - Compliance with the Sarbanes-Oxley Act may increase the time and costs associated with completing an acquisition, particularly regarding internal controls[213]. Financial Projections and Liabilities - The company may incur substantial debt to complete a business combination, which could adversely affect its financial condition and shareholder value[188]. - The company may face significant write-downs or charges post-business combination, potentially impacting financial condition and security prices[214]. - Due diligence may not uncover all material issues with target businesses, leading to unexpected risks and potential reporting losses[215]. - Claims by third parties could reduce the proceeds held in the trust account, potentially leading to a per-share redemption amount of less than $10.00[150]. - If bankruptcy occurs after distributing trust account proceeds, shareholders may face recovery claims, reducing their per-share amount[157]. - The company has not independently verified whether its sponsor has sufficient funds to satisfy indemnity obligations, raising concerns about the trust account's viability[152]. Management and Governance - The company currently has five officers who will devote time as necessary until the initial business combination is completed[110]. - Initial shareholders collectively own 20.0% of the company's ordinary shares, potentially exerting substantial influence over shareholder votes[205]. - The company may engage in transactions to influence shareholder votes or reduce the public float of its securities, potentially impacting the outcome of business combinations[134]. - The company has not yet selected a specific target business for its initial business combination, making it difficult to assess the merits or risks of potential operations[174]. - The company may seek to amend its governing instruments to facilitate the completion of its initial business combination, which could be approved by at least 65% of outstanding ordinary shares[200].
Kensington Capital Acquisition V(KCGI) - 2022 Q4 - Annual Report