Item
1. Business
General
We
are a blank check company incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout
this report as our initial business combination. We have no revenues to date and we will not generate operating revenues until we consummate
our initial business combination. While we may pursue an acquisition opportunity in any industry or sector, we have concentrated our
efforts on businesses that complement our management team’s expertise in the production, operation and development of crude oil
and natural gas wells and related infrastructure, and to capitalize on the ability of our management team to source, screen, evaluate,
negotiate, structure, close and manage acquisitions of energy assets or businesses globally. We have concentrated on acquiring one or
more businesses with an aggregate enterprise value of approximately $500 million to $1 billion.
Business
Combination Agreement
On
January 29, 2021, Alussa entered into a Business Combination Agreement (the “Business Combination Agreement”) with
FREYR AS, a company organized under the laws of Norway (“FREYR”), Alussa Energy Sponsor LLC, a limited liability company
formed under the laws of Delaware, in the capacity as the representative for the Alussa shareholders in accordance with the terms and
conditions of the Business Combination Agreement (“Sponsor” or “Purchaser Representative”), FREYR
Battery, a corporation in the form of a public limited liability company organized under the laws of Luxembourg (“Pubco”),
Norway Sub 1 AS, a private limited liability company under the laws of Norway (“Norway Merger Sub 1”), Norway Sub
2 AS, a private limited liability company under the laws of Norway (“Norway Merger Sub 2” and together with Norway
Merger Sub 1, the “Norway Merger Subs”), Adama Charlie Sub, a Cayman Islands exempted company (“Cayman Merger
Sub”), certain shareholders of FREYR named in the Business Combination Agreement (the “Major Shareholders”),
and ATS NEXT AS, in the capacity as the representative for the Major Shareholders in accordance with the terms and conditions of the
Business Combination Agreement (the “Shareholder Representative”). FREYR is a Norway-based developer of clean, next-generation
battery cell production capacity. FREYR is targeting development of up to 43 GWh of battery cell production capacity in Norway by 2025
to position the Company as one of Europe’s largest battery cell suppliers. FREYR expects to deliver safer, higher energy density
and lower cost clean battery cells made with renewable energy from an ethically and sustainably sourced supply chain. The Company’s
ambition is to become the battery cell producer with the lowest lifecycle carbon footprint in the world. FREYR plans to utilize Norway’s
inherent advantages, including access to renewable energy, some of Europe’s lowest electricity prices and shorter delivery distances
to main markets in Europe and the US as compared to competitors in Asia. Pursuant to the terms of the Business Combination Agreement,
(a) Alussa will merge with and into Cayman Merger Sub, with Alussa continuing as the surviving entity (the “Cayman Merger”),
(b) Alussa will distribute all of its interests in Norway Merger Sub 1 to Pubco, (c) FREYR will merge with and into Norway Merger Sub
2, with Norway Merger Sub 2 continuing as the surviving entity (the “Norway Merger”), (d) Norway Merger Sub 1 will
merge with and into Pubco, with Pubco continuing as the surviving entity (the “Cross-Border Merger”), as a result
of which, (i) each issued and outstanding security of Alussa immediately prior to the effective time of the Cayman Merger shall be exchanged
for the right of the holder thereof to receive securities of Pubco in accordance with the Business Combination Agreement (or, in the
case of Dissenting Purchaser Shareholders, if any, the right to receive the fair value of such holder’s Dissenting Purchaser Ordinary
Shares and such other rights as are granted by the Cayman Companies Law), (ii) each issued and outstanding security of FREYR immediately
prior to the effective time of the Norway Merger shall be exchanged for the right of the holder thereof to receive securities of Norway
Merger Sub 1 in accordance with the Business Combination Agreement and (iii) each issued and outstanding security of Norway Merger Sub
1 immediately prior to the Cross-Border Effective Time shall be exchanged for the right of the holder to receive securities of Pubco,
all upon the terms and subject to the conditions set forth in the Business Combination Agreement and in accordance with the provisions
of applicable law (the “Business Combination”).
Consummation
of the transactions contemplated by the Business Combination Agreement are subject to customary conditions or the respective parties,
including the approval of the Business Combination by the Company’s shareholders in accordance with the Company’s amended
and restated memorandum and articles of association and the completion of a redemption offer whereby the Company will be providing its
public shareholders with the opportunity to redeem their ordinary shares for cash equal to their pro rata share of the aggregate amount
on deposit in the Company’s trust account.
The
Business Combination Agreement and related agreements are further described in the Form 8-K filed by the Company on January 29, 2021.
For additional information regarding FREYR, the Business Combination Agreement and the Business Combination, see the S-4 to be filed.
Other
than as specifically discussed, this report does not assume the closing of the Business Combination.
Business
Strategy and Deal Origination
We
expect that the experience of the management team will provide us with a robust number of acquisition or investment opportunities. In
addition, target business candidates are brought to our attention by various unaffiliated sources, which may include investment market
participants, private equity groups, investment banking firms, accounting firms, equity sponsors, lending institutions, family offices,
attorneys and brokers energy sector consultants, public and private oil and gas companies, International Oil Companies (IOCs), Governmental
Licensing Authorities, and business enterprises who seek to rationalize their existing portfolio. Since the consummation of our initial
public offering, members of our management team have communicated with their network of relationships to articulate the parameters for
our search for a target company and a potential business combination and began the process of pursuing and reviewing potential leads.
Business
Combination Criteria
Consistent
with our acquisition strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating
prospective target businesses. We use these criteria and guidelines in evaluating acquisition opportunities. While we intend to acquire
companies that we believe exhibit one or more of the following characteristics, we may decide to enter into our initial business combination
with a target business that does not meet these criteria and guidelines. We intend to acquire companies that we believe have the following
characteristics:
|
●
|
Management
Control: It will be an important factor to have operational control, or alternatively a pathway to such operational control,
rather than being a passive equity partner. Existing staff needs to have credentials, expertise and performance that are aligned
with future operational activity. Potential should exist for local and expatriate recruitment to compliment the special requirements
of future operational activity. Furthermore, the ability to contract specialized consultants and service companies should exist.
|
|
●
|
Ease
of Operating: Health, Safety, Security, Environmental and Social (HSSES) standards, procedures and performance will be a
critical element of future operational activity; historical records and performance will be an essential element in assessing suitability
for future efficient and effective performance.
|
|
●
|
Financial
Restructuring: Capital Allocation, Cash Flow Analysis, Authority for Expenditure (AFE), Economic Modeling processes and
Corporate Finance integration will be essential processes to ensure effective and efficient future operation. An assessment of existing
processes should highlight deficiencies and where essential restructuring modifications should not be too onerous.
|
For
potential E&P acquisitions, we intend to target opportunities with:
|
●
|
Subsurface
materiality: Existing production is 10,000bopd, where historical production suggests significant increases can be achieved
through, but not restricted to a variety of well interventions, infill wells, pressure support, pattern reconfigurations and other
operational activity. Independent Reserve Audits demonstrate material Proven Undeveloped Reserves (PUD’s), together with Probable
(P2), Possible (P3) and Contingent Resources exist. Realistic Field Development Plans (FDP’s) are in place or can be constructed.
Sufficient surveillance data and information is available to envisage significant impact can be achieved with the implementation
of various Digital Science and Analysis techniques.
|
These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be
based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management
may deem relevant.
Our Business
Combination Process
In
evaluating a prospective target business, we conduct a thorough due diligence review that encompasses, among other things, meetings with
incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information.
We also utilize our operational and capital allocation experience.
In
order to execute our business strategy, we are building a portfolio of prospects to evaluate through a process which includes, but is
not limited to, the following dimensions:
|
●
|
Health,
Safety & Environmental Evaluation;
|
|
●
|
Financial
Structuring; and
|
After
the initial business combination, our management team intends to apply a rigorous approach to enhancing shareholder value, including
evaluating the experience and expertise of incumbent management and making changes where appropriate, examining opportunities for revenue
enhancement, cost savings, operating efficiencies and strategic acquisitions and divestitures and developing and implementing corporate
strategies and initiatives to improve profitability and long-term value. In doing so, our management team anticipates evaluating corporate
governance, opportunistically accessing capital markets and other opportunities to enhance liquidity, identifying acquisition and divestiture
opportunities and properly aligning management and board incentives with growing shareholder value. Our management team intends to pursue
post-merger initiatives through participation on the Board of Directors, through direct involvement in and operational control of the
company and/or calling upon a stable of former managers and advisors when necessary.
Our
acquisition criteria, due diligence processes and value creation methods are not intended to be exhaustive. Any evaluation relating to
the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as
other considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter into our initial
business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business
does not meet the above criteria in our shareholder communications related to our initial business combination, which, as discussed in
this report, would be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
Sourcing
of Potential Business Combination Targets
We
believe that the operational and transactional experience of our management team and the relationships they have developed as a result
of such experience, provides us with a substantial number of potential business combination targets. These individuals and entities have
developed a broad network of contacts and corporate relationships around the world. This network has grown through sourcing, acquiring
and financing businesses and maintaining relationships with sellers, financing sources and target management teams. Our management team
members have significant experience in executing transactions under varying economic and financial market conditions. We believe that
these networks of contacts and relationships and this experience provides us with important sources of investment opportunities. In addition,
target business candidates may be brought to our attention from various unaffiliated sources, including investment market participants,
private equity funds and large business enterprises seeking to divest noncore assets or divisions.
We
are not prohibited from pursuing an initial business combination with a business combination target that is affiliated with funds advised
by Encompass Capital Advisors LLC (“Encompass,” and together with the pooled investment vehicles for which Encompass serves
as the investment advisor and which are members of the sponsor, the “Encompass Funds”), our sponsor, officers or directors
or making the acquisition through a joint venture or other form of shared ownership with funds advised by Encompass, our sponsor, officers
or directors. In the event we seek to complete our initial business combination with a company that is affiliated with funds advised
by Encompass, our sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent
investment banking firm or another independent firm that commonly renders valuation opinions for the type of company we are seeking to
acquire or an independent accounting firm that our initial business combination is fair to our company from a financial point of view.
We are not required to obtain such an opinion in any other context. If any of our officers or directors becomes aware of a business combination
opportunity that falls within the line of business of any entity to which he or she has then-current fiduciary or contractual obligations,
he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination
opportunity to us, subject to his or her fiduciary duties under Cayman Islands law. Our officers and directors currently have certain
relevant fiduciary duties or contractual obligations that may take priority over their duties to us. Any such entity may co-invest with
us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition
by making a specified future issuance to any such entity.
Other
Acquisition Considerations
Unless
we complete our initial business combination with an affiliated entity, or our Board of Directors cannot independently determine the
fair market value of the target business or businesses, we are not required to obtain an opinion from an independent investment banking
firm, another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or from an
independent accounting firm that the price we are paying for a target is fair to our company from a financial point of view. If no opinion
is obtained, our shareholders will be relying on the business judgment of our Board of Directors, which will have significant discretion
in choosing the standard used to establish the fair market value of the target or targets, and different methods of valuation may vary
greatly in outcome from one another. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials,
as applicable, related to our initial business combination.
Members
of our management team directly or indirectly own our ordinary shares and/or private placement warrants, and, accordingly, may have a
conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial
business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular
business combination if the retention or resignation of any such officers and directors was included by a target business as a condition
to any agreement with respect to our initial business combination.
Each
of our directors and officers presently has, and in the future any of our directors and our officers may have additional, fiduciary or
contractual obligations to other entities pursuant to which such officer or director is or will be required to present acquisition opportunities
to such entity. Accordingly, subject to his or her fiduciary duties under Cayman Islands law, if any of our officers or directors becomes
aware of an acquisition opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations,
he or she will need to honor his or her fiduciary or contractual obligations to present such acquisition opportunity to such entity,
and only present it to us if such entity rejects the opportunity. In addition, we may, at our option, pursue an Affiliated Joint Acquisition
opportunity with an entity to which Encompass (or funds advised by Encompass), an officer or director has a fiduciary or contractual
obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could
raise additional proceeds to complete the acquisition by making a specified future issuance to any such entity. Our amended and restated
memorandum and articles of association provide that, subject to his or her fiduciary duties under Cayman Islands law, no director or
officer shall be disqualified or prevented from contracting with the company nor shall any contract or transaction entered into by or
on behalf of the company in which any director shall have an interest be liable to be avoided. A director shall be at liberty to vote
in respect of any contract or transaction in which he is interested provided that the nature of such interest shall be disclosed at or
prior to its consideration or any vote thereon by the Board of Directors. We do not believe, however, that any fiduciary duties or contractual
obligations of our directors or officers would materially undermine our ability to complete our business combination.
Our
officers have agreed not to become an officer or director of any other special purpose acquisition company with a class of securities
registered under the Exchange Act, until we have entered into a definitive agreement regarding our initial business combination or we
have failed to complete our initial business combination by November 29, 2021.
Initial
Business Combination
NYSE
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value
of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable) at the time of our signing
a definitive agreement in connection with our initial business combination. If our Board of Directors is not able to independently determine
the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm or
another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or an independent
accounting firm with respect to the satisfaction of such criteria. We do not intend to purchase multiple businesses in unrelated industries
in conjunction with our initial business combination.
We
may, at our option, pursue an Affiliated Joint Acquisition with an entity affiliated with (or funds advised by) Encompass or with an
entity to which an officer or director has a fiduciary or contractual obligation. Any such parties would co-invest only if (i) permitted
by applicable regulatory and other legal limitations; (ii) we and Encompass considered a transaction to be mutually beneficial to us
as well as the affiliated entity; and (iii) other business reasons exist to do so, such as the strategic merits of including such co-investors,
the need for additional capital beyond the amount held in our trust account to fund the initial business combination and/or the desire
to obtain committed capital for closing the initial business combination. We refer to this potential future issuance, or a similar issuance
to other specified purchasers, as a “specified future issuance” throughout this report. The amount and other terms and conditions
of any such specified future issuance would be determined at the time thereof. We are not obligated to make any specified future issuance
and may determine not to do so. This is not an offer for any specified future issuance. Pursuant to the anti-dilution provisions of our
Class B ordinary shares, any such specified future issuance would result in an adjustment to the conversion ratio such that our initial
stockholders and their permitted transferees, if any, would retain their aggregate percentage ownership at 20% of the sum of the total
number of all ordinary shares outstanding plus all shares issued in the specified future issuance, unless the holders of a majority of
the then-outstanding Class B ordinary shares agreed to waive such adjustment with respect to the specified future issuance at the time
thereof. We cannot determine at this time whether a majority of the holders of our Class B ordinary shares at the time of any such specified
future issuance would agree to waive such adjustment to the conversion ratio. They may waive such adjustment due to (but not limited
to) the following: (i) closing conditions which are part of the agreement for our initial business combination; (ii) negotiation with
Class A shareholders on structuring an initial business combination; (iii) negotiation with parties providing financing which would trigger
the anti-dilution provisions of the Class B ordinary shares; or (iv) as part of the Affiliated Joint Acquisition. If such adjustment
is not waived, the specified future issuance would not reduce the percentage ownership of holders of our Class B ordinary shares, but
would reduce the percentage ownership of holders of our Class A ordinary shares. If such adjustment is waived, the specified future issuance
would reduce the percentage ownership of holders of both classes of our ordinary shares.
We
anticipate structuring our initial business combination so that the post-transaction company in which our public shareholders own shares
will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial
business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target
business in order to meet certain objectives of the target management team or shareholders or for other reasons, including an Affiliated
Joint Acquisition as described above. However, we will only complete such business combination if the post-transaction company owns or
acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient
for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment
Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our shareholders
prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed
to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial
number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling
interest in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior
to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination.
If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction
company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets
test. If our initial business combination involves more than one target business, the 80% of net assets test will be based on the aggregate
value of all of the target businesses. If our securities are not listed on the NYSE, we would not be required to satisfy the 80% requirement.
However, we intend to satisfy the 80% requirement even if our securities are not listed on the NYSE at the time of our initial business
combination.
Status
as a Public Company
We
believe our structure makes us an attractive business combination partner to target businesses. As an existing public company, we offer
a target business an alternative to the traditional initial public offering through a merger or other business combination. In this situation,
the owners of the target business would exchange their shares of stock in the target business for our shares or for a combination of
our shares and cash, allowing us to tailor the consideration to the specific needs of the sellers. Although there are various costs and
obligations associated with being a public company, we believe target businesses will find this method a more certain and cost effective
method to becoming a public company than the typical initial public offering. In a typical initial public offering, there are additional
expenses incurred in marketing, road show and public reporting efforts that may not be present to the same extent in connection with
a business combination with us.
Furthermore,
once a proposed business combination is completed, the target business will have effectively become public, whereas an initial public
offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could
delay or prevent the offering from occurring. Once public, we believe the target business would then have greater access to capital and
an additional means of providing management incentives consistent with shareholders’ interests. It can offer further benefits by
augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While
we believe that our structure and our management team’s backgrounds makes us an attractive business partner, some potential target
businesses may have a negative view of us since we are a blank check company, without an operating history, and there is uncertainty
relating to our ability to obtain shareholder approval of our proposed initial business combination and retain sufficient funds in our
trust account in connection therewith.
We
are an “emerging growth company,” as defined in the JOBS Act. We will remain an emerging growth company until the earlier
of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which
we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means
the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the prior June 30th, and
(2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
Financial
position
With
funds available for a business combination in the amount of $279,771,941, as of December 31, 2020, (assuming no redemptions and after
payment of up to $10,062,500 of deferred underwriting fees) before fees and expenses associated with our initial business combination,
we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential
growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to complete
our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility
to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs
and desires. However, we have not taken any steps to secure third party financing and there can be no assurance it will be available
to us.
Effecting
our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any operations until we consummate our initial business combination. We intend
to effectuate our initial business combination using cash from the proceeds of our initial public offering and the private placement
of the private placement warrants, our shares, debt or a combination of these as the consideration to be paid in our initial business
combination. We may, although we do not currently intend to, seek to complete our initial business combination with a company or business
that may be financially unstable or in its early stages of development or growth, start-up companies or companies with speculative business
plans or excess leverage, which would subject us to the numerous risks inherent in such companies and businesses.
If
our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust account
are used for payment of the consideration in connection with our initial business combination or used for redemptions of our Class A
ordinary shares, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including
for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness
incurred in completing our initial business combination, to fund the purchase of other companies or for working capital.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our initial
business combination, and we may effectuate our initial business combination using the proceeds of such offering rather than using the
amounts held in the trust account.
In
the case of an initial business combination funded with assets other than the trust account assets, our tender offer documents or proxy
materials disclosing the business combination would disclose the terms of the financing and, only if required by law, we would seek shareholder
approval of such financing. There are no prohibitions on our ability to raise funds privately or through loans in connection with our
initial business combination, including pursuant to any specified future issuance. At this time, we are not a party to any arrangement
or understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise.
Selection
of a target business and structuring of our initial business combination
NYSE
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value
of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable) at the time of our signing
a definitive agreement in connection with our initial business combination. The fair market value of the target or targets will be determined
by our Board of Directors based upon one or more standards generally accepted by the financial community, such as discounted cash flow
valuation or value of comparable businesses. Our shareholders will be relying on the business judgment of our Board of Directors, which
will have significant discretion in choosing the standard used to establish the fair market value of the target or targets, and different
methods of valuation may vary greatly in outcome from one another. Such standards used will be disclosed in our tender offer documents
or proxy solicitation materials, as applicable, related to our initial business combination.
If
our Board of Directors is not able to independently determine the fair market value of the target business or businesses, we will obtain
an opinion from an independent investment banking firm or another independent firm that commonly renders valuation opinions for the type
of company we are seeking to acquire or an independent accounting firm, with respect to the satisfaction of such criteria. We do not
intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. Subject to these
requirements, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target
businesses, although we will not be permitted to effectuate our initial business combination with another blank check company or a similar
company with nominal operations.
In
any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities
of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business
or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company is what will be
valued for purposes of the 80% of net assets test. There is currently no basis for investors to evaluate the possible merits or risks
of any target business with which we may ultimately complete our initial business combination.
To
the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages
of development or growth we may be affected by numerous risks inherent in such company or business. Although our management will endeavor
to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
In
evaluating a prospective target business, we conduct a thorough due diligence review which encompasses, among other things, meetings
with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal
and other information which will be made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs
associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification
and evaluation of a prospective target business with which our initial business combination is not ultimately completed will result in
our incurring losses and will reduce the funds we can use to complete another business combination.
Lack
of business diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend entirely
on the future performance of a single business. Unlike other entities that have the resources to complete business combinations with
multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate
the risks of being in a single line of business. By completing our initial business combination with only a single entity, our lack of
diversification may:
|
●
|
subject
us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the
particular industry in which we operate after our initial business combination; and
|
|
●
|
cause
us to depend on the marketing and sale of a single product or limited number of products or services.
|
Limited
ability to evaluate the target’s management team
Although
we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial
business combination with that business, our assessment of the target business’s management may not prove to be correct. In addition,
the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future
role of members of our management team, if any, in the target business cannot presently be stated with any certainty. While it is possible
that one or more of our directors will remain associated in some capacity with us following our initial business combination, it is unlikely
that any of them will devote their full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure
you that members of our management team will have significant experience or knowledge relating to the operations of the particular target
business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company. The
determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business
combination.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We
cannot assure you that we will have the ability to recruit additional managers, or that such additional managers will have the requisite
skills, knowledge or experience necessary to enhance the incumbent management.
Shareholders
may not have the ability to approve our initial business combination
We
may conduct redemptions without a shareholder vote pursuant to the tender offer rules of the SEC subject to the provisions of our amended
and restated memorandum and articles of association. However, we will seek shareholder approval if it is required by law or applicable
stock exchange rule, or we may decide to seek shareholder approval for business or other legal reasons.
Under
the NYSE’s listing rules, shareholder approval would be required for our initial business combination if, for example:
|
●
|
we
issue Class A ordinary shares that will be equal to or in excess of 20% of the number of Class A ordinary shares then outstanding;
|
|
●
|
any
of our directors, officers or substantial security holders (as defined by the NYSE rules) has a 5% or greater interest, directly
or indirectly, in the target business or assets to be acquired and if the number of Class A ordinary shares to be issued, or if the
number of Class A ordinary shares into which the securities may be convertible or exercisable, exceeds either (a) 1% of the number
of Class A ordinary shares or 1% of the voting power outstanding before the issuance in the case of any of our directors and officers
or (b) 5% of the number of Class A ordinary shares or 5% of the voting power outstanding before the issuance in the case of any substantial
security holders; or
|
|
●
|
the
issuance or potential issuance of ordinary shares will result in our undergoing a change of control.
|
Permitted
purchases of our securities
In
the event we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our sponsor, directors, officers or advisors, the Encompass Funds, or their
respective affiliates may purchase our Class A ordinary shares in privately negotiated transactions or in the open market either prior
to or following the completion of our initial business combination. There is no limit on the number of shares such persons may purchase.
However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions
for any such transactions. In the event our sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates
determine to make any such purchases at the time of a shareholder vote relating to our initial business combination, such purchases could
have the effect of influencing the vote necessary to approve such transaction. None of the funds in the trust account will be used to
purchase shares in such transactions. They will not make any such purchases when they are in possession of any material non-public information
not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. Such a purchase may include a
contractual acknowledgement that such shareholder, although still the record holder of our Class A ordinary shares, is no longer the
beneficial owner thereof and therefore agrees not to exercise its redemption rights. We have adopted an insider trading policy which
requires insiders to: (i) refrain from purchasing our shares during certain blackout periods and when they are in possession of any material
non-public information and (ii) to clear all trades with our legal counsel prior to execution. We cannot currently determine whether
our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, including but
not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases pursuant
to a Rule 10b5-1 plan or determine that such a plan is not necessary.
In
the event that our sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates purchase our Class A
ordinary shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights,
such selling shareholders would be required to revoke their prior elections to redeem their shares. We do not currently anticipate that
such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction
subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that
the purchases are subject to such rules, the purchasers will comply with such rules.
The
purpose of such purchases would be to (i) vote such Class A ordinary shares in favor of the business combination and thereby increase
the likelihood of obtaining shareholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with
a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination,
where it appears that such requirement would otherwise not be met. This may result in the completion of our initial business combination
that may not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our ordinary shares may be reduced and the number of beneficial
holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our
securities on a national securities exchange.
Our
sponsor, directors, officers or advisors, Encompass, or their respective affiliates anticipate that they may identify the shareholders
with whom our sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates may pursue privately negotiated
purchases by either the shareholders contacting us directly or by our receipt of redemption requests submitted by shareholders following
our mailing of proxy materials in connection with our initial business combination. To the extent that our sponsor, directors, officers
or advisors, the Encompass Funds, or their respective affiliates enter into a private purchase, they would identify and contact only
potential selling shareholders who have expressed their election to redeem their shares for a pro rata share of the trust account or
vote against the business combination. Such persons would select the shareholders from whom to acquire shares based on the number of
shares available, the negotiated price per share and such other factors as any such person may deem relevant at the time of purchase.
The price per share paid in any such transaction may be different than the amount per share a public shareholder would receive if it
elected to redeem its shares in connection with our initial business combination. Our sponsor, directors, officers or advisors, the Encompass
Funds, or their respective affiliates will only purchase our shares if such purchases comply with Regulation M under the Exchange Act
and the other federal securities laws.
Any
purchases by our sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates who are affiliated purchasers
under Rule 10b-18 under the Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18,
which is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain
technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, directors,
officers or advisors, the Encompass Funds, or their respective affiliates will not make purchases of our ordinary shares if the purchases
would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
Redemption
rights for public shareholders upon completion of our initial business combination
We
will provide our public shareholders with the opportunity to redeem all or a portion of their Class A ordinary shares upon the completion
of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust
account as of two business days prior to the consummation of the initial business combination, including interest (which interest shall
be net of taxes payable) divided by the number of then outstanding public shares, subject to the limitations described herein. The amount
in the trust account, as of December 31, 2020, was $289,834,441. The per-share amount we will distribute to investors who properly redeem
their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. The redemption rights will
include the requirement that a beneficial holder must identify itself in order to validly redeem its shares. Our sponsor, officers and
directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect
to their founder shares and any public shares they may hold in connection with the completion of our initial business combination.
Manner
of conducting redemptions
We
will provide our public shareholders with the opportunity to redeem all or a portion of their Class A ordinary shares upon the completion
of our initial business combination either (i) in connection with a shareholder meeting called to approve the business combination or
(ii) by means of a tender offer. The decision as to whether we will seek shareholder approval of a proposed business combination or conduct
a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction
and whether the terms of the transaction would require us to seek shareholder approval under the law or stock exchange listing requirement.
Under NYSE rules, asset acquisitions and stock purchases would not typically require shareholder approval while direct mergers with our
company where we do not survive and any transactions where we issue more than 20% of our outstanding ordinary shares or seek to amend
our amended and restated memorandum and articles of association would require shareholder approval. We intend to conduct redemptions
without a shareholder vote pursuant to the tender offer rules of the SEC unless shareholder approval is required by law or stock exchange
listing requirement or we choose to seek shareholder approval for business or other legal reasons. So long as we obtain and maintain
a listing for our securities on the NYSE, we will be required to comply with NYSE rules.
If
a shareholder vote is not required and we do not decide to hold a shareholder vote for business or other legal reasons, we will, pursuant
to our amended and restated memorandum and articles of association:
|
●
|
conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and
|
|
●
|
file
tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial
and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the
Exchange Act, which regulates the solicitation of proxies.
|
Upon
the public announcement of our initial business combination, we or our sponsor will terminate any plan established in accordance with
Rule 10b5-1 to purchase our Class A ordinary shares in the open market if we elect to redeem our public shares through a tender offer,
to comply with Rule 14e-5 under the Exchange Act.
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days,
in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until
the expiration of the tender offer period. In addition, the tender offer will be conditioned on public shareholders not tendering more
than a specified number of public shares which are not purchased by our sponsor, which number will be based on the requirement that we
will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately
prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that
we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may
be contained in the agreement relating to our initial business combination. If public shareholders tender more shares than we have offered
to purchase, we will withdraw the tender offer and not complete the initial business combination.
If,
however, shareholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain shareholder
approval for business or other legal reasons, we will, pursuant to our amended and restated memorandum and articles of association:
|
●
|
conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation
of proxies, and not pursuant to the tender offer rules; and
|
|
●
|
file
proxy materials with the SEC.
|
We
expect that a final proxy statement would be mailed to public shareholders at least 10 days prior to the shareholder vote. However, we
expect that a draft proxy statement would be made available to such shareholders well in advance of such time, providing additional notice
of redemption if we conduct redemptions in conjunction with a proxy solicitation. Although we are not required to do so, we currently
intend to comply with the substantive and procedural requirements of Regulation 14A in connection with any shareholder vote even if we
are not able to maintain our NYSE listing or Exchange Act registration.
In
the event that we seek shareholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public shareholders with the redemption rights described above upon completion of the initial business combination.
If
we seek shareholder approval, we will complete our initial business combination only if a majority of the issued and outstanding ordinary
shares voted are voted in favor of the business combination. In such case, pursuant to the terms of a letter agreement entered into with
us, our sponsor, officers and directors have agreed (and their permitted transferees will agree) to vote any founder shares and any public
shares held by them in favor of our initial business combination. We expect that at the time of any shareholder vote relating to our
initial business combination, our sponsor and its permitted transferees will own at least 20% of our issued and outstanding ordinary
shares entitled to vote thereon. Each public shareholder may elect to redeem their public shares irrespective of whether they vote for
or against the proposed transaction. In addition, our sponsor, officers and directors have entered into a letter agreement with us, pursuant
to which they have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with
the completion of a business combination.
Our
amended and restated memorandum and articles of association provides that we will only redeem our public shares so long as (after such
redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business
combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny
stock” rules). Redemptions of our public shares may also be subject to a higher net tangible asset test or cash requirement pursuant
to an agreement relating to our initial business combination. For example, the proposed business combination may require: (i) cash consideration
to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes
or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the
event the aggregate cash consideration we would be required to pay for all Class A ordinary shares that are validly submitted for redemption
plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount
of cash available to us, we will not complete the business combination or redeem any shares, and all Class A ordinary shares submitted
for redemption will be returned to the holders thereof.
Limitation
on redemption upon completion of our initial business combination if we seek shareholder approval
Notwithstanding
the foregoing, if we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with
our initial business combination pursuant to the tender offer rules, our amended and restated memorandum and articles of association
provide that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is
acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption
rights with respect to more than 15% of the shares sold in our initial public offering (the “Excess Shares”). We believe
this restriction will discourage shareholders from accumulating large blocks of shares, and subsequent attempts by such holders to use
their ability to exercise their redemption rights against a proposed business combination as a means to force us or our sponsor or its
affiliates to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this
provision, a public shareholder holding more than an aggregate of 15% of the shares sold in our initial public offering could threaten
to exercise its redemption rights if such holder’s shares are not purchased by us or our sponsor or its affiliates at a premium
to the then-current market price or on other undesirable terms. By limiting our shareholders’ ability to redeem no more than 15%
of the shares sold in our initial public offering our purchased thereafter through open market purchases, we believe we will limit the
ability of a small group of shareholders to unreasonably attempt to block our ability to complete our initial business combination, particularly
in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain
amount of cash. However, we would not be restricting our shareholders’ ability to vote all of their shares (including Excess Shares)
for or against our initial business combination. Our sponsor, officers and directors have, pursuant to a letter agreement entered into
with us, waived their right to have any founder shares or public shares held by them redeemed in connection with our initial business
combination. Unless any of our other affiliates acquires founder shares through a permitted transfer from an initial shareholder, and
thereby becomes subject to the letter agreement, no such affiliate is subject to this waiver. However, to the extent any such affiliate
acquires public shares, it would be a public shareholder and restricted from seeking redemption rights with respect to any Excess Shares.
Tendering
share certificates in connection with a tender offer or redemption rights
We
may require our public shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares
in “street name,” to either tender their certificates (if any) to our transfer agent prior to the date set forth in the tender
offer documents, or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute
proxy materials, or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) System, rather than simply voting against the initial business combination. The tender offer or proxy materials, as applicable,
that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are
requiring public shareholders to satisfy such delivery requirements. Accordingly, a public shareholder would have from the time we send
out our tender offer materials until the close of the tender offer period, or up to two days prior to the vote on the business combination
if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Pursuant
to the tender offer rules, the tender offer period will be not less than 20 business days and, in the case of a shareholder vote, a final
proxy statement would be mailed to public shareholders at least 10 days prior to the shareholder vote. However, we expect that a draft
proxy statement would be made available to such shareholders well in advance of such time, providing additional notice of redemption
if we conduct redemptions in conjunction with a proxy solicitation. Given the relatively short exercise period, it is advisable for shareholders
to use electronic delivery of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through
the DWAC System. The transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether or not
to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking
to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless
of the timing of when such delivery must be effectuated.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the
date of the shareholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered
its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect
to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically).
It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed
promptly after the completion of our initial business combination.
If
our initial business combination is not approved or completed for any reason, then our public shareholders who elected to exercise their
redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case,
we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different
target by November 29, 2021.
Redemption
of public shares and liquidation if no initial business combination
Our
sponsor, officers and directors have agreed that we will have until November 29, 2021 to complete our initial business combination. If
we are unable to complete our initial business combination by November 29, 2021, we will: (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a
per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to
$100,000 of interest to pay dissolution expenses (which interest shall be net of taxes payable) divided by the number of then outstanding
public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to
receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining shareholders and our Board of Directors, liquidate and dissolve, subject in
each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail
to complete our initial business combination within such time period.
Our
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating
distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination by
November 29, 2021. However, if our sponsor acquires public shares, it will be entitled to liquidating distributions from the trust account
with respect to such public shares if we fail to complete our initial business combination within such time period.
Our
sponsor, officers and directors have agreed, pursuant to a written letter agreement with us, that they will not propose any amendment
to our amended and restated memorandum and articles of association that would (i) modify the substance or timing of our obligation to
allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our
initial business combination by November 29, 2021 or (ii) with respect to the other provisions relating to shareholders’ rights
or pre-business combination activity, unless we provide our public shareholders with the opportunity to redeem their Class A ordinary
shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding public shares.
However, we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001
either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and
commissions (so that we are not subject to the SEC’s “penny stock” rules). If this optional redemption right is exercised
with respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described above),
we would not proceed with the amendment or the related redemption of our public shares.
We
expect to use the amounts held outside the trust account ($370,958 as of December 31, 2020) to pay for all costs and expenses associated
with implementing our plan of dissolution, as well as payments to any creditors, if we do not complete an initial business combination
by November 29, 2021, although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds are
not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any
interest accrued in the trust account not required to pay taxes, we may request the trustee to release to us an additional amount of
up to $100,000 of such accrued interest to pay those costs and expenses.
If
we were to expend all of the net proceeds of our initial public offering and the sale of the private placement warrants, other than the
proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share
redemption amount received by shareholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account
could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public shareholders.
We cannot assure you that the actual per-share redemption amount received by shareholders will not be substantially less than $10.00.
While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’
claims.
Although
we will seek to have all vendors, service providers (other than our independent auditors), prospective target businesses or other entities
with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held
in the trust account for the benefit of our public shareholders, there is no guarantee that they will execute such agreements or even
if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited
to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability
of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the
trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management
will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed
a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In
addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising
out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption
of our public shares, if we are unable to complete our initial business combination within the prescribed time frame, or upon the exercise
of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors
that were not waived that may be brought against us within the 10 years following redemption. Our sponsor has agreed that it will be
liable to us if and to the extent any claims by a third party (other than our independent auditors) for services rendered or products
sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of
funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account
as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount
of interest which may be withdrawn to pay taxes. This liability will not apply with respect to any claims by a third party who executed
a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters
of our initial public offering against certain liabilities, including liabilities under the Securities Act. Because we are a blank check
company, rather than an operating company, and our operations are limited to searching for prospective target businesses to acquire,
the only third parties we currently expect to engage would be vendors such as lawyers, investment bankers, computer or information and
technical services providers or prospective target businesses. In the event that an executed waiver is deemed to be unenforceable against
a third party, then our sponsor will not be responsible to the extent of any liability for such third-party claims. We have not independently
verified whether our sponsor has sufficient funds to satisfy their indemnity obligations and believe that our sponsor’s only assets
are securities of our company. None of our other officers will indemnify us for claims by third parties including, without limitation,
claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public
share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets,
in each case net of the amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy
its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors
would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect
that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to
us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance.
Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be substantially
less than $10.00 per share.
We
will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring
to have all vendors, service providers (other than our independent auditors), prospective target businesses or other entities with which
we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account.
Our sponsor will also not be liable as to any claims under our indemnity of the underwriters of our initial public offering against certain
liabilities, including liabilities under the Securities Act. We may have access to use the amounts held outside the trust account ($370,958
as of December 31, 2020) to pay any such potential claims (including costs and expenses incurred in connection with our liquidation,
currently estimated to be no more than approximately $100,000) but these amounts may be spend on expenses incurred as a result of being
a public company or due diligence expenses on prospective business combination candidates. In the event that we liquidate and it is subsequently
determined that the reserve for claims and liabilities is insufficient, shareholders who received funds from our trust account could
be liable for claims made by creditors.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the
trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of
third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete the trust account, we cannot
assure you we will be able to return $10.00 per share to our public shareholders. Additionally, if we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed
under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover all amounts received by our shareholders. Furthermore, our Board of Directors may
be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and
our company to claims of punitive damages, by paying public shareholders from the trust account prior to addressing the claims of creditors.
We cannot assure you that claims will not be brought against us for these reasons.
Our
public shareholders will be entitled to receive funds from the trust account only upon the earlier of (i) the completion of our initial
business combination, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended
and restated memorandum and articles of association to (A) modify the substance or timing of our obligation to allow redemption in connection
with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination by
November 29, 2021 or (B) with respect to any other provision relating to shareholders’ rights or pre-business combination activity
and (iii) the redemption of all of our public shares if we are unable to complete our initial business combination by November 29, 2021,
subject to applicable law. In no other circumstances will a shareholder have any right or interest of any kind to or in the trust account.
In the event we seek shareholder approval in connection with our initial business combination, a shareholder’s voting in connection
with the business combination alone will not result in a shareholder’s redeeming its shares to us for an applicable pro rata share
of the trust account. Such shareholder must have also exercised its redemption rights described above.
Amended
and Restated Memorandum and Articles of Association
Our
amended and restated memorandum and articles of association contain certain requirements and restrictions relating to our initial public
offering that apply to us until the consummation of our initial business combination. If we seek to amend any provisions of our amended
and restated memorandum and articles of association relating to shareholders’ rights or pre-business combination activity, we will
provide dissenting public shareholders with the opportunity to redeem their public shares in connection with any such vote. Our sponsor,
officers and directors have agreed to waive any redemption rights with respect to their founder shares and public shares in connection
with the completion of our initial business combination. Specifically, our amended and restated memorandum and articles of association
provide, among other things, that:
|
●
|
prior
to the consummation of our initial business combination, we shall either (1) seek shareholder approval of our initial business combination
at a meeting called for such purpose at which shareholders may seek to redeem their shares, regardless of whether they vote for or
against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account,
including interest (which interest shall be net of taxes payable) or (2) provide our public shareholders with the opportunity to
tender their shares to us by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their
pro rata share of the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes
payable) in each case subject to the limitations described herein;
|
|
●
|
we
will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 either immediately prior
to or upon such consummation and, solely if we seek shareholder approval, a majority of the issued and outstanding ordinary shares
voted are voted in favor of the business combination;
|
|
●
|
if
our initial business combination is not consummated prior to November 29, 2021, then our existence will terminate and we will distribute
all amounts in the trust account; and
|
|
●
|
prior
to our initial business combination, we may not issue additional ordinary shares that would entitle the holders thereof to (i) receive
funds from the trust account or (ii) vote on any initial business combination.
|
These
provisions cannot be amended without the approval of holders of at least two-thirds of our ordinary shares. In the event we seek shareholder
approval in connection with our initial business combination, our amended and restated memorandum and articles of association provide
that we may consummate our initial business combination only if approved by a majority of the ordinary shares voted by our shareholders
at a duly held shareholders meeting.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we encounter intense competition from other
entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout
funds, and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive experience
identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial,
technical, human and other resources than us. Our ability to acquire larger target businesses will be limited by our available financial
resources. This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation
to pay cash in connection with our public shareholders who exercise their redemption rights may reduce the resources available to us
for our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed
favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating
an initial business combination.
Conflicts
of interest
Although
we do not believe any conflict currently exists between us and Encompass, funds advised by Encompass, or its affiliates may compete with
us for acquisition or investment opportunities. If such entities decide to pursue an opportunity, we may be precluded from procuring
such opportunity. In addition, investment ideas generated within Encompass may be suitable for both us, and for funds advised, or separate
accounts managed by, Encompass and for an Encompass affiliate and may be directed to such entity rather than to us. Encompass will not
have any obligation to present us with any opportunity for a potential business combination of which they become aware. Encompass may
be required to present potential business combinations to future Encompass affiliates, or funds advised by, or separate accounts managed
by, Encompass, or third parties, before they present such opportunities to us. Encompass and our management team may have similar obligations
to future investment vehicles or third parties.
We
may, at our option, pursue an Affiliated Joint Acquisition opportunity with (or funds advised by) Encompass or any such fund or other
investment vehicle, but such parties would co-invest only if permitted by applicable regulatory and other legal limitations and to the
extent considered appropriate. Such entity may co-invest with us in the target business at the time of our initial business combination,
or we could raise additional proceeds to complete the initial business combination by making a specified future issuance to any such
fund or vehicle.
Each
of our directors and officers presently has, and in the future any of our directors and our officers may have additional, fiduciary or
contractual obligations to other entities pursuant to which such officer or director is or will be required to present acquisition opportunities
to such entity. Accordingly, subject to his or her fiduciary duties under Cayman Islands law, if any of our officers or directors becomes
aware of an acquisition opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations,
he or she will need to honor his or her fiduciary or contractual obligations to present such acquisition opportunity to such entity,
and only present it to us if such entity rejects the opportunity. In addition, we may, at our option, pursue an Affiliated Joint Acquisition
opportunity with an entity to which Encompass (or funds advised by Encompass), an officer or director has a fiduciary or contractual
obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could
raise additional proceeds to complete the acquisition by making a specified future issuance to any such entity. Our amended and restated
memorandum and articles of association provide that, subject to his or her fiduciary duties under Cayman Islands law, no director or
officer shall be disqualified or prevented from contracting with the company nor shall any contract or transaction entered into by or
on behalf of the company in which any director shall have an interest be liable to be avoided. A director shall be at liberty to vote
in respect of any contract or transaction in which he is interested provided that the nature of such interest shall be disclosed at or
prior to its consideration or any vote thereon by the Board of Directors. We do not believe, however, that any fiduciary duties or contractual
obligations of our directors or officers would materially undermine our ability to complete our business combination.
Members
of our management team directly or indirectly own our ordinary shares and/or private placement warrants, and, accordingly, may have a
conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial
business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular
business combination if the retention or resignation of any such officers and directors was included by a target business as a condition
to any agreement with respect to our initial business combination.
Indemnity
Our
sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent auditors)
for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction
agreement, reduce the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public
share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets,
in each case net of the interest which may be withdrawn to pay taxes. This liability will not apply with respect to any claims by a third
party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity
of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. Because
we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target
businesses to acquire, the only third parties we currently expect to engage would be vendors such as lawyers, investment bankers, computer
or information and technical services providers or prospective target businesses. Moreover, in the event that an executed waiver is deemed
to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third party claims.
We have not independently verified whether our sponsor has sufficient funds to satisfy their indemnity obligations and believe that our
sponsor’s only assets are securities of our company. We have not asked our sponsor to reserve for such obligations.
Employees
We
have four (4) officers. Aside from Daniel Barcelo, our Chief Executive Officer, who devotes his full time to our affairs, members of
our management team are not obligated to devote any specific number of hours to our matters but they devote as much of their time as
they deem necessary to our affairs until we have completed our initial business combination. The amount of time that our officers or
any other members of our management team aside from Mr. Barcelo devote in any time period will vary based on whether a target business
has been selected for our initial business combination and the current stage of the business combination process.
Periodic
reporting and financial information
We
have registered our units, Class A ordinary shares and warrants under the Exchange Act and have reporting obligations, including the
requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act,
our annual reports will contain financial statements audited and reported on by our independent registered public auditors.
We
will provide shareholders with audited financial statements of the prospective target business as part of the tender offer materials
or proxy solicitation materials sent to shareholders to assist them in assessing the target business. These financial statements may
be required to be prepared in accordance with, or be reconciled to, U.S. GAAP, or IFRS, depending on the circumstances and the historical
financial statements may be required to be audited in accordance with the PCAOB. These financial statement requirements may limit the
pool of potential target businesses we may acquire because some targets may be unable to provide such statements in time for us to disclose
such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
While this may limit the pool of potential acquisition candidates, we do not believe that this limitation will be material.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with this Annual Report
on Form 10-K/A. As long as we maintain our status as an emerging growth company, we will not be required to comply with the independent
registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank
check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public
companies because a target company with which we seek to complete our business combination may not be in compliance with the provisions
of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal control of any such entity to
achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such,
we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies
that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and
shareholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive
as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other
words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of
the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our ordinary shares that is held by non-affiliates exceeds
$700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible
debt securities during the prior three-year period. References herein to “emerging growth company” shall have the meaning
associated with it in the JOBS Act.
Corporate
Information
Our
executive offices are located at PO Box 500, 71 Fort Street, Grand Cayman KY1-1106, Cayman Islands and our telephone number at that location
is +1345 949 4900.
Item
1A. Risk Factors
Summary
Risk Factors
As a smaller
reporting company, we are not required to include risk factors in this annual report. However, below please find the following material
risks, uncertainties and other factors:
|
·
|
we
are an early stage Company with no revenue or basis to evaluate our ability to select a suitable
business target;
|
|
|
|
|
·
|
we
may not be able to select an appropriate target business or businesses and complete our initial
business combination in the prescribed time frame;
|
|
|
|
|
·
|
our
expectations around the performance of a prospective target business or businesses may not
be realized;
|
|
|
|
|
·
|
we
may not be successful in retaining or recruiting required officers, key employees or directors
following our initial business combination;
|
|
|
|
|
·
|
our
officers and directors may have difficulties allocating their time between the Company and
other businesses and may potentially have conflicts of interest with our business or in approving
our initial business combination;
|
|
|
|
|
·
|
we
may not obtain additional financing to complete our initial business combination or reduce
number of shareholders requesting redemption;
|
|
|
|
|
·
|
you
may not be given the opportunity to choose the initial business target or to vote on the
initial business combination;
|
|
|
|
|
·
|
trust
account funds may not be protected against third party claims or bankruptcy;
|
|
|
|
|
·
|
an
active market for our public securities' may not develop and you will have limited liquidity
and trading;
|
|
|
|
|
·
|
the
availability to us of funds from interest income on the trust account balance may be insufficient
to operate our business prior to the business combination;
|
|
|
|
|
·
|
our
financial performance following a business combination with an entity may be negatively affected
by their lack an established record of revenue, cash flows and experienced management;
|
|
·
|
changes
in personnel and availability of qualified personnel;
|
|
·
|
our
ability to remediate the material weakness in our internal control over financial reporting; and,
|
|
·
|
we
may face litigation and other risks as a result of the material weakness in our internal control over financial reporting.
|
Risk
Factors
For the
list of risks relating to our operations, see the section titled “Risk Factors” contained in our prospectus dated November
27, 2019. For risk factors related to the Business Combination with FREYR, see the S-4 to be filed by the Company. In addition to these
risk factors, the Company has identified the following additional risk factor in conjunction with the restatement of the Original Form
10-K with this Annual Report on Form 10-K/A.
Our
Public Warrants and Private Placement Warrants are accounted for as liabilities and the changes in value of our warrants could have a
material effect on our financial results.
On April 12, 2021, the Acting Director of the Division of Corporation
Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting considerations for
warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for
Warrants Issued by Special Purpose Acquisition Companies”. Specifically, the SEC Statement focused on certain settlement terms
and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant
agreement governing our Warrants. As a result of the SEC Statement, we reevaluated the accounting treatment of our 14,375,000 Public
Warrants and 8,750,000 Private Placement Warrants and restated our previously issued financial statements to classify the Warrants as
derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.
As
a result, included on our balance sheet as of December 31, 2020 contained elsewhere in this Annual Report on Form 10-K/A are derivative
liabilities related to embedded features contained within our Warrants. ASC 815 provides for the remeasurement of the fair value of such
derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized
in earnings in the statements of operations. As a result of the recurring fair value measurement, our financial statements and results
of operations may fluctuate quarterly, based on factors, which are outside of our control. Due to the recurring fair value measurement,
we expect that we will recognize non-cash gains or losses on our Warrants each reporting period and that the amount of such gains or
losses could be material.
We
have identified a material weakness in our internal control over financial reporting as of December 31, 2020. If we are unable
to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our
financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business
and operating results.
As discussed
in the explanatory note to this Annual Report on Form 10-K/A, following the issuance of the SEC Statement, on May 5, 2021, we concluded
that our previously issued audited financial statements for the year ended December 31, 2020 and the period from June 13, 2019 (inception)
through December 31, 2019, and each of our unaudited condensed financial statements for the quarterly and year-to-date periods during
such years, and related disclosures, should be restated (the “Restatement”). As part of such process, we identified a material
weakness in our internal controls over financial reporting. For further discussion of the material weakness, please see Item 9A of this
report, “Controls and Procedures”. A material weakness is a deficiency or combination of deficiencies in internal control
over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements would not
be prevented or detected on a timely basis. These deficiencies could result in additional material misstatements to our financial statements
that could not be prevented or detected on a timely basis.
Effective
internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate
the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will
ultimately have the intended effects.
If we
discover additional weaknesses in our internal controls in the future, any such newly identified material weakness could limit our ability
to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our financial statements.
In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in
addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price
may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will
be sufficient to avoid potential future material weaknesses.
We
may face litigation and other risks as a result of the material weakness in our internal control over financial reporting.
Following the issuance of the SEC Statement, our management and our
audit committee concluded that it was appropriate to restate our previously issued audited financial statements as of December 31, 2020
and 2019 and for the year ended December 31, 2020 and the period from June 13, 2019 (inception) through December 31, 2019. As part of
the restatement, we identified a material weakness in our internal controls over financial reporting.
As a result of such material weakness, the restatement related to the
accounting for the Warrants, and other matters raised or that may in the future be raised by the SEC, we face potential litigation or
other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims
arising from the restatement and material weakness in our internal control over financial reporting. As of the date of this Annual Report
on Form 10-K/A, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or
dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect
on our business, results of operations and financial condition or our ability to complete a Business Combination.