The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our unaudited financial
statements and the notes related thereto which are included in "Item 1.
Financial Statements" of this Quarterly Report on Form 10Q.
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this
Quarterly Report on Form 10Q including, without limitation, statements under
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the Company's financial position, business strategy and
the plans and objectives of management for future operations, are
forward-looking statements. When used in this Quarterly Report on Form 10Q,
words such as "anticipate," "believe," "estimate," "expect," "intend" and
similar expressions, as they relate to us or the Company's management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of management, as well as assumptions made by, and information currently
available to, the Company's management. Actual results could differ materially
from those contemplated by the forward-looking statements as a result of certain
factors detailed in our filings with the SEC. All subsequent written or oral
forward-looking statements attributable to us or persons acting on the Company's
behalf are qualified in their entirety by this paragraph.
Overview
We are a blank check company incorporated on June 25, 2020 as a Delaware
corporation and formed for the purpose of effecting a Business Combination with
one or more target businesses. We completed our Public Offering on August 10,
2020.
We intend to effectuate our Business Combination using cash from the proceeds of
our Public Offering and the sale of the Private Placement Warrants, our capital
stock, debt, or a combination of cash, stock and debt.
Recent Developments
Proposed Business Combination
On February 22, 2021, the "Company" entered into a Business Combination
Agreement (the "Business Combination Agreement"), by and among the Company,
Ardagh Metal Packaging S.A. ("AMPSA"), Ardagh Group S.A. ("AGSA") and Ardagh MP
MergeCo Inc. ("MergeCo"), which provides for, among other things: (a) a series
of transactions that will result in the subsidiaries of AGSA that are engaged in
the business of developing, manufacturing, marketing and selling metal beverage
cans and ends and providing related technical and customer services becoming
wholly-owned by AMPSA (the "Pre-Closing Restructuring"), and (b) the merger of
MergeCo with and into the Company, with the Company being the surviving
corporation as a wholly-owned subsidiary of AMPSA (the "Merger", and, together
with the Pre-Closing Restructuring and other transactions contemplated in the
Business Combination Agreement, the "Proposed Business Combination").
The Business Combination Agreement and the transactions contemplated thereby
were unanimously approved by the Board of Directors of the Company on February
22, 2021 and the Board of Directors of AGSA on February 22, 2021.
The Business Combination Agreement
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Proposed Business Combination Consideration
The aggregate consideration to be paid to AGSA pursuant to the Transfer
Agreement (as defined within the Business Combination Agreement) and the
Business Combination Agreement consists of (a) $2,315,000,000, payable in cash
and in equivalent in U.S. dollars or euros (or a combination thereof), (b)
484,956,250 shares of AMPSA, with a nominal value of EUR 0.01 per share (the
"AMPSA Shares"), (c) a promissory note issued by AMPSA in the amount of
$1,085,000,000, to be paid in cash at the consummation of the Merger (the
"Closing") or, in certain circumstances, a combination of cash and AMPSA Shares,
and (d) the right to receive, during the five-year period commencing 180 days
after the Closing 60,730,000 additional AMPSA Shares in five equal installments
depending on whether the price of AMPSA Shares maintains for a certain period of
time a volume weighted average price of $13.00, $15.00, $16.50, $18.00 or $19.50
(collectively, the "AGSA Consideration").
Representations and Warranties
The Business Combination Agreement contains customary representations,
warranties and covenants of AMPSA, AGSA, GHV and MergeCo relating to, among
other things, their ability to enter into the Business Combination Agreement and
their outstanding capitalization.
Covenants
The Business Combination Agreement includes customary covenants of the parties
with respect to operation of their respective businesses prior to consummation
of the Proposed Business Combination and efforts to satisfy conditions to
consummation of the Proposed Business Combination. The Business Combination
Agreement also contains additional covenants of the parties, including, among
others, covenants providing for the Company and AGSA to cooperate in the
preparation of the Proxy Statement/Prospectus and Registration Statement (as
each such term is defined in the Business Combination Agreement) required to be
filed in connection with the Proposed Business Combination. The covenants of the
parties to the Business Combination Agreement will not survive the Closing,
except for those covenants that by their terms expressly apply in whole or in
part after the Closing.
Conditions to Consummation of the Proposed Business Combination
The consummation of the Proposed Business Combination is conditioned upon, among
other things, (a) no action or governmental order or law shall have been
enacted, issued, promulgated, enforced or entered that restrains, enjoins or
otherwise prohibits the consummation of the Proposed Business Combination or
would cause any part of the Proposed Business Combination to be rescinded
following the Closing; (b) the proposal to adopt the Business Combination
Agreement and approve the Proposed Business Combination shall have been approved
and adopted by the requisite affirmative vote of the Company stockholders; (c) a
Luxembourg statutory independent auditor (réviseur d'entreprises agréé) of AMPSA
shall have issued appropriate reports regarding the contributions relating to
the AMPSA Shares to be issued to the Company stockholders or AGSA as set forth
in the Business Combination Agreement; (d) all closing conditions to the private
placement pursuant to which investors will purchase 60,000,000 AMPSA Shares for
a purchase price of $10.00 per share (the "PIPE Shares") shall have been
satisfied or waived and the $600,000,000 gross proceeds from the private
placement shall have been paid to AMPSA on the date the Merger is consummated;
(e) the Registration Statement of which the Proxy Statement/Prospectus forms a
part shall have been declared effective under the Securities Act and no stop
order or proceedings for purposes of suspending the effectiveness of the
registration statement shall have been initiated by the SEC and not withdrawn;
and (f) the AMPSA Shares shall have been approved for listing on NYSE, subject
to official notice of issuance.
Private Placement Subscription Agreements
In connection with the execution of the Business Combination Agreement, on
February 22, 2021, AMPSA and the Company entered into Subscription Agreements
(each, a "Subscription Agreement" and collectively, the "Subscription
Agreements") with certain investors and Gores Sponsor V LLC (the "Sponsor"),
pursuant to which the investors and the Sponsor agreed to purchase, and AMPSA
agreed to sell to the investors and the Sponsor the PIPE Shares for an aggregate
cash amount of $600,000,000.
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The issuance of the PIPE Shares pursuant to the Subscription Agreements is
contingent upon, among other customary closing conditions, the substantially
concurrent consummation of the Proposed Business Combination. Pursuant to the
Subscription Agreements, AMPSA agreed that, within 30 calendar days after the
date of Closing, it will file with the SEC (at AMPSA's sole cost and expense) a
registration statement registering the resale of the PIPE Shares, and AMPSA will
use its commercially reasonable efforts to have the registration statement
declared effective as soon as practicable after the filing thereof.
Results of Operations
For the six months ended June 30, 2021, we had net loss of ($7,571,031), of
which $502,500 relates to a non-cash loss related to the change in fair value of
the warrant liability. Our business activities during the quarter mainly
consisted of identifying and evaluating prospective acquisition candidates for a
Business Combination. We believe that we have sufficient funds available to
complete our efforts to effect a Business Combination with an operating business
by August 10, 2022. However, if our estimates of the costs of identifying a
target business, undertaking in-depth due diligence and negotiating a Business
Combination are less than the actual amount necessary to do so, we may have
insufficient funds available to operate our business prior to our Business
Combination.
As indicated in the accompanying unaudited financial statements, at June 30,
2021, we had $870 in cash and deferred offering costs of $18,375,000. Further,
we expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete our Business
Combination will be successful.
Liquidity and Capital Resources
On July 14, 2020, the Sponsor purchased 11,500,000 Founder Shares for an
aggregate purchase price of $25,000, or approximately $0.002 per share.
Subsequently, the Sponsor transferred an aggregate of 75,000 Founder Shares to
the Company's independent directors. On August 5, 2020, the Company effected a
stock dividend with respect to the Company's Founder Shares of 2,156,250 shares
thereof, resulting in the Company's initial stockholders holding an aggregate of
13,656,250 shares of Class F Common Stock. On September 21, 2020, the Sponsor
forfeited 531,250 Founder Shares following the expiration of the unexercised
portion of underwriters' over-allotment option, so that the Founder Shares held
by the Initial Stockholders would represent 20.0% of the outstanding shares of
common stock following completion of the Public Offering.
On August 10, 2020, the Company consummated its Public Offering of 52,500,000
Units at a price of $10.00 per Unit, including 5,000,000 Units as a result of
the underwriters' partial exercise of their over-allotment option, generating
gross proceeds of $525,000,000. On the IPO Closing Date, we completed the
private sale of an aggregate of 6,250,000 Private Placement Warrants, each
exercisable to purchase one share of Common Stock at $11.50 per share, to our
Sponsor, at a price of $2.00 per Private Placement Warrant, generating gross
proceeds, before expenses, of $12,500,000. After deducting the underwriting
discounts and commissions (excluding the Deferred Discount, which amount will be
payable upon consummation of the Business Combination, if consummated) and the
estimated offering expenses, the total net proceeds from our Public Offering and
the sale of the Private Placement Warrants were $526,055,000, of which
$525,000,000 (or $10.00 per share sold in the Public Offering) was placed in the
Trust Account. The amount of proceeds not deposited in the Trust Account was
$1,055,000 at the closing of our Public Offering. Interest earned on the funds
held in the Trust Account may be released to us to fund our Regulatory
Withdrawals, for a maximum of 24 months and/or additional amounts necessary to
pay our franchise and income taxes.
On July 14, 2020, Company borrowed $300,000 by the issuance of an unsecured
promissory note from the Sponsor for $300,000 to cover expenses related to the
Public Offering. These Notes were non-interest bearing and payable on the
earlier of June 30, 2021 or the completion of the Public Offering. These Notes
were repaid in full upon the completion of the Public Offering.
At June 30, 2021 and December 31, 2020, we had cash held outside of the Trust
Account of approximately $870 and $705,817, respectively, which is available to
fund our working capital requirements. Additionally, interest earned on the
funds held in the Trust Account may be released to us to fund our Regulatory
Withdrawals, for a maximum of 24 months and/or additional amounts necessary to
pay our franchise and income taxes.
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At June 30, 2021 and December 31, 2020, the Company had current liabilities of
$40,877,342 and $34,235,359, respectively, and working capital of ($40,599,540)
and ($33,175,454), respectively, the balances of which are primarily related to
warrants we have recorded as liabilities as described in Notes 2 and 3. Other
amounts related to accrued expenses owed to professionals, consultants, advisors
and others who are working on seeking a Business Combination as described in
Note 1. Such work is continuing after June 30, 2021 and amounts are continuing
to accrue. Additionally, the warrant liability will not impact the Company's
liquidity until a Business Combination has been consummated, as they do not
require cash settlement until such event has occurred.
We intend to use substantially all of the funds held in the Trust Account,
including interest (which interest shall be net of Regulatory Withdrawals and
taxes payable) to consummate our Business Combination. Moreover, we may need to
obtain additional financing either to complete a Business Combination or because
we become obligated to redeem a significant number of shares of our Common Stock
upon completion of a Business Combination. Subject to compliance with applicable
securities laws, we would only complete such financing simultaneously with the
completion of our Business Combination. If we are unable to complete our
Business Combination because we do not have sufficient funds available to us, we
will be forced to cease operations and liquidate the Trust Account. In addition,
following our Business Combination, if cash on hand is insufficient, we may need
to obtain additional financing in order to meet our obligations. To the extent
that our capital stock or debt is used, in whole or in part, as consideration to
consummate our Business Combination, the remaining proceeds held in our Trust
Account, if any, will be used as working capital to finance the operations of
the target business or businesses, make other acquisitions and pursue our growth
strategy.
Contractual Obligations
As of June 30, 2021 and December 31, 2020, we did not have any long-term debt
obligations, capital lease obligations, operating lease obligations, purchase
obligations or long-term liabilities. In connection with the Public Offering, we
entered into an administrative services agreement to pay monthly recurring
expenses of $20,000 to The Gores Group for office space, utilities and
secretarial support. The administrative services agreement terminates upon the
earlier of the completion of a Business Combination or the liquidation of the
Company.
The underwriters are entitled to underwriting discounts and commissions of 5.5%
($28,875,000), of which 2.0% ($10,500,000) was paid at the closing of the Public
Offering, and 3.5% ($18,375,000) was deferred. The Deferred Discount will become
payable to the underwriters from the amounts held in the Trust Account solely in
the event that the Company completes a Business Combination, subject to the
terms of the underwriting agreement. The underwriters are not entitled to any
interest accrued on the Deferred Discount.
Recently Issued Accounting Pronouncements Not Yet Adopted
Management does not believe that any recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material effect on
the Company's financial statements based on current operations of the
Company. The impact of any recently issued accounting standards will be
re-evaluated on a regular basis or if a Business Combination is completed where
the impact could be material.
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