COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2023

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 6 — COMMITMENTS AND CONTINGENCIES

Registration and Shareholder Rights

Pursuant to a registration and shareholder rights agreement entered into on January 20, 2022, the holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights. The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the Business Combination. However, the registration and shareholder rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lockup period. The registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement

The Company granted the underwriters a 45-day option to purchase up to 3,750,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. On January 25, 2022, the underwriter’s elected to fully exercise the over-allotment option to purchase an additional 3,750,000 Units at a price of $10.00 per Unit. The underwriters were paid a cash underwriting discount of $0.20 per Unit, or $5,000,000 in the aggregate payable upon the closing of the Initial Public Offering. In addition, the underwriter will be entitled to a deferred fee of (i) 5.0% of the gross proceeds of the initial 25,000,000 Units sold in the Public Offering, or $12,500,000, and (ii) 7.0% of the gross proceeds from the Units sold pursuant to the over-allotment option, or $2,625,000. The total deferred fee of $15,125,000 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.

On March 13, 2023, the Company signed a fee reduction agreement with Cantor Fitzgerald in which the underwriters forfeited 80.17% of the deferred underwriting commissions resulting in a reduction of $12,125,000 with a remaining $3,000,000 that is deferred and payable upon the business combination. The reduction of the $12,125,000 resulted in a gain from forgiveness of deferred underwriting commissions of $297,062 and $11,827,938 was recorded to additional paid-in capital.

Finder’s Agreement

In February 2022, the Company entered into an agreement with a service provider to help identify targets, negotiate terms of potential Business Combinations, consummate a Business Combination and/or provide other services. In connection with this agreement, the Company will be required to pay a finder’s fee for such services, in an amount equal to $1,000,000, which would be contingent on the consummation of a Business Combination with a target that is introduced by the service provider. No payment under this agreement would be triggered in connection with the consummation of the Business Combination Agreement.

Business Combination Agreement

On March 13, 2023, the Company entered into a Business Combination Agreement (the “Agreement”), by and among MURANO PV, S.A. DE C.V., a Mexican corporation (“Murano PV”), Elías Sacal Cababie, an individual (“ESC”), ES Agrupación, S.A. de C.V., a Mexican corporation (the “ESAGRUP” and collectively with ESC, the “Seller”), Murano Global B.V. a private limited liability company under Dutch law (“PubCo”), MPV Investment B.V., a private limited liability company under Dutch law, which is a direct wholly-owned subsidiary of PubCo (“HoldCo”) and Murano Global Cayman, a Cayman Islands exempted company incorporated with limited liability which is a direct wholly-owned subsidiary of PubCo (“New CayCo” and together with Murano PV, Seller, PubCo and HoldCo, the “Murano Parties”). The Merger (as defined below) was unanimously approved by the Company’s Board of Directors and by Murano PV’s Board of Directors. If the Agreement is approved by the Company’s shareholders and Murano PV’s shareholders, and the transactions contemplated by the Agreement are consummated, (i) New CayCo will merge with and into the Company, the separate corporate existence of New CayCo will cease, and the Company will be the surviving company (the “Surviving Company”) and a wholly owned direct subsidiary of PubCo (the “Merger”) and (ii) the Company will change its name to “Murano Global Hospitality”.

In addition, at the effective time of the Merger, (i) each issued and outstanding Class A Ordinary Share and Class B Ordinary Share, each par value $0.0001 per share, of the Company (the “Company Ordinary Shares”) will be automatically canceled and extinguished, and each holder of the Company Ordinary Shares will be entitled to receive merger rights representing a corresponding number of PubCo Ordinary Shares, which are held in the accounts of the Exchange Agent (“Merger Rights”), and (ii) each issued and outstanding warrant to purchase one share of Company Class A Ordinary Shares will automatically cease to represent a right to acquire Company Class A Ordinary Shares and will automatically convert into and represent a right to acquire PubCo Ordinary Shares (“Converted Warrant”) and each Converted Warrant (a) will represent the right to acquire the number of PubCo Ordinary Shares equal to the number of Company Class A Ordinary Shares, (b) will have an exercise price of $11.50 per whole warrant required to purchase one PubCo Ordinary Share, and (c) will expire on the five year anniversary of the closing date of the Merger. Additionally, and in connection with the transactions contemplated by the Agreement, on March 13, 2023, the underwriters of the Company’s initial public offering agreed to reduce the total deferred underwriting fee that is to be paid to such underwriters upon the consummation of the Company’s initial business combination to $3,000,000.

On March 17, 2023, the Company signed an agreement with Cohen & Company Capital Markets (“CCM”) to act as its financial advisor and capital markets advisor in connection with a possible business combination transaction.  The Company shall pay CCM (i) an advisor fee in an amount equal to $1,000,000 in connection with the Merger, and (ii) a transaction fee in connection with a private placement in  an amount equal to 4.0% of the sum of (A) the gross proceeds raised from investors and received by the Company or the target business simultaneously with or before the closing of the private placement plus (B) proceeds released from the Trust Account with respect to any stockholder of the Company that (x) entered into a non-redemption or other similar agreement and did not redeem shares of the Company’s common stock or (y) did not redeem shares of the Company’s common stock as a result of CCM’s services hereunder in the good faith reasonable judgement of the Company.

In addition, the Company may, in its reasonable discretion, pay to CCM a discretionary fee in an amount up to $1,000,000, payable only upon the closing of the Merger, if the Company determines in its discretion and reasonable judgment that the performance of CCM in connection with its leadership role in connection with the Merger warrants such additional fee.