S-1 1 d175920ds1.htm S-1 S-1
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As filed with the U.S. Securities and Exchange Commission on November 24, 2021.

Registration No. 333-[]

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Pershing Square SPARC Holdings, Ltd.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   6770   87-3427627

(State or Other Jurisdiction of

Incorporation or Organization)

  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

787 Eleventh Avenue, 9th Floor

New York, New York 10019

(212) 813-3700

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

 

Steve Milankov, Esq.

787 Eleventh Avenue, 9th Floor

New York, New York 10019

(212) 813-3700

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

 

 

Copies to:

Stephen Fraidin, Esq.

Gregory P. Patti, Jr., Esq.

Cadwalader, Wickersham & Taft LLP

200 Liberty Street

New York, New York 10281

(212) 504-6000

 

 

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this registration statement.

 

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934, as amended. (Check one):

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of
Security Being Registered

 

Amount
Being

Registered

  Proposed
Maximum
Offering Price
per Security(1)(2)
 

Proposed
Maximum

Aggregate

Offering Price(1)(2)

  Amount of
Registration Fee

Subscription warrants to purchase one share of common stock, $0.0001 par value, at a minimum exercise price of $10.00 per share (“SPARs”)

  244,444,444   —     —     —  (3)

Shares of common stock issuable upon exercise of SPARs

  244,444,444   $10.00   $2,444,444,440   $226,600

Total

          $2,444,444,440   $226,600

 

 

(1)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) of the Securities Act.

(2)

The issuer may determine, prior to the date on which the SPARs become exercisable, to increase the exercise price of the SPARs to price greater than $10.00 per share. There is not a maximum exercise price. In connection with any increase in exercise price, the issuer will file a post-effective amendment to this registration statement and submit the additional registration fee due in connection therewith.

(3)

No fee pursuant to Rule 457(g).

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED NOVEMBER 24, 2021

PRELIMINARY PROSPECTUS

Pershing Square SPARC Holdings, Ltd.

244,444,444 Subscription Warrants to Purchase Common Stock at a minimum price of $10.00 per Share

 

 

Pershing Square SPARC Holdings, Ltd., a Delaware corporation, is a newly organized company formed 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 prospectus as our business combination. We have not selected any specific business combination partner and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination partner. Our sponsor, Pershing Square SPARC Sponsor, LLC, a Delaware limited liability company (“Sponsor”), is an affiliate of Pershing Square Capital Management, L.P. (“Pershing Square” or “PSCM”), a registered investment advisor under the Investment Advisers Act of 1940, as amended, with approximately $17.9 billion of assets under management as of November 1, 2021. Our Sponsor is wholly owned by Pershing Square Holdings, Ltd., a Guernsey company, Pershing Square, L.P., a Delaware limited partnership, and Pershing Square International, Ltd., a Cayman Islands exempted company, each of which is an investment fund managed by PSCM (the “Pershing Square Funds”). Our Sponsor is also an affiliate of Pershing Square Tontine Holdings, Ltd., a Delaware corporation (“PSTH”), which is a special purpose acquisition company (a “SPAC”). As described below, we are distributing our subscription warrants to the holders of the Class A common stock and distributable redeemable warrants of PSTH.

Our company is not a SPAC. We are conducting a public offering of our securities pursuant to the registration statement of which this prospectus forms a part (the “Registration Statement”), but we are not raising capital from public investors at this time. Instead, we are distributing, at no cost, subscription warrants to purchase our shares at a future date. We refer to these subscription warrants as special purpose acquisition rights, or “SPARs.” We will not raise any public capital until after we have entered into a definitive agreement for our business combination and distributed to SPAR holders a prospectus, included in an effective registration statement, that describes the proposed business combination, following which time investors may subscribe to acquire our shares by electing to exercise their SPARs. The shares issuable upon the exercise of our SPARs will be issued concurrently with the closing of our business combination.

SPARs are a novel security with unique features, which we propose to list and trade on the New York Stock Exchange (the “NYSE”). The listing and trading of SPARs will require the Securities and Exchange Commission (the “SEC”) to approve a new listing rule submitted by the NYSE permitting the listing and trading of subscription warrants by acquisition companies. A proposed listing rule has been published in the Federal Register for public comment, and is being reviewed by the SEC. There can be no assurance that a listing rule permitting the listing and trading of SPARs will be approved. If such a rule is not approved and adopted, SPARs would trade on the “over-the-counter” market, which may present significant risks to the holders of SPARs, including lower availability and efficiency of market price quotations, significantly less liquidity, increased trading costs, the absence of certain corporate governance protections, and the applicability of state securities laws that could result in restrictions on the sale of our SPARs. See Listing of SPARs, page 3 and Risk Factors, page 55. There is currently no public market for our SPARs or our common stock, par value $0.0001 per share (the “Common Stock”). We refer to the common stock of the post-combination company, which, depending on the form our business combination takes, may be an entity other than our company, as “Public Shares.” We intend to apply to list our SPARs and Common Stock on the NYSE under the symbols “[].W” and “[].”

We believe that the structure of our company is more favorable to public investors than a SPAC, as described on page 13 of this prospectus. See Comparison to Special Purpose Acquisition Companies, page 131, for a detailed comparison of our company to SPACs. However, we cannot guarantee that we will consummate a business combination or that the post-combination business will increase in value. Those who purchase our SPARs on the open market and those who exercise SPARs may lose their entire investment. Our SPARs will be subject to specific exercise procedures and restrictions limiting their trading during certain periods, described in detail beginning on page 29. We urge you to carefully review those procedures and time periods. See Risk Factors for further discussion.


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Our SPARs

We are distributing our SPARs at no cost to the recipients thereof. The SPARs will each be exercisable for one Public Share, at a minimum exercise price of $10.00 per share. In connection with a proposed business combination, we may decide to seek a greater amount of capital from public investors, in which case we may increase, but not decrease, the exercise price of our SPARs. If we decide to increase the exercise price of our SPARs, we will publicly announce such increase at the time we announce that we have entered into a definitive agreement with respect to our business combination (the “Definitive Agreement”). We refer to the $10.00 SPAR exercise price as the “Minimum Exercise Price” and to the publicly announced final exercise price as the “Final Exercise Price.” The total proceeds from the exercise of all SPARs at the Minimum Exercise Price will be $2,444,444,440. There is no maximum Final Exercise Price, and accordingly, no maximum amount of total proceeds we could raise from the exercise of all SPARs at the Final Exercise Price (the “Final Exercise Proceeds”). For example, if we decided to raise twice as much public capital, each SPAR would become exercisable for one Public Share at a Final Exercise Price of $20.00, and the Final SPAR Proceeds would be $4,888,888,880.

We will distribute 200,000,000 SPARs to the holders of the Class A common stock of PSTH and 44,444,444 SPARs to the holders of the distributable redeemable warrants of PSTH (the “Distribution”), based on record ownership as of [●], 2021 (the “Distribution Record Date”), which we expect will be on or about the date that PSTH consummates its initial business combination or liquidates its trust account and returns funds to its public stockholders. If PSTH has completed its initial business combination at the time of the Distribution, 200,000,000 SPARs will be distributed on a pro rata basis in respect of the shares of PSTH Class A common stock that remain outstanding after PSTH stockholders have had the opportunity to redeem their shares in connection with PSTH’s initial business combination. If PSTH does not consummate an initial business combination and liquidates its trust account, one SPAR will be distributed in respect of each of the 200,000,000 shares of PSTH common stock outstanding. In each case, two SPARs will be distributed in respect of each of the 22,222,222 outstanding distributable redeemable warrants of PSTH.

The SPARs will become exercisable shortly before the consummation of our business combination, as described below. The SPARs will expire upon the earlier of (i) an Early Termination of our company (as defined below), (ii) the consummation of our business combination or (iii) the date that is 10 years from the distribution of the SPARs. “Early Termination” refers to the liquidation of our company in connection with the abandonment of our business combination during the SPAR Holder Payment Period (as defined below).

Company Lifecycle

The Distribution will occur following the time at which the SEC has declared this Registration Statement to be effective and PSTH has either consummated its business combination or announced its intention to liquidate. We expect that the SPARs will be listed for trading at or shortly following the time of the Distribution. If we are unable to list our SPARs on the NYSE, the SPARs will trade on the “over-the-counter” market and, as a result, holders will be subject to significant additional risks, as described throughout this prospectus. See Listing of SPARs, page 7. The SPARs will not yet be exercisable at the time of their initial listing. As set forth in our certificate of incorporation (as amended from time to time, our “Charter”), and the warrant agreement pursuant to which the SPARs will be issued (the “SPAR Agreement”), the SPARs will be tradable and exercisable as follows:

 

  1.

Search Period:

 

   

Distribution: The SPARs are distributed to PSTH security holders after this Registration Statement has been declared effective. We commence our search for a business combination partner.

 

   

Trading: The SPARs commence trading upon the Distribution.

 

   

Exercisability: The SPARs are not exercisable during the Search Period.

 

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  2.

Disclosure Period:

 

   

Definitive Agreement and Final Exercise Price: The company executes a Definitive Agreement and announces the Final Exercise Price.

 

   

Post-Effective Amendment: The Post-Effective Amendment (as defined below) is filed, which provides comprehensive disclosures regarding the proposed business combination and the Public Shares.

 

   

Closing Conditions: The company satisfies or waives substantially all express closing conditions in the Definitive Agreement, including any required regulatory approvals (the “Disclosure Period Closing Conditions”), other than those that can only be satisfied as of a later date.

 

   

Effectiveness: The Post-Effective Amendment is declared effective by the SEC, following revisions by the company in response to the SEC’s review process and satisfaction of the Disclosure Period Closing Conditions. The Post-Effective Amendment is then distributed to all SPAR holders.

 

   

Trading: The SPARs continue to be tradable during the Disclosure Period.

 

   

Exercisability: The SPARs are not exercisable during the Disclosure Period.

 

  3.

SPAR Holder Election Period—20 Business Days:

 

   

Election to Exercise: SPAR holders have 20 business days from and after the mailing of the Post-Effective Amendment to decide whether to submit an irrevocable notice of their election to exercise their SPARs for Public Shares (an “Election”). Elections may be revoked only in certain limited circumstances.

 

   

Trading: SPARs with respect to which an Election has been submitted (“Elected SPARs”) become restricted and ineligible for trading upon the submission of such Election. SPARs with respect to which no Election has been submitted (“Unelected SPARs”) continue to trade until two business days prior to the end of the SPAR Holder Election Period, after which time, all SPARs are restricted from trading. Elected SPARs are not submitted to the warrant agent, and continue to be held by their respective holders.

 

   

Exercisability: The submission of an Election is not an exercise of a SPAR and SPARs cannot be exercised at this time. By submitting an Election, a SPAR holder (i) becomes obligated to submit the applicable exercise price for their Elected SPARs if and when the SPAR Holder Payment Period occurs, and (ii) consents to the automatic exercise of their SPARs for Public Shares, which will occur concurrently with the consummation of the business combination.

 

  4.

Company Decision Period—Up to 10 Calendar Days:

 

   

Assessment: The company assesses whether the Decision Period Closing Conditions (as defined below) are or will be satisfied or waived, including whether it expects to have sufficient funds from the exercise of SPARs, the Forward Purchase and any other financing that has been arranged.

 

   

Announcement: No later than 10 calendar days following the end of the SPAR Holder Election Period, the company publicly announces whether it will proceed with the proposed business combination.

 

   

Announcement of Decision not to Proceed: All Elections are rejected, no SPARs have been exercised, and all SPARs will again become unrestricted and remain with their respective holders. The company begins its search for a different business combination, and SPARs recommence trading.

 

   

Announcement of Decision to Proceed: The SPAR Holder Payment Period begins.

 

   

Trading: All SPARs remain restricted and ineligible for trading during the Company Decision Period.

 

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Exercisability: Elections may not be revoked, subject to certain limited exceptions. Unelected SPARs will have value only in the event that we decide not to proceed and seek a different business combination. See What happens if the business combination is abandoned?, page 7.

 

  5.

SPAR Holder Payment Period—Five Calendar Days:

 

   

Payment: SPAR holders who have submitted Elections will submit payment of the Final Exercise Price within five calendar days of the start of the SPAR Holder Payment Period. Electing SPAR holders who submit their payment are entitled to receive Public Shares, and their SPARs will automatically be exercised, contingent upon and concurrently with the consummation of the business combination.

 

   

Custodial Account: All payments are held in an interest-bearing account controlled by an independent custodian until consummation of the business combination (the “Custodial Account”).

 

   

Exercisability: No Elections may be revoked, subject to certain limited exceptions.

 

   

Trading: All SPARs will be restricted from trading during the SPAR Holder Payment Period.

 

   

Liquidation upon Early Termination: If, notwithstanding the earlier satisfaction of closing conditions, the business combination is abandoned during the SPAR Holder Payment Period, all payments will be returned, all SPARs will expire worthless, and the company will liquidate.

 

  6.

Closing and Post-Closing

 

   

Issuance of Public Shares: Concurrently with the consummation of the business combination, Public Shares will be issued in respect of exercised SPARs. All unexercised SPARs will expire.

 

   

Distribution of SPARC II Tontine SPARs: SPARC II, an entity similar to our company that our Sponsor intends to have formed by this time, will issue 244,444,444 subscription warrants of SPARC II on a pro rata basis to exercising SPAR holders (as further described herein).

As used herein, the term “Post-Effective Amendment” includes an amendment to this Registration Statement as well as other eligible registration statements under the Securities Act of 1933, as amended (the “Securities Act”) or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that, depending on the structure of our business combination, may be filed by us or another party to the business combination. In certain circumstances, including in connection with amendments to the Charter, Definitive Agreement or SPAR Agreement that are determined, in the reasonable, good-faith judgment of the independent members of our board of directors (the “Board”), would have materially adversely impact SPAR holders (a “Materially Adverse Amendment”), SPAR holders will be permitted to revoke their Elections, and we may postpone or extend the SPAR Holder Election Period. /See Rights of SPAR Holders/, page 42. The term “Decision Period Closing Conditions” refers to (i) the availability of necessary financing to consummate the transaction, (ii) that a material adverse change has not occurred and (iii) the “bring-down” of certain representations and warranties.

All payments received in respect of Elected SPARs during the SPAR Holder Payment Period will be held in the Custodial Account. If an Early Termination occurs, we will return all amounts held in the Custodial Account, with interest and net of taxes, to electing SPAR holders in proportion to the aggregate exercise price paid by each holder. Except for the foregoing, no funds will be released from the Custodial Account other than in connection with the consummation of our business combination. Our Board, in its sole discretion, may determine to extend the SPAR Holder Payment Period if (i) our business combination partner breaches its obligations under the Definitive Agreement in a manner that frustrates the consummation of the business combination or (ii) we are enjoined by a governmental authority from consummating the transaction and are permitted under applicable law to appeal such injunction. If our Board decides to further pursue the business combination rather than carry out an Early Termination, we would continue to hold funds in the Custodial Account until such matter is resolved and the business combination is consummated (at which time the SPARs will be exercised), or we decide to carry out an Early Termination.

 

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The Forward Purchase Agreement

Prior to the Distribution, we will enter into a Forward Purchase Agreement with each of the Pershing Square Funds (which we collectively refer to in such capacity as the “Committed Forward Purchasers”) and [●], an investment fund managed by PSCM (which we refer to as the “Additional Forward Purchaser,” and collectively with the Committed Forward Purchasers, the “Forward Purchasers”). The Forward Purchase Agreement provides for the purchase of an aggregate of up to $3,500,000,000 Public Shares, a portion of which the Committed Forward Purchasers will be obligated to purchase, and the remainder of which the Additional Forward Purchaser may elect to purchase.

The Committed Forward Purchasers have agreed to purchase a minimum of $500,000,000 of Public Shares at a Final Exercise Price of $10.00, which amount will increase proportionately if we set a higher Final Exercise Price, up to a maximum of $1,000,000,000 at a Final Exercise Price of $20.00 or above (the “Committed Forward Purchase”). Accordingly, the Committed Forward Purchasers are obligated to invest approximately 20.5% of the Final SPAR Proceeds if the Final Exercise Price is less than $20.00, or a fixed amount of $1,000,000,000 if the Final Exercise Price is $20.00 or greater. The Committed Forward Purchase will occur simultaneously with the closing of our business combination. The Committed Forward Purchasers’ obligation to purchase the Committed Forward Purchase shares may not be transferred to any other parties.

The Forward Purchase Agreement provides that the Additional Forward Purchaser may elect to purchase up to the amount of the $3,500,000,000 Forward Purchase that is not subject to the Committed Forward Purchase (the “Additional Forward Purchase”). Depending on the Final Exercise Price, the Additional Forward Purchaser will have the right to purchase between $2,500,000,000 and $3,000,000,000 of Public Shares. The Additional Forward Purchaser will commit to the amount it will purchase at the time that we announce the Definitive Agreement, and the purchase will take place simultaneously with the closing of our business combination. The Additional Forward Purchaser’s right to purchase the Additional Forward Purchase shares may be transferred, in whole or in part, to any entity that is managed by PSCM (“Affiliate Transferees”), but not to third parties. The Public Shares purchased pursuant to the Forward Purchase Agreement will be subject to certain transfer restrictions and have registration rights.

For example, at the Minimum Exercise Price of $10.00, we would issue 50,000,000 Public Shares in connection with the $500,000,000 Committed Forward Purchase, and up to 300,000,000 Public Shares in connection with the $3,000,000,000 Additional Forward Purchase. If the Final Exercise Price were set at $25.00, we would issue 40,000,000 Public Shares in connection with the $1,000,000,000 Committed Forward Purchase, and up to 100,000,000 Public Shares in connection with the $2,500,000,000 Additional Forward Purchase.

Sponsor Shares

Our Sponsor has purchased 23,660 shares of Common Stock at $10.00 per share, for an aggregate purchase price of $236,600 (the “Sponsor Shares”). Prior to our business combination, the Sponsor Shares will be the only outstanding shares of Common Stock, and we do not intend to issue Common Stock to any third parties. Accordingly, our Sponsor will be able to provide any stockholder approval required in connection with our business combination or any other matter. If we set a Final Exercise Price above the Minimum Exercise Price, we will carry out a reverse stock split of the Sponsor Shares at a ratio such that the effective purchase price of each post-split Sponsor Share equals the Final Exercise Price at which SPAR holders will purchase Public Shares. For example, if the Final Exercise Price is set at $20.00, we will carry out a 2-to-1 reverse split of the Sponsor Shares, such that half as many Sponsor Shares are outstanding and the effective price paid for each Sponsor Share then outstanding will equal $20.00. Our Sponsor may, but is not obligated to, purchase additional Sponsor Shares in order to provide us with additional working capital. The Sponsor Shares generally may not be transferred (other than to Affiliate Transferees) prior to the consummation of our business combination, and have certain registration rights.

 

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Sponsor Preferred Shares

Prior to the Distribution, our Sponsor will purchase 3,000 shares of mandatorily convertible cumulative preferred stock, par value $0.0001 per share, which we refer to as the “Sponsor Preferred Shares,” for an aggregate purchase price of $30,000,000. The Sponsor Preferred Shares generally do not have any voting rights, have a liquidation preference of $10,000 per share, rank higher in priority to our Common Stock and will automatically convert into Public Shares upon the consummation of our business combination. The Sponsor Preferred Shares are entitled to a cumulative annual dividend of 5.0%, payable in cash. We will pay the accrued dividends at the time of the conversion of the Sponsor Preferred Shares. The number of Public Shares issuable upon conversion will equal the aggregate liquidation preference of the Sponsor Preferred Shares, divided by the Final Exercise Price. The Sponsor Preferred Shares are generally not transferable (other than to Affiliate Transferees), and the Public Shares issuable upon the conversion thereof will have certain registration rights.

The proceeds from the sale of the Sponsor Shares and the Sponsor Preferred Shares are intended to provide us with working capital. Our Sponsor may, but is not obligated to, purchase additional Sponsor Shares and Sponsor Preferred Shares. We will place a portion of the proceeds from the purchase of the Sponsor Preferred Shares in an escrow account, ensuring that we maintain net tangible assets of at least $5,000,001 until we consummate our business combination. Accordingly, our company will not be subject to Rule 419 of the Securities Act.

Sponsor Warrants and Director Warrants

Prior to the Distribution, we will issue warrants to our Sponsor (the “Sponsor Warrants”). The Sponsor Warrants will be exercisable, in the aggregate, for 4.95% of the Public Shares that are outstanding as of the time immediately following the consummation of our business combination, on a fully-diluted basis (such 4.95% of shares, the “Reference Shares”). The Sponsor Warrants will have an exercise price equal to 120% of the Final Exercise Price (the “Reference Price”), meaning that our Sponsor will participate in the value of our business combination only if the Public Shares appreciate by at least 20% above the price at which SPAR holders purchase their Public Shares. For example, if the Final Exercise Price is $10.00, the Reference Price will be $12.00. Our Sponsor may exercise the Sponsor Warrants on a cashless basis, in which case it would receive upon exercise that number of shares equal to (i) the number of Reference Shares, multiplied by (ii)(a) the “fair market value” of a Public Share in excess of the Reference Price, divided by (b) the fair market value of a Reference Share. As used above, “fair market value” refers to the volume-weighted average trading price of a Public Share over the 10 consecutive trading days ending on the third trading day prior to a notice of exercise being sent.

The Sponsor Warrants will generally not be saleable or transferable until three years after the consummation of our business combination and are subject to certain adjustments as described herein. The Public Shares issuable upon exercise of the Sponsor Warrants will generally not be saleable or transferable until three years after the consummation of our business combination and will have certain registration rights. The Sponsor Warrants will expire on the date that is 10 years from the consummation of our business combination. The Sponsor Warrants may be exercised in whole or in part and will not be subject to redemption.

Prior to the Distribution, we will issue warrants to certain of our independent director nominees or Board observers (the “Director Warrants,” and with the Sponsor Warrants, the “Private Warrants”). The Director Warrants will be identical to the Sponsor Warrants, except that they are exercisable, in the aggregate, for approximately 0.26% of the Public Shares outstanding as of the time immediately following the consummation of our business combination, on a fully-diluted basis. The Private Warrants will be exercisable, in the aggregate, for approximately 5.21% of the outstanding Public Shares.

As an example, if we were to contribute $4 billion in proceeds from the exercise of our SPARs at the Minimum Exercise Price of $10.00, the sale of the Sponsor Shares, Sponsor Preferred Shares and the Forward Purchase in a business combination that results in a post-combination equity valuation of $20.0 billion, there would be 2.0 billion shares outstanding and our stockholders (including the Forward Purchasers) would initially own 20% of the post-combination company. At a fair market value of $12.00 per share or lower, the Private Warrants would be

 

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out-of-the-money and therefore would not be exercised. At a fair market value of $15.00 per share, a 50% increase in our stock price, upon a cashless exercise, the holders of the Private Warrants would be issued approximately 22.0 million Public Shares (the value of the approximately 109.9 million Reference Shares in excess of the $12.00 Reference Price, divided by the $15.00 fair market value), constituting ownership of 1.1% of the post-combination company, and our public stockholders would own 19.8% of the post-combination company (a 0.2% decrease in ownership, representing dilution of 1.1%). At a fair market value of $30.00 at the time of exercise, a three-fold increase in our stock price, the holders of the Private Warrants would be issued approximately 66.0 million Public Shares upon exercise. The holders of the Private Warrants would thereby own 3.2% of the post-combination company, and our stockholders would own 19.4% of the post-combination company (a 0.6% decrease, or 3.2% dilution).

As of the date of this prospectus, our only outstanding securities are the 23,660 Sponsor Shares. At the Minimum Exercise Price, assuming approximately $2.4 billion in Final SPAR Proceeds and $500 million from the sale of the Committed Forward Purchase shares, we expect to have a minimum of $2.9 billion in equity capital for use in our business combination, and as much as $5.9 billion, assuming the sale of all Additional Forward Purchase shares. At a Final Exercise Price of $25.00, we would have $6.1 billion in Final SPAR Proceeds from the exercise of all SPARs and $1.0 billion from the sale of the Committed Forward Purchase shares, providing $7.1 billion in equity capital and up to $9.6 billion, assuming the sale of all Additional Forward Purchase shares.

SPARC II Tontine SPARs

Our Sponsor intends to incorporate a new acquisition company, prior to the consummation of our business combination, which we refer to as “SPARC II,” which would be substantially identical to our company. Following the consummation of our business combination, SPARC II will register and carry out the distribution of 244,444,444 subscription warrants (the “SPARC II Tontine SPARs”), on a pro rata basis, only to those holders who exercised their SPARs in connection with our business combination. If all SPARs are exercised in connection with our business combination, one SPARC II Tontine SPAR will be distributed in respect of each of our SPARs. If only half of our SPARs are exercised, two SPARC II Tontine SPARs will be distributed in respect of each of our SPARs that is exercised. As a result, SPAR holders will potentially receive additional value in the form of SPARC II Tontine SPARs if they choose to exercise their SPARs. We believe that, by delivering additional value to exercising SPAR holders, the distribution of the SPARC II Tontine Warrants will increase the likelihood that all or substantially all of our SPARs are exercised. Notwithstanding our Sponsor’s current intentions, our Sponsor is not obligated to incorporate a new acquisition company such as SPARC II, and any such entity, if incorporated, may have materially different terms than those of our company.

This is not an underwritten offering. The warrants are being distributed directly by us without the services of an underwriter or selling agent.

 

 

We are an “emerging growth company” under applicable federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See the section of this prospectus entitled “Risk Factors” beginning on page 55 for a discussion of information that should be considered in connection with an investment in our securities. Investors will not be entitled to the protections normally afforded to investors in Rule 419 blank check offerings.

Neither the Securities and Exchange Commission (“SEC”) nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

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We are responsible for the information contained in this prospectus. We have not authorized anyone to provide you with different information, and we take no responsibility for any other information others may give to you. We are not making an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.

TABLE OF CONTENTS

 

SUMMARY

     1  

RISK FACTORS

     55  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     80  

USE OF PROCEEDS

     81  

DIVIDEND POLICY

     83  

DILUTION

     93  

CAPITALIZATION

     94  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     95  

PROPOSED BUSINESS

     102  

MANAGEMENT

     137  

PRINCIPAL STOCKHOLDERS

     145  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     148  

DESCRIPTION OF SECURITIES

     154  

UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

     163  

PLAN OF DISTRIBUTION

     169  

LEGAL MATTERS

     169  

EXPERTS

     169  

WHERE YOU CAN FIND ADDITIONAL INFORMATION

     169  

INDEX TO FINANCIAL STATEMENTS

     F-1  


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Pershing Square SPARC Holdings, Ltd.

787 Eleventh Avenue, 9th Floor

New York, New York 10019

November 24th, 2021

Dear Investors:

Today, we filed a registration statement with the SEC for Pershing Square SPARC Holdings, Ltd. (“SPARC,” “we” or “us”). Subject to comments from the SEC and any further required revisions of this document, we expect to file a final version of this registration statement and distribute warrants to acquire shares in SPARC (“SPARs”) to the Class A shareholders and distributable warrant holders of Pershing Square Tontine Holdings, Ltd. (“Tontine”), as described in the registration statement: one SPAR for each Tontine Class A share outstanding, and two SPARs for each distributable warrant outstanding, for a total of 244,444,444 SPARs. We intend to list the SPARs on the NYSE, which will require approval by the SEC of a proposed new listing rule that the NYSE has submitted. Alternatively, SPARs may trade on the over-the-counter market, otherwise known as the “Pink Open Market.”

If Tontine enters into a definitive agreement for an initial business combination before SPARC is approved, SPARC will distribute SPARs to Tontine securityholders in connection with Tontine’s business combination transaction. If Tontine does not consummate an initial business combination and returns its capital in trust to shareholders, we will distribute SPARs to Tontine securityholders at that time. SPARC will pursue a business combination that meets its investment criteria, which are effectively identical to Tontine’s, but with more flexibility on the size of the target company.

Tontine was designed to address many of the problems of conventional SPACs, which include serious alignment and incentive issues, and large frictional costs. Tontine addressed these concerns by: (1) eliminating founder stock and promotes, (2) Pershing Square committing to invest a minimum of $1 billion and up to $3 billion in the business combination on the same terms as other shareholders, (3) the sponsor and the directors purchasing Sponsor and Director Warrants for their estimated fair market value of approximately $68 million, with a strike price 20% above Tontine’s IPO price and a three-year restriction on their sale, and (4) the negotiation of favorable underwriting fees. Tontine’s IPO was extremely well received by investors due to these attractive features.

SPARC’s Structural Improvements

SPARC builds upon the favorable investor-friendly features of Tontine with a number of important value-creating improvements:

Eliminating the Opportunity Cost of Capital

By distributing SPARs for free to Tontine shareholders and warrant holders, SPAR holders will not be required to invest capital until such time as SPARC has: (1) identified a target, (2) completed its due diligence, (3) negotiated a transaction, (4) signed a definitive agreement, (5) received the required board votes and shareholder approval (provided by our Sponsor and sole shareholder), and (6) satisfied substantially all closing conditions that can be satisfied in advance, including regulatory approvals. This eliminates the opportunity cost of capital for SPAR holders while we seek to identify and consummate a transaction. Investor capital will only need to be funded only five calendar prior to the closing of the transaction.

Eliminating Underwriting Fees

An important additional benefit of the distribution of the SPARs to Tontine investors is that we do not need an underwriter to do so. This eliminates substantial costs compared to SPACs and IPOs where these fees can be as much as 7% of the capital raised in an IPO, or 5.5% of capital raised in a SPAC IPO.

 

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SPARs Will Have a 10-year Term Effectively Eliminating Deadline Pressure for the Sponsor

The SPARs will have a 10-year term. While the length of the term is not intended to suggest SPARC will take 10 years to complete a transaction, this longer term will have the effect of eliminating deadline pressure on us. This will remove the perceived deadline pressure to complete a transaction that SPACs face prior to their expiration (typically two years after their IPO), thereby improving SPARC’s negotiating leverage, and potentially reducing the time required to negotiate a transaction.

Eliminating the Dilutive Effect of Shareholder Warrants

Since we are not asking investors to invest capital at the time of the distribution, we don’t need to “induce” them to invest by granting dilutive shareholder warrants, which are granted for free at the IPO of nearly every SPAC, including Tontine. By eliminating shareholder warrants, SPARC will have a simple capital structure, consisting only of (i) stock purchased by our Sponsor at the same price that exercising SPAR holders will pay for their shares and (ii) out-of-the money Sponsor and Director warrants. SPARC’s simplified capital structure should substantially increase its appeal to a counterparty, likely improving the economics of a potential transaction to SPAR holders and SPARC shareholders.

Reduced Amount of Sponsor Warrants

SPARC’s Sponsor Warrants will be reduced from warrants on 5.95% of the newly merged company’s fully diluted shares (in the case of Tontine) to 4.95%. This will further reduce the amount of dilutive securities outstanding which should improve the value creation opportunity for SPARC shareholders and SPAR holders.

Flexibility in the Amount of Capital Raised

SPARC will also have substantially more flexibility in the amount of equity it commits to a transaction compared with Tontine – a greater or lesser amount depending upon the requirements of a transaction. This flexibility is achieved by the variable exercise price of the SPARs and a variable minimum forward purchase commitment from Pershing Square of $500 million to $1 billion, depending upon the final exercise price of the SPARs, with the flexibility for Pershing Square to increase its total Forward Purchase to a maximum of $3.5 billion.

The SPARs will have an initial minimum exercise price of $10.00 per share, which, with a minimum $500 million forward purchase agreement from Pershing Square and 244.44 million SPARs outstanding, means that SPARC, assuming all SPARs are exercised, will have a minimum of approximately $3 billion in equity capital for a transaction, compared with Tontine’s minimum equity capital of $5 billion.

The SPAR’s Final Exercise Price will be determined based on the amount of capital needed for a particular transaction. For example, if a transaction requires $7.3 billion of equity from SPAR holders, the Final Exercise Price will be set at $30.00. The final exercise price will be disclosed at the same time we announce that we have entered into a transaction agreement.

With no maximum exercise price, SPARC will have the flexibility to raise very large amounts of capital from its SPAR holders giving it a competitive advantage in pursuing transactions with private companies that have very large enterprise values. The ability to scale up the size of SPARC should greatly increase its universe of potential targets and enable us to tailor the precise amount of capital needed for a transaction without needing to raise PIPE capital. It will also potentially allow SPARC to compete to acquire controlling or 100% stakes in businesses – transactions in which the amount of capital that is required limits competition largely to strategic buyers, who, unlike SPARC, present antitrust risks.

 

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Distribution of SPARC II SPARs

We intend to form and register Pershing Square SPARC Holdings II, Ltd., a SPARC that will pursue a subsequent business combination after the completion of SPARC’s business combination. We expect to distribute 244,444,444 SPARC II Tontine SPARs (“SPAR2s”) only to those SPAR holders who exercise to receive stock in SPARC’s initial business combination. The distribution of SPAR2s will provide additional value to exercising SPAR holders, and to the extent that this increases the trading price of SPARs prior to closing, it will increase the likelihood that all or substantially all SPARs are exercised.

By providing free SPAR2s to exercising holders, we provide more value to exercising SPAR holders, increasing the probability of SPARs being exercised, and thereby increasing transaction certainty for our business combination partner. We intend to use this same approach for Pershing Square SPARC Holdings III, Ltd. and thereafter.

We are working expeditiously to launch SPARC and identify a value-creating transaction for the benefit of all of our investors.

Sincerely,

/s/ William A. Ackman

 

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SUMMARY

This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under the section of this prospectus entitled “Risk Factors” and our financial statements and the related notes included elsewhere in this prospectus, before investing.

Unless otherwise stated in this prospectus or the context otherwise requires, references to:

 

   

“Additional Forward Purchase” are to the $2,500,000,000 to $3,000,000,000 of Public Shares that the Additional Forward Purchaser may elect to purchase, at the Final Exercise Price, pursuant to the Forward Purchase Agreement;

 

   

“Additional Forward Purchaser” are to [●], a Delaware LLC that is managed by PSCM;

 

   

“Affiliate Transferees” are to any entity that is managed by PSCM;

 

   

“Board” are to the board of directors of the company;

 

   

“company,” “our company,” “we” or “us” are to Pershing Square SPARC Holdings, Ltd.;

 

   

“Committed Forward Purchase” are to the $500,000,000 to $1,000,000,000 of Public Shares that the Forward Purchasers have committed to purchase, at the Final Exercise Price, pursuant to the Forward Purchase Agreement;

 

   

“Committed Forward Purchasers” are to the Pershing Square Funds;

 

   

“Common Stock” are to our common stock, par value $0.0001 per share prior to the consummation of our business combination;

 

   

“Custodial Account” are to the account in which we will hold the SPAR exercise payments received during the SPAR Holder Payment Period until the consummation of our business combination (at which time we will issue the Public Shares), or until the earlier abandonment of the proposed business combination.

 

   

“Decision Period Closing Conditions” are to the following conditions to consummating our business combination that cannot be satisfied prior to the SPAR Holder Election Period: (i) the availability of necessary financing to consummate the transaction, (ii) that a material adverse change has not occurred and (iii) the “bring-down” of certain representations and warranties;

 

   

“Disclosure Period Closing Conditions” are to all express closing conditions other than the Decision Period Closing Conditions and the absence of a permanent legal injunction by a governmental authority, which are to be satisfied prior to the SPAR Holder Election Period;

 

   

“Definitive Agreement” are to the definitive agreement to be entered into with respect to our business combination;

 

   

“DGCL” are to the Delaware General Corporation Law;

 

   

“Director Warrants” are to the warrants that will be issued to certain of our independent directors or Board observers, which are exercisable, in the aggregate, for approximately 0.26% of the Public Shares outstanding as of the time immediately following our business combination, on a fully-diluted basis, at an exercise price equal to 120% of the Final Exercise Price;

 

   

“Distribution” are to the distribution of our SPARs pursuant to this prospectus;

 

   

“Distribution Record Date” are to the record date that will be set by our Board for determining the holders of the common stock and distributable redeemable warrants of PSTH that will receive SPARs;

 

   

“Early Termination” are to the liquidation of our company in connection with the abandonment of, or failure to consummate, our business combination during the SPAR Holder Payment Period;

 

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“Election” are to the notices to be submitted by SPAR holders during the SPAR Holder Election Period of their offer to exercise their SPARs during the SPAR Holder Payment Period, which are generally irrevocable;

 

   

“Elected SPARs” are to SPARs for which an Election has been submitted;

 

   

“Final Exercise Price” are to the exercise price of our SPARs, as disclosed in connection with the public announcement of the Definitive Agreement and as to be set forth in the Post-Effective Amendment;

 

   

“Final SPAR Proceeds” are to the aggregate amount of proceeds from the exercise of all SPARs at the Final Exercise Price;

 

   

“Forward Purchase Agreement” are to an agreement providing for the sale of Public Shares to the Pershing Square Funds (in their capacity as the Committed Forward Purchasers) or, in the case of the Additional Forward Purchase, to the Additional Forward Purchaser, in private placements occurring simultaneously with the closing of our business combination;

 

   

“Forward Purchasers” are to the Committed Forward Purchasers and the Additional Forward Purchaser;

 

   

“Management” or our “Management Team” are to our directors, director nominees and officers;

 

   

“Materially Adverse Amendment” are to any amendment to our Charter or the Definitive Agreement, or any proposed amendment to the SPAR Agreement, that in the good-faith, reasonable judgment of our independent directors, would have a materially adverse impact on SPAR holders;

 

   

“Minimum Exercise Price” are to the $10.00 per share minimum exercise price of our SPARs, which we may increase in connection with entry into the Definitive Agreement in our discretion;

 

   

“Pershing Square Funds” are to Pershing Square, L.P., a Delaware limited partnership, Pershing Square International, Ltd., a Cayman Islands exempted company, and Pershing Square Holdings, Ltd., a Guernsey company, which funds are managed by PSCM and are, collectively, the members of our Sponsor and the Committed Forward Purchasers;

 

   

“Post-Effective Amendment” are to the post-effective amendment to this registration statement that we will file with the SEC following entry into a Definitive Agreement, which will contain a prospectus with information regarding the proposed transaction;

 

   

“PSTH” are to Pershing Square Tontine Holdings, Ltd., a Delaware corporation, which is an affiliate of our Sponsor and the Pershing Square Funds;

 

   

“Public Shares” are to the shares of the post-combination company issuable upon the exercise of SPARs;

 

   

“Reference Price” are to the exercise price per Public Share, equal to 120% of the Final Exercise Price (subject to adjustment), at which the Sponsor Warrants and Director Warrants are exercisable;

 

   

“Reference Shares” are to the number of shares equal to 4.95% of the outstanding Public Shares, on a fully-diluted basis, as of the time immediately following the consummation of our business combination, into which the Sponsor Warrants are convertible, or 0.26% in the case of the Director Warrants;

 

   

“SEC” are to the Securities and Exchange Commission;

 

   

“SPARs” are to the subscription warrants being distributed hereby, each exercisable for one Public Share at a Minimum Exercise Price of $10.00 per share;

 

   

“Sponsor” are to Pershing Square SPARC Sponsor, LLC, a Delaware limited liability company;

 

   

“Sponsor Shares” are to the shares of Common Stock purchased by our Sponsor;

 

   

“Sponsor Preferred Shares” are to the shares of mandatorily convertible cumulative preferred stock to be purchased by our Sponsor, which will automatically convert into Public Shares at the time of our business combination;

 

   

“Sponsor Warrants” are to the warrants that we will issue to our Sponsor, which are exercisable, in the aggregate, for 4.95% of the Public Shares outstanding as of the time immediately following our business combination, on a fully-diluted basis, at an exercise price equal to 120% of the Final Exercise Price; and

 

   

“Unelected SPARs” are to SPARs for which an Election has not been submitted.

 

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QUESTIONS AND ANSWERS RELATING TO OUR SUBSCRIPTION WARRANTS

The following are examples of what we anticipate will be common questions about our subscription warrants, or SPARs. The answers are based on selected information included elsewhere in this prospectus. The following questions and answers do not contain all of the information that may be important to you and may not address all of the questions that you may have about the SPARs. This prospectus and the documents incorporated by reference contain more detailed descriptions of the terms and conditions of the SPARs and provide additional information about us and about our business, including potential risks related to our SPARs, our Public Shares, and our business.

Exercising and trading in the SPARs will involve a high degree of risk. We urge you to carefully read the section entitled “Risk Factors” beginning on page 55 of this prospectus and all other information included in, or incorporated by reference into, this prospectus in their entirety. Prior to the time at which the SPARs become exercisable, we will file a Post-Effective Amendment containing information regarding our proposed business combination, our Public Shares and certain risks related thereto, which we urge you to read in its entirety once available and before you decide whether to exercise your SPARs.

Listing of SPARs

We intend to list our SPARs and Public Shares on the NYSE. The listing and trading of SPARs on the NYSE will require the Securities and Exchange Commission to approve a new listing rule promulgated by NYSE.

On August 24, 2021, the NYSE filed with the SEC a proposed rule change to adopt listing standards for subscription warrants issued by a company organized solely for the purpose of identifying an acquisition target, notice of which was published in the Federal Register on September 10, 2021. This began a period of 21 days, ended September 30, 2021, in which the public could submit comments on the proposed rule, and a period of 45 days (or up to 90 days, if the SEC determines a longer period to be appropriate) for the SEC to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether a proposed rule change should be disapproved. On September 30, 2021, the SEC extended this period to 90 days, ending December 9, 2021. No later than December 9, 2021, we expect that the SEC will either approve the rule, disapprove the rule, or institute proceedings to determine whether the rule change should be disapproved. If the SEC institutes proceedings to disapprove the proposed rule, it must publish its reasons for doing so in the Federal Register, beginning another 21-day comment period, and a 35-day period within which the NYSE can submit a rebuttal. The SEC has a maximum of 240 days from the initial publication of the proposed rule change to issue a disapproval order, which period will end on May 8, 2022. The NYSE’s rule proposal submission and public comments can be viewed on the SEC’s website at https://www.sec.gov/comments/sr-nyse-2021-45/srnyse202145.htm. Of the approximately 168 public comments published on the SEC’s website, an overwhelming majority express support for the proposed rule.

We believe that our company will comply with the listing standards that NYSE has proposed. However, there is no guarantee that this or a similar listing rule will be approved, or that our company will comply with and be approved for listing on the NYSE pursuant to any such rule. If our SPARs cannot be listed on the NYSE, they would trade on the “over-the-counter” market, which may present significant risks to the holders of SPARs, including lower availability and efficiency of market price quotations, significantly less liquidity, increased trading costs, the absence of certain corporate governance protections, and the applicability of state securities laws that could result in restrictions on the sale of our SPARs. See Risk Factors, page 55. There is currently no public market for our SPARs or Common Stock.

 

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What are the SPARs?

We refer to the subscription warrants being distributed in connection with this prospectus as special purpose acquisition rights, or “SPARs.” Each SPAR will entitle the holder thereof to acquire one Public Share following payment of the exercise price, which will be a minimum of $10.00, which we refer to as the Minimum Exercise Price. In connection with entering into the Definitive Agreement, we will announce whether we will seek to raise a greater amount of capital from public investors by setting a higher exercise price. We refer to the exercise price that will be announced at this time as the Final Exercise Price.

We will distribute 200,000,000 SPARs to the holders of the Class A common stock of PSTH and 44,444,444 SPARs to the holders of the distributable redeemable warrants of PSTH, based on record ownership as of [●], 2021, the Distribution Record Date, which we expect will be on or about the date that PSTH consummates its initial business combination or liquidates its trust account and returns funds to its public stockholders. If PSTH has completed its initial business combination at the time of the Distribution, 200,000,000 SPARs will be distributed on a pro rata basis in respect of the shares of PSTH Class A common stock that remain outstanding after PSTH stockholders have had the opportunity to redeem their shares in connection with PSTH’s initial business combination. If PSTH has not consummated an initial business combination and liquidates its trust account, one SPAR will be distributed in respect of each of the 200,000,000 shares of PSTH common stock outstanding. In each case, we will also distribute two SPARs in respect of each of the 22,222,222 outstanding distributable redeemable warrants of PSTH.

Our SPARs will become exercisable in connection with, and in order to provide funding for, our business combination. The SPARs, if not exercised in connection with our business combination, will expire worthless.

What is the purpose of the Distribution?

We are conducting the Distribution in order to finance our business combination. Our SPARs will not become exercisable, and we will not raise any capital from public investors, until after (i) we have entered a Definitive Agreement, (ii) we have satisfied the Disclosure Period Closing Conditions and (iii) a Post-Effective Amendment has been declared effective by the SEC and mailed to holders of SPARs.

We are carrying out a direct distribution of our SPARs in lieu of an underwritten offering in order to (i) establish an initial base of SPAR holders who we believe, as stockholders and warrant holders of PSTH, understand the investment strategy that we intend to apply and (ii) reduce offering costs, including underwriting fees and discounts. We have decided to distribute the SPARs for no cost so that the recipients do not bear any investment risk in initially obtaining our SPARs (though the receipt of SPARs may be taxable to recipients).

We have structured our company as a SPARC, rather than as a SPAC, in order to provide investors with the opportunity to financially participate in our business combination without having to provide us with funds during the period in which we are searching for and negotiating our business combination. By seeking capital from investors only after a business combination target has been identified and the conditions to closing the transaction have largely been satisfied, we are able to eliminate certain dilutive features of SPACs, including shareholder warrants and deferred underwriting fees. This greatly simplifies our capital structure, and reduces frictional transaction costs, which we believe makes us a substantially more attractive counterparty for potential business combination partners, and increase the probability that we execute a transaction on terms that are economically attractive to our investors.

Our Board is not making any recommendation regarding the exercise of the SPARs being distributed.

How will the Final Exercise Price be determined?

Our Board determined the number of SPARs to be distributed and a Minimum Exercise Price of $10.00 in order to provide our company with capital to finance a business combination. We have set this as a minimum price,

 

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subject to increase, to provide our company with the flexibility to pursue business combinations at a broader range of transaction sizes, and to provide public investors with the opportunity to participate in our business combination if we seek additional capital (rather than us obtaining such capital through a private financing, such as a PIPE or debt financing).

In connection with entering into the Definitive Agreement for our business combination, we will take into account factors including, but not limited to, the size and structure of the transaction, the number of shares that the Additional Forward Purchaser has agreed to purchase, and conditions in equity and debt markets. Based on this assessment, we will determine whether to increase the total amount of capital to be raised from the public.

You should not consider the Minimum Exercise Price or the Final Exercise Price as an indication of value of our company, the SPARs or, once issued, the Public Shares. There is no guarantee that an increase in the exercise price will result in an increase in the proceeds we receive. You should not assume or expect that, after the Distribution, our SPARs will trade at a positive value or that, after the business combination, our Public Shares will trade at or above the applicable exercise price of your SPARs. After the SPAR Holder Election Period, unexercised SPARs will remain outstanding but not be listed for trading, holders will generally not be permitted to revoke their Elections to exercise their SPARs, and the SPARs will expire worthless if we fail to consummate a business combination. We cannot guarantee that an active trading market will develop in our SPARs. The market price of our Public Shares may decline after the business combination, and you may not be able to sell such securities at a price equal to or greater than the applicable exercise price. Prior to the SPAR Holder Election Period, we will provide the holders of our SPARs with information regarding the proposed transaction. You should make your own assessment of our business combination, our prospects for the future and the terms of the proposed transaction.

How much will the company receive in net proceeds from the exercise of the SPARs?

At the Minimum Exercise Price, the Final SPAR Proceeds (assuming all SPARs are exercised) will be approximately $2.4 billion. Upon entering into the Definitive Agreement, we may determine to increase the exercise price of our SPARs. The table immediately below presents the proceeds we would have available at various Final Exercise Prices, assuming, in each case, that all SPARs are exercised.

 

            Equity Capital Available for Business
Combination
 

Final Exercise Price

   Final SPAR
Proceeds
     With Committed Forward
Purchase
     With Maximum
Additional Forward
Purchase
 

$10.00

   $ 2.4 B      $ 2.9 B      $ 5.9 B  

$15.00

   $ 3.7 B      $ 4.4 B      $ 7.2 B  

$20.00

   $ 4.9 B      $ 5.9 B      $ 8.4 B  

$25.00

   $ 6.1 B      $ 7.1 B      $ 9.6 B  

$50.00

   $ 12.2 B      $ 13.2 B      $ 15.7 B  

$75.00

   $ 18.3 B      $ 19.3 B      $ 21.8 B  

All payments made in respect of Elected SPARs will be held in an interest-bearing Custodial Account until the consummation of our business combination, or the earlier return of payments as a result of abandonment of the transaction.

Have any parties committed to exercise their SPARs?

No party has committed to exercise the SPARs to be distributed pursuant to this prospectus.

 

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Am I required to exercise all of the SPARs I receive in the Distribution?

No. You may exercise any number of your SPARs, or you may choose not to exercise any SPARs. You may also elect to sell some or all of your SPARs if you do not wish to exercise them. However, there is no guarantee you will be able to do so at a favorable price (particularly if our SPARs are not listed on the NYSE at such time), or at all. Unelected SPARs, following the SPAR Holder Election Period, will have value only if we decide not to pursue the business combination and seek an alternate transaction. Upon the consummation of our business combination, Unelected SPARs will not be exercised and will expire worthless.

How long will the company have to consummate a business combination?

We will have up to 10 years from the Distribution to consummate our business combination. If we fail to do so by the date that is 10 years after the Distribution, the SPARs will expire worthless. Accordingly, a potentially substantial amount of time could pass before we enter into a Definitive Agreement.

When will I receive information regarding the business combination?

Promptly following our entry into a Definitive Agreement, we will publicly disclose that we have done so by means of press release and by filing a Current Report on Form 8-K with the SEC, which will include, as exhibits, the text of the Definitive Agreement and other material agreements entered into in connection therewith. As promptly as practicable, we will prepare a Post-Effective Amendment that includes comprehensive information regarding the proposed business combination, which will be filed with the SEC and publicly available on the SEC’s website. We will likely amend the Post-Effective Amendment in response to review and comment by the SEC, and for other reasons. Promptly following the satisfaction of the Disclosure Period Closing Conditions, we will request that the SEC declare the Post-Effective Amendment to be effective. Upon effectiveness, we will mail a prospectus to all SPAR holders.

When will I be able to elect to exercise my SPARs?

Holders will be able to elect to exercise their SPARs only during the SPAR Holder Election Period, which will occur after we have (i) entered into a Definitive Agreement, (ii) filed and had declared effective a Post-Effective Amendment to this Registration Statement and (iii) satisfied all of the Disclosure Period Closing Conditions. The SPAR Holder Election Period will begin upon or promptly after the mailing of a prospectus to all SPAR holders. At such time, SPAR holders will be able to submit notices of their offer to acquire Public Shares by exercising their SPARs, or “Elections.” The actual exercise of our SPARs will occur at a later date, as described below.

What is the difference between an Election and the exercise of SPARs?

We will provide SPAR holders with a period of 20 business days in which they can submit an Election, which we refer to as the SPAR Holder Election Period. The SPARs are not yet exercised upon submitting an Election, are not transferred or submitted to the warrant agent and no payment is submitted.

An Election is a notice that SPAR holders must submit if they wish to exercise their SPARs and participate in our business combination. Holders will indicate, on their Election forms, the number of SPARs they are agreeing to exercise. An Election is an irrevocable offer (subject to certain limited exceptions) that, upon our acceptance of such offer, creates a binding obligation for the electing SPAR holders to pay the applicable exercise price. SPAR holders are also consenting to the automatic exercise of their SPARs as described below.

Following the SPAR Holder Election Period, we will have up to 10 calendar days to determine whether or not to proceed with the proposed business combination, which we refer to as the Company Decision Period. A decision to proceed with the business combination during the Company Decision Period constitutes an acceptance of an

 

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electing SPAR holder’s irrevocable offer to acquire Public Shares, and a decision not to proceed constitutes a rejection of the offer. Once we announce our decision to proceed, the SPAR Holder Payment Period will begin. Electing SPAR holders will have five calendar days to submit payment for the Public Shares that they have elected to acquire, and their SPARs will automatically be exercised concurrently with the consummation of the business combination.

What happens if the business combination is abandoned?

If we decide not to pursue a proposed business combination in the period between entering into the Definitive Agreement and the SPAR Holder Election Period, we will seek a different business combination. At such time, no Elections will have been submitted, and the SPARs will remain with their holders and continue to be outstanding and tradable. Once we enter into a new Definitive Agreement, the Election and payment procedures described herein will apply in the same manner.

If we decide to abandon a proposed business combination during the SPAR Holder Election Period or Company Decision Period, all Elections will be disregarded. At such time, no SPARs will have been exercised, and no payments will have been submitted. SPARs will remain with their holders and will again be tradable. If our business combination partner seeks to abandon the transaction, and we decide to pursue the business combination, all Elections will be disregarded, and a new SPAR Holder Election Period will begin if and when such matter is resolved.

Our ability to decide not to proceed with the business combination will be limited by our obligations under the Definitive Agreement. During the Company Decision Period, if all Decision Period Closing Conditions, including the sufficiency of available funds, are satisfied, we are likely to proceed with the transaction.

If we abandon a proposed business combination during the SPAR Holder Payment Period, all payments received from electing SPAR holders will promptly be returned, with interest and net of taxes. All SPARs will expire pursuant to their terms, and the company will liquidate. During the SPAR Holder Payment Period if (i) our business combination partner breaches its obligations under the Definitive Agreement in a manner that frustrates the consummation of the business combination or (ii) we are enjoined by a governmental authority from consummating the transaction in a manner that we are permitted to appeal under applicable law, our Board will determine, in its sole discretion, whether to further pursue the business combination or carry out an Early Termination. During this period, we would continue to hold exercise payments in the Custodial Account until (i) such matter is successfully resolved and the business combination is consummated (at which time the SPARs would automatically be exercised) or (ii) we decide to carry out an Early Termination.

What rights do I have if the Charter, SPAR Agreement or Definitive Agreement is amended?

SPAR Holders will have certain rights in connection with amendments to the Charter and Definitive Agreement, and proposed amendments to the SPAR Agreement, that, in the reasonable, good-faith judgment of our independent directors, would have a materially adverse impact on SPAR holders, which we refer to as Materially Adverse Amendments. Although we do not expect to amend these documents once the SPAR Holder Election Period has begun, and will restrict ourselves from making Materially Adverse Amendments to the Charter and SPAR Agreement following the SPAR Holder Election Period, we cannot guarantee that no Materially Adverse Amendments will be made or proposed. Accordingly, once SPAR Holders are able to commit to exercise their SPARs and become obligated to pay the exercise price to us, they will be provided the rights described below. In the case of the SPAR Agreement only, SPAR holders will also have the right to vote on Materially Adverse Amendments.

 

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The table below summarizes the rights of SPAR holders in connection with Materially Adverse Amendments to the Charter, SPAR Agreement and Definitive Agreement. Additional detail is provided in the text that follows.

Rights of SPAR Holders in Connection with Materially Adverse Amendments

 

    

Charter

  

SPAR Agreement

  

Definitive Agreement

Search Period

   None    Approval Right    N/A

Disclosure Period

   None    Approval Right    None

SPAR Holder Election Period

   Revocation Right   

Approval Right

Revocation Right

   Revocation Right

Company Decision Period

   No Materially Adverse
Amendments Permitted
   No Materially Adverse
Amendments Permitted
   Revocation Right

SPAR Holder Payment Period

   No Materially Adverse
Amendments Permitted
   No Materially Adverse
Amendments Permitted
   Revocation Right*

Charter. SPAR holders will have no right to vote on or approve any amendments to the Charter, as they will not be stockholders prior to the consummation of our business combination. If, during the SPAR Holder Election Period, we make a Materially Adverse Amendment to the Charter, we will provide holders with a minimum 10-business-day period in which they can choose to revoke their Elections. For the avoidance of doubt, an increase in the authorized shares of Common Stock will not be considered a Materially Adverse Amendment. We will not be permitted to make any Materially Adverse Amendment to the Charter during the Company Decision Period or the SPAR Holder Payment Period.

SPAR Agreement. The SPARs will be issued subject to a warrant agreement, which we refer to as the SPAR Agreement. If a Materially Adverse Amendment to the SPAR Agreement is proposed at any time following the Distribution, the amendment will require the approval of holders of a majority of the SPARs present and voting on such matter. SPAR holders will be able to indicate, along with their vote, whether they wish to revoke their Elections in the event that the amendment is approved. If the amendment is not approved, no Elections will be revoked. We will not be permitted to make Materially Adverse Amendments to the SPAR Agreement during the Company Decision Period or SPAR Holder Payment Period.

Definitive Agreement. If, during the SPAR Holder Election Period or Company Decision Period, a Materially Adverse Amendment is made to the Definitive Agreement, we will provide holders with a minimum 10-business-day period in which they can choose to revoke their Elections.

*During the SPAR Holder Payment Period, if our business combination partner breaches its obligations to consummate the transaction, we expect that we would seek to enforce our legal rights to specific performance, and consummate the transaction on the terms set forth in the Definitive Agreement. However, it is possible that we reach a negotiated settlement in which the Definitive Agreement is amended. If the changes to the Definitive Agreement constitute a Materially Adverse Amendment, we will provide SPAR holders with a revocation right.

Our Board may, in its sole discretion (including in connection with any revocation period), determine to extend the SPAR Holder Election Period. You should be aware that you will not have revocation rights in connection with amendments other than Materially Adverse Amendments, or amendments to any other agreements or documents, and that once you have submitted an Election, or once trading has been restricted on the second business day prior to the end of the SPAR Holder Election Period, you will not be able to sell your SPARs.

May I transfer my SPARs?

Generally, yes. Prior to the SPAR Holder Election Period, you may sell, transfer or assign your SPARs to anyone, subject to applicable securities laws, and provided you are not otherwise prohibited from doing so (for example, because you are an insider or affiliate of the company or because you possess material nonpublic information about the company).

 

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During the SPAR Holder Election Period, SPARs with respect to which an Election has been submitted will be restricted from any sales, transfers and assignments. Beginning two business days prior to the end of the SPAR Holder Election Period, all SPARs will be restricted from transfers. This transfer restriction will continue through the Company Decision Period and SPAR Holder Payment Period.

Although we intend to list our SPARs on the NYSE, there is no guarantee that we will be able to do so, or that we will be able to maintain such listing. If we are not listed on the NYSE and our SPARs are traded “over-the-counter,” your ability to sell your SPARs may be significantly adversely impacted. See Listing of SPARs above, and Risk Factors, page 55, for additional information.

Are we requiring a minimum amount of SPARs to be exercised?

We will not require a minimum number of SPARs to be exercised. However, our ability to consummate our business combination may depend on the extent to which holders submit Elections to exercise their SPARs. During the Company Decision Period, we will assess the capital we expect to have from the exercise of Elected SPARs, the Forward Purchase, and other financing sources. If we determine that such amount is insufficient, we may not be able to proceed with the transaction.

Has our Board made a recommendation regarding the exercise of the SPARs?

No. Our Board is not making a recommendation regarding your exercise of the SPARs. Investors who exercise SPARs risk investment loss on the money invested. We cannot predict the price at which our Public Shares will trade, and therefore, we cannot assure you that the market price for our Public Shares or shares of the post-combination company will be above the Final Exercise Price, or that anyone purchasing our SPARs on the open market will be able to sell them in the future at the same price or a higher price. You are urged to make your decision based on your own assessment of our proposed business combination. Please see Risk Factors in this prospectus and all other information included in, or incorporated by reference into, this prospectus for a discussion of some of the risks involved in investing in our securities. In addition, our Board is not making a recommendation as to whether or not holders of SPARs should retain or sell their SPARs. While the initial recipients of our SPARs will not bear any investment loss as a result of holding our SPARs, the decision to retain or sell their SPARs could result in foregone gains. Those who purchase our SPARs in the open market may lose their entire investment if our SPARs do not trade at a positive value.

Will I be able to revoke my Election?

Only in limited circumstances. Once an Election has been submitted holders will generally not be able to revoke their Elections, and will be obligated to pay the applicable exercise price during the SPAR Holder Payment Period. Revocation will only be permitted in the circumstances described above with respect to Materially Adverse Amendments to the Charter, Definitive Agreement or SPAR Agreement. Once payment has been submitted, electing SPAR holders will have no ability to cancel or prevent the automatic exercise of their SPARs and seek the return of their funds, except in connection with a Materially Adverse Amendment to the Definitive Agreement during such period. You should not elect to exercise your SPARs unless you are certain that you wish to purchase the number of Public Shares for which you have subscribed.

When will I receive my Public Shares?

We will issue the Public Shares concurrently with the consummation of our business combination. We expect that the business combination will be consummated within 15 calendar days of the end of the SPAR Holder Election Period. However, as described herein, factors including uncertainties or disagreements with our business combination partner, the failure to timely satisfy closing conditions and actions taken by governmental

 

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authorities or regulators, could delay or even prevent the consummation of our business combination. If you hold your SPARs through a custodian bank, broker, dealer or other nominee, it may take several days before your Public Shares are credited to your account. Depending on the form that our transaction takes, Public Shares may be issued as shares of our Common Stock or as shares of another entity.

What are the SPARC II Tontine SPARs?

Our Sponsor intends to incorporate a new acquisition company substantially similar to ours, which we refer to as SPARC II. Following the consummation of our business combination, SPARC II will register and carry out the distribution of 244,444,444 subscription warrants, which we refer to as the SPARC II Tontine SPARs. The SPARC II Tontine SPARs will be distributed on a pro rata basis, only to those holders who exercised their SPARs in connection with our business combination. If all of our SPARs are exercised in connection with our business combination, one SPARC II Tontine SPAR will be distributed in respect of each of our SPARs; or, for example, if only half of our SPARs are exercised, two SPARC II Tontine SPARs will be distributed in respect of each of our SPARs that is exercised. As a result, SPAR holders will potentially receive additional value in the form of SPARC II Tontine SPARs if they choose to exercise their SPARs. We believe that, by delivering additional value to exercising SPAR holders, the distribution of the SPARC II Tontine Warrants will increase the likelihood that all or substantially all of our SPARs are exercised. Notwithstanding our Sponsor’s current intentions, our Sponsor is not obligated to incorporate a new acquisition company such as SPARC II, and any such entity, if incorporated, may have materially different terms than those of our company.

Will the company’s directors and officers participate in the Distribution?

Certain of our directors and officers may own securities of PSTH as of the Distribution Record Date, in which case they would receive SPARs. Such parties have not made any commitment with respect to retaining or selling their SPARs, or with respect to the exercise of their SPARs.

Are there risks in holding or electing to exercise my SPARs?

Yes. Although we are distributing our SPARs at no cost, the initial holders of our SPARs may forego potential gains by selling the SPARs if the SPARs subsequently trade at a higher price, or may lose the opportunity to receive value for their SPARs by not selling them at a time when the SPARs are trading at a positive value. Any SPAR holder who purchases their SPARs in the open market following the Distribution will be at risk of losing their entire investment. Such SPAR holders will have paid to obtain the SPARs and would then have to pay the applicable exercise price in order to exercise their SPARs, resulting in a greater aggregate amount paid to obtain a Public Share than initial SPAR holders.

You should not consider the Minimum Exercise Price, Final Exercise Price or market price of our SPARs as an indication of the value of our company, our SPARs, our Public Shares or the post-combination company. You should not assume or expect that, after the Distribution, our SPARs will trade at a positive value. If we are not listed on the NYSE and our SPARs trade in the “over-the-counter” market, your ability to sell your SPARs may be significantly adversely impacted. See Listing of SPARs, above, and Risk Factors, page 55. Trading in, and the exercise of, your SPARs involves significant risks. Electing to exercise your SPARs involves the purchase of our Public Shares and should be considered as carefully as you would consider any other equity investment. Among other things, you should carefully consider the risks described under the heading “Risk Factors” in this prospectus and all other information included in or incorporated by reference into this prospectus, and the information that we will provide in the Post-Effective Amendment to this Registration Statement prior the date on which Elections may be submitted.

 

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Will I receive interest on any funds I deposit upon exercise of my SPARs?

The funds received upon the exercise of SPARs will be held in an interest-bearing Custodial Account. However, you will only receive the interest earned on these funds in the event that funds are returned to you in connection with an Early Termination. We do not presently expect to invest the funds held in the Custodial Account. However, if the funds held in the Custodial Account are invested, they will be invested in U.S. Treasury obligations with a maturity of 180 days or less, or in money market funds meeting certain conditions under Rule 2a-7 of under the Investment Company Act of 1940, as amended (the “Investment Company Act”). If an Early Termination occurs, the electing holders will receive their pro rata share of the Custodial Account, calculated with respect to the number of Public Shares for which each holder subscribed at the applicable exercise price, inclusive of interest and net of taxes. We expect that funds will be held in the Custodial Account for no longer than five days, in which case only a nominal amount of interest will be earned, if any. However, as described above, it is possible that we will hold funds in the Custodial Account for a longer period.

When can I sell the Public Shares I receive upon exercise of the SPARs?

If you exercise your SPARs, you will be able to sell your Public Shares once your account has been credited with those shares, provided you are not otherwise restricted from doing so (for example, because you are an insider or affiliate of the company or because you possess material nonpublic information about the company). Depending on how our business combination is structured, our Public Shares may first become tradeable as shares of our company or as shares of another entity. We cannot assure you that, following the exercise of your SPARs and the issuance of Public Shares, you will be able to sell your Public Shares at a price equal to or greater than the Final Exercise Price.

What are the U.S. federal income tax consequences of receiving SPARs in the Distribution?

Although the matter is not free from doubt, we expect that U.S. Holders (as defined below) will recognize ordinary income upon their receipt of SPARs in an amount equal to the fair market value of the SPARs when received. We do not expect any such income to qualify for the dividends received deduction or to be treated as qualified dividend income.

We also expect that a Non-U.S. Holder (as defined below) will be subject to withholding tax upon receipt of the SPARs in an amount equal to 30% (possibly subject to reduction under an applicable income tax treaty) of the fair market value of the SPARs at such time, unless the receipt of the SPARs is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains in the United States).

You should seek specific tax advice from your tax advisors in light of your particular circumstances and as to the applicability and effect of any other tax laws. See United States Federal Income Tax Considerations.

What fees or charges apply in connection with the submission of an Election or the purchase of Public Shares during the SPAR Holder Payment Period?

We are not charging any fee or sales commission to issue SPARs to you or to issue Public Shares to you if you exercise your SPARs (other than the exercise price). If you exercise your SPARs through a custodian bank, broker, dealer or other nominee, you are responsible for paying any fees your nominee may charge you.

Whom should I contact if I have other questions?

If you have other questions regarding our SPARs or our company, please contact us at [●].

 

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Our Company

General

We are a newly organized company incorporated in Delaware and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other business combination transaction with one or more businesses, which we refer to throughout this prospectus as our “business combination.”

Our Sponsor is managed by Pershing Square Capital Management, L.P. (“Pershing Square” or “PSCM”), a registered investment adviser under the Investment Advisers Act of 1940, as amended, and the members of our Sponsor are the Pershing Square Funds.

Pershing Square was established in 2003, and had approximately $17.9 billion of assets under management as of November 1, 2021. Pershing Square has demonstrated a strong track record of historical performance. The compound annual rate of return and cumulative total return (net of fees) of Pershing Square, L.P, the investment fund managed by Pershing Square with the longest track record, from its inception on January 1, 2004 to November 1, 2021, has materially exceeded that of its benchmark, the S&P 500 Index, over the same period.

In addition to Pershing Square, L.P., Pershing Square has managed three other investment funds, each of which (like Pershing Square, L.P.) has invested in various public securities over its period of operation. The compound annual rate of return and cumulative total return (net of fees) of two of these other funds have also materially exceeded that of the S&P 500 Index, while one fund has not exceeded the S&P 500 Index (in each case from the inception of such fund until its closing or as of October 31, 2021, as applicable). Pershing Square has also managed six co-investment vehicles, each of which invested in a single, publicly traded company. The compound annual rate of return and cumulative total return (net of fees) of five of the co-investment vehicles materially exceeded that of the S&P 500 Index over their respective periods of operation, while one co-investment fund substantially underperformed the S&P 500 Index over its period of operation.

Pershing Square has previously served as co-sponsor of Justice Holdings, Ltd., a special purpose acquisition company, and an affiliate of Pershing Square is currently serving as sponsor of Pershing Square Tontine Holdings, Ltd. (“PSTH”), which is also a special purpose acquisition company. Justice Holdings, Ltd. raised approximately $1.5 billion in its initial public offering (including a $458 million investment by funds managed by Pershing Square), and subsequently merged with Burger King Worldwide Inc., and later, Tim Hortons, to form Restaurant Brands International Inc. Pershing Square, through certain of the funds it manages, remains the second-largest investor in Restaurant Brands International Inc. The stock of Restaurant Brands International, Inc. has generated a compound annual total return of 17% since its merger with Justice Holdings, Ltd. in 2012 (as of October 31, 2021).

PSTH raised $4.0 billion in its initial public offering, which was consummated on July 24, 2020. PSTH’s Class A common stock and warrants trade under the symbols PSTH and PSTH.WS, respectively. PSTH has not yet entered into a definitive agreement with respect to its initial business combination. The performance of Justice Holdings, Ltd. or PSTH is not indicative of whether we will be able to enter into and consummate a business combination.

Our Management Team is led by William A. Ackman, our Chairman and Chief Executive Officer, who will work closely with the PSCM investment team and the other employees of, and resources available to, PSCM to fulfill our corporate mission. Mr. Ackman has spent 29 years in the investment management industry, the last 18 years as CEO of PSCM. PSCM’s investment strategy involves the purchase of large minority stakes in high-quality, large capitalization, growth companies during periods when they have underperformed their potential. By working with management teams and boards of directors, PSCM has assisted its portfolio companies in creating substantial long-term value.

 

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The Pershing Square Investment Team is comprised of eight investment professionals, seven of whom have tenures at Pershing Square of four to 18 years, who prior to Pershing Square, served in analyst and associate roles at Apollo, Blackstone, KKR, Goldman Sachs, Hellman & Friedman and Warburg Pincus. PSCM has 32 other accounting, legal, finance, and technology professionals who will support our company on an as-needed basis.

We are not a special purpose acquisition company, or “SPAC.” Our company, which we refer to as a “special purpose acquisition rights company,” or “SPARC,” differs from a conventional SPAC in important respects. We believe that this SPARC structure, combined with the Sponsor Warrants and Director Warrants, makes our company substantially more favorable to investors and potential business combination partners, and is more protective of investors. We believe that the SPARC structure provides many of the same benefits and opportunities to public investors as a conventional SPAC, but improves substantially upon SPACs in the following ways:

 

  1.

Opt-In Structure:

 

   

In our company, investors opt in to the business combination if they view it favorably, whereas, in a SPAC, investors must opt out if they disapprove of the business combination.

 

   

In a conventional SPAC, investors contribute funds to the SPAC at the initial public offering (“IPO”), before a business combination is identified, based largely on the expected performance of the SPAC’s investment team. In our company, investors will contribute funds only after we have entered into a Definitive Agreement and provided comprehensive public disclosures regarding the transaction.

 

   

Investors in a SPAC, after a business combination is announced, can vote against the transaction and/or redeem their shares, or they may sell their shares. SPAC stockholders may inadvertently invest in a business combination if they do not exercise their opportunity to redeem.

 

   

Investors in our company must take affirmative steps in order to participate in our business combination if they view it favorably, (and therefore can’t invest unintentionally) and can otherwise sell or decline to exercise their SPARs.

 

  2.

Reduced Opportunity Cost:

 

   

We will not hold investors’ funds during the period we search for and negotiate a business combination. We believe this structure, by not requiring a commitment of capital up-front, better achieves a primary purpose of SPACs in capital markets—increasing public investors’ access to private companies at the time they go public.

 

   

For up to three years following a SPAC’s IPO, while the SPAC searches for a business combination partner, its investors bear the opportunity cost of not being able to make other investments with their funds. SPAC investor funds are held in a trust account for the life of the SPAC or until a business combination is consummated, earning interest at the then-current rate of short-term U.S. Treasury obligations.

 

   

We will hold investor funds in a custodial account only during the period between the satisfaction of closing conditions and consummation of the business combination (which we expect will be five days).

 

  3.

Flexible Capital Raise:

 

   

Our company will first identify the most attractive business combination that fits our criteria, and then determine the amount of capital we will raise. If we require more capital than we would raise at the Minimum Exercise Price, we will set a higher Final Exercise Price and offer public investors the opportunity to provide that capital, rather than seeking private capital.

 

   

A SPAC must determine the amount of public capital it will need before it has identified a business combination partner. If the SPAC pursues a transaction that requires additional capital, it

 

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must raise those funds from private investors (i.e., debt financing or a PIPE), the terms of which could be unfavorable to public investors and target company stockholders.

 

   

Our flexible capital raise will enable us to pursue a broader range of transactions, with respect to both the size of the potential target company and the ownership interest we will hold in the post-combination company. We believe this will increase the likelihood of identifying an attractive business combination, and enable us to identify a business combination partner more quickly.

 

  4.

Substantially Reduced Deadline Pressure:

 

   

Our company will have up to 10 years to consummate our business combination. A SPAC is required to consummate a business combination within, at most, three years of its IPO.

 

   

As a SPAC’s deadline approaches, potential target companies may gain negotiating leverage, and the sponsor, at risk of losing its entire investment, may be more willing to accept a transaction on terms that are unattractive to public stockholders. SPACs with shorter deadlines must seek stockholder approval for an extension, which it may fail to obtain. SPACs may also face deadline pressure as they run out of working capital to fund their search process.

 

   

The ten-year life of our company will permit us to conduct a substantially longer search process for a business combination partner, if necessary, before any potential deadline pressure arises. We believe that this improved negotiating position will assist us in completing a transaction more promptly, and on more favorable terms.

 

   

Our Sponsor is making an initial investment of $30.0 million, giving us substantially more working capital than is available to most SPACs. Our Sponsor will be incentivized to provide us with additional capital if necessary in order to consummate a business combination, as it will otherwise lose its entire investment. This further reduces the likelihood of facing deadline pressure, and will also provide us with the resources to conduct thorough due diligence on potential business partners.

 

  5.

Better Sponsor and Public Investor Alignment – No Conventional Sponsor Promote:

 

   

Our Sponsor will not have an opportunity to profit unless our public investors also have an opportunity to profit.

 

   

SPAC sponsors may have an incentive to complete a business combination even if its public investors would potentially lose money. SPAC sponsors typically obtain a 20% share of the SPAC’s stock at a nominal price (the “sponsor promote”), and provide a certain amount of at-risk capital by purchasing SPAC warrants. In a business combination where public investors lose money, the sponsor promote could still be worth multiples of the price paid. For example, if 50% of public stockholders redeemed their shares and the post-combination company declined in value by 50%, the sponsor would still hold the same number of shares that it initially purchased, and the sponsor promote would be worth several times more than the price paid by the sponsor for its promote shares and warrants (assuming no renegotiation of the sponsor’s interest).

 

   

Our Sponsor Warrants will only be profitable if the post-business combination company has significant, long-term appreciation in value—in order to exercise the Sponsor Warrants, the share price of the post-combination company must be at least 20% above the Final Exercise Price paid by our SPAR holders. Our Sponsor will generally not be able to transfer or sell the Sponsor Warrants, or any shares issued upon conversion, until three years after our business combination. Accordingly, our Sponsor is strongly incentivized to identify a target company that will appreciate in value over the long term.

 

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  6.

Less Dilutive to Public Investors and Stockholders of a Business Combination Partner:

 

   

Our Sponsor Warrants and Director Warrants will not be dilutive to our investors until the post-combination company’s share price increases by 20% above the Final Exercise Price paid by our SPAR holders. As the share price of the post-combination company increases, the maximum dilution to our stockholders and to stockholders of our business combination partner from our Sponsor Warrants approaches a limit of 4.95%.

 

   

Investors in a conventional SPAC face immediate dilution of 20.0% as a result of the customary sponsor promote, and will face greater dilution to the extent that other public investors redeem their shares. Further, sponsor promote shares typically have anti-dilution protection—if the SPAC raises equity financing, additional shares may be issued to the sponsor at no cost in order to maintain its 20.0% interest in the SPAC.

 

   

A SPAC sponsor promote will also dilute stockholders of the business combination partner if they remain as investors in the post-combination company. This may reduce the willingness of such stockholders to support a proposed transaction, or increase the price at which they are willing to conduct a transaction.

 

   

Most SPACs issue warrants to the public to encourage participation in their IPO. These warrants, if exercised, are dilutive to the post-combination company, and may make the SPAC a less attractive potential business combination partner. We are not issuing warrants to public stockholders, and the pro-rata distribution of SPARC II Tontine Warrants to exercising SPAR holders, which we believe will increase the likelihood that all of our SPARs are exercised, will have no dilutive impact on the post-combination company because they are being issued by a different company.

 

   

In a business combination with our company in which target company stockholders held 80% of the post-combination company, this ownership would be reduced to 78.4% as a result of the exercise of our Sponsor Warrants at a fair market value that is double the Final Exercise Price (a dilutive impact of 2.0%). As a result, potential business combination partners may determine that our structure presents a lower risk of dilution to its stockholders as compared to a conventional SPAC.

 

  7.

More Efficient Capital Structure:

 

   

We are not conducting an underwritten offering, and will not bear underwriting expenses. Accordingly, we expect that 100% of the public’s investment in our company will be available to finance our business combination.

 

   

In a typical SPAC, a maximum of 96.5% of the public’s investment is available to finance the business combination as a result of underwriting fees. This is because a deferred underwriting fee, equal to 3.5% of the IPO proceeds, is paid at the time of the business combination using the funds remaining in the trust account after redemptions.

 

   

SPAC investors also bear the costs of the up-front underwriting fee (2.0% of IPO proceeds) and of operating the SPAC, which are funded through the sale of potentially dilutive warrants to the sponsor.

 

   

Our Sponsor is providing working capital by purchasing the Sponsor Shares and Sponsor Preferred Shares. At the time of our business combination, the Sponsor Shares will be subject to a reverse split, if necessary, and the Sponsor Preferred Shares will convert into Public Shares at the Final Exercise Price, such that our Sponsor will have paid the same per-share price for its Public Shares that exercising SPAR holders will pay.

 

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Because we will benefit from the resources of Pershing Square, which are being provided to us at no cost, we expect that our operating expenses will be substantially lower than that of many SPACs.

 

  8.

Increased Deal Certainty:

 

   

Guaranteed Stockholder Approval: SPAC business partners face a risk that the SPAC will not obtain stockholder approvals necessary to approve a business combination. Because our Sponsor will be our sole stockholder, we will be able to provide a potential target company with certainty that our company will be authorized to consummate a business combination.

 

   

Early Satisfaction of Closing Conditions: Before our SPARs become exercisable, we will seek to satisfy substantially all closing conditions, such as regulatory approvals, that can be satisfied in advance of closing.

 

   

Substantial Committed Capital: Upon entry into the Definitive Agreement, we will announce the size of the Forward Purchase—a minimum of $500.0 million to $1.0 billion, and up to a total of $3.5 billion. SPACs typically do not have a definitive capital commitment, and their ability to consummate a transaction may depend on the availability of third-party financing on suitable terms. We believe this substantial committed capital not only provides SPAR holders and potential business combination partners with certainty as to our ability to consummate a transaction, but also provides a signal of our Sponsor’s commitment and financial incentive to doing so on attractive terms.

We intend to pursue business combination opportunities with private, large-capitalization, high-quality, growth companies, including family-owned companies, and will also consider carve-out transactions with large-capitalization public or private companies. Our primary intention is to enter into a business combination that results in our stockholders owning a minority interest in the resulting entity. However, we will also consider potential business combination partners with lower market capitalizations and transactions in which our stockholders would own a majority interest, provided that our other acquisition criteria are met, and we believe such a transaction would be in the best interests of our stockholders. We will use PSCM’s substantial experience in identifying, analyzing, and determining business quality and the sustainable competitive advantages of a target company, as well as PSCM’s due diligence and negotiation expertise.

We believe that our unique SPARC structure will help facilitate the completion of a transaction on attractive terms. We believe that we have several competitive advantages not only when compared to a conventional SPAC, but also when compared to other sources of equity capital, such as private equity, growth equity and hedge funds. We have these competitive advantages because of the combination of the amount of committed capital we will be able to provide, our low cost of capital, our ability to give a private company access to the public equity markets and better alignment of our Sponsor’s interests with those of public stockholders and the stockholders of a potential business combination partner.

We believe that the amount of committed capital that the Forward Purchasers (affiliates of our Sponsor) will provide in connection with our business combination will provide potential business combination partners with greater certainty that we will have sufficient capital to complete a transaction. The Committed Forward Purchasers are obligated to purchase $500.0 million of Forward Purchase shares at the Minimum Exercise Price, and a proportionately greater amount at higher exercise prices, up to a limit of $1.0 billion at a Final Exercise Price of $20.00 or above. The Additional Forward Purchaser will have the right to purchase a substantial additional amount, with the total Forward Purchase not to exceed $3.5 billion, and will commit to purchasing this amount at the time we enter into a Definitive Agreement. We believe that the Forward Purchase Agreement will make a transaction with our company attractive to a large-capitalization, high-quality private company.

 

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In addition, our Sponsor intends to form SPARC II, an acquisition company substantially similar to our company. The 244,444,444 subscription warrants of SPARC II, or SPARC II Tontine Warrants, would be distributed promptly after the closing of our business combination, and would be distributed, pro-rata, only to those holders who exercise their SPARs. The SPARC II Tontine Warrants would be securities of a different company, and therefore would have no dilutive impact on the post-combination company. We believe that the SPARC II Tontine Warrants, by potentially providing additional value to exercising SPAR holders, will increase the probability that all or substantially all of our SPARs are exercised.

Following the exercise of our SPARs, we will likely have one of the largest amounts of capital of any company formed for the purpose of carrying out a business combination. The table below illustrates the amount of committed equity capital we will have available for use in our business combination, assuming the exercise of all SPARs at the indicated Final Exercise Price.

 

            Equity Capital Available for Business
Combination
 

Final Exercise Price

   Final SPAR
Proceeds
     With Committed
Forward Purchase
     With Maximum
Additional
Forward Purchase
 

$10.00

   $ 2.4 B      $ 2.9 B      $ 5.9 B  

$15.00

   $ 3.7 B      $ 4.4 B      $ 7.2 B  

$20.00

   $ 4.9 B      $ 5.9 B      $ 8.4 B  

$25.00

   $ 6.1 B      $ 7.1 B      $ 9.6 B  

$50.00

   $ 12.2 B      $ 13.2 B      $ 15.7 B  

$75.00

   $ 18.3 B      $ 19.3 B      $ 21.8 B  

We believe that a substantial majority of other investors in private companies, such as hedge funds and private equity funds, are not prepared to (or are not able to) deploy this amount of cash in the acquisition of a minority interest in a company. As a result, we believe we will be one of the larger sources of cash equity capital for a private, single-company, minority investment. In addition, while comparably sized or larger investment funds generally seek to acquire controlling or 100% interests in a company, we are willing to execute a transaction in which our stockholders will, upon consummation of the business combination, own a minority stake in a large-capitalization company. We believe the price at which we can, through a business combination, acquire a minority interest in a large-capitalization, high-quality business, without the often substantial cost of a control premium, will enable us to complete a business combination on attractive terms. While we believe it is more likely that we will pursue a business combination in which our stockholders will own a minority interest in the post-combination company, we may pursue a business combination in which we purchase a controlling interest in a company, resulting in our stockholders owning a majority interest. We are open to considering control transactions in which, as a result of our large amount of equity capital and the limited (if any) antitrust risks of a transaction with our company, we would have a competitive advantage over other financial or strategic buyers.

We believe our company also presents several advantages to conducting an IPO. The nature of the IPO process—whereby the pricing, the ultimate terms of the offering, and even whether or not the offering can be completed remain unknown until the day of pricing of the offering—makes the IPO process inherently uncertain and risky. We believe that this uncertainty and risk, along with the upfront expenses and significant time required to pursue an IPO can discourage many large, private companies from attempting to execute public offerings.

Becoming “IPO-ready” can be time-consuming and costly for a company, even before it makes its first public filing. For example, a company may have detailed financial statements, but not in the form required for public filings with the SEC. The preparation and auditing of these financial statements may take several months. In a negotiated transaction, however, many of the steps to becoming “public company ready” can be carried out in parallel with the deal process, provided that sufficiently detailed and accurate information is available for due diligence.

 

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In addition, during the IPO process, a private company faces the risk of negative developments and unfavorable market conditions that can significantly reduce the proceeds of the offering below the amount sought, or cause the offering to be delayed or even abandoned. The amount of capital and the valuation a company will receive in its IPO may be uncertain up until the day of pricing. Companies face a risk of underpricing, as reflected in the immediate post-IPO “pop” in stock price many companies experience, and a risk of overpricing that results in the IPO being resized or repriced, or the stock trading downwards. Companies have an incentive to avoid the negative market signal sent by an unsuccessful IPO, which may result in pricing the offering lower, and potentially foregoing a larger capital raise and/or higher valuation.

The IPO process also limits the information a private company can provide to its investors. In addition to the “quiet period,” in which companies are restricted from certain communications with potential investors and may have limited ability to respond to unfavorable coverage (or to convey positive developments), a company may be unable or reluctant to share certain information with public investors. In our diligence and negotiation process, under a non-disclosure agreement, we may be able to obtain certain confidential or proprietary information or other detailed information of particular relevance to our valuation process, and would be able to engage with the company’s management to develop a deeper understanding of its performance and plans. Through a negotiated transaction with our company, a business combination partner could obtain not only the certainty of a mutually agreed valuation, but also a potentially more favorable valuation that reflects a more comprehensive evaluation of its business than it may be able to obtain through the IPO process.

We also believe that we can enable a private company to become public in a more capital-efficient manner than in an IPO or a SPAC. We are not conducting an underwritten SPAC offering, which typically carries fees of 5.5% of the amount of public capital raised, with 2.0% funded by the sale of SPAC warrants to the sponsor, and 3.5% paid out of funds raised from public investors. A typical SPAC will only be able to contribute a maximum of 96.5% of its public capital (and a lower percentage to the extent there are redemptions) to finance its business combination. Instead, we are directly distributing our SPARs to the stockholders and warrant holders of PSTH, and expect that 100% of the capital we raise from public investors will be available to finance our business combination.

Our company also does not have a conventional “sponsor promote,” which can substantially dilute stockholders of the private company. The Sponsor Shares, the Forward Purchase shares and the Public Shares issuable upon conversion of the Sponsor Preferred Shares will be purchased at the same per-share price that SPAR holders pay for their Public Shares. Our Sponsor Warrants and Director Warrants will not be dilutive until the share price of the post-combination company increases by 20% above the Final Exercise Price, and the maximum dilutive impact upon conversion of the Sponsor Warrants approaches 4.95% (or 5.21%, including the Director Warrants) in transactions that produce enormous value for our stockholders.

We believe that a large-capitalization, private company will find the price certainty of a negotiated transaction with our company to be more attractive than an IPO. Through a business combination, we will be, in effect, facilitating the IPO of a large private company, enabling a private business to avoid the costs and risks associated with the traditional IPO process.

Potential business combination partners may also identify drawbacks to a business combination with our company. The amount of capital we will have available to finance our business combination will depend in part on the number of SPARs that are exercised. We believe that the capital uncertainty arising from non-exercising holders of SPARs is comparable to the risk that investors in a conventional SPAC will redeem their shares. We note that, because exercising a SPAR requires taking affirmative steps, there is a risk that SPARs are not exercised by holders who would have otherwise intended to do so. We believe this is a positive, investor-protective attribute of our structure, and will seek to mitigate that risk through public disclosures and communications to SPAR holders. Generally, we believe this capital risk is reduced by (i) the substantial amount

 

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of capital from our Forward Purchasers, a minimum of $500.0 million to $1.0 billion, and up to $3.5 billion, (ii) the minimally dilutive nature of our capital structure and (iii) the pro rata distribution of the SPARC II Tontine Warrants to exercising holders of our SPARs, which we believe will increase the probability that all or substantially all of our SPARs are exercised. In addition, we will be able to provide certainty with respect to stockholder approval of a transaction, as any necessary approvals will be provided by our Sponsor in its capacity as our sole stockholder.

A business combination partner may also consider the possibility that our Forward Purchase will cause us to forego an opportunity to raise capital on more attractive terms. The Committed Forward Purchasers will be obligated to purchase, and we will be obligated to sell, at least $500 million and up to $1.0 billion of Public Shares at the Final Exercise Price, and the Additional Forward Purchaser may choose to purchase, and we would be obligated to sell, additional Public Shares up to an aggregate Forward Purchase of $3.5 billion of such shares. If third-party investors were willing to purchase shares at a higher price, it is possible we would not be able to take advantage of this opportunity to the extent our capital needs for the transaction were satisfied by the Forward Purchase. However, the Committed Forward Purchase also protects against the “downside” risk faced by a SPAC—the risk of seeking third-party equity financing and only being able to obtain such funds on unattractive or dilutive terms, if at all. This risk is similar to what a private company might face in considering an IPO relative to a negotiated transaction—business and market conditions may improve in the time leading up to an IPO. However, as described above, this possibility is paired with a significant risk of negative outcomes. Compared to a SPAC transaction or an IPO, potential business combination partners may find the capital certainty presented by the Forward Purchase and the valuation certainty of a negotiated transaction price to be more valuable than the possibility of any foregone upside.

On balance, we believe that going public through a business combination with our company is likely to be attractive to potential business combination partners.

We believe that our structure and committed capital and Pershing Square’s track record and experience in aiding the growth of companies will make us particularly attractive to certain types of companies:

Mature Unicorns. Over the past decade, numerous high-quality, venture-backed businesses have achieved significant scale, market share, competitive dominance and cash flow—we call these companies “Mature Unicorns.” Many of these companies have chosen to remain private, as there has been, until recently, limited pressure from their investors for liquidity, and large amounts of growth capital available from investors, mutual funds and hedge funds. Over the time period in which we will be searching for a business combination partner—up to 10 years—we expect that conditions in equity markets, including the stock market and private or growth equity markets, will fluctuate. As a result, the relative attractiveness of an IPO, the amount of funding available from private equity sources, and demands for liquidity from investors may change significantly. While we are not completely isolated from such factors, we believe there will be periods in which we are particularly well-positioned, as compared to other sources of equity capital, to offer a potential business combination partner with needed financing, liquidity and an efficient path to becoming a publicly traded company.

Carve-Out Transactions. We believe that we are well-positioned to facilitate a “carve-out” transaction, in which we enter into a business combination with a large, high-quality subsidiary of a private or public company. For a private company, the process of taking a subsidiary public would present the same risks and challenges of an IPO. A public company considering a “spin-off” transaction would also have many of the same concerns as a company considering an IPO, including pricing uncertainty. A transaction with our company would provide valuation certainty, greater capital efficiency, a potentially shorter timeline, immediate liquidity and the advantages of PSCM’s experience and ability in identifying talented executives to aid a newly public company’s growth as a stand-alone entity.

 

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Family-Owned Businesses. Large, family-owned companies are likely to have multiple distinct lines of business that are well-suited to operating as independent companies. Compared to other private companies, family-owned business may have unique reasons to go public, such as the liquidity needs of the family, succession planning, or a desire to step back from the active management of a growing and increasingly complex business. A transaction with our company provides the same advantages discussed immediately above, as well as the benefit of PSCM’s expertise in navigating the often complex corporate restructuring involved in transactions with family-owned companies.

Private Equity-Owned Businesses. Private equity funds invest in companies for a finite time period, by the end of which they must exit the investment in order to return funds to investors. Most frequently, this exit takes the form of an IPO or a sale to another private equity firm. A transaction with our company would provide a private equity firm with the liquidity it seeks, potentially more quickly than it could obtain through an IPO, and with certainty as to the valuation of the transaction. In addition, to the extent that we are able to influence the management of the post-combination company through our ownership and/or board representation, both the seller and the target company would stand to benefit from our expertise in identifying talented executives and experience in aiding the growth of companies.

Control Transactions. Because of our ability to scale up the size of our capital raise, we believe we would be able to acquire a majority interest in a large, privately-owned corporation (i.e., valuations above $25.0 billion). Other sources of capital, such as private equity funds, are generally not able to raise capital for a transaction of that size. Potential “strategic acquirers” of such companies face antitrust risks that can substantially delay or even prevent such a transaction from occurring, or require complex restructuring and the divestment of certain assets. A large privately-owned company that seeks to raise additional capital may find a business combination with our company to be a more viable means of doing so.

We intend to source business combination opportunities through Mr. Ackman’s and PSCM’s extensive relationship network of private business owners, public and private company executives and board members, venture capital fund managers, private equity and debt fund managers, investment bankers, ultra-high net worth families and their advisors, commercial bankers, attorneys, management consultants, accountants and other transaction intermediaries. We believe that this approach, augmented by the relationships and experience of our directors, will generate a substantial number of potential transaction alternatives that will create significant value for our stockholders.

Our Management Team

Our Management Team will consist of William Ackman, our Chairman and Chief Executive Officer, Ben Hakim, our President, Michael Gonnella, our Chief Financial Officer, and Steve Milankov, our Corporate Secretary, who will be supported by the PSCM investment team, the broader PSCM organization and our independent directors, as further described below.

Mr. Ackman, Mr. Hakim and each other member of the PSCM investment team (the “Investment Team”) bring significant investment expertise as well as broad industry networks that encompass a wide array of sectors, industry participants, and intermediaries. We believe that each member of the Investment Team has complementary skills and experience relevant to our business strategy, as well as a track record of working together and providing creative solutions for complex transactions, which we believe represent an important competitive advantage.

The Investment Team has experience in:

 

   

sourcing, structuring, and executing on a wide range of investment opportunities;

 

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providing constructive strategic and operational guidance to management teams and boards of directors, to drive long-term stockholder value creation;

 

   

leveraging insights from their substantial investment, financial, operational oversight and governance experience to help optimize the financial condition, operating performance and strategy of a company; and

 

   

leveraging their extensive network of relationships to augment or complement the senior management team or board of directors of a company.

William Ackman serves as our Chairman and Chief Executive Officer. Mr. Ackman also serves as the Chairman and Chief Executive Officer of PSTH. Mr. Ackman founded Pershing Square in 2003, and is principally responsible for its investment policies and implementation. Mr. Ackman has spent 29 years in the investment management industry. Prior to forming Pershing Square, he co-founded Gotham Partners Management Co., LLC, an investment adviser that managed public and private equity portfolios. Mr. Ackman is currently Chairman of the Board of the Howard Hughes Corporation, and a member of the Investment Advisory Committee of the Federal Reserve Bank of NY. Mr. Ackman received his Bachelor of Arts degree from Harvard College, where he graduated magna cum laude, and received his Masters in Business Administration from Harvard Business School.

Ben Hakim serves as our President. Mr. Hakim is also President of PSTH and a Partner at Pershing Square and joined the Investment Team in 2012. Mr. Hakim was previously a Senior Managing Director at The Blackstone Group, where he worked in the Mergers & Acquisitions group for 13 years. Mr. Hakim received his Bachelor of Science from Cornell University in 1997.

Michael Gonnella serves as our Chief Financial Officer. Mr. Gonnella is also Chief Financial Officer of PSTH and Chief Financial Officer and a Partner at Pershing Square. Prior to his appointment as Pershing Square’s Chief Financial Officer in 2017, he served as senior controller of Pershing Square since joining the firm in 2005. Mr. Gonnella is a certified public accountant and received his Bachelor of Science from Seton Hall University in 2002.

Steve Milankov serves as our Corporate Secretary. Mr. Milankov is also Corporate Secretary of PSTH and Assistant General Counsel and a partner at Pershing Square. Prior to his appointment as Pershing Square’s Assistant General Counsel, he served as Senior Trading Counsel of Pershing Square since joining the firm in 2013. Mr. Milankov received his Joint MBA and Law degrees from McGill University in 2000. Mr. Milankov worked at the law firm Clifford Chance LLP and most recently at Société Générale prior to joining Pershing Square.

Our Investment Team

In addition to Mr. Ackman and Mr. Hakim, our Investment Team includes the following individuals:

Ryan Israel is a Partner at Pershing Square and joined the Investment Team in 2009. Mr. Israel was previously an analyst at Goldman Sachs in the Technology, Media and Telecom group. Mr. Israel served as a director of Element Solutions Inc. from October 2013 through January 2019. Mr. Israel received his Bachelor of Science from the Wharton School at the University of Pennsylvania, where he graduated summa cum laude and beta gamma sigma in 2007.

Anthony Massaro is a Partner at Pershing Square and joined the Investment Team in 2013. Mr. Massaro was previously a private equity associate at Apollo Global Management, where he focused on leveraged buyout and distressed debt investments across a wide range of industries. Prior to Apollo, he was an analyst at Goldman Sachs in the Natural Resources group. Mr. Massaro received his Bachelor of Science from the Wharton School at the University of Pennsylvania, where he graduated summa cum laude and beta gamma sigma in 2009.

 

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Charles Korn is a Partner at Pershing Square and joined the Investment Team in 2014. Mr. Korn was previously a private equity associate at KKR, where he focused on media, communications and industrials. Prior to KKR, he was an analyst at Goldman Sachs in the Technology, Media and Telecom group. Mr. Korn received a degree in Honors Business Administration from The Richard Ivey School of Business at The University of Western Ontario, where he graduated with highest distinction as an Ivey Scholar in 2010.

Bharath Alamanda is a Partner at Pershing Square and joined the Investment Team in 2017. Mr. Alamanda was previously a private equity associate at KKR, where he focused on financial services. Prior to KKR, he was an analyst at Goldman Sachs in the Technology, Media and Telecom Group. Mr. Alamanda received his Bachelor of Science in Engineering from Princeton University, where he graduated summa cum laude and phi beta kappa in 2013.

Feroz Qayyum is a Partner at Pershing Square and joined the Investment Team in 2017. Mr. Qayyum was previously a private equity associate at Hellman & Friedman, where he evaluated and oversaw investments across a wide range of industries. Prior to Hellman & Friedman, he was an analyst in the Mergers & Acquisitions group at Evercore. Mr. Qayyum received a degree in Honors Business Administration from The Richard Ivey School of Business at The University of Western Ontario, where he graduated with highest distinction as an Ivey Scholar in 2013.

Manning Feng joined the Pershing Square Investment Team in 2021. Ms. Feng was previously a private equity associate at Warburg Pincus, where she focused on industrials and business services. Prior to Warburg Pincus, she was an investment banking analyst at Centerview Partners. Ms. Feng received her Bachelor of Science from the Wharton School at the University of Pennsylvania, where she graduated summa cum laude in 2016.

Our Independent Director Nominees

Our Investment Team’s efforts to seek a suitable business combination target will be complemented and augmented by the expertise and network of relationships of our director nominees, who will provide extensive experience in business and financial matters.

Dr. Jennifer Blouin is the Richard B. Worley Professor of Financial Management and Professor of Accounting at The Wharton School of the University of Pennsylvania. Dr. Blouin is an expert on the role of taxation in firm decision making. Her research examines the effect of taxes on asset pricing, capital structure, corporate payout behavior, multinational firm behavior, and mergers and acquisitions. Dr. Blouin has provided expert analysis in tax shelter litigation on behalf of the US Department of Justice, and in pharmaceutical patent litigation regarding transfer pricing and the repatriation of earnings by multinational corporations and their affiliates. Dr. Blouin has presented her work at over 70 universities and at numerous association conferences. Three research centers at Wharton, and the International Tax Policy Forum have awarded her research grants. She is one of only five accountants to have been granted access to the Department of Commerce’s Bureau of Economic Analysis. She has published papers in top general interest academic journals as well as in leading tax-specific journals and, in 2010, won the Tax Manuscript Award from the American Taxation Association for the paper making the greatest impact on the literature in the past five years. Dr. Blouin is frequently cited in the press, including The Wall Street Journal, The New York Times, and the Financial Times. Her papers have been cited by the Center on Budget and Policy Priorities and the National Bureau of Economics Research Digest. Dr. Blouin is an editor of the Review of Accounting Studies and an associate editor of the Journal of Accounting Research. Dr. Blouin teaches taxation to undergraduate, MBA, and PhD students and is a recipient of the University of Pennsylvania’s Lindback Award for Distinguished Teaching and Wharton Teaching Excellence Award. Prior to her academic career, Dr. Blouin was a tax manager with Arthur Andersen. She received her PhD in Accounting from the University of North Carolina- Chapel Hill and her BS from Indiana University – Bloomington.

 

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Kathryn Judge is the Harvey J. Goldschmid Professor of Law at Columbia Law School. Her scholarship has been published in Harvard Law Review, Stanford Law Review, The University of Chicago Law Review and other top journals, and has earned accolades from academic peers and industry. She is co-editor of the Journal of Financial Regulation and a Research Member of the European Corporate Governance Institute. She has served on the Financial Research Advisory Committee of the Office of Financial Research and the Task Force on Financial Stability co-sponsored by the Hutchins Center on Fiscal & Monetary Policy at the Brookings Institution and the Initiative on Global Markets at the University of Chicago Booth School of Business. She also served as a clerk for Judge Richard Posner and Supreme Court Justice Stephen Breyer. She is a graduate of Stanford Law School and Wesleyan University.

Linda Rottenberg is one of the world’s leading voices in entrepreneurship, technology, and business transformation. She is the cofounder and CEO of Endeavor, the leading global community of, by, and for high-impact entrepreneurs, and the president of Endeavor Catalyst, a rules-based investment fund, which invests in select Endeavor companies. Founded in 1997, Endeavor selects, supports, and co-invests in top founders based in emerging and growth markets across Latin America, Europe, Asia, Middle East, as well as in underserved markets in the U.S. and Canada. With $250 million in assets under management across three funds, Endeavor Catalyst has made 180+ investments in 30+ markets to date and counts 25 companies valued at more than $1 billion in its portfolio. Ms. Rottenberg currently serves as a director of Globant, a $9 billion software and digital transformation pioneer (NYSE: GLOB); Olo, a $6 billion SaaS-based restaurant ordering platform (NYSE: OLO); Reinvent Technologies Z, a SPAC formed by LinkedIn cofounder Reid Hoffman and Zynga founder Marc Pincus, which will merge with insurtech firm Hippo in 2021 (NYSE: RTPZ); and Valor Latitud Acquisition Corp (NASDAQ: VLATU), one of Latin America’s first SPACs. She formerly served as a director of Zayo Group, a $15 billion global bandwidth infrastructure company (NYSE: ZAYO). She is a member of YPO, CFR, the World Economic Forum, and the Yale President’s Council on International Activities. A graduate of Harvard College and Yale Law School, her 2014 book, CRAZY IS A COMPLIMENT: The Power of Zigging When Everyone Else Zags, was an instant New York Times bestseller.

Our Board Observers

The following individuals currently serve as directors of PSTH, and will be observers at meetings of our Board. At the time their service as directors of PSTH concludes, they will be offered the opportunity to join our Board as independent directors.

Lisa Gersh co-founded Oxygen Media (“Oxygen”) in 1999 and remained its President and Chief Operating Officer until the company’s sale to NBC in 2007 for $925 million. Oxygen was the first-ever multi-platform brand and created content for women, by women, and reached 74 million homes at the time of its sale. Following the sale of Oxygen, Ms. Gersh joined NBC and spearheaded NBC’s acquisition of the Weather Channel, serving briefly as its interim Chief Executive Officer. Also at NBC, Ms. Gersh launched Education Nation, a transformative education initiative that established NBC as the media authority on education. In 2011, Ms. Gersh took over the operations of Martha Stewart Living Omnimedia, Inc. (“Martha Stewart”), first as President and later as its Chief Executive Officer. During her tenure, Ms. Gersh rebranded Martha Stewart, materially reduced its operating expenses, and returned the company to profitability. In 2014, Ms. Gersh transformed Gwyneth Paltrow’s blog, Goop, Inc. (“Goop”), into the first contextual commerce brand. In the process of taking Goop from a collection of recommendations to a freestanding brand, Ms. Gersh oversaw, among other things, the launch of Goop’s e-commerce store, skincare and fashion lines, and created Goop’s pop-up retail strategy. In 2017, Ms. Gersh was named Chief Executive Officer of Alexander Wang, a global fashion brand based in New York City. A graduate of Rutgers Law School, Ms. Gersh began her career as a lawyer, first as a litigation associate at Debevoise & Plimpton LLP, and then as a Partner at Friedman, Kaplan, Seiler & Adelman LLP, a boutique law firm specializing in complex litigation and commercial transactions, which Ms. Gersh co-founded, and which today has more than 50 lawyers. Currently, Ms. Gersh sits on the board of directors of Hasbro, Inc.,

 

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where she chairs the Compensation Committee, and Establishment Labs Holdings Inc., where she chairs the Nomination and Governance Committee and MoneyLion, where she chairs the Nominating and Governance Committee. She also serves on the board of directors of the Bail Project, Inc. and the Samsung Retail Advisory Board. Ms. Gersh previously served on the board of directors of comScore, Inc.

Michael Ovitz co-founded Creative Artists Agency (CAA) in 1974 and served as its Chairman until 1995. Over that 20-year period, he grew the agency from a start-up organization to the world’s leading talent agency, representing more than 1,000 of the most notable actors, directors, musicians, screenwriters and other personalities in the entertainment industry, including Martin Scorsese, Sean Connery, Robert Redford, Paul Newman, Robert DeNiro, Al Pacino, Bill Murray, Dustin Hoffman, Steven Spielberg, David Letterman, Meryl Streep, Barbara Streisand, Michael Crichton and Michael Jackson. In his journey from the mailroom to media mogul, Mr. Ovitz launched the most powerful agency in the world (to-date), sold three major Hollywood studios, executed all marketing and advertising for The Coca-Cola Company (including creating the Polar Bear Campaign) and was at the forefront of the digital revolution, making alliances with Intel Corporation and other early Silicon Valley companies. Mr. Ovitz also served as President of the Walt Disney Company, from October 1995 to January 1997. In 2010, Mr. Ovitz founded the venture capital fund Broad Beach Ventures LLC, a portfolio of over two hundred companies. He has been a senior advisor to Palantir Technologies for over 10 years and has invested in and advised companies from startups to black swans. He was instrumental in the creation of venture capital firm Andreessen Horowitz and frequently consults for many other firms. In 2018, Mr. Ovitz wrote and published his memoir Who Is Michael Ovitz?, which was on the long-list for The Financial Times and McKinsey Business Book of the Year Award. Mr. Ovitz is a graduate of University of California, Los Angeles and helped rebuild the UCLA Medical Center in 1997, while serving as its Chairman for over a decade. Mr. Ovitz is also a notable art collector and serves on The Board of Trustees at The Museum of Modern Art in New York City.

Jacqueline Dawn Reses serves as the chief executive officer of Post House Capital and most recently served as executive chair of Square Financial Services LLC and capital lead at Square, Inc., a publicly traded financial services company which provides services to small businesses and consumers, from October 2015 to October 2020. From February 2016 to July 2018, she also served as people lead at Square, Inc. From September 2012 to October 2015, she served as chief development officer of Yahoo! Inc. Prior to Yahoo, she led the U.S. media group as a partner at Apax Partners Worldwide LLP, a global private equity firm, which she joined in 2001. As of 2020, she serves on the board of the Wharton School of the University of Pennsylvania. She currently serves on the board of directors of Nubank, has also served on the board of directors of Affirm and Context Logic since July 2020 and has been the chairperson of the Economic Advisory Council of the Federal Reserve Bank of San Francisco since 2015. She previously served on the board of directors of Alibaba Group Holding Limited, Social Capital Hedosophia Holding Corp. and Social Capital Hedosophia Holding Corp III. She holds a Bachelor’s of Science in Economics with honors from the Wharton School of the University of Pennsylvania.

Joseph S. Steinberg is Chairman of the Board of Directors of Jefferies Financial Group Inc., and, from January 1979 until March 1, 2013, served as President of Leucadia National Corporation (now Jefferies Financial Group Inc.). He has also been a director of Jefferies Group since 2008, Crimson Wine Group since 2013 and served as a director of HomeFed Corporation from August 1998 and Chairman of the Board from December 1999 until its acquisition by Jefferies Financial Group Inc. in 2019. Mr. Steinberg has previously served as a director of Spectrum Brands Holdings, Inc., Mueller Industries, Inc., Fidelity & Guaranty Life and Fortescue Metals Group Ltd. Mr. Steinberg has managerial and investing experience in a broad range of businesses through his more than 40 years as President and a director of Leucadia National Corporation and now as Chairman and a director of Jefferies Financial Group Inc.

 

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Notwithstanding our founders’ and Management Team’s past experiences, past performance is not a guarantee (i) that we will be able to identify a suitable candidate for our business combination or (ii) that we will provide an attractive return to our stockholders from any business combination we may consummate. You should not rely on the historical record of our founders’ and management’s performance as indicative of our future performance. See Risk Factors—Past performance of our founders and the other members of our Management Team, including investments and transactions in which they have participated and businesses with which they have been associated, may not be indicative of future performance of an investment in us, and we may be unable to provide positive returns to stockholders. For more information, see the section of this prospectus entitled Management—Conflicts of Interest.

Our Business Strategy

Our business strategy is to identify and complete a business combination that creates substantial long-term value for our stockholders. We will seek target companies that demonstrate the characteristics set out under “Our Acquisition Criteria” below. We believe our Investment Team’s operational, financial and transaction experience across economic cycles and broad networks of relationships, along with our deep understanding of the equity and debt capital markets, will allow us to effectively and efficiently identify and evaluate potential opportunities for our business combination.

We will consider companies in a wide range of industries, but generally will seek to acquire a simple, high-quality, high-return on capital business that generates predictable growing cash flows that can be estimated within a reasonable range over the long term. We will prefer targets that have low sensitivity to macroeconomic factors, with minimal commodity exposure and/or cyclical risk. We are willing to accept a high degree of situational, legal, and/or capital structure complexity in a business combination if we believe that the potential for reward justifies this additional complexity, particularly if these issues can be resolved in connection with and as a result of a combination with us.

To achieve a successful business combination, our Investment Team will leverage its experience to identify a company with a strong competitive position that can benefit from being a public company in the execution of its growth and value-creation strategy. We believe our scale and structure, coupled with our Investment Team’s background and experience, will make us an attractive partner for high-quality management teams and owners.

Following the completion of the Distribution of our SPARs, we intend to begin the process of communicating with the network of relationships of our Investment Team, our board of directors and their affiliates to articulate the parameters for our search for a potential target business combination and begin the process of pursuing and reviewing potential opportunities.

You should note that our Investment Team is engaged in the business of identifying business opportunities for other companies sponsored by affiliates of PSCM in addition to the company, as well as other investment and advisory activities for itself and others. See the section of this prospectus entitled Management—Conflicts of Interest for more detail regarding potential conflicts of interest.

Our Acquisition Criteria

Consistent with our core investment principles and business strategy, we expect to identify high-quality companies that have a number of the characteristics enumerated below. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to complete our business combination with a target business that does not meet all of these criteria. We will seek to acquire companies that have the following characteristics:

 

   

Simple, predictable, and free-cash-flow-generative. We will generally seek companies with a proven track record of growth and free cash flow generation, and predictable future financial performance that

 

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we expect will generate strong, sustainable growth in cash flows over the long term—however, we are open to considering a company that may, at the time of the business combination, be cash-flow negative, if we believe that the business’s cash flow will become positive within a reasonable amount of time;

 

   

Formidable barriers to entry. We will seek companies that have long-term sustainable competitive advantages, significant barriers to entry, or “wide moats,” around their business, and low risks of disruption due to competition, innovation or new entrants;

 

   

Limited exposure to extrinsic factors that we cannot control. We will seek companies that are not materially affected by macroeconomic factors, commodity prices, regulatory risks, interest rate volatility and/or cyclical risk;

 

   

Strong balance sheet. We will seek companies that are conservatively financed relative to their free-cash-flow generation, after taking into consideration the de-leveraging effects of the business combination;

 

   

Minimal capital markets dependency. We will seek companies that can benefit from being a public company with broader access to the capital markets and greater governance, but will prefer companies that are not highly reliant on the capital markets to operate and grow their businesses;

 

   

Large capitalization. We will seek companies with large enterprise values and significant long-term growth potential that will be likely candidates for inclusion in the S&P 500 index;

 

   

Attractive valuation. We will seek companies at an attractive valuation relative to their long-term intrinsic value; and

 

   

Exceptional management and governance. We will seek companies that have trustworthy, talented, experienced, and highly competent management teams. These companies may be led by entrepreneurs who are looking for a partner with our expertise to execute on the next stage of their growth. For target companies that require new management, we will leverage PSCM’s experience in identifying and recruiting new management.

These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination may be based, to the extent relevant, on these general guidelines, as well as other considerations, factors and criteria that our management and our Investment Team may deem relevant. If we decide to enter into our business combination with a target business that does not substantially meet the above criteria and guidelines, we will disclose that the target business does not substantially meet the above criteria in our communications to holders of our SPARs related to our business combination, which, as discussed in this prospectus, would be in the form of a Post-Effective Amendment to this registration statement that we would file with the SEC.

Our Acquisition Process

In evaluating a prospective target business, we expect to conduct a detailed due diligence review of the issues that we deem important in order to determine a company’s business quality and estimate its intrinsic value. That due diligence review will include, among other things, financial statement analysis, detailed document reviews, meetings with incumbent management and employees, consultations with relevant industry experts, competitors, customers and suppliers, as well as a review of additional financial, legal and other information that we will seek to obtain as part of our analysis of a target company.

We have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to a business combination with us. We are not prohibited from pursuing a business combination with a company that is affiliated with our Sponsor, officers or directors.

 

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Members of our Management Team are not obligated to devote any specific number of hours to our matters, but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our business combination. In addition, we have an Investment Team comprised of eight members, who are employed by PSCM. We believe our Investment Team members will be able to allocate their duties to us and to PSCM (including for this purpose any acquisition companies sponsored by affiliates of PSCM now or in the future) amongst themselves in a manner that allows them to provide us with the resources and support we require while fulfilling their responsibilities to PSCM. The amount of time that any such person will devote in any time period will vary based on whether a target business has been selected for our business combination and the current stage of the business combination process. In addition, 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 is included by a target business as a condition to any agreement with respect to our business combination.

Our affiliate, PSCM, manages or advises several funds. PSCM and its affiliates may, in the future, sponsor acquisition companies with whom we could potentially compete. PSCM and its affiliates may form and manage other investment vehicles investing in public or private companies at any time prior to the announcement of our business combination, including, but not limited to, private or public investment vehicles that may invest side-by-side with our company. In any of the foregoing circumstances, a conflict of interest may arise. To the extent any such conflicts arise, we cannot guarantee that they will be resolved in our favor.

However, except for the foregoing, we do not believe that PSCM and its affiliates’ activities present significant conflicts of interest with respect to our pursuit of an acquisition target, because we intend that our acquisition target will be a large-capitalization, privately-owned company, and the Pershing Square Funds are not permitted by their constituent documents to make investments in the equities of companies whose securities are not publicly traded (except that they may make investments in public companies that issue private securities). We do not believe that PSTH, which is sponsored by an affiliate of PSCM, presents a potential conflict of interest, as we will distribute our SPARs only after PSTH has consummated a business combination or announced its intention to return the funds held in its trust account to its public stockholders.

Each of our directors, director nominees and officers currently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer, director or director nominee is or will be required to present business combination opportunities to such entity. Our Charter provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. Neither the affiliates of our Sponsor nor members of our Management Team who are employed by our Sponsor or its affiliates have any obligation to present us with any opportunity for a potential business combination of which they become aware. Accordingly, in the future, if any of our directors or officers becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity. Any presentation of such opportunities to entities other than us, or affiliates of our Sponsor, may present additional conflicts.

Business Combination

Our Charter will require that our business combination must be with one or more operating businesses or assets with a fair market value, at the time of signing the agreement to enter into the business combination, equal to at least 80% of the total amount of proceeds that would be raised from the exercise of all SPARs at the Final Exercise Price. We refer to this as the “80% of net assets test.” As further described in this prospectus, the NYSE has proposed a rule for the listing of subscription warrants by acquisition companies. We believe it is likely that

 

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the final version of this rule, if adopted, will apply this or a similar requirement with respect to the size of our business combination. If our Board 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 which is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”), or an independent valuation or accounting firm with respect to the satisfaction of such criteria. While we consider it unlikely that our Board will not be able to make an independent determination of the fair market value of a target business or businesses, it may be unable to do so if it is less familiar or experienced with the target company’s business, there is a significant amount of uncertainty as to the value of the company’s assets or prospects, including if such company is at an early stage of development, operations or growth, or if the anticipated transaction involves a complex financial analysis or other specialized skills and our Board determines that outside expertise would be helpful or necessary in conducting such analysis. Any such opinion, if obtained, would merely state that the fair market value of the target business meets the 80% of net assets test, unless such opinion includes material information regarding the valuation of a target business or the consideration to be provided, it is not anticipated that copies of such opinion would be distributed to SPAR holders, unless we would be required to do so under applicable law.

We anticipate structuring our business combination so that the post-business combination company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our business combination such that the post-business combination 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 stockholders or for other reasons, but we will only complete such business combination if the post-business combination company owns or acquires 50% or more of the outstanding voting securities of the target business 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.

Even if the post-business combination company owns or acquires 50% or more of the voting securities of the target business, our stockholders may collectively own a minority interest in the post-business combination company, depending on valuations ascribed to the target business 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, shares or other equity interests of a target business. In this case, we would acquire a 100% controlling interest in the target business. However, as a result of the issuance of a substantial number of new shares, our stockholders could own less than a majority of our issued and outstanding shares subsequent to our business combination.

The size of the interest we expect our stockholders to hold in the post-combination company could be impacted by a number of factors, including the structure of our business combination and the form of consideration we pay to acquire the target business, the size of the target business, the relative valuations ascribed to the target and us in the business combination and the potential dilutive effect of our Sponsor Warrants and Director Warrants. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-business combination 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 the 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.

 

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SPARC Life Cycle

 

 

LOGO

Search Period

We will distribute our SPARs shortly after the Registration Statement of which this prospectus forms a part is declared effective by the SEC. We anticipate that the SPARs will be listed for trading at such time, although we cannot guarantee that they will be listed on the NYSE. The listing and trading of SPARs on the NYSE will require the SEC to approve a new listing rule submitted by the NYSE permitting the listing and trading of subscription warrants by acquisition companies. See Listing of SPARs, page 3. If our SPARs are not listed on the NYSE, they would trade on the “over-the-counter” market, which may present significant risks to the holders of SPARs, including lower availability and efficiency of market price quotations, significantly less liquidity, increased trading costs, the absence of certain requirements regarding our corporate governance, and the application of state securities laws that could result in restrictions on the sale of our SPARs. See Risk Factors, page 55.

Upon the distribution of our SPARs, we will commence our search for a business combination partner, carry out due diligence on potential business combination partners, and negotiate the Definitive Agreement. We do not expect to make any public disclosures regarding this process until we have entered into a Definitive Agreement, except as may be required by applicable law. During this time, the SPARs will not be exercisable. As our SPARs have a term of 10 years, it is possible that a substantial amount of time could pass before we enter into a Definitive Agreement.

Disclosure Period

Upon entry into the Definitive Agreement, we will announce the Final Exercise Price of our SPARs, which will be no less than $10.00, and will not be adjusted further following the effectiveness of the Post-Effective Amendment. Our determination of the Final Exercise Price will take into account factors including, but not limited to, the ownership stake in the post-combination company we seek to obtain, the post-combination company’s capital needs, the minimum amount of capital we will be required to contribute in the business combination, the amount that the Additional Forward Purchaser has agreed to invest, our expectations

 

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regarding the extent to which SPARs will be exercised, and the availability and terms of additional debt or equity private financing (and conditions in those financing markets).

We will file with the SEC, as promptly as possible following entry into the Definitive Agreement, a Post-Effective Amendment to this Registration Statement. The Post-Effective Amendment will contain comprehensive disclosures regarding the proposed transaction, equivalent to the disclosures that would be included in a merger proxy statement. Depending on the structure our transaction takes, the Post-Effective Amendment may be filed as a registration statement by a different entity. It is likely the Post-Effective Amendment will be amended after the initial filing in response to the SEC’s review process, as well as for other reasons.

During this period, we will seek the satisfaction of all Disclosure Period Closing Conditions which refers to all express closing conditions contained in the Definitive Agreement, including any regulatory approvals, other than those that can only be satisfied as of a later date. The Disclosure Period Closing Conditions could include antitrust approval, listing exchange approval, and other regulatory matters, as well as conditions precedent that are particular to the proposed business combination. The closing conditions to be satisfied at a later time are discussed below, under “Company Decision Period.” Because we anticipate the closing of our business combination to occur within two months of the effectiveness of the Post-Effective Amendment, we believe we will be able to structure the Definitive Agreement in a manner such that many conditions to closing can be satisfied at this time, although there is no guarantee that the Definitive Agreement will provide for this, or that we will be able to satisfy such conditions.

Once all Disclosure Period Closing Conditions have been satisfied or waived, we will seek to have the Post-Effective Amendment declared effective by the SEC. Promptly following the time that the Post-Effective Amendment is declared effective, we will mail this document to all SPAR holders, and the SPAR Holder Election Period will begin on the date of mailing or shortly thereafter. At this time, we will also obtain any necessary stockholder approvals from our Sponsor, in its capacity as our sole stockholder.

If we amend the Charter or Definitive Agreement during this period, we will amend the Post-Effective Amendment as necessary. SPAR holders will have no rights in connection with such amendments, as they are not stockholders at this time. If we propose to amend the SPAR Agreement during this period, and the independent directors of our Board determine, in their reasonable, good-faith judgment, that such amendment could have a materially adverse impact on SPAR holders, such Materially Adverse Amendment will require approval of the holders of a majority of our SPARs present and voting on such matter. If we decide not to pursue the business combination (i.e., because certain of the Disclosure Period Closing Conditions cannot be satisfied), our SPARs will remain outstanding and with their holders, and we will pursue an alternate business combination. If our business combination partner seeks to abandon the transaction, we will determine our course of action and resume the disclosure, election and payment process if and when an agreement is reached to proceed with the transaction.

SPAR Holder Election Period

The SPAR Holder Election Period will begin only after (i) a Definitive Agreement has been entered into, (ii) the Post-Effective Amendment has been declared effective, and (iii) the Disclosure Period Closing Conditions have been satisfied or waived. SPAR holders will have a period of 20 business days to submit an Election regarding the exercise of their SPARs. Elections will not be revocable, except as provided below, and electing SPAR holders will be obligated to pay the aggregate exercise price for the number of SPARs that they have agreed to exercise, as indicated on their notice of Election. During this period, we expect that the market price of our SPARs will provide an indication of market perception of the proposed business combination, although we caution SPAR holders that this price is not necessarily indicative of the value they will realize upon the consummation of our business combination, and they should take into account all available information in

 

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determining whether to submit an Election. Once an Election has been submitted with respect to a SPAR, such SPAR will be restricted from trading. All SPARs, whether or not an Election has been submitted, will become restricted from trading on the date that is two business days before the end of the SPAR Holder Election Period.

The SPARs are not actually exercised at this time—no payment will be submitted yet, and SPARs will remain with their holders. An Election constitutes an irrevocable offer to exercise the indicated number of SPARs and pay the applicable aggregate exercise price. Once we have accepted such offer by announcing our decision to proceed with the transaction, electing SPAR holders will be obligated to pay the applicable exercise price during the SPAR Holder Payment Period. In addition, by submitting an Election, SPAR holders will be consenting to the automatic exercise of their SPARs concurrently with the consummation of our business combination.

During the SPAR Holder Election Period, if a Materially Adverse Amendment is made to the Charter or Definitive Agreement, we will provide SPAR holders with a period of at least 10 business days in which they can revoke their Elections, and may extend or postpone the SPAR Holder Election Period as our Board, in its sole discretion deems necessary. If we propose a Materially Adverse Amendment to the SPAR Agreement, such amendment must be approved by the holders of a majority of the SPARs present and voting for or against the matter. SPAR holders may choose to vote for or against the amendment or to abstain, and can indicate whether they wish to revoke their Elections in the event that the amendment is approved. If the amendment is not approved, no Elections will be revoked. Only SPAR holders who submit a ballot will have the opportunity to revoke their Elections. In connection with the vote on such amendment, SPAR holders will have a SPAR holders will not have the right to vote on any amendment to the Charter or the Definitive Agreement.

If we decide to abandon the transaction, all Elections will be disregarded, SPARs will remain with their holders and again be tradable, and we will search for a new business combination. We may decide to abandon the transaction, among other reasons, if we determine that we or our business combination partner will be unable to meet certain closing conditions. Our ability to abandon the transaction will be limited by our obligations under the Definitive Agreement and/or our ability to reach an agreement with our business combination partner to terminate the Definitive Agreement. If our business combination partner seeks to abandon the transaction and/or breaches its material obligations under the Definitive Agreement, we will determine our course of action, taking into account factors such as the expense and time required to do so and our likelihood of prevailing. If we do pursue the transaction, we will postpone the SPAR Holder Election Period until we are able to proceed with the transaction. Holders who have submitted Elections will not have a revocation right in such circumstances, except as described above in connection with Materially Adverse Amendments, or if the Board, in its sole discretion, provides such a right.

SPARs will become restricted from trading upon the earlier of (i) the submission of an Election and (ii) two business days prior to the end of the SPAR Holder Election Period. Unelected SPARs will not have any value following the SPAR Holder Election Period and are likely to expire worthless, unless we abandon the proposed business combination during the Company Decision Period and seek a new business combination. Accordingly, any SPAR holder who wishes to sell their SPARs must do so prior to submitting an Election and no later than two business days prior to the end of the SPAR Holder Election Period.

Company Decision Period

Following the SPAR Holder Election Period, we will have up to 10 calendar days to determine whether or not to proceed with the business combination. This decision will be driven primarily by whether the Decision Period Closing Conditions have been or will be satisfied as of the end of the Company Decision Period. The Decision Period Closing Conditions are (i) the availability of necessary financing to consummate the transaction, (ii) the absence of any material adverse change and (iii) the “bring-down” of certain representations and

 

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warranties. In particular, we will assess the expected proceeds from the Elections that have been submitted, the amount of the Forward Purchase and the availability and terms of any private debt or equity capital that may be necessary to meet any minimum available cash condition to the closing of the business combination. If closing conditions in our favor are not satisfied, our Board will assess whether it is in the best interests of our company to waive such conditions. In general, our ability to choose not to proceed will be limited by our obligations under the Definitive Agreement.

If we determine not to pursue the business combination, we will publicly announce such decision. This decision will constitute a rejection of the Elections submitted. Accordingly, SPARs will not have been exercised, will remain with their holders and again be tradable.

If we determine to pursue the business combination, we will publicly announce such decision, and the SPAR Holder Payment Period will commence on the following business day. The decision to pursue the business combination will constitute an acceptance of the Elections that have been submitted, and electing SPAR holders will be obligated to submit their exercise payments during the SPAR Holder Payment Period. Holders will not be able to revoke their Elections during the Company Decision Period, except in connection with a Materially Adverse Amendment to the Definitive Agreement.

No Materially Adverse Amendments may be made to the Charter or SPAR Agreement during the Company Decision Period or the SPAR Holder Payment Period. If our business combination partner seeks to abandon the transaction and breaches its material obligations under the Definitive Agreement, we will determine whether to pursue the matter, taking into account factors such as the expense and time required to do so and our likelihood of prevailing. If we do pursue the transaction, we may extend the Company Decision Period until such matter is resolved, and holders who have submitted Elections will not have a revocation right in connection therewith except as required in connection with a Materially Adverse Amendment to the Definitive Agreement, or unless our Board, in its sole discretion, permits revocation.

During the Company Decision Period, all SPARs will remain restricted and will not be tradable.

SPAR Holder Payment Period

SPAR holders who have submitted Elections will have five calendar days to submit payment for their SPARs. Holders will not be able to seek a return of their funds or cancel or prevent the exercise of their SPARs. Once the company has received an electing SPAR holder’s payment, such holder will be entitled to receive the applicable number of Public Shares, contingent on the consummation of the business combination. SPARs for which payment has been received will automatically be exercised concurrently with the consummation of the business combination. All funds received will be held in an interest-bearing Custodial Account, and will be released to us in connection with the consummation of our business combination, or will be returned in connection with an Early Termination.

It is possible that a legal injunction from a governmental authority prevents us from consummating the business combination, or that our business combination partner breaches its obligations and declines to consummate the transaction. We may decide to extend the SPAR Holder Payment Period if (i) our business combination partner breaches its obligations under the Definitive Agreement in a manner that frustrates the consummation of the business combination or (ii) we are enjoined by a governmental authority from consummating the transaction and are permitted under applicable law to appeal such injunction. In such event, our Board will determine, in its sole discretion, whether to further pursue the business combination or carry out an Early Termination. If our business combination partner breaches its obligations to consummate the transaction, we would most likely seek to enforce our legal right to specific performance and have the transaction consummated on the terms set forth in the Definitive Agreement. However, it is possible that we reach a

 

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negotiated settlement in which the Definitive Agreement is amended. In such case, if the changes to the Definitive Agreement constitute a Materially Adverse Amendment, we will provide SPAR holders with a period of at least 10 business days in which they can revoke their Elections.

In order to maximize the certainty of consummating a business combination prior to accepting exercise payments, we will seek to structure our Definitive Agreement such that all closing conditions, to the extent possible, are to be satisfied as of the date the Company Decision Period ends, rather than as of the date of the closing (as is the case in most business combinations). However, we may be unable to structure our business combination in this manner, in which case there may be less certainty as to whether the transaction will be consummated. In addition, because we may not be able to abandon the transaction in the event that a material adverse change occurs during the SPAR Holder Payment Period, our company and electing SPAR holders will bear the risk of such adverse changes. We believe that such risk is limited by the brief duration of the SPAR Holder Payment Period, but cannot guarantee that such adverse events will not occur, particularly if we extend the SPAR Holder Payment Period.

If we do not consummate the business combination, we will promptly return all payments received on a pro rata basis with respect to the exercise price paid by electing SPAR holders, with interest and net of any taxes, and we will liquidate our company.

During the SPAR Holder Payment Period, all SPARs will remain restricted and will not be tradable.

Closing and Post-Closing

We will issue the Public Shares concurrently with the consummation of our business combination. Upon consummation of our business combination, all unexercised SPARs will expire worthless. Our Sponsor intends that, at or shortly after the time at which we consummate our business combination, 244,444,444 SPARC II Tontine Warrants will be distributed on a pro rata basis to holders who exercised their SPARs in connection with our business combination. SPARC II, and the SPARC II Tontine Warrants, would have terms substantially similar to that of our company. However, we cannot provide you with any assurance as to the formation of SPARC II, the distribution of the SPARC II Tontine Warrants, and the terms of such distribution or of the warrants.

Our Forward Purchase Agreement

We believe our ability to complete our business combination will be enhanced by having entered into the Forward Purchase Agreement. Prior to the Distribution, we will enter into a Forward Purchase Agreement with the Forward Purchasers (who are affiliates of Pershing Square) in the amount of $3.5 billion, a portion of which the Committed Forward Purchasers are obligated to purchase, and the remainder of which the Additional Forward Purchaser may elect to purchase. At the time we enter into a Definitive Agreement, we will announce the Final Exercise Price, which determines the Committed Forward Purchase amount, and the Additional Forward Purchaser will also announce the extent to which it will exercise the Additional Forward Purchase. We believe that the availability of the Forward Purchase will make us more attractive to potential business combination partners, by increasing the likelihood that we will have sufficient capital to consummate a business combination, and, because the total amount of the Forward Purchase will be announced before the SPAR Holder Election Period begins, it will provide SPAR holders with additional certainty of our ability to do so.

The Committed Forward Purchasers will be obligated to invest $500.0 million if the Final Exercise Price is $10.00, and a proportionately greater amount at a higher Final Exercise Price, up to a maximum commitment of $1.0 billion at a Final Exercise Price of $20.00 or greater. The Additional Forward Purchaser will have the right to purchase an additional $2.5 billion to $3.0 billion (such that the aggregate Forward Purchase does not exceed

 

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$3.5 billion) of Public Shares. The Forward Purchase shares will have a per-share purchase price equal to the Final Exercise Price at which electing SPAR holders will purchase Public Shares. The table below illustrates how the size of the Committed Forward Purchase and maximum Additional Forward Purchase vary based upon the Final Exercise Price, as a dollar amount and as a percentage of the number of Public Shares issuable upon the exercise of all SPARs.

 

    Dollar Amount of Forward Purchase     Share Amount
(as % of Public Shares)
 

Final Exercise Price

  Committed
Forward Purchase
    Max. Additional
Forward Purchase
    Committed
Forward Purchase
    Max. Additional
Forward Purchase
 
$10.00   $ 500.0 M     $ 3.00 B       20.5     122.7
$15.00   $ 750.0 M     $ 2.75 B       20.5     75.0
$20.00   $ 1.00 B     $ 2.50 B       20.5     51.1
$25.00   $ 1.00 B     $ 2.50 B       16.4     40.9
$50.00   $ 1.00 B     $ 2.50 B       8.2     20.5
$75.00   $ 1.00 B     $ 2.50 B       5.5     13.6

The purchase of the Forward Purchase shares will take place simultaneously with the closing of our business combination. The Committed Forward Purchasers’ obligation to purchase Forward Purchase shares will be allocated among the Committed Forward Purchasers from time to time as described herein, but may not be transferred to any other parties. The Additional Forward Purchaser’s right to purchase Additional Forward Purchase shares may be transferred, in whole or in part, to any entity that is managed by PSCM, but not to third parties. The Public Shares purchased pursuant to the Forward Purchase Agreement will be subject to certain transfer restrictions and will have registration rights.

The Sponsor Shares and Sponsor Preferred Shares

Our Sponsor has purchased 23,660 shares of Common Stock at a price $10.00 per share, for an aggregate purchase price of $236,600. The Sponsor Shares, following consummation of our business combination, will become Public Shares. If we determine to set the Final Exercise Price above the Minimum Exercise Price, we will carry out a reverse stock split of the Sponsor Shares at a ratio such that the effective purchase price per Sponsor Share equals the Final Exercise Price at which SPAR holders will purchase Public Shares. For example, if the Final Exercise Price is $20.00, we will carry out a 2-to-1 reverse stock split of the Sponsor Shares, such that half as many Sponsor Shares are outstanding and the effective purchase price paid for each Sponsor Share then outstanding will equal $20.00.

In order to fund our initial capital needs, our Sponsor will purchase, prior to the Distribution, 3,000 Sponsor Preferred Shares for an aggregate purchase price of $30,000,000. The Sponsor Preferred Shares generally do not have any voting rights, have a liquidation preference of $10,000 per share, rank higher in priority to our Common Stock and will automatically convert into Public Shares upon the consummation of our business combination. The Sponsor Preferred Shares are entitled to a cumulative annual dividend of 5.0%, payable in cash. We will pay the accrued dividends at the time of the conversion of the Sponsor Preferred Shares. The number of Public Shares issuable upon conversion will equal the aggregate liquidation preference of the Sponsor Preferred Shares, divided by the Final Exercise Price. Our Sponsor will have paid the same per-share price to acquire Public Shares upon conversion as exercising SPAR holders and, because the dividends are payable only in cash, the Sponsor Preferred Shares will not have a dilutive effect on stockholders. Our Sponsor may, but is not obligated to, purchase additional Sponsor Preferred Shares prior to our business combination in order to provide us with additional working capital. The Sponsor Preferred Shares are generally not transferable, and the Public Shares issuable upon the conversion thereof will have certain registration rights.

 

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We will use the proceeds from the sale of the Sponsor Shares and Sponsor Preferred Shares to pay expenses in connection with the Distribution and for our operating expenses, including search costs for identifying a potential business combination partner and other expenses related to executing a business combination.

Sponsor Warrants and Director Warrants

Issuance and Purchase Price. Prior to the Distribution, we will issue the Sponsor Warrants to our Sponsor, and the Director Warrants to certain of our independent director nominees or Board observers. Our Private Warrants will represent substantially the same investment opportunity as do the private warrants of PSTH—the right to acquire a fixed percentage of a post-combination company. An affiliate of our Sponsor paid $65.0 million for its PSTH sponsor warrants (exercisable for 5.95% of the post-combination company), and these independent director nominees paid an aggregate of approximately $2.4 million (exercisable for 0.26% of the post-combination company), which purchase prices were determined at the time of issuance, in consultation with a third-party, nationally recognized valuation firm, to be the fair market value of the private warrants. Our Private Warrants will have substantially similar terms, with the primary difference being that the Sponsor Warrants are exercisable for 4.95% of the post-combination company, rather than 5.95%.

We believe that, if PSTH does not consummate a business combination, the holders of our Private Warrants will have, in effect, already paid for the investment opportunity represented by the Private Warrants. Accordingly, we will issue the Sponsor Warrants and Director Warrants to their respective holders at a nominal cost. However, if PSTH does consummate a business combination and the holders of the PSTH private warrants may be able to realize the investment opportunity for which they previously paid, the holders of our Private Warrants will pay our company for the investment opportunity represented by our Private Warrants. In such event, we will determine the fair market value of our Sponsor Warrants and Director Warrants in consultation with a third-party, nationally recognized valuation firm, and the holders of the Private Warrants will pay that amount to our company as a purchase price. We expect that, prior to the time at which this Registration Statement is declared effective, PSTH will have either consummated a business combination or returned funds to its investors. The fair value of the Private Warrants will be determined as of the time of their issuance, and will take into account various factors including, but not limited to: the restriction on sale or transfer of the Private Warrants and the shares issuable upon exercise thereof, the estimated range of possible business combination partner equity values, and the probability of consummating a business combination prior to the expiration of our SPARs. Any valuation process will be inherently uncertain and imprecise, and may result in a higher or lower valuation, or terms more or less favorable, than would be obtained in an arm’s length negotiation between third parties.

Terms of Private Warrants. The Sponsor Warrants will be exercisable, in the aggregate, for 4.95% of the Public Shares that are outstanding as of the time immediately following the consummation of our business combination, on a fully-diluted basis (such 4.95% of shares, the “Reference Shares”). The Sponsor Warrants will have an exercise price equal to 120% of the Final Exercise Price (the “Reference Price”), meaning that our Sponsor will participate in the value of our business combination only if the Public Shares appreciate by at least 20% above the price at which SPAR holders purchase Public Shares. For example, if the Final Exercise Price is $10.00, the Reference Price will be $12.00. Our Sponsor may exercise the Sponsor Warrants on a cashless basis, in which case it would receive upon exercise that number of shares equal to (i) the number of Reference Shares, multiplied by (ii)(a) the “fair market value” of a Public Share in excess of the Reference Price, divided by (b) the fair market value of a Reference Share. As used above, “fair market value” refers to the volume-weighted average trading price of a Public Share over the 10 consecutive trading days ending on the third trading day prior to a notice of exercise being sent.

The Director Warrants will be identical to the Sponsor Warrants, except that they are exercisable, in the aggregate, for approximately 0.26% of the Public Shares outstanding as of the time immediately following the

 

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consummation of our business combination, on a fully-diluted basis. The Sponsor Warrants and the Director Warrants will be exercisable, in the aggregate, for approximately 5.21% of the outstanding Public Shares of the post-combination company.

The Private Warrants will generally not be saleable or transferable until three years after the consummation of our business combination and are subject to certain adjustments as described herein. The Public Shares issuable upon exercise of the Private Warrants will generally not be saleable or transferable until three years after the consummation of our business combination and will have certain registration rights. The Private Warrants will expire on the date that is 10 years from the consummation of our business combination. The Private Warrants may be exercised in whole or in part and will not be subject to redemption.

Effect of Sponsor Warrants and Director Warrants on Ownership

The unique structure of our Sponsor Warrants and Director Warrants, which are exercisable for a fixed percentage of the pro forma post-combination company, will have different effects on the ownership interest of public stockholders in the post-combination company, and that of the owners of the business combination partner (assuming such stockholders remain investors in the post-combination company) as compared to the typical structure of special purpose acquisition companies, in which the sponsor maintains an ownership interest equal to 25% of that of its public stockholders in the post-combination company (or greater, in the case of redemptions).

Though the number of shares issuable to the holders of the Private Warrants (for purposes of this discussion, the “Private Holders”) is determined with respect to 4.95% and 0.26%, respectively, of the fully-diluted Public Shares outstanding immediately following the business combination, the actual ownership stake of the Private Holders in the post-combination business upon exercise will differ significantly depending on the fair market value. At or below the Reference Price (120% of the Final Exercise Price), the Private Holders will not have any ownership stake. Accordingly, there will be no dilutive effect on our security-holders who become holders of Public Shares (for the purposes of this discussion, the “Public Stockholders,” which includes both exercising SPAR holders and the Forward Purchasers). Above the Reference Price, the holders would receive upon exercise a number of shares calculated as provided above. At higher market prices, the ownership stake (and overall dilutive effect on Public Stockholders) increases towards its limit of approximately 5.21%.

Compared to a conventional SPAC, in which the dilutive effect of the sponsor promote increases significantly as the SPAC owns a larger percentage of the post-combination company, the dilutive effect from our Sponsor Warrants and Director Warrants does not vary based on the relative size of our business combination partner. In a conventional SPAC, all stockholders other than the sponsor experience immediate dilution as a result of the sponsor promote, regardless of whether the stock price of the post-combination company increases or decreases.

As an example, assume a transaction in which the Final Exercise Price is $10.00, the valuation of the post-combination company is $20.0 billion (with 2.0 billion shares outstanding, based on the initial per-share value of $10.00), and our company contributes $4.0 billion in proceeds from the exercise of our SPARs, the sale of the Sponsor Preferred Shares and the Forward Purchase. In such a transaction, our stockholders (including the Forward Purchasers) would initially own 20% of the post-combination company. At a fair market value of $12.00 per share or lower, the Private Warrants would be out-of-the-money and therefore would not be exercised. At a fair market value of $15.00 per share, a 50% increase in our stock price, upon a cashless exercise, the holders of the Private Warrants would be issued approximately 22.0 million Public Shares (the value of 109.9 million Reference Shares in excess of the $12.00 Reference Price, divided by the $15.00 fair market value), constituting ownership of 1.1% of the post-combination company. Our Public Stockholders would own 19.8% of the post-combination company (a 0.2% decrease in ownership, representing dilution of 1.1%). At a fair market value of $30.00 at the time of exercise, a three-fold increase in our stock price, the holders of the Private

 

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Warrants would be issued approximately 66.0 million Public Shares upon exercise. The holders of the Private Warrants would thereby own 3.2% of the post-combination company, and the Public Stockholders would own 19.4% of the post-combination company (a 0.6% decrease, or 3.2% dilution).

As shown below, the size of the ownership stake of all Public Stockholders decreases proportionately with a larger deal size. However, the dilutive effect for Public Stockholders does not vary significantly with deal size, nor does the ownership of the Private Holders—for each one percent of ownership acquired by the Private Holders, the Public Stockholders are diluted by one percent. The maximum amount of dilution is 5.21%. The illustration below assumes total proceeds of $4.0 billion are contributed by our company in the transaction.

 

Fair Market Value of Public Share

   Post-Combination Company Equity Value     Public
Dilution
    Private
Ownership
 
   $8.0B     $12.0B     $16.0B     $24.0B     $40.0B  
   Public Ownership  
$10.00      50.0     33.3     25.0     16.7     10.0     0.0     0.0
$12.00      50.0     33.3     25.0     16.7     10.0     0.0     0.0
$15.00      49.5     33.0     24.7     16.5     9.9     1.1     1.1
$20.00      48.9     32.6     24.5     16.3     9.8     2.2     2.2
$25.00      48.6     32.4     24.3     16.2     9.7     2.8     2.8
$30.00      48.4     32.3     24.2     16.1     9.7     3.2     3.2
$50.00      48.0     32.0     24.0     16.0     9.6     4.0     4.0

Corporate Information

Our offices are located at 787 Eleventh Avenue, 9th Floor, New York, NY 10019, and our telephone number is (212) 813-3700. Upon the closing of the Distribution, our website address will be http://www.[●].com. Our website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered to be part of, this prospectus or the registration statement of which this prospectus is a part. You should not rely on any such information in making your decision whether to invest in our securities.

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or 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 of 2002, or 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 stockholder 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.

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.

 

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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 this 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 Common Stock held by non-affiliates exceeds $700.0 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.

 

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The SPARs Distribution

You should carefully consider the risks set forth in the section of this prospectus entitled “Risk Factors.”

 

Securities Offered

We are distributing, at no cost to the recipients, 244,444,444 subscription warrants to acquire one Public Share at a minimum exercise price of $10.00.

 

  In connection with entering into the Definitive Agreement, we will determine the Final Exercise Price of the SPARs, which will be no less than $10.00.

 

  No fractional SPARs will trade, only whole SPARs may be exercised, and no fractional Public Shares will be issued upon the exercise of the SPARs.

 

  As described further herein, although we intend to list our SPARs on the NYSE, doing so will require the approval and adoption of a new listing rule. There is no guarantee we will be able to list our SPARs on the NYSE, in which case they would trade on the “over-the-counter” market, which may present significant risks to the holders of SPARs, including lower availability and efficiency of market price quotations, significantly less liquidity, increased trading costs, the absence of certain corporate governance protections, and the applicability of state securities laws that could result in restrictions on the sale of our SPARs. See Listing of SPARs, page 3, and Risk Factors, page 55.

 

Distribution

200,000,000 SPARs will be distributed on a pro rata basis to the holders of the Class A common stock of PSTH. If PSTH consummates an initial business combination, SPARs will be distributed on a pro rata basis only in respect of those shares of PSTH Class A common stock that remain outstanding after PSTH stockholders have had the opportunity to redeem their shares in connection with PSTH’s initial business combination. If PSTH does not consummate an initial business combination and liquidates its trust account and return funds to its public stockholders, one SPAR will be distributed in respect of each of the 200,000,000 shares of PSTH Class A common stock outstanding.

 

  44,444,444 SPARs will be distributed on a two-to-one basis in respect of each of the 22,222,222 distributable redeemable warrants of PSTH.

 

  The SPARs will be distributed to the holders of record of such PSTH securities as of the Distribution Record Date. Our Board has set [●], 2021 as the Distribution Record Date.

 

Search Period

Following the Distribution, we will begin our search for a business combination partner, conduct due diligence on potential business combination partners, and negotiate the Definitive Agreement. Upon entering into the Definitive Agreement, we will announce the Final Exercise Price.

 

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Disclosure Period

As soon as practicable following the time at which we have entered into a Definitive Agreement with respect to our business combination, we will file a Post-Effective Amendment to this registration statement that will include comprehensive information regarding the proposed business combination. We will also seek to satisfy all Disclosure Period Closing Conditions, which include all express closing conditions other than those that can only be satisfied at a later date. We will seek to have the Post-Effective Amendment declared effective once the Disclosure Period Closing Conditions have been satisfied. As promptly as practicable after the Post-Effective Amendment has been declared effective by the SEC, we will distribute the Post-Effective Amendment to SPAR holders.

 

SPAR Holder Election Period

The SPAR Holder Election Period will begin upon the mailing of the Post-Effective Amendment. SPAR holders will have 20 business days to submit an Election, which is an offer to exercise the number of SPARs indicated on their notice of Election, and pay the applicable aggregate exercise price in order to acquire Public Shares. Elections will not be revocable except in certain limited circumstances. SPARs will become restricted from trading upon the earlier of (i) submission of an Election and (ii) two business days prior to the end of the SPAR Holder Election Period.

 

  If the business combination is abandoned, all Elections will be rejected, the SPARs will remain with their respective holders, and again become tradable. The company will seek a new business combination.

 

  In certain circumstances, the Board may extend or postpone the SPAR Holder Election Period.

 

Company Decision Period

Following this SPAR Holder Election Period, the company will have up to 10 calendar days to determine whether to proceed with the proposed business combination. The Board will assess whether the Decision Period Closing Conditions have or will be satisfied, including with respect to the available proceeds from the expected exercise of SPARs, the Forward Purchase, and any other financing. If the Board decides not to proceed, all Elections will be rejected. If the Board decides to proceed, all Elections will be accepted, and the SPAR Holder Payment Period will begin.

 

  SPARs will be restricted from trading during the Company Decision Period.

 

  In certain circumstances, the Board may extend the Company Decision Period.

 

SPAR Holder Payment Period

Electing SPAR holders will have five calendar days to submit exercise payments for the Public Shares they have elected to purchase. Payments received will be held in the Custodial Account

 

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and will not be released until consummation of the business combination, except in connection with an Early Termination. SPARs for which payment has been received will automatically be exercised concurrently with the consummation of the business combination.

 

  SPARs will be restricted from trading during the SPAR Holder Payment Period. In certain limited circumstances, the Board may extend the SPAR Holder Payment Period.

 

Expiration

Our SPARs will expire upon the earlier to occur of (i) the consummation of our business combination (or the occurrence of an Early Termination during the SPAR Holder Payment Period) and (ii) the date that is 10 years from the issuance of our SPARs.

 

Issuance of Public Shares

We will issue our Public Shares in connection with the closing of our business combination. Depending on the form our transaction takes, the Public Shares may be issued as shares of the post-combination company.

 

  If we fail to consummate our business combination after the receipt of payment from SPAR holders, the funds held in the Custodial Account, inclusive of any interest and net of taxes, will be returned promptly on a pro rata basis to electing holders, and no Public Shares will have been issued.

 

Distribution of SPARC II Tontine Warrants

Our Sponsor intends to form an acquisition company, SPARC II, substantially similar to ours. In connection with the consummation of our business combination, SPARC II would distribute 244,444,444 of its subscription warrants, or SPARC II Tontine Warrants, on a pro rata basis, to SPAR holders who exercised their SPARs in connection with our business combination.

 

  We cannot guarantee that our Sponsor will form such an entity or carry out such a distribution, nor can we guarantee that the terms of any such company or securities would not differ materially from those of our company.

 

Use of Proceeds

We will use the proceeds from the sale of the Sponsor Shares ($236,600) and the Sponsor Preferred Shares (expected to be $30.0 million) to fund the costs of the Distribution and our operating costs. Of such proceeds, $5,000,001 will be held in an escrow account until the earlier of the consummation of our business combination or the liquidation of our company. We will not obtain any proceeds from public investors in connection with the Distribution. We will obtain proceeds from public investors only once the SPARs are exercisable, during the SPAR Holder Payment Period.

 

 

The aggregate proceeds from the exercise of the SPARs at the Minimum Exercise Price of $10.00 will be approximately $2.4 billion, assuming all SPARs are exercised. There is no maximum

 

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Final Exercise Price, and accordingly, no maximum amount of proceeds we could raise.

 

  We will also have up to $3.5 billion of proceeds from the Forward Purchase Agreement, of which $500.0 million to $1.0 billion (depending on the Final Exercise Price) the Committed Forward Purchasers will be obligated to purchase.

All proceeds from the exercise of the SPARs will be held in an interest-bearing Custodial Account, and will not be released until our business combination (other than in connection with the payment of certain taxes on interest income earned on the funds in the Custodial Account) or until an Early Termination occurs. We will use the proceeds from the exercise of SPARs and the sale of the Forward Purchase shares to fund our business combination.

 

Transferability of SPARs

Prior to the SPAR Holder Election Period, and subject to applicable securities laws, SPARs may be transferred by the holders thereof. During the SPAR Holder Election Period, SPARs will become restricted from trading upon the earlier of an Election being submitted with respect to such SPAR, or the date that is two business days prior to the end of the SPAR Holder Election Period. Once an Election is submitted, a SPAR will not be transferable. During the Company Decision Period and SPAR Holder Payment Period, no SPARs will be transferable. Following the consummation of the Business Combination, no SPARs will remain outstanding.

 

No Board Recommendation

Our Board is not, at this time, making any recommendation regarding the exercise of our SPARs. Holders of SPARs are urged to make their decision based on their own assessment of our company and the proposed business combination.

 

Rights of SPAR Holders

SPAR holders will have revocation rights only in the event that a proposed amendment to the Charter, SPAR Agreement or Definitive Agreement, in the reasonable, good-faith judgment of our independent directors, would have a materially adverse impact on SPAR holders (which we refer to as Materially Adverse Amendments), and only during certain periods.

 

  Charter. SPAR holders will have revocation rights as provided below, and will not at any time have the right to vote on an amendment to the Charter. If a Materially Adverse Amendment occurs during the SPAR Holder Election Period, SPAR holders will have a period of at least 10 business days in which they may revoke their Elections. We will not be permitted to make Materially Adverse Amendments to the Charter following the SPAR Holder Election Period.

 

 

SPAR Agreement: SPAR Holders will have revocation rights and approval rights as provided below. During the Search Period, Disclosure Period and SPAR Holder Election Period, any proposed Materially Adverse Amendment must be approved by the holders of a

 

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majority of SPARs present and voting for or against such amendment. If a Materially Adverse Amendment occurs during the SPAR Holder Election Period, in connection with such vote, holders will be able to indicate whether they wish to revoke their Elections in the event that the amendment is approved. If the amendment is not approved, no Elections will be revoked. SPAR holders must submit a ballot to have the opportunity to revoke their Elections. We will not be permitted to propose Materially Adverse Amendments to the SPAR Agreement following the SPAR Holder Election Period.

 

  Definitive Agreement: SPAR holders will have revocation rights as provided below, and will not at any time have the right to vote on any amendment to the Definitive Agreement. If a Materially Adverse Amendment to the Definitive Agreement is made during the SPAR Holder Election Period, Company Decision Period or SPAR Holder Payment Period, holders will have a period of at least 10 business days to revoke their elections.

 

  The SPARs will generally not be tradable during a revocation period. Except as provided above, all Elections to exercise SPARs are irrevocable, even if the electing holders thereof later learn of information they consider unfavorable to the exercise of their SPARs. The Board, in its sole discretion, may provide a revocation right in other circumstances, or decide to extend or postpone the SPAR Holder Election Period, but it is under no obligation to do so other than as provided above. Holders of SPARs should not submit an Election unless they are certain that they wish to exercise their SPARs and acquire Public Shares.

 

Material U.S. Federal Income Tax Considerations of the Distribution

Although the matter is not free from doubt, we expect that U.S. Holders (as defined below) will recognize ordinary income upon their receipt of SPARs in an amount equal to the fair market value of the SPARs when received. We do not expect any such income to qualify for the dividends received deduction or to be treated as qualified dividend income.

 

  We also expect that a Non-U.S. Holder (as defined below) will be subject to withholding tax upon receipt of the SPARs in an amount equal to 30% (possibly subject to reduction under an applicable income tax treaty) of the fair market value of the SPARs at such time,

unless the receipt of the SPARs is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains in the United States).

 

  You should seek specific tax advice from your tax advisors in light of your particular circumstances and as to the applicability and effect of any other tax laws. See United States Federal Income Tax Considerations.

 

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Procedures for Exercising SPARs

Beginning on or about the date that the Post-Effective Amendment is distributed to SPAR holders, the SPAR Holder Election Period will begin. Holders will have 20 business days to submit their Elections, which are generally irrevocable and, upon the company’s decision to proceed with the transaction, will obligate electing holders to submit payment during the SPAR Holder Payment Period to exercise the number of SPARs specified in their notice of Election. In submitting an Election, SPAR holders consent to the automatic exercise of their SPARs concurrently with the consummation of the business combination.

 

  The Post-Effective Amendment will provide detailed information regarding the procedures for submitting Election, payment, and the exercise of SPARs.

 

Warrant Agent and Custodian

We anticipate retaining Continental Stock Transfer & Trust as warrant agent and as custodian.

 

Fees and Expenses

We are not charging any fee or sales commission to issue and distribute SPARs, or to issue Public Shares upon the exercise thereof (other than the Exercise Price). If you exercise your SPARs through a custodian bank, broker, dealer or other nominee, you are responsible for paying any fees your nominee may charge you.

 

Proposed NYSE symbols

SPARs: “[●].W”

Common Stock: “[●]”

 

  The listing and trading of SPARs on the NYSE will require the SEC to approve a new listing rule submitted by the NYSE permitting the listing and trading of subscription warrants by acquisition companies. See Listing of SPARs, page 3, and Risk Factors, page 55.

 

Trading Commencement of Securities

We expect that the SPARs will begin trading on or shortly after the Distribution. The SPARs will cease trading upon the earlier of (i) an Election being submitted with respect to any SPAR and (ii) the date that is two business days prior to the end of the SPAR Holder Election Period. Following the SPAR Holder Election Period, Unelected SPARs will remain outstanding until their expiration, but will not be tradable or exercisable, and will not have any value unless we abandon the business combination and pursue a new business combination. We expect that our Public Shares will begin trading on or shortly after their issuance. Depending on the form our business combination takes, our Public Shares may be issued as shares of the post-combination company.

 

  No fractional SPARs or Public Shares will be issued, and only whole SPARs and Public Shares will trade.

 

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Outstanding Common Stock:

 

Number Outstanding Before the Distribution:

23,660 Sponsor Shares1

 

Number Outstanding After the Distribution:

23,660 Sponsor Shares2

 

Number Outstanding Upon Closing:

297,468,104 Public Shares3

 

Sponsor Shares

On November 10, 2021, our Sponsor purchased 1,000 Sponsor Shares for an aggregate purchase price of $10,000, or $10.00 per share. On November 22, 2021, our Sponsor purchased 22,660 Sponsor Shares for an aggregate purchase price of $226,600, or $10.00 per share. If the Final Exercise Price is higher than $10.00, the Sponsor Shares will be subject to a reverse stock split such that the aggregate purchase price paid for the Sponsor Shares, divided by the number of Sponsor Shares outstanding immediately following the reverse stock split, equals the Final Exercise Price. Prior to the consummation of our business combination, the Sponsor Shares may be transferred only to affiliates of PSCM. The Sponsor Shares will have certain registration rights.

 

Forward Purchase Agreement

Prior to the Distribution, we will enter into a Forward Purchase Agreement with the Forward Purchasers (affiliates of Pershing Square) for an aggregate of $3.5 billion, a portion of which the Committed Forward Purchasers will be required to purchase, and the remainder of which the Additional Forward Purchaser may elect to purchase. The Committed Forward Purchasers will be obligated to purchase a minimum of $500.0 million of Public Shares if the Final Exercise Price is $10.00, and a proportionately greater amount up to $1.0 billion at a Final Exercise Price of $20.00 or greater. The Additional Forward Purchaser may elect to purchase up to the amount not subject to the obligations of the Committed Forward Purchasers and, at the time we enter into a Definitive Agreement, will commit to

 

1 

23,660 shares of Common Stock, or Sponsor Shares, purchased by our Sponsor at a price of $10.00 per share in a private placement prior to the date of this prospectus, and subject to a reverse stock split in proportion to any increase in the SPAR exercise price. Does not include shares issuable upon the conversion of the Sponsor Preferred Shares.

2 

Does not include Public Shares issuable upon exercise of 244,444,444 SPARs.

3 

Assumes a Final Exercise Price of $10.00. Includes (i) 23,660 Sponsor Shares, (ii) 3,000,000 Public Shares issuable upon conversion of the Sponsor Preferred Shares, (iii) 50,000,000 Committed Forward Purchase shares and (iv) 244,444,444 Public Shares issued in connection with the exercise of all SPARs being distributed. Does not include any Additional Forward Purchase shares, shares issuable upon the purchase of additional Sponsor Preferred Shares by our Sponsor, or any additional shares that may be issued. Prior to the consummation of our business combination, we will amend our Charter to increase the number of shares of Common Stock authorized for issuance.

 

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the amount of Public Shares it will purchase. The Public Shares purchased pursuant to the Forward Purchase Agreement will have a purchase price equal to the Final Exercise Price at which SPAR holders will purchase Public Shares, and the purchases will take place simultaneously with the closing of our business combination.

 

  The Committed Forward Purchasers’ obligation to purchase the Committed Forward Purchase shares may be allocated among the Committed Forward Purchasers from time to time, but may not be transferred to any third parties. The Additional Forward Purchaser’s right to purchase the Additional Forward Purchase shares may be transferred, in whole or in part, to any Affiliate Transferee, but not to third parties.

 

  The Public Shares purchased pursuant to the Forward Purchase Agreement will be subject to certain transfer restrictions and, as long as such shares are held by the Forward Purchasers or their permitted transferees, will have certain registration rights.

 

Sponsor Preferred Shares

In order to fund our initial capital needs, our Sponsor will purchase, prior to the Distribution, an aggregate of $30,000,000 of mandatorily convertible cumulative preferred shares, par value $0.0001 per share, which we refer to as the “Sponsor Preferred Shares.” The Sponsor Preferred Shares generally do not have any voting rights, have a liquidation preference of $10,000 per share, rank higher in priority to our Common Stock and will automatically convert into Public Shares upon the consummation of our business combination. The Sponsor Preferred Shares are entitled to a cumulative annual dividend of 5.0%, payable in cash. We will pay all accrued dividends at the time of the conversion of the Sponsor Preferred Shares. The number of Public Shares issuable upon conversion will equal the aggregate liquidation preference of the Sponsor Preferred Shares, divided by the Final Exercise Price (i.e., at the Minimum Exercise Price of $10.00, $30,000,000 of Sponsor Preferred Shares would convert into 3,000,000 Public Shares). The Sponsor Preferred Shares may be transferred only to affiliates of PSCM, and the Public Shares issuable upon the conversion thereof will have certain registration rights.

 

Sponsor Warrants

Prior to the Distribution, we will issue the Sponsor Warrants to our Sponsor. The Sponsor Warrants will be exercisable, in the aggregate, for 4.95% of the Public Shares that are outstanding as of the time immediately following the consummation of our business combination, on a fully-diluted basis (such 4.95% of shares, the “Reference Shares”). The Sponsor Warrants will have an exercise price equal to 120% of the Final Exercise Price (the “Reference Price”), meaning that our Sponsor will participate in the value of our business combination only if the Public Shares appreciate by at least 20% above the price at which SPAR holders purchase their Public Shares. If the Final Exercise Price is $10.00, the Reference Price will be $12.00. Our Sponsor may exercise the Sponsor Warrants on a

 

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cashless basis, in which case it would receive upon exercise that number of shares equal to (i) the number of Reference Shares, multiplied by (ii)(a) the “fair market value” of a Public Share in excess of the Reference Price, divided by (b) the fair market value of a Reference Share. As used above, “fair market value” refers to the volume-weighted average trading price of a Public Share over the 10 consecutive trading days ending on the third trading day prior to a notice of exercise being sent.

 

  The Sponsor Warrants will generally not be saleable or transferable until three years after the consummation of our business combination and are subject to certain adjustments as described herein. The Public Shares issuable upon exercise of the Sponsor Warrants will generally not be saleable or transferable until three years after the consummation of our business combination and will have certain registration rights (except to certain permitted transferees and as described under the section of this prospectus entitled “Principal Stockholders—Restrictions on Transfers of Sponsor Warrants”). The Sponsor Warrants will expire on the date that is 10 years from the consummation of our business combination. The Sponsor Warrants may be exercised in whole or in part and will not be subject to redemption.

 

Director Warrants

Prior to the Distribution, we will issue the Director Warrants to certain of our independent director nominees or Board observers. The Director Warrants are identical to the Sponsor Warrants, except that they are exercisable, in the aggregate, for 0.26% of the Public Shares outstanding as of the time immediately following the consummation of our business combination, on a fully-diluted basis. The Sponsor Warrants and the Director Warrants will be exercisable, in the aggregate, for approximately 5.21% of the outstanding Public Shares.

 

Letter Agreement with Sponsor

Our Sponsor has entered into a letter agreement (the “Letter Agreement”) with us, pursuant to which it has agreed to vote all Common Stock held by it as recommended by our Board. In addition, pursuant to the Letter Agreement, our Sponsor may not transfer the Sponsor Shares or Sponsor Preferred Shares prior to the consummation of our business combination, with certain limited exceptions.

 

Registration Rights Agreement

Concurrently with the Distribution, we will enter into a Registration Rights Agreement with our Sponsor, the Forward Purchasers and our independent director nominees and Board observers, pursuant to which we will be required to use commercially reasonable efforts to file a registration statement within 120 days of our business combination, and use our best efforts to cause such registration statement to be declared effective as soon as practicable (but in no event later than 60 days) thereafter, providing for the resale, under Rule 415 of the Securities Act, of (i) the Sponsor Shares, (ii) the Public Shares issuable upon the conversion of the Sponsor Preferred Shares, (iii) the Public Shares issuable upon exercise of the Sponsor

 

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Warrants, (iv) the Public Shares issuable upon exercise of the Director Warrants, (v) the Public Shares issued pursuant to the Forward Purchase Agreement, (vi) Public Shares issued upon the conversion of working capital loans and (vii) any other shares of the company that the parties to the Registration Rights Agreement have purchased on the open market, subject to certain conditions as provided in the Registration Rights Agreement. The parties to the Registration Rights Agreement, and their permitted transferees, will be entitled to make up to 10 demands that we register these, and will have certain “piggyback rights” with respect to other registration statements filed by the company. The post-combination company will bear the cost of registering these securities.

 

Voting

All matters submitted to a vote of stockholders will require the approval of the holders of a majority of our outstanding Common Stock. Any stockholder approvals required in connection with our business combination will be obtained prior to the issuance of our Public Shares, through a consent of our Sponsor, the sole owner of our Common Stock prior to the consummation of our business combination. Accordingly, our investors will not have the opportunity to vote in favor of or against our proposed business combination. If the holders of our SPARs disapprove of the proposed transaction, their recourse will be limited to choosing not to exercise their SPARs and/or selling their SPARs.

 

Anticipated expenses and funding sources

Our Sponsor has purchased 23,660 Sponsor Shares as of the date of this prospectus, for an aggregate price of $236,600, and intends to purchase 3,000 Sponsor Preferred Shares prior to the Distribution, for an aggregate purchase price of $30,000,000. Of our Sponsor’s initial investment in our company, $5,000,001 will be held in an escrow account until the earlier of an Early Termination or the consummation of our business combination, and will not be available to fund our operating expenses. All proceeds from the exercise of our SPARs will be held in an interest-bearing Custodial Account. Except for any amounts paid in respect of taxes on any interest earned on the funds in the Custodial Account, unless and until the consummation of our business combination or the liquidation of our company, no proceeds held in the Custodial Account will be available for our use. We currently intend to place the proceeds from the exercise of SPARs in a Custodial Account that is interest-bearing, in which case we may determine not to invest such funds. However, if the proceeds held in the Custodial Account are invested, such funds will be invested only in U.S. Treasury obligations with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in U.S. Treasury obligations. We will disclose in each quarterly and annual report filed with the SEC prior to our business combination whether the proceeds deposited in the Custodial Account are invested in U.S. Treasury obligations or money market funds or a combination thereof. We

 

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expect that, due to the brief period in which funds will be held in the Custodial Account, any interest earned will be nominal. Until the consummation of our business combination, the only funds available to pay our operating costs will be:

 

   

proceeds from sales of Sponsor Shares and Sponsor Preferred Shares; and

 

   

any loans or additional investments from our Sponsor, members of our Management Team or their affiliates or third parties, although they are under no obligation to advance funds or invest in us.

 

  There is no limitation on our ability to raise funds privately, including through the sale of additional Sponsor Preferred Shares, or through loans in connection with our business combination. Up to $5.0 million of working capital loans may be converted into Public Shares at the Final Exercise Price upon the consummation of our business combination at the option of the lender.

 

Release of funds in Custodial Account

If, during the SPAR Holder Payment Period, we are unable to consummate our business combination, all amounts held in the Custodial Account will be returned, inclusive of interest, net of taxes and without penalty, on a pro rata basis to all electing holders of our SPARs. Concurrently with the consummation of our business combination all amounts held in the Custodial Account will be released to us. We will use these funds to pay all or a portion of the consideration payable to the target or owners of the target of our business combination and to pay other expenses associated with our business combination. If our business combination is paid for using equity or debt instruments, or not all of the funds released from the Custodial Account are used for payment of the consideration in connection with our business combination, we may apply the balance of the cash released to us from the Custodial Account for general corporate purposes, including for maintenance or expansion of operations of post-combination businesses, the payment of principal or interest due on indebtedness incurred in completing our business combination, to fund the purchase of other companies or make other investments, or for working capital.

 

Structure of business combination

Our business combination may be structured in a variety of ways, including, but not limited to, a merger, capital stock exchange, asset acquisition, stock purchase, or reorganization, provided that it shall meet the definition of “initial business combination” applicable to SPACs under the NYSE listing rules, or such listing rule applicable to subscription warrant companies as in effect at the time of the Distribution.

 

Limited payments to insiders

Certain of our independent directors will receive cash compensation for their service as directors. Certain of our independent director

 

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nominees will receive Director Warrants. Otherwise, there will be no finder’s fees, reimbursements, consulting fees, or cash or non-cash payments made to our Sponsor, directors, director nominees or officers, or their affiliates, for services rendered to us prior to or in connection with the completion of our business combination.

 

  The following payments will be made to our Sponsor, directors, director nominees or officers, or their affiliates, prior to the completion of our business combination:

 

   

Compensation of $275,000 per year, payable on a quarterly basis, to certain of our independent directors and an additional $25,000 per year, payable on a quarterly basis, to the chairs of each of our board committees;

 

   

Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing our business combination; and

 

   

Repayment of any other loans which may be made by our Sponsor or an affiliate of our Sponsor or certain of our directors and officers to finance transaction costs in connection with an intended business combination, the terms of which have not been determined, and nor have any written agreements been executed with respect thereto.

 

  In addition, we will issue the Sponsor Warrants and the Director Warrants at a nominal initial cost to the holders thereof. In certain circumstances, the holders of the Private Warrants may pay a purchase price for such securities to our company.

 

  Our audit committee will review on a quarterly basis all payments that were made to our Sponsor, directors or officers, or their affiliates.

 

  Up to $5.0 million of loans may be converted into Public Shares upon consummation of our business combination at a price equal to the Final Exercise Price, at the option of the lender. Such shares will have certain registration rights.

 

Audit Committee

We will establish and maintain an audit committee, which will be composed entirely of independent directors to, among other things, monitor compliance with the terms described above and the other terms relating to the Distribution. If any noncompliance is identified, the audit committee has the responsibility to immediately take all action necessary to rectify such noncompliance or otherwise to cause our company to comply with the terms of the Distribution. For more information, see the section of this prospectus entitled Management—Committees of the Board of Directors—Audit Committee.

 

Permitted purchases of SPARs by our affiliates

Our Sponsor, directors, officers, advisors or their affiliates may purchase SPARs in privately negotiated transactions or in the open

 

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market prior to the Company Decision Period. 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. If they engage in such transactions, they will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. 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.

 

Conflicts of Interest

Each of our directors, director nominees and officers currently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present business combination opportunities to such entity. Our Charter will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. Neither the affiliates of our Sponsor nor members of our Management Team who are employed by our Sponsor or its affiliates have any obligation to present us with any opportunity for a potential business combination of which they become aware. Accordingly, in the future, if any of our directors or officers becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity. Any presentation of such opportunities to entities other than us, or affiliates of our Sponsor, may present additional conflicts.

 

  Our affiliate, PSCM, manages or advises several funds. PSCM and its affiliates may, in the future, sponsor acquisition companies with whom we could potentially compete. PSCM and its affiliates may form and manage other investment vehicles investing in public or private companies at any time prior to the announcement of our business combination, including, but not limited to, private or public investment vehicles that may invest side-by-side with our company. In any of the foregoing circumstances, a conflict of interest may arise. To the extent any such conflicts arise, we cannot guarantee that they will be resolved in our favor.

 

 

Although we do not intend to enter into a business combination with a target business that is affiliated with our sponsor, our directors or our executive officers, we are not prohibited from doing so. In the event

 

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we enter into such a transaction, our Charter will require that we, or a committee of independent directors, obtain an opinion from an independent investment banking firm which is a member of FINRA or a qualified independent accounting firm that such a business combination is fair to our company from a financial point of view.

 

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Summary Financial Data

The following table summarizes the relevant financial data for our business and should be read with our financial statements, which are included in this prospectus. We have not had any significant operations to date, so only balance sheet data is presented.

 

Balance Sheet Data:

   November 10, 2021  
     (Audited)  

Working capital (deficiency)

   $ (1,149,986

Total assets

     10,000  

Total liabilities

     1,149,986  

Stockholders’ equity (deficit)

     (1,139,986

In the event of an Early Termination, the proceeds then on deposit in the Custodial Account, including any interest earned on such funds and not previously released to us to pay our taxes (less $100,000 of interest to pay dissolution expenses), will be returned to the electing holders of SPARs in proportion to the aggregate exercise price paid by each holder. The holders of our Sponsor Shares and Sponsor Preferred Shares will not be entitled to any liquidating distributions from the Custodial Account in respect of such shares. Upon the liquidation of our company prior to the consummation of our business combination, we will return the amounts in the Custodial Account (if any) as described above. Any remaining assets of the company will be distributed first in respect of the Sponsor Preferred Shares in the amount of their liquidation preference of $10,000 per share, followed by any outstanding shares of Common Stock.

 

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Risks

We are a company newly formed for the purpose of entering into a business combination, and we have conducted no operations. Our SPARs involve, and when issued our Public Shares will involve, a high degree of risk. You should consider carefully all of the risks described in the section entitled Risk Factors, together with the other information contained in this prospectus, before making a decision to retain, sell, and/or exercise our SPARs.

 

   

Our company structure is the first of its kind and is subject to market uncertainties that may cause the trading price of our SPARs to be volatile.

 

   

The listing of our company on the NYSE will require a change to the listing rules. If such rule change is not adopted, our SPARs will trade in the “over-the-counter,” which may have a significant adverse impact on SPAR holders’ ability to trade in our SPARs.

 

   

We may fail to maintain the listing of our SPARs on the NYSE and an active trading market in our SPARs may not develop.

 

   

We may never enter into a definitive transaction agreement with respect to our business combination, in which case our SPARs will expire worthless.

 

   

We expect the receipt of our SPARs to be taxable to U.S. Holders, which may cause U.S. Holders to sell a portion of their SPARs and may reduce the trading price of our SPARs. If a U.S. Holder’s SPARs expire unexercised, the holder’s resulting capital losses may be subject to limitation.

 

   

SPAR holders will not be entitled to vote on our proposed business combination, which means we may complete our business combination even if a majority of SPAR holders do not support the transaction.

 

   

Past performance by Pershing Square, PSTH, Justice Holdings, Ltd. or our Management Team may not be indicative of our future performance.

 

   

Because no minimum subscription is required and because we will not have commitments from our SPAR holders for any amount we seek to raise in connection with the exercise of SPARs, we cannot assure you of the amount of proceeds that we will receive, and accordingly, cannot assure you or our potential business combination counterparty of the funds we will have available for our business combination.

 

   

The ability of our SPAR holders to elect not to exercise their SPARs may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with a target.

 

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RISK FACTORS

Our SPARs involve, and when issued our Public Shares will involve, a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this prospectus, before making a decision to retain, sell, and/or exercise our SPARs.

RISKS RELATED TO OUR SUBSCRIPTION WARRANTS

Our company structure is the first of its kind and is subject to substantial market uncertainties, including whether an active trading market will develop, that may cause the trading price of our SPARs to be volatile.

We intend to distribute our SPARs, identify a business combination target and raise funds to consummate our business combination through the exercise of our SPARs by our SPAR holders. To our knowledge there are no comparable companies that have utilized this structure and no established trading market exists for such subscription warrants. Our SPARs are accordingly subject to market uncertainties, including, among others, whether the initial recipients of our SPARs are likely to retain or sell their SPARs, whether an active trading market for our SPARs will develop and whether potential business combination counterparties will find our structure to be attractive. Unlike the shares of a SPAC, which may trade below their per-share redemption value due to, among other reasons, a market expectation that its business combination will result in a decline in share price below the redemption value, the equivalent scenario for our SPARs would imply a negative market price. However, our SPARs will only be able to trade at positive prices; accordingly, if the market expectation is that the Public Shares that will be issued in our business combination will trade at a price below the announced Final Exercise Price, it is likely that our SPARs would trade at a very low price, or not at all. The likelihood of an active trading market being maintained could be negatively impacted by, among other things, our SPARs not maintaining a positive trading price or the potentially lengthy period in which no information regarding our company will be publicly disclosed while we search for a target company. These uncertainties could cause the trading price of our SPARs to be volatile and you may be unable to sell our SPARs at an attractive, or any, price.

We may not be able to list our SPARs on the NYSE or, if listed, maintain the listing of our SPARs on the NYSE.

The listing and trading of SPARs on the NYSE will require the SEC to approve, a new listing rule submitted by the NYSE permitting the listing and trading of subscription warrants by acquisition companies. On August 24, 2021, the NYSE filed with the SEC a proposed rule change to adopt listing standards for subscription warrants issued by a company organized solely for the purpose of identifying an acquisition target. No later than December 9, 2021, the SEC will either approve the proposed rule, disapprove the proposed rule, or institute proceedings to determine whether the proposed rule change should be disapproved. If the SEC institutes proceedings to disapprove the proposed rule, it must publish its reasons for doing so in the Federal Register, beginning another 21-day comment period, and a 35-day period within which the NYSE can submit a rebuttal. The SEC has a maximum of 240 days from the initial publication of the proposed rule change to issue a disapproval order, which period will end on May 8, 2022. Although we believe that our company will comply with the listing standards that NYSE has proposed, there is no guarantee that this or a similar listing rule will be approved, or that our company will comply with and be approved for listing on the NYSE pursuant to any such rule. If our SPARs are listed on the NYSE, there is no guarantee we will be able to meet the continued listing standards under such a rule and maintain our listing.

If we are unable to list our securities on the NYSE, or if the NYSE delists any of our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect such securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:

 

   

a limited availability of market quotations for our securities and reduced efficiency or accuracy of such quotations;

 

   

reduced liquidity for our securities;

 

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a determination that our SPARs are a “penny stock,” (if we fail to meet other criteria for not being deemed a “penny stock,” such as the requirement that we have net tangible assets in excess of $5.0 million) which will require brokers trading in our SPARs to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

 

   

a limited amount of news and analyst coverage; and

 

   

a decreased ability to issue additional securities or obtain additional financing in the future.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the distribution or sale of certain securities, which are referred to as “covered securities.” If our SPARs are listed on the NYSE, they will be covered securities. Although the states would be preempted from regulating the distribution and sale of our securities if they were listed on the NYSE, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the distribution or sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the distribution or sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. This risk may be greater in the case of the distribution of a novel security, such as our SPARs. If our SPARs are not listed on, or are de-listed from, the NYSE, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities, including in connection with our business combination.

We may never enter into a Definitive Agreement with respect to our business combination, in which case our SPARs will expire worthless.

We intend to identify an attractive target business, negotiate a Definitive Agreement, enable holders to exercise their SPARs, and consummate our business combination. If we are unable to identify a suitable business combination target, are unable to negotiate an acceptable Definitive Agreement or consummate a business combination within 10 years of the issuance of our SPARs, our SPARs will expire worthless. Our ability to accomplish our goal is dependent on numerous factors, many of which are beyond our control, including: general economic and market conditions, such as downturns in the economy and recessions; the level of activity in the mergers and acquisitions and financing markets; market perceptions of other companies formed for the purpose of a business combination (such as SPACs); and market perceptions of our structure, our Sponsor and our management. If our SPARs expire worthless due to our failure to consummate a business combination, the initial recipients of our SPARs who held our SPARs may have lost the opportunity to have sold them at market prices after the Distribution, and purchasers of our SPARs in the secondary trading market would lose their entire investment.

After entering into a Definitive Agreement, we may fail to complete our business combination.

After entering into a Definitive Agreement, it is possible that the Definitive Agreement will be terminated, that our business combination partner breaches its obligations under the Definitive Agreement, or that we are legally enjoined from or otherwise unable to consummate the transaction. If this occurs prior to the SPAR Holder Payment Period, all Elections will be rejected, our SPARs will remain outstanding, will continue to be held by their respective holders and will again become tradable. In such case, we will search for an alternative business combination, but will have consumed resources and our available time to consummate such a transaction, and may be unable to enter into a new definitive agreement and consummate such alternative business combination before the end of the 10-year period in which our SPARs may be exercised. If the business combination is abandoned during the SPAR Holder Payment Period, all proceeds from the payment of the SPAR exercise price, with interest and net of taxes, will be returned from the Custodial Account to the holders who have submitted payment on a pro rata basis. In the case of such an Early Termination, the SPARs will no longer be outstanding, and our company will liquidate. If we fail to consummate a business combination or carry out an Early Termination, our SPARs will expire worthless. The initial recipients of our SPARs, if still holders at such time,

 

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will have lost the opportunity to have sold them at market prices after the Distribution, and purchasers of our SPARs in the secondary trading market will lose their entire investment.

We may have limited recourse if our business combination partner breaches its obligations under the Definitive Agreement and declines to consummate the business combination.

If our business combination partner attempts to abandon the business combination, we will determine whether or not to pursue any available legal remedies to complete the business combination. Our ability to pursue the business combination will depend, among other factors, the likelihood of being able to resolve the dispute, the expected time required to do so and our prospects for identifying an alternate transaction and consummating it prior to the expiration of our SPARs. If such event occurs during the SPAR Holder Payment Period, we may determine to abandon a transaction even if we believe we are legally entitled to consummate the transaction, in which event we would have to liquidate our company. In certain circumstances, this may provide a potential business combination partner with negotiating leverage to obtain the amendment or waiver of terms in the Definitive Agreement in a manner less favorable to us. Our ability to mitigate this risk will depend, in part, on the remedies for breach that we are able to obtain in the Definitive Agreement, which we cannot predict. As a result, SPAR holders could lose some or all of their investment, have lost the opportunity to sell their SPARs at a higher price, and may receive a lower or negative return on their Public Shares once issued.

We expect the receipt of our SPARs to be taxable to U.S. Holders, which may cause U.S. Holders to sell a portion of their SPARs and may reduce the trading price of our SPARs. If a U.S. Holder’s SPARs expire unexercised, the holder’s resulting tax losses may be limited.

We expect that U.S. Holders will recognize ordinary income upon their receipt of our SPARs in an amount equal to the fair market value of our SPARs when received. Because we are not making a cash distribution, some U.S. Holders may be required to sell some of their SPARs to fund the resulting tax liability or, otherwise, fund the tax liability from other sources. Additionally, backup withholding may apply to recipients of SPARs who do not provide the necessary documents and certifications. See the section of this prospectus captions “United States Federal Income Tax Considerations—Information Reporting and Backup Withholding.” Significant sales of our SPARs could reduce their trading price.

Notwithstanding that we expect a U.S. Holder to recognize ordinary income upon receipt of our SPARs, if a U.S. Holder does not exercise the SPARs or they expire, then the U.S. Holder should recognize a capital loss at that time. A U.S. Holder’s ability to use capital losses may be subject to limitations.

The Final Exercise Price determined by our Board is not an indication of the likely fair value of shares of the post-combination company.

Our Board will determine the Final Exercise Price in order to provide our company with capital to finance our business combination. The valuation of the post-combination business reflected in the Definitive Agreement may not be accurate at the time we enter into the Definitive Agreement, or at the time you submit an Election or receive your Public Shares.

You should not consider the Final Exercise Price of our SPARs as an indication of value of our company, the SPARs or, once issued, our Public Shares. You should not assume or expect that our Public Shares, once issued, will trade at or above the exercise price paid. We cannot guarantee that an active trading market will develop in our Public Shares. The market price of our Public Shares may decline after the business combination, and you may not be able to sell such securities at a price equal to or greater than the Final Exercise Price. Prior to the SPAR Holder Election Period, we will provide the holders of our SPARs with information regarding the proposed transaction. You should make your own assessment of our business combination, our prospects for the future, the terms of the proposed transaction and the value of the Public Shares.

 

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You will generally not be able to revoke your Election to exercise your SPARs, and you will be restricted from transferring your SPARs following the earlier of your Election and the second business day prior to the end of the SPAR Holder Election Period.

A SPAR will become restricted from trading upon the submission of an Election and, for SPARs with respect to which no Election has been submitted, the date that is two business days prior to the end of the SPAR Holder Election Period. Once you submit an Election with respect to a SPAR, you will not be able to sell or transfer such SPAR, and you will not be able to revoke or change your Election except in connection with a Materially Adverse Amendment (i.e., an amendment that, in the reasonable good-faith determination of our independent directors, would have a materially adverse impact on SPAR holders) to our Charter, the SPAR Agreement, or the Definitive Agreement. If a Materially Adverse Amendment is made to the Charter during the SPAR Holder Election Period, or to the Definitive Agreement during the SPAR Holder Payment Period, Company Decision Period or SPAR Holder Payment Period, holders will be provided at least 10 business days in which they may revoke their Elections. If a Materially Adverse Amendment to the SPAR Agreement is proposed, SPAR holders must approve the amendment, and in connection with their vote, will be able to indicate whether they wish to revoke their Elections in the event that the amendment is approved. If the amendment is not approved, no Elections will be approved. A SPAR holder who wishes to abstain must submit a ballot in order to have the opportunity to revoke their Election. The SPARs will generally not be tradable during a revocation period. In all other circumstances, including amendments other than Materially Adverse Amendments, Elections will be final and irrevocable, unless our Board, in its sole discretion, determines otherwise.

During the SPAR Holder Payment Period, electing SPAR holders will be obligated to submit their exercise payments and will not be able to cancel or prevent the exercise of their SPARs (except as provided above), which exercise will occur automatically and concurrently with the consummation of our business combination. Accordingly, if you submit an Election to exercise your SPARs and you later learn information about us or the proposed business combination that you consider unfavorable to the exercise of your SPARs, you may not revoke or change your exercise or sell your SPARs and will be obligated to submit payment for the SPARs you have elected to exercise (subject to the limited exceptions described above). In addition, we cannot predict how these restrictions on trading and revocation will impact the trading price of our SPARs prior to or during the SPAR Holder Election Period.

Our Board may, in its discretion, withdraw and terminate the SPAR Holder Election Period early or extend the SPAR Holder Election Period, Company Decision Period and/or SPAR Holder Payment Period.

Our Board, in certain circumstances, will be required to extend the SPAR Holder Election Period or provide a minimum 10-business-day period in which electing SPAR holders may revoke their Elections. Otherwise, our Board will have sole discretion in deciding to terminate, extend or postpone the SPAR Holder Election Period, and as to the duration of any extension or postponement. Possible circumstances in which the Board may postpone or extend the SPAR Holder Election Period include, but are not limited to: material amendments to the Definitive Agreement; material amendments to the SPAR Agreement; disputes with our business combination partner; and requirements under applicable law. During the SPAR Holder Payment Period, our Board may extend the SPAR Holder Payment Period if (i) our business combination partner breaches its obligations under the Definitive Agreement in a manner that frustrates the consummation of the business combination and our Board determines to enforce its legal rights under the Definitive Agreement to specific performance or (ii) we are enjoined by a governmental authority from consummating the transaction and are permitted under applicable law to appeal such injunction and our Board determines to do so, rather than carrying out an Early Termination. In such event, we will hold the Final SPAR Proceeds in the Custodial Account pending resolution of the matter (subject to any legal requirements or stock exchange listing rules requiring the earlier return of funds).

If our Board determines to pursue an alternate business combination, our SPARs are likely to lose any market value gained in connection with the proposed transaction, and holders may lose a substantial part of their investment. Any postponement or extension of these periods may cause uncertainty as to the likelihood of our business combination being consummated and, if our SPARs are tradable at such time, may negatively impact the market price of our SPARs and may impair the ability of SPAR holders to sell their SPARs.

 

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Substantially all closing conditions will be satisfied in advance of the consummation of our business combination, which could result in electing SPAR holders bearing the risk of adverse events during the period prior to closing.

We will seek to structure our Definitive Agreement such that all closing conditions, to the extent possible, are to be satisfied as of the date the Company Decision Period ends, rather than as of the date of the closing (as is the case in most business combinations). Because we may not be able to abandon the transaction in the event that a material adverse change in the financial or operating condition of our business combination partner occurs during the SPAR Holder Payment Period, our company, and electing SPAR holders, will bear the risk of such adverse changes. In addition, there are circumstances in which our Board may determine to extend the SPAR Holder Payment Period, and the risk of such an adverse event or change in the financial or operating condition of our business combination partner would increase over longer time periods. During such period, absent a Materially Adverse Amendment to the Definitive Agreement, electing SPAR holders will not be able to revoke their Elections or cancel or prevent the exercise of their SPARs. As a result of such potential negative changes to the condition of our business combination partner during the SPAR Holder Payment Period, the Public Shares, once issued, could be worth significantly less than the exercise price paid by electing SPAR holders.

The Final Exercise Price of our SPARs will not be determined until the time at which we enter into a Definitive Agreement.

At the time that we enter into a Definitive Agreement with respect to our business combination, we will announce the Final Exercise Price, which will be a minimum of $10.00 and is not subject to an upper limit. Following this announcement, the Final Exercise Price will not be further adjusted. Accordingly, during the Search Period, you will not know the exercise price you will have to pay to exercise your SPARs and acquire Public Shares. This could result in uncertainty as to the value of our SPARs, volatility in the trading price of our SPARs, and could result in the loss of part of your investment. At substantially higher Final Exercise Prices, holders who would otherwise wish to exercise all of their SPARs may not have sufficient funds to do so, and would be required to either sell or not exercise a portion of their SPARs, which could depress the trading price of our SPARs or reduce the Final SPAR Proceeds we receive, which may negatively impact our ability to consummate our business combination.

If you do not act on a timely basis and follow the exercise instructions, your Election to exercise your SPARs could be rejected, and if your payment is not received on a timely basis, you may not be issued any Public Shares

SPAR holders who desire to acquire Public Shares must submit a valid Election prior to the end of the SPAR Holder Election Period, and must act on a timely basis and ensure that all required forms are actually received by the warrant agent. If your Election is not received on a timely basis, your SPARs will expire worthless (unless we pursue an alternate business combination). SPAR holders must also act on a timely basis and ensure that all payments clear and are received by the warrant agent during the SPAR Holder Payment Period. If you are a beneficial owner of SPARs, you must act promptly to ensure that your broker, dealer, custodian bank or other nominee acts for you and that all required forms and payments are actually received by the warrant agent prior to the end of the SPAR Holder Payment Period. We are not responsible if your broker, dealer, custodian bank or nominee fails to ensure that all required forms and payments are actually received by the warrant agent, and all payments clear, prior to the end of the SPAR Holder Payment Period. We may also require guarantees from credit-worthy entities or other forms or procedural safeguards to ensure that SPAR holders who submit valid Elections will have the funds required to be paid during the SPAR Holder Payment Period.

If you fail to complete and sign the required forms, send an incorrect payment amount or otherwise fail to follow the procedures that apply to the Election and exercise of SPARs or your payment does not clear prior to the end of the SPAR Holder Payment Period, the warrant agent may, depending on the circumstances, reject your exercise notice or accept it only to the extent of any payment that was timely received and cleared. Neither we, nor the warrant agent, undertakes to contact you concerning an incomplete or incorrect subscription form or

 

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payment, nor are we or the warrant agent under any obligation to correct such forms or payments. We have the sole discretion to determine whether the exercise of your SPARs properly and timely follows the exercise procedures.

In addition, in connection with a Materially Adverse Amendment to the SPAR Agreement during the SPAR Election Period, you must submit your vote on a timely basis in order for it to be counted, and will only have the opportunity to revoke your Election if you properly submit a ballot (even if abstaining from voting on the amendment).

Prior to the SPAR Holder Election Period, we will file a Post-Effective Amendment to this registration statement providing detailed instructions on how to exercise your SPARs.

There may be delays in the issuance of our Public Shares or the return of exercise payments.

We intend to issue our Public Shares concurrently with the consummation of our business combination, and we intend to structure our Definitive Agreement such that that all closing conditions are to be satisfied immediately prior to the SPAR Holder Payment Period, such that the consummation will occur no later than five days after SPAR holders submit payment. In certain circumstances, such as a breach by our business combination partner that frustrates the consummation of our business combination, or an injunction against consummating the transaction by a governmental authority that we are permitted under applicable law to appeal, we may seek to pursue our available legal remedies and, in connection therewith, our Board may decide to extend the SPAR Holder Payment Period. Such an extension could result in a significant delay in the issuance of Public Shares, during which time we will continue to hold exercise payments in the Custodial Account, and which will not give rise to a revocation right other than in certain limited circumstances. In the event of an Early Termination, we intend to return payments to electing SPAR holders as promptly as practicable, and in no event more than five business days after the Early Termination. However, an Early Termination may occur during an extension of the SPAR Holder Payment Period. In addition, there may be operational difficulties experienced by our service providers in administering the Election process and the exercise of our SPARs, as there is no precedent for our transaction structure. In such case, electing SPAR holders may not receive their Public Shares within five days of submitting their payment, or may experience a delay in receiving their Public Shares following the consummation of the business combination, and in the event of an Early Termination, may experience delays in having their funds returned to them.

Our Sponsor will have the right to elect all of our directors prior to our business combination, and holders of our SPARs will have no ability to elect our directors.

Our Sponsor does not presently intend to issue Common Stock to third parties prior to the consummation of our business combination, and will be restricted from transfers of its Common Stock other than to Affiliate Transferees. Any such transferee will be subject to the same provisions of the Letter Agreement as our Sponsor, and will be required to vote any such shares as recommended by our Board. Accordingly, our Sponsor, as holder of the Sponsor Shares will be our only stockholder and will have the exclusive right to elect all of our directors prior to our business combination, and will be the sole party entitled to vote on the removal of directors prior to our business combination.

Our public investors will not have the opportunity to vote on our proposed business combination or any other matter submitted for stockholder approval prior to the consummation of our business combination, which means we may complete our business combination or amend certain agreements even if a majority of holders of our SPARs do not support the transaction or such amendment.

Holders who have elected to exercise their SPARs will not be issued any Public Shares until the consummation of our business combination, and accordingly, have no rights as stockholders of our company until the business combination has been consummated. Prior to the consummation of our business combination,

 

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our Sponsor will be our sole stockholder. As a result, any stockholder approval required by applicable law or exchange rules will be satisfied by the vote of our Sponsor. Accordingly, we may enter into or amend agreements, including the Definitive Agreement, for which stockholder approval is required and complete our business combination even if a majority of holders of our SPARs do not support the transaction. If holders of a significant number of our SPARs were to sell their SPARs during the SPAR Holder Election Period because they did not support the transaction, the trading price of our SPARs may be reduced and it is possible that fewer SPARs would be exercised, reducing the capital available to fund our business combination and possibly causing us to be unable to complete our business combination.

If you do not support the business combination, your recourse will be limited to (i) revocation of your Election, only in connection with Materially Adverse Amendments, as described herein, (ii) declining to submit an Election, if you have not already done so, or (iii) selling your SPARs, if they are Unelected and the trading period for SPARs has not yet ended. In all other circumstances, if we decide to proceed with the business combination, you will be obligated to exercise your SPARs and pay the applicable exercise price.

We may amend our Charter, bylaws, the Definitive Agreement and all other agreements to which we are a party, other than, in certain circumstances, the SPAR Agreement, without the approval of SPAR holders.

Each of the agreements to which we are a party may be amended without the approval of the holders of our SPARs, including the Registration Rights Agreement, the Forward Purchase Agreement, the SPAR Agreement (in certain circumstances), the Sponsor Warrant agreement and the Director Warrant agreement. These agreements contain, or will contain, various provisions that our SPAR holders might deem to be material. For example, certain of these agreements may contain certain lock-up and transfer restriction provisions with respect to our securities, or could have a negative impact on the ownership interest that electing SPAR holders would have in the post-combination company. Amendments to such agreements would require the consent of the applicable parties thereto and would need to be approved by our Board, which may do so for a variety of reasons, including to facilitate our business combination, consistent with our directors’ obligations under applicable law. While we do not expect our Board to approve any amendment to any of these agreements prior to our business combination, it is possible that our Board, in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to any such agreement. Any amendment entered into in connection with the execution of the Definitive Agreement will be disclosed in our Post-Effective Amendment related to our business combination, and any other material amendment to any of our material agreements will be disclosed in a filing with the SEC. If you do not support an amendment to any agreement to which the company is a party (other than the Definitive Agreement and SPAR Agreement) or to our bylaws, your recourse would be limited to declining to submit an Election, if you have not already done so, or selling your SPARs, if still tradable at that time. The SPARs will not be tradable after the earlier of (i) the submission of an Election with respect to such SPAR and (ii) the date that is two business days prior to the end of the SPAR Holder Election Period.

If we seek to amend the Definitive Agreement or Charter, stockholder approval would be provided by our Sponsor in its capacity as our sole stockholder, and SPAR holders would not have the right to vote on such matter. In the event of a Materially Adverse Amendment to the (i) Charter, during the SPAR Holder Election Period or (ii) the Definitive Agreement, during the SPAR Holder Election Period, Company Decision Period or SPAR Holder Payment Period, SPAR holders will have a period of at least 10 business days to decide whether to revoke their Elections. If we seek to amend the SPAR Agreement, the approval of SPAR holders will be required only in connection with Materially Adverse Amendments. In such case, approval of the holders of at least a majority of the SPARs voted on such matter would be required (with abstentions not counted as votes), which may be less than a majority of all outstanding SPARs. During the SPAR Holder Election Period, in connection with a proposed Materially Adverse Amendment to the SPAR Agreement, holders will be able to revoke their Elections, conditional upon the amendment being approved. In all other circumstances, including amendments to the Definitive Agreement, Charter or SPAR Agreement that are not Materially Adverse Amendments, you will have no approval right or revocation right, and your recourse would be limited to declining to submit an Election, if you have not already done so, or selling your SPARs, if still tradable at that time.

 

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Any such amendments that would not require approval from our SPAR holders may result in the completion of our business combination when it would not have otherwise been possible, and may have an adverse effect on the value of an investment in our securities.

To the extent any such amendments would be deemed to fundamentally change the nature of any securities offered through this Registration Statement, we would register, or seek an exemption from registration for, the affected securities. We cannot assure you that we will not seek to amend our governing documents, or any other agreements to which we are a party, in order to effectuate our business combination.

You will not be entitled to the same protections applicable to investors in other blank check companies, including those subject to Rule 419 of the Securities Act.

Because our company has been formed to carry out an business combination with a target business that has not been identified, we may be deemed to be a “blank check” company under the United States securities laws. However, because we will have net tangible assets of in excess of $5.0 million as a result of placing $5,000,001 of the proceeds from the sale of the Sponsor Shares and the Sponsor Preferred Shares in an escrow account, and will file a Current Report on Form 8-K after the Distribution, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. In addition, it is unclear how such rules would apply, if at all, to a company that issues subscription warrants for the purposes of an acquisition rather than stock. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means our SPARs will be immediately tradable and we will have a longer period of time to complete our business combination than do companies subject to Rule 419. In addition, we will have a longer period of time to complete our business combination than is available to a SPAC, which are limited to no more than three years by stock exchange rules. The NYSE’s proposed rule for the listing of subscription warrants by companies such as ours contains requirements that are similar, in some cases, to those applicable to SPACs, but may not necessarily be as protective of investors as existing listing rules for SPACs, and there is no guarantee that a final rule change will be approved, or as to what the terms of any such rule would be, including whether any such rule would be more or less protective of investors than existing rules applicable to SPACs. For a more detailed comparison of our offering to offerings that comply with Rule 419 and to SPACs, please see the section of this prospectus entitled Proposed Business—Comparison of Our Company to Other Blank Check Companies.

You will not be a stockholder of our company until you have been issued Public Shares in connection with our business combination.

If you exercise your SPARs, you will not be issued Public Shares until the consummation of our business combination, and you will have no rights as a stockholder with respect to the Public Shares until they are issued to you. Accordingly, among other things, you will not have the right to vote on any matter presented to our stockholders for their approval, you will not have the right to elect directors, and you will have no right to liquidating distributions from the funds held outside the Custodial Account.

There is no guarantee that you will receive a distribution of subscription warrants from “SPARC II.”

Our Sponsor intends to form an acquisition company substantially similar to ours, which we refer to as “SPARC II.” Upon the consummation of our business combination, and following the effectiveness of a registration statement, our Sponsor intends that SPARC II would distribute 244,444,444 subscription warrants, or SPARC II Tontine Warrants, on a pro rata basis to exercising holders of our SPARs. There is no guarantee, however, that we will consummate a business combination, that our Sponsor will form SPARC II, that SPARC II will have a structure and terms similar to that of our company, or that our Sponsor will distribute the SPARC II Tontine Warrants in this manner. Further, there is no guarantee that the planned distribution of SPARC II Tontine Warrants would increase the value of our securities or have any positive impact on the level of SPAR exercises and our ability to consummate our business combination. You should carefully consider the uncertainties regarding the distribution of SPARC II Tontine Warrants in making any investment decisions, including with respect to exercise, regarding your SPARs.

 

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RISKS RELATED TO OUR PUBLIC SHARES AND OUR BUSINESS COMBINATION.

Past performance by Pershing Square, PSTH, Justice Holdings, Ltd. or our Management Team may not be indicative of our future performance.

Any past experience and performance of Pershing Square (and the investment funds and co-investment vehicles that it manages or has managed), PSTH, Justice Holdings, Ltd. or our Management Team is not a guarantee either: (1) that we will be able to successfully identify a suitable candidate for our business combination; or (2) of any results with respect to any business combination we may consummate. You should not rely on the historical record of Pershing Square, PSTH, Justice Holdings, Ltd., or our Management Team’s performance as indicative of the future performance of an investment in us or the returns we will generate or are likely to generate going forward. An investment in us is not an investment in Pershing Square.

Because no minimum number of SPARs will be required to be exercised, and because we will not have commitments from our SPAR holders for any amount we seek to raise in connection with the exercise of SPARs, and because we may increase the exercise price of our SPARs, we cannot assure you of the amount of proceeds that we will receive, and accordingly, cannot assure you or our potential business combination counterparty of the funds we will have available for our business combination.

We are not conditioning the exercise of our SPARs on any minimum number of SPARs being exercised. We do not currently have any commitments from any entities to which we will distribute SPARs that they will exercise our SPARs. Although we may increase the exercise price above the Minimum Exercise Price, which would increase the maximum possible amount of capital we will raise, it is possible that no SPARs will be exercised in connection with the offering. As a result, we cannot assure you or our business combination partner of the amount of proceeds that we will receive from the exercise of SPARs, and therefore, the amount we will have available to consummate our business combination. In addition, it is possible that electing SPAR holders breach their obligation to submit payment and exercise their SPARs during the SPAR Holder Payment Period. Even though we will be legally entitled to such funds, it is possible that non-payments could result in us being unable to consummate our business combination.

In evaluating a prospective target business for our business combination, our management will rely in part on the availability of the funds from the sale of the Forward Purchase shares to be used as part of the consideration to the sellers in our business combination. If the sale of the Forward Purchase shares fails to close, for any reason, we may lack sufficient funds to consummate our business combination.

We have entered into a Forward Purchase Agreement with the Forward Purchasers (affiliates of our Sponsor), pursuant to which the Committed Forward Purchasers are obligated to purchase an aggregate of at least $500.0 million of Public Shares, at a per-share price equal to the Final Exercise Price. The amount of the Committed Forward Purchase will be proportionately higher to the extent that the Final Exercise Price exceeds $10.00, up to a maximum of $1.0 billion at a Final Exercise Price of $20.00 or higher.

The funds from the sale of the Committed Forward Purchase shares are expected to be used as part of the consideration to the sellers in our business combination, to pay expenses in connection with our business combination and may be used for working capital by the post-combination company. If the sale of the Committed Forward Purchase shares does not close by reason of the failure of the Forward Purchasers to fund the purchase price, for example, or for any other reason, we may lack sufficient funds to consummate our business combination. In addition, the Committed Forward Purchasers’ obligations to purchase the Committed Forward Purchase shares are subject to fulfillment of customary closing conditions, including that our business combination must be consummated substantially concurrently with the purchase of the Committed Forward Purchase shares. In the event of any such failure to fund, any obligation being so terminated or any such condition not being satisfied and waived by such party, we may not be able to obtain additional funds to account

 

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for such shortfall on terms favorable to us, or at all. In addition, because the Committed Forward Purchasers are affiliates of our Sponsor, we may face a conflict of interest in determining whether to pursue any legal action relating to the Committed Forward Purchase. Any such shortfall would also reduce the amount of funds that we have available for the completion of our business combination or working capital of the post-combination company.

Our business combination will require approval of a majority of our independent directors, which approval we might not obtain.

Our Charter requires that our business combination be approved by a majority of our independent directors. Unless we receive the requisite board member approvals, we will not be able to enter into a definitive merger or similar agreement relating to our business combination.

The ability of our SPAR holders to elect not to exercise their SPARs may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with a target.

We may seek to enter into our business combination agreement with a prospective business combination partner that requires as a closing condition that we have a stipulated minimum amount of cash. If holders of a significant number of our SPARs were to decide not to exercise their SPARs, and we do not obtain sufficient funds from the sale of our Forward Purchase shares or from third-party financing, we would not be able to meet such closing condition and, as a result, would not be able to proceed with our business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a business combination with us.

If holders of a significant number of our SPARs were to decide not to exercise their SPARs, we may not be able to optimize our capital structure.

At the time we enter into a Definitive Agreement, we will not know how many of our SPARs will be exercised, and therefore will need to structure the transaction based on our expectations as to the number of SPARs that will be exercised. If the Definitive Agreement requires us to have a minimum amount of available cash at closing, we may need a larger portion of the Additional Forward Purchase to be exercised or arrange for third-party financing, neither of which may occur, or we may need to restructure the transaction. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels, which would limit our ability to optimize our capital structure.

The Additional Forward Purchaser has the right to purchase Additional Forward Purchase shares up to an aggregate Forward Purchase of $3.5 billion, but has no obligation to make such purchase. At the time that the Additional Forward Purchaser commits to the size of its investment (if any), it may be acquiring shares of our company for less than the implied market price or the then-current value of our shares.

The Forward Purchasers have committed to purchase no less than $500 million of Forward Purchase shares at the time of our business combination, and the size of this committed amount will increase proportionately to the extent the Final Exercise Price exceeds $10.00, up to a maximum of $1.0 billion at a Final Exercise Price of $20.00 or higher. The Additional Forward Purchaser is entitled, but not obligated, to purchase that amount of the $3.5 billion Forward Purchase not allocated to the Committed Forward Purchaser—up to $3.0 billion of Forward Purchase shares at a Final Exercise Price of $10.00, and up to $2.5 billion of Forward Purchase Shares at a Final Exercise Price of $20.00 or higher. The Additional Forward Purchaser will commit to the amount it will purchase at the time we enter into our Definitive Agreement. The Public Shares purchased pursuant to the Forward Purchase Agreement will be purchased at a per-share price equal to the Final Exercise Price at which SPAR holders will purchase Public Shares. However, at the time that the Additional Forward Purchase amount is announced, and at the time the Forward Purchase is exercised, the value of our Public Shares (as implied by the market price of our SPARs) may be higher than the Final Exercise Price. In such case, the Committed Forward

 

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Purchasers will be required to purchase, and the Additional Forward Purchaser might seek to buy, Forward Purchase shares that the company would be obligated to sell, even though the company may be able to obtain equity financing from other sources at a higher price per share. Accordingly, we may be required to sell Forward Purchase shares at less than their market value. In addition, we will determine the Final Exercise Price based, in part, on the size of the Additional Forward Purchase. Because the Additional Forward Purchaser is an affiliate of our Sponsor, we may face a conflict of interest in determining whether to allocate this investment opportunity to SPAR holders, which could potentially decrease the willingness of SPAR holders to elect to exercise their SPARs during the SPAR Holder Election Period and reduce the capital we have available to consummate our business combination.

Our ability to raise additional capital or consummate our business combination may be adversely impacted if the Additional Forward Purchaser declines to exercise its right to purchase Forward Purchase shares.

The Additional Forward Purchaser has the right, but not the obligation, to purchase that amount of the Forward Purchase (a total of $3.5 billion) that is not allocated to the Committed Forward Purchaser. If our Board determines that our business combination requires additional capital, and the Additional Forward Purchaser (or Affiliate Transferees) do not exercise this right in part or in full at the time we enter into a Definitive Agreement, our ability to consummate our business combination may depend in part on our ability to raise debt financing or additional capital from third-party investors. This could negatively impact the market price of our SPARs and reduce the extent to which SPAR holders Elect to exercise their SPARs, which could further increase our need to obtain additional capital in order to consummate the transaction. In addition, if the Additional Forward Purchaser does elect to purchase the entire additional amount, they could receive a substantial number of Public Shares (up to 123% of the number of Public Shares at the Minimum Exercise Price, or up to 20% of the number of Public Shares at a Final Exercise Price of $50.00). Depending on the terms of our business combination and the value of the transaction, this may reduce and/or dilute the economic interest of our public stockholders in the post-combination company.

If the proceeds of the sale of the Sponsor Shares and the Sponsor Preferred Shares are insufficient, it could limit the amount available to fund our search for a target business or businesses and complete our business combination and we will depend on loans from our Sponsor or Management Team to fund our search for our business combination, to pay our taxes and to complete our business combination. If we are unable to obtain such funding, we may be unable to complete our business combination.

We expect that approximately $21.4 million of proceeds from the sale of the Sponsor Shares and the Sponsor Preferred Shares, after giving effect to the $30.0 million of Sponsor Preferred Shares that our Sponsor intends to purchase prior to the Distribution, and after expenses related to our formation and the Distribution and the escrow of $5,000,001 of the proceeds, will initially be available to us to fund our working capital requirements. Our Sponsor may purchase additional Sponsor Shares or Sponsor Preferred Shares in order to fund our operating costs, but has no obligation to do so. If the proceeds from the sale of the Sponsor Shares and Sponsor Preferred Shares are insufficient to fund our operations for up to 10 years, we may require additional funding in the form of additional purchases of our securities by, or loans from, our affiliates, or we may be forced to liquidate. In the event of our liquidation, our SPARs will expire worthless. None of our Sponsor, members of our Management Team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such advances would be repaid from funds available upon completion of our business combination, or would be converted, at the election of the lender, into Public Shares at the Final Exercise Price at the time of our business combination. We do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds on favorable terms, including a waiver of any claim to the funds held in the Custodial Account, if any.

 

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It is possible that the proceeds held in the Custodial Account are reduced, and the amount received by exercising SPAR holders in the event of an Early Termination may be less than the exercise price paid by such holders.

Although our company is structured so that investor funds will be held in the Custodial Account for only a brief period of time, and because we will seek to enter into agreements with third-parties only if they provide a waiver with respect to any claim to funds held in the Custodial Account, there are circumstances that could reduce the funds available to return to electing SPAR holders in the event of an Early Termination. If the funds held in the Custodial Account are invested in U.S. Treasury obligations or certain money market funds, it is possible that such instruments will bear a negative interest rate. If the funds are not invested, the interest-bearing Custodial Account may not be insured, and therefore the funds on deposit will be subject to a risk of loss. We may not succeed in obtaining waivers from third parties from claims to the funds held in the Custodial Account, or such parties may assert claims despite such a waiver. In the event that a third party does successfully bring such a claim, our Sponsor is not providing us with any indemnification for a reduction of the assets held in the Custodial Account below the aggregate exercise prices paid.

If, before distributing the proceeds in the Custodial Account in connection with an Early Termination, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Custodial 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 electing SPAR holders. To the extent any bankruptcy claims deplete the Custodial Account, the amount that would otherwise be received by our electing SPAR holders in connection with our liquidation may be reduced.

The risk of any such reduction occurring will increase if and to the extent that we extend the SPAR Holder Payment Period.

We may not have sufficient funds to satisfy indemnification claims of our directors and officers.

We have agreed to indemnify our directors and officers to the fullest extent permitted by law and we will purchase directors’ and officers’ liability insurance that insures our directors and officers against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our directors and officers. However, any such insurance may not be available or sufficient. Any indemnification provided by us will be able to be satisfied only if (i) we have sufficient funds, or (ii) we consummate our business combination. Our obligations to indemnify our directors and officers may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duties. These provisions may also have the effect of reducing the likelihood of derivative litigation against our directors and officers even though, such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent that we may incur the costs of settlement and damage awards against our directors and officers pursuant to these indemnification provisions.

If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our business combination.

If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:

 

   

restrictions on the nature of our investments; and

 

   

restrictions on the issuance of securities, each of which may make it difficult for us to complete our business combination.

 

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In addition, we may have imposed upon us burdensome requirements, including:

 

   

registration as an investment company;

 

   

adoption of a specific form of corporate structure; and

 

   

reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.

In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and complete our business combination and, thereafter, to the extent we are able to influence the management of the post-combination company, to operate the post-combination business or assets for the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.

We do not believe that our anticipated principal activities will subject us to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete our business combination or result in our liquidation. If we are unable to complete a business combination, our SPARs will expire worthless and, if we were to liquidate after our business combination, our public stockholders may receive less than the exercise price paid.

Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our business combination, and our results of operations or the results of operations of the post-combination company.

We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our business combination, and our results of operations or the results of operations of the post-combination company.

The grant of registration rights may make it more difficult to complete our business combination, and the future exercise of such rights may adversely affect the market price of the Public Shares.

Concurrently with the Distribution, we will enter into a Registration Rights Agreement with our Sponsor, the Forward Purchasers and our independent director nominees and Board observers, pursuant to which we will be required to use commercially reasonable efforts to file a registration statement within 120 days of our business combination, and use our best efforts to cause such registration statement to be declared effective as soon as practicable (but in no event later than 60 days) thereafter, providing for the resale, under Rule 415 of the Securities Act, of (i) the Sponsor Shares, (ii) the Public Shares issuable upon the conversion of the Sponsor Preferred Shares, (iii) the Public Shares issuable upon exercise of the Sponsor Warrants, (iv) the Public Shares issuable upon exercise of the Director Warrants, (v) the Public Shares issued pursuant to the Forward Purchase Agreement, (vi) Public Shares issued upon the conversion of working capital loans and (vii) any other shares of the company that the parties to the Registration Rights Agreement have purchased on the open market, subject to certain conditions as provided in the Registration Rights Agreement. The parties to the Registration Rights Agreement, and their permitted transferees, will be entitled to make up to 10 demands that we register these

 

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securities, and will have certain “piggyback rights” with respect to other registration statements filed by the company. The post-combination business will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading in the public market (to the extent any such securities are not subject to transfer restrictions) may have an adverse effect on the market price of the Public Shares. In addition, the existence of the registration rights may make our business combination more costly or difficult to conclude. This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of the Public Shares that is expected when such securities are registered.

We may be affected by numerous risks inherent in the business operations with which we combine and we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence.

If we consummate a business combination, we may be affected by numerous risks inherent in the business operations with which we combine. Although our directors and officers will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our Public Shares will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Our investors will not be stockholders of our company prior to the consummation of the business combination, and accordingly, will not have any rights as stockholders, and our Board will not owe any fiduciary duties to them. Accordingly, any security holders who become security holders upon our business combination and suffer a reduction in the value of their securities below the exercise price will not have a remedy for such reduction in value unless they are able to successfully bring a private claim under securities laws that the Post-Effective Amendment or other solicitation materials relating to our business combination constituted an actionable material misstatement or omission.

Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our business combination may not have attributes entirely consistent with our general criteria and guidelines.

Although we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our business combination will not have all of these positive attributes. If we complete our business combination with a target that does not meet some or all of these criteria and guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target that does not meet our general criteria and guidelines, fewer SPAR holders may exercise their warrants, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum amount of cash.

We may not be required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial point of view.

Our Charter will require us to seek a fairness opinion only in the event that we pursue a business combination with an affiliated entity. Except for the foregoing, we are not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm that the price we are paying is fair to our company from a financial point of view. If we do obtain such an opinion in connection with a transaction with an affiliated entity, potential conflicts of interest may still exist and, as a result, the terms of the business combination may not be as advantageous to electing SPAR holders as they would be absent any conflicts of interest.

 

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We may issue additional Common Stock or preferred shares to complete our business combination or under an employee incentive plan after completion of our business combination, and may do so without the approval of SPAR holders. Any such issuances would dilute the interest of our public stockholders and likely present other risks.

Our Charter currently authorizes the issuance of up to 50,000 shares of Common Stock, par value $0.0001 per share and 10,000 shares of preferred stock, par value $0.0001 per share. Prior to issuing the Sponsor Preferred Shares, we will amend the Charter to designate 5,000 preferred shares as Sponsor Preferred Shares prior to the time at which we issue the Sponsor Preferred Shares. Prior to the consummation of our business combination, we will amend our Charter to authorize the issuance of a substantially greater number of shares of Common Stock and preferred stock, in the amount our Board determines is sufficient for the issuance of the maximum number of Public Shares (2,444,444,444 shares), shares to be issued as consideration in our business combination, and the expected ongoing stock issuance needs of the post-combination company. Following the Distribution, 26,340 authorized but unissued shares of Common Stock and 7,000 authorized but unissued shares of preferred stock (including 2,000 authorized but unissued Sponsor Preferred Shares) will be available for issuance, reflecting the issuance of 23,660 shares of Common Stock to our Sponsor and the expected issuance of 3,000 Sponsor Preferred Shares to our Sponsor. Because our sole stockholder prior to the consummation of our business combination will be our Sponsor, we will be able to amend our Charter without the approval of SPAR holders or any other parties.

We may issue a substantial number of additional shares of Common Stock or preferred shares to complete our business combination or under an employee incentive plan after completion of our business combination.

The issuance of additional common stock or preferred stock:

 

   

may significantly dilute the equity interest obtainable by electing SPAR holders upon issuance of Public Shares, or the value thereof to the extent that such shares are issued at a price lower than the Final Exercise Price;

 

   

may subordinate the rights of holders of Common Stock if preferred stock issued with rights senior to those afforded our Common Stock;

 

   

could cause a change of control if a substantial number of shares of Common Stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our directors and officers; and

 

   

may adversely affect prevailing market prices for our Common Stock following the business combination.

Resources could be consumed in researching business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.

We anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention, and substantial costs for accountants, attorneys, consultants and others. If we decide not to complete a specific business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.

 

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Our ability to successfully effect our business combination and to be successful thereafter will be totally dependent upon the efforts of key personnel. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.

Our ability to successfully effect our business combination is dependent upon the efforts of key personnel. The role of key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory positions following our business combination, it is likely that some or all of the management of the target business will remain in place, particularly if we purchase a minority interest in a business as we expect. To the extent we have any ability to participate in the decision-making of the post-combination company, we intend to closely scrutinize any individuals employed following the business combination, but we cannot assure you that we will be able to so participate, or that our assessment of these individuals will prove to be correct.

In addition, the directors and officers of a business combination candidate may resign upon completion of our business combination. The departure of our business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business. The role of our business combination candidate’s key personnel upon the completion of our business combination cannot be ascertained at this time. Although we contemplate that certain members of our business combination partner’s management team will remain associated with the company following our business combination, it is possible that some will not wish to continue their employment. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.

We are dependent upon our directors and officers and their departure could adversely affect our ability to operate.

Our operations are dependent upon a relatively small group of individuals and, in particular, directors and officers. We believe that our success depends on the continued service of our directors and officers, at least until we have completed our business combination. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or officers. The unexpected loss of the services of one or more of our directors or officers could have a detrimental effect on us.

Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following our business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.

Our key personnel may be able to remain with us after the completion of our business combination only if they are able to negotiate employment or consulting agreements in connection with our business combination. Such negotiations would take place simultaneously with the negotiation of our business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the completion of our business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business. However, we believe the ability of such individuals to remain with us after the completion of our business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however, that any of our key personnel will remain with us after the completion of our business combination. We cannot assure you that any of our key personnel will remain in senior management or advisory positions with us. The determination as to whether any of our key personnel will remain with us will be made at the time of our business combination.

 

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We may have a limited ability to assess the management of a prospective target business and, as a result, may affect our business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company, which could, in turn, negatively impact the value of our stockholders’ investment in us.

When evaluating the desirability of effecting our business combination with a prospective target business, our ability to assess the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any security holders who choose to remain security holders following the business combination could suffer a reduction in the value of their securities. Such stockholders are unlikely to have a remedy for such reduction in value.

Our management may have limited influence over or control of a target business after our business combination.

Our business combination may be structured in a variety of ways, including, but not limited to, a merger, capital stock exchange, asset acquisition, stock purchase, or reorganization. We are not able to predict the form that our business combination will take. It is likely that our stockholders (including the Forward Purchasers and our Sponsor) will own a minority share of the post-combination company or the target business. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the target company’s stock than we initially acquired. Accordingly our management may have limited ability, if any, to influence or control the target business. We cannot provide assurance that we will maintain representation on the board of directors of the post-combination company, or that we will have sufficient influence to ensure that management of the target business will possess the skills, qualifications or abilities necessary to profitably operate such business.

Members of our Management Team and Investment Team will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our business combination.

The members of our Management Team and Investment Team are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for our business combination and their other businesses. We do not intend to have any full-time employees prior to the completion of our business combination. The members of our Management Team and Investment Team may be engaged in other business endeavors for which he or she may be entitled to substantial compensation, and our officers are not obligated to contribute any specific number of hours per week to our affairs. The eight members of our Investment Team will allocate their time between fulfilling their duties to us and to PSCM (including for this purpose any acquisition companies sponsored by affiliates of PSCM). Our directors may also serve as officers or board members for other entities. If such persons’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our business combination. For a complete discussion of our officers’ and directors’ other business affairs, please see the section of this prospectus entitled “Management—Directors and Officers.”

Certain of our directors, director nominees and officers are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be presented.

Following the completion of the Distribution of our SPARs and until we consummate our business combination, we intend to engage in the business of identifying and combining with one or more businesses. Our Sponsor, directors, director nominees and officers are, and may in the future become, affiliated with entities that are engaged in a similar business.

 

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Our affiliate, PSCM, manages or advises several funds. PSCM and its affiliates may form and manage other investment vehicles investing in public or private companies at any time prior to the announcement of our business combination, including, but not limited to, private or public investment vehicles that may invest side-by-side with our company. In any of the foregoing circumstances, a conflict of interest may arise. To the extent any such conflicts arise, we cannot guarantee that they will be resolved in our favor.

Our directors, director nominees and officers currently have, and any of them in the future may have, additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity, including, without limitation, funds managed or advised by our Sponsor or its affiliates, subject to their fiduciary duties. If any of our directors or officers becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing 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.

Our directors and officers also may become aware of business opportunities which may be necessary or appropriate for presentation to other entities to which they owe certain fiduciary or contractual duties. Any presentation of such opportunities to such other entities may present additional conflicts.

Accordingly, our directors and officers may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us. Our Charter provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.

None of the members of our Management Team or Investment Team are required to commit his or her full time to our affairs. The members of our Investment Team are employed by PSCM. While the members of our Management Team intend to vote as much of their time as they deem necessary to our affairs, and while we believe the eight members of our Investment Team will be able to allocate their duties to us and to PSCM (including for this purpose the acquisition companies sponsored by affiliates of PSCM) in a manner that allows them to provide us with the resources and support we require while also fulfilling their responsibilities to PSCM, such persons may have conflicts of interest in allocating his or her time among various business activities.

For a complete discussion of our officers’, directors’ and director nominees’ business affiliations and the potential conflicts of interest that you should be aware of, please see the sections of this prospectus entitled “Management—Directors and Officers,” “Management—Conflicts of Interest” and “Certain Relationships and Related Party Transactions.”

Our officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.

We have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. It is possible that we enter into our business combination with a target business that is affiliated with our Sponsor and/or its affiliates, our directors or officers. We do not have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.

 

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We may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated with our Sponsor, officers, directors or existing holders which may raise potential conflicts of interest.

In light of the involvement of our Sponsor, directors, and officers with other entities, we may decide to acquire one or more businesses affiliated with our Sponsor, directors or officers. Our directors and officers may also serve as officers and board members for other entities, including, without limitation, those described under the section of this prospectus entitled Management—Conflicts of Interest. Such entities may compete with us for business combination opportunities. Our Sponsor, directors and officers are not currently aware of any specific opportunities for us to complete our business combination with any entities with which they are affiliated, and there have been no preliminary discussions concerning a business combination with any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for our business combination as set forth in the section of this prospectus entitled Proposed Business—Selection of a Target Business and Structuring of our Business Combination and such transaction was approved by a majority of our disinterested directors. Although we are required by our Charter to obtain an opinion from an independent investment banking firm that is a member of FINRA, or from an independent accounting firm, regarding the fairness to our company from a financial point of view of a business with one or more businesses affiliated with our directors, officers, or current stockholders, potential conflicts of interest still may exist and, as a result, the terms of our business combination may not be as advantageous to our SPAR holders as they would be absent any conflicts of interest.

We may issue notes or other debt instruments, or otherwise incur substantial debt, to complete our business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.

Although we have no commitments as of the date of this prospectus to issue any notes or other debt instruments, or to otherwise incur outstanding debt following the Distribution, we may choose to incur substantial debt to complete our business combination, which could have a variety of negative effects, including:

 

   

default and foreclosure on our assets if our operating revenues after our business combination are insufficient to repay our debt obligations;

 

   

acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

 

   

our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;

 

   

our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;

 

   

our inability to pay dividends on our Common Stock;

 

   

using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common shares if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;

 

   

limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

 

   

increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;

 

   

limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and

 

   

other disadvantages compared to our competitors who have less debt.

 

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Subsequent to the completion of our business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our share price, which could cause you to lose some or all of your investment.

Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this due diligence will surface all material issues that may be present inside a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write down or write off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing to partially finance our business combination. SPAR holders will have no rights as stockholders prior to our business combination, and will not be owed any fiduciary duties by our Board. Accordingly, any security holders who exercise their SPARs and suffer a reduction in the value of their shares below the exercise price paid are unlikely to have a remedy for such reduction in value unless they are able to successfully bring a private claim under securities laws that the Post-Effective Amendment or other solicitation materials furnished to them, as applicable, relating to our business combination, constituted an actionable material misstatement or omission.

We intend to complete only one business combination, which will cause us to be solely dependent on a single business which may have a limited number of products or services and limited operating activities. This lack of diversification may negatively impact our operating results and profitability.

We intend to effectuate our business combination with a single target business. However, we may seek to effectuate business combinations with multiple target businesses simultaneously or within a short period of time, which we may not be able to do as a result of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing our business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry.

We may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete our business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.

If we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete our business combination. We do not, however, intend to purchase multiple businesses in unrelated industries in conjunction with our business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.

 

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We are likely to attempt to complete our business combination with a private company about which little information is publicly available, which may result in a business combination with a company that is not as profitable as we suspected, if at all.

In pursuing our business combination strategy, we are likely to seek to effectuate our business combination with a privately held company. Very little public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential business combination on the basis of limited information, which may result in our business combination with a company that is not as profitable as we suspected, if at all.

We may be unable to obtain additional financing to complete our business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination.

Because we have not yet identified any prospective target business, we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of the sale of our Sponsor Shares, Sponsor Preferred Shares, Committed Forward Purchase shares, any Additional Forward Purchase shares and our issuance of the Public Shares upon exercise of our SPARs proves to be insufficient to complete our business combination, either because of the size of our business combination, the depletion of the available net proceeds in search of a target business, the failure of the holders of a significant number or our SPARs to exercise their SPARs, or the decision of the Additional Forward Purchaser not to purchase any or a sufficient number of Public Shares, we may be required to seek additional financing or to abandon the proposed business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete our business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. In addition, even if we do not need additional financing to complete our business combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business.

We are an “emerging growth company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.

We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may 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 nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, holders of SPARs or our Public Shares may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our Common Stock held by non-affiliates exceeds $700.0 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.

 

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Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Because we have up to 10 years to consummate our business combination, it is possible that we will lose our status as an emerging growth company prior to consummating our business combination. The increased compliance and disclosure requirements that would apply to us could increase our operating costs, and reduce the working capital available to pursue a business combination, and will also require the time and resources of our Management Team that would otherwise be allocated towards consummating a business combination.

Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our business combination, require substantial financial and management resources, and increase the time and costs of completing our business combination.

Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31, 2022. Only in the event we are deemed to be a large accelerated filer or an accelerated filer will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain 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. Compliance with the requirements of the Sarbanes-Oxley Act could be 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 its 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 business combination.

Provisions in our Charter and the DGCL may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Common Stock or Public Shares and could entrench management.

Our Charter contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These provisions include the ability of the board of directors to designate the terms of and issue new series of preferred shares, which may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

Section 203 of the DGCL affects the ability of an “interested stockholder” to engage in certain business combinations, for a period of three years following the time that the stockholder becomes an “interested stockholder.” We will take all necessary corporate action to ensure that our Sponsor, its affiliates, and their transferees will not be deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them, and will therefore not be subject to such restrictions. See Description of Securities—Certain Provisions of Delaware Law and our Charter and Bylaws.

 

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Our Charter requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware or, if that court lacks subject matter jurisdiction, another federal or state court situated in the State of Delaware. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our Charter. This exclusive provision forum will not apply to suits arising under the Exchange Act or any other claim for which federal courts have exclusive jurisdiction. In addition, our Charter provides that the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in our Charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.

Cyber incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.

We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. While we expect to have access to certain resources of PSCM, including information technology, as an early stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial loss.

We may reincorporate in another jurisdiction in connection with our business combination and such reincorporation may result in taxes imposed on stockholders.

We may, in connection with our business combination and subject to requisite stockholder approval under the DGCL, reincorporate in the jurisdiction in which the target company or business is located or in another jurisdiction. The transaction may require a stockholder to recognize taxable income in the jurisdiction in which the stockholder is a tax resident or in which its members are resident if it is a tax transparent entity. We do not intend to make any cash distributions to stockholders to pay such taxes. Stockholders may be subject to withholding taxes or other taxes with respect to their ownership of us after the reincorporation.

If we effect our business combination with a company with operations or opportunities outside of the United States, we would be subject to a variety of additional risks that may negatively impact our operations.

If we effect our business combination with a company with operations or opportunities outside of the United States, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following:

 

   

higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets;

 

   

rules and regulations regarding currency redemption;

 

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complex corporate withholding taxes;

 

   

laws governing the manner in which future business combinations may be effected;

 

   

tariffs and trade barriers;

 

   

regulations related to customs and import/export matters;

 

   

longer payment cycles and challenges in collecting accounts receivable;

 

   

tax issues, such as tax law changes and variations in tax laws as compared to the United States;

 

   

currency fluctuations and exchange controls;

 

   

rates of inflation;

 

   

cultural and language differences;

 

   

employment regulations;

 

   

crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;

 

   

deterioration of political relations with the United States; and

 

   

government appropriations of assets.

We may not be able to adequately address these additional risks. If we were unable to do so, our operations might suffer, which may adversely impact our results of operations and financial condition.

After our business combination, it is possible that a majority of our directors and officers will live outside the United States and all of our assets will be located outside the United States; therefore, investors may not be able to enforce federal securities laws or their other legal rights.

It is possible that after our business combination, a majority of our directors and officers will reside outside of the United States and all of our assets will be located outside of the United States. As a result, it may be difficult, or in some cases not possible, for investors in the United States to enforce their legal rights, to effect service of process upon all of our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on our directors and officers under United States laws.

If our management following our business combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws, which could lead to various regulatory issues.

Following our business combination, our management may resign from their positions as officers or directors of the company and the management of the target business at the time of the business combination will remain in place. Management of the target business may not be familiar with United States securities laws. If new management is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.

After our business combination, substantially all of our assets may be located in a foreign country and substantially all of our revenue may be derived from our operations in any such country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and social conditions and government policies, developments and conditions in the country in which we operate.

The economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect our business. Economic growth could be uneven, both geographically and

 

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among various sectors of the economy and such growth may not be sustained in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to find an attractive target business with which to consummate our business combination and, if we effect our business combination, the ability of that target business to remain or become profitable.

Exchange rate fluctuations and currency policies may cause a target business’ ability to succeed in the international markets to be diminished.

In the event we acquire a non-U.S. target, the majority of our revenues and income would likely be received in a foreign currency, and the dollar equivalent of our net assets and distributions, if any, could be adversely affected by reductions in the value of the local currency. The value of the currencies in our target regions fluctuate and are affected by, among other things, changes in political and economic conditions. Any change in the relative value of such currency against our reporting currency may affect the attractiveness of any target business or, following consummation of our business combination, our financial condition and results of operations. Additionally, if a currency appreciates in value against the dollar prior to the consummation of our business combination, the cost of a target business as measured in dollars will increase, which may make it less likely that we are able to consummate such transaction.

We may reincorporate in another jurisdiction in connection with our business combination, and the laws of such jurisdiction may govern some or all of our future material agreements and we may not be able to enforce our legal rights.

In connection with our business combination, we may relocate the home jurisdiction of our business from Delaware to another jurisdiction. If we determine to do this, the laws of such jurisdiction may govern some or all of our future material agreements. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the Delaware. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our Management Team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus may include, for example, statements about:

 

   

our ability to select an appropriate target business or businesses;

 

   

our ability to complete our business combination;

 

   

our expectations around the performance of the prospective target business or businesses;

 

   

our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our business combination;

 

   

our Management Team and Investment Team members allocating their time to other businesses, and our directors and officers potentially having conflicts of interest with our business or in approving our business combination, as a result of which they would then receive expense reimbursements;

 

   

our potential ability to obtain additional financing to complete our business combination;

 

   

our pool of prospective target businesses;

 

   

the ability of our directors and officers to generate a number of potential acquisition opportunities;

 

   

our public securities’ potential liquidity and trading, including the trading price of the SPARs;

 

   

the lack of a market for our securities;

 

   

our financial performance following the Distribution.

The forward-looking statements contained in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section of this prospectus entitled Risk Factors. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

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USE OF PROCEEDS

Prior to the date of this prospectus, our Sponsor purchased 23,660 Sponsor Shares for an aggregate purchase price of $236,600. Our Sponsor has also agreed to purchase 3,000 Sponsor Preferred Shares for an aggregate purchase price of $30,000,000. We estimate the funds we will receive from the sale of the Sponsor Shares and Sponsor Preferred Shares, after taking into account costs of the Distribution, will be as set forth in the following table.

 

Gross proceeds

  

Gross proceeds from Sponsor Shares sold in a private placement prior to Distribution

   $ 236,600  

Gross proceeds from Sponsor Preferred Shares sold in a private placement

     30,000,000  
  

 

 

 

Total gross proceeds

   $ 30,236,600  
  

 

 

 

Offering expenses(1)

  

SEC Expenses

     226,600  

Legal & Accounting Fees/Expenses

     2,000,000  

Auditor fees and expenses

     140,000  

Printing and engraving expenses

     100,000  

NYSE listing and filing fees

     85,000  

Miscellaneous

     1,300,000  
  

 

 

 

Total offering expenses

     3,851,600  
  

 

 

 

Proceeds after offering expenses

   $ 26,385,000  
  

 

 

 

Escrow

     5,000,001  
  

 

 

 

Proceeds after offering expenses and Escrow

   $ 21,384,999  
  

 

 

 

The following table shows the estimated use of the $21,384,999 in proceeds remaining after offering expenses and the escrow of $5,000,001 that will be available for working capital until our business combination.

 

     Amount      %
of Total
 

Directors’ compensation

   $ 8,500,000        39.75

Legal, accounting, due diligence, travel, consulting and other expenses in connection with any business combination

     5,000,000        23.38  

Legal and accounting fees related to regulatory reporting obligations

     2,400,000        11.22  

NYSE continued listing fees

     850,000        3.97  

Working capital to cover miscellaneous expenses (including franchise taxes)

     500,000        2.34  

Excess proceeds of Sponsor Shares and Sponsor Preferred Shares

     4,134,999        19.34  
  

 

 

    

 

 

 

Total

   $ 21,384,999        100.00
  

 

 

    

 

 

 

 

(1)

These expenses are estimates only. Our actual expenditures for some or all of these items may differ from the estimates set forth herein. For example, we may incur greater legal and accounting expenses than our current estimates in connection with negotiating and structuring our business combination based upon the level of complexity of such business combination. In the event we identify a business combination target in a specific industry subject to specific regulations, we may incur additional expenses associated with legal due diligence and the engagement of special legal counsel. In addition, our staffing needs may vary and as a result, we may engage a number of consultants to assist with legal and financial due diligence. We do not anticipate any change in our intended use of proceeds, other than fluctuations among the current categories of allocated expenses, which fluctuations, to the extent they exceed current estimates for any specific category of expenses, would not be available for our expenses.

 

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We believe that net proceeds from sales of the Sponsor Shares and Sponsor Preferred Shares will be sufficient to pay the costs and expenses to which such proceeds are allocated, but cannot guarantee that this will be the case. This belief is based on the fact that, while we may begin preliminary due diligence of a target business in connection with an indication of interest, we intend to undertake in-depth due diligence, depending on the circumstances of the relevant prospective acquisition, only after we have negotiated and signed a letter of intent or other preliminary agreement that addresses the terms of a business combination. However, if our estimate of the costs of undertaking in-depth due diligence and negotiating a business combination is less than the actual amount necessary to do so, we may be required to raise additional capital, the amount, availability and cost of which is currently unascertainable. If we are required to seek additional capital, we could seek such additional capital through loans or additional investments from our Sponsor, members of our Management Team or their affiliates, but such persons are not under any obligation to advance funds to, or invest in, us. Our Sponsor may, but is not obligated to, purchase additional Sponsor Shares and Sponsor Preferred Shares to fund our ongoing operating expenses.

In order to finance transaction costs in connection with an intended business combination, our Sponsor or an affiliate of our Sponsor or certain of our directors and officers may, but are not obligated to, loan us funds as may be required. If we complete our business combination, we could repay such loaned amounts out of the proceeds of the exercise of our SPARs, or, at the option of the lender, such loans could be converted into Public Shares at the Final Exercise Price upon consummation of our business combination. Otherwise, such loans would be repaid only out of other working capital held by our company. The terms of such loans by our directors and officers, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our business combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds held in the Custodial Account.

Prior to the Distribution, we will entered into a Forward Purchase Agreement with the Forward Purchasers, pursuant to which the Forward Purchasers will agree to purchase an aggregate of up to $3.5 billion of Public Shares, a portion of which the Committed Forward Purchasers will be obligated to purchase, and the remainder of which the Additional Forward Purchaser may elect to purchase, which election would be made at the time we enter into our Definitive Agreement.

Our Sponsor, directors, officers, advisors or their affiliates may purchase SPARs in privately negotiated transactions or on the open market prior to the Company Decision Period, and may purchase Public Shares following the completion of our business combination. 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. If they engage 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. 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.

If we fail to complete a business combination and liquidate our company, any remaining assets of the company will be distributed to the holders of our Sponsor Preferred Shares first, in the amount of the liquidation preference of such shares plus accrued dividends (or such lesser amount as is available), then to the holders of our Common Stock (which would consist solely of our Sponsor in its capacity as sole stockholder), in each case, subject to applicable law.

 

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DIVIDEND POLICY

We have not paid any cash dividends on our Common Stock to date and do not intend to pay cash dividends prior to the completion of our business combination. The payment of cash dividends in the future will be dependent upon the structure of our business combination, our revenues and earnings (if any), capital requirements and general financial condition subsequent to completion of our business combination. The payment of any cash dividends subsequent to our business combination will be within the discretion of our board of directors at such time. Further, if we incur any indebtedness in connection with our business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.

Our Sponsor Preferred Shares will earn a cumulative annual dividend of 5.0%, payable in cash. We will pay all accrued dividends at the time of the consummation of our business combination, at which time the Sponsor Preferred Shares will automatically convert into Public Shares at a conversion price equal to the Final Exercise Price.

 

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THE DISTRIBUTION

The following describes the Distribution of our SPARs and assumes, unless specifically provided otherwise, that you are a record holder of PSTH Common Stock on the Distribution Record Date. If you hold your shares in a brokerage account or through a broker, dealer, custodian bank or other nominee, please also refer to “—Method of Exercising SPARs — Subscription by Beneficial Owners.”

QUESTIONS AND ANSWERS RELATING TO OUR SUBSCRIPTION WARRANTS

The following are examples of what we anticipate will be common questions about our subscription warrants, or SPARs. The answers are based on selected information included elsewhere in this prospectus. The following questions and answers do not contain all of the information that may be important to you and may not address all of the questions that you may have about the SPARs. This prospectus and the documents incorporated by reference contain more detailed descriptions of the terms and conditions of the SPARs and provide additional information about us and about our business, including potential risks related to our SPARs, our Public Shares, and our business.

Exercising and trading in the SPARs will involve a high degree of risk. We urge you to carefully read the section entitled “Risk Factors” beginning on page 55 of this prospectus and all other information included in, or incorporated by reference into, this prospectus in their entirety before making an investment decision. Prior to the time at which the SPARs become exercisable, we will file a Post-Effective Amendment containing information regarding our proposed business combination, our Public Shares and certain risks related thereto, which we urge you to read in its entirety once available and before you decide whether to exercise your SPARs.

Listing of SPARs

We intend to list our SPARs and Public Shares on the NYSE. The listing and trading of SPARs on the NYSE will require the Securities and Exchange Commission to approve a new listing rule promulgated by NYSE.

On August 24, 2021, the NYSE filed with the SEC a proposed rule change to adopt listing standards for subscription warrants issued by a company organized solely for the purpose of identifying an acquisition target, notice of which was published in the Federal Register on September 10, 2021. This began a period of 21 days, ended September 30, 2021, in which the public could submit comments on the proposed rule, and a period of 45 days (or up to 90 days, if the SEC determines a longer period to be appropriate) for the SEC to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether a proposed rule change should be disapproved. On September 30, 2021, the SEC extended this period to 90 days, ending December 9, 2021. No later than December 9, 2021, we expect that the SEC will either approve the rule, disapprove the rule, or institute proceedings to determine whether the rule change should be disapproved. If the SEC institutes proceedings to disapprove the proposed rule, it must publish its reasons for doing so in the Federal Register, beginning another 21-day comment period, and a 35-day period within which the NYSE can submit a rebuttal. The SEC has a maximum of 240 days from the initial publication of the proposed rule change to issue a disapproval order, which period will end on May 8, 2022. The NYSE’s rule proposal submission and public comments can be viewed on the SEC’s website at https://www.sec.gov/comments/sr-nyse-2021-45/srnyse202145.htm. Of the approximately 168 public comments published on the SEC’s website, an overwhelming majority express support for the proposed rule.

We believe that our company will comply with the listing standards that NYSE has proposed. However, there is no guarantee that this or a similar listing rule will be approved, or that our company will comply with and be approved for listing on the NYSE pursuant to any such rule. If our SPARs cannot be listed on the NYSE, they would trade on the “over-the-counter” market, which may present significant risks to the holders of SPARs, including lower availability and efficiency of market price quotations, significantly less liquidity, increased

 

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trading costs, the absence of certain corporate governance protections, and the applicability of state securities laws that could result in restrictions on the sale of our SPARs. See Risk Factors, page 55. There is currently no public market for our SPARs or Common Stock.

What are the SPARs?

We refer to the subscription warrants being distributed in connection with this prospectus as special purpose acquisition rights, or “SPARs.” Each SPAR will entitle the holder thereof to acquire one Public Share following payment of the exercise price, which will be a minimum of $10.00, which we refer to as the Minimum Exercise Price. In connection with entering into the Definitive Agreement, we will announce whether we will seek to raise a greater amount of capital from public investors by setting a higher exercise price. We refer to the exercise price that will be announced at this time as the Final Exercise Price.

We will distribute 200,000,000 SPARs to the holders of the Class A common stock of PSTH and 44,444,444 SPARs to the holders of the distributable redeemable warrants of PSTH, based on record ownership as of [●], 2021, the Distribution Record Date, which we expect will be on or about the date that PSTH consummates its initial business combination or announces its intention to liquidate its trust account and returns funds to its public stockholders. If PSTH has completed its initial business combination at the time of the Distribution, 200,000,000 SPARs will be distributed on a pro rata basis in respect of the shares of PSTH Class A common stock that remain outstanding after PSTH stockholders have had the opportunity to redeem their shares in connection with PSTH’s initial business combination. If PSTH does not consummate an initial business combination and liquidates its trust account, one SPAR will be distributed in respect of each of the 200,000,000 shares of PSTH common stock outstanding. In each case, we will also distribute two SPARs in respect of each of the 22,222,222 outstanding distributable redeemable warrants of PSTH.

Our SPARs will become exercisable in connection with, and in order to provide funding for, our business combination. The SPARs, if not exercised in connection with our business combination, will expire worthless.

What is the purpose of the Distribution?

We are conducting the Distribution in order to finance our business combination. Our SPARs will not become exercisable, and we will not raise any capital from public investors, until after (i) we have entered a Definitive Agreement, (ii) we have satisfied the Disclosure Period Closing Conditions and (iii) a Post-Effective Amendment has been declared effective by the SEC and mailed to holders of SPARs.

We are carrying out a direct distribution of our SPARs in lieu of an underwritten offering in order to (i) establish an initial base of SPAR holders who we believe, as stockholders and warrant holders of PSTH, understand the investment strategy that we intend to apply and (ii) reduce offering costs, including underwriting fees and discounts. We have decided to distribute the SPARs for no cost so that the recipients do not bear any investment risk in initially obtaining our SPARs (though the receipt of SPARs may be taxable to recipients).

We have structured our company as a SPARC, rather than as a SPAC, in order to provide investors with the opportunity to financially participate in our business combination without having to provide us with funds during the period in which we are searching for and negotiating our business combination. By seeking capital from investors only after a business combination target has been identified and the conditions to closing the transaction have largely been satisfied, we are able to eliminate certain dilutive features of SPACs, including shareholder warrants and deferred underwriting fees. This greatly simplifies our capital structure, and reduces frictional transaction costs, which we believe makes us a substantially more attractive counterparty for potential business combination partners, and increases the probability that we execute a transaction on terms that are economically attractive to our investors.

Our Board is not making any recommendation regarding the exercise of the SPARs being distributed.

 

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How will the Final Exercise Price be determined?

Our Board determined the number of SPARs to be distributed and a Minimum Exercise Price of $10.00 in order to provide our company with capital to finance a business combination. We have set this as a minimum price, subject to increase, to provide our company with the flexibility to pursue business combinations at a broader range of transaction sizes, and to provide public investors with the opportunity to participate in our business combination if we seek additional capital (rather than us obtaining such capital through a private financing, such as a PIPE or debt financing).

In connection with entering into the Definitive Agreement for our business combination, we will take into account factors including, but not limited to, the size and structure of the transaction, the number of shares that the Additional Forward Purchaser has agreed to purchase, and conditions in equity and debt markets. Based on this assessment, we will determine whether to increase the total amount of capital to be raised from the public.

You should not consider the Minimum Exercise Price or the Final Exercise Price as an indication of value of our company, the SPARs or, once issued, the Public Shares. There is no guarantee that an increase in the exercise price will result in an increase in the proceeds we receive. You should not assume or expect that, after the Distribution, our SPARs will trade at a positive value or that, after the business combination, our Public Shares will trade at or above the applicable exercise price of your SPARs. After the SPAR Holder Election Period, unexercised SPARs will remain outstanding but not be listed for trading, holders will generally not be permitted to revoke their Elections to exercise their SPARs, and the SPARs will expire worthless if we fail to consummate a business combination. We cannot guarantee that an active trading market will develop in our SPARs. The market price of our Public Shares may decline after the business combination, and you may not be able to sell such securities at a price equal to or greater than the applicable exercise price. Prior to the SPAR Holder Election Period, we will provide the holders of our SPARs with information regarding the proposed transaction. You should make your own assessment of our business combination, our prospects for the future and the terms of the proposed transaction.

How much will the company receive in net proceeds from the exercise of the SPARs?

At the Minimum Exercise Price, the Final SPAR Proceeds (assuming all SPARs are exercised) will be approximately $2.4 billion. Upon entering into the Definitive Agreement, we may determine to increase the exercise price of our SPARs. The table immediately below presents the proceeds we would have available at various Final Exercise Prices, assuming, in each case, that all SPARs are exercised.

 

          Equity Capital Available for Business
Combination

Final Exercise Price

   Final SPAR
Proceeds
   With Committed Forward
Purchase
   With Maximum
Additional
Forward
Purchase

$10.00

   $2.4 B    $2.9 B    $5.9 B

$15.00

   $3.7 B    $4.4 B    $7.2 B

$20.00

   $4.9 B    $5.9 B    $8.4 B

$25.00

   $6.1 B    $7.1 B    $9.6 B

$50.00

   $12.2 B    $13.2 B    $15.7 B

$75.00

   $18.3 B    $19.3 B    $21.8 B

All payments made in respect of Elected SPARs will be held in an interest-bearing Custodial Account until the consummation of our business combination, or the earlier return of payments as a result of abandonment of the transaction.

Have any parties committed to exercise their SPARs?

No party has committed to exercise the SPARs to be distributed pursuant to this prospectus.

 

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Am I required to exercise all of the SPARs I receive in the Distribution?

No. You may exercise any number of your SPARs, or you may choose not to exercise any SPARs. You may also elect to sell some or all your SPARs if you do not wish to exercise them. However, there is no guarantee you will be able to do so at a favorable price (particularly if our SPARs are not listed on the NYSE at such time), or at all. Unelected SPARs, following the SPAR Holder Election Period, will have value only if we decide not to pursue the business combination and seek an alternate transaction. Upon the consummation of our business combination, Unelected SPARs will not be exercised and will expire worthless.

How long will the company have to consummate a business combination?

We will have up to 10 years from the Distribution to consummate our business combination. If we fail to do so by the date that is 10 years after the Distribution, the SPARs will expire worthless. Accordingly, a potentially substantial amount of time could pass before we enter into a Definitive Agreement.

When will I receive information regarding the business combination?

Promptly following our entry into a Definitive Agreement, we will publicly disclose that we have done so by means of press release and by filing a Current Report on Form 8-K with the SEC, which will include, as exhibits, the text of the Definitive Agreement and other material agreements entered into in connection therewith. As promptly as practicable, we will prepare a Post-Effective Amendment that includes comprehensive information regarding the proposed business combination, which will be filed with the SEC and publicly available on the SEC’s website. We will likely amend the Post-Effective Amendment in response to review and comment by the SEC, and for other reasons. Promptly following the satisfaction of the Disclosure Period Closing Conditions, we will request that the SEC declare the Post-Effective Amendment to be effective. Upon effectiveness, we will mail a prospectus to all SPAR holders.

When will I be able to elect to exercise my SPARs?

Holders will be able to elect to exercise their SPARs only during the SPAR Holder Election Period, which will occur after we have (i) entered into a Definitive Agreement, (ii) filed and had declared effective a Post-Effective Amendment to this Registration Statement and (iii) satisfied all of the Disclosure Period Closing Conditions. The SPAR Holder Election Period will begin upon or promptly after the mailing of a prospectus to all SPAR holders. At such time, SPAR holders will be able to submit notices of their offer to acquire Public Shares by exercising their SPARs, or “Elections.” The actual exercise of our SPARs will occur at a later date, as described below.

What is the difference between an Election and the exercise of SPARs?

We will provide SPAR holders with a period of 20 business days in which they can submit an Election, which we refer to as the SPAR Holder Election Period. The SPARs are not yet exercised upon submitting an Election, are not transferred or submitted to the warrant agent and no payment is submitted.

An Election is a notice that SPAR holders must submit if they wish to exercise their SPARs and participate in our business combination. Holders will indicate, on their Election forms, the number of SPARs they are agreeing to exercise. An Election is an irrevocable offer (subject to certain limited exceptions) that, upon our acceptance of such offer, creates a binding obligation for the electing SPAR holders to pay the applicable exercise price. SPAR holders are also consenting to the automatic exercise of their SPARs as described below.

Following the SPAR Holder Election Period, we will have up to 10 calendar days to determine whether or not to proceed with the proposed business combination, which we refer to as the Company Decision Period. A decision to proceed with the business combination during the Company Decision Period constitutes an acceptance of an electing SPAR holder’s irrevocable offer to acquire Public Shares, and a decision not to proceed constitutes a rejection of the offer. Once we announce our decision to proceed, the SPAR Holder Payment Period will begin.

 

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Electing SPAR holders will have five calendar days to submit payment for the Public Shares that they have elected to acquire, and their SPARs will automatically be exercised concurrently with the consummation of the business combination.

What happens if the business combination is abandoned?

If we decide not to pursue a proposed business combination in the period between entering into the Definitive Agreement and the SPAR Holder Election Period, we will seek a different business combination. At such time, no Elections will have been submitted, and the SPARs will remain with their holders and continue to be outstanding and tradable. Once we enter into a new Definitive Agreement, the Election and payment procedures described herein will apply in the same manner.

If we decide to abandon a proposed business combination during the SPAR Holder Election Period or Company Decision Period, all Elections will be disregarded. At such time, no SPARs will have been exercised, and no payments will have been submitted. SPARs will remain with their holders and will again be tradable. If our business combination partner seeks to abandon the transaction, and we decide to pursue the business combination, all Elections will be disregarded, and a new SPAR Holder Election Period will begin if and when such matter is resolved.

Our ability to decide not to proceed with the business combination will be limited by our obligations under the Definitive Agreement. During the Company Decision Period, if all Decision Period Closing Conditions, including the sufficiency of available funds, are satisfied, we are likely to proceed with the transaction.

If we abandon a proposed business combination during the SPAR Holder Payment Period, all payments received from electing SPAR holders will promptly be returned, with interest and net of taxes. All SPARs will expire pursuant to their terms, and the company will liquidate. During the SPAR Holder Payment Period if (i) our business combination partner breaches its obligations under the Definitive Agreement in a manner that frustrates the consummation of the business combination or (ii) we are enjoined by a governmental authority from consummating the transaction in a manner that we are permitted to appeal under applicable law, our Board will determine, in its sole discretion, whether to further pursue the business combination or carry out an Early Termination. During this period, we would continue to hold exercise payments in the Custodial Account until (i) such matter is successfully resolved and the business combination is consummated (at which time the SPARs would automatically be exercised) or (ii) we decide to carry out an Early Termination.

What rights do I have if the Charter, SPAR Agreement or Definitive Agreement is amended?

SPAR Holders will have certain rights in connection with amendments to the Charter and Definitive Agreement, and proposed amendments to the SPAR Agreement, that, in the reasonable, good-faith judgment of our independent directors, would have a materially adverse impact on SPAR holders, which we refer to as Materially Adverse Amendments. Although we do not expect to amend these documents once the SPAR Holder Election Period has begun, and will restrict ourselves from making Materially Adverse Amendments to the Charter and SPAR Agreement following the SPAR Holder Election Period, we cannot guarantee that no Materially Adverse Amendments will be made or proposed. Accordingly, once SPAR Holders are able to commit to exercise their SPARs and become obligated to pay the exercise price to us, they will be provided the rights described below. In the case of the SPAR Agreement only, SPAR holders will also have the right to vote on Materially Adverse Amendments.

 

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The table below summarizes the rights of SPAR holders in connection with Materially Adverse Amendments to the Charter, SPAR Agreement and Definitive Agreement. Additional detail is provided in the text that follows.

Rights of SPAR Holders in Connection with Materially Adverse Amendments

 

    

Charter

  

SPAR Agreement

  

Definitive Agreement

Search Period

   None    Approval Right    N/A

Disclosure Period

   None    Approval Right    None

SPAR Holder Election Period

   Revocation Right   

Approval Right

Revocation Right

   Revocation Right

Company Decision Period

   No Materially Adverse
Amendments Permitted
   No Materially Adverse
Amendments Permitted
   Revocation Right

SPAR Holder Payment Period

   No Materially Adverse
Amendments Permitted
   No Materially Adverse
Amendments Permitted
   Revocation Right*

Charter. SPAR holders will have no right to vote on or approve any amendments to the Charter, as they will not be stockholders prior to the consummation of our business combination. If, during the SPAR Holder Election Period, we make a Materially Adverse Amendment to the Charter, we will provide holders with a minimum 10-business-day period in which they can choose to revoke their Elections. For the avoidance of doubt, an increase in the authorized shares of Common Stock will not be considered a Materially Adverse Amendment. We will not be permitted to make any Materially Adverse Amendment to the Charter during the Company Decision Period or the SPAR Holder Payment Period.

SPAR Agreement. The SPARs will be issued subject to a warrant agreement, which we refer to as the SPAR Agreement. If a Materially Adverse Amendment to the SPAR Agreement is proposed at any time following the Distribution, the amendment will require the approval of holders of a majority of the SPARs present and voting on such matter. SPAR holders will be able to indicate, along with their vote, whether they wish to revoke their Elections in the event that the amendment is approved. If the amendment is not approved, no Elections will be revoked. We will not be permitted to make Materially Adverse Amendments to the SPAR Agreement during the Company Decision Period or SPAR Holder Payment Period.

Definitive Agreement. If, during the SPAR Holder Election Period or Company Decision Period, a Materially Adverse Amendment is made to the Definitive Agreement, we will provide holders with a minimum 10-business-day period in which they can choose to revoke their Elections.

*During the SPAR Holder Payment Period, if our business combination partner breaches its obligations to consummate the transaction, we expect that we would seek to enforce our legal rights to specific performance, and consummate the transaction on the terms set forth in the Definitive Agreement. However, it is possible that we reach a negotiated settlement in which the Definitive Agreement is amended. If the changes to the Definitive Agreement constitute a Materially Adverse Amendment, we will provide SPAR holders with a revocation right.

Our Board may, in its sole discretion (including in connection with any revocation period), determine to extend the SPAR Holder Election Period. You should be aware that you will not have revocation rights in connection with amendments other than Materially Adverse Amendments, or amendments to any other agreements or documents, and that once you have submitted an Election, or once trading has been restricted on the second business day prior to the end of the SPAR Holder Election Period, you will not be able to sell your SPARs.

May I transfer my SPARs?

Generally, yes. Prior to the SPAR Holder Election Period, you may sell, transfer or assign your SPARs to anyone, subject to applicable securities laws, and provided you are not otherwise prohibited from doing so (for example, because you are an insider or affiliate of the company or because you possess material nonpublic information about the company).

 

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During the SPAR Holder Election Period, SPARs with respect to which an Election has been submitted will be restricted from any sales, transfers and assignments. Beginning two business days prior to the end of the SPAR Holder Election Period, all SPARs will be restricted from transfers. This transfer restriction will continue through the Company Decision Period and SPAR Holder Payment Period.

Although we intend to list our SPARs on the NYSE, there is no guarantee that we will be able to do so, or that we will be able to maintain such listing. If we are not listed on the NYSE and our SPARs are traded “over-the-counter,” your ability to sell your SPARs may be significantly adversely impacted. See Listing of SPARs above, and Risk Factors, page 55, for additional information.

Are we requiring a minimum amount of SPARs to be exercised?

We will not require a minimum number of SPARs to be exercised. However, our ability to consummate our business combination may depend on the extent to which holders submit Elections to exercise their SPARs. During the Company Decision Period, we will assess the capital we expect to have from the exercise of Elected SPARs, the Forward Purchase, and other financing sources. If we determine that such amount is insufficient, we may not be able to proceed with the transaction.

Has our Board made a recommendation regarding the exercise of the SPARs?

No. Our Board is not making a recommendation regarding your exercise of the SPARs. Investors who exercise SPARs risk investment loss on the money invested. We cannot predict the price at which our Public Shares will trade, and therefore, we cannot assure you that the market price for our Public Shares or shares of the post-combination company will be above the Final Exercise Price, or that anyone purchasing our SPARs on the open market will be able to sell them in the future at the same price or a higher price. You are urged to make your decision based on your own assessment of our proposed business combination. Please see Risk Factors in this prospectus and all other information included in, or incorporated by reference into, this prospectus for a discussion of some of the risks involved in investing in our securities. In addition, our Board is not making a recommendation as to whether or not holders of SPARs should retain or sell their SPARs. While the initial recipients of our SPARs will not bear any investment loss as a result of holding our SPARs, the decision to retain or sell their SPARs could result in foregone gains. Those who purchase our SPARs in the open market may lose their entire investment if our SPARs do not trade at a positive value.

Will I be able to revoke my Election?

Only in limited circumstances. Once an Election has been submitted holders will generally not be able to revoke their Elections, and will be obligated to pay the applicable exercise price during the SPAR Holder Payment Period. Revocation will only be permitted in the circumstances described above with respect to Materially Adverse Amendments to the Charter, Definitive Agreement or SPAR Agreement. Once payment has been submitted, electing SPAR holders will have no ability to cancel or prevent the automatic exercise of their SPARs and seek the return of their funds, except in connection with a Materially Adverse Amendment to the Definitive Agreement during such period. You should not elect to exercise your SPARs unless you are certain that you wish to purchase the number of Public Shares for which you have subscribed.

When will I receive my Public Shares?

We will issue the Public Shares concurrently with the consummation of our business combination. We expect that the business combination will be consummated within 15 calendar days of the end of the SPAR Holder Election Period. However, as described herein, factors including uncertainties or disagreements with our business combination partner, the failure to timely satisfy closing conditions and actions taken by governmental authorities or regulators, could delay or even prevent the consummation of our business combination. If you hold your SPARs through a custodian bank, broker, dealer or other nominee, it may take several days before your Public Shares are credited to your account. Depending on the form that our transaction takes, Public Shares may be issued as shares of our Common Stock or as shares of another entity.

 

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What are the SPARC II Tontine SPARs?

Our Sponsor intends to incorporate a new acquisition company substantially similar to ours, which we refer to as SPARC II. Following the consummation of our business combination, SPARC II will register and carry out the distribution of 244,444,444 subscription warrants, which we refer to as the SPARC II Tontine SPARs. The SPARC II Tontine SPARs will be distributed on a pro rata basis, only to those holders who exercised their SPARs in connection with our business combination. If all of our SPARs are exercised in connection with our business combination, one SPARC II Tontine SPAR will be distributed in respect of each of our SPARs; or, for example, if only half of our SPARs are exercised, two SPARC II Tontine SPARs will be distributed in respect of each of our SPARs that is exercised. As a result, SPAR holders will potentially receive additional value in the form of SPARC II Tontine SPARs if they choose to exercise their SPARs. We believe that, by delivering additional value to exercising SPAR holders, the distribution of the SPARC II Tontine Warrants will increase the likelihood that all or substantially all of our SPARs are exercised. Notwithstanding our Sponsor’s current intentions, our Sponsor is not obligated to incorporate a new acquisition company such as SPARC II, and any such entity, if incorporated, may have materially different terms than those of our company.

Will the company’s directors and officers participate in the Distribution?

Certain of our directors and officers may own securities of PSTH as of the Distribution Record Date, in which case they would receive SPARs. Such parties have not made any commitment with respect to retaining or selling their SPARs, or with respect to the exercise of their SPARs.

Are there risks in holding or electing to exercise my SPARs?

Yes. Although we are distributing our SPARs at no cost, the initial holders of our SPARs may forego potential gains by selling the SPARs if the SPARs subsequently trade at a higher price, or may lose the opportunity to receive value for their SPARs by not selling them at a time when the SPARs are trading at a positive value. Any SPAR holder who purchases their SPARs in the open market following the Distribution will be at risk of losing their entire investment. Such SPAR holders will have paid to obtain the SPARs and would then have to pay the applicable exercise price in order to exercise their SPARs, resulting in a greater aggregate amount paid to obtain a Public Share than initial SPAR holders.

You should not consider the Minimum Exercise Price, Final Exercise Price or market price of our SPARs as an indication of the value of our company, our SPARs, our Public Shares or the post-combination company. You should not assume or expect that, after the Distribution, our SPARs will trade at a positive value. If we are not listed on the NYSE and our SPARs trade in the “over-the-counter” market, your ability to sell your SPARs may be significantly adversely impacted. See Listing of SPARs, above and Risk Factors, page 55. Trading in, and the exercise of, your SPARs involves significant risks. Electing to exercise your SPARs involves the purchase of our Public Shares and should be considered as carefully as you would consider any other equity investment. Among other things, you should carefully consider the risks described under the heading “Risk Factors” in this prospectus and all other information included in or incorporated by reference into this prospectus, and the information that we will provide in the Post-Effective Amendment to this Registration Statement prior the date on which the Elections may be submitted.

Will I receive interest on any funds I deposit upon exercise of my SPARs?

The funds received upon the exercise of SPARs will be held in an interest-bearing Custodial Account. However, you will only receive the interest earned on these funds in the event that funds are returned to you in connection with an Early Termination. We do not presently expect to invest the funds held in the Custodial Account. However, if the funds held in the Custodial Account are invested, they will be invested in U.S. Treasury obligations with a maturity of 180 days or less, or in money market funds meeting certain conditions under Rule 2a-7 of under the Investment Company Act of 1940, as amended (the “Investment Company Act”). If an Early Termination occurs, the electing holders will receive their pro rata share of the Custodial Account, calculated with respect to the number of Public Shares for which each holder subscribed at the applicable exercise price,

 

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inclusive of interest and net of taxes. We expect that funds will be held in the Custodial Account for no longer than five days, in which case only a nominal amount of interest will be earned, if any. However, as described above, it is possible that we will hold funds in the Custodial Account for a longer period.

When can I sell the Public Shares I receive upon exercise of the SPARs?

If you exercise your SPARs, you will be able to sell your Public Shares once your account has been credited with those shares, provided you are not otherwise restricted from doing so (for example, because you are an insider or affiliate of the company or because you possess material nonpublic information about the company). Depending on how our business combination is structured, our Public Shares may first become tradeable as shares of our company or as shares of another entity. We cannot assure you that, following the exercise of your SPARs and the issuance of Public Shares, you will be able to sell your Public Shares at a price equal to or greater than the Final Exercise Price.

What are the U.S. federal income tax consequences of receiving SPARs in the Distribution?

Although the matter is not free from doubt, we expect that U.S. Holders (as defined below) will recognize ordinary income upon their receipt of SPARs in an amount equal to the fair market value of the SPARs when received. We do not expect any such income to qualify for the dividends received deduction or to be treated as qualified dividend income.

We also expect that a Non-U.S. Holder (as defined below) will be subject to withholding tax upon receipt of the SPARs in an amount equal to 30% (possibly subject to reduction under an applicable income tax treaty) of the fair market value of the SPARs at such time, unless the receipt of the SPARs is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains in the United States).

You should seek specific tax advice from your tax advisors in light of your particular circumstances and as to the applicability and effect of any other tax laws. See United States Federal Income Tax Considerations.

What fees or charges apply in connection with the submission of an Election or the purchase of Public Shares during the SPAR Holder Payment Period?

We are not charging any fee or sales commission to issue SPARs to you or to issue Public Shares to you if you exercise your SPARs (other than the exercise price). If you exercise your SPARs through a custodian bank, broker, dealer or other nominee, you are responsible for paying any fees your nominee may charge you.

Whom should I contact if I have other questions?

If you have other questions regarding our SPARs or our company, please contact us at [●].

 

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DILUTION

We do not currently have any public stockholders. Our Public Shares will not be issued until our business combination, at which time they will be subject to dilution in connection with the exercise of our Sponsor Warrants and Director Warrants.

The dilution to our public stockholders as a result of our Sponsor Warrants and Directors Warrants will depend on the fair market value of shares of the post-combination company, and will not exceed 5.21%. See Proposed Business—Effect of Sponsor Warrants and Director Warrants on Ownership.

 

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CAPITALIZATION

The following table sets forth our capitalization at November 10, 2021, and as adjusted to the reflect the application of the estimated net proceeds derived from the sale of the Sponsor Shares, the Public Shares issuable upon conversion of the Sponsor Preferred Shares that our Sponsor intends to purchase, the Committed Forward Purchase shares, and the exercise of all SPARs. At this time, the company cannot reasonably estimate the number of SPARs that will be exercised, the Final Exercise Price, or the amount of additional Sponsor Shares, Sponsor Preferred Shares and Additional Forward Purchase shares that will be purchased, if any. Accordingly, the following table assumes all SPARs are exercised at a Final Exercise Price of $10.00, that the Committed Forward Purchase of $500.0 million is consummated, and that no additional Sponsor Preferred Shares or Additional Forward Purchase shares are purchased.

 

     November 10, 2021  
     Actual     As Adjusted(1)(2)(3)  

Actual: Common Stock, $0.0001 par value; 10,000 shares authorized; 1,000 shares issued. As Adjusted: 3,000,000,000 shares authorized; 297,468,104 shares issued

   $ —       $ 29,747  

Actual: Preferred Shares, $0.0001 par value; 10,000 shares authorized, 0 shares issued. As Adjusted: 1,000,000 shares authorized; 0 shares issued

   $ —       $ —    

Additional paid-in capital

   $  10,000     $  2,974,651,293  

Accumulated deficit

   $  (1,149,986   $ (1,149,986
  

 

 

   

 

 

 

Total shareholders’ equity (deficit)

   $  (1,139,986   $ 2,973,531,054  
  

 

 

   

 

 

 

Total capitalization

   $  (1,139,986   $ 2,973,531,054  
  

 

 

   

 

 

 

 

(1)

On November 19, 2021, we amended its Charter to increase the number of authorized shares of Common Stock to 50,000, and on November 22, 2021, our Sponsor purchased an additional 22,660 Sponsor Shares at a purchase price of $10.00 per share.

(2)

Includes (i) 244,444,444 Public Shares issuable upon the exercise of all SPARs, (ii) 50,000,000 Committed Forward Purchase Shares, (iii) 3,000,000 Public Shares issuable upon the conversion of the 3,000 Sponsor Preferred Shares to be issued prior to the Distribution and (iv) 23,660 Sponsor Shares, as adjusted upon the consummation of a business combination. Assumes, on an as-adjusted basis, total shares of Common Stock authorized for issuance of 3,000,000,000 and total shares of preferred stock authorized for issuance of 1,000,000. The actual number of authorized shares at the time of the exercise of the SPARs will be determined prior to the consummation of the business combination and will be set forth in an amendment to our Charter. The total number of authorized shares will depend on, among other factors, the number of shares to be issued in connection with the exercise of SPARs and the Forward Purchase, as consideration in our business combination (if any) and the expected stock issuance needs of the post-combination company.

(3)

We expect the Sponsor Preferred Shares, upon issuance, to meet the equity classification criteria under ASC Topic 480 and ASC 815-40. As such, we have reflected those shares in the capitalization table above.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a newly organized company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target. We intend to effectuate our business combination using cash from the proceeds of the exercise of our SPARs and the private placements of the Sponsor Shares, Sponsor Preferred Shares, Forward Purchase shares, our capital stock, debt or a combination of cash, stock and debt.

The issuance of additional shares in a business combination, including the Forward Purchase shares:

 

   

may significantly dilute the equity interest that exercising SPAR holders would have otherwise obtained;

 

   

may subordinate the rights of holders of our Common Stock if preferred shares are issued with rights senior to those afforded our Common Stock;

 

   

could cause a change in control if a substantial number of ordinary or preferred shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present directors and officers;

 

   

may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and

 

   

may adversely affect prevailing market prices for our SPARs and, following our business combination, our Common Stock.

Similarly, if we issue debt instruments or otherwise incur significant debt to banks or other lenders or owners of a target, it could result in:

 

   

default and foreclosure on our assets if our operating revenues after our business combination are insufficient to repay our debt obligations;

 

   

acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

 

   

our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;

 

   

our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;

 

   

our inability to pay dividends on our Common Stock;

 

   

using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Common Stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;

 

   

limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

 

   

increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;

 

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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and

 

   

other purposes and other disadvantages compared to our competitors who have less debt.

As indicated in the accompanying financial statements, at November 10, 2021, we had accrued expenses related to operations of $1,149,986. Further, we expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital, including through the exercise of our SPARs and the sale of Forward Purchase shares, or to complete our business combination will be successful.

Results of Operations and Known Trends or Future Events

We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for the Distribution of our SPARs. Following the Distribution, we will not generate any operating revenues until after completion of our business combination. We may generate non-operating income in the form of interest income on cash and cash equivalents held. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements. After the Distribution, we expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. We expect our expenses to increase substantially after the Distribution.

Liquidity and Capital Resources

Our liquidity needs have been satisfied prior to the date of this prospectus by the purchase of an aggregate of $236,600 of Sponsor Shares. Prior to the Distribution, our Sponsor will purchase $30.0 million of Sponsor Preferred Shares. Including the $30.0 million of Sponsor Preferred Shares that our Sponsor will purchase, and after deducting initial expenses of approximately $3.9 million and the escrowed amount of approximately $5.0 million, there will be approximately $21.4 million available to us to fund our working capital expenses.

We will use these funds primarily to pay director compensation and to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.

We intend to use substantially all of the funds provided by the exercise of our SPARs to complete our business combination. To the extent that our capital stock or debt financing is used, in whole or in part, as consideration to complete our business combination, the remaining proceeds from the exercise of SPARs, and any remaining proceeds from the sale of Forward Purchase shares, will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

In order to fund working capital deficiencies or finance transaction costs in connection with an intended business combination, our Sponsor or an affiliate of our Sponsor or certain of our directors and officers may, but are not obligated to, loan us funds as may be required. If we complete our business combination, we could repay such loaned amounts from the proceeds of the exercise of our SPARs or from the sale of Forward Purchase shares. The terms of such loans by our directors and officers, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans. Any such loans, up to an aggregate of $5.0 million, may be converted into Public Shares at the Final Exercise Price upon to the consummation of our business combination, at the election of the lender. Such shares would have certain registration rights. In addition, our Sponsor may, but is not obligated to, purchase additional Sponsor Shares and Sponsor Preferred Shares to fund our operating expenses.

 

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We expect our primary liquidity requirements during that period to include approximately $8.5 million for directors’ compensation; $5.0 million for legal, accounting, due diligence, travel and other expenses associated with structuring, negotiating and documenting any business combinations; $2.4 million for legal and accounting fees related to regulatory reporting requirements; $850,000 for NYSE continued listing fees; and approximately $500,000 for working capital that will be used for miscellaneous expenses and reserves (including franchise taxes).

These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of our working capital to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.

We do not believe we will need to raise additional funds following the Distribution in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating our 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. Moreover, we may need to obtain additional financing to complete our business combination if the cash consideration to be paid exceeds our capital available, including because a lower-than-expected number of SPAR holders choose to exercise their SPARs or because an insufficient amount of Additional Forward Purchase shares are purchased. In such case, we may issue additional securities or incur debt in connection with such 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 may be forced to cease operations. 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.

Controls and Procedures

We are not currently required to maintain an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley Act. We will be required to comply with the internal control requirements of the Sarbanes-Oxley Act for the fiscal year ending December 31, 2021. Only in the event that we are deemed to be a large accelerated filer or an accelerated filer would we be required to comply with the independent registered public accounting firm attestation requirement. Further, for as long as we remain an emerging growth company as defined in the JOBS Act, we intend 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 independent registered public accounting firm attestation requirement.

Prior to the Distribution, we have not completed an assessment, nor have our auditors tested our systems, of internal controls. We expect to assess the internal controls of our target business or businesses prior to the completion of our business combination and, if necessary, to implement and test additional controls as we may determine are necessary in order to state that we maintain an effective system of internal controls. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. Many small and mid-sized target businesses that we may consider for our business combination may have internal controls that need improvement in areas such as:

 

   

staffing for financial, accounting and external reporting areas, including segregation of duties;

 

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reconciliation of accounts;

 

   

proper recording of expenses and liabilities in the period to which they relate;

 

   

evidence of internal review and approval of accounting transactions;

 

   

documentation of processes, assumptions and conclusions underlying significant estimates; and

 

   

documentation of accounting policies and procedures.

Because it will take time, management involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and market expectations for our operation of a target business, we may incur significant expense in meeting our public reporting responsibilities, particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also take longer than we expect, thus increasing our exposure to financial fraud or erroneous financing reporting.

Once our management’s report on internal controls is complete, we will retain our independent auditors to audit and render an opinion on such report when required by Section 404 of the Sarbanes-Oxley Act. The independent auditors may identify additional issues concerning a target business’s internal controls while performing their audit of internal control over financial reporting.

Quantitative and Qualitative Disclosures about Market Risk

The proceeds received from any exercise of SPARs will be held in an interest-bearing Custodial Account until the consummation of our business combination, or will be returned to electing SPAR holders in the event of an Early Termination. The funds that are held in the Custodial Account, if invested, will only be invested in U.S. Treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. Treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk. However, if the interest rates of U.S. Treasury obligations become negative, we may have less interest income available to us for payment of taxes, and a decline in the value of the assets held in the Custodial Account could reduce the principal below the amount initially deposited in the Custodial Account.

Related Party Transactions

On November 10, 2021, our Sponsor purchased 1,000 Sponsor Shares at an aggregate price of $10,000 in a private placement. On November 22, 2021, our Sponsor purchased 22,660 Sponsor Shares at an aggregate price of $226,600 in a private placement. The Sponsor Shares are subject to certain transfer restrictions prior to our business combination and will have certain registration rights.

Prior to the Distribution, our Sponsor will purchase 3,000 Sponsor Preferred Shares for an aggregate purchase price of $30,000,000. Prior to the Distribution, we will issue the Sponsor Warrants to our Sponsor and the Director Warrants to certain of our independent director nominees. Prior to the initial purchase of Sponsor Shares, we had no tangible or intangible assets.

Certain affiliates of our Sponsor, as parties to forward purchase agreements entered into with PSTH, may be holders of PSTH securities as of the Distribution Record Date. Such parties will receive SPARs that will be identical to, and distributed on the same terms as, all other SPARs. These affiliated SPAR holders have not entered into any agreement or expressed any intention as to whether they will retain or sell their SPARs, or as to whether they intend to exercise their SPARs.

Certain of the independent directors will receive annual compensation of $275,000, with an additional $25,000 payable in connection with committee chairmanship, for their service as directors. Our Sponsor,

 

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directors and officers, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our compensation committee will review, on an annual basis, the compensation payable to our independent directors. Our audit committee will review on a quarterly basis all payments that were made to our Sponsor, officers, directors or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.

In order to finance transaction costs in connection with an intended business combination, our Sponsor or an affiliate of our Sponsor or certain of our directors and officers may, but are not obligated to, loan us funds as may be required. If we complete our business combination, we would repay such loaned amounts. The terms of such loans by our directors and officers, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds. Any such loans, up to an aggregate of $5.0 million, may be converted into Public Shares at the election of the lender upon the consummation of our business combination, at a price equal to the Final Exercise Price. Such shares would have registration rights.

Our Sponsor may, but is not obligated to, purchase additional Sponsor Shares or Sponsor Preferred Shares to fund our ongoing working capital needs.

Prior to the Distribution, we will enter into a Forward Purchase Agreement with the Forward Purchasers (who are affiliates of our Sponsor), pursuant to which the Committed Forward Purchasers will be obligated to purchase an aggregate of $500.0 million of Forward Purchase shares if the Final Exercise Price is $10.00, and a proportionately greater amount up to $1.0 billion at a Final Exercise Price of $20.00 or greater. The Additional Forward Purchaser may elect to purchase that amount of the $3.5 billion Forward Purchase that is not allocated to the Committed Forward Purchaser, and will commit to the amount it will purchase at the time we enter into a Definitive Agreement. The Forward Purchase shares will have a purchase price equal to the Final Exercise Price, and the purchase of such shares will take place simultaneously with the closing of our business combination. The Forward Purchasers’ obligation to purchase the Committed Forward Purchase shares may not be transferred to any other parties. The right to purchase the Additional Forward Purchase shares may be transferred, in whole or in part, to any affiliate transferee, but not to third parties. The Public Shares purchased pursuant to the Forward Purchase Agreement will be subject to certain transfer restrictions and, as long as such shares are held by the Forward Purchasers or permitted transferees, will be entitled to registration rights.

In the event that we increase the exercise price of our SPARs above the Minimum Exercise Price, we will effect a reverse share split in our Sponsor Shares such that the effective price paid per share equals the Final Exercise Price paid by SPAR holders to acquire Public Shares.

The Sponsor Preferred Shares generally do not have any voting rights, are entitled to a cumulative annual dividend of 5.0%, payable in cash. We will pay all accrued dividends upon the conversion of the Sponsor Preferred Shares, which will occur automatically upon the consummation of our business combination. The Sponsor Preferred Shares will have a liquidation preference of $10,000 and rank higher in priority to our Common Stock. The Sponsor Preferred Shares will convert into that number of Public Shares equal to the aggregate liquidation preference divided by the Final Exercise Price. The Sponsor Preferred Shares will be subject to certain transfer restrictions, and the Public Shares issued upon the conversion thereof will have certain registration rights.

Prior to the Distribution, we will issue the Sponsor Warrants to our Sponsor. The Sponsor Warrants will be exercisable, in the aggregate, for 4.95% of the Public Shares that are outstanding as of the time immediately following the consummation of our business combination, on a fully-diluted basis. The Sponsor Warrants will have an exercise price equal to 120% of the Final Exercise Price, meaning that our Sponsor will participate in the value of our business combination only if the Public Shares appreciate by at least 20% above the price at which

 

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SPAR holders purchase their Public Shares. If the Final Exercise Price is $10.00, the Reference Price will be $12.00. Our Sponsor may exercise the Sponsor Warrants on a cashless basis, in which case it would receive upon exercise that number of shares equal to (i) the number of Reference Shares, multiplied by (ii)(a) the “fair market value” of a Public Share in excess of the Reference Price, divided by (b) the fair market value of a Reference Share. As used above, “fair market value” refers to the volume-weighted average trading price of a Public Share over the 10 consecutive trading days ending on the third trading day prior to a notice of exercise being sent.

The Sponsor Warrants will generally not be saleable or transferable until three years after the consummation of our business combination and are subject to certain adjustments as described herein. The Public Shares issuable upon exercise of the Sponsor Warrants will generally not be saleable or transferable until three years after the consummation of our business combination and will have certain registration rights. The Sponsor Warrants will expire on the date that is 10 years from the consummation of our business combination. The Sponsor Warrants may be exercised in whole or in part and will not be subject to redemption.

Prior to the Distribution, we will issue the Director Warrants to certain of our independent director nominees or Board observers. The Director Warrants are identical to the Sponsor Warrants, except that they are exercisable, in the aggregate, for 0.26% of the Public Shares outstanding as of the time immediately following the consummation of our business combination, on a fully-diluted basis. The Sponsor Warrants and the Director Warrants will be exercisable, in the aggregate, for approximately 5.21% of the outstanding Public Shares.

The term “fully-diluted basis” means the number of shares deemed to be outstanding at such time and will include the gross number of shares issuable upon the conversion of the Sponsor Warrants and Director Warrants, as well as the gross number of shares underlying any other instrument, whether debt, equity or otherwise, that is convertible or exercisable into or exchangeable for, or that tracks the performance of, common shares (including any equity or equity-based award), in each case without regard to whether such warrant, option or instrument is then exercisable or convertible or “in-the-money” and without regard as to whether fewer shares of common stock may actually be issued as a result of any “cashless” or “net exercise” procedure.

We intend to issue the Sponsor Warrants and Director Warrants to their respective holders at a nominal initial cost because we believe that they have, in effect, previously paid for the investment opportunity represented by the Private Warrants. An affiliate of our Sponsor paid $65.0 million for a sponsor warrant issued by PSTH, and the director nominees to whom we will issue the Director Warrants paid an aggregate of $2,387,500 to purchase director warrants from PSTH. The warrants issued by PSTH are substantially similar to our Private Warrants, except that our Sponsor Warrants are exercisable with respect to 4.95% of the post-combination company, compared to the 5.95% for which the PSTH sponsor warrant is exercisable. In the event that PSTH consummates an initial business combination, we will determine the fair value of our Sponsor Warrants and Director Warrants in consultation with a third-party, nationally recognized valuation firm, and the holders of the Private Warrants will pay that amount to our company as a purchase price. The fair value of the Private Warrants will be determined as of the time of their issuance, and will take into account various factors including, but not limited to: the restriction on sale or transfer of the Private Warrants and the shares issuable upon exercise thereof, the estimated range of possible business combination partner equity values, and the probability of consummating a business combination prior to the expiration of our SPARs. Any valuation process will be inherently uncertain and imprecise, and may result in a higher or lower valuation, or terms more or less favorable, than would be obtained in an arm’s length negotiation between third parties.

Prior to the consummation of our business combination, our Sponsor will be permitted to transfer the Sponsor Shares and Sponsor Preferred Shares only to certain permitted transferees, including the Affiliate Transferees, but the transferees receiving such securities will be subject to the same agreements with respect to such securities as the transferor. Following our business combination, there will be no transfer restrictions applicable to the Sponsor Shares or the Public Shares issuable upon the conversion of the Sponsor Preferred Shares.

 

 

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The Private Warrants, and the shares issuable upon the exercise thereof, may be transferred only to certain permitted transferees, including the Affiliate Transferees, but the transferees receiving such securities will be subject to the same agreements with respect to such securities as the transferor, which transfer restrictions will continue to apply until the date that is three years after the consummation of our business combination.

Concurrently with the Distribution, we will enter into a Registration Rights Agreement with our Sponsor, the Forward Purchasers and our independent director nominees and Board observers, pursuant to which we will be required to use commercially reasonable efforts to file a registration statement within 120 days of our business combination, and use our best efforts to cause such registration statement to be declared effective as soon as practicable (but in no event later than 60 days) thereafter, providing for the resale, under Rule 415 of the Securities Act, of (i) the Sponsor Shares, (ii) the Public Shares issuable upon the conversion of the Sponsor Preferred Shares, (iii) the Public Shares issuable upon exercise of the Sponsor Warrants, (iv) the Public Shares issuable upon exercise of the Director Warrants, (v) the Public Shares issued pursuant to the Forward Purchase Agreement, (vi) Public Shares issued upon the conversion of working capital loans and (vii) any other shares of the company that the parties to the Registration Rights Agreement have purchased on the open market, subject to certain conditions as provided in the Registration Rights Agreement. The parties to the Registration Rights Agreement, and their permitted transferees, will be entitled to make up to 10 demands that we register these securities, and will have certain “piggyback rights” with respect to other registration statements filed by the company. The post-combination company will bear the cost of registering these securities. See the section of this prospectus entitled “Certain Relationships and Related Party Transactions.”

Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results

As of November 10, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations. No unaudited quarterly operating data is included in this prospectus, as we have conducted no operations to date.

JOBS Act

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions, we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of the Distribution or until we are no longer an “emerging growth company,” whichever is earlier.

 

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PROPOSED BUSINESS

Our Company

General

We are a newly organized company incorporated in Delaware and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other business combination transaction with one or more businesses, which we refer to throughout this prospectus as our “business combination.”

Our Sponsor is managed by Pershing Square Capital Management, L.P. (“Pershing Square” or “PSCM”), a registered investment adviser under the Investment Advisers Act of 1940, as amended, and the members of our Sponsor are the Pershing Square Funds.

Pershing Square was established in 2003, and had approximately $17.9 billion of assets under management as of November 1, 2021. Pershing Square has demonstrated a strong track record of historical performance. The compound annual rate of return and cumulative total return (net of fees) of Pershing Square, L.P, the investment fund managed by Pershing Square with the longest track record, from its inception on January 1, 2004 to November 1, 2021, has materially exceeded that of its benchmark, the S&P 500 Index, over the same period.

In addition to Pershing Square, L.P., Pershing Square has managed three other investment funds, each of which (like Pershing Square, L.P.) has invested in various public securities over its period of operation. The compound annual rate of return and cumulative total return (net of fees) of two of these other funds have also materially exceeded that of the S&P 500 Index, while one fund has not exceeded the S&P 500 Index (in each case from the inception of such fund until its closing or as of October 31, 2021, as applicable). Pershing Square has also managed six co-investment vehicles, each of which invested in a single, publicly traded company. The compound annual rate of return and cumulative total return (net of fees) of five of the co-investment vehicles materially exceeded that of the S&P 500 Index over their respective periods of operation, while one co-investment fund substantially underperformed the S&P 500 Index over its period of operation.

Pershing Square has previously served as co-sponsor of Justice Holdings, Ltd., a special purpose acquisition company, and an affiliate of Pershing Square is currently serving as sponsor of Pershing Square Tontine Holdings, Ltd. (“PSTH”), which is also a special purpose acquisition company. Justice Holdings, Ltd. raised approximately $1.5 billion in its initial public offering (including a $458 million investment by funds managed by Pershing Square), and subsequently merged with Burger King Worldwide Inc., and later, Tim Hortons, to form Restaurant Brands International Inc. Pershing Square, through certain of the funds it manages, remains the second-largest investor in Restaurant Brands International Inc. The stock of Restaurant Brands International, Inc. has generated a compound annual total return of 17% since its merger with Justice Holdings, Ltd. in 2012 (as of October 31, 2021).

PSTH raised $4.0 billion in its initial public offering, which was consummated on July 24, 2020. PSTH’s Class A common stock and warrants trade under the symbols PSTH and PSTH.WS, respectively. PSTH has not yet entered into a definitive agreement with respect to its initial business combination. The performance of Justice Holdings, Ltd. or PSTH is not indicative of whether we will be able to enter into and consummate a business combination.

Our Management Team is led by William A. Ackman, our Chairman and Chief Executive Officer, who will work closely with the PSCM investment team and the other employees of, and resources available to, PSCM to fulfill our corporate mission. Mr. Ackman has spent 29 years in the investment management industry, the last 18 years as CEO of PSCM. PSCM’s investment strategy involves the purchase of large minority stakes in high-quality, large capitalization, growth companies during periods when they have underperformed their potential. By working with management teams and boards of directors, PSCM has assisted its portfolio companies in creating substantial long-term value.

 

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The Pershing Square Investment Team is comprised of eight investment professionals, seven of whom have tenures at Pershing Square of four to 18 years, who prior to Pershing Square, served in analyst and associate roles at Apollo, Blackstone, KKR, Goldman Sachs, Hellman & Friedman and Warburg Pincus. PSCM has 32 other accounting, legal, finance, and technology professionals who will support our company on an as-needed basis.

We are not a special purpose acquisition company, or “SPAC.” Our company, which we refer to as a “special purpose acquisition rights company,” or “SPARC,” differs from a conventional SPAC in important respects. We believe that this SPARC structure, combined with the Sponsor Warrants and Director Warrants, makes our company substantially more favorable to investors and potential business combination partners, and is more protective of investors. We believe that the SPARC structure provides many of the same benefits and opportunities to public investors as a conventional SPAC, but improves substantially upon SPACs in the following ways:

 

  1.

Opt-In Structure:

 

   

In our company, investors opt in to the business combination if they view it favorably, whereas, in a SPAC, investors must opt out if they disapprove of the business combination.

 

   

In a conventional SPAC, investors contribute funds to the SPAC at the initial public offering (“IPO”), before a business combination is identified, based largely on the expected performance of the SPAC’s investment team. In our company, investors will contribute funds only after we have entered into a Definitive Agreement and provided comprehensive public disclosures regarding the transaction.

 

   

Investors in a SPAC, after a business combination is announced, can vote against the transaction and/or redeem their shares, or they may sell their shares. SPAC stockholders may inadvertently invest in a business combination if they do not exercise their opportunity to redeem.

 

   

Investors in our company must take affirmative steps in order to participate in our business combination if they view it favorably (and therefore can’t invest unintentionally), and can otherwise sell or decline to exercise their SPARs.

 

  2.

Reduced Opportunity Cost:

 

   

We will not hold investors’ funds during the period we search for and negotiate a business combination. We believe this structure, by not requiring a commitment of capital up-front, better achieves a primary purpose of SPACs in capital markets—increasing public investors’ access to private companies at the time they go public.

 

   

For up to three years following a SPAC’s IPO, while the SPAC searches for a business combination partner, its investors bear the opportunity cost of not being able to make other investments with their funds. SPAC investor funds are held in a trust account for the life of the SPAC or until a business combination is consummated, earning interest at the then-current rate of short-term U.S. Treasury obligations.

 

   

We will hold investor funds in a custodial account only during the period between the satisfaction of closing conditions and consummation of the business combination (which we expect will be five days).

 

  3.

Flexible Capital Raise:

 

   

Our company will first identify the most attractive business combination that fits our criteria, and then determine the amount of capital we will raise. If we require more capital than we would raise at the Minimum Exercise Price, we will set a higher Final Exercise Price and offer public investors the opportunity to provide that capital, rather than seeking private capital.

 

   

A SPAC must determine the amount of public capital it will need before it has identified a business combination partner. If the SPAC pursues a transaction that requires additional capital, it

 

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must raise those funds from private investors (i.e., debt financing or a PIPE), the terms of which could be unfavorable to public investors and target company stockholders.

 

   

Our flexible capital raise will enable us to pursue a broader range of transactions, with respect to both the size of the potential target company and the ownership interest we will hold in the post-combination company. We believe this will increase the likelihood of identifying an attractive business combination, and enable us to identify a business combination partner more quickly.

 

  4.

Substantially Reduced Deadline Pressure:

 

   

Our company will have up to 10 years to consummate our business combination. A SPAC is required to consummate a business combination within, at most, three years of its IPO.

 

   

As a SPAC’s deadline approaches, potential target companies may gain negotiating leverage, and the sponsor, at risk of losing its entire investment, may be more willing to accept a transaction on terms that are unattractive to public stockholders. SPACs with shorter deadlines must seek stockholder approval for an extension, which it may fail to obtain. SPACs may also face deadline pressure as they run out of working capital to fund their search process.

 

   

The ten-year life of our company will permit us to conduct a substantially longer search process for a business combination partner, if necessary, before any potential deadline pressure arises. We believe that this improved negotiating position will assist us in completing a transaction more promptly, and on more favorable terms.

 

   

Our Sponsor is making an initial investment of $30.0 million, giving us substantially more working capital than is available to most SPACs. Our Sponsor will be incentivized to provide us with additional capital if necessary in order to consummate a business combination, as it will otherwise lose its entire investment. This further reduces the likelihood of facing deadline pressure, and will also provide us with the resources to conduct thorough due diligence on potential business partners.

 

  5.

Better Sponsor and Public Investor Alignment—No Conventional Sponsor Promote:

 

   

Our Sponsor will not have an opportunity to profit unless our public investors also have an opportunity to profit.

 

   

SPAC sponsors may have an incentive to complete a business combination even if its public investors would potentially lose money. SPAC sponsors typically obtain a 20% share of the SPAC’s stock at a nominal price (the “sponsor promote”), and provide a certain amount of at-risk capital by purchasing SPAC warrants. In a business combination where public investors lose money, the sponsor promote could still be worth multiples of the price paid. For example, if 50% of public stockholders redeemed their shares and the post-combination company declined in value by 50%, the sponsor would still hold the same number of shares that it initially purchased, and the sponsor promote would be worth several times more than the price paid by the sponsor for its promote shares and warrants (assuming no renegotiation of the sponsor’s interest).

 

   

Our Sponsor Warrants will only be profitable if the post-business combination company has significant, long-term appreciation in value—in order to exercise the Sponsor Warrants, the share price of the post-combination company must be at least 20% above the Final Exercise Price paid by our SPAR holders. Our Sponsor will generally not be able to transfer or sell the Sponsor Warrants, or any shares issued upon conversion, until three years after our business combination. Accordingly, our Sponsor is strongly incentivized to identify a target company that will appreciate in value over the long term.

 

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  6.

Less Dilutive to Public Investors and Stockholders of a Business Combination Partner:

 

   

Our Sponsor Warrants and Director Warrants will not be dilutive to our investors until the post-combination company’s share price increases by 20% above the Final Exercise Price paid by our SPAR holders. As the share price of the post-combination company increases, the maximum dilution to our stockholders and to stockholders of our business combination partner from our Sponsor Warrants approaches a limit of 4.95%.

 

   

Investors in a conventional SPAC face immediate dilution of 20.0% as a result of the customary sponsor promote, and will face greater dilution to the extent that other public investors redeem their shares. Further, sponsor promote shares typically have anti-dilution protection—if the SPAC raises equity financing, additional shares may be issued to the sponsor at no cost in order to maintain its 20.0% interest in the SPAC.

 

   

A SPAC sponsor promote will also dilute stockholders of the business combination partner if they remain as investors in the post-combination company. This may reduce the willingness of such stockholders to support a proposed transaction, or increase the price at which they are willing to conduct a transaction.

 

   

Most SPACs issue warrants to the public to encourage participation in their IPO. These warrants, if exercised, are dilutive to the post-combination company, and may make the SPAC a less attractive potential business combination partner. We are not issuing warrants to public stockholders, and the pro-rata distribution of SPARC II Tontine Warrants to exercising SPAR holders, which we believe will increase the likelihood that all of our SPARs are exercised, will have no dilutive impact on the post-combination company because they are being issued by a different company.

 

   

In a business combination with our company in which target company stockholders held 80% of the post-combination company, this ownership would be reduced to 78.4% as a result of the exercise of our Sponsor Warrants at a fair market value that is double the Final Exercise Price (a dilutive impact of 2.0%). As a result, potential business combination partners may determine that our structure presents a lower risk of dilution to its stockholders as compared to a conventional SPAC.

 

  7.

More Efficient Capital Structure:

 

   

We are not conducting an underwritten offering, and will not bear underwriting expenses. Accordingly, we expect that 100% of the public’s investment in our company will be available to finance our business combination.

 

   

In a typical SPAC, a maximum of 96.5% of the public’s investment is available to finance the business combination as a result of underwriting fees. This is because a deferred underwriting fee, equal to 3.5% of the IPO proceeds, is paid at the time of the business combination using the funds remaining in the trust account after redemptions.

 

   

SPAC investors also bear the costs of the up-front underwriting fee (2.0% of IPO proceeds) and of operating the SPAC, which are funded through the sale of potentially dilutive warrants to the sponsor.

 

   

Our Sponsor is providing working capital by purchasing the Sponsor Shares and Sponsor Preferred Shares. At the time of our business combination, the Sponsor Shares will be subject to a reverse split, if necessary, and the Sponsor Preferred Shares will convert into Public Shares at the Final Exercise Price, such that our Sponsor will have paid the same per-share price for its Public Shares that exercising SPAR holders will pay.

 

   

Because we will benefit from the resources of Pershing Square, which are being provided to us at no cost, we expect that our operating expenses will be substantially lower than that of many SPACs.

 

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  8.

Increased Deal Certainty:

 

   

Guaranteed Stockholder Approval: SPAC business partners face a risk that the SPAC will not obtain stockholder approvals necessary to approve a business combination. Because our Sponsor will be our sole stockholder, we will be able to provide a potential target company with certainty that our company will be authorized to consummate a business combination.

 

   

Early Satisfaction of Closing Conditions: Before our SPARs become exercisable, we will seek to satisfy substantially all closing conditions, such as regulatory approvals, that can be satisfied in advance of closing.

 

   

Substantial Committed Capital: Upon entry into the Definitive Agreement, we will announce the size of the Forward Purchase—a minimum of $500.0 million to $1.0 billion, and up to a total of $3.5 billion. SPACs typically do not have a definitive capital commitment, and their ability to consummate a transaction may depend on the availability of third-party financing on suitable terms. We believe this substantial committed capital not only provides SPAR holders and potential business combination partners with certainty as to our ability to consummate a transaction, but also provides a signal of our Sponsor’s commitment and financial incentive to doing so on attractive terms.

We intend to pursue business combination opportunities with private, large-capitalization, high-quality, growth companies, including family-owned companies, and will also consider carve-out transactions with large-capitalization public or private companies. Our primary intention is to enter into a business combination that results in our stockholders owning a minority interest in the resulting entity. However, we will also consider potential business combination partners with lower market capitalizations and transactions in which our stockholders would own a majority interest, provided that our other acquisition criteria are met, and we believe such a transaction would be in the best interests of our stockholders. We will use PSCM’s substantial experience in identifying, analyzing, and determining business quality and the sustainable competitive advantages of a target company, as well as PSCM’s due diligence and negotiation expertise.

We believe that our unique SPARC structure will help facilitate the completion of a transaction on attractive terms. We believe that we have several competitive advantages not only when compared to a conventional SPAC, but also when compared to other sources of equity capital, such as private equity, growth equity and hedge funds. We have these competitive advantages because of the combination of the amount of committed capital we will be able to provide, our low cost of capital, our ability to give a private company access to the public equity markets and better alignment of our Sponsor’s interests with those of public stockholders and the stockholders of a potential business combination partner.

We believe that the amount of committed capital that the Forward Purchasers (affiliates of our Sponsor) will provide in connection with our business combination will provide potential business combination partners with greater certainty that we will have sufficient capital to complete a transaction. The Committed Forward Purchasers are obligated to purchase $500.0 million of Forward Purchase shares at the Minimum Exercise Price, and a proportionately greater amount at higher exercise prices, up to a limit of $1.0 billion at a Final Exercise Price of $20.00 or above. The Additional Forward Purchaser will have the right to purchase a substantial additional amount, with the total Forward Purchase not to exceed $3.5 billion, and will commit to purchasing this amount at the time we enter into a Definitive Agreement. We believe that the Forward Purchase Agreement will make a transaction with our company attractive to a large-capitalization, high-quality private company.

In addition, our Sponsor intends to form SPARC II, an acquisition company substantially similar to our company. The 244,444,444 subscription warrants of SPARC II, or SPARC II Tontine Warrants, would be distributed promptly after the closing of our business combination, and would be distributed, pro-rata, only to those holders who exercise their SPARs. The SPARC II Tontine Warrants would be securities of a different company, and therefore would have no dilutive impact on the post-combination company. We believe that the

 

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SPARC II Tontine Warrants, by potentially providing additional value to exercising SPAR holders, will increase the probability that all or substantially all of our SPARs are exercised.

Following the exercise of our SPARs, we will likely have one of the largest amounts of capital of any company formed for the purpose of carrying out a business combination. The table below illustrates the amount of committed equity capital we will have available for use in our business combination, assuming the exercise of all SPARs at the indicated Final Exercise Price.

 

     Final SPAR
Proceeds
     Equity Capital Available for Business
Combination
 

Final Exercise Price

   With Committed Forward
Purchase
     With Maximum
Additional Forward
Purchase
 

$10.00

   $ 2.4 B      $ 2.9 B      $ 5.9 B  

$15.00

   $ 3.7 B      $ 4.4 B      $ 7.2 B  

$20.00

   $ 4.9 B      $ 5.9 B      $ 8.4 B  

$25.00

   $ 6.1 B      $ 7.1 B      $ 9.6 B  

$50.00

   $ 12.2 B      $ 13.2 B      $ 15.7 B  

$75.00

   $ 18.3 B      $ 19.3 B      $ 21.8 B  

We believe that a substantial majority of other investors in private companies, such as hedge funds and private equity funds, are not prepared to (or are not able to) deploy this amount of cash in the acquisition of a minority interest in a company. As a result, we believe we will be one of the larger sources of cash equity capital for a private, single-company, minority investment. In addition, while comparably sized or larger investment funds generally seek to acquire controlling or 100% interests in a company, we are willing to execute a transaction in which our stockholders will, upon consummation of the business combination, own a minority stake in a large-capitalization company. We believe the price at which we can, through a business combination, acquire a minority interest in a large-capitalization, high-quality business, without the often substantial cost of a control premium, will enable us to complete a business combination on attractive terms. While we believe it is more likely that we will pursue a business combination in which our stockholders will own a minority interest in the post-combination company, we may pursue a business combination in which we purchase a controlling interest in a company, resulting in our stockholders owning a majority interest. We are open to considering control transactions in which, as a result of our large amount of equity capital and the limited (if any) antitrust risks of a transaction with our company, we would have a competitive advantage over other financial or strategic buyers.

We believe our company also presents several advantages to conducting an IPO. The nature of the IPO process—whereby the pricing, the ultimate terms of the offering, and even whether or not the offering can be completed remain unknown until the day of pricing of the offering—makes the IPO process inherently uncertain and risky. We believe that this uncertainty and risk, along with the upfront expenses and significant time required to pursue an IPO can discourage many large, private companies from attempting to execute public offerings.

Becoming “IPO-ready” can be time-consuming and costly for a company, even before it makes its first public filing. For example, a company may have detailed financial statements, but not in the form required for public filings with the SEC. The preparation and auditing of these financial statements may take several months. In a negotiated transaction, however, many of the steps to becoming “public company ready” can be carried out in parallel with the deal process, provided that sufficiently detailed and accurate information is available for due diligence.

In addition, during the IPO process, a private company faces the risk of negative developments and unfavorable market conditions that can significantly reduce the proceeds of the offering below the amount sought, or cause the offering to be delayed or even abandoned. The amount of capital and the valuation a company will receive in its IPO may be uncertain up until the day of pricing. Companies face a risk of

 

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underpricing, as reflected in the immediate post-IPO “pop” in stock price many companies experience, and a risk of overpricing that results in the IPO being resized or repriced, or the stock trading downwards. Companies have an incentive to avoid the negative market signal sent by an unsuccessful IPO, which may result in pricing the offering lower, and potentially foregoing a larger capital raise and/or higher valuation.

The IPO process also limits the information a private company can provide to its investors. In addition to the “quiet period,” in which companies are restricted from certain communications with potential investors and may have limited ability to respond to unfavorable coverage (or to convey positive developments), a company may be unable or reluctant to share certain information with public investors. In our diligence and negotiation process, under a non-disclosure agreement, we may be able to obtain certain confidential or proprietary information or other detailed information of particular relevance to our valuation process, and would be able to engage with the company’s management to develop a deeper understanding of its performance and plans. Through a negotiated transaction with our company, a business combination partner could obtain not only the certainty of a mutually agreed valuation, but also a potentially more favorable valuation that reflects a more comprehensive evaluation of its business than it may be able to obtain through the IPO process.

We also believe that we can enable a private company to become public in a more capital-efficient manner than in an IPO or a SPAC. We are not conducting an underwritten SPAC offering, which typically carries fees of 5.5% of the amount of public capital raised, with 2.0% funded by the sale of SPAC warrants to the sponsor, and 3.5% paid out of funds raised from public investors. A typical SPAC will only be able to contribute a maximum of 96.5% of its public capital (and a lower percentage to the extent there are redemptions) to finance its business combination. Instead, we are directly distributing our SPARs to the stockholders and warrant holders of PSTH, and expect that 100% of the capital we raise from public investors will be available to finance our business combination.

Our company also does not have a conventional “sponsor promote,” which can substantially dilute stockholders of the private company. The Sponsor Shares, the Forward Purchase shares and the Public Shares issuable upon conversion of the Sponsor Preferred Shares will be purchased at the same per-share price that SPAR holders pay for their Public Shares. Our Sponsor Warrants and Director Warrants will not be dilutive until the share price of the post-combination company increases by 20% above the Final Exercise Price, and the maximum dilutive impact upon conversion of the Sponsor Warrants approaches 4.95% (or 5.21%, including the Director Warrants) in transactions that produce enormous value for our stockholders.

We believe that a large-capitalization, private company will find the price certainty of a negotiated transaction with our company to be more attractive than an IPO. Through a business combination, we will be, in effect, facilitating the IPO of a large private company, enabling a private business to avoid the costs and risks associated with the traditional IPO process.

Potential business combination partners may also identify drawbacks to a business combination with our company. The amount of capital we will have available to finance our business combination will depend in part on the number of SPARs that are exercised. We believe that the capital uncertainty arising from non-exercising holders of SPARs is comparable to the risk that investors in a conventional SPAC will redeem their shares. We note that, because exercising a SPAR requires taking affirmative steps, there is a risk that SPARs are not exercised by holders who would have otherwise intended to do so. We believe this is a positive, investor-protective attribute of our structure, and will seek to mitigate that risk through public disclosures and communications to SPAR holders. Generally, we believe this capital risk is reduced by (i) the substantial amount of capital from our Forward Purchasers, a minimum of $500.0 million to $1.0 billion, and up to $3.5 billion, (ii) the minimally dilutive nature of our capital structure and (iii) the pro rata distribution of the SPARC II Tontine Warrants to exercising holders of our SPARs, which we believe will increase the probability that all or substantially all of our SPARs are exercised. In addition, we will be able to provide certainty with respect to stockholder approval of a transaction, as any necessary approvals will be provided by our Sponsor in its capacity as our sole stockholder.

 

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A business combination partner may also consider the possibility that our Forward Purchase will cause us to forego an opportunity to raise capital on more attractive terms. The Committed Forward Purchasers will be obligated to purchase, and we will be obligated to sell, at least $500 million and up to $1.0 billion of Public Shares at the Final Exercise Price, and the Additional Forward Purchaser may choose to purchase, and we would be obligated to sell, additional Public Shares up to an aggregate Forward Purchase of $3.5 billion of such shares. If third-party investors were willing to purchase shares at a higher price, it is possible we would not be able to take advantage of this opportunity to the extent our capital needs for the transaction were satisfied by the Forward Purchase. However, the Committed Forward Purchase also protects against the “downside” risk faced by a SPAC—the risk of seeking third-party equity financing and only being able to obtain such funds on unattractive or dilutive terms, if at all. This risk is similar to what a private company might face in considering an IPO relative to a negotiated transaction—business and market conditions may improve in the time leading up to an IPO. However, as described above, this possibility is paired with a significant risk of negative outcomes. Compared to a SPAC transaction or an IPO, potential business combination partners may find the capital certainty presented by the Forward Purchase and the valuation certainty of a negotiated transaction price to be more valuable than the possibility of any foregone upside.

On balance, we believe that going public through a business combination with our company is likely to be attractive to potential business combination partners.

We believe that our structure and committed capital and Pershing Square’s track record and experience in aiding the growth of companies will make us particularly attractive to certain types of companies:

Mature Unicorns. Over the past decade, numerous high-quality, venture-backed businesses have achieved significant scale, market share, competitive dominance and cash flow—we call these companies “Mature Unicorns.” Many of these companies have chosen to remain private, as there has been, until recently, limited pressure from their investors for liquidity, and large amounts of growth capital available from investors, mutual funds and hedge funds. Over the time period in which we will be searching for a business combination partner—up to 10 years—we expect that conditions in equity markets, including the stock market and private or growth equity markets, will fluctuate. As a result, the relative attractiveness of an IPO, the amount of funding available from private equity sources, and demands for liquidity from investors may change significantly. While we are not completely isolated from such factors, we believe there will be periods in which we are particularly well-positioned, as compared to other sources of equity capital, to offer a potential business combination partner with needed financing, liquidity and an efficient path to becoming a publicly traded company.

Carve-Out Transactions. We believe that we are well-positioned to facilitate a “carve-out” transaction, in which we enter into a business combination with a large, high-quality subsidiary of a private or public company. For a private company, the process of taking a subsidiary public would present the same risks and challenges of an IPO. A public company considering a “spin-off” transaction would also have many of the same concerns as a company considering an IPO, including pricing uncertainty. A transaction with our company would provide valuation certainty, greater capital efficiency, a potentially shorter timeline, immediate liquidity and the advantages of PSCM’s experience and ability in identifying talented executives to aid a newly public company’s growth as a stand-alone entity.

Family-Owned Businesses. Large, family-owned companies are likely to have multiple distinct lines of business that are well-suited to operating as independent companies. Compared to other private companies, family-owned business may have unique reasons to go public, such as the liquidity needs of the family, succession planning, or a desire to step back from the active management of a growing and increasingly complex business. A transaction with our company provides the same advantages discussed immediately above, as well as the benefit of PSCM’s expertise in navigating the often complex corporate restructuring involved in transactions with family-owned companies.

Private Equity-Owned Businesses. Private equity funds invest in companies for a finite time period, by the end of which they must exit the investment in order to return funds to investors. Most frequently, this exit takes the form of an IPO or a sale to another private equity firm. A transaction with our company would provide a

 

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private equity firm with the liquidity it seeks, potentially more quickly than it could obtain through an IPO, and with certainty as to the valuation of the transaction. In addition, to the extent that we are able to influence the management of the post-combination company through our ownership and/or board representation, both the seller and the target company would stand to benefit from our expertise in identifying talented executives and experience in aiding the growth of companies.

Control Transactions. Because of our ability to scale up the size of our capital raise, we believe we would be able to acquire a majority interest in a large, privately-owned corporation (i.e., valuations above $25.0 billion). Other sources of capital, such as private equity funds, are generally not able to raise capital for a transaction of that size. Potential “strategic acquirers” of such companies face antitrust risks that can substantially delay or even prevent such a transaction from occurring, or require complex restructuring and the divestment of certain assets. A large privately-owned company that seeks to raise additional capital may find a business combination with our company to be a more viable means of doing so.

We intend to source business combination opportunities through Mr. Ackman’s and PSCM’s extensive relationship network of private business owners, public and private company executives and board members, venture capital fund managers, private equity and debt fund managers, investment bankers, ultra-high net worth families and their advisors, commercial bankers, attorneys, management consultants, accountants and other transaction intermediaries. We believe that this approach, augmented by the relationships and experience of our directors, will generate a substantial number of potential transaction alternatives that will create significant value for our stockholders.

Our Management Team

Our Management Team will consist of William Ackman, our Chairman and Chief Executive Officer, Ben Hakim, our President, Michael Gonnella, our Chief Financial Officer, and Steve Milankov, our Corporate Secretary, who will be supported by the PSCM investment team, the broader PSCM organization and our independent directors, as further described below.

Mr. Ackman, Mr. Hakim and each other member of the PSCM investment team (the “Investment Team”) bring significant investment expertise as well as broad industry networks that encompass a wide array of sectors, industry participants, and intermediaries. We believe that each member of the Investment Team has complementary skills and experience relevant to our business strategy, as well as a track record of working together and providing creative solutions for complex transactions, which we believe represent an important competitive advantage.

The Investment Team has experience in:

 

   

sourcing, structuring, and executing on a wide range of investment opportunities;

 

   

providing constructive strategic and operational guidance to management teams and boards of directors, to drive long-term stockholder value creation;

 

   

leveraging insights from their substantial investment, financial, operational oversight and governance experience to help optimize the financial condition, operating performance and strategy of a company; and

 

   

leveraging their extensive network of relationships to augment or complement the senior management team or board of directors of a company.

William Ackman serves as our Chairman and Chief Executive Officer. Mr. Ackman also serves as the Chairman and Chief Executive Officer of PSTH. Mr. Ackman founded Pershing Square in 2003, and is principally responsible for its investment policies and implementation. Mr. Ackman has spent 29 years in the investment management industry. Prior to forming Pershing Square, he co-founded Gotham Partners

 

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Management Co., LLC, an investment adviser that managed public and private equity portfolios. Mr. Ackman is currently Chairman of the Board of the Howard Hughes Corporation, and a member of the Investment Advisory Committee of the Federal Reserve Bank of NY. Mr. Ackman received his Bachelor of Arts degree from Harvard College, where he graduated magna cum laude, and received his Masters in Business Administration from Harvard Business School.

Ben Hakim serves as our President. Mr. Hakim is also President of PSTH and a Partner at Pershing Square and joined the Investment Team in 2012. Mr. Hakim was previously a Senior Managing Director at The Blackstone Group, where he worked in the Mergers & Acquisitions group for 13 years. Mr. Hakim received his Bachelor of Science from Cornell University in 1997.

Michael Gonnella serves as our Chief Financial Officer. Mr. Gonnella is also Chief Financial Officer of PSTH and Chief Financial Officer and a Partner at Pershing Square. Prior to his appointment as Pershing Square’s Chief Financial Officer in 2017, he served as senior controller of Pershing Square since joining the firm in 2005. Mr. Gonnella is a certified public accountant and received his Bachelor of Science from Seton Hall University in 2002.

Steve Milankov serves as our Corporate Secretary. Mr. Milankov is also Corporate Secretary of PSTH and Assistant General Counsel and a partner at Pershing Square. Prior to his appointment as Pershing Square’s Assistant General Counsel, he served as Senior Trading Counsel of Pershing Square since joining the firm in 2013. Mr. Milankov received his Joint MBA and Law degrees from McGill University in 2000. Mr. Milankov worked at the law firm Clifford Chance LLP and most recently at Société Générale prior to joining Pershing Square.

Our Investment Team

In addition to Mr. Ackman and Mr. Hakim, our Investment Team includes the following individuals:

Ryan Israel is a Partner at Pershing Square and joined the Investment Team in 2009. Mr. Israel was previously an analyst at Goldman Sachs in the Technology, Media and Telecom group. Mr. Israel served as a director of Element Solutions Inc. from October 2013 through January 2019. Mr. Israel received his Bachelor of Science from the Wharton School at the University of Pennsylvania, where he graduated summa cum laude and beta gamma sigma in 2007.

Anthony Massaro is a Partner at Pershing Square and joined the Investment Team in 2013. Mr. Massaro was previously a private equity associate at Apollo Global Management, where he focused on leveraged buyout and distressed debt investments across a wide range of industries. Prior to Apollo, he was an analyst at Goldman Sachs in the Natural Resources group. Mr. Massaro received his Bachelor of Science from the Wharton School at the University of Pennsylvania, where he graduated summa cum laude and beta gamma sigma in 2009.

Charles Korn is a Partner at Pershing Square and joined the Investment Team in 2014. Mr. Korn was previously a private equity associate at KKR, where he focused on media, communications and industrials. Prior to KKR, he was an analyst at Goldman Sachs in the Technology, Media and Telecom group. Mr. Korn received a degree in Honors Business Administration from The Richard Ivey School of Business at The University of Western Ontario, where he graduated with highest distinction as an Ivey Scholar in 2010.

Bharath Alamanda is a Partner at Pershing Square and joined the Investment Team in 2017. Mr. Alamanda was previously a private equity associate at KKR, where he focused on financial services. Prior to KKR, he was an analyst at Goldman Sachs in the Technology, Media and Telecom Group. Mr. Alamanda received his Bachelor of Science in Engineering from Princeton University, where he graduated summa cum laude and phi beta kappa in 2013.

Feroz Qayyum is a Partner at Pershing Square and joined the Investment Team in 2017. Mr. Qayyum was previously a private equity associate at Hellman & Friedman, where he evaluated and oversaw investments

 

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across a wide range of industries. Prior to Hellman & Friedman, he was an analyst in the Mergers & Acquisitions group at Evercore. Mr. Qayyum received a degree in Honors Business Administration from The Richard Ivey School of Business at The University of Western Ontario, where he graduated with highest distinction as an Ivey Scholar in 2013.

Manning Feng joined the Pershing Square Investment Team in 2021. Ms. Feng was previously a private equity associate at Warburg Pincus, where she focused on industrials and business services. Prior to Warburg Pincus, she was an investment banking analyst at Centerview Partners. Ms. Feng received her Bachelor of Science from the Wharton School at the University of Pennsylvania, where she graduated summa cum laude in 2016.

Our Independent Director Nominees

Our Investment Team’s efforts to seek a suitable business combination target will be complemented and augmented by the expertise and network of relationships of our director nominees, who will provide extensive experience in business and financial matters.

Dr. Jennifer Blouin is the Richard B. Worley Professor of Financial Management and Professor of Accounting at The Wharton School of the University of Pennsylvania. Dr. Blouin is an expert on the role of taxation in firm decision making. Her research examines the effect of taxes on asset pricing, capital structure, corporate payout behavior, multinational firm behavior, and mergers and acquisitions. Dr. Blouin has provided expert analysis in tax shelter litigation on behalf of the US Department of Justice, and in pharmaceutical patent litigation regarding transfer pricing and the repatriation of earnings by multinational corporations and their affiliates. Dr. Blouin has presented her work at over 70 universities and at numerous association conferences. Three research centers at Wharton, and the International Tax Policy Forum have awarded her research grants. She is one of only five accountants to have been granted access to the Department of Commerce’s Bureau of Economic Analysis. She has published papers in top general interest academic journals as well as in leading tax-specific journals and, in 2010, won the Tax Manuscript Award from the American Taxation Association for the paper making the greatest impact on the literature in the past five years. Dr. Blouin is frequently cited in the press, including The Wall Street Journal, The New York Times, and the Financial Times. Her papers have been cited by the Center on Budget and Policy Priorities and the National Bureau of Economics Research Digest. Dr. Blouin is an editor of the Review of Accounting Studies and an associate editor of the Journal of Accounting Research. Dr. Blouin teaches taxation to undergraduate, MBA, and PhD students and is a recipient of the University of Pennsylvania’s Lindback Award for Distinguished Teaching and Wharton Teaching Excellence Award. Prior to her academic career, Dr. Blouin was a tax manager with Arthur Andersen. She received her PhD in Accounting from the University of North Carolina- Chapel Hill and her BS from Indiana University—Bloomington.

Kathryn Judge is the Harvey J. Goldschmid Professor of Law at Columbia Law School. Her scholarship has been published in Harvard Law Review, Stanford Law Review, The University of Chicago Law Review and other top journals, and has earned accolades from academic peers and industry. She is co-editor of the Journal of Financial Regulation and a Research Member of the European Corporate Governance Institute. She has served on the Financial Research Advisory Committee of the Office of Financial Research and the Task Force on Financial Stability co-sponsored by the Hutchins Center on Fiscal & Monetary Policy at the Brookings Institution and the Initiative on Global Markets at the University of Chicago Booth School of Business. She also served as a clerk for Judge Richard Posner and Supreme Court Justice Stephen Breyer. She is a graduate of Stanford Law School and Wesleyan University.

 

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Linda Rottenberg is one of the world’s leading voices in entrepreneurship, technology, and business transformation. She is the cofounder and CEO of Endeavor, the leading global community of, by, and for high-impact entrepreneurs, and the president of Endeavor Catalyst, a rules-based investment fund, which invests in select Endeavor companies. Founded in 1997, Endeavor selects, supports, and co-invests in top founders based in emerging and growth markets across Latin America, Europe, Asia, Middle East, as well as in underserved markets in the U.S. and Canada. With $250 million in assets under management across three funds, Endeavor Catalyst has made 180+ investments in 30+ markets to date and counts 25 companies valued at more than $1 billion in its portfolio. Ms. Rottenberg currently serves as a director of Globant, a $9 billion software and digital transformation pioneer (NYSE: GLOB); Olo, a $6 billion SaaS-based restaurant ordering platform (NYSE: OLO); Reinvent Technologies Z, a SPAC formed by LinkedIn cofounder Reid Hoffman and Zynga founder Marc Pincus, which will merge with insurtech firm Hippo in 2021 (NYSE: RTPZ); and Valor Latitud Acquisition Corp (NASDAQ: VLATU), one of Latin America’s first SPACs. She formerly served as a director of Zayo Group, a $15 billion global bandwidth infrastructure company (NYSE: ZAYO). She is a member of YPO, CFR, the World Economic Forum, and the Yale President’s Council on International Activities. A graduate of Harvard College and Yale Law School, her 2014 book, CRAZY IS A COMPLIMENT: The Power of Zigging When Everyone Else Zags, was an instant New York Times bestseller.

Our Board Observers

The following individuals currently serve as directors of PSTH, and will be observers at meetings of our Board. At the time their service as directors of PSTH concludes, they will be offered the opportunity to join our Board as independent directors.

Lisa Gersh co-founded Oxygen Media (“Oxygen”) in 1999 and remained its President and Chief Operating Officer until the company’s sale to NBC in 2007 for $925 million. Oxygen was the first-ever multi-platform brand and created content for women, by women, and reached 74 million homes at the time of its sale. Following the sale of Oxygen, Ms. Gersh joined NBC and spearheaded NBC’s acquisition of the Weather Channel, serving briefly as its interim Chief Executive Officer. Also at NBC, Ms. Gersh launched Education Nation, a transformative education initiative that established NBC as the media authority on education. In 2011, Ms. Gersh took over the operations of Martha Stewart Living Omnimedia, Inc. (“Martha Stewart”), first as President and later as its Chief Executive Officer. During her tenure, Ms. Gersh rebranded Martha Stewart, materially reduced its operating expenses, and returned the company to profitability. In 2014, Ms. Gersh transformed Gwyneth Paltrow’s blog, Goop, Inc. (“Goop”), into the first contextual commerce brand. In the process of taking Goop from a collection of recommendations to a freestanding brand, Ms. Gersh oversaw, among other things, the launch of Goop’s e-commerce store, skincare and fashion lines, and created Goop’s pop-up retail strategy. In 2017, Ms. Gersh was named Chief Executive Officer of Alexander Wang, a global fashion brand based in New York City. A graduate of Rutgers Law School, Ms. Gersh began her career as a lawyer, first as a litigation associate at Debevoise & Plimpton LLP, and then as a Partner at Friedman, Kaplan, Seiler & Adelman LLP, a boutique law firm specializing in complex litigation and commercial transactions, which Ms. Gersh co-founded, and which today has more than 50 lawyers. Currently, Ms. Gersh sits on the board of directors of Hasbro, Inc., where she chairs the Compensation Committee, and Establishment Labs Holdings Inc., where she chairs the Nomination and Governance Committee and Money Lion, where she chairs the Nominating and Governance Committee. She also serves on the board of directors of the Bail Project, Inc. and the Samsung Retail Advisory Board. Ms. Gersh previously served on the board of directors of comScore, Inc.

Michael Ovitz co-founded Creative Artists Agency (CAA) in 1974 and served as its Chairman until 1995. Over that 20-year period, he grew the agency from a start-up organization to the world’s leading talent agency, representing more than 1,000 of the most notable actors, directors, musicians, screenwriters and other personalities in the entertainment industry, including Martin Scorsese, Sean Connery, Robert Redford, Paul Newman, Robert DeNiro, Al Pacino, Bill Murray, Dustin Hoffman, Steven Spielberg, David Letterman, Meryl Streep, Barbara Streisand, Michael Crichton and Michael Jackson. In his journey from the mailroom to media

 

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mogul, Mr. Ovitz launched the most powerful agency in the world (to -date), sold three major Hollywood studios, executed all marketing and advertising for The Coca-Cola Company (including creating the Polar Bear Campaign) and was at the forefront of the digital revolution, making alliances with Intel Corporation and other early Silicon Valley companies. Mr. Ovitz also served as President of the Walt Disney Company, from October 1995 to January 1997. In 2010, Mr. Ovitz founded the venture capital fund Broad Beach Ventures LLC, a portfolio of over two hundred companies. He has been a senior advisor to Palantir Technologies for over 10 years and has invested in and advised companies from startups to black swans. He was instrumental in the creation of venture capital firm Andreessen Horowitz and frequently consults for many other firms. In 2018, Mr. Ovitz wrote and published his memoir Who Is Michael Ovitz?, which was on the long -list for The Financial Times and McKinsey Business Book of the Year Award. Mr. Ovitz is a graduate of University of California, Los Angeles and helped rebuild the UCLA Medical Center in 1997, while serving as its Chairman for over a decade. Mr. Ovitz is also a notable art collector and serves on The Board of Trustees at The Museum of Modern Art in New York City.

Jacqueline Dawn Reses serves as the chief executive officer of Post House Capital and most recently served as executive chair of Square Financial Services LLC and capital lead at Square, Inc., a publicly traded financial services company which provides services to small businesses and consumers, from October 2015 to October 2020. From February 2016 to July 2018, she also served as people lead at Square, Inc. From September 2012 to October 2015, she served as chief development officer of Yahoo! Inc. Prior to Yahoo, she led the U.S. media group as a partner at Apax Partners Worldwide LLP, a global private equity firm, which she joined in 2001. As of 2020, she serves on the board of the Wharton School of the University of Pennsylvania. She currently serves on the board of directors of Nubank, has also served on the board of directors of Affirm and Context Logic since July 2020 and has been the chairperson of the Economic Advisory Council of the Federal Reserve Bank of San Francisco since 2015. She previously served on the board of directors of Alibaba Group Holding Limited, Social Capital Hedosophia Holding Corp. and Social Capital Hedosophia Holding Corp III. She holds a Bachelor’s of Science in Economics with honors from the Wharton School of the University of Pennsylvania.

Joseph S. Steinberg is Chairman of the Board of Directors of Jefferies Financial Group Inc., and, from January 1979 until March 1, 2013, served as President of Leucadia National Corporation (now Jefferies Financial Group Inc.). He has also been a director of Jefferies Group since 2008, Crimson Wine Group since 2013 and served as a director of HomeFed Corporation from August 1998 and Chairman of the Board from December 1999 until its acquisition by Jefferies Financial Group Inc. in 2019. Mr. Steinberg has previously served as a director of Spectrum Brands Holdings, Inc., Mueller Industries, Inc., Fidelity & Guaranty Life and Fortescue Metals Group Ltd. Mr. Steinberg has managerial and investing experience in a broad range of businesses through his more than 40 years as President and a director of Leucadia National Corporation and now as Chairman and a director of Jefferies Financial Group Inc.

Notwithstanding our founders’ and Management Team’s past experiences, past performance is not a guarantee (i) that we will be able to identify a suitable candidate for our business combination or (ii) that we will provide an attractive return to our stockholders from any business combination we may consummate. You should not rely on the historical record of our founders’ and management’s performance as indicative of our future performance. See Risk Factors—Past performance of our founders and the other members of our Management Team, including investments and transactions in which they have participated and businesses with which they have been associated, may not be indicative of future performance of an investment in us, and we may be unable to provide positive returns to stockholders. For more information, see the section of this prospectus entitled Management—Conflicts of Interest.

Our Business Strategy

Our business strategy is to identify and complete a business combination that creates substantial long-term value for our stockholders. We will seek target companies that demonstrate the characteristics set out under “Our Acquisition Criteria” below. We believe our Investment Team’s operational, financial and transaction experience

 

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across economic cycles and broad networks of relationships, along with our deep understanding of the equity and debt capital markets, will allow us to effectively and efficiently identify and evaluate potential opportunities for our business combination.

We will consider companies in a wide range of industries, but generally will seek to acquire a simple, high-quality, high-return on capital business that generates predictable growing cash flows that can be estimated within a reasonable range over the long term. We will prefer targets that have low sensitivity to macroeconomic factors, with minimal commodity exposure and/or cyclical risk. We are willing to accept a high degree of situational, legal, and/or capital structure complexity in a business combination if we believe that the potential for reward justifies this additional complexity, particularly if these issues can be resolved in connection with and as a result of a combination with us.

To achieve a successful business combination, our Investment Team will leverage its experience to identify a company with a strong competitive position that can benefit from being a public company in the execution of its growth and value-creation strategy. We believe our scale and structure, coupled with our Investment Team’s background and experience, will make us an attractive partner for high-quality management teams and owners.

Following the completion of the Distribution of our SPARs, we intend to begin the process of communicating with the network of relationships of our Investment Team, our board of directors and their affiliates to articulate the parameters for our search for a potential target business combination and begin the process of pursuing and reviewing potential opportunities.

You should note that our Investment Team is engaged in the business of identifying business opportunities for other companies sponsored by affiliates of PSCM in addition to the company, as well as other investment and advisory activities for itself and others. See the section of this prospectus entitled Management—Conflicts of Interest for more detail regarding potential conflicts of interest.

Our Acquisition Criteria

Consistent with our core investment principles and business strategy, we expect to identify high-quality companies that have a number of the characteristics enumerated below. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to complete our business combination with a target business that does not meet all of these criteria. We will seek to acquire companies that have the following characteristics:

 

   

Simple, predictable, and free-cash-flow-generative. We will generally seek companies with a proven track record of growth and free cash flow generation, and predictable future financial performance that we expect will generate strong, sustainable growth in cash flows over the long term—however, we are open to considering a company that may, at the time of the business combination, be cash-flow negative, if we believe that the business’s cash flow will become positive within a reasonable amount of time;

 

   

Formidable barriers to entry. We will seek companies that have long-term sustainable competitive advantages, significant barriers to entry, or “wide moats,” around their business, and low risks of disruption due to competition, innovation or new entrants;

 

   

Limited exposure to extrinsic factors that we cannot control. We will seek companies that are not materially affected by macroeconomic factors, commodity prices, regulatory risks, interest rate volatility and/or cyclical risk;

 

   

Strong balance sheet. We will seek companies that are conservatively financed relative to their free-cash-flow generation, after taking into consideration the de-leveraging effects of the business combination;

 

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Minimal capital markets dependency. We will seek companies that can benefit from being a public company with broader access to the capital markets and greater governance, but will prefer companies that are not highly reliant on the capital markets to operate and grow their businesses;

 

   

Large capitalization. We will seek companies with large enterprise values and significant long-term growth potential that will be likely candidates for inclusion in the S&P 500 index;

 

   

Attractive valuation. We will seek companies at an attractive valuation relative to their long-term intrinsic value; and

 

   

Exceptional management and governance. We will seek companies that have trustworthy, talented, experienced, and highly competent management teams. These companies may be led by entrepreneurs who are looking for a partner with our expertise to execute on the next stage of their growth. For target companies that require new management, we will leverage PSCM’s experience in identifying and recruiting new management.

These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination may be based, to the extent relevant, on these general guidelines, as well as other considerations, factors and criteria that our management and our Investment Team may deem relevant. If we decide to enter into our business combination with a target business that does not substantially meet the above criteria and guidelines, we will disclose that the target business does not substantially meet the above criteria in our communications to holders of our SPARs related to our business combination, which, as discussed in this prospectus, would be in the form of a Post-Effective Amendment to this registration statement that we would file with the SEC.

Our Acquisition Process

In evaluating a prospective target business, we expect to conduct a detailed due diligence review of the issues that we deem important in order to determine a company’s business quality and estimate its intrinsic value. That due diligence review will include, among other things, financial statement analysis, detailed document reviews, meetings with incumbent management and employees, consultations with relevant industry experts, competitors, customers and suppliers, as well as a review of additional financial, legal and other information that we will seek to obtain as part of our analysis of a target company.

We have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to a business combination with us. We are not prohibited from pursuing a business combination with a company that is affiliated with our Sponsor, officers or directors.

Members of our Management Team are not obligated to devote any specific number of hours to our matters, but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our business combination. In addition, we have an Investment Team comprised of eight members, who are employed by PSCM. We believe our Investment Team members will be able to allocate their duties to us and to PSCM (including for this purpose any acquisition companies sponsored by affiliates of PSCM now or in the future) amongst themselves in a manner that allows them to provide us with the resources and support we require while fulfilling their responsibilities to PSCM. The amount of time that any such person will devote in any time period will vary based on whether a target business has been selected for our business combination and the current stage of the business combination process. In addition, 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 is included by a target business as a condition to any agreement with respect to our business combination.

Our affiliate, PSCM, manages or advises several funds. PSCM and its affiliates may, in the future, sponsor acquisition companies with whom we could potentially compete. PSCM and its affiliates may form and manage

 

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other investment vehicles investing in public or private companies at any time prior to the announcement of our business combination, including, but not limited to, private or public investment vehicles that may invest side-by-side with our company. In any of the foregoing circumstances, a conflict of interest may arise. To the extent any such conflicts arise, we cannot guarantee that they will be resolved in our favor.

However, except for the foregoing, we do not believe that PSCM and its affiliates’ activities present significant conflicts of interest with respect to our pursuit of an acquisition target, because we intend that our acquisition target will be a large-capitalization, privately-owned company, and the Pershing Square Funds are not permitted by their constituent documents to make investments in the equities of companies whose securities are not publicly traded (except that they may make investments in public companies that issue private securities). We do not believe that PSTH, which is sponsored by an affiliate of PSCM, presents a potential conflict of interest, as we will distribute our SPARs only after PSTH has consummated a business combination or announced its intention to return the funds held in its trust account to its public stockholders.

Each of our directors, director nominees and officers currently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer, director or director nominee is or will be required to present business combination opportunities to such entity. Our Charter provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. Neither the affiliates of our Sponsor nor members of our Management Team who are employed by our Sponsor or its affiliates have any obligation to present us with any opportunity for a potential business combination of which they become aware. Accordingly, in the future, if any of our directors or officers becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity. Any presentation of such opportunities to entities other than us, or affiliates of our Sponsor, may present additional conflicts.

Business Combination

Our Charter will require that our business combination must be with one or more operating businesses or assets with a fair market value, at the time of signing the agreement to enter into the business combination, equal to at least 80% of the total amount of proceeds that would be raised from the exercise of all SPARs at the Final Exercise Price. We refer to this as the “80% of net assets test.” As further described in this prospectus, the NYSE has proposed a rule for the listing of subscription warrants by acquisition companies. We believe it is likely that the final version of this rule, if adopted, will apply this or a similar requirement with respect to the size of our business combination. If our Board 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 which is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”), or an independent valuation or accounting firm with respect to the satisfaction of such criteria. While we consider it unlikely that our Board will not be able to make an independent determination of the fair market value of a target business or businesses, it may be unable to do so if it is less familiar or experienced with the target company’s business, there is a significant amount of uncertainty as to the value of the company’s assets or prospects, including if such company is at an early stage of development, operations or growth, or if the anticipated transaction involves a complex financial analysis or other specialized skills and our Board determines that outside expertise would be helpful or necessary in conducting such analysis. Any such opinion, if obtained, would merely state that the fair market value of the target business meets the 80% of net assets test, unless such opinion includes material information regarding the valuation of a target business or the consideration to be provided, it is not anticipated that copies of such opinion would be distributed to SPAR holders, unless we would be required to do so under applicable law.

We anticipate structuring our business combination so that the post-business combination company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target

 

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business or businesses. We may, however, structure our business combination such that the post-business combination 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 stockholders or for other reasons, but we will only complete such business combination if the post-business combination company owns or acquires 50% or more of the outstanding voting securities of the target business 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.

Even if the post-business combination company owns or acquires 50% or more of the voting securities of the target business, our stockholders may collectively own a minority interest in the post-business combination company, depending on valuations ascribed to the target business 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, shares or other equity interests of a target business. In this case, we would acquire a 100% controlling interest in the target business. However, as a result of the issuance of a substantial number of new shares, our stockholders could own less than a majority of our issued and outstanding shares subsequent to our business combination.

The size of the interest we expect our stockholders to hold in the post-combination company could be impacted by a number of factors, including the structure of our business combination and the form of consideration we pay to acquire the target business, the size of the target business, the relative valuations ascribed to the target and us in the business combination and the potential dilutive effect of our Sponsor Warrants and Director Warrants. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-business combination 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 the 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.

SPARC Life Cycle

 

LOGO

 

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Search Period

We will distribute our SPARs shortly after the Registration Statement of which this prospectus forms a part is declared effective by the SEC. We anticipate that the SPARs will be listed for trading at such time, although we cannot guarantee that they will be listed on the NYSE. The listing and trading of SPARs on the NYSE will require the SEC to approve a new listing rule submitted by the NYSE permitting the listing and trading of subscription warrants by acquisition companies. See Listing of SPARs, page 3. If our SPARs are not listed on the NYSE, they would trade on the “over-the-counter” market, which may present significant risks to the holders of SPARs, including lower availability and efficiency of market price quotations, significantly less liquidity, increased trading costs, the absence of certain requirements regarding our corporate governance, and the application of state securities laws that could result in restrictions on the sale of our SPARs. See Risk Factors, page 55.

Upon the distribution of our SPARs, we will commence our search for a business combination partner, carry out due diligence on potential business combination partners, and negotiate the Definitive Agreement. We do not expect to make any public disclosures regarding this process until we have entered into a Definitive Agreement, except as may be required by applicable law. During this time, the SPARs will not be exercisable. As our SPARs have a term of 10 years, it is possible that a substantial amount of time could pass before we enter into a Definitive Agreement.

Disclosure Period

Upon entry into the Definitive Agreement, we will announce the Final Exercise Price of our SPARs, which will be no less than $10.00, and will not be adjusted further following the effectiveness of the Post-Effective Amendment. Our determination of the Final Exercise Price will take into account factors including, but not limited to, the ownership stake in the post-combination company we seek to obtain, the post-combination company’s capital needs, the minimum amount of capital we will be required to contribute in the business combination, the amount that the Additional Forward Purchaser has agreed to invest, our expectations regarding the extent to which SPARs will be exercised, and the availability and terms of additional debt or equity private financing (and conditions in those financing markets).

We will file with the SEC, as promptly as possible following entry into the Definitive Agreement, a Post-Effective Amendment to this Registration Statement. The Post-Effective Amendment will contain comprehensive disclosures regarding the proposed transaction, equivalent to the disclosures that would be included in a merger proxy statement. Depending on the structure our transaction takes, the Post-Effective Amendment may be filed as a registration statement by a different entity. It is likely the Post-Effective Amendment will be amended after the initial filing in response to the SEC’s review process, as well as for other reasons.

During this period, we will seek the satisfaction of all Disclosure Period Closing Conditions which refers to all express closing conditions contained in the Definitive Agreement, including any regulatory approvals, other than those that can only be satisfied as of a later date. The Disclosure Period Closing Conditions could include antitrust approval, listing exchange approval, and other regulatory matters, as well as conditions precedent that are particular to the proposed business combination. The closing conditions to be satisfied at a later time are discussed below, under “Company Decision Period.” Because we anticipate the closing of our business combination to occur within two months of the effectiveness of the Post-Effective Amendment, we believe we will be able to structure the Definitive Agreement in a manner such that many conditions to closing can be satisfied at this time, although there is no guarantee that the Definitive Agreement will provide for this, or that we will be able to satisfy such conditions.

Once all Disclosure Period Closing Conditions have been satisfied or waived, we will seek to have the Post-Effective Amendment declared effective by the SEC. Promptly following the time that the Post-Effective Amendment is declared effective, we will mail this document to all SPAR holders, and the SPAR Holder

 

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Election Period will begin on the date of mailing or shortly thereafter. At this time, we will also obtain any necessary stockholder approvals from our Sponsor, in its capacity as our sole stockholder.

If we amend the Charter or Definitive Agreement during this period, we will amend the Post-Effective Amendment as necessary. SPAR holders will have no rights in connection with such amendments, as they are not stockholders at this time. If we propose to amend the SPAR Agreement during this period, and the independent directors of our Board determine, in their reasonable, good-faith judgment, that such amendment could have a materially adverse impact on SPAR holders, such Materially Adverse Amendment will require approval of the holders of a majority of our SPARs present and voting on such matter. If we decide not to pursue the business combination (i.e., because certain of the Disclosure Period Closing Conditions cannot be satisfied), our SPARs will remain outstanding and with their holders, and we will pursue an alternate business combination. If our business combination partner seeks to abandon the transaction, we will determine our course of action and resume the disclosure, election and payment process if and when an agreement is reached to proceed with the transaction.

SPAR Holder Election Period

The SPAR Holder Election Period will begin only after (i) a Definitive Agreement has been entered into, (ii) the Post-Effective Amendment has been declared effective, and (iii) the Disclosure Period Closing Conditions have been satisfied or waived. SPAR holders will have a period of 20 business days to submit an Election regarding the exercise of their SPARs. Elections will not be revocable, except as provided below, and electing SPAR holders will be obligated to pay the aggregate exercise price for the number of SPARs that they have agreed to exercise, as indicated on their notice of Election. During this period, we expect that the market price of our SPARs will provide an indication of market perception of the proposed business combination, although we caution SPAR holders that this price is not necessarily indicative of the value they will realize upon the consummation of our business combination, and they should take into account all available information in determining whether to submit an Election. Once an Election has been submitted with respect to a SPAR, such SPAR will be restricted from trading. All SPARs, whether or not an Election has been submitted, will become restricted from trading on the date that is two business days before the end of the SPAR Holder Election Period.

The SPARs are not actually exercised at this time—no payment will be submitted yet, and SPARs will remain with their holders. An Election constitutes an irrevocable offer to exercise the indicated number of SPARs and pay the applicable aggregate exercise price. Once we have accepted such offer by announcing our decision to proceed with the transaction, electing SPAR holders will be obligated to pay the applicable exercise price during the SPAR Holder Payment Period. In addition, by submitting an Election, SPAR holders will be consenting to the automatic exercise of their SPARs concurrently with the consummation of our business combination.

During the SPAR Holder Election Period, if a Materially Adverse Amendment is made to the Charter or Definitive Agreement, we will provide SPAR holders with a period of at least 10 business days in which they can revoke their Elections, and may extend or postpone the SPAR Holder Election Period as our Board, in its sole discretion deems necessary.

If we propose a Materially Adverse Amendment to the SPAR Agreement, such amendment must be approved by the holders of a majority of the SPARs present and voting for or against the matter. SPAR holders may choose to vote for or against the amendment or to abstain, and can indicate whether they wish to revoke their Elections in the event that the amendment is approved. If the amendment is not approved, no Elections will be revoked. Only SPAR holders who submit a ballot will have the opportunity to revoke their Elections. In connection with the vote on such amendment, SPAR holders will have a SPAR holders will not have the right to vote on any amendment to the Charter or the Definitive Agreement.

If we decide to abandon the transaction, all Elections will be disregarded, SPARs will remain with their holders and again be tradable, and we will search for a new business combination. We may decide to abandon the

 

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transaction, among other reasons, if we determine that we or our business combination partner will be unable to meet certain closing conditions. Our ability to abandon the transaction will be limited by our obligations under the Definitive Agreement and/or our ability to reach an agreement with our business combination partner to terminate the Definitive Agreement. If our business combination partner seeks to abandon the transaction and/or breaches its material obligations under the Definitive Agreement, we will determine our course of action, taking into account factors such as the expense and time required to do so and our likelihood of prevailing. If we do pursue the transaction, we will postpone the SPAR Holder Election Period until we are able to proceed with the transaction. Holders who have submitted Elections will not have a revocation right in such circumstances, except as described above in connection with Materially Adverse Amendments, or if the Board, in its sole discretion, provides such a right.

SPARs will become restricted from trading upon the earlier of (i) the submission of an Election and (ii) two business days prior to the end of the SPAR Holder Election Period. Unelected SPARs will not have any value following the SPAR Holder Election Period and are likely to expire worthless, unless we abandon the proposed business combination during the Company Decision Period and seek a new business combination. Accordingly, any SPAR holder who wishes to sell their SPARs must do so prior to submitting an Election and no later than two business days prior to the end of the SPAR Holder Election Period.

Company Decision Period

Following the SPAR Holder Election Period, we will have up to 10 calendar days to determine whether or not to proceed with the business combination. This decision will be driven primarily by whether the Decision Period Closing Conditions have been or will be satisfied as of the end of the Company Decision Period. The Decision Period Closing Conditions are (i) the availability of necessary financing to consummate the transaction, (ii) the absence of any material adverse change and (iii) the “bring-down” of certain representations and warranties. In particular, we will assess the expected proceeds from the Elections that have been submitted, the amount of the Forward Purchase and the availability and terms of any private debt or equity capital that may be necessary to meet any minimum available cash condition to the closing of the business combination. If closing conditions in our favor are not satisfied, our Board will assess whether it is in the best interests of our company to waive such conditions. In general, our ability to choose not to proceed will be limited by our obligations under the Definitive Agreement.

If we determine not to pursue the business combination, we will publicly announce such decision. This decision will constitute a rejection of the Elections submitted. Accordingly, SPARs will not have been exercised, will remain with their holders and again be tradable.

If we determine to pursue the business combination, we will publicly announce such decision, and the SPAR Holder Payment Period will commence on the following business day. The decision to pursue the business combination will constitute an acceptance of the Elections that have been submitted, and electing SPAR holders will be obligated to submit their exercise payments during the SPAR Holder Payment Period. Holders will not be able to revoke their Elections during the Company Decision Period, except in connection with a Materially Adverse Amendment to the Definitive Agreement.

No Materially Adverse Amendments may be made to the Charter or SPAR Agreement during the Company Decision Period or the SPAR Holder Payment Period. If our business combination partner seeks to abandon the transaction and breaches its material obligations under the Definitive Agreement, we will determine whether to pursue the matter, taking into account factors such as the expense and time required to do so and our likelihood of prevailing. If we do pursue the transaction, we may extend the Company Decision Period until such matter is resolved, and holders who have submitted Elections will not have a revocation right in connection therewith except as required in connection with a Materially Adverse Amendment to the Definitive Agreement, or unless our Board, in its sole discretion, permits revocation.    

During the Company Decision Period, all SPARs will remain restricted and will not be tradable.

 

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SPAR Holder Payment Period

SPAR holders who have submitted Elections will have five calendar days to submit payment for their SPARs. Holders will not be able to seek a return of their funds or cancel or prevent the exercise of their SPARs. Once the company has received an electing SPAR holder’s payment, such holder will be entitled to receive the applicable number of Public Shares, contingent on the consummation of the business combination. SPARs for which payment has been received will automatically be exercised concurrently with the consummation of the business combination. All funds received will be held in an interest-bearing Custodial Account, and will be released to us in connection with the consummation of our business combination, or will be returned in connection with an Early Termination.

It is possible that a legal injunction from a governmental authority prevents us from consummating the business combination, or that our business combination partner breaches its obligations and declines to consummate the transaction. We may decide to extend the SPAR Holder Payment Period if (i) our business combination partner breaches its obligations under the Definitive Agreement in a manner that frustrates the consummation of the business combination or (ii) we are enjoined by a governmental authority from consummating the transaction and are permitted under applicable law to appeal such injunction. In such event, our Board will determine, in its sole discretion, whether to further pursue the business combination or carry out an Early Termination. If our business combination partner breaches its obligations to consummate the transaction, we would most likely seek to enforce our legal right to specific performance and have the transaction consummated on the terms set forth in the Definitive Agreement. However, it is possible that we reach a negotiated settlement in which the Definitive Agreement is amended. In such case, if the changes to the Definitive Agreement constitute a Materially Adverse Amendment, we will provide SPAR holders with a period of at least 10 business days in which they can revoke their Elections.

In order to maximize the certainty of consummating a business combination prior to accepting exercise payments, we will seek to structure our Definitive Agreement such that all closing conditions, to the extent possible, are to be satisfied as of the date the Company Decision Period ends, rather than as of the date of the closing (as is the case in most business combinations). However, we may be unable to structure our business combination in this manner, in which case there may be less certainty as to whether the transaction will be consummated. In addition, because we may not be able to abandon the transaction in the event that a material adverse change occurs during the SPAR Holder Payment Period, our company and electing SPAR holders will bear the risk of such adverse changes. We believe that such risk is limited by the brief duration of the SPAR Holder Payment Period, but cannot guarantee that such adverse events will not occur, particularly if we extend the SPAR Holder Payment Period.

If we do not consummate the business combination, we will promptly return all payments received on a pro rata basis with respect to the exercise price paid by electing SPAR holders, with interest and net of any taxes, and we will liquidate our company.

During the SPAR Holder Payment Period, all SPARs will remain restricted and will not be tradable.

Closing and Post-Closing

We will issue the Public Shares concurrently with the consummation of our business combination. Upon consummation of our business combination, all unexercised SPARs will expire worthless. Our Sponsor intends that, at or shortly after the time at which we consummate our business combination, 244,444,444 SPARC II Tontine Warrants will be distributed on a pro rata basis to holders who exercised their SPARs in connection with our business combination. SPARC II, and the SPARC II Tontine Warrants, would have terms substantially similar to that of our company. However, we cannot provide you with any assurance as to the formation of SPARC II, the distribution of the SPARC II Tontine Warrants, and the terms of such distribution or of the warrants.

 

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Our Forward Purchase Agreement

We believe our ability to complete our business combination will be enhanced by having entered into the Forward Purchase Agreement. Prior to the Distribution, we will enter into a Forward Purchase Agreement with the Forward Purchasers (who are affiliates of Pershing Square) in the amount of $3.5 billion, a portion of which the Committed Forward Purchasers are obligated to purchase, and the remainder of which the Additional Forward Purchaser may elect to purchase. At the time we enter into a Definitive Agreement, we will announce the Final Exercise Price, which determines the Committed Forward Purchase amount, and the Additional Forward Purchaser will also announce the extent to which it will exercise the Additional Forward Purchase. We believe that the availability of the Forward Purchase will make us more attractive to potential business combination partners, by increasing the likelihood that we will have sufficient capital to consummate a business combination, and, because the total amount of the Forward Purchase will be announced before the SPAR Holder Election Period begins, it will provide SPAR holders with additional certainty of our ability to do so.

The Committed Forward Purchasers will be obligated to invest $500.0 million if the Final Exercise Price is $10.00, and a proportionately greater amount at a higher Final Exercise Price, up to a maximum commitment of $1.0 billion at a Final Exercise Price of $20.00 or greater. The Additional Forward Purchaser will have the right to purchase an additional $2.5 billion to $3.0 billion (such that the aggregate Forward Purchase does not exceed $3.5 billion) of Public Shares. The Forward Purchase shares will have a per-share purchase price equal to the Final Exercise Price at which electing SPAR holders will purchase Public Shares. The table below illustrates how the size of the Committed Forward Purchase and maximum Additional Forward Purchase vary based upon the Final Exercise Price, as a dollar amount and as a percentage of the number of Public Shares issuable upon the exercise of all SPARs.

 

     Dollar Amount of Forward Purchase      Share Amount
(as % of Public Shares)
 

Final Exercise Price

   Committed
Forward Purchase
     Max.
Additional Forward
Purchase
     Committed
Forward Purchase
    Max. Additional
Forward Purchase
 

$10.00

   $ 500.0 M      $ 3.00 B        20.5     122.7

$15.00

   $ 750.0 M      $ 2.75 B        20.5     75.0

$20.00

   $ 1.00 B      $ 2.50 B        20.5     51.1

$25.00

   $ 1.00 B      $ 2.50 B        16.4     40.9

$50.00

   $ 1.00 B      $ 2.50 B        8.2     20.5

$75.00

   $ 1.00 B      $ 2.50 B        5.5     13.6

The purchase of the Forward Purchase shares will take place simultaneously with the closing of our business combination. The Committed Forward Purchasers’ obligation to purchase Forward Purchase shares will be allocated among the Committed Forward Purchasers from time to time as described herein, but may not be transferred to any other parties. The Additional Forward Purchaser’s right to purchase Additional Forward Purchase shares may be transferred, in whole or in part, to any entity that is managed by PSCM, but not to third parties. The Public Shares purchased pursuant to the Forward Purchase Agreement will be subject to certain transfer restrictions and will have registration rights.

The Sponsor Shares and Sponsor Preferred Shares

Our Sponsor has purchased 23,660 shares of Common Stock at a price $10.00 per share, for an aggregate purchase price of $236,600. The Sponsor Shares, following consummation of our business combination, will become Public Shares. If we determine to set the Final Exercise Price above the Minimum Exercise Price, we will carry out a reverse stock split of the Sponsor Shares at a ratio such that the effective purchase price per Sponsor Share equals the Final Exercise Price at which SPAR holders will purchase Public Shares. For example, if the Final Exercise Price is $20.00, we will carry out a 2-to-1 reverse stock split of the Sponsor Shares, such that half as many Sponsor Shares are outstanding and the effective purchase price paid for each Sponsor Share then outstanding will equal $20.00.

 

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In order to fund our initial capital needs, our Sponsor will purchase, prior to the Distribution, 3,000 Sponsor Preferred Shares for an aggregate purchase price of $30,000,000. The Sponsor Preferred Shares generally do not have any voting rights, have a liquidation preference of $10,000 per share, rank higher in priority to our Common Stock and will automatically convert into Public Shares upon the consummation of our business combination. The Sponsor Preferred Shares are entitled to a cumulative annual dividend of 5.0%, payable in cash. We will pay the accrued dividends at the time of the conversion of the Sponsor Preferred Shares. The number of Public Shares issuable upon conversion will equal the aggregate liquidation preference of the Sponsor Preferred Shares, divided by the Final Exercise Price. Our Sponsor will have paid the same per-share price to acquire Public Shares upon conversion as exercising SPAR holders and, because the dividends are payable only in cash, the Sponsor Preferred Shares will not have a dilutive effect on stockholders. Our Sponsor may, but is not obligated to, purchase additional Sponsor Preferred Shares prior to our business combination in order to provide us with additional working capital. The Sponsor Preferred Shares are generally not transferable, and the Public Shares issuable upon the conversion thereof will have certain registration rights.

We will use the proceeds from the sale of the Sponsor Shares and Sponsor Preferred Shares to pay expenses in connection with the Distribution and for our operating expenses, including search costs for identifying a potential business combination partner and other expenses related to executing a business combination.

Sponsor Warrants and Director Warrants

Issuance and Purchase Price. Prior to the Distribution, we will issue the Sponsor Warrants to our Sponsor, and the Director Warrants to certain of our independent director nominees or Board observers. Our Private Warrants will represent substantially the same investment opportunity as do the private warrants of PSTH—the right to acquire a fixed percentage of a post-combination company. An affiliate of our Sponsor paid $65.0 million for its PSTH sponsor warrants (exercisable for 5.95% of the post-combination company), and these independent director nominees paid an aggregate of approximately $2.4 million (exercisable for 0.26% of the post-combination company), which purchase prices were determined at the time of issuance, in consultation with a third-party, nationally recognized valuation firm, to be the fair market value of the private warrants. Our Private Warrants will have substantially similar terms, with the primary difference being that the Sponsor Warrants are exercisable for 4.95% of the post-combination company, rather than 5.95%.

We believe that, if PSTH does not consummate a business combination, the holders of our Private Warrants will have, in effect, already paid for the investment opportunity represented by the Private Warrants. Accordingly, we will issue the Sponsor Warrants and Director Warrants to their respective holders at a nominal initial cost. However, if PSTH does consummate a business combination and the holders of the PSTH private warrants may be able to realize the investment opportunity for which they previously paid, the holders of our Private Warrants will pay our company for the investment opportunity represented by our Private Warrants. In such event, we will determine the fair market value of our Sponsor Warrants and Director Warrants in consultation with a third-party, nationally recognized valuation firm, and the holders of the Private Warrants will pay that amount to our company as a purchase price. We expect that, prior to the time at which this Registration Statement is declared effective, PSTH will have either consummated a business combination or returned funds to its investors. The fair value of the Private Warrants will be determined as of the time of their issuance, and will take into account various factors including, but not limited to: the restriction on sale or transfer of the Private Warrants and the shares issuable upon exercise thereof, the estimated range of possible business combination partner equity values, and the probability of consummating a business combination prior to the expiration of our SPARs. Any valuation process will be inherently uncertain and imprecise, and may result in a higher or lower valuation, or terms more or less favorable, than would be obtained in an arm’s length negotiation between third parties.

Terms of Private Warrants. The Sponsor Warrants will be exercisable, in the aggregate, for 4.95% of the Public Shares that are outstanding as of the time immediately following the consummation of our business combination, on a fully-diluted basis (such 4.95% of shares, the “Reference Shares”). The Sponsor Warrants will

 

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have an exercise price equal to 120% of the Final Exercise Price (the “Reference Price”), meaning that our Sponsor will participate in the value of our business combination only if the Public Shares appreciate by at least 20% above the price at which SPAR holders purchase Public Shares. For example, if the Final Exercise Price is $10.00, the Reference Price will be $12.00. Our Sponsor may exercise the Sponsor Warrants on a cashless basis, in which case it would receive upon exercise that number of shares equal to (i) the number of Reference Shares, multiplied by (ii)(a) the “fair market value” of a Public Share in excess of the Reference Price, divided by (b) the fair market value of a Reference Share. As used above, “fair market value” refers to the volume-weighted average trading price of a Public Share over the 10 consecutive trading days ending on the third trading day prior to a notice of exercise being sent.

The Director Warrants will be identical to the Sponsor Warrants, except that they are exercisable, in the aggregate, for approximately 0.26% of the Public Shares outstanding as of the time immediately following the consummation of our business combination, on a fully-diluted basis. The Sponsor Warrants and the Director Warrants will be exercisable, in the aggregate, for approximately 5.21% of the outstanding Public Shares of the post-combination company.

The Private Warrants will generally not be saleable or transferable until three years after the consummation of our business combination and are subject to certain adjustments as described herein. The Public Shares issuable upon exercise of the Private Warrants will generally not be saleable or transferable until three years after the consummation of our business combination and will have certain registration rights. The Private Warrants will expire on the date that is 10 years from the consummation of our business combination. The Private Warrants may be exercised in whole or in part and will not be subject to redemption.

Effect of Sponsor Warrants and Director Warrants on Ownership

The unique structure of our Sponsor Warrants and Director Warrants, which are exercisable for a fixed percentage of the pro forma post-combination company, will have different effects on the ownership interest of public stockholders in the post-combination company, and that of the owners of the business combination partner (assuming such stockholders remain investors in the post-combination company) as compared to the typical structure of special purpose acquisition companies, in which the sponsor maintains an ownership interest equal to 25% of that of its public stockholders in the post-combination company (or greater, in the case of redemptions).

Though the number of shares issuable to the holders of the Private Warrants (for purposes of this discussion, the “Private Holders”) is determined with respect to 4.95% and 0.26%, respectively, of the fully-diluted Public Shares outstanding immediately following the business combination, the actual ownership stake of the Private Holders in the post-combination business upon exercise will differ significantly depending on the fair market value. At or below the Reference Price (120% of the Final Exercise Price), the Private Holders will not have any ownership stake. Accordingly, there will be no dilutive effect on our security-holders who become holders of Public Shares (for the purposes of this discussion, the “Public Stockholders,” which includes both exercising SPAR holders and the Forward Purchasers). Above the Reference Price, the holders would receive upon exercise a number of shares calculated as provided above. At higher market prices, the ownership stake (and overall dilutive effect on Public Stockholders) increases towards its limit of approximately 5.21%.

Compared to a conventional SPAC, in which the dilutive effect of the sponsor promote increases significantly as the SPAC owns a larger percentage of the post-combination company, the dilutive effect from our Sponsor Warrants and Director Warrants does not vary based on the relative size of our business combination partner. In a conventional SPAC, all stockholders other than the sponsor experience immediate dilution as a result of the sponsor promote, regardless of whether the stock price of the post-combination company increases or decreases.

As an example, assume a transaction in which the Final Exercise Price is $10.00, the valuation of the post-combination company is $20.0 billion (with 2.0 billion shares outstanding, based on the initial per-share value of

 

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$10.00), and our company contributes $4.0 billion in proceeds from the exercise of our SPARs, the sale of the Sponsor Preferred Shares and the Forward Purchase. In such a transaction, our stockholders (including the Forward Purchasers) would initially own 20% of the post-combination company. At a fair market value of $12.00 per share or lower, the Private Warrants would be out-of-the-money and therefore would not be exercised. At a fair market value of $15.00 per share, a 50% increase in our stock price, upon a cashless exercise, the holders of the Private Warrants would be issued approximately 22.0 million Public Shares (the value of 109.9 million Reference Shares in excess of the $12.00 Reference Price, divided by the $15.00 fair market value), constituting ownership of 1.1% of the post-combination company. Our Public Stockholders would own 19.8% of the post-combination company (a 0.2% decrease in ownership, representing dilution of 1.1%). At a fair market value of $30.00 at the time of exercise, a three-fold increase in our stock price, the holders of the Private Warrants would be issued approximately 66.0 million Public Shares upon exercise. The holders of the Private Warrants would thereby own 3.2% of the post-combination company, and the Public Stockholders would own 19.4% of the post-combination company (a 0.6% decrease, or 3.2% dilution).

As shown below, the size of the ownership stake of all Public Stockholders decreases proportionately with a larger deal size. However, the dilutive effect for Public Stockholders does not vary significantly with deal size, nor does the ownership of the Private Holders—for each one percent of ownership acquired by the Private Holders, the Public Stockholders are diluted by one percent. The maximum amount of dilution is 5.21%. The illustration below assumes total proceeds of $4.0 billion are contributed by our company in the transaction.

 

     Post-Combination Company Equity Value     Public
Dilution
    Private
Ownership
 
     $8.0B     $12.0B     $16.0B     $24.0B     $40.0B  

Fair Market Value of Public Share

   Public Ownership  

$10.00

     50.0     33.3     25.0     16.7     10.0     0.0     0.0

$12.00

     50.0     33.3     25.0     16.7     10.0     0.0     0.0

$15.00

     49.5     33.0     24.7     16.5     9.9     1.1     1.1

$20.00

     48.9     32.6     24.5     16.3     9.8     2.2     2.2

$25.00

     48.6     32.4     24.3     16.2     9.7     2.8     2.8

$30.00

     48.4     32.3     24.2     16.1     9.7     3.2     3.2

$50.00

     48.0     32.0     24.0     16.0     9.6     4.0     4.0

Status as a Public Company

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or 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 of 2002, or 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 stockholder 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.

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 this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in

 

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which we are deemed to be a large accelerated filer, which means the market value of our Common Stock held by non-affiliates exceeds $700.0 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.

Financial Position

As a result of the exercise of our SPARs and the Committed Forward Purchase, we expect to have a minimum of approximately $2.9 billion in equity capital for use in our business combination assuming the maximum number of SPARs are exercised, and as much as $5.9 billion if the total amount of the Additional Forward Purchase is consummated, in each case assuming that the maximum number of SPARs are exercised and before the payment of fees and expenses associated with our business combination. We believe that 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, strengthening its balance sheet by reducing its debt. Because we are able to complete our business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to tailor the consideration to be paid to the target business to fit owner’s and management’s needs and requirements. We have not, however, taken any steps to secure third-party financing and there can be no assurance such financing will be available to us on acceptable terms or at all.

Effecting our Business Combination

We are not presently engaged in, and we will not engage in, any operations for an indefinite period of time following the Distribution of our SPARs. We intend to effectuate our business combination using cash from the proceeds of the exercise of our SPARs, the private placement of the Sponsor Shares, Sponsor Preferred Shares the Forward Purchase shares, our capital stock, debt or a combination of these as the consideration to be paid in our business combination. We may seek to complete our business combination with a company or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.

If our business combination is paid for using equity or debt instruments, or not all of the proceeds from the exercise of our SPARs are used for payment of the consideration in connection with our business combination, we may apply the balance of the cash released to us by the trustee for general corporate purposes, including for maintenance or expansion of operations of the post-combination business, the payment of principal or interest due on indebtedness incurred in completing our business combination, to fund the purchase of other companies or make other investments, or for working capital.

In addition to the Forward Purchase shares, we may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our business combination, and we may effectuate our business combination using the proceeds of such offering. Subject to compliance with applicable securities laws, we would expect to complete such financing only simultaneously with the completion of our business combination. We will promptly disclose any such financing to SPAR holders. SPAR holders will not have any rights to approve such financing. There are no prohibitions on our ability to raise funds privately, or through loans in connection with our business combination. At this time, other than the Forward Purchase Agreement, 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.

Sources of Target Businesses

We anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private equity fund sponsors, investment banking firms, consultants, accounting firms and large business enterprises. These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many of these sources will

 

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have read this prospectus and know what types of businesses we are targeting. Our directors and officers, as well as their affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. In addition, we expect to receive a number of proprietary deal flow opportunities that would not otherwise necessarily be available to us as a result of the business relationships of our directors and officers. We may engage the services of professional firms (such as a boutique investment bank) or other individuals that specialize in business acquisitions on any formal basis, in which event we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s-length negotiation based on the terms of the transaction. We will engage such parties only to the extent our management determines that doing so may bring opportunities to us that may not otherwise be available to us, or if finders approach us on an unsolicited basis with a potential transaction that our management determines is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion of a transaction. In no event, however, will our Sponsor or any of our current directors or officers, or any entity with which they are affiliated, be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the completion of our business combination (regardless of the type of transaction that it is). We have agreed to reimburse our Sponsor for any out-of-pocket expenses related to identifying, investigating and completing our business combination. Some of our directors and officers may enter into employment or consulting agreements with the post-combination business following our business combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our selection process of an acquisition candidate.

If our board of directors is not able to independently determine the fair market value of the target business or businesses, or if we are considering a business combination with an affiliated entity, we will obtain an opinion from an independent investment banking firm which is a member of the Financial Industry Regulatory Authority, Inc., or FINRA, or an independent valuation or accounting firm with respect to the satisfaction of such criteria. While we consider it unlikely that our Board will not be able to make an independent determination of the fair market value of a target business or businesses, it may be unable to do so if it is less familiar or experienced with the target company’s business, there is a significant amount of uncertainty as to the value of the company’s assets or prospects, including if such company is at an early stage of development, operations or growth, or if the anticipated transaction involves a complex financial analysis or other specialized skills and our board of directors determines that outside expertise would be helpful or necessary in conducting such analysis. Since any opinion, if obtained, would merely state that the fair market value of the target business meets the 80% of net assets test, unless such opinion includes material information regarding the valuation of a target business or the consideration to be provided, it is not anticipated that copies of such opinion would be distributed to our SPAR holders unless required by applicable law, the disclosure that we deliver to SPAR holders and file with the SEC in connection with a proposed transaction will include such opinion. We are not prohibited from pursuing an business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, our Charter requires that we will obtain an opinion from an independent investment banking firm which is a member of FINRA or a qualified independent accounting firm that our business combination is fair to our company from a financial point of view. Except with respect to the foregoing, we will not be required to obtain such an opinion.

As more fully discussed in the section of this prospectus entitled Management—Conflicts of Interest, if any of our directors or officers becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing 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.

Selection of a Target Business and Structuring of our Business Combination

Our Charter will require that our business combination must occur with one or more target businesses that together have an aggregate fair market value at time of entering into the Definitive Agreement of at least 80% of

 

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proceeds that would be raised upon the exercise of all SPARs, and may not enter into a business combination with another blank check company or a similar company with nominal operations. Though we intend to enter into a business combination with a target business of greater value than the proceeds available from the exercise of our SPARs, we cannot guarantee that this will be the case. We will not enter into a business combination with another blank check or similar company. Subject to that restriction, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses.

Our business combination may be structured in a variety of ways, including, but not limited to, a merger, capital stock exchange, asset acquisition, stock purchase, or reorganization. Although we are not able to predict the form that our business combination will take, it will be structured so that we are not required to register as an investment company under the Investment Company Act.

There is no basis for investors in the SPARs, prior to the time we enter into a Definitive Agreement, to evaluate the possible merits or risks of any target business with which we may ultimately complete our business combination.

To the extent we effect our 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 expect to conduct a thorough due diligence review, which will encompass, among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial and other information that will be made available to us.

The time required to select and evaluate a target business and to structure and complete our 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 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 business combination, the prospects for our success may depend entirely on the future performance of a single business. If we complete our 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 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 business combination with that business, our assessment of the target business’ 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 business

 

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combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our 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 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 additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.

Public Stockholders Will Not Have the Opportunity to Vote on Our Business Combination

We expect that any stockholder approvals required in connection with our business combination will be obtained prior to the issuance of our Public Shares, through a consent of our Sponsor, as our sole stockholder. Accordingly, holders of our SPARs will not have the opportunity to vote in favor of or against our proposed business combination. If the holders of our SPARs disapprove of the proposed transaction, their recourse will be limited to selling or choosing not to exercise their SPARs. We will comply with applicable requirements under Delaware law and applicable listing exchange standards in obtaining the approval of the holders of our issued and outstanding shares of Common Stock at the time such approval is required. Presented in the table below are certain types of business combinations we may consider, and the applicable stockholder approval standard, if any, under Delaware law.

 

Type of Transaction

   Whether Stockholder
Approval is Required

Purchase of assets

   No

Purchase of stock of target not involving a merger with the company

   No

Merger of target into a subsidiary of the company

   No

Merger of the company with a target

   Yes

Under the NYSE’s listing rules, stockholder approval would be required for our business combination if, for example:

 

   

we issue common stock that will be equal to or in excess of 20% of the number of shares of our Common Stock then outstanding (other than in a public offering);

 

   

any of our directors, officers or substantial security holders (as defined by NYSE rules) has a 5% or greater interest, directly or indirectly, in the target business or assets to be acquired and the number of shares or common stock to be issued, or if the number of shares into which the securities may be convertible or exercisable, exceeds either (a) 1% of the number of shares of common stock 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 shares of common stock 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 shares will result in our undergoing a change of control (as defined by NYSE rules).

Comparison of This Offering to Other Blank Check Companies

Blank Check Companies under Rule 419

Rule 419 of the Securities Act applies to blank check companies that raise public funds in an initial public offering in order to carry out an acquisition and do not have net tangible assets in excess of $5,000,000. The

 

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provisions of Rule 419 include a prohibition on the trading of the securities issued in the initial public offering prior to consummation of a business combination, an 18-month period in which to complete an acquisition, and a prohibition on the release of any funds held in the trust account other than in connection with the completion of an acquisition or the return of funds to investors. Because we will have at least $5,000,001 held in an escrow account until the closing of our business combination, we will not be subject to Rule 419. In addition, because we are not issuing shares of common stock in a public offering (and accordingly will not be holding investor funds until a later time), the provisions of Rule 419 are not in each case directly applicable to our company. The principal similarity between our company and blank check companies subject to Rule 419 is the requirement to file a post-effective amendment in connection with entry into a definitive agreement. The main differences between our company and blank check companies subject to Rule 419 are as follows:

 

   

we will hold 100% of public proceeds from the exercise of SPARs in a custodial account, whereas Rule 419 companies may retain up to 10% of IPO proceeds net of underwriting expenses;

 

   

our SPARs will be immediately tradable upon their distribution, whereas shares of Rule 419 companies are restricted;

 

   

we will be permitted to release interest earned on the funds held in the Custodial Account in order to pay taxes on those earnings;

 

   

we will have up to 10 years to consummate our business combination; and

 

   

our public investors will contribute funds to our company by choosing to exercise their SPARs, whereas in a Rule 419 company, investors contribute funds during the IPO and must notify the issuer to have those funds returned if they do not wish to participate in the transaction.

Comparison to Special Purpose Acquisition Companies

The following is a comparison of our company to the typical features of a special purpose acquisition company and the requirements applicable to a special purpose acquisition company listed pursuant to Section 102.06 of the NYSE listing rules. As described elsewhere in this prospectus, the NYSE has proposed a rule that would permit the listing of subscription warrants by acquisition companies. This rule is currently being reviewed by the SEC, and may not be adopted in its current form, if at all. See Listing of SPARs, page 3. We have established terms for our company that we believe comply with the proposed rule, and have set these terms forth in our Charter and the SPAR Agreement. We cannot guarantee that our securities will be approved for listing on the NYSE.

 

    

SPARC Terms

  

Conventional SPAC Terms

Definition of Business Combination

   A business combination in the form of a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more operating businesses or assets. The resultant entity must qualify for an initial listing on the NYSE, and the acquisition agreement must require that the transaction will be consummated only if the resultant entity will be listed on the NYSE or another national securities exchange.    A business combination in the form of a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more operating businesses or assets.

 

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Conventional SPAC Terms

Fair Market Value of Acquisition Target

   The business or businesses to be acquired must have a fair market value, at the time of the execution of the Definitive Agreement, equal to at least 80% of the proceeds that would be received upon the exercise of all SPARs at the Final Exercise Price.    The business or business to be acquired must have a fair market value equal to at least 80% of the net assets held in trust (net of amounts disbursed to management for working capital purposes and excluding the amount of any deferred underwriting discount held in trust).

Securities Offered or Distributed

  

Distribution, at no cost, of SPARs that are exercisable into common stock of the entity resulting from the business combination, or into common stock of the acquisition company that will, immediately upon consummation of the business combination, become common stock of the resulting entity.

 

No other warrants will be issued to public investors.

  

Generally, an offering of either (i) common stock or (ii) Units, containing one share of common stock and a warrant or fraction of a warrant.

 

Warrants are not exercisable until after the business combination, and have an exercise price equal to 115% of the securities sold in the IPO.

Manner of Raising Proceeds

  

Exercise of SPARs following entry into a business combination agreement.

 

Purchase of Common Stock and Sponsor Preferred Shares by Sponsor to fund operating expenses.

  

Underwritten IPO of units prior to entering into a business combination agreement.

 

Issuance of warrants to sponsor in order to fund underwriting costs and operating expenses.

Custodial Account / Trust Account

  

100% of proceeds from exercise of SPARs to be placed in an interest-bearing Custodial Account until consummation of a business combination or liquidation of the company.

 

At least 90% of proceeds of IPO and any concurrent sales of equity securities to be held in a trust account controlled by an independent custodian until consummation of a business combination or liquidation of company.

  

Time to Complete Transaction

   Up to 10 years from issuance of SPARs.    Up to 36 months from IPO.

 

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Conventional SPAC Terms

Board Approval of Business Combination

   Approval by majority of independent directors.    Approval by majority of independent directors.

Stockholder Approval

   Majority of outstanding shares of common stock. Our Sponsor will be our sole shareholder. SPAR holders have no right to vote on transaction.    If a shareholder vote is required, a majority of shares cast at the stockholder meeting must approve.

Opt-Out / Redemption

   SPAR holders who do not wish to participate in the business combination do not exercise their SPARs. There are no Public Shares outstanding to be redeemed, or funds to be returned at this time.    Stockholders who do not wish to participate in a transaction can redeem their shares. The issuer must provide for redemption in connection with a stockholder vote on the business combination, or provide an opportunity for redemption via tender offer.

Waiver of Rights by Founding Stockholders

   The Sponsor and its affiliates must waive its right to receive funds upon the liquidation of the Custodial Account in respect of all securities of the company owned prior to the Distribution or purchased in a private placement.    The founding stockholders must waive their rights to participate in any liquidation distribution with respect to all shares owned prior to the IPO or purchased in any private placement.

Registration of Securities and Disclosure

  

The sale of the SPARs and issuance of Public Shares must both be registered under the Securities Act.