424B3 1 d305814d424b3.htm 424B3 424B3
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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-261376
Dated September 29, 2023

 

PROSPECTUS

Pershing Square SPARC Holdings, Ltd.

Up to 61,111,111 Subscription Warrants to Purchase Two Shares of 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. 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. Our Sponsor is wholly owned by three investment funds managed by PSCM (the “Pershing Square Funds”). Our Sponsor was also an affiliate of Pershing Square Tontine Holdings, Ltd., a Delaware corporation (“PSTH”), which was a special purpose acquisition company (a “SPAC”) listed on the New York Stock Exchange that did not enter into an initial business combination within the prescribed time period and redeemed all of its Class A common stock and subsequently dissolved.

Our company is not a SPAC and we are not raising capital from public investors at this time. Instead, we are distributing, at no cost to the recipients, subscription warrants, which we refer to as special purpose acquisition rights, or “SPARs”, to purchase our shares at a future date in connection with our business combination. We are distributing an aggregate of up to 50,000,000 SPARs to the former holders of the Class A common stock of PSTH and an aggregate of up to 11,111,111 SPARs to the former holders of the distributable redeemable warrants of PSTH, in each case based on ownership of PSTH Class A common stock and distributable redeemable warrants as of July 25, 2022, the final date on which PSTH securities traded, as further described herein. We will file a Current Report on Form 8-K promptly after the date that is 30 days from the date of this prospectus to disclose the final aggregate number of SPARs that were distributed pursuant to the Registration Statement.

Our SPARs are not tradable or exercisable, and we will not raise capital from public investors, until after we have entered into a definitive agreement for our business combination and distributed to SPAR holders a prospectus included in a post-effective effective amendment to the registration statement of which this prospectus is a part that provides comprehensive disclosure of the proposed business combination, including the number of SPARs that we expect will have been distributed and are eligible for election as of the beginning of the SPAR Election Period (as defined below) (the “Business Combination Registration Statement”). We are seeking to have our SPARs quoted, after the distribution of the Business Combination Registration Statement, on the OTCQX marketplace of the OTC Markets Group Inc. (“OTCQX”), during a 20-business-day period which we refer to as the “SPAR Election Period”.

During the SPAR Election Period, holders will be entitled to elect to have each SPAR exercised at the closing of our business combination, in full and not in part, for two Public Shares (as defined below) at a minimum exercise price of $10.00 per share ($20.00 in total). The funds received in connection with the submission of Elections will be held in an account controlled by an independent custodian (the “Custodial Account”) as further described in this prospectus. Funds will be released from the Custodial Account to us in connection with the Closing, or to electing SPAR holders in connection with the abandonment of our business combination or the liquidation of our company. Any return of funds to electing SPAR holders will be made promptly, on a pro rata basis, with interest (if any). In no other event will funds be released from the Custodial Account.

The exercise of the SPARs will occur concurrently with the consummation of our business combination (the “Closing”), as described elsewhere in this prospectus. 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 per-share 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. We refer to the $10.00 SPAR exercise price per share 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 $1,222,222,220 (assuming all SPARs are issued). 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


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Proceeds”). The SPARs will expire upon the earlier of (i) the Closing, (ii) the liquidation of our company in connection with the failure to consummate a business combination by the date that is 10 months from the start of the SPAR Holder Election Period described below and (iii) the date that is 10 years from the date the SPARs were first distributed pursuant to the Registration Statement.

Prior to the date on which the SPARs were first distributed, we entered into a Committed Forward Purchase Agreement (the “Committed Forward Purchase Agreement”) with the Pershing Square Funds (which we collectively refer to in such capacity as the “Committed Forward Purchasers”) and an Additional Forward Purchase Agreement (the “Additional Forward Purchase Agreement”, and together with the Committed Forward Purchase Agreement, the “Forward Purchase Agreements”) with PS SPARC I Master, L.P., 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 Agreements provide for the purchase of an aggregate of up to $3,500,000,000 of Public Shares at the Final Exercise Price (the “Forward Purchase Shares”). The Committed Forward Purchasers will be obligated to purchase at least $250,000,000 of Forward Purchase Shares if the Final Exercise Price is $10.00 per share, and a proportionally higher amount at a higher Final Exercise Price, up to a maximum of $1,000,000,000 at a Final Exercise Price of $40.00 per share or greater (the “Committed Forward Purchase”). The Additional Forward Purchaser will have the right, but not the obligation, to purchase (the “Additional Forward Purchase”), at the Final Exercise Price, the remainder of the $3,500,000,000 of Forward Purchase Shares that is not allocated to the Committed Forward Purchase (such amount, the “Aggregate Additional Forward Purchase Amount”). The Additional Forward Purchaser may exercise the Additional Forward Purchase, at its election, in one or two tranches (each, the “First Tranche Additional Forward Purchase” and the “Second Tranche Additional Forward Purchase”, respectively), each of which would be effectuated, at the Final Exercise Price, at the time of the consummation of our business combination; provided that in no event will the number of Public Shares purchased pursuant to the First Tranche Additional Forward Purchase and the Second Tranche Additional Forward Purchase collectively exceed the quotient obtained by dividing (i) the Aggregate Additional Forward Purchase Amount by (ii) the Final Exercise Price (the “Maximum Additional Forward Purchase”). The Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the First Tranche Additional Forward Purchase, in an amount up to the Maximum Additional Forward Purchase, by written notice to us no later than five (5) business days prior to the execution of the Definitive Agreement. In the event that (i) the First Tranche Additional Forward Purchase is less than the Maximum Additional Forward Purchase and (ii) all SPARs issued and outstanding immediately prior to the commencement of the SPAR Holder Election Period are not elected to be exercised as of the end of the SPAR Holder Election Period, then the Company shall promptly notify the Additional Forward Purchaser of the number of such issued and outstanding SPARs that were not elected to be exercised (the “Unexercised SPARs”) and the Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the Second Tranche Additional Forward Purchase no later than five (5) business days after such notice, in an amount up to the aggregate number of Public Shares, at the Final Exercise Price, equal to the product of (i) two (2) and (ii) the number of Unexercised SPARs. The Company reserves the right to obtain additional debt and equity financing in connection with the consummation of its business combination, including without limitation selling additional Public Shares to third parties or related parties (including the Additional Forward Purchaser), provided sales of Public Shares will be made at the Final Exercise Price and the terms of any such additional financing will be disclosed in the Business Combination Registration Statement in accordance with applicable law.

On July 28, 2023, we sold warrants to our Sponsor (the “Sponsor Warrants”) for an aggregate purchase price of $35,892,480. The transaction price of the Sponsor Warrants was determined by the Company, in consultation with a third-party, nationally recognized valuation firm, based on its fair value as of the previous month-end. The valuation firm reviewed and discussed with us our methodology, procedures and assumptions for valuing the Sponsor Warrants. The value of the Sponsor Warrants was determined using the Black-Scholes option pricing model, subject to additional valuation adjustments reflecting certain volatility assumptions, the risk of a transaction not being consummated and other factors as described in “Description of Securities—Valuation of Sponsor Warrants.” Taking into account such consultation, we concluded that our methodology, procedures and assumptions are reasonable. The Sponsor Warrants are exercisable, in the aggregate, for up to 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 (including without limitation Public Shares issued upon exercise of the SPARs, Public Shares issued pursuant to the Forward Purchase Agreements, Public Shares issued to the target business or its shareholders and Public Shares issuable upon the exercise of Sponsor Warrants or the conversion or exercise of then-outstanding securities of the


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surviving corporation, whether or not convertible or exercisable at such time). We refer to the number of Public Shares into which the Sponsor Warrants are exercisable as the “Reference Shares.” The actual percentage of the Public Shares on a fully diluted basis into which the Sponsor Warrants are exercisable will depend on the amount of funds raised by the exercise of SPARs at the closing of the business combination and the amount of the Additional Forward Purchase, if any, made by the Additional Forward Purchaser, and will be calculated by multiplying 4.95% by a fraction (the “Proration Fraction”), (i) the numerator of which is the sum of (A) the amount of funds raised by the exercise of SPARs at the closing of the business combination and (B) the amount of the Additional Forward Purchase, if any, funded by the Additional Forward Purchaser at the closing of the business combination (including, for the avoidance of doubt, pursuant to the Second Tranche Additional Forward Purchase) and (ii) the denominator of which is the amount of funds that would have been raised at the Final Exercise Price if all SPARs issued and outstanding immediately prior to the start of the SPAR Holder Election Period had been exercised at the closing of the business combination, excluding for the avoidance of doubt the amount of the Additional Forward Purchase (i.e., at the Minimum Exercise Price, and assuming all 61,111,111 SPARs are issued and outstanding immediately prior to the start of the SPAR Holder Election Period, the denominator will be $1,222,222,220). Because the Additional Forward Purchaser may exercise the Second Tranche Additional Forward Purchase at its election after the SPAR Holder Election Period as described above, the Additional Forward Purchaser (which, like our sponsor, is an affiliate of PSCM) has the ability to prevent the Proration Fraction being reduced to less than 1.0. In no event, however, will the Proration Fraction exceed 1.0; accordingly, under no circumstance will the Sponsor Warrants be exercisable, in the aggregate, for in excess of 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 “Proration”).

The Sponsor Warrants are exercisable at any time after the three-year anniversary, and on or prior to the 10-year anniversary, of the business combination, and 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 per share, the Reference Price will be $12.00. In addition, prior to the date on which the SPARs were first distributed, we issued warrants (the “Advisor Warrants,” and together with the Sponsor Warrants, the “Private Warrants”) for no cost to our advisory board members. The Advisor Warrants are identical to the Sponsor Warrants (including with respect to the Proration), except that the Advisor Warrants (i) are exercisable, in the aggregate, for up to approximately 0.154% of the Public Shares that are outstanding as of the time immediately following the consummation of our business combination, on a fully diluted basis, (ii) expressly provide that if the percentage of Public Shares into which the Sponsor Warrants are exercisable is reduced for any reason, the percentage of Public Shares into which the Advisor Warrants are exercisable will be reduced proportionally and (iii) are subject to repurchase by the Company or the Sponsor under the circumstances set forth herein.

SPARs are a novel security with unique and important features that have been briefly summarized above. We urge you to read the “Summary” section of this prospectus, and the important additional information contained in this prospectus, for more comprehensive and detailed information with respect to us, our Sponsor, the SPARs, the SPAR Holder Election Period, the Custodial Account, the Forward Purchase Agreements and the Private Warrants.

There is currently no public market for our SPARs or our common stock, par value $0.0001 per share (“Common Stock”). We refer to the common shares of the surviving entity of our business combination, 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 the Public Shares on a national securities exchange in connection with the closing of our business combination.

This is not an underwritten offering. The SPARs are being distributed directly by us without the services of an underwriter or selling agent. This distribution must be registered, or be exempt from registration, in every state in which we distribute our SPARs (unless any such state’s securities laws do not require the distribution to be registered). If no such registration has been made, or no exemption is available, in any particular state, we will not distribute our SPARs in that state, and this prospectus shall not be a solicitation of an offer to receive our warrants in that state. We have engaged Jefferies LLC to act as an accommodating agent in states that require the distribution to be made by a registered broker-dealer under applicable state securities law.

 

 

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


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involves a high degree of risk. See the section of this prospectus entitled “Risk Factors” beginning on page 67 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.

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SUMMARY

     1  

RISK FACTORS

     67  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     96  

USE OF PROCEEDS

     97  

DIVIDEND POLICY

     99  

DILUTION

     112  

CAPITALIZATION

     113  

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

     114  

OUR COMPANY

     124  

MANAGEMENT

     162  

PRINCIPAL STOCKHOLDERS

     172  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     175  

DESCRIPTION OF SECURITIES

     182  

UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

     195  

PLAN OF DISTRIBUTION

     201  

LEGAL MATTERS

     202  

EXPERTS

     203  

WHERE YOU CAN FIND ADDITIONAL INFORMATION

     203  

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

September 29, 2023

Dear Investors:

On September 29, 2023, the SEC declared effective the registration statement for Pershing Square SPARC Holdings, Ltd. (“SPARC,” “we” or “us”), which was originally filed with the SEC in November 2021. As a result, we are distributing our SPARs, which are subscription warrants to acquire shares in the company resulting from our business combination, to former security holders of PSTH. SPARC will pursue a business combination that meets its investment criteria, which are substantially identical to those of PSTH, but with more flexibility with respect to the size of the target company.

The SPARs are being distributed at no cost to those who held the Class A common stock and/or distributable redeemable warrants of Pershing Square Tontine Holdings, Ltd. (“PSTH” or “Tontine”) as of July 25, 2022. We are distributing one SPAR for every four shares of PSTH Class A common stock then outstanding, and one SPAR for every two distributable redeemable warrants then outstanding, for a total of up to 61,111,111 SPARs. We are not issuing fractional SPARs, no cash is being paid in lieu thereof, and any fractional amount is being rounded down to the nearest whole number. Accordingly, former holders of the distributable redeemable warrants and Class A common stock of PSTH must have owned two distributable redeemable warrants or four shares of Class A common stock of PSTH, based on ownership as of July 25, 2022, to receive one SPAR. Each SPAR will be exercisable for two shares of the post-combination company. We will file a Current Report on Form 8-K promptly after the date that is 30 days from the date of this prospectus to disclose the final aggregate number of SPARs that were distributed pursuant to the Registration Statement.

Our SPARs are non-transferable until after we have entered into a definitive agreement with respect to our business combination and filed an effective registration statement, at which time we will seek to have our SPARs quoted on the OTCQX marketplace of the OTC Markets Group Inc. or other quotation service.

SPARC’s Structural Improvements

SPARC builds upon the favorable investor-friendly features and superior investment alignment of PSTH compared with other SPACs with a number of material value-creating improvements:

Eliminating the Opportunity Cost of Capital

By distributing SPARs for free to former PSTH stockholders and warrant holders, SPAR holders will not be required to invest capital until 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 stockholder approval (provided by our Sponsor and sole stockholder); and (6) satisfied substantially all closing conditions that can be satisfied in advance, including regulatory approvals. Our structure eliminates the opportunity cost of capital for SPAR holders while we seek to identify and consummate a transaction.

Flexibility on the Amount of Capital Raised and Expanded Target Company Universe

While PSTH’s $5 billion minimum capital differentiated it from other SPACs, its large size limited the universe of potential targets. In comparison, at the time of the announcement of a transaction, SPARC will have the ability to increase the $10.00 minimum exercise price of the SPARs with effectively no upper limit. This feature, along

 

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with the Forward Purchasers’ Forward Purchase Agreements of up to $3.5 billion, will provide a high degree of flexibility to tailor the size of a potential capital raise to the needs of a potential target company, significantly expanding the universe of potential target transactions. With no maximum exercise price, SPARC will have the flexibility to raise large amounts of capital from its SPAR holders, giving it a competitive advantage in pursuing transactions with private companies that have large enterprise values. It will also potentially allow SPARC to seek 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.

Eliminating Underwriting Fees

We are distributing the SPARs directly to former Tontine shareholders and warrant holders. This eliminates underwriting fees 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.

SPARs Will Have a 10-year Term, Substantially Reducing Deadline Pressure for SPARC

The SPARs will have a 10-year term. The length of the term is not intended to suggest SPARC will take 10 years to complete a transaction. Rather, it is intended to improve SPARC’s ability to find a transaction on attractive terms. This longer term will significantly reduce the perceived deadline pressure to complete a transaction that SPACs face prior to their expiration (typically not more than two years after their IPO), thereby improving SPARC’s negotiating leverage. We believe that this improved leverage will enable us to negotiate a transaction not only on better terms, but also more quickly.

Eliminating the Dilutive Effect of IPO Warrants

Since we are not asking investors to invest capital at the time of the distribution, we do not need to “induce” them to invest by granting dilutive stockholder warrants for free at the time of the IPO (“IPO Warrants”), which is a typical feature of most SPACs, including Tontine. By eliminating IPO Warrants, SPARC will have a simple capital structure, consisting only of (i) common stock from the exercise of SPARs, (ii) common stock purchased by our Sponsor and its affiliates at the same price that exercising SPAR holders will pay for their shares and (iii) 20% out-of-the-money Sponsor Warrants (for which the Sponsor has paid fair market value) and Advisor Warrants.

SPARC’s simplified capital structure should increase its appeal to a counterparty, likely improving the economics of a potential transaction to SPAR holders and target company stockholders. We view the lack of IPO Warrants as a significant advantage compared to SPACs, particularly in high-redemption environments as the SPAC market has experienced. If a SPAC with typical IPO Warrants suffers significant redemptions in connection with its initial business combination, the dilutive effect from having a fixed number of IPO Warrants relative to the amount of capital remaining after redemptions becomes increasingly significant, all other things being equal. If fewer than all SPARC investors elect not to participate in a business combination, SPARC will have raised less capital, but the SPAR holders who exercise their SPARs will not be burdened by the dilutive effect of IPO Warrants.

Reduced Amount of Sponsor Warrants

SPARC’s Sponsor Warrants are exercisable with respect to up to a maximum of 4.95% of the newly merged company’s fully diluted shares, lower than the 5.95% sponsor warrants in the case of Tontine. In addition, this percentage will be decreased ratably at the closing of the business combination in the event that (1) the aggregate funds raised at the closing of the business combination from the exercise of the SPARs and the Additional Forward Purchase, if any, made by the Sponsor is less than (2) the amount of funds that would have been raised if 100% of the issued SPARs had been exercised at the closing of the business combination.

In traditional SPACs, transactions suffer dilution from outstanding shareholder warrants and founder stock regardless as to whether shareholders elect to redeem their funds prior to the SPAC merger closing. This

 

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traditional SPAC structure increases the incentive for shareholders to redeem as the amount of founder stock and shareholder warrants outstanding in the newly-merged company remains the same regardless of the degree of participation by SPAC shareholders in the transaction. In other words, there is a huge dilution penalty for not redeeming in a transaction that has a high proportion of redeeming shareholders. This structure is bad for participating shareholders and the SPAC’s counterparty in a merger.

By contrast, in SPARC, Sponsor Warrants are ratably reduced in the event that less than 100% of the expected amount of capital is raised. While the Sponsor cannot guarantee that all SPARs will be exercised, there is no incremental dilution to the holders who choose to exercise their SPARs in a transaction in which all SPARs are not exercised because the Sponsor Warrants are ratably reduced in that event.

Benefits Relative to Customary IPO

We believe that SPARC will provide investors with the opportunity to invest in a newly-public company, much like a traditional initial public offering, with several material additional benefits to our investors. In a traditional IPO, the private company which intends to go public and a lead underwriter hired by the company typically agree on a “range” within which the IPO is expected to price. Thereafter, the company engages in a road show to assess investor demand and establish a final offering price, based in part on the results of the road show and then-current stock market conditions. In deciding whether to participate in an IPO, IPO investors attempt to determine whether the proposed IPO price will be lower than where the stock trades after the completion of the offering. Their ability to do so, however, is limited as there is no pre-IPO trading of the soon-to-be-public company. In comparison, in SPARC’s initial business combination, SPAR holders will have the opportunity to view the trading price of the SPARs for 20 business days after the transaction’s registration statement has gone effective and before they need to decide whether to exercise their SPARs or sell them in the market.

Traditional IPO transactions are underwritten by investment banks that receive fees for completing the transaction. These banks rarely if ever commit any long-term capital to the company in connection with the IPO, but rather serve as agents facilitating the sale of shares. In comparison, SPARC will complete a long-term search for ultimately one private business that meets its investment criteria. The PSCM Investment Team will complete due diligence on the target company and its management before SPARC enters into a definitive agreement on arms’-length negotiated terms. Affiliates of the Sponsor will commit a minimum of 20% of the capital invested by SPAR holders unless the transaction size exceeds $5.9 billion in capital at which size the commitment of the Sponsor’s affiliates will be no less than $1 billion. In comparison to a typical IPO, SPAR holders will have the important alignment and other benefits of a highly experienced investment team which has done private equity due diligence on the target and whose Affiliates are committing a large amount of capital alongside SPAR holders’ investment in the newly merged company.

In summary, SPARC offers a private company seeking the opportunity to go public certainty on the transaction terms including the minimum amount of capital that will be raised (the Forward Purchase amount funded by the Sponsor) and the valuation at which capital will be invested in the company (the IPO price) regardless of the market environment, and subject only to the merged company’s registration statement being declared effective by the SEC and obtaining any other required regulatory approvals. In light of today’s particularly challenging capital markets environment, we believe that going public through a merger with SPARC will be highly attractive to many companies seeking to access the public equity capital markets.

We are working expeditiously to launch SPARC and begin our search for 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 $3,250,000,000 of Public Shares that the Additional Forward Purchaser may elect to purchase, at the Final Exercise Price, pursuant to the Additional Forward Purchase Agreement;

 

   

“Additional Forward Purchase Agreement” are to the Additional Forward Purchase Agreement providing for the sale of Public Shares to the Additional Forward Purchaser, in a private placement occurring simultaneously with the closing of our business combination;

 

   

“Additional Forward Purchase Shares” are to the Public Shares issued pursuant to the Additional Forward Purchase Agreement;

 

   

“Additional Forward Purchaser” are to PS SPARC I Master, L.P., a Cayman Islands limited partnership that is managed by PSCM;

 

   

“Advisor Warrants” are to the warrants issued to our Advisors, which are exercisable, in the aggregate, for up to approximately 0.154% 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;

 

   

“Advisors” are to members of our Advisory Board;

 

   

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

 

   

“Aggregate Additional Forward Purchase Amount” are to the remainder of the $3,500,000,000 of Forward Purchase Shares that is not allocated to the Committed Forward Purchase;

 

   

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

 

   

“Business Combination Registration Statement” are to the post-effective amendment to this Registration Statement (or such other registration statement under the securities laws), that we will file with the SEC following entry into a Definitive Agreement, including any subsequent amendments thereto, which will contain a prospectus with information regarding the proposed transaction, including the number of SPARs that we expect will have been distributed and are eligible for election as of the beginning of the SPAR Election Period, that will be distributed to SPAR holders once the Business Combination Registration Statement has been declared effective;

 

   

“Charter” are to our Third Amended and Restated Certificate of Incorporation;

 

   

“Closing” are to the consummation of our business combination;

 

   

“Closing Deadline” are to the date that is 10 months from the start of the SPAR Holder Election Period, at which time we will be required to return the funds held in the Custodial Account and liquidate our company if we have not abandoned or consummated our business combination prior thereto;

 

   

“Closing Period” are to the period immediately following the SPAR Holder Election Period in which we seek to consummate our proposed business combination, which will be 10 business days unless, in certain limited circumstances, the Closing Period is extended;

 

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“Closing Period Extension” are to the additional period of time that our Board may provide (only in certain limited circumstances) in order for us to consummate our business combination, which will end no later than the date that is 10 months after the start of the SPAR Holder Election Period;

 

   

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

 

   

“Committed Forward Purchase” are to the $250,000,000 to $1,000,000,000 of Public Shares that the Committed Forward Purchasers have committed to purchase, at the Final Exercise Price, pursuant to the Committed Forward Purchase Agreement;

 

   

“Committed Forward Purchase Agreement” are to the Committed Forward Purchase Agreement providing for the sale of Public Shares to the Committed Forward Purchasers, in private placements occurring simultaneously with the closing of our business combination;

 

   

“Committed Forward Purchase Shares” are to the Public Shares issued pursuant to the Committed 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 interest-bearing account in which the SPAR exercise payments will be held;

 

   

“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;

 

   

“Disclosure Period Closing Conditions” are to all express closing conditions contained in the Definitive Agreement other than those that may only be satisfied as of a later date, and which we will seek to satisfy before the distribution of the Business Combination Registration Statement;

 

   

“Distribution” are to, collectively, the distribution of our SPARs pursuant to this prospectus, which occurred as soon as practicable after the date on which the Registration Statement became effective on September 29, 2023;

 

   

“Early Termination” are to the liquidation of our company in connection with the failure to consummate a business combination by the Closing Deadline;

 

   

“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 Closing Period, which are generally irrevocable;

 

   

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

 

   

“Final Closing Conditions” are to the conditions to consummating our business combination that cannot be satisfied prior to the SPAR Holder Election Period, including: (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;

 

   

“Final Exercise Price” are to the exercise price of our SPARs, which will be at least $10.00 per Public Share, but may be increased at the time of, and will be disclosed in connection with, the public announcement of the Definitive Agreement and as to be set forth in the Business Combination Registration Statement;

 

   

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

 

   

“First Tranche Additional Forward Purchase” are to the right, but not the obligation, of the Additional Forward Purchaser to purchase up to the Maximum Additional Forward Purchase by written notice to us no later than five (5) business days prior to the execution of the Definitive Agreement;

 

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“Forward Purchase” are to the up to $3,500,000,000 of Public Shares that the Forward Purchasers may purchase pursuant to the Forward Purchase Agreements;

 

   

“Forward Purchase Agreements” are to the Committed Forward Purchase Agreement and the Additional Forward Purchase Agreement;

 

   

“Forward Purchase Shares” are to the Committed Forward Purchase Shares and the Additional Forward Purchase Shares;

 

   

“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 Rights Agreement, that in the good-faith, reasonable judgment of our independent directors, would have a materially adverse impact on SPAR holders;

 

   

“Maximum Additional Forward Purchase” are to the maximum number of Public Shares that may be purchased pursuant to the First Tranche Additional Forward Purchase and the Second Tranche Additional Forward Purchase, which shall be equal to the quotient obtained by dividing (i) the Aggregate Additional Forward Purchase Amount by (ii) the Final Exercise Price;

 

   

“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;

 

   

“PSTH” are to Pershing Square Tontine Holdings, Ltd., a Delaware corporation, a special purpose acquisition company that was sponsored by an affiliate of our Sponsor and the Pershing Square Funds;

 

   

“Public Shares” are to the common shares of the surviving entity of our business combination, which, depending on the form our business combination takes, may be an entity other than our company;

 

   

“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 Advisor Warrants are exercisable;

 

   

“Reference Shares” are to the number of shares equal to up 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 up to 0.154% in the case of the Advisor Warrants;

 

   

“SEC” are to the Securities and Exchange Commission;

 

   

“Second Tranche Additional Forward Purchase” are to, in the event that (i) the First Tranche Additional Forward Purchase is less than the Maximum Additional Forward Purchase and (ii) all SPARs issued and outstanding immediately prior to the commencement of the SPAR Holder Election Period are not elected to be exercised as of the end of the SPAR Holder Election Period, the right, but not the obligation, of the Additional Forward Purchaser to purchase up to an aggregate number of Public Shares, at the Final Exercise Price, equal to the product of (i) two (2) and (ii) the number of Unexercised SPARs;

 

   

“Segregated Account” means a segregated account funded with at least $5,000,001 of the proceeds from the sale of the Sponsor Shares and the Sponsor Warrants, which account will be held in cash;

 

   

“SPAR Holder Election Period” are to the 20-business-day period, following the satisfaction or waiver of the Disclosure Period Closing Conditions and the Business Combination Registration Statement becoming effective and being mailed to the holders of SPARs, during which time SPAR holders may submit an irrevocable notice of their election to purchase Public Shares upon consummation of our business combination;

 

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“SPARs” are to the subscription warrants being distributed hereby, each exercisable for two Public Shares at the Final Exercise Price;

 

   

“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 Warrants” are to the warrants purchased by Sponsor in a private placement on July 28, 2023, which are exercisable, in the aggregate, for up to 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;

 

   

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

 

   

“Unexercised SPARs” are to the number of issued and outstanding SPARs immediately prior to the SPAR Holder Election Period that are not elected to be exercised as of the end of the SPAR Holder Election Period.

 

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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.

Our SPARs are generally not transferable when you receive them, and you will only be able to transfer or trade your SPARs during the SPAR Holder Election Period. Exercising or 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 66 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 you may choose to exercise your SPARs, we will file the Business Combination Registration Statement 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 or trade in SPARs.

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 two Public Shares following payment of the exercise price, which will be a minimum of $10.00 per share, which we refer to as the Minimum Exercise Price. The SPARs are being distributed at no cost, and SPAR holders are not contributing capital to our company until after we enter into a Definitive Agreement and provide holders with comprehensive disclosure regarding our proposed business combination, including the number of SPARs that we expect will have been distributed and are eligible for election as of the beginning of the SPAR Election Period, in an effective registration statement. SPAR holders will then have an opportunity to evaluate the proposed business combination and choose whether they wish to exercise their SPARs. Those wishing to exercise will submit an “Election” and the corresponding exercise payment and, upon consummation of our business combination, will be issued shares of the post-combination company, which we refer to as Public Shares.

An individual SPAR cannot be exercised in part. Accordingly, at the Minimum Exercise Price of $10.00 per share, a SPAR holder wishing to acquire Public Shares must make a total exercise payment of $20.00 per SPAR, and would receive two Public Shares per exercised SPAR in connection with the consummation of our business combination. Holders who wish to acquire fewer Public Shares than the amount underlying their SPARs may do so by not submitting an Election to exercise such SPARs and/or by selling some of their SPARs. 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.

Our ability to set an exercise price without an upper limit could cause SPAR holders, depending on their resources, to be unable to exercise their SPARs, and thus be unable to participate in any future appreciation in the post-business-combination entity. See Risk Factors, page 60. Any increase in price above the Minimum Exercise Price will be reflected in the Business Combination Registration Statement and will not be subject to further adjustment.

We are distributing up to 50,000,000 SPARs to the holders of the Class A common stock of PSTH and up to 11,111,111 SPARs to the holders of the distributable redeemable warrants of PSTH, based on ownership as of July 25,

 

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2022, the final date on which PSTH securities traded prior to its liquidation. One SPAR is being distributed in respect of every four shares of PSTH Class A common stock outstanding, and one SPAR is being distributed in respect of every two distributable redeemable warrants of PSTH. We are not issuing fractional SPARs, no cash is being paid in lieu thereof, and any fractional amount is being rounded down to the nearest whole number. Accordingly, former holders of the distributable redeemable warrants and Class A common stock of PSTH must have owned two distributable redeemable warrants or four shares of Class A common stock of PSTH, based on ownership as of July 25, 2022, to receive one SPAR.

We distributed the SPARs as soon as practicable following the date on which the Registration Statement became effective on September 29, 2023. We will file a Current Report on Form 8-K promptly after the date that is 30 days from the date of this prospectus to disclose the final aggregate number of SPARs that were distributed pursuant to the Registration Statement. See Plan of Distribution.

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.

Quotation of SPARs

Our SPARs are generally not transferable when you receive them and will remain generally non-transferable until the SPAR Holder Election Period. In connection with the SPARs becoming transferable, we intend to have our SPARs quoted on the OTCQX marketplace of the OTC Markets Group, Inc. or other quotation service. This will require, among other things, that at least one market maker publishes quotations for SPARs and that a Form 211 is submitted to, and approved by, FINRA. The quotation of SPARs on the OTCQX marketplace, as compared to being listed on a national securities exchange such as the NYSE or the Nasdaq, 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 (i.e., lack of stock exchange requirements mandating a board with a majority of independent directors, independent nomination, compensation and audit committees, and stockholder approval of certain actions), and the applicability of state securities laws that could result in restrictions on the sale of our SPARs. See Risk Factors, page 60. There is currently no public market for our SPARs, our common stock, or the Public Shares.

Notwithstanding the foregoing, SPARs may be transferred: (i) upon death by will or intestacy; (ii) by instrument to an inter vivos or testamentary trust in which the SPARs are to be passed to beneficiaries upon the death of the trustee; (iii) pursuant to a court order; or (iv) by operation of law, including a consolidation or merger, or in connection with the dissolution of any partnership, limited liability company, corporation or other entity.

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) all closing conditions that can be satisfied in advance of the Closing have been satisfied or waived, including regulatory approvals, which we refer to as the Disclosure Period Closing Conditions; and (iii) a Business Combination Registration Statement has been declared effective 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 former stockholders and warrant holders of PSTH, understand the investment strategy that we intend to execute; and (ii) reduce offering costs, including underwriting fees and discounts. In addition, by distributing the SPARs for no cost to the recipients, the recipients will not bear any investment risk in initially obtaining our SPARs (though the receipt of SPARs may be taxable to recipients).

 

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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 until we have identified, negotiated, and are prepared to consummate, a 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, such as underwriting fees and the IPO Warrants. This simplifies our capital structure and reduces frictional transaction costs. We believe the SPARC structure makes us a more attractive counterparty for potential business combination partners and increases the probability that we execute a transaction on terms that are 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 will determine the Final Exercise Price at the time we enter into a Definitive Agreement based primarily on the amount of capital that will be required, inclusive of other potential financing sources, to consummate our business combination. We have established a Minimum Exercise Price of $10.00 per Public Share that is subject to increase. Our ability to set an exercise price without an upper limit could cause SPAR holders, depending on their resources, to be unable to exercise their SPARs, and thus be unable to participate in any future appreciation in the post-business-combination entity. See Risk Factors, page 60. Any increase above the Minimum Exercise Price will be reflected in the Business Combination Registration Statement, at which time the Final Exercise Price will be a fixed amount. At the Minimum Exercise Price, we will raise up to approximately $1.2 billion (up to approximately $1.5 billion with the Committed Forward Purchase), which we believe is an appropriate baseline amount for a business combination with the type of high-quality, large capitalization company we will seek to partner with. The ability to increase this exercise price will provide our company with the flexibility to pursue business combinations with a broader range of transaction sizes, and will provide public investors with a greater opportunity to participate in our business combination if we seek additional capital (rather than, as is the case with SPACs, raising additional capital through a PIPE or other private financing).

In connection with entering into the Definitive Agreement for our business combination, our Board will take into account factors including, but not limited to, the size and structure of the transaction, the Committed Forward Purchase, the number of shares that the Additional Forward Purchaser has agreed to purchase, and conditions in equity and debt markets. Based on this assessment, our Board 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 the 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 from the exercise of SPARs. We expect that our SPARs will be quoted on the OTCQX, which carries certain risks, and we cannot guarantee that an active trading market will develop for our SPARs. You should not assume or expect that, during the SPAR Holder Election Period, our SPARs will trade at a positive value (if at all). You should not assume or expect that, after the business combination, our Public Shares will trade at or above the exercise price of your SPARs. 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 and the Forward Purchase Agreements?

At the Minimum Exercise Price, the Final Exercise Proceeds from the exercise of all SPARs will be approximately $1.2 billion (assuming all SPARs are issued). In connection with entering into the Definitive Agreement, we may determine to increase the exercise price of our SPARs. The table immediately below

 

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presents the proceeds we would have available at various Final Exercise Prices, assuming, in each case, that all SPARs are exercised. No minimum amount of SPARs are required to be exercised and there can be no guarantee that any SPARs will be exercised.

Pursuant to the Forward Purchase Agreements, we will sell up to $3.5 billion of Public Shares at the Final Exercise Price, a portion of which is committed, and a portion of which is optional. The Pershing Square Funds have committed to purchase $250.0 million of Public Shares if the Final Exercise Price is $10.00 per Public Share, and a proportionately greater amount at higher exercise prices, up to a maximum of $1.0 billion at a Final Exercise Price of $40.00 per share or greater. The Additional Forward Purchaser will have the right, but not the obligation, to purchase (the “Additional Forward Purchase”), at the Final Exercise Price, the remainder of the $3,500,000,000 of Forward Purchase Shares that is not allocated to the Committed Forward Purchase (such amount, the “Aggregate Additional Forward Purchase Amount”). The Additional Forward Purchaser may exercise the Additional Forward Purchase, at its election, in one or two tranches (each, the “First Tranche Additional Forward Purchase” and the “Second Tranche Additional Forward Purchase”, respectively), each of which would be effectuated, at the Final Exercise Price, at the time of the consummation of our business combination; provided that in no event will the number of Public Shares purchased pursuant to the First Tranche Additional Forward Purchase and the Second Tranche Additional Forward Purchase collectively exceed the quotient obtained by dividing (i) the Aggregate Additional Forward Purchase Amount by (ii) the Final Exercise Price (the “Maximum Additional Forward Purchase”). The Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the First Tranche Additional Forward Purchase, in an amount up to the Maximum Additional Forward Purchase, by written notice to us no later than five (5) business days prior to the execution of the Definitive Agreement. In the event that (i) the First Tranche Additional Forward Purchase is less than the Maximum Additional Forward Purchase and (ii) all SPARs issued and outstanding immediately prior to the commencement of the SPAR Holder Election Period are not elected to be exercised as of the end of the SPAR Holder Election Period, then the Company shall promptly notify the Additional Forward Purchaser of the number of such issued and outstanding SPARs that were not elected to be exercised (the “Unexercised SPARs”) and the Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the Second Tranche Additional Forward Purchase no later than five (5) business days after such notice, in an amount up to the aggregate number of Public Shares, at the Final Exercise Price, equal to the product of (i) two (2) and (ii) the number of Unexercised SPARs.

 

            Equity Capital Available for Business
Combination
 

Final Exercise Price

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

$10.00

   $ 1.2 B      $ 1.5 B      $ 4.7 B  

$15.00

   $ 1.8 B      $ 2.2 B      $ 5.3 B  

$20.00

   $ 2.4 B      $ 2.9 B      $ 5.9 B  

$25.00

   $ 3.1 B      $ 3.7 B      $ 6.6 B  

$50.00

   $ 6.1 B      $ 7.1 B      $ 9.6 B  

$75.00

   $ 9.2 B      $ 10.2 B      $ 12.7 B  

The Company reserves the right to obtain additional debt and equity financing in connection with the consummation of its business combination, including without limitation selling additional Public Shares to third parties or related parties (including the Additional Forward Purchaser), provided sales of Public Shares will be made at the Final Exercise Price and the terms of any such additional financing will be disclosed in the Business Combination Registration Statement in accordance with applicable law.

Have any parties committed to exercise their SPARs?

No party has committed to exercise the SPARs being 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 choose to sell some or all of your SPARs if you do not wish to exercise them. However, each individual SPAR must be exercised in full, for two shares, and cannot be exercised in part. If you choose to sell some or all of your SPARs, there is no guarantee you will be able to do so at a favorable price, or at all. Upon the Closing, 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 date the SPARs were first distributed pursuant to the Registration Statement to consummate our business combination. If we fail to do so by the date that is 10 years from the date the SPARs were first distributed, the SPARs will expire worthless. A potentially substantial amount of time could pass before we enter into a Definitive Agreement.

In addition, we will not be permitted to hold funds in the Custodial Account for longer than 10 months. Accordingly, from the first date on which we may receive investor funds (the start of the SPAR Holder Election Period), we will have 10 months to complete our business combination. If we fail to do so by the Closing Deadline, we will promptly return all proceeds held in the Custodial Account (with interest, if any) and liquidate our company, and the SPARs will expire worthless.

When will I receive information regarding the business combination?

Promptly following our entry into a Definitive Agreement, we will issue a press release and publicly file a Current Report on Form 8-K, which will include a summary of the Definitive Agreement and, as exhibits, the complete text of the Definitive Agreement and other material agreements entered into in connection therewith. As promptly as practicable, we will prepare the Business Combination Registration Statement, which will include information regarding the proposed business combination, including disclosure of payments, incentives and benefits that may be received by, and any conflicts of interest involving, our Sponsor and its affiliates. The Business Combination Registration Statement will take the form of a post-effective amendment to this Registration Statement, or that of 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”). Depending on the structure of our business combination, the Business Combination Registration Statement may be filed by us or another party to the business combination. The Business Combination Registration Statement will be filed with the SEC and will be publicly available on the SEC’s website. We will likely amend the Business Combination Registration Statement in response to review and comment by the SEC, and for other reasons. Promptly following the satisfaction of the Disclosure Period Closing Conditions and the Business Combination Registration Statement becoming effective, we will mail or otherwise make available 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 (i) we have entered into a Definitive Agreement, (ii) all of the Disclosure Period Closing Conditions have been satisfied or waived and (iii) the Business Combination Registration Statement has been declared effective. The SPAR Holder Election Period will begin promptly after the distribution of the effective Business Combination Registration Statement. At such time, you will be able to submit a notice of your offer to acquire Public Shares by exercising your SPARs, or an “Election.” The actual exercise of your SPARs will occur at a later date, as described immediately below.

 

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

An Election is a notice that SPAR holders must provide if they wish to exercise their SPARs and participate in our business combination. The submission of an Election will require a SPAR holder to tender its SPAR(s) to the SPAR Rights Agent (or, in the case of SPARs held beneficially through a bank, broker or other intermediary (“brokers”), will require the beneficial SPAR holder to instruct its broker to tender its SPAR(s) via a DTC platform for the submission of Elections of SPARs), together with the Final Exercise Price therefor. The submission of an Election is irrevocable and tendered SPAR(s) will be held, pending the closing of the Business Combination, by the SPAR Rights Agent or DTC, as the case may be, pending closing of the Business Combination, and accordingly will not be available to be traded after an Election is submitted. An Election is an irrevocable offer (subject to certain limited exceptions) to have your exercise payment released to our company and to have your SPARs exercised in order to acquire Public Shares. Our decision to proceed with the business combination constitutes an acceptance of an electing SPAR holder’s irrevocable offer to acquire Public Shares through the exercise of their SPARs. A decision to abandon the business combination constitutes a rejection of the offer.

Exercise payments will be held in the Custodial Account and will not be released to us other than in connection with the Closing.

Following the SPAR Holder Election Period, the Closing Period begins. During the Closing Period, we will assess whether the Final Closing Conditions (including whether we have adequate capital to consummate the business combination) have been satisfied or are capable of being satisfied at Closing, and if so, we will promptly thereafter (within two business days) carry out the Closing. At this time, exercise payments will be released to us from the Custodial Account, Elected SPARs will be exercised, Public Shares of the post-combination company will be issued to you, and Unelected SPARs will expire worthless.

What happens if the business combination is abandoned?

Following our entry into the Definitive Agreement, it is possible that we decide not to pursue, or become unable to proceed with the business combination. This may occur for a variety of reasons including, but not limited to, an inability to obtain regulatory approvals or a material adverse change to the condition of our business combination partner. Generally, the parties’ obligations under the Definitive Agreement will determine the circumstances in which they are able to abandon a proposed business combination.

If the business combination is abandoned, we will make prompt public disclosure of this fact. If the business combination is abandoned prior to the start of the Election Period, we will seek a new business combination, and upon entering into a new Definitive Agreement, the Election and payment procedures described herein will apply in the same manner.

If we have received Elections, the offer constituted by the submission of an Election will be rejected, and all Elections will be disregarded. Any funds held in the Custodial Account will be promptly returned to electing SPAR holders, with interest (if any), all SPARs will expire, and we will liquidate our company.

Similarly, if the business combination is abandoned during a Closing Period Extension, we will promptly return all funds held in the Custodial Account to electing SPAR holders, with interest (if any), all SPARs will expire, and we will liquidate our company. A Closing Period Extension will happen only under limited circumstances, including circumstances in which (i) our business combination partner has breached its obligations under the Definitive Agreement in a manner that frustrates the consummation of the business combination or (ii) we have been enjoined by a governmental authority from consummating the transaction in a manner that we are permitted to appeal under applicable law. In such event, our Board will determine, in its sole discretion, whether to further pursue the business combination, in which case we will have until the date that is 10 months after the start of the SPAR Holder Election Period to consummate the transaction.

 

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What rights do I have if the Charter, SPAR Rights 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 Rights Agreement, that, in the reasonable, good-faith judgment of our independent directors, would have a materially adverse impact on SPAR holders. We refer to such amendments as Materially Adverse Amendments. Although we do not expect to amend these documents once the SPAR Holder Election Period has begun, and the Definitive Agreement will likely restrict our ability to amend the Charter or SPAR Rights Agreement, we cannot guarantee that no Materially Adverse Amendments will be made or proposed. In addition, our Charter provides that amendments to the Definitive Agreement entered into during the Closing Period in order to permit us to raise additional funds to satisfy financing or other closing conditions set forth in the Definitive Agreement will not be deemed to be a Materially Adverse Amendment so long as (i) the additional funds are raised by selling additional Public Shares to third parties (or to the Additional Forward Purchaser or other of our affiliates) in private placements at the Final Exercise Price and (ii) the number of such Public Shares sold, together with the Public Shares issued in respect of Elected SPARs, does not exceed the total number of Public Shares that would have been issued had all SPARs been elected to be exercised.

During the SPAR Holder Election Period and the Closing Period, in the event of a Materially Adverse Amendment we will (i) file a post-effective amendment to the Business Combination Registration Statement to disclose the Materially Adverse Amendment in accordance with applicable securities law, (ii) cause all previous Elections of SPARs to be revoked, (iii) return all funds from the Custodial Account that were tendered at the Final Exercise Price in connection with such Elections and (iv) hold or re-open the SPAR Holder Election Period for an additional 20 business days, during which additional 20 business days we anticipate the SPARs will trade on the OTCQX marketplace of the OTC Markets Group or other quotation service. In such event, the 10 month Closing Deadline would continue to be calculated from the first day of the initial SPAR Holder Election Period (and not, for the avoidance of doubt, from the first day of the post-Materially Adverse Amendment additional 20 business day SPAR Holder Election Period).

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

Rights of SPAR Holders in Connection with Materially Adverse Amendments to:

 

    

Charter

  

Other
Agreements

  

Definitive

Agreement

  

SPAR Rights

Agreement

Search Period

   None    None    N/A    Approval Right

Disclosure Period

   None    None    None    Approval Right

SPAR Holder Election Period

   Revocation    Revocation    Revocation   

Approval Right

Revocation

Closing Period

   Revocation    Revocation    Revocation   

Approval Right

Revocation

Amendments to Charter or Definitive Agreement. In the Search Period or Disclosure Period, SPAR holders will have no right to vote on or approve any amendments to the Charter or the Definitive Agreement (or any other agreement to which we are a party), as SPAR holders will not be stockholders prior to the consummation of our business combination. If, during the SPAR Holder Election Period or the Closing Period, we make a Materially Adverse Amendment, we will cause all previous Elections of SPARs to be revoked, return all funds from the Custodial Account that were tendered at the Final Exercise Price in connection with such Elections and hold or re-open the SPAR Holder Election Period for an additional 20 business days. Our Charter provides that

 

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amendments to the Definitive Agreement entered into during the Closing Period in order to permit us to raise additional funds to satisfy financing or other closing conditions set forth in the Definitive Agreement will not be deemed to be a Materially Adverse Amendment so long as (i) the additional funds are raised by selling additional Public Shares to third parties (or to the Additional Forward Purchaser or other of our affiliates) in private placements at the Final Exercise Price and (ii) the number of such Public Shares sold, together with the Public Shares issued in respect of Elected SPARs, does not exceed the total number of Public Shares that would have been issued had all SPARs been elected to be exercised.

Amendments to SPAR Rights Agreement. The SPARs are being issued subject to a SPAR rights agreement, which we refer to as the SPAR Rights Agreement. If a Materially Adverse Amendment to the SPAR Rights 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. If such amendment is proposed during the SPAR Holder Election Period or the Closing Period, 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. In connection with the foregoing, we will revoke all Elections previously made, return all funds tendered, and hold the SPAR Holder Election Period open for an additional 20 business days.

During the Closing Period, Materially Adverse Amendments to the Charter, Definitive Agreement, and SPAR Rights Agreement would likely only arise in, and only be possible in, the limited circumstances in which we extend the Closing Period. For example, if our business combination partner breaches its obligations to consummate the transaction, we expect that we would extend the Closing Period and 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 would reach a negotiated settlement in which the Definitive Agreement is amended. If any Materially Adverse Amendments are made during the Closing Period, we will revoke all Elections previously made, return all funds tendered, and reinstitute an additional SPAR Holder Election Period for an additional 20 business days.

Our Board is entitled, in its sole discretion (including in connection with any revocation period), to determine to extend or postpone the SPAR Holder Election Period, subject to the Closing Deadline requirement that investor funds cannot be held in the Custodial Account beyond the date that is 10 months from the start of the SPAR Holder Election Period. You should be aware that you will not have revocation rights in connection with amendments to any agreements or documents, and that once you have submitted an Election, or once all remaining Unelected SPARs become generally non-transferable on the second trading day prior to the end of the SPAR Holder Election Period, you will not be able to sell your SPARs. Revocation will only occur in the circumstances described herein with respect to Materially Adverse Amendments to the Charter, Definitive Agreement or SPAR Rights Agreement.

May I transfer my SPARs?

You are entitled to transfer or assign your SPARs only during the SPAR Holder Election Period, 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). Prior to this time, the SPARs are generally not transferable.

During the SPAR Holder Election Period, SPARs will be transferable until the earlier of (i) the submission of an Election (that is, an election to have such SPAR(s) exercised upon the consummation of the Business Combination) or (ii) for the remaining Unelected SPARs, the date that is two trading days prior to the end of the SPAR Holder Election Period. The submission of an Election will require a SPAR holder to tender its SPAR(s) to the SPAR Rights Agent (or, in the case of SPARs held beneficially through a bank, broker or other intermediary (“brokers”), will require the beneficial SPAR holder to instruct its broker to tender its SPAR(s) via

 

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a DTC platform for the submission of Elections of SPARs), together with the Final Exercise Price therefor. The submission of an Election is irrevocable and tendered SPAR(s) will be held, pending the closing of the Business Combination, by the SPAR Rights Agent or DTC, as the case may be, pending closing of the Business Combination, and accordingly will not be available to be traded after an Election is submitted. Assuming Closing occurs, at Closing Elected SPARs will be exercised and Unelected SPARs will expire worthless. In connection with the SPARs becoming transferable during the SPAR Holder Election Period, we intend to have our SPARs quoted on the OTCQX marketplace of the OTC Markets Group or other quotation service. The quotation of SPARs on the OTCQX marketplace, rather than trading on a national securities exchange such as the NYSE or Nasdaq, may adversely impact your ability to sell your SPARs. See Quotation of SPARs above, and Risk Factors, page 60, for additional information.

Notwithstanding the foregoing, SPARs may be transferred: (i) upon death by will or intestacy; (ii) by instrument to an inter vivos or testamentary trust in which the SPARs are to be passed to beneficiaries upon the death of the trustee; (iii) pursuant to a court order; or (iv) by operation of law, including a consolidation or merger, or in connection with the dissolution of any partnership, limited liability company, corporation or other entity.

Why are the SPARs Non-Transferable Before the SPAR Holder Election Period?

We believe that the price discovery function of the market is most valuable to SPAR holders during the SPAR Holder Election Period. In addition, our ability to successfully raise funds during the SPAR Holder Election Period requires that our SPARs be held by those willing and able to pay the exercise price.

We expect that our SPARs will be quoted on the OTCQX pursuant to an exemption from certain securities law requirements applicable to broker-dealers and quotation systems. If this exemption was not available, it is possible that broker-dealers and quotation systems would be unwilling or unable to quote our SPARs. The exemption is available to blank check companies such as ours for a period of 18 months following their initial quotation. By prohibiting transfers prior to the SPAR Holder Election Period, we can ensure that our SPARs will be eligible for quotation under this exemption during the time in which transferability is most important.

We have considered the downsides to this approach, including the inconvenience to SPAR holders of having a non-transferable and difficult-to-value security for a potentially significant period of time, and the inability of those other than the initial recipients to obtain SPARs before a business combination has been announced, when the price of doing so might potentially be lower. However, we also note that, prior to announcing a business combination, the market price of our SPARs would likely reflect expectations about our ability to consummate a transaction and market conditions more generally. Compared to the valuation of a specific transaction, these factors are inherently more speculative. Prices would also be more susceptible to rumors or inaccurate information about potential transactions, and trading in SPARs could present greater risks to market participants.

Notwithstanding the foregoing, SPARs may be transferred: (i) upon death by will or intestacy; (ii) by instrument to an inter vivos or testamentary trust in which the SPARs are to be passed to beneficiaries upon the death of the trustee; (iii) pursuant to a court order; or (iv) by operation of law, including a consolidation or merger, or in connection with the dissolution of any partnership, limited liability company, corporation or other entity.

How will state securities laws affect SPAR holders?

Because our SPARs will not be listed on a national securities exchange such as the NYSE or Nasdaq, they will not be “covered securities,” and accordingly, we will be subject to the securities regulations of each state (also known as “Blue Sky” laws), and must register our securities in every state and, in some states, any distribution of our securities. Most states require submission of a Form U-1, or a similar standard form, and many states provide an exemption from registration for securities that are quoted on the OTCQX. Certain states may have more

 

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burdensome registration requirements, such as a requirement that registrations be renewed on a periodic basis, or subjecting an offering to a “merit review” in which a state regulator will assess the offering according to the terms of the North American Securities Administrators Association’s guidelines.

We will use commercially reasonable efforts to register our securities in every state, and have included a requirement that we do so in the SPAR Rights Agreement. In connection with the distribution, we have registered our securities and the distribution in every state where registration is required. For more detailed information on how you may be impacted by the applicability of state securities laws, see Risk Factors, page 60.

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 factors including the funds available to consummate our business combination after taking into account the extent to which holders have elected to exercise their SPARs, the Forward Purchase, and any other financing. During the Closing 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, it is possible that we will 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, during the period in which our SPARs are transferable, 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 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 during the period in which they are transferable.

Will I be able to revoke my Election?

No. We will be required to revoke all Elections only in limited circumstances. Once an Election has been submitted holders will not be able to revoke their Elections and have their exercise payments returned to them. Revocation will only occur in the circumstances described above with respect to Materially Adverse Amendments to the Charter, Definitive Agreement or SPAR Rights Agreement. 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 approximately 10 business days after 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

 

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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.

Are the company’s officers and directors participating in the distribution?

To our knowledge, none of our officers or directors, other than Michael Gonnella, were holders of PSTH Class A common stock or distributable redeemable warrants as of July 25, 2022, and therefore our officers and directors, other than those previously mentioned, are not receiving any SPARs in the distribution.

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 during the SPAR Holder Election Period 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, once transferable, our SPARs will trade at a positive value. In connection with the SPARs becoming transferable during the SPAR Holder Election Period, we intend to have our SPARs quoted on the OTCQX marketplace of the OTC Markets Group or other quotation service. The quotation of SPARs on the OTCQX marketplace, as compared to being listed on a national securities exchange such as the NYSE or Nasdaq, may adversely impact your ability to sell your SPARs. See Quotation of SPARs above, and Risk Factors, page 60, for additional information. Trading in, and the exercise of, your SPARs involves significant risks. Electing to exercise your SPARs is a commitment to purchase 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 Business Combination Registration Statement prior the date on which Elections may be submitted.

Will I receive interest on any funds I deposit upon submitting an Election?

The funds received in connection with the submission of Elections will be held in a Custodial Account and will be held in cash or, at our election, 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 the Investment Company Act of 1940, as amended (the “Investment Company Act”). We expect to make and announce the decision to hold the funds in cash, or such U.S. Treasury obligations or money market funds, in the Business Combination Registration Statement, based on market, legal and other factors at such time, including (i) the relative interest rates for cash accounts and such other instruments, (ii) then-existing market practice and legal and regulatory considerations with respect to custodial accounts for SPACs and other similar vehicles (including whether holding the funds in such U.S. Treasury obligations or money market funds would require us to register as an investment company under the Investment Company Act), (iii) the willingness of banks and other depositary institutions to hold large sums in cash in light of their regulatory and business requirements, and (iv) our assessment of the credit profile of any such bank or other depositary institution willing to hold a cash account. However, you will only receive the interest earned on these funds in the event that funds are returned to you in connection with a postponement of the SPAR Holder Election Period or us abandoning or failing to consummate

 

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our business combination. Absent an extension of the Closing Period, your funds will likely be held in the Custodial Account for no longer than 30 business days, and any interest earned, if any, is likely to be minimal. In no event will funds be held longer than 10 months. If the funds held in the Custodial Account are returned to electing SPAR holders, they 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 (if any). If we consummate our business combination, any interest earned will be released to us for use in the business combination and the operation of the post-combination company.

Although we reserve the right to invest funds received in connection with the submission of Elections other than in cash as described above, we are not, we do not hold ourselves out as, and we do not propose to be engaged primarily in the business of investing, reinvesting, or trading in securities. We are, we hold ourselves out as, and we propose to be engaged primarily in the business of pursuing and consummating a business combination with an operating business. To the extent that you submit your SPARs for Election, you should do so only because you wish to invest in the operating business described in our Business Combination Registration Statement and not because we may choose to invest funds received in the U.S. Treasury obligations and/or money market funds described above.

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, if any, 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, if any, 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 Election 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.

 

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Whom should I contact if I have other questions?

If you have other questions regarding our SPARs or our company, please contact us at (212) 813-3700.

 

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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 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 June 30, 2023, 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 June 30, 2023, 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 served as sponsor of Pershing Square Tontine Holdings, Ltd. (“PSTH”), which was also a special purpose acquisition company that did not enter into an initial business combination within the prescribed time period and redeemed all of its Class A common stock and subsequently dissolved. 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 shareholder return of 18% since its merger with Justice Holdings, Ltd. in 2012 (as of June 30, 2023).

PSTH raised $4.0 billion in its initial public offering, which was consummated on July 24, 2020. PSTH did not consummate a business combination and, in July 2022, returned the funds held in its trust account to its stockholders. 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 30 years in the investment management industry, the last nearly 20 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 PSCM 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 30 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 Advisor 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 while 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 an interest-bearing Custodial Account only during the period between the holders submitting exercise payments and Closing (which we expect will be no more than 30 business days, and will not exceed 10 months).

 

  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.

 

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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 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.

 

   

Until we approach the date that is 10 years from the date the SPARs were first distributed (at which time the SPARs will expire), we will face no deadline pressure to enter into a business combination. We believe that this improved negotiating position will assist us in completing a transaction on more favorable terms than might be the case if our company had a shorter life, and potentially enable us to do so more promptly if, as a result, a greater number of potential transactions meet our financial criteria. We will also be able to conduct a substantially longer search process for a business combination partner, if necessary.

 

   

Our Sponsor has made an initial investment of approximately $40.1 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 would otherwise potentially 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:

 

   

On July 28, 2023, our Sponsor purchased the Sponsor Warrants for an aggregate purchase price of $35,892,480. The transaction price of the Sponsor Warrants was determined by the Company, in consultation with a third-party, nationally recognized valuation firm, based on its fair value as of the previous month-end. The valuation firm reviewed and discussed with us our methodology, procedures and assumptions for valuing the Sponsor Warrants. The value of the Sponsor Warrants was determined using the Black-Scholes option pricing model, subject to additional valuation adjustments reflecting certain volatility assumptions, the risk of a transaction not being consummated and other factors as described in “Description of Securities—Valuation of Sponsor Warrants.”

 

   

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 is generally not able to transfer or sell the Sponsor Warrants, or any shares issued upon conversion, until three years after our business combination. Accordingly, the PSCM Investment Team is strongly incentivized to maximize our Sponsor’s investment by identifying a target company that will appreciate in value over the long term.

 

 

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Affiliates of our Sponsor will invest a minimum of $250.0 million, and up to $3.5 billion, in our business combination at the same Final Exercise Price, and upon the same other terms, as our public investors. Our Sponsor and its affiliates 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 pre-business combination 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).

 

  6.

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

 

   

Our Sponsor Warrants and Advisor 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 target stockholders to support a proposed transaction, or increase the price at which they are willing to conduct a transaction.

 

   

Most SPACs issue IPO Warrants to the public to encourage participation in their IPO. These IPO Warrants, if exercised, are dilutive to the post-combination company, and may make the SPAC less attractive to IPO investors and market participants, and to potential business combination partners. We are not issuing conventional warrants to public stockholders.

 

   

In a business combination with our company in which the target company stockholders held 80% of the post-combination company, their ownership would be reduced to 78.3% 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 2.1%). 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,

 

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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 provided working capital by purchasing the Sponsor Shares, which are structured so that our Sponsor will have paid the same per-share price for its Public Shares that exercising SPAR holders will pay, and the Sponsor Warrants, the exercise of which will be profitable only if the share price of the post-combination company is at least 20% above the Final Exercise Price.

 

   

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 $250.0 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.

 

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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 $250.0 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 $40.00 per share or greater. The Additional Forward Purchaser will have the right, but not the obligation, to purchase (the “Additional Forward Purchase”), at the Final Exercise Price, the remainder of the $3,500,000,000 of Forward Purchase Shares that is not allocated to the Committed Forward Purchase (such amount, the “Aggregate Additional Forward Purchase Amount”). The Additional Forward Purchaser may exercise the Additional Forward Purchase, at its election, in one or two tranches (each, the “First Tranche Additional Forward Purchase” and the “Second Tranche Additional Forward Purchase”, respectively), each of which would be effectuated, at the Final Exercise Price, at the time of the consummation of our business combination; provided that in no event will the number of Public Shares purchased pursuant to the First Tranche Additional Forward Purchase and the Second Tranche Additional Forward Purchase collectively exceed the quotient obtained by dividing (i) the Aggregate Additional Forward Purchase Amount by (ii) the Final Exercise Price (the “Maximum Additional Forward Purchase”). The Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the First Tranche Additional Forward Purchase, in an amount up to the Maximum Additional Forward Purchase, by written notice to us no later than five (5) business days prior to the execution of the Definitive Agreement. In the event that (i) the First Tranche Additional Forward Purchase is less than the Maximum Additional Forward Purchase and (ii) all SPARs issued and outstanding immediately prior to the commencement of the SPAR Holder Election Period are not elected to be exercised as of the end of the SPAR Holder Election Period, then the Company shall promptly notify the Additional Forward Purchaser of the number of such issued and outstanding SPARs that were not elected to be exercised (the “Unexercised SPARs”) and the Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the Second Tranche Additional Forward Purchase no later than five (5) business days after such notice, in an amount up to the aggregate number of Public Shares, at the Final Exercise Price, equal to the product of (i) two (2) and (ii) the number of Unexercised SPARs. We believe that the Forward Purchase Agreements will make a transaction with our company attractive to a large capitalization, high-quality private company.

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. No minimum amount of SPARs are required to be exercised and there can be no guarantee that any SPARs will be exercised.

 

            Equity Capital Available for Business
Combination
 

Final Exercise Price

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

$10.00

   $ 1.2 B      $ 1.5 B      $ 4.7 B  

$15.00

   $ 1.8 B      $ 2.2 B      $ 5.3 B  

$20.00

   $ 2.4 B      $ 2.9 B      $ 5.9 B  

$25.00

   $ 3.1 B      $ 3.7 B      $ 6.6 B  

$50.00

   $ 6.1 B      $ 7.1 B      $ 9.6 B  

$75.00

   $ 9.2 B      $ 10.2 B      $ 12.7 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

 

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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 need to pay 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. The IPO market is also highly cyclical. In unfavorable market conditions like those occurring currently, low valuations and limited investor demand can result in a long period in which an IPO is unattractive or not possible. In a negotiated transaction, a private company seeking to raise capital or obtain liquidity may be able to find a transaction partner that values the company’s business more favorably than would public investors at a time of negative market sentiment.

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 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 due 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

 

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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 and the Forward Purchase Shares will be purchased at the same per-share price that SPAR holders pay for their Public Shares. Our Sponsor Warrants and Advisor 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 5.104%, including the Advisor 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 $250.0 million to $1.0 billion, and up to $3.5 billion, and (ii) the minimally dilutive nature of our capital structure. 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 $250 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 has been particularly significant for SPACs over the past year, as unfavorable market conditions have resulted in high redemptions and greater difficulty in securing PIPE financing. In addition, prospective SEC regulations of SPACs could, among other things, decrease the willingness of investment banks to participate in raising PIPE capital.

Private companies face a similar evaluation of upside versus downside risk 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

 

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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. We believe this is particularly true in the current market environment—with SPACs (including the post-combination public companies resulting from SPAC mergers) performing extremely poorly, with the stock market indices suffering substantial declines and the traditional initial public offering market being effectively shut down, we believe our company may present an attractive alternative for a private company to go public.

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 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.

 

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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 General Counsel and 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 served 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 30 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 Howard Hughes Holdings Inc., a member of the Board of Universal Music Group N.V., 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.

 

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Ben Hakim serves as our President. Mr. Hakim is a Partner at Pershing Square and joined the Investment Team in 2012, and previously served as President of PSTH. 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 and is Chief Financial Officer and a Partner at Pershing Square. Mr. Gonnella also served as Chief Financial Officer of PSTH. 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 General Counsel and Corporate Secretary, and is the Assistant General Counsel and a Partner at Pershing Square. Mr. Milankov previously served as Corporate Secretary of PSTH. 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 and Chief Investment Officer 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 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.

 

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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 testimony 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 75 universities and at numerous association conferences. Dr. Blouin is frequently cited in the press, including The Wall Street Journal, The New York Times, and the Financial Times. She currently serves on the board of directors of Extra Space Storage Inc. (NYSE: EXR), and she 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 and Vice Dean for Intellectual Life at Columbia Law School. Her research focuses on financial regulation and intermediation design. She is a regular speaker at academic, industry and policy conferences in the United States and abroad. She currently serves on the Research Committee of the European Corporate Governance Institute and on the board of directors of Bread for the World, Bread for the World Institute and the Columbia Business Law Review. She has served on the Financial Research Advisory Committee of the Office of Financial Research, during which time she co-chaired the LIBOR to SOFR Working Group and the Financial Innovation Working Group. She also served as an editor of the Journal of Financial Regulation and as a member of 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 previously served as a law 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 premier voices in entrepreneurship, technology, and business transformation. As CEO and cofounder of Endeavor, she helped forge the leading global community of, by, and for high-growth entrepreneurs operating in 42 markets across the globe. She also serves as President of Endeavor Catalyst, a rules-based investment fund that invests in Endeavor companies. With $500 million in assets under management across four funds, Endeavor Catalyst has made 280 investments in 37 markets and counts 50 companies valued at more than $1 billion in its portfolio. Rottenberg currently serves as a director of Globant, a world-leader in digital transformation and software development (NYSE: GLOB); and Olo, a SaaS-based restaurant ordering platform (NYSE: OLO). She formerly served as a director of Zayo Group, a $15 billion global bandwidth infrastructure company (NYSE: ZAYO). In 2023, Rottenberg was appointed Vice Chair of the

 

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Yale President’s Council on International Activities; she is a member of YPO and the World Economic Forum. 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 Advisory Board

We have established an advisory board, the role and functions of which will be determined by the board of directors from time to time. We currently expect our advisory board to, upon the request of the directors, provide its business insights and access to its relationships (i) as we source potential business combination targets, (ii) as we assess potential business combination targets and (iii) as we work to create additional value in the business or businesses that we acquire. The role of the advisory board is consultative in nature to support our directors and officers in operating our business, and it will not perform managerial board or committee functions. Members of the advisory board will not be subject to the fiduciary requirements to which our board of directors are subject, nor will advisory board members have any internal voting or decision making role, or any authority to act on our behalf. The board of directors is not required to follow any advice, comments or recommendations of the advisory board in relation to the matters described herein. We have not entered into any agreements governing our relationship with any members of our advisory board, and we may modify or expand our roster of advisory board members as we source potential business combination targets or work to create value in the business or businesses that we acquire.

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. Ms. Gersh previously served on the board of directors of PSTH and 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

 

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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. Additionally, Mr. Ovitz previously served on the board of directors of PSTH. Mr. Ovitz is also a notable art collector and currently 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 advisors of the Wharton School of the University of Pennsylvania. She previously served on the board of directors of PSTH and currently serves on the board of directors of Nubank, Affirm, TaskUs, and Endeavor. She also is the chairperson of the Economic Advisory Council of the Federal Reserve Bank of San Francisco. She previously served on the board of directors of Alibaba Group Holding Limited, Context Logic, 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.

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 investors 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.

 

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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 date on which our SPARs are first being distributed, we intend to begin the process of communicating with the network of relationships of our Investment Team and our independent directors to articulate the parameters for our search for a potential target business combination and begin the process of pursuing and reviewing potential opportunities.

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;

 

   

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,

 

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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 Business Combination 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 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).

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

 

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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 requires 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 Definitive Agreement, 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.” 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 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

 

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and Advisor 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.

Our SPARs

We are distributing our SPARs at no cost to the recipients thereof. The SPARs will each be exercisable for two Public Shares at a minimum exercise price of $10.00 per share ($20.00 in total). Each SPAR may only be exercised in full, for two Public Shares, and cannot be exercised in part. 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 per-share 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 per share 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 $1,222,222,220 (assuming all SPARs are issued). 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 two Public Shares at a Final Exercise Price of $20.00 per share ($40.00 in total), and the Final Exercise Proceeds would be $2,444,444,440 (assuming all SPARs are issued and exercised). Our ability to set an exercise price without an upper limit could cause SPAR holders, depending on their resources, to be unable to exercise their SPARs, and thus be unable to participate in any future appreciation in the post-business-combination entity. See Risk Factors, page 60. Any increase in price above the Minimum Exercise Price will be reflected in the Business Combination Registration Statement and will not be subject to further adjustment.

We are distributing up to 50,000,000 SPARs to the former holders of the Class A common stock of PSTH and up to 11,111,111 SPARs to the former holders of the distributable redeemable warrants of PSTH, based on ownership as of July 25, 2022, the final date on which PSTH securities traded. Accordingly, one SPAR is being distributed in respect of every four shares of PSTH Class A common stock then outstanding, and one SPAR is being distributed in respect of every two distributable redeemable warrants then outstanding. We are not issuing fractional SPARs, no cash is being paid in lieu thereof, and any fractional amount is being rounded down to the nearest whole number. Accordingly, former holders of the distributable redeemable warrants and Class A common stock of PSTH must have owned two distributable redeemable warrants or four shares of Class A common stock of PSTH, based on ownership as of July 25, 2022, to receive one SPAR.

 

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SPARC Life Cycle

 

LOGO

Search Period

We are distributing the SPARs now that the Registration Statement of which this prospectus forms a part has become effective. The SPARs are generally non-transferable at this time, and are not exercisable.

Upon the initial 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. 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 per Public Share (a total of $20.00 to exercise each SPAR). 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, the Business Combination Registration Statement. The Business Combination Registration Statement will contain comprehensive disclosures regarding the proposed transaction, including the number of SPARs that we expect will have been distributed and are eligible for election as of the beginning of the SPAR Election Period, equivalent to the disclosures that would be included in a merger proxy statement, and will include disclosure of all payments, incentives and benefits that may be received by, and any conflicts of interest involving, our Sponsor or its affiliates in connection with the business combination. Depending on the structure our transaction takes, the Business

 

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Combination Registration Statement may be filed as a post-effective amendment to this Registration Statement or as a registration statement by a different entity. It is likely the Business Combination Registration Statement 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. Because we anticipate the closing of our business combination to occur within approximately 30 business days of the effectiveness of the Business Combination Registration Statement, 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 or our business combination partner will be able to satisfy such conditions.

Once all Disclosure Period Closing Conditions have been satisfied or waived, and the Business Combination Registration Statement has been declared effective, we will mail or otherwise make available a prospectus to all SPAR holders, and the SPAR Holder Election Period will begin. At this time, we will also obtain any necessary stockholder approvals from our Sponsor, in its capacity as our sole stockholder.

The SPARs will be generally non-transferable and will not be exercisable during the Disclosure Period.

If we amend the Charter, SPAR Rights Agreement or Definitive Agreement during this period, we will amend the Business Combination Registration Statement as necessary. SPAR holders will have no rights in connection with amendments to the Charter or Definitive Agreement, as they are not stockholders at this time. If we propose to amend the SPAR Rights 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 (e.g., 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 Disclosure Period Closing Conditions have been satisfied or waived and (iii) the Business Combination Registration Statement has been declared effective.

We expect that the SPARs will be quoted on the OTCQX marketplace of the OTC Markets Group in connection with the SPAR Holder Election Period. This will require, among other things, that at least one market maker publishes quotations for SPARs, and that a Form 211 is submitted to, and approved by, FINRA. The quotation of SPARs on the OTCQX marketplace, as compared to being listed on a national securities exchange such as the NYSE or Nasdaq, may present significant risks to the holders of SPARs, including lower availability and efficiency of market price quotations, significantly less liquidity, increased transaction costs, the absence of certain requirements regarding our corporate governance (i.e., lack of stock exchange requirements mandating a board with a majority of independent directors, independent nomination, compensation and audit committees, and stockholder approval of certain actions), and the application of state securities laws that could result in restrictions on the sale of our SPARs. See Risk Factors, page 60.

 

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The NYSE listing rules require, among other things, that listed companies have: (i) a board comprised of a majority of independent directors; (ii) nomination, compensation and audit committees composed entirely of directors that meet the independence standards applicable to such committee, and an audit committee that includes a financial expert; (iii) corporate governance guidelines and a code of business conduct and ethics that are made publicly available; (iv) meetings of independent directors in executive session; (v) annual meetings of stockholders; and (vi) stockholder approval for certain matters such as stock issuances, regardless of whether such approval is required under law or by the company’s governing documents. We will be subject to the less stringent OTCQX corporate governance requirements, that we have a board with at least two independent directors and a majority of independent directors on the audit committee members, only during the SPAR Holder Election Period. Although our Charter and SPAR Rights Agreement will require that we comply with the corporate governance provisions applicable to NYSE-listed companies (without giving effect to any exceptions applicable to controlled companies), unlike most blank check companies, we will not be subject to any external requirement that we comply with such provisions and will not be subject to delisting in the event we fail to so comply. See Risk Factors, page 60.

SPAR holders will have a period of 20 business days to submit an Election regarding the exercise of their SPARs. Elections are irrevocable, and electing SPAR holders must submit with their Election the aggregate exercise price for the number of SPARs that they have agreed to exercise. 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 held at DTC in a “rights envelope” pursuant to customary DTC rights offerings procedures, pending the consummation of the business combination. The Company expects to instruct DTC to “chill” remaining Unelected SPARs—that is, instruct DTC to no longer permit transfers of SPARs among DTC participants on the date that is two trading days before the end of the SPAR Holder Election Period.

The Elected SPARs are not actually exercised at this time— Elected SPARs will be held in the DTC “rights envelope”, and exercise payments will be held in a Custodial Account, not to be released to us except in connection with the Closing. An Election constitutes an irrevocable offer to have your exercise payment released to our company and to have your SPARs be exercised in order to acquire Public Shares. Our decision to proceed with the business combination constitutes an acceptance of an electing SPAR holder’s irrevocable offer to acquire Public Shares through the exercise of their SPARs. Our decision to abandon the business combination constitutes a rejection of the offer.

During the SPAR Holder Election Period, if we make a Materially Adverse Amendment to the Charter or Definitive Agreement, we will revoke all Elections previously made, return all funds from the Custodial Account that were tendered at the Final Exercise Price in connection with such Elections, and hold the SPAR Holder Election Period open for an additional 20 business days. Our Charter provides that amendments to the Definitive Agreement entered into during the Closing Period in order to permit us to raise additional funds to satisfy financing or other closing conditions set forth in the Definitive Agreement will not be deemed to be a Materially Adverse Amendment so long as (i) the additional funds are raised by selling additional Public Shares to third parties (or to the Additional Forward Purchaser or other of our affiliates) in private placements at the Final Exercise Price and (ii) the number of such Public Shares sold, together with the Public Shares issued in respect of Elected SPARs, does not exceed the total number of Public Shares that would have been issued had all SPARs been elected to be exercised.

If we propose a Materially Adverse Amendment to the SPAR Rights 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. In connection with the foregoing, we will revoke all Elections previously made, return all funds tendered, and hold the SPAR Holder Election Period open for an additional 20 business days.

 

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If the transaction is abandoned during the SPAR Holder Election Period, the offer constituted by the submission of an Election will be rejected, and all Elections will be disregarded. Any funds held in the Custodial Account will be promptly returned to electing SPAR holders, with interest (if any), all SPARs will expire, and we will liquidate our company. 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 extend the SPAR Holder Election Period, the length of time for which we will be able to do so will be limited by the Closing Deadline, which requires that we may not hold investor funds beyond the date that is 10 months after the start of the SPAR Holder Election Period. Unelected SPARs will not have any value following the SPAR Holder Election Period, will generally not be transferable and will expire worthless. Accordingly, any SPAR holder who wishes to sell their SPARs must do so prior to submitting an Election and no later than two trading days prior to the end of the SPAR Holder Election Period.

Closing Period

Following the SPAR Holder Election Period, we will have up to 10 business days to determine whether or not to proceed with the business combination. This decision will be driven primarily by whether the Final Closing Conditions have been or will be satisfied as of Closing. The Final Closing Conditions include (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 any Final 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.

No later than 10 business days after the SPAR Holder Election Period ends, we will publicly disclose our decision to either (i) consummate the business combination, (ii) abandon the business combination or (iii) in very limited circumstances described below, extend the Closing Period. If all remaining closing conditions are satisfied or waived, we will promptly thereafter (within two business days), carry out the Closing. Elected SPARs will be exercised, Public Shares of the post-combination company will be issued, and Unelected SPARs will expire worthless.

If we become unable to consummate the business combination due to (i) an injunction by a governmental authority or (ii) a legal dispute with our business combination partner, only then may our Board decide to extend the Closing Period. During the Closing Period Extension, which will end on the date that is 10 months from the start of the SPAR Holder Election Period, we will seek to resolve these issues and consummate the business combination. During a Closing Period Extension, exercise payments will continue to be held in the Custodial Account. If we abandon the business combination during a Closing Period Extension, or are unable to consummate a business combination by the Closing Deadline (or, if earlier, the date that is 10 years from the date the SPARs were first distributed), we will promptly return the funds held in the Custodial Account, the SPARs will expire worthless, and we will liquidate the company.

During the Closing Period, Materially Adverse Amendments to the Charter, Definitive Agreement, and SPAR Rights Agreement would likely only arise in, and only be possible in, the limited circumstances in which we extend the Closing Period. For example, if our business combination partner breaches its obligations to consummate the transaction, we expect that we would extend the Closing Period and seek to enforce our legal rights to specific performance, and consummate the transaction on the terms set forth in the Definitive

 

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Agreement. However, it is possible that we would reach a negotiated settlement in which the Definitive Agreement is amended. If any Materially Adverse Amendments are made during the Closing Period, we will revoke all Elections previously made, return all funds tendered, and reinstitute an additional SPAR Holder Election Period for an additional 20 business days.

SPARs are not transferable during the Closing Period or a Closing Period Extension.

Our Forward Purchase Agreements

We believe our ability to complete our business combination will be enhanced by having entered into the Forward Purchase Agreements. Prior to the date on which the SPARs were first distributed, we entered into the Forward Purchase Agreements 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. All shares purchased pursuant to the Forward Purchase Agreements will be purchased at the Final Exercise Price.

At the time we enter into a Definitive Agreement, we will announce the Final Exercise Price, which determines the Committed Forward Purchase amount. Also at that time, the Additional Forward Purchaser will announce the amount of the Additional Forward Purchase it will make, if any. 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. Further, 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 consummate the announced business combination.

The Committed Forward Purchasers will be obligated to invest $250.0 million if the Final Exercise Price is $10.00 per share, 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 $40.00 per share or greater. The Additional Forward Purchaser will have the right, but not the obligation, to purchase (the “Additional Forward Purchase”), at the Final Exercise Price, the remainder of the $3,500,000,000 of Forward Purchase Shares that is not allocated to the Committed Forward Purchase (such amount, the “Aggregate Additional Forward Purchase Amount”). The Additional Forward Purchaser may exercise the Additional Forward Purchase, at its election, in one or two tranches (each, the “First Tranche Additional Forward Purchase” and the “Second Tranche Additional Forward Purchase”, respectively), each of which would be effectuated, at the Final Exercise Price, at the time of the consummation of our business combination; provided that in no event will the number of Public Shares purchased pursuant to the First Tranche Additional Forward Purchase and the Second Tranche Additional Forward Purchase collectively exceed the quotient obtained by dividing (i) the Aggregate Additional Forward Purchase Amount by (ii) the Final Exercise Price (the “Maximum Additional Forward Purchase”). The Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the First Tranche Additional Forward Purchase, in an amount up to the Maximum Additional Forward Purchase, by written notice to us no later than five (5) business days prior to the execution of the Definitive Agreement. In the event that (i) the First Tranche Additional Forward Purchase is less than the Maximum Additional Forward Purchase and (ii) all SPARs issued and outstanding immediately prior to the commencement of the SPAR Holder Election Period are not elected to be exercised as of the end of the SPAR Holder Election Period, then the Company shall promptly notify the Additional Forward Purchaser of the number of such issued and outstanding SPARs that were not elected to be exercised (the “Unexercised SPARs”) and the Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the Second Tranche Additional Forward Purchase no later than five (5) business days after such notice, in an amount up to the aggregate number of Public Shares, at the Final Exercise Price, equal to the product of (i) two (2) and (ii) the number of Unexercised SPARs.

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

 

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Forward Purchase and the 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, assuming all SPARs are exercised. No minimum amount of SPARs are required to be exercised and there can be no guarantee that any SPARs will be exercised.

 

    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   $  250.0 M     $  3.25 B       20.5     265.9 
$15.00   $ 375.0 M     $ 3.13 B       20.5     170.5
$20.00   $ 500.0 M     $ 3.0 B       20.5     122.7
$30.00   $ 750.0 M     $ 2.75 B       20.5     75.0
$40.00   $ 1.0 B     $ 2.5 B       20.5     51.1
$50.00   $ 1.0 B     $ 2.5 B       16.4     40.9

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 Agreements will be subject to certain transfer restrictions and will have registration rights.

The Company reserves the right to obtain additional debt and equity financing in connection with the consummation of its business combination, including without limitation selling additional Public Shares to third parties or related parties (including the Additional Forward Purchaser), provided sales of Public Shares will be made at the Final Exercise Price and the terms of any such additional financing will be disclosed in the Business Combination Registration Statement in accordance with applicable law.

Sponsor Shares

Our Sponsor has purchased, as of the date of this prospectus, 422,533 shares of Common Stock for an aggregate purchase price of $4,225,330, or $10.00 per share. 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.

Our Sponsor may, but is not obligated to, purchase additional Sponsor Shares prior to our business combination in order to provide us with additional working capital.

Prior to the time at which this Registration Statement became effective, we filed an amendment to the Registration Statement that included an audited balance sheet reflecting at least $5,000,001 of the proceeds from the sale of the Sponsor Shares and the Sponsor Warrants described below having been deposited in a segregated account, which will be held in cash (the “Segregated Account”). We will not release such funds from the Segregated Account except in connection with the consummation of our business combination, an Early Termination, or the expiration of the SPARs.

We will use the proceeds from the sale of the Sponsor Shares and the Sponsor Warrants described below, other than the amount held in the Segregated Account, 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. We will hold such funds in cash pending use.

 

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Sponsor Warrants and Advisor Warrants

Issuance and Terms of Private Warrants. In order to fund our initial capital needs, our Sponsor purchased on July 28, 2023 the Sponsor Warrants for an aggregate purchase price of $35,892,480. The transaction price of the Sponsor Warrants was determined by the Company, in consultation with a third-party, nationally recognized valuation firm, based on its fair value as of the previous month-end. The valuation firm reviewed and discussed with us our methodology, procedures and assumptions for valuing the Sponsor Warrants. The value of the Sponsor Warrants was determined using the Black-Scholes option pricing model, subject to additional valuation adjustments reflecting certain volatility assumptions, the risk of a transaction not being consummated and other factors as described in “Description of Securities—Valuation of Sponsor Warrants.” Taking into account such consultation, we concluded that our methodology, procedures and assumptions are reasonable.

The Sponsor Warrants are exercisable, in the aggregate, for up to 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 (including without limitation Public Shares issued upon exercise of the SPARs, Public Shares issued pursuant to the Forward Purchase Agreements, Public Shares issued to the target business or its shareholders and Public Shares issuable upon the exercise of Sponsor Warrants or the conversion or exercise of then-outstanding securities of the surviving corporation, whether or not convertible or exercisable at such time). We refer to the number of Public Shares into which the Sponsor Warrants are exercisable as the “Reference Shares.” The actual percentage of the Public Shares on a fully diluted basis into which the Sponsor Warrants are exercisable will depend on the amount of funds raised by the exercise of SPARs at the closing of the business combination and the amount of the Additional Forward Purchase, if any, made by the Additional Forward Purchaser, and will be calculated by multiplying 4.95% by a fraction (the “Proration Fraction”), (i) the numerator of which is the sum of (A) the amount of funds raised by the exercise of SPARs at the closing of the business combination and (B) the amount of the Additional Forward Purchase, if any, funded by the Additional Forward Purchaser at the closing of the business combination (including, for the avoidance of doubt, pursuant to the Second Tranche Additional Forward Purchase) and (ii) the denominator of which is the amount of funds that would have been raised at the Final Exercise Price if all SPARs issued and outstanding immediately prior to the start of the SPAR Holder Election Period had been exercised at the closing of the business combination, excluding for the avoidance of doubt the amount of the Additional Forward Purchase (i.e., at the Minimum Exercise Price, and assuming all 61,111,111 SPARs are issued and outstanding immediately prior to the start of the SPAR Holder Election Period, the denominator will be $1,222,222,220). Because the Additional Forward Purchaser may exercise the Second Tranche Additional Forward Purchase at its election after the SPAR Holder Election Period as described above, the Additional Forward Purchaser (which, like our sponsor, is an affiliate of PSCM) has the ability to prevent the Proration Fraction being reduced to less than 1.0. In no event, however, will the Proration Fraction exceed 1.0; accordingly, under no circumstance will the Sponsor Warrants be exercisable, in the aggregate, for in excess of 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 “Proration”).

The Sponsor Warrants are exercisable at any time after the three-year anniversary, and on or prior to the 10-year anniversary, of the business combination and 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 per share, 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 the number of shares equal to the number of Reference Shares, multiplied by (x) the “fair market value” of a Public Share in excess of the Reference Price, divided by (y) 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.

 

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Prior to the date on which the SPARs were first distributed, we issued the Advisor Warrants for no cost to our advisory board members. The Advisor Warrants are identical to the Sponsor Warrants (including with respect to the Proration), except that the Advisor Warrants (i) are exercisable, in the aggregate, for up to approximately 0.154% of the Public Shares that are outstanding as of the time immediately following the consummation of our business combination, on a fully diluted basis and (ii) expressly provide that if the percentage of Public Shares into which the Sponsor Warrants are exercisable is reduced for any reason, the percentage of Public Shares into which the Advisor Warrants are exercisable will be reduced proportionally.

In addition, in the event an advisory board member resigns for any reason prior to our business combination and at a time when we are not subject to a letter of intent (or a Definitive Agreement) with respect to our business combination, we will be entitled, at our election, to repurchase in full such advisory board member’s Advisor Warrants. The repurchase price in each case will be $1,000,000 with respect to each advisory board member or $3,000,000 in the aggregate. The repurchase right may be assigned or transferred to one of our affiliates and must be exercised, if at all, by the date that is the later of (i) the two-year anniversary of the date on which the SPARs were first distributed pursuant to the Registration Statement and (ii) 60 days after the effective date of such director’s resignation. In the event we (or an affiliate) does not exercise the repurchase right by such time, the resigning advisory board member will retain the Advisor Warrants.

The repurchase price of the Advisor Warrants was established by our Sponsor in its discretion and was not intended to, and may not, represent the fair market value of the Advisor Warrants as of the time of issuance or any time of potential repurchase. The repurchase price and other terms of the Advisor Warrants were established in order to attract what we believe are highly experienced and capable advisory board members, and were based on the significant time commitment expected of advisory board members, including with respect to assisting the company in identifying potential business combination candidates, the novel nature of our company in the public market and the risks and responsibilities attendant to untested public vehicles, the potential ten-year term of our company, the skill, expertise and business contacts of our advisory board members, and the value of our advisory board members’ respective time in light of their experience and other professional responsibilities. Our Sponsor did not assign any relative or specific weights to these factors, and instead conducted an overall analysis of the factors. The repurchase price was also established at a price the Company believes will likely be a substantial discount to the fair value of the Advisor Warrants immediately after our business combination, which we believe incentivizes our advisory board members to remain on the board over time. In the event an advisory board member elects to resign during the time periods described above, the Company currently anticipates that it or Sponsor would likely exercise its repurchase right (assuming the Company or Sponsor, as applicable, then believed that the repurchase price was less than the then fair value of the Advisor Warrants as of such time), and contemplates that any such repurchase would likely reasonably compensate such an advisory board member for their service on the board. The repurchase was structured as our repurchase right (and not our obligation) to permit us to decide, at the time of any director resignation described above, whether or not the exercise of the repurchase right is advantageous to the Company in light of market and other conditions then applicable to the Company.

The Sponsor Warrants and the Advisor Warrants will be exercisable, in the aggregate, for up to approximately 5.104% of the outstanding Public Shares of the post-combination company.

The Private Warrants and 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 are subject to certain adjustments and registration rights as described herein. 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, other than as provided above, will not be subject to redemption or any repurchase right.

 

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Effect of Sponsor Warrants and Advisor Warrants on Ownership

The unique structure of our Sponsor Warrants and Advisor 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).

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 Advisor 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.

Though the number of shares issuable to the holders of the Sponsor Warrants and Advisor Warrants (for purposes of this discussion, the “Private Holders”) is determined with respect to up to 4.95% and 0.154% (as adjusted as set forth herein, the “Reference Percentages”), 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 upon two factors. The Reference Percentages establish the maximum potential ownership obtainable from exercising the Private Warrants, and will depend on the percentage of SPARs exercised and the amount of the Additional Forward Purchase. The Reference Percentages will be reduced in proportion to the extent that the SPAR proceeds plus the Additional Forward Purchase is less than the amount we would obtain if all SPARs were exercised.

The actual percentage ownership obtained upon exercise will depend on the fair market value of the post-combination company. 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, and assuming all SPARs are exercised, the ownership stake (and overall dilutive effect on Public Stockholders) increases towards its limit of approximately 5.104%.

As an example, assume a transaction in which the Final Exercise Price is $10.00, the valuation of the post-combination company is $8.0 billion (with 800 million shares outstanding, based on the initial per-share value of $10.00), and our company contributes $2.0 billion in proceeds from the exercise of all of our SPARs, the sale of the Sponsor Warrants and the Forward Purchase. In such a transaction, our stockholders (including the Forward Purchasers) would initially own 25% of the post-combination company. The number of Reference Shares, calculated as 5.104% of the fully diluted shares outstanding, would be approximately 43 million. However, upon a cashless exercise of the Private Warrants, the Private Holders would likely receive substantially fewer than 43 million shares, as they are receiving only that number of shares equivalent to the value of the Reference Shares in excess of the exercise price. As a result, the Private Holders would own less than 5.104% of the company and have a dilutive impact on Public Stockholders of less than 5.104%.

At a fair market value lower than $12.00 per share, 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, the holders of the Private Warrants would be issued approximately 8.6 million Public Shares (the value of 43 million Reference Shares in excess of the $12.00 Reference Price, divided by the $15.00 fair market value),

 

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constituting ownership of 1.1% of the post-combination company. Our Public Stockholders would own 24.7% of the post-combination company (a 0.3% 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 25.8 million Public Shares upon exercise. The holders of the Private Warrants would thereby own 3.1% of the post-combination company, and the Public Stockholders would own 24.2% of the post-combination company (a 0.8% decrease, or 3.1% 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 5.104%. The illustration below assumes total proceeds of $2.0 billion are contributed by our company in the transaction.

 

Fair Market Value of Public Share

   Post-Combination Company Equity Value              
   $4.0B     $8.0B     $12.0B     $20.0B     $40.0B     Public
Dilution
    Private
Ownership
 
   Public Ownership  
$10.00      50.0     25.0     16.7     10.0     5.0     0.0     0.0
$12.00      50.0     25.0     16.7     10.0     5.0     0.0     0.0
$15.00      49.5     24.7     16.5     9.9     4.9     1.1     1.1
$20.00      48.9     24.5     16.3     9.8     4.9     2.1     2.1
$25.00      48.6     24.3     16.2     9.7     4.9     2.7     2.7
$30.00      48.4     24.2     16.1     9.7     4.8     3.1     3.1
$100.00      47.7     23.9     15.9     9.5     4.8     4.5     4.5

Corporate Information

Our offices are located at 787 Eleventh Avenue, 9th Floor, New York, NY 10019, and our telephone number is (212) 813-3700. Our website address is pershingsquaresparcholdings.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, up to 61,111,111 subscription warrants, each exercisable for two Public Shares at a Minimum Exercise Price of $10.00 per share.

 

  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 per share and is not subject to any maximum. Any increase above the Minimum Exercise Price will be reflected in the Business Combination Registration Statement, at which time the Final Exercise Price will be a fixed amount.

 

  No fractional SPARs are being issued, no cash is being paid in lieu of any fractional SPAR amounts, and any such fractional amount is being rounded down to the nearest whole number. SPARs may only be exercised in full, for two Public Shares, and cannot be exercised in part. No fractional Public Shares will be issued upon the exercise of the SPARs.

 

  The SPARs are generally non-transferable at all times other than in connection with the SPAR Holder Election Period. In connection with the SPARs becoming exercisable, we will seek to have our SPARs quoted on the OTCQX marketplace of the OTC Markets Group or other quotation service. This will require, among other things, that at least one market maker publishes quotations for SPARs, and that a Form 211 is submitted to, and approved by, FINRA. The quotation of SPARs on the OTCQX marketplace, as compared to being listed on a national securities exchange such as the NYSE or the Nasdaq, 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 Quotation of SPARs, page 5, and Risk Factors, page 60.

 

  Notwithstanding the foregoing, SPARs may be transferred: (i) upon death by will or intestacy; (ii) by instrument to an inter vivos or testamentary trust in which the SPARs are to be passed to beneficiaries upon the death of the trustee; (iii) pursuant to a court order; or (iv) by operation of law, including a consolidation or merger, or in connection with the dissolution of any partnership, limited liability company, corporation or other entity.

 

Distribution

The SPARs are being distributed to the former owners of the Class A common stock and distributable redeemable warrants of PSTH as of July 25, 2022 (the last day of trading for PSTH securities). Up to 50,000,000 SPARs are being distributed in respect of the 200,000,000 shares of PSTH Class A common stock, and up to 11,111,111 SPARs

 

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are being distributed in respect of each of the 22,222,222 distributable redeemable warrants of PSTH.

The SPARs are now being distributed since the Registration Statement has become effective on September 29, 2023.

 

Search Period

Following the date on which the SPARs are first being distributed, we will 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. The SPARs are generally not transferable or exercisable during the Search Period.

 

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 the Business Combination Registration Statement, which will include information regarding the proposed business combination, including with respect to payments, incentives, benefits and any potential conflicts of interest involving our Sponsor or its affiliates. We will also seek to satisfy all Disclosure Period Closing Conditions, which includes all express closing conditions other than those that can only be satisfied at a later date. Once the Disclosure Period Closing Conditions have been satisfied and the Business Combination Registration Statement has become effective, we will distribute the Business Combination Registration Statement to SPAR holders. The SPARs will generally not be transferable or exercisable during the Disclosure Period.

 

SPAR Holder Election Period

The SPAR Holder Election Period will begin upon the mailing of the Business Combination Registration Statement. SPAR holders will have 20 business days to submit an Election, at which time they will submit the applicable exercise payment to be held in the Custodial Account. An Election is an offer to exercise the number of SPARs indicated on their notice of Election and purchase the number of underlying Public Shares. Elections are irrevocable. The SPARs will first become transferable in connection with the SPAR Holder Election Period, and we anticipate that they will be quoted on the OTCQX. The SPARs will again become generally non-transferable upon the earlier of (i) submission of an Election and (ii) two trading days prior to the end of the SPAR Holder Election Period.

 

  If the business combination is abandoned, the offer constituted by the submission of an Election will be rejected, and all Elections will be disregarded. Any funds held in the Custodial Account will be promptly returned to electing SPAR holders, with interest (if any), all SPARs will expire, and we will liquidate our company.

 

 

In certain circumstances, the Board may extend or postpone the SPAR Holder Election Period, subject to the Closing Deadline, which requires that we hold investor funds in the Custodial Account for no longer than 10 months, and that we liquidate our company if we have not prior

 

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consummated the business combination or returned funds in connection with abandoning the business combination.

 

Closing Period

Following the SPAR Holder Election Period, the company will assess whether the Final 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. No later than 10 business days after the SPAR Holder Election Period ends, the company will publicly disclose its decision to either (i) consummate the business combination, (ii) abandon the business combination or (iii) in very limited circumstances described below, extend the Closing Period. If all remaining closing conditions are satisfied or waived, the Closing will occur within two business days thereafter. Elected SPARs will be exercised, Public Shares of the post-combination company will be issued, and Unelected SPARs will expire worthless.

 

  Except in connection with a Closing Period Extension, if any closing condition remains outstanding at this time, the transaction will be abandoned. In such case, all Elections will be rejected, and the SPARs will remain unexercised and with their holders, and will generally be non-transferable until we enter into a new SPAR Holder Election Period in connection with an alternate transaction. Funds held in the Custodial Account will be promptly returned to electing SPAR holders, with interest (if any).

 

  If the company is unable to consummate the business combination due to (i) an injunction by a governmental authority or (ii) a legal dispute with its business combination partner, only then may the Board decide to extend the Closing Period. During the Closing Period Extension, which will end on the date that is 10 months from the start of the SPAR Holder Election Period, exercise payments will continue to be held in the Custodial Account. SPARs are not transferable during the Closing Period or a Closing Period Extension. If the transaction is abandoned during, or the Closing does not occur by the Closing Deadline, funds held in the Custodial Account will be promptly returned to electing SPAR holders, the SPARs will expire, and the company will liquidate.
 

 

Expiration

The SPARs will expire upon the earlier to occur of (i) the consummation of our business combination, (ii) the abandonment of or failure to consummate a business combination by the Closing Deadline and (iii) the date that is 10 years from the date the SPARs were first distributed pursuant to the Registration Statement.

 

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 in the form of our common stock or as shares of a different entity.

 

Use of Proceeds

We will use the proceeds from the sale of the Sponsor Shares ($4,225,330) and the Sponsor Warrants ($35,892,480), less the

 

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amount held in the Segregated Account, to fund the costs of the Distribution and our operating costs. We will hold such funds in cash pending use. Of such proceeds, at least $5,000,001 will be held in cash in the Segregated Account until the earlier of the consummation of our business combination or the liquidation of our company, which Segregated Account is reflected in the audited balance sheet at July 31, 2023 included in this Registration Statement. We will not obtain any proceeds from public investors in connection with the Distribution. Public investors will not provide capital until the SPAR Holder Election Period, and we will not receive any public investor funds unless and until such funds are released from the Custodial Account in connection with the Closing.

 

  The aggregate proceeds from the exercise of the SPARs at the Minimum Exercise Price of $10.00 per share will be approximately $1.2 billion, assuming all SPARs are issued and exercised. There is no maximum Final Exercise Price, and accordingly, no maximum amount of proceeds we could raise. Any increase above the Minimum Exercise Price will be reflected in the Business Combination Registration Statement, at which time the Final Exercise Price will be a fixed amount.

 

  We will also have up to $3.5 billion of proceeds from the Forward Purchase Agreements, of which $250.0 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 funds are to be returned to SPAR holders in connection with the abandonment of a transaction. 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

The SPARs will only be transferable in connection with the SPAR Holder Election Period. During the SPAR Holder Election Period, SPARs will be transferable until the earlier of (i) the submission of an Election with respect to a SPAR and (ii) for Unelected SPARs, the time that is two trading days prior to the last day on which Elections may be submitted. At all other times, the SPARs are generally not transferable.

 

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

We will revoke previously made Elections only in the event that a proposed amendment to the Charter, SPAR Rights Agreement or

 

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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.

 

  Amendments to the Charter or Definitive Agreement. In the Search Period or Disclosure Period, SPAR holders will have no right to vote on or approve any amendments to the Charter or the Definitive Agreement, as they will not be stockholders prior to the consummation of our business combination. If, during the SPAR Holder Election Period or the Closing Period, we make a Materially Adverse Amendment to the Charter or Definitive Agreement, we will cause all previous Elections of SPARs to be revoked, return all funds from the Custodial Account that were tendered at the Final Exercise Price in connection with such Elections and hold or re-open the SPAR Holder Election Period for an additional 20 business days. Our Charter provides that amendments to the Definitive Agreement entered into during the Closing Period in order to permit us to raise additional funds to satisfy financing or other closing conditions set forth in the Definitive Agreement will not be deemed to be a Materially Adverse Amendment so long as (i) the additional funds are raised by selling additional Public Shares to third parties (or to the Additional Forward Purchaser or other of our affiliates) in private placements at the Final Exercise Price and (ii) the number of such Public Shares sold, together with the Public Shares issued in respect of Elected SPARs, does not exceed the total number of Public Shares that would have been issued had all SPARs been elected to be exercised.

 

  Amendments to the SPAR Rights Agreement. The SPARs are being issued subject to a SPAR rights agreement, which we refer to as the SPAR Rights Agreement. If a Materially Adverse Amendment to the SPAR Rights 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. If such amendment is proposed during the SPAR Holder Election Period or the Closing Period, 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. In connection with the foregoing, we will revoke all Elections previously made, return all funds tendered, and hold the SPAR Holder Election Period open for an additional 20 business days.

 

 

During the Closing Period, Materially Adverse Amendments to the Charter, Definitive Agreement, and SPAR Rights Agreement would likely only arise in, and only be possible in, the limited circumstances in which we extend the Closing Period. For example, if our business combination partner breaches its obligations to consummate the transaction, we expect that we would extend the Closing Period and seek to enforce our legal rights to specific performance, and consummate the transaction on the terms set forth in the Definitive

 

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Agreement. However, it is possible that we would reach a negotiated settlement in which the Definitive Agreement is amended. If any Materially Adverse Amendments are made during the Closing Period, we will revoke all Elections previously made, return all funds tendered, and reinstitute an additional SPAR Holder Election Period for an additional 20 business days.

 

  Our Board is entitled, in its sole discretion (including in connection with any revocation period), to determine to extend or postpone the SPAR Holder Election Period, subject to the Closing Deadline requirement that investor funds cannot be held in the Custodial Account beyond the date that is 10 months from the start of the SPAR Holder Election Period. You should be aware that you will not have revocation rights in connection with amendments to any agreements or documents, and that once you have submitted an Election, or once all remaining Unelected SPARs become generally non-transferable on the second trading day prior to the end of the SPAR Holder Election Period, you will not be able to sell your SPARs. Revocation will only occur in the circumstances described herein with respect to Materially Adverse Amendments to the Charter, Definitive Agreement or SPAR Rights Agreement.

 

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, if any 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, if any, 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.

 

Procedures for Exercising SPARs

Beginning promptly after the Business Combination Registration Statement is distributed to SPAR holders, the SPAR Holder Election Period will begin. Holders will have 20 business days to submit their Elections and their exercise payments, which will be held in the Custodial Account. An Election is an irrevocable offer (subject to certain limited

 

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exceptions) to have such exercise payments released to our company and to have such SPARs be exercised in order to acquire Public Shares. Our decision to proceed with the business combination constitutes an acceptance of an electing SPAR holder’s irrevocable offer to acquire Public Shares through the exercise of their SPARs. A decision to abandon the business combination constitutes a rejection of the offer.

 

  The Business Combination Registration Statement will provide detailed information regarding the procedures for submitting Elections, payment, and the exercise of SPARs.

 

SPAR Rights Agent

We anticipate retaining Continental Stock Transfer & Trust as SPAR rights agent.

 

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.

 

Quotation of SPARs

The SPARs are generally not transferable until and only in connection with the SPAR Holder Election Period. In connection with the SPARs becoming transferable, we intend to have our SPARs quoted on the OTCQX marketplace of the OTC Markets Group or other quotation service. See Quotation of SPARs, page 5, and Risk Factors, page 60.

 

OTCQX Quotation Standards

We expect that our SPARs, when they become transferable, will be quoted on the OTCQX. The OTCQX requires blank check companies to comply with the OTCQX U.S. initial quotations standards which are less stringent than the listing standards applicable to special purpose acquisition companies on the NYSE or NASDAQ. For a comparison of OTCQX U.S. initial quotation standards to NYSE and NASDAQ initial listing standards, see Our Company - Comparison of This Offering to Other Blank Check Companies - Comparison of Requirements for Listing or Quotation.

 

Commencement of Quotation of Securities

We expect that the SPARs will become transferable and quoted on the OTCQX shortly after we distribute the Business Combination Registration Statement relating to our business combination, and no later than the first date on which holders may submit Elections. The SPARs will again become generally non-transferable upon the earlier of (i) an Election with respect to such SPAR having been submitted during the SPAR Holder Election Period and (ii) the date that is two trading days prior to the end of the SPAR Holder Election Period. Following the SPAR Holder Election Period, Unelected SPARs will generally not be transferable, and will not have any value. We expect that our Public Shares will begin trading on or shortly after their issuance. Depending on the form our business combination takes, the Public Shares of the post-combination company may be issued as our Common Stock or as shares of a different entity.

 

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

Outstanding Common Stock:

 

Number Outstanding Before the Distribution:

422,533 Sponsor Shares1

 

Number Outstanding After the Distribution:

422,533 Sponsor Shares2

 

Number Outstanding Upon Closing:

147,644,755 Public Shares3

 

Sponsor Shares

Our Sponsor has purchased, as of the date of this prospectus, 422,533 Sponsor Shares for an aggregate purchase price of $4,225,330 Sponsor Shares, or $10.00 per share. These purchases took place on the following dates and in the following amounts: November 10, 2021 (1,000 Sponsor Shares); November 22, 2021 (22,660 Sponsor Shares); February 22, 2022 (4,383 Sponsor Shares); May 26, 2022 (169,145 Sponsor Shares); September 26, 2022 (81,729 Sponsor Shares); December 23, 2022 (121,048 Sponsor Shares) and April 18, 2023 (22,568 Sponsor Shares). 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. Our Sponsor may, but it not obligated to, purchase additional Sponsor Shares prior to our business combination in order to provide us with additional working capital. The Sponsor Shares will have certain registration rights.

 

  At least $5,000,001 of the proceeds from the sale of the Sponsor Shares and the Sponsor Warrants described below will be held in cash in the Segregated Account, from which funds can be released only in connection with the consummation of our business combination or the liquidation of our company.

 

1 

422,533 shares of Common Stock, or Sponsor Shares, purchased by our Sponsor at a price of $10.00 per share in private placements prior to the date of this prospectus, and subject to a reverse stock split in proportion to any increase in the SPAR exercise price.

2 

Does not include 122,222,222 Public Shares issuable upon exercise of up to 61,111,111 SPARs.

3 

Assumes a Final Exercise Price of $10.00. Includes (i) 422,533 Sponsor Shares, (ii) 25,000,000 Committed Forward Purchase Shares and (iv) 122,222,222 Public Shares issued in connection with the exercise of all SPARs being distributed. Does not include any Additional Forward Purchase Shares or any additional Sponsor 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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Forward Purchase Agreements

Prior to the date on which the SPARs were first distributed, we entered 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 $250.0 million of Public Shares if the Final Exercise Price is $10.00 per share, and a proportionately greater amount up to $1.0 billion at a Final Exercise Price of $40.00 per share or greater. The Additional Forward Purchaser will have the right, but not the obligation, to purchase (the “Additional Forward Purchase”), at the Final Exercise Price, the remainder of the $3,500,000,000 of Forward Purchase Shares that is not allocated to the Committed Forward Purchase (such amount, the “Aggregate Additional Forward Purchase Amount”). The Additional Forward Purchaser may exercise the Additional Forward Purchase, at its election, in one or two tranches (each, the “First Tranche Additional Forward Purchase” and the “Second Tranche Additional Forward Purchase”, respectively), each of which would be effectuated, at the Final Exercise Price, at the time of the consummation of our business combination; provided that in no event will the number of Public Shares purchased pursuant to the First Tranche Additional Forward Purchase and the Second Tranche Additional Forward Purchase collectively exceed the quotient obtained by dividing (i) the Aggregate Additional Forward Purchase Amount by (ii) the Final Exercise Price (the “Maximum Additional Forward Purchase”). The Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the First Tranche Additional Forward Purchase, in an amount up to the Maximum Additional Forward Purchase, by written notice to us no later than five (5) business days prior to the execution of the Definitive Agreement. In the event that (i) the First Tranche Additional Forward Purchase is less than the Maximum Additional Forward Purchase and (ii) all SPARs issued and outstanding immediately prior to the commencement of the SPAR Holder Election Period are not elected to be exercised as of the end of the SPAR Holder Election Period, then the Company shall promptly notify the Additional Forward Purchaser of the number of such issued and outstanding SPARs that were not elected to be exercised (the “Unexercised SPARs”) and the Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the Second Tranche Additional Forward Purchase no later than five (5) business days after such notice, in an amount up to the aggregate number of Public Shares, at the Final Exercise Price, equal to the product of (i) two (2) and (ii) the number of Unexercised SPARs.

 

 

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

 

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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 Company reserves the right to obtain additional debt and equity financing in connection with the consummation of its business combination, including without limitation selling additional Public Shares to third parties or related parties (including the Additional Forward Purchaser), provided sales of Public Shares will be made at the Final Exercise Price and the terms of any such additional financing will be disclosed in the Business Combination Registration Statement in accordance with applicable law.

 

  The Public Shares purchased pursuant to the Forward Purchase Agreements 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 Warrants

On July 28, 2023, our Sponsor purchased the Sponsor Warrants for an aggregate purchase price of $35,892,480. The transaction price of the Sponsor Warrants was determined by the Company, in consultation with a third-party, nationally-recognized valuation firm, based on its fair value as of the previous month-end. The valuation firm reviewed and discussed with us our methodology, procedures and assumptions for valuing the Sponsor Warrants. The value of the Sponsor Warrants was determined using the Black-Scholes option pricing model, subject to additional valuation adjustments reflecting certain volatility assumptions, the risk of a transaction not being consummated and other factors as described in “Description of Securities—Valuation of Sponsor Warrants.” Taking into account such consultation, we concluded that our methodology, procedures and assumptions are reasonable.

 

 

The Sponsor Warrants are exercisable, in the aggregate, for up to 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 (including without limitation Public Shares issued upon exercise of the SPARs, Public Shares issued pursuant to the Forward Purchase Agreements, Public Shares issued to the target business or its shareholders and Public Shares issuable upon the exercise of Sponsor Warrants or the conversion or exercise of then-outstanding securities of the surviving corporation, whether or not convertible or exercisable at such time). We refer to the number of Public Shares into which the Sponsor Warrants are exercisable as the “Reference Shares.” The actual percentage of the Public Shares on a fully diluted basis into which the Sponsor Warrants are exercisable will depend on the amount of funds raised by the exercise of SPARs at the closing of the business combination and the amount of the Additional Forward Purchase, if any, made by the Additional Forward Purchaser, and will be calculated by multiplying 4.95% by a fraction (the “Proration Fraction”), (i) the numerator of which is the sum of (A) the amount of funds raised by

 

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the exercise of SPARs at the closing of the business combination and (B) the amount of the Additional Forward Purchase, if any, funded by the Additional Forward Purchaser at the closing of the business combination (including, for the avoidance of doubt, pursuant to the Second Tranche Additional Forward Purchase) and (ii) the denominator of which is the amount of funds that would have been raised at the Final Exercise Price if all SPARs issued and outstanding immediately prior to the start of the SPAR Holder Election Period had been exercised at the closing of the business combination, excluding for the avoidance of doubt the amount of the Additional Forward Purchase (i.e., at the Minimum Exercise Price, and assuming all 61,111,111 SPARs are issued and outstanding immediately prior to the start of the SPAR Holder Election Period, the denominator will be $1,222,222,220). Because the Additional Forward Purchaser may exercise the Second Tranche Additional Forward Purchase at its election after the SPAR Holder Election Period as described above, the Additional Forward Purchaser (which, like our sponsor, is an affiliate of PSCM) has the ability to prevent the Proration Fraction being reduced to less than 1.0. In no event, however, will the Proration Fraction exceed 1.0; accordingly, under no circumstance will the Sponsor Warrants be exercisable, in the aggregate, for in excess of 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 “Proration”).

The Sponsor Warrants are exercisable at any time after the three-year anniversary, and on or prior to the 10-year anniversary, of the business combination and 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 cashless basis, in which case it would receive upon exercise the number of shares equal to the number of Reference Shares, multiplied by (x) the “fair market value” of a Public Share in excess of the Reference Price, divided by (y) 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 and 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 (except to certain permitted transferees and as described under the section of this prospectus entitled “Principal Stockholders—Restrictions on Transfers of Sponsor Warrants”) and are subject to certain adjustments and registration rights as described herein. The Sponsor Warrants will expire on the date that is 10 years from the consummation of our

 

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business combination. The Sponsor Warrants may be exercised in whole or in part and will not be subject to redemption.

 

Advisor Warrants

Prior to the date on which the SPARs were first distributed, we issued the Advisor Warrants for no cost to our advisory board members. The Advisor Warrants are identical to the Sponsor Warrants (including with respect to the Proration), except that the Advisor Warrants (i) are exercisable, in the aggregate, for up to 0.154% of the Public Shares outstanding as of the time immediately following the consummation of our business combination, on a fully diluted basis and (ii) expressly provide that if the percentage of Public Shares into which the Sponsor Warrants are exercisable is reduced for any reason, the percentage of Public Shares into which the Advisor Warrants are exercisable will be reduced proportionally. The Sponsor Warrants and the Advisor Warrants will be exercisable, in the aggregate, for up to approximately 5.104% of the outstanding Public Shares.

 

  The Advisor Warrants and the Public Shares issuable upon exercise of the Advisor Warrants will generally not be saleable or transferable until three years after the consummation of our business combination (except to certain permitted transferees) and are subject to certain adjustments and registration rights as described herein.

In addition, in the event an advisory board member resigns for any reason prior to our business combination and at a time when we are not subject to a letter of intent (or a Definitive Agreement) with respect to our business combination, we will be entitled, at our election, to repurchase in full such advisory board member’s Advisor Warrants. The repurchase price in each case will be $1,000,000 with respect to each advisory board member, or $3,000,000 in the aggregate. The repurchase right may be assigned or transferred to one of our affiliates and must be exercised, if at all, by the date that is the later of (i) the two-year anniversary of the date on which the SPARs were first distributed pursuant to the Registration Statement and (ii) 60 days after the effective date of such director’s resignation. In the event we (or an affiliate) does not exercise the repurchase right by such time, the resigning advisory board member will retain the Advisor Warrants.

The repurchase price of the Advisor Warrants was established by our Sponsor in its discretion and was not intended to, and may not, represent the fair market value of the Advisor Warrants as of the time of issuance or any time of potential repurchase. The repurchase price and other terms of the Advisor Warrants were established in order to attract what we believe are highly experienced and capable advisory board members, and were based on the significant time commitment expected of advisory board members, including with respect to assisting the company in identifying potential business combination candidates, the novel nature of our company in the public market and the risks and responsibilities attendant to untested public vehicles, the potential ten-year term of our company, the skill, expertise and business contacts of our advisory board members, and the value of our advisory

 

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board members’ respective time in light of their experience and other professional responsibilities. Our Sponsor did not assign any relative or specific weights to these factors, and instead conducted an overall analysis of the factors. The repurchase price was also established at a price the Company believes will likely be a substantial discount to the fair value of the Advisor Warrants immediately after our business combination, which we believe incentivizes our advisory board members to remain on the board over time. In the event an advisory board member elects to resign during the time periods described above, the Company currently anticipates that it or Sponsor would likely exercise its repurchase right (assuming the Company or Sponsor, as applicable, then believed that the repurchase price was less than the then fair value of the Advisor Warrants as of such time), and contemplates that any such repurchase would likely reasonably compensate such an advisory board member for their service on the board. The repurchase was structured as our repurchase right (and not our obligation) to permit us to decide, at the time of any advisory board member resignation described above, whether or not the exercise of the repurchase right is advantageous to the Company in light of market and other conditions then applicable to the Company.

 

Registration Rights Agreement

On the date on which the SPARs were first distributed, we entered into a Registration Rights Agreement with our Sponsor, the Forward Purchasers and our Advisors, 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 exercise of the Sponsor Warrants, (iii) the Public Shares issuable upon exercise of the Advisor Warrants, (iv) the Public Shares issued pursuant to the Forward Purchase Agreements, and (v) 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,

 

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their recourse will be limited to choosing not to exercise their SPARs and/or selling their SPARs during the SPAR Holder Election Period.

 

  Except as provided otherwise in the SPAR Rights Agreement, amendments (not including, among other things, determination of the Final Exercise Price) to the SPAR Rights Agreement will not require the approval of the holders of a majority warrants present and voting on such amendment.
 

 

Anticipated expenses and funding sources

Our Sponsor has purchased, as of the date of this prospectus, 422,533 Sponsor Shares for an aggregate price of $4,225,330, and the Sponsor Warrants for an aggregate purchase price of $35,892,480. Of our Sponsor’s initial investment in our company, at least $5,000,001 will be held in cash in the Segregated Account until the earlier of the consummation of our business combination or the liquidation of our company, and will not be available to fund our operating expenses. We will use the remaining funds from proceeds from the sale of the Sponsor Shares and the Sponsor Warrants, other than the amount held in the segregated cash account, 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. We will hold such funds in cash pending use.

The funds received in connection with submission of Elections will be held in an interest-bearing Custodial Account. Such funds will be held in cash, or at our election, 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 under the Investment Company Act which invest only in U.S. Treasury obligations. We will disclose in our Business Combination Registration Statement whether the proceeds deposited in the Custodial Account will be held in cash or will be invested in U.S. Treasury obligations or money market funds or a combination thereof, based on market, legal and other factors at such time, including (i) the relative interest rates for cash accounts and such other instruments, (ii) then-existing market practice and legal and regulatory considerations with respect to custodial accounts for SPACs and other similar vehicles (including whether holding the funds in such U.S. Treasury obligations or money market funds would require us to register as an investment company under the Investment Company Act), (iii) the willingness of banks and other depositary institutions to hold large sums in cash in light of their regulatory and business requirements, and (iv) our assessment of the credit profile of any such bank or other depositary institution willing to hold a cash 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

 

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for our use. In no event will funds be held in the Custodial Account for longer than 10 months.

 

  Although we reserve the right to invest funds received in connection with the submission of Elections other than in cash as described above, we are not, we do not hold ourselves out as, and we do not propose to be engaged primarily in the business of investing, reinvesting, or trading in securities. We are, we hold ourselves out as, and we propose to be engaged primarily in the business of pursuing and consummating a business combination with an operating business. To the extent that you submit your SPARs for Election, you should do so only because you wish to invest in the operating business described in the Business Combination Registration Statement and not because we may choose to invest funds received in the U.S. Treasury obligations and/or money market funds described above.

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 Warrants; and

 

   

any 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 Shares. Any transactions with our Sponsor or its affiliates entered into after the date on which the SPARs were first distributed will be subject to our code of ethics, and will require the approval of our audit committee.

 

Release of funds in Custodial Account

If, during the SPAR Holder Election Period, unless we extend the Closing Period, we are unable to consummate our business combination, all amounts held in the Custodial Account will be returned, inclusive of interest (if any), 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.

 

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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.

 

Limited payments to insiders

Our independent directors will receive cash compensation for their service as directors. Our advisory board members will receive Advisor Warrants, which will generally not be saleable or transferable until three years after the consummation of our business combination. In addition, the Advisor Warrants will be subject to repurchase by us in certain circumstances (and if we do not elect to make such repurchase, our Sponsor may repurchase the warrants) at an aggregate cost for all Advisor Warrants of $3.0 million. Our independent directors may be reimbursed for reasonable out-of-pocket expenses in connection with their services in such capacity. 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 our independent directors and an additional $25,000 per year, payable on a quarterly basis, to the chairs of each of our board committees; and

 

   

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

 

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

 

Corporate Governance and Board Committees

Unlike most blank check companies, we will not be subject to the corporate governance requirements applicable to companies listed on the NYSE or Nasdaq. Although our SPARs will not be listed on the NYSE, our Charter and the SPAR Rights Agreement will require us to comply with the corporate governance provisions of the NYSE listing rules, these documents may be amended. Further, we may have less incentive to comply with such requirements than other blank check companies, which could be substantially negatively affected if their non-compliance resulted in delisting. See Risk Factors, page 60. As required by our Charter and SPAR Rights Agreement, a majority of our Board will be independent, and we will, among other things, maintain and adopt charters for our audit committee, compensation committee, and nominating and corporate governance committee. Our

 

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audit committee will be composed entirely of independent directors and will, 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.

 

  We will maintain a compensation committee composed entirely of independent directors, which will be responsible for matters including the compensation of our directors and our officers (although we do not currently intend to pay any compensation to our officers).

 

  We will maintain a nominating and corporate governance committee composed entirely of independent directors, which will be responsible for matters including filling vacancies on the board of directors and reviewing our corporate governance policies on a regular basis.

For more information, see the section of this prospectus entitled ManagementCommittees of the Board of Directors.

 

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 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.

 

 

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.

 

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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 we enter into such a transaction, our Charter requires 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.

 

  On or prior to the date on which the SPARs were first distributed, we adopted a code of ethics, a form of which is filed as an exhibit to this Registration Statement. Our code of ethics includes a related party transactions policy which, among other things, requires transactions with our Sponsor and affiliates to be approved by the audit committee.

 

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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:

   June 30, 2023      December 31, 2022      December 31, 2021  
     (Unaudited)      (Audited)      (Audited)  

Working capital (deficiency)

   $ (4,308,633    $ (710,981    $ (1,750,683

Total assets

   $ 9,691      $ 23,522      $ 10,000  

Total liabilities

   $ 4,318,324      $ 734,503      $ 1,760,683  

Stockholders’ equity (deficit)

   $ (4,308,633    $ (710,981    $ (1,750,683

In the event that we abandon a business combination or liquidate our company, 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, 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 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 in respect of the Sponsor Shares.

 

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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 SPARs are generally non-transferable at all times other than in connection with the SPAR Holder Election Period.

 

   

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

 

   

The quotation of SPARs on the OTCQX marketplace, rather than being listed on a national securities exchange such as the New York Stock Exchange or the NASDAQ Global Market, 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.

 

   

We may fail to maintain the quotation of our SPARs on the OTCQX and an active and orderly 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. 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 and orderly trading market will develop, that may cause the trading price of our SPARs to be volatile.

We are distributing our SPARs and intend to 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 during the SPAR Holder Election Period, whether an active and orderly trading market for our SPARs will develop during the SPAR Holder Election Period and whether potential business combination counterparties will find our structure to be attractive. Unlike the shares of a SPAC, which may trade at or 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 during the SPAR Holder Election Period could be negatively impacted by, among other things, negative developments or rumors regarding our proposed business combination, unfavorable regulatory developments, or other factors that cause our SPARs to not maintain a positive trading price. 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.

Our SPARs are generally non-transferable at all times other than in connection with the SPAR Holder Election Period.

Our SPARs are generally not transferable prior to the time at which we have distributed an effective Business Combination Registration Statement, and they will again be generally non-transferable upon the earlier of the submission of an Election or the time that is two trading days prior to the end of the SPAR Holder Election Period. As a result, holders of our SPARs will not be able to trade or sell their SPARs during most periods in the life of our company, even in private transactions. SPAR holders will likely have difficulty determining the market value of their SPARs during these periods. Following the SPAR Holder Election Period, SPAR Holders who wish to change their Election decision will not be able to do so, subject to limited exceptions, and will not be able to sell or transfer their SPARs.

SPARs may be transferred: (i) upon death by will or intestacy; (ii) by instrument to an inter vivos or testamentary trust in which the SPARs are to be passed to beneficiaries upon the death of the trustee; (iii) pursuant to a court order; or (iv) by operation of law, including a consolidation or merger, or in connection with the dissolution of any partnership, limited liability company, corporation or other entity.

Quotation on the OTCQX marketplace, rather than being listed on a national securities exchange such as the New York Stock Exchange or the NASDAQ Global Market, may present significant risks to the holders of SPARs.

Our SPARs will become transferable in connection with the SPAR Holder Election Period. We intend to have our SPARs quoted on the OTCQX marketplace of the OTC Markets Group or other quotation service. This

 

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will require, among other things, that at least one market maker publishes quotations for SPARs, and that a Form 211 is submitted to, and approved by, FINRA. The quotation of SPARs on the OTCQX marketplace, as compared to being listed on a national securities exchange such as the NYSE or the Nasdaq, may present significant risks to the holders of SPARs, including:

 

   

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

 

   

reduced liquidity for our securities;

 

   

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;

 

   

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

 

   

an inability to offer or sell our securities in certain states due to the applicability of state securities laws; and

 

   

the absence of certain corporate governance protections applicable to companies with exchange-listed securities.

If we are unable to maintain the quotation of our SPARs on the OTCQX or another over-the-counter marketplace, your ability to sell your SPARs during the SPAR Holder Election Period will be limited to private transactions, or you may not be able sell your SPARs at all. Transactions effected on the OTCQX will likely have higher transaction costs than those for a listed security, and private transactions may have higher transaction costs than those conducted on the OTCQX.

Our SPARs will be eligible for quotation for a period of 18 months from their initial quotation, pursuant to an exemption from the securities rules governing the publication and submission of quotations by broker-dealers and qualified interdealer quotation systems. If this exemption or any other exemption is not available, the quotation of SPARs will require a broker-dealer or quotation system to comply with certain requirements, which may include, among other things, that we have current financial information publicly available, that such broker-dealer or quotation system has a reasonable basis to believe our information is accurate in all material respects, and that an application be filed with FINRA prior to publishing a quotation. It is possible that any such procedures, if available, would have to be carried out on an ongoing basis. Broker-dealers and quotation systems may be unable or unwilling to meet the requirements for quoting our SPARs following this 18-month period, in which case you will only be able to transfer your SPARs (at a time when they are transferable) in private transactions, if at all.

In addition, although we intend that the Public Shares of the post-combination company will be listed on a national securities exchange, and we expect that such listing will be a closing condition to our business combination, there is no guarantee we will be able to obtain or maintain such listing of our Public Shares. We expect that the initial listing of the post-combination company would have to meet the listing exchange’s initial listing criteria for companies conducting an IPO, which in some cases are more stringent than those applicable to companies carrying out a de-SPAC transaction. If we fail to satisfy a closing condition that requires the Public Shares to be listed on a national securities exchange, we may be unable to consummate our business combination and your SPARs could expire worthless, or the Public Shares you receive may be quoted on the OTCQX marketplace, which may negatively impact your investment for the reasons set forth above.

Because we will not be listed on a national securities exchange, we will not be required to comply with corporate governance provisions generally applicable to other blank check companies.

Although our Charter and SPAR Rights Agreement will require us to comply with the corporate governance provisions of the NYSE listing rules, these documents may be amended (in the latter case, with the approval of a

 

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majority of the SPAR holders). Unlike most blank check companies, we will not be required to affirm our compliance with these requirements, and will not be subject to delisting in the event we fail to comply with these requirements. Accordingly, we may have less incentive to comply with these corporate governance requirements.

The NYSE listing rules require, among other things, that listed companies have (i) boards comprised of a majority of independent directors and meet in executive sessions without management; (ii) nomination, compensation and audit committees composed entirely of directors that meet the independence standards applicable to such committee, and an audit committee that includes a financial expert; (iii) corporate governance guidelines and a code of business conduct and ethics that are made publicly available; (iv) meetings of independent directors in executive session; (v) annual meetings of stockholders; and (vi) stockholder approval for certain matters, regardless of whether such approval is required under law or by the company’s governing documents, including the adoption of equity compensation plans, the issuance of common stock in excess of 20% of the company’s outstanding common stock at a price lower than the “minimum price” (generally, the trading price of the common stock at the time of signing a binding agreement in connection with such issuance), the issuance of common stock to related parties and change-of-control transactions. NYSE-listed companies are also generally prohibited from taking actions that would disproportionately reduce the voting power of stockholders, such as the issuance of “super-voting” stock.

We will be subject to the corporate governance requirements of the OTCQX only during the period in which our SPARs are quoted on the OTCQX. During this period, we will be required to have a board with at least two independent directors and a majority of independent directors on the audit committee. The requirements of the OTCQX are significantly less stringent than those of the NYSE or Nasdaq, and may be waived in the sole discretion of the OTCQX.

As a result, market participants may have less confidence in the ability of our board maintain good corporate governance practices and fulfill its responsibilities, which may negatively impact the willingness of SPAR holders to invest in our business combination, and accordingly may negatively impact the market for SPARs when they become transferable.

Our SPARs will be subject to state securities regulations, which may result in us being unable to offer or sell our securities in certain states.

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.” Because our SPARs will not be listed on a national securities exchange such as the NYSE or Nasdaq, they will not be “covered securities,” and accordingly, we will be subject to regulation in each state, including during the SPAR Holder Election Period, unless an exemption is available or the applicable state law does not otherwise require registration.

In order to register our securities, we will have to comply with the procedures and requirements of each state. Many states require submission of a Form U-1, or a similar standard form, and many states provide an exemption from registration for securities that are quoted on the OTCQX. However, the requirements of other states may be more burdensome, such as a requirement that registrations be renewed on a periodic basis, or subjecting an offering to a “merit review” in which a state regulator will assess the offering according to the terms of the North American Securities Administrators Association’s guidelines. We note that some state securities regulators may view blank check companies such as us unfavorably and might use their regulatory powers, or threaten to use these powers, to hinder the distribution 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. Compliance with state securities laws could result in significant administrative costs to our company, and the failure to do so could result in monetary fines or other penalties, reducing the funds we have available to pursue a business combination.

The SPAR Rights Agreement requires us to use commercially reasonable efforts to register our securities in every state. We have registered our securities and the distribution in every state where registration is required.

 

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However, the securities regulations of one or more states may in the future restrict the ability of SPAR holders to sell or transfer their SPARs during the SPAR Holder Election Period, SPAR holders may be unable to submit Elections, and/or we may be unable to issue Public Shares to SPAR holders who have submitted Elections, among other things, and there can be no assurance that we will be able to comply with, or qualify for exemptions under, state securities laws in the future. These risks could depress the trading price of our SPARs, result in loss of the opportunity to participate in our business combination or, in the case of a holder who can neither submit an Election nor sell theirs SPARs, a complete loss of value. These circumstances could in turn have negative impacts on all SPAR holders, as a loss of market liquidity could result in inefficient pricing and difficulty selling SPARs, or could result in a lower number of SPARs being exercised, which could result in us not having sufficient funds to consummate our business combination.

SPARs are a novel security, and vendors and other market participants, such as DTC, DTC participants, our securities quotation marketplace, our transfer agent, our custodian, and blue sky and other regulators, and potential business combination counterparties, have no experience in administering or otherwise engaging with SPARs or companies such as ours, which may present execution and other risks to the holders of SPARs.

Our company structure is the first of its kind and involves different phases of operation, including the initial distribution of SPARs, the Search Period, the Disclosure Period, the SPAR Holder Election Period and the Closing Period. In each of these phases, we will engage with vendors and other market participants in distributing and administering our SPARs and in executing our business of engaging in a business combination. Because our company structure has not previously been utilized, vendors and other market participants may not have established procedures for tasks they are contractually obligated, or otherwise wish, to perform. Our transfer agent and DTC participants, in particular, are involved in the Distribution of SPARs, but to our knowledge a similar distribution has not occurred to previous holders of a SPAC and DTC participants may not have previously held similar, non-transferable securities in customer accounts. Similarly, there are no similar instruments quoted on our securities quotation marketplace; blue sky and other regulators will not have familiarity with the SPAR instrument in connection with previous reviews of similar instruments; and our ability to restrict SPARs from trading once an Election is made by such SPAR holder will likely be subject to novel procedures at DTC. Potential business combination counterparties will also be unfamiliar with our structure, which could reduce interest in transacting with us. In each of these instances, the novel nature of SPARs and our company may cause errors in execution, delay, or other unforeseen problems that will not have previously been experienced and solved in connection with the offerings of other similar companies.

Our SPARs, when they become transferable, may be difficult to value, and may be susceptible to rumors and market manipulation, presenting significant risks to investors.

As a blank check company with no operations other than the identification and consummation of a business combination, the value of our securities is largely dependent on market expectations of (i) the value of our proposed business combination (following entry into a Definitive Agreement) and (ii) the likelihood of our consummating the proposed business combination. As such, the market price of our SPARs, which will only be transferable in connection with the SPAR Holder Election Period, could be significantly impacted by rumors regarding the status of a pending transaction. Further, because we expect that the value of our SPARs will reflect the expected per-share value of our business combination in excess of the applicable exercise price, the market price of our securities is likely to be low. Securities that trade at low prices may be more susceptible to market manipulation, which can cause significant changes in market prices to the detriment of other investors. Because we are using a novel structure, and issuing a novel security, it is possible that market prices may be less efficient than is the case with conventional blank check company securities and that, even in the absence of manipulation or fraudulent trading practices, the price of our SPARs will not reflect the value of our proposed business combination. Additionally, our SPARs may not necessarily trade at a price that is indicative of the value of the new public company after the completion of the business combination because of uncertainties associated with the closing conditions and the operation of the combined company thereafter, the susceptibility of the SPARs to rumors and market manipulation, the risks associated with trading on the OTCQX instead of NYSE or Nasdaq and conflicts of interests related to our Sponsor.

 

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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 date on which the SPARs were first distributed, 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 during the SPAR Holder Election Period.

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, that we or our business combination target are unable to satisfy the closing conditions for our business combination, or that we are legally enjoined from or otherwise unable to consummate the transaction. If this occurs other than in connection with a Closing Period Extension, all Elections will be rejected, our SPARs will remain outstanding, will continue to be held by their respective holders and will again become generally non-transferable. 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 a Closing Period Extension, or due to a failure to consummate the transaction by the Closing Deadline or the date that is 10 years from the date the SPARs were first distributed, all proceeds held in the Custodial Account, with interest (if any), will be returned from the Custodial Account to the holders who have submitted payment on a pro rata basis. In such case, the SPARs will have expired worthless, and our company will liquidate. The initial recipients of our SPARs, if still holders at such time, may have lost the opportunity to have sold them during the SPAR Holder Election Period, and purchasers of our SPARs in the secondary trading market will have lost their entire investment.

Operating a blank check company and consummating a business combination are subject to significant regulatory and litigation risks and there is no assurance we will be able to complete a business combination. PSTH, a special purpose acquisition company that was sponsored by an affiliate of Pershing Square, failed to complete a business combination, and we may fail to complete our business combination. PSTH was also subject to litigation alleging that it was an unregistered investment company, and we may be subject to litigation with respect to regulatory or other issues.

PSTH, a special purpose acquisition company that went public in July 2020 and was sponsored by an affiliate of Pershing Square, did not consummate an initial business combination agreement it had entered with Universal Music Group, or any other business combination, within the prescribed time period and redeemed all of its Class A common stock and subsequently dissolved. PSTH decided not to consummate the transaction with Universal Music Group after, among other reasons, the SEC indicated that it did not agree with PSTH’s view that a stock purchase constituted a valid “business combination” under the NYSE rules applicable to special purpose acquisition companies. In addition, PSTH was sued by private plaintiffs who alleged that PSTH was an unregistered investment company. SPARC may face other regulatory or litigation challenges and there can be no assurances that we will be able to complete a business combination.

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

 

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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 Closing Period, we may determine to abandon a transaction even if we believe we are legally entitled to consummate the transaction, or be forced to abandon the transaction at the Closing Deadline, 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 an amendment or waiver of terms in the Definitive Agreement in a manner less favorable to us. SPAR Holders will not have the right to vote on any amendment to the Definitive Agreement, and we will revoke previously made Elections only in the limited circumstance of a Materially Adverse Amendment. 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. 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 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.”

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, which we may increase at the time we enter into a Definitive Agreement, 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. There is no maximum to the exercise price we may set, and each SPAR must be exercised in full, for two Public Shares. At the Final Exercise Price, some SPAR holders may be unwilling or unable to pay the Final Exercise Price with respect to all of their SPARs.

SPAR holders who do not wish to exercise all of their SPARs may choose to sell their SPARs, although there is no guarantee that they will be able to do so at a favorable price, if at all. If they are unable to sell their SPARs, their Unelected SPARs will expire worthless. If a significant number of SPAR holders attempt to sell their SPARs as a result of a high Final Exercise Price, this may depress the market price of the SPARs, and result in fewer SPARs being exercised, reducing the proceeds available to fund our business combination, potentially below the amount required to consummate our business combination.

The Final Exercise Price will be determined taking into account a variety of factors, and is not necessarily an indication of the fair value of shares of the post-combination company, particularly as 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, and may not be accurate 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 the 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 and orderly trading market will develop in our Public Shares. The market price of our Public Shares may decline after the business

 

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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.

Because we have the ability to establish the Final Exercise Price in any share amount equal to or greater than $10.00 without an upper limit, the Final Exercise Price could be established at a price which could require a SPAR holder to make a significant capital outlay. If such Final Exercise Price exceeds the investor’s available funds, they will not be able to exercise the SPARs or participate in any future appreciation.

Because we have the ability to establish the Final Exercise Price at a price greater than $10.00 per Public Share without an upper limit, it may be difficult for certain investors to raise the necessary capital to pay the Final Exercise Price and exercise their SPARs. If investors do not have sufficient liquidity and capital resources to pay such an exercise price, they will not be able to exercise their SPARs and receive their shares of Common Stock upon the closing of our business combination or participate in any future potential appreciation of such shares of Common Stock. If SPARs are not exercised by the end of the SPAR Holder Election Period and the business combination closes, then any unexercised SPARs will expire worthless and the SPAR holder will not be entitled to any additional compensation.

You will not be able to revoke your Election to exercise your SPARs or have your exercise payment returned to you, 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 generally non-transferable upon the submission of an Election and, for SPARs with respect to which no Election has yet been submitted, the date that is two trading days prior to the end of the SPAR Holder Election Period. Once you submit an Election and exercise payment 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. If a Materially Adverse Amendment is made to the Charter or Definitive Agreement during the SPAR Holder Election Period or the Closing Period, we will cause all previous Elections of SPARs to be revoked, return all funds from the Custodial Account that were tendered at the Final Exercise Price in connection with such Elections and hold or re-open the SPAR Holder Election Period for an additional 20 business days. Our Charter provides that amendments to the Definitive Agreement entered into during the Closing Period in order to permit us to raise additional funds to satisfy financing or other closing conditions set forth in the Definitive Agreement will not be deemed to be a Materially Adverse Amendment so long as (i) the additional funds are raised by selling additional Public Shares to third parties (or to the Additional Forward Purchaser or other of our affiliates) in private placements at the Final Exercise Price and (ii) the number of such Public Shares sold, together with the Public Shares issued in respect of Elected SPARs, does not exceed the total number of Public Shares that would have been issued had all SPARs been elected to be exercised.

If a Materially Adverse Amendment to the SPAR Rights Agreement is proposed during the SPAR Holder Election Period or the Closing Period, 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. In connection with the foregoing, we will revoke all Elections previously made, return all funds tendered, and hold the SPAR Holder Election Period open for an additional 20 business days. 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.

Electing SPAR holders will have agreed to have their exercise payments released to us from the Custodial Account in connection with the Closing, and will not be able to cancel or prevent the exercise of their SPARs, 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

 

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or change your exercise or sell your SPARs and will not be able to have your exercise payment returned to you (subject to the limited exceptions described above). In addition, we cannot predict how these restrictions on transferability and revocation, or other features of SPARs, will impact the trading price of our SPARs during the SPAR Holder Election Period.

Our Board may, in certain circumstances, extend the SPAR Holder Election Period or Closing Period.

Our Board, in certain circumstances, will be required to extend the SPAR Holder Election Period. Our Board will have sole discretion in deciding to extend or postpone the SPAR Holder Election Period, and as to the duration of any extension or postponement (subject to an overall limit that investor funds be held in the Custodial Account no longer than 10 months from the start of the SPAR Holder Election Period). Possible circumstances in which the Board may postpone or extend the SPAR Holder Election Period include, but are not limited to: Materially Adverse Amendments to the Definitive Agreement, Charter or SPAR Rights Agreement; disputes with our business combination partner; and requirements under applicable law. During the Closing Period, our Board may extend the Closing 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. If our Board determines to do so, rather than abandoning the business combination, the Final Exercise Proceeds will be held in the Custodial Account pending resolution of the matter. In no event will we hold investor funds beyond the date that is 10 months from the start of the SPAR Holder Election Period.

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 per share (or $20.00 to exercise each SPAR) and is not subject to an upper limit. Following this announcement, the Final Exercise Price will be reflected in the Business Combination Registration Statement and 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, particularly in the absence of a trading market (as our SPARs are generally non-transferable at such time) will result in uncertainty as to the value of our SPARs. 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 Exercise 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 and make payment of the applicable exercise price prior to the end of the SPAR Holder Election Period, and must act on a timely basis and ensure that all required forms and funds are actually received by the SPAR rights agent. If your Election and payment is not received on a timely basis, your SPARs will expire worthless. If you are a beneficial owner of SPARs in “street name”, 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 SPAR rights agent prior to the end of the SPAR Holder Election 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 SPAR rights agent, and all payments clear, prior to the end of the SPAR Holder Election 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

 

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SPAR Holder Election Period, the SPAR rights 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 SPAR rights agent, undertakes to contact you concerning an incomplete or incorrect subscription form or payment, nor are we or the SPAR rights 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 Rights Agreement during the SPAR Election Period, you must submit your vote on a timely basis in order for it to be counted.

Prior to the SPAR Holder Election Period, we will file the Business Combination Registration Statement, which will include 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 expect that the Closing will occur approximately 10 business days after the SPAR Holder Election Period ends. However, 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 Closing Period up to the date that is 10 months from the start of the SPAR Holder Election 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 that we abandon our business combination, we intend to return payments to electing SPAR holders as promptly as practicable, and in any event within five business days. We caution, however, that there may be operational difficulties experienced by our service providers in administering the Election, payment, exercise and/or refund processes, as there is no precedent for our transaction structure. In such case, electing SPAR holders may experience a delay in receiving their Public Shares following the consummation of the business combination or 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 transfer restrictions in the subscription agreement between us and our Sponsor and will be required to vote any such shares in favor of any business combination that we negotiate and submit for approval to our stockholders. Accordingly, our Sponsor (or its Affiliate Transferees), 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 or Sponsor (or its Affiliate Transferees) 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, 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

 

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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) declining to submit an Election, if you have not already done so, in which case your SPARs will expire worthless or (ii) selling your SPARs, if they are unelected and it is prior to the second trading day before the end of the SPAR Holder Election Period. In all other circumstances, if we decide to proceed with the business combination, your exercise payment will be released to us and your SPARs will be exercised.

You will have no approval rights in connection with amendments to our Charter or the agreements to which we are a party prior to the SPAR Holder Election Period (other than a Materially Adverse Amendment to the SPAR Rights Agreement), and only limited rights in connection with amendments to the Charter and certain of those agreements during the SPAR Holder Election Period and Closing Period.

The Registration Rights Agreement, the Forward Purchase Agreements, the Sponsor Warrant and the Advisor Warrant, and our Charter, bylaws and the Definitive Agreement (when entered), can be amended prior to the SPAR Holder Election Period without the approval of SPAR holders. 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 our Charter or such agreements prior to the SPAR Holder Election Period would require the consent of our stockholders (but not SPAR holders) or the applicable parties thereto, respectively, 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 our Charter or any of these agreements prior to the SPAR Holder Election Period, 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 such amendment will be disclosed in our Business Combination Registration Statement related to our business combination and otherwise filed with the SEC in accordance with applicable law. If you do not support an amendment to our Charter or any agreement to which we are a party prior to the SPAR Holder Election Period your recourse would be limited to declining to submit an Election or to sell your SPARs during the SPAR Holder Election Period.

During the SPAR Holder Election Period and Closing Period, SPAR Holders will have only limited rights in connection with amendments to these documents and to the SPAR Rights Agreement, and then only if any such amendment, in the reasonable, good-faith judgment of our independent directors, would have a materially adverse impact on SPAR holders. We refer to such amendments as Materially Adverse Amendments. Although we do not expect to amend these documents once the SPAR Holder Election Period has begun, and the Definitive Agreement will likely restrict our ability to amend the Charter or SPAR Rights Agreement, we cannot guarantee that no Materially Adverse Amendments will be made or proposed. In addition, our Charter provides that amendments to the Definitive Agreement entered into during the Closing Period in order to permit us to raise additional funds to satisfy financing or other closing conditions set forth in the Definitive Agreement will not be deemed to be a Materially Adverse Amendment so long as (i) the additional funds are raised by selling additional Public Shares to third parties (or to the Additional Forward Purchaser or other of our affiliates) in private placements at the Final Exercise Price and (ii) the number of such Public Shares sold, together with the Public Shares issued in respect of Elected SPARs, does not exceed the total number of Public Shares that would have been issued had all SPARs been elected to be exercised.

During the SPAR Holder Election Period and the Closing Period, in the event of a Materially Adverse Amendment we will (i) file a post-effective amendment to the Business Combination Registration Statement to

 

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disclose the Materially Adverse Amendment in accordance with applicable securities laws, (ii) cause all previous Elections of SPARs to be revoked, (ii) return all funds from the Custodial Account that were tendered at the Final Exercise Price in connection with such Elections and (iv) hold or re-open the SPAR Holder Election Period for an additional 20 business days, during which additional 20 business days we anticipate the SPARs will trade on the OTCQX marketplace of the OTC Markets Group or other quotation service. If you do not support a Materially Adverse Amendment your recourse would be limited to declining to submit an Election or to sell your SPARs during the additional SPAR Holder Election Period.

You will not be entitled to the same protections applicable to investors in blank check companies subject to Rule 419 of the Securities Act, and the application of other proposed rules to our company is not clear and may adversely affect our ability to negotiate and complete our business combination.

Because our company has been formed to carry out a 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 have net tangible assets of in excess of $5.0 million as a result of depositing at least $5,000,001 of the proceeds from the sale of the Sponsor Shares and the Sponsor Warrants in cash in the Segregated Account, and have filed an amendment to the Registration Statement prior to effectiveness that includes an audited balance sheet that reflects having such assets, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means we will have a longer period of time to complete our business combination than do companies subject to Rule 419. 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.

In addition, on March 30, 2022, the SEC issued proposed rules relating to, among other items, enhancing disclosures in business combination transactions involving SPACs and private operating companies; amending the financial statement requirements applicable to transactions involving shell companies; effectively limiting the use of projections in SEC filings in connection with proposed business combination transactions; increasing the potential liability of certain participants in proposed business combination transactions; and the extent to which SPACs could become subject to regulation under the Investment Company Act of 1940. Although we will seek to comply with any such rules to the extent applicable, it may be unclear how such rules would apply to a company that issues subscription warrants, rather than stock, for the purposes of an acquisition. These rules, if adopted, whether in the form proposed or in revised form, may materially adversely affect our ability to negotiate and complete our business combination and may increase the costs and time related thereto.

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.

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

 

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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 are distributing 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 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.

On or prior to the date on which the SPARs were first distributed, we will have entered into a Forward Purchase Agreements with the Forward Purchasers (affiliates of our Sponsor), pursuant to which the Committed Forward Purchasers are obligated to purchase an aggregate of at least $250.0 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 per share, up to a maximum of $1.0 billion at a Final Exercise Price of $40.00 per share or greater.

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 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 disinterested independent directors, which approval we might not obtain.

Our Charter requires that our business combination be approved by a majority of our disinterested 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.

 

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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 will be acquiring shares of our company at the Final Exercise Price, rather than the price that would be result from an arm’s-length negotiation with a third party or would be reflected in the market if the SPARs were transferable at such time.

The Committed Forward Purchasers have committed to purchase no less than $250.0 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 per share, up to a maximum of $1.0 billion at a Final Exercise Price of $40.00 per share or greater. The Additional Forward Purchaser is entitled, but not obligated, to purchase that amount of the $3.5 billion Forward Purchase not allocated, in each case at the Final Exercise Price, to the Committed Forward Purchasers at the Final Exercise Price. The Public Shares purchased pursuant to the Forward Purchase Agreements 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 could be higher or lower than would be obtained in an arm’s length negotiation with an independent third party carried out at such time, or as would be implied by market prices if SPARs were transferable at such time. In such case, the Committed Forward 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 or the Additional Forward Purchaser. The foregoing factors 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.

 

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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 Purchasers. If our Board determines that our business combination requires additional capital, and the Additional Forward Purchaser (or Affiliate Transferees) does 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.

If the proceeds of the sale of the Sponsor Shares and the Sponsor Warrants 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 additional investments by 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 $25.4 million of proceeds from the sale of the Sponsor Shares and the Sponsor Warrants, after expenses related to our formation and the Distribution and the funding of at least $5,000,001 to be held in cash in the Segregated Account, will initially be available to us to fund our working capital requirements. We will hold these funds in cash pending use. Our Sponsor may purchase additional Sponsor 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 Warrants 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 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 invest funds in us in such circumstances.

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 that we abandon or are unable to consummate a business combination. For example, the funds held in the Custodial Account may be invested in U.S. Treasury obligations or certain money market funds, which could bear a negative interest rate or having a negative rate of return. 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 the abandonment of a business combination or the liquidation of our company, 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 Closing Period, which extension may result in us holding investor funds for as long 10 months.

 

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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 may 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, upon commercially reasonable terms or at all, 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 alleged or deemed to be an investment company under the Investment Company Act, we may be subject to litigation costs and/or 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.

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 not, and do not hold ourselves out as being engaged primarily, or propose to engage primarily, in the business of 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 otherwise buy securities with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or securities or to be a passive investor.

In the context of SPACs, private litigants have claimed that a SPAC’s customary investment of escrow account funds 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, constitutes engaging primarily in the business of investing in securities, and that accordingly SPACs that hold their escrow accounts in such securities (rather than cash) are subject to registration as an investment company under the Investment Company Act. As described elsewhere in this prospectus, we may elect to hold funds received in connection with the submission of Elections in cash or, at our election, in such U.S. Treasury obligations and/or money market funds, and we expect to make and announce the decision to hold the funds in cash, or such U.S. Treasury obligations or money market funds, in the Business Combination Registration Statement, based on market, legal and other factors at such time, including (i) the

 

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relative interest rates for cash accounts and such other instruments, (ii) then-existing market practice and legal and regulatory considerations with respect to custodial accounts for SPACs and other similar vehicles (including whether holding the funds in such U.S. Treasury obligations or money market funds would require us to register as an investment company under the Investment Company Act), (iii) the willingness of banks and other depositary institutions to hold large sums in cash in light of their regulatory and business requirements, and (iv) our assessment of the credit profile of any such bank or other depositary institution willing to hold a cash account. If we elect to hold funds received in connection with the submission of Elections in U.S. Treasury obligations and/or money market funds, rather than in cash, we will subject ourselves to the risk that we will face litigation or other challenges from the SEC and/or private litigants alleging that we are operating as an unregistered investment company or be required to register as an investment company. While we believe that receiving and holding funds in U.S. Treasury obligations and/or money market funds for a short period of time and only after a specific operating business has been identified and disclosed to investors is a significant differentiating factor of SPARC relative to typical SPACs, and that SPARC should be deemed to be engaged primarily in the business of pursuing and consummating a business combination with an identified operating business (and not engaging primarily in the business of investing, reinvesting or trading in securities within the meaning of the Investment Company Act), we are not aware of any court decisions espousing this view and the SEC and/or private litigants may take a different view.

We also believe that, even if we (i) elect to hold funds received in connection with the submission of Elections in such U.S. Treasury obligations and/or money market funds and (ii) are deemed as a result to be engaging primarily in the business of investing in securities, SPARC would likely qualify as a “transient investment company” under Rule 3a-2 under the Investment Company Act. The purpose of that rule is to provide temporary (one-year) relief from Investment Company Act registration for companies that could be deemed to be an investment company because of a temporary situation which (but for Rule 3a-2) would trigger Investment Company Act registration. Because under no circumstances will SPARC hold investor funds for longer than 10 months from the end of the Election Period, we believe SPARC would likely qualify as a transient investment company under Rule 3a-2. However, in the context of a novel vehicle such as SPARC, the SEC and/or private litigants may take a different view.

We do not believe that our anticipated principal activities will subject us to the registration requirements of the Investment Company Act. If we were alleged or deemed to be subject to such requirements, we will likely be subject to litigation and administrative costs, and compliance with the additional regulatory burdens of the Investment Company Act 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.

We may not be able to complete a business combination with a U.S. target company if such business combination is subject to U.S. foreign investment regulations and review by a U.S. government entity such as the Committee on Foreign Investment in the United States (CFIUS), or ultimately prohibited.

The Committee on Foreign Investment in the U.S. (“CFIUS”) is an interagency committee authorized to review certain transactions involving acquisitions and investments in the U.S. by foreign persons in order to determine the effect of such transactions on the national security of the U.S. CFIUS has jurisdiction to review transactions that could result in control of a U.S. business directly or indirectly by a foreign person, certain non-controlling investments that afford the foreign investor non-passive rights in a “TID U.S. business” (defined as a U.S. business that (1) produces, designs, tests, manufactures, fabricates, or develops one or more critical technologies; (2) owns or operates certain critical infrastructure; or (3) collects or maintains directly or indirectly sensitive personal data of U.S. citizens), and certain acquisitions, leases, and concessions involving real estate even with no underlying U.S. business. Certain categories of acquisitions of and investments in a U.S. business also may be subject to a mandatory notification requirement.

 

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Our Sponsor is wholly owned by the Pershing Square Funds, one of which owns an approximately 87% membership in our Sponsor and, as a Guernsey company, is a non-U.S. person. Accordingly, although our Sponsor is not controlled by a non-U.S. person (it is managed by PSCM and not by its members), our Sponsor does have substantial ties with a non-U.S. person. Although we intend to enter into a business combination in which our investors, both our Sponsor and its affiliates as well as our public investors, would own a minority of the post-combination company, we cannot guarantee that this will be the case. In addition, we cannot predict whether there will be significant ownership by non-U.S. persons among the exercising SPAR holders, among other factors that could affect the likelihood of a CFIUS or similar review.

If our business combination with a U.S. business is subject to CFIUS review, we may determine that we are required to make a mandatory filing or that we will submit a voluntary notice to CFIUS, or to proceed with the business combination without notifying CFIUS and risk CFIUS intervention, before or after Closing. CFIUS may decide to block or delay our business combination, impose conditions to mitigate national security concerns with respect to such business combination or order us to divest all or a portion of a U.S. business of the combined company without first obtaining CFIUS clearance. As a result, we may exclude companies in certain industries from consideration as potential business combination partners, and companies in those industries may not view us as an attractive business combination partner, reducing the pool of potential targets companies, and reducing the likelihood that we complete a business combination. We may be adversely affected in terms of competing with other blank check companies or investment partners that do not have similar foreign ownership issues.

Moreover, the process of government review, whether by the CFIUS or otherwise, could be lengthy, and we may have limited time to complete our business combination due to the terms of the Definitive Agreement, the 10-year term of our company, or the maximum period of 10 months that we may hold investor funds in the Custodial Account. If the review process extends beyond such timeframe or our business combination is ultimately prohibited by CFIUS or another U.S. government entity, we may determine to abandon the business combination and liquidate our company. In such circumstances, our SPARs will have expired worthless.

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. In recent years, changes in accounting interpretations for SPACs have resulted in financial restatements and delayed periodic filings, and have resulted in increased operating and compliance costs on an ongoing basis. As discussed above, the SEC has proposed rules that would set forth disclosure and other requirements with respect to SPACs, including rules that may affect the willingness of investment banks to participate in obtaining third-party financing, which may also apply to or affect the financing of SPARC. 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.

On or prior to the date on which the SPARs were first distributed, we entered into a Registration Rights Agreement with our Sponsor, the Forward Purchasers and our Advisors, 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

 

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Sponsor Shares, (ii) the Public Shares issuable upon exercise of the Sponsor Warrants, (iii) the Public Shares issuable upon exercise of the Advisor Warrants, (iv) the Public Shares issued pursuant to the Forward Purchase Agreements and (v) 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 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 Business Combination Registration Statement 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.

 

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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 authorizes the issuance of up to 3,000,000,000 shares of Common Stock, par value $0.0001 per share and 1,000,000 shares of preferred stock, par value $0.0001 per share. Following the Distribution, 2,999,577,467 authorized but unissued shares of Common Stock and 1,000,000 authorized but unissued shares of preferred stock will be available for issuance, reflecting the issuance of 422,533 shares of Common Stock 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 in the future without the approval of SPAR holders or any other parties to, among other things, increase the number of authorized shares.

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.

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.

 

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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.

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.

 

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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 date on which the SPARs are first being distributed, 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.

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.

 

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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 devote 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.

In addition, although we adopted a code of ethics on or prior to the date on which the SPARs were first distributed pursuant to which, among other things, our audit committee must approve any related-party transaction, this policy will not apply to the agreements and transactions with our Sponsor and its affiliates entered into prior to the date on which the SPARs were first distributed. As a result, the purchase of the Sponsor Shares, the Forward Purchase Agreements, the sale of the Sponsor Warrants and the issuance of the Advisor Warrants, are not and will not be subject to any audit committee review.

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.

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

 

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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 independent 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.

Our Sponsor Warrants and Advisor Warrants may create an incentive for our Sponsor and advisory board members to identify and advocate for a business combination that may not be in the best interests of SPAR warrant holders.

Our Charter provides that entering into our business combination requires the approval of a majority of our disinterested independent directors, each of whom is being compensated solely in cash for their board service and has not been issued Sponsor Warrants or Advisor Warrants. However, our Sponsor and advisory board may play a significant role in identifying potential business combination targets and negotiating the terms of any proposed potential business combination. Because our Sponsor and the members of our advisory board hold Sponsor Warrants and Advisor Warrants, respectively, they may have an incentive to identify and advocate for a business combination that may not be in the best interests of SPAR holders. In particular, even though the Sponsor Warrants and Advisor Warrants are not “in-the-money” until the share price of surviving entity of the business combination is at least 20% higher than the Final Exercise Price, the Sponsor Warrants and the Advisor Warrants have a term of 10 years from the consummation of the business combination, which could incent our Sponsor and advisory board members to identify and advocate for a business combination with a value at the time of the business combination below the Final Exercise Price, if such parties believed that over the 10 year term of the Sponsor Warrants and Advisor Warrants, a value in excess of the exercise price of the Sponsor Warrants and Advisor Warrants could be achieved.

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;

 

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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.

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 Business Combination Registration Statement 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.

 

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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.

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 Warrants, 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 a significant number of SPAR holders 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

 

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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.

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, 2023. 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

 

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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.

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 state securities laws and 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.

 

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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;

 

   

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.

 

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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 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 eligibility for quotation and 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 422,533 Sponsor Shares for an aggregate purchase price of $4,225,330 and purchased the Sponsor Warrants for an aggregate purchase price of $35,892,480. The funds we received from the sale of the Sponsor Shares and Sponsor Warrants, after taking into account costs of the Distribution, is set forth in the following table.

 

Gross proceeds

  

Gross proceeds from Sponsor Shares sold in private placements

   $ 4,225,330  

Gross proceeds from Sponsor Warrants sold in a private placement

     35,892,480  
  

 

 

 

Total gross proceeds

   $ 40,117,810  
  

 

 

 

Offering expenses(1)

  

SEC Expenses

     226,600  

Legal & Accounting Fees/Expenses

     6,500,000  

Auditor fees and expenses

     900,000  

Printing and engraving expenses

     600,000  

OTC quotation and filing fees

     225,500  

Miscellaneous

     1,300,000  
  

 

 

 

Total offering expenses

     9,752,100  
  

 

 

 

Proceeds after offering expenses

   $ 30,365,710  
  

 

 

 

Segregated Account

     5,001,000  
  

 

 

 

Proceeds after offering expenses and Segregated Account

   $ 25,364,710  
  

 

 

 

The following table shows the estimated use of the $25,364,710 in proceeds remaining after offering expenses and the funding of at least $5,000,001 to be held in cash in the Segregated Account that will be available for working capital until our business combination. We will hold these funds in cash pending use.

 

     Amount      %
of Total
 

Directors’ compensation

   $ 9,000,000        35.48

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

     5,000,000        19.71  

Legal and accounting fees related to regulatory reporting obligations

     3,000,000        11.83  

OTC continuing fees

     250,000        0.99  

Working capital to cover miscellaneous expenses (including franchise taxes)

     500,000        1.97  

Excess proceeds of Sponsor Shares and Sponsor Warrants

     7,614,710        30.02  
  

 

 

    

 

 

 

Total

   $ 25,364,710        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 Warrants 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 additional investments from our Sponsor, members of our Management Team or their affiliates, but such persons are not under any obligation to invest in us. Our Sponsor may, but is not obligated to, purchase additional Sponsor Shares to fund our ongoing operating expenses.

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 Shares (which is expected to consist solely of our Sponsor in its capacity as sole stockholder), 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.

 

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THE DISTRIBUTION

The following describes the Distribution of our SPARs and assumes, unless specifically provided otherwise, that you were an owner of PSTH Common Stock or distributable redeemable warrants on July 25, 2022, the last trading day of PSTH securities prior to PSTH’s liquidation.

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.

Our SPARs are generally not transferable when you receive them, and you will only be able to transfer or trade your SPARs during the SPAR Holder Election Period. Exercising or 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 66 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 you may choose to exercise your SPARs, we will file the Business Combination Registration Statement 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 or trade in SPARs.

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 two Public Shares following payment of the exercise price, which will be a minimum of $10.00 per share, which we refer to as the Minimum Exercise Price. The SPARs are being distributed at no cost, and SPAR holders will not contribute capital to our company until after we enter into a Definitive Agreement and provide holders with comprehensive disclosure regarding our proposed business combination, including the number of SPARs that we expect will have been distributed and are eligible for election as of the beginning of the SPAR Election Period, in an effective registration statement. SPAR holders will then have an opportunity to evaluate the proposed business combination and choose whether they wish to exercise their SPARs. Those wishing to exercise will submit an “Election” and the corresponding exercise payment and, upon consummation of our business combination, will be issued shares of the post-combination company, which we refer to as Public Shares.

An individual SPAR cannot be exercised in part. Accordingly, at the Minimum Exercise Price of $10.00 per share, a SPAR holder wishing to acquire Public Shares must make a total exercise payment of $20.00 per SPAR, and would receive two Public Shares per exercised SPAR in connection with the consummation of our business combination. Holders who wish to acquire fewer Public Shares than the amount underlying their SPARs may do so by not submitting an Election to exercise such SPARs and/or by selling some of their SPARs. 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. After such announcement, the Final Exercise Price will be reflected in the Business Combination Registration Statement, at which time the Final Exercise Price will be a fixed amount.

We are distributing up to 50,000,000 SPARs to the holders of the Class A common stock of PSTH and up to 11,111,111 SPARs to the holders of the distributable redeemable warrants of PSTH, based on ownership as of July 25, 2022, the final date on which PSTH securities traded prior to its liquidation. Accordingly, one SPAR is being

 

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distributed in respect of every four shares of PSTH Class A common stock outstanding, and one SPAR is distributed in respect of every two distributable redeemable warrants of PSTH. We are not issuing fractional SPARs, no cash is being paid in lieu thereof, and any fractional amount is being rounded down to the nearest whole number. Accordingly, former holders of the distributable redeemable warrants and Class A common stock of PSTH must have owned two distributable redeemable warrants or four shares of Class A common stock of PSTH, based on ownership as of July 25, 2022, to receive one SPAR.

We carried out the initial distribution as soon as practicable following the date on which the Registration Statement became effective on September 29, 2023. See Plan of Distribution.

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.

Quotation of SPARs

Our SPARs are generally not transferable when you receive them and will remain generally non-transferable until the SPAR Holder Election Period. In connection with the SPARs becoming transferable, we intend to have our SPARs quoted on the OTCQX marketplace of the OTC Markets Group, Inc. or other quotation service. This will require, among other things, that at least one market maker publishes quotations for SPARs, and that a Form 211 is submitted to, and approved by, FINRA. The quotation of SPARs on the OTCQX marketplace, as compared to being listed on a national securities exchange such as the NYSE or the Nasdaq, 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 (i.e., lack of stock exchange requirements mandating a board with a majority of independent directors, independent nomination, compensation and audit committees, and stockholder approval of certain actions), and the applicability of state securities laws that could result in restrictions on the sale of our SPARs. See Risk Factors, page 60. There is currently no public market for our SPARs, our common stock, or the Public Shares.

Notwithstanding the foregoing, SPARs may be transferred: (i) upon death by will or intestacy; (ii) by instrument to an inter vivos or testamentary trust in which the SPARs are to be passed to beneficiaries upon the death of the trustee; (iii) pursuant to a court order; or (iv) by operation of law, including a consolidation or merger, or in connection with the dissolution of any partnership, limited liability company, corporation or other entity.

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) all closing conditions that can be satisfied in advance of the Closing have been satisfied or waived, including regulatory approvals, which we refer to as the Disclosure Period Closing Conditions; and (iii) a Business Combination Registration Statement has been declared effective 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 former stockholders and warrant holders of PSTH, understand the investment strategy that we intend to execute; and (ii) reduce offering costs, including underwriting fees and discounts. In addition, by distributing the SPARs for no cost to the recipients, the recipients will 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 until we have identified, negotiated, and are prepared to consummate, a 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, such as underwriting fees and the IPO Warrants. This simplifies our capital structure and reduces frictional transaction costs. We believe the SPARC structure makes us a more attractive counterparty for potential business combination partners and increases the probability that we execute a transaction on terms that are attractive to our investors.

 

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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 will determine the Final Exercise Price at the time we enter into a Definitive Agreement based primarily on the amount of capital that will be required, inclusive of other potential financing sources, to consummate our business combination. We have established a Minimum Exercise Price of $10.00 per Public Share that is subject to increase. Our ability to set an exercise price without an upper limit could cause SPAR holders, depending on their resources, to be unable to exercise their SPARs, and thus be unable to participate in any future appreciation in the post-business-combination entity. See Risk Factors, page 60. Any increase above the Minimum Exercise Price will be reflected in the Business Combination Registration Statement, at which time the Final Exercise Price will be a fixed amount. At the Minimum Exercise Price, we will raise up to approximately $1.2 billion (up to approximately $1.5 billion with the Committed Forward Purchase), which we believe is an appropriate baseline amount for a business combination with the type of high-quality, large capitalization company we will seek to partner with. The ability to increase this exercise price will provide our company with the flexibility to pursue business combinations with a broader range of transaction sizes, and will provide public investors with a greater opportunity to participate in our business combination if we seek additional capital (rather than, as is the case with SPACs, raising additional capital through a PIPE or other private financing).

In connection with entering into the Definitive Agreement for our business combination, the Board will take into account factors including, but not limited to, the size and structure of the transaction, the Forward Purchase commitment, the number of shares that the Additional Forward Purchaser has agreed to purchase, and conditions in equity and debt markets. Based on this assessment, the Board 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 the 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 from the exercise of SPARs. We expect that our SPARs will be quoted on the OTCQX, which carries certain risks, and we cannot guarantee that an active trading market will develop in our SPARs. You should not assume or expect that, during the SPAR Holder Election Period, our SPARs will trade at a positive value (if at all). You should not assume or expect that, after the business combination, our Public Shares will trade at or above the exercise price of your SPARs. 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 and the Forward Purchase Agreements?

At the Minimum Exercise Price, the Final Exercise Proceeds from the exercise of all SPARs will be approximately $1.2 billion (assuming all SPARs are issued). In connection with 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. No minimum amount of SPARs are required to be exercised and there can be no guarantee that any SPARs will be exercised.

Pursuant to the Forward Purchase Agreements, we will sell up to $3.5 billion of Public Shares at the Final Exercise Price, a portion of which is committed, and a portion of which is optional. The Pershing Square Funds have committed to purchase $250.0 million of Public Shares if the Final Exercise Price is $10.00 per Public Share, and a proportionately greater amount at higher exercise prices, up to a maximum of $1.0 billion at a Final Exercise Price of $40.00 per share or greater. The Additional Forward Purchaser will have the right, but not the obligation, to purchase (the “Additional Forward Purchase”), at the Final Exercise Price, the remainder of the $3,500,000,000 of

 

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Forward Purchase Shares that is not allocated to the Committed Forward Purchase (such amount, the “Aggregate Additional Forward Purchase Amount”). The Additional Forward Purchaser may exercise the Additional Forward Purchase, at its election, in one or two tranches (each, the “First Tranche Additional Forward Purchase” and the “Second Tranche Additional Forward Purchase”, respectively), each of which would be effectuated, at the Final Exercise Price, at the time of the consummation of our business combination; provided that in no event will the number of Public Shares purchased pursuant to the First Tranche Additional Forward Purchase and the Second Tranche Additional Forward Purchase collectively exceed the quotient obtained by dividing (i) the Aggregate Additional Forward Purchase Amount by (ii) the Final Exercise Price (the “Maximum Additional Forward Purchase”). The Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the First Tranche Additional Forward Purchase, in an amount up to the Maximum Additional Forward Purchase, by written notice to us no later than five (5) business days prior to the execution of the Definitive Agreement. In the event that (i) the First Tranche Additional Forward Purchase is less than the Maximum Additional Forward Purchase and (ii) all SPARs issued and outstanding immediately prior to the commencement of the SPAR Holder Election Period are not elected to be exercised as of the end of the SPAR Holder Election Period, then the Company shall promptly notify the Additional Forward Purchaser of the number of such issued and outstanding SPARs that were not elected to be exercised (the “Unexercised SPARs”) and the Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the Second Tranche Additional Forward Purchase no later than five (5) business days after such notice, in an amount up to the aggregate number of Public Shares, at the Final Exercise Price, equal to the product of (i) two (2) and (ii) the number of Unexercised SPARs.

 

            Equity Capital Available for Business
Combination
 

Final Exercise Price

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

$10.00

   $ 1.2 B      $ 1.5 B      $ 4.7 B  

$15.00

   $ 1.8 B      $ 2.2 B      $ 5.3 B  

$20.00

   $ 2.4 B      $ 2.9 B      $ 5.9 B  

$25.00

   $ 3.1 B      $ 3.7 B      $ 6.6 B  

$50.00

   $ 6.1 B      $ 7.1 B      $ 9.6 B  

$75.00

   $ 9.2 B      $ 10.2 B      $ 12.7 B  

The Company reserves the right to obtain additional debt and equity financing in connection with the consummation of its business combination, including without limitation selling additional Public Shares to third parties or related parties (including the Additional Forward Purchaser), provided sales of Public Shares will be made at the Final Exercise Price and the terms of any such additional financing will be disclosed in the Business Combination Registration Statement in accordance with applicable law.

Have any parties committed to exercise their SPARs?

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

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 choose to sell some or all of your SPARs if you do not wish to exercise them. However, each individual SPAR must be exercised in full, for two shares, and cannot be exercised in part. If you choose to sell some or all of your SPARs, there is no guarantee you will be able to do so at a favorable price, or at all. Upon the Closing, Unelected SPARs will not be exercised and will expire worthless.

 

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

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

In addition, we will not be permitted to hold funds in the Custodial Account for longer than 10 months. Accordingly, from the first date on which we may receive investor funds (the start of the SPAR Holder Election Period), we will have 10 months to complete our business combination. If we fail to do so by the Closing Deadline, we will promptly return all proceeds held in the Custodial Account (with interest, if any) and liquidate our company, and the SPARs will expire worthless.

When will I receive information regarding the business combination?

Promptly following our entry into a Definitive Agreement, we will issue a press release and publicly file a Current Report on Form 8-K, which will include a summary of the Definitive Agreement and, as exhibits, the complete text of the Definitive Agreement and other material agreements entered into in connection therewith. As promptly as practicable, we will prepare the Business Combination Registration Statement, which will include information regarding the proposed business combination, including disclosure of payments, incentives and benefits that may be received by, and any conflicts of interest involving, our Sponsor and its affiliates. The Business Combination Registration Statement will take the form of a post-effective amendment to this Registration Statement, or that of 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”). Depending on the structure of our business combination, the Business Combination Registration Statement may be filed by us or another party to the business combination.

The Business Combination Registration Statement will be filed with the SEC and will be publicly available on the SEC’s website. We will likely amend the Business Combination Registration Statement in response to review and comment by the SEC, and for other reasons. Promptly following the satisfaction of the Disclosure Period Closing Conditions and the Business Combination Registration Statement becoming effective, we will mail or otherwise make available 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 (i) we have entered into a Definitive Agreement, (ii) all of the Disclosure Period Closing Conditions have been satisfied or waived and (iii) the Business Combination Registration Statement has been declared effective. The SPAR Holder Election Period will begin promptly after the distribution of the effective Business Combination Registration Statement. At such time, you will be able to submit a notice of your offer to acquire Public Shares by exercising your SPARs, or an “Election.” The actual exercise of your SPARs will occur at a later date, as described immediately below.

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

An Election is a notice that SPAR holders must provide 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, and must submit the applicable exercise payment, which will be held in escrow in the Custodial Account. An Election is an irrevocable offer (subject to certain limited exceptions) to have your exercise payment released to our company and to have your SPARs exercised in order to acquire Public Shares. Our decision to proceed with the business combination constitutes an acceptance of an electing SPAR

 

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holder’s irrevocable offer to acquire Public Shares through the exercise of their SPARs. A decision to abandon the business combination constitutes a rejection of the offer.

Exercise payments will be held in the Custodial Account and will not be released to us other than in connection with the Closing.

Following the SPAR Holder Election Period, the Closing Period begins. During the Closing Period, we will assess whether the Final Closing Conditions (including whether we have adequate capital to consummate the business combination) have been satisfied or are capable of being satisfied at Closing, and if so, we will promptly thereafter (within two business days) carry out the Closing. At this time, exercise payments will be released to us from the Custodial Account, Elected SPARs will be exercised, Public Shares of the post-combination company will be issued to you, and Unelected SPARs will expire worthless.

What happens if the business combination is abandoned?

Following our entry into the Definitive Agreement, it is possible that we decide not to pursue, or become unable to proceed with the business combination. This may occur for a variety of reasons including, but not limited to, an inability to obtain regulatory approvals or a material adverse change to the condition of our business combination partner. Generally, the parties’ obligations under the Definitive Agreement will determine the circumstances in which they are able to abandon a proposed business combination.

If the business combination is abandoned, we will make prompt public disclosure of this fact. If the business combination is abandoned prior to the start of the Election Period, we will seek a new business combination, and upon entering into a new Definitive Agreement, the Election and payment procedures described herein will apply in the same manner.

If we have received Elections, the offer constituted by the submission of an Election will be rejected, and all Elections will be disregarded. Any funds held in the Custodial Account will be promptly returned to electing SPAR holders, with interest (if any), all SPARs will expire, and we will liquidate our company.

Similarly, if the business combination is abandoned during a Closing Period Extension, we will promptly return all funds held in the Custodial Account to electing SPAR holders, with interest (if any), all SPARs will expire, and we will liquidate our company. A Closing Period Extension will happen only under limited circumstances, including circumstances in which (i) our business combination partner has breached its obligations under the Definitive Agreement in a manner that frustrates the consummation of the business combination or (ii) we have been enjoined by a governmental authority from consummating the transaction in a manner that we are permitted to appeal under applicable law. In such event, our Board will determine, in its sole discretion, whether to further pursue the business combination, in which case we will have until the date that is 10 months after the start of the SPAR Holder Election Period to consummate the transaction.

What rights do I have if the Charter, SPAR Rights 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 Rights Agreement, that, in the reasonable, good-faith judgment of our independent directors, would have a materially adverse impact on SPAR holders. We refer to such amendments as Materially Adverse Amendments. Although we do not expect to amend these documents once the SPAR Holder Election Period has begun, and the Definitive Agreement will likely restrict our ability to amend the Charter or SPAR Rights Agreement, we cannot guarantee that no Materially Adverse Amendments will be made or proposed. In addition, our Charter provides that amendments to the Definitive Agreement entered into during the Closing Period in order to permit us to raise additional funds to satisfy financing or other closing conditions set forth in the Definitive Agreement will not be deemed to be a Materially Adverse Amendment so long as (i) the additional funds are raised by selling additional Public Shares to third parties (or to the Additional Forward

 

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Purchaser or other of our affiliates) in private placements at the Final Exercise Price and (ii) the number of such Public Shares sold, together with the Public Shares issued in respect of Elected SPARs, does not exceed the total number of Public Shares that would have been issued had all SPARs been elected to be exercised.

During the SPAR Holder Election Period and the Closing Period, in the event of a Materially Adverse Amendment we will (i) file a post-effective amendment to the Business Combination Registration Statement to disclose the Materially Adverse Amendment in accordance with applicable securities law, (ii) cause all previous Elections of SPARs to be revoked, (iii) return all funds from the Custodial Account that were tendered at the Final Exercise Price in connection with such Elections and (iv) hold or re-open the SPAR Holder Election Period for an additional 20 business days, during which additional 20 business days we anticipate the SPARs will trade on the OTCQX marketplace of the OTC Markets Group or other quotation service. In such event, the 10 month Closing Deadline would continue to be calculated from the first day of the initial SPAR Holder Election Period (and not, for the avoidance of doubt, from the first day of the post-Materially Adverse Amendment additional 20 business day SPAR Holder Election Period).

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

Rights of SPAR Holders in Connection with Materially Adverse Amendments to:

 

    

Charter

  

Other

Agreements

  

Definitive

Agreement

  

SPAR Rights

Agreement

Search Period

   None   

None

  

N/A

  

Approval Right

Disclosure Period

   None   

None

  

None

  

Approval Right

SPAR Holder Election Period

   Revocation   

Revocation

  

Revocation

  

Approval Right

Revocation

Closing Period

   Revocation   

Revocation

  

Revocation

  

Approval Right Revocation

Amendments to Charter or Definitive Agreement. In the Search Period or Disclosure Period, SPAR holders will have no right to vote on or approve any amendments to the Charter or the Definitive Agreement (or any other agreement to which we are a party), as SPAR holders will not be stockholders prior to the consummation of our business combination. If, during the SPAR Holder Election Period or the Closing Period, we make a Materially Adverse Amendment, we will cause all previous Elections of SPARs to be revoked, return all funds from the Custodial Account that were tendered at the Final Exercise Price in connection with such Elections and hold or re-open the SPAR Holder Election Period for an additional 20 business days. Our Charter provides that amendments to the Definitive Agreement entered into during the Closing Period in order to permit us to raise additional funds to satisfy financing or other closing conditions set forth in the Definitive Agreement will not be deemed to be a Materially Adverse Amendment so long as (i) the additional funds are raised by selling additional Public Shares to third parties (or to the Additional Forward Purchaser or other of our affiliates) in private placements at the Final Exercise Price and (ii) the number of such Public Shares sold, together with the Public Shares issued in respect of Elected SPARs, does not exceed the total number of Public Shares that would have been issued had all SPARs been elected to be exercised.

Amendments to SPAR Rights Agreement. The SPARs are being issued subject to a SPAR rights agreement, which we refer to as the SPAR Rights Agreement. If a Materially Adverse Amendment to the SPAR Rights 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. If such amendment is proposed during the SPAR Holder Election Period or the Closing Period, 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

 

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amendment or to abstain. In connection with the foregoing, we will revoke all Elections previously made, return all funds tendered, and hold the SPAR Holder Election Period open for an additional 20 business days.

During the Closing Period, Materially Adverse Amendments to the Charter, other agreement, Definitive Agreement, and SPAR Rights Agreement would likely only arise in, and only be possible in, the limited circumstances in which we extend the Closing Period. For example, if our business combination partner breaches its obligations to consummate the transaction, we expect that we would extend the Closing Period and 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 would reach a negotiated settlement in which the Definitive Agreement is amended. If any Materially Adverse Amendments are made during the Closing Period, we will revoke all Elections previously made, return all funds tendered, and reinstitute an additional SPAR Holder Election Period for an additional 20 business days.

Our Board is entitled, in its sole discretion (including in connection with any revocation period), to determine to extend or postpone the SPAR Holder Election Period, subject to the Closing Deadline requirement that investor funds cannot be held in the Custodial Account beyond the date that is 10 months from the start of the SPAR Holder Election Period. You should be aware that you will not have revocation rights in connection with amendments to any agreements or documents, and that once you have submitted an Election, or once all remaining Unelected SPARs become generally non-transferable on the second trading day prior to the end of the SPAR Holder Election Period, you will not be able to sell your SPARs. Revocation will only occur in the circumstances described herein with respect to Materially Adverse Amendments to the Charter, Definitive Agreement or SPAR Rights Agreement.

May I transfer my SPARs?

You are entitled to transfer or assign your SPARs only during the SPAR Holder Election Period, 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). Prior to this time, the SPARs are generally not transferable.

During the SPAR Holder Election Period, SPARs will be transferable until the earlier of (i) the submission of an Election (that is, an election to have such SPAR(s) exercised upon the consummation of the Business Combination) or (ii) for the remaining Unelected SPARs, the date that is two trading days prior to the end of the SPAR Holder Election Period. The submission of an Election will require a SPAR holder to tender its SPAR(s) to the SPAR Rights Agent (or, in the case of SPARs held beneficially through a bank, broker or other intermediary (“brokers”), will require the beneficial SPAR holder to instruct its broker to tender its SPAR(s) via a DTC platform for the submission of Elections of SPARs), together with the Final Exercise Price therefor. The submission of an Election is irrevocable and tendered SPAR(s) will be held, pending the closing of the Business Combination, by the SPAR Rights Agent or DTC, as the case may be, pending closing of the Business Combination, and accordingly will not be available to be traded after an Election is submitted. Assuming Closing occurs, at Closing Elected SPARs will be exercised and Unelected SPARs will expire worthless. In connection with the SPARs becoming transferable during the SPAR Holder Election Period, we intend to have our SPARs quoted on the OTCQX marketplace of the OTC Markets Group or other quotation service. The quotation of SPARs on the OTCQX marketplace, rather than trading on a national securities exchange such as the NYSE or Nasdaq, may adversely impact your ability to sell your SPARs. See Quotation of SPARs above, and Risk Factors, page 60, for additional information.

Notwithstanding the foregoing, SPARs may be transferred: (i) upon death by will or intestacy; (ii) by instrument to an inter vivos or testamentary trust in which the SPARs are to be passed to beneficiaries upon the death of the trustee; (iii) pursuant to a court order; or (iv) by operation of law, including a consolidation or merger, or in connection with the dissolution of any partnership, limited liability company, corporation or other entity.

 

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Why are the SPARs Non-Transferable Before the SPAR Holder Election Period?

We believe that the price discovery function of the market is most valuable to SPAR holders during the SPAR Holder Election Period. In addition, our ability to successfully raise funds during the SPAR Holder Election Period requires that our SPARs be held by those willing and able to pay the exercise price.

We expect that our SPARs will be quoted on the OTCQX pursuant to an exemption from certain securities law requirements applicable to broker-dealers and quotation systems. If this exemption was not available, it is possible that broker-dealers and quotation systems would be unwilling or unable to quote our SPARs. The exemption is available to blank check companies such as ours for a period of 18 months following their initial quotation. By prohibiting transfers prior to the SPAR Holder Election Period, we can ensure that our SPARs will be eligible for quotation under this exemption during the time in which transferability is most important.

We have considered the downsides to this approach, including the inconvenience to SPAR holders of having a non-transferable and difficult-to-value security for a potentially significant period of time, and the inability of those other than the initial recipients to obtain SPARs before a business combination has been announced, when the price of doing so might potentially be lower. However, we also note that, prior to announcing a business combination, the market price of our SPARs would likely reflect expectations about our ability to consummate a transaction and market conditions more generally. Compared to the valuation of a specific transaction, these factors are inherently more speculative. Prices would also be more susceptible to rumors or inaccurate information about potential transactions, and trading in SPARs could present greater risks to market participants.

Notwithstanding the foregoing, SPARs may be transferred: (i) upon death by will or intestacy; (ii) by instrument to an inter vivos or testamentary trust in which the SPARs are to be passed to beneficiaries upon the death of the trustee; (iii) pursuant to a court order; or (iv) by operation of law, including a consolidation or merger, or in connection with the dissolution of any partnership, limited liability company, corporation or other entity.

How will state securities laws affect SPAR holders?

Because our SPARs will not be listed on a national securities exchange such as the NYSE or Nasdaq, they will not be “covered securities,” and accordingly, we will be subject to the securities regulations of each state (also known as “Blue Sky” laws), and must register our securities in every state and, in some states, any distribution of our securities. Most states require submission of a Form U-1, or a similar standard form, and many states provide an exemption from registration for securities that are quoted on the OTCQX. Certain states may have more burdensome registration requirements, such as a requirement that registrations be renewed on a periodic basis, or subjecting an offering to a “merit review” in which a state regulator will assess the offering according to the terms of the North American Securities Administrators Association’s guidelines.

We will use commercially reasonable efforts to register our securities in every state, and have included a requirement that we do so in the SPAR Rights Agreement. In connection with the distribution, we have registered our securities and the distribution in every state where registration is required. For more detailed information on how you may be impacted by the applicability of state securities laws, see Risk Factors, page 60.

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 factors including the funds available to consummate our business combination after taking into account the extent to which holders have elected to exercise their SPARs, the Forward Purchase, and any other financing. During the Closing 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, it is possible that we will not be able to proceed with the transaction.

 

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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, during the period in which our SPARs are transferable, 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 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 during the period in which they are transferable.

Will I be able to revoke my Election?

No. We will be required to revoke all Elections only in limited circumstances. Once an Election has been submitted holders will not be able to revoke their Elections and have their exercise payments returned to them. Revocation will only occur in the circumstances described above with respect to Materially Adverse Amendments to the Charter, Definitive Agreement or SPAR Rights Agreement. 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 approximately 10 business days after 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.

Are the company’s officers and directors participating in the distribution?

To our knowledge, none of our officers or directors, other than Michael Gonnella, were holders of PSTH Class A common stock or distributable redeemable warrants as of July 25, 2022, and therefore our officers and directors, other than those previously mentioned, are not receiving any SPARs in the distribution.

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 during the SPAR Holder Election Period 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.

 

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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, once transferable, our SPARs will trade at a positive value. In connection with the SPARs becoming transferable during the SPAR Holder Election Period, we intend to have our SPARs quoted on the OTCQX marketplace of the OTC Markets Group or other quotation service. The quotation of SPARs on the OTCQX marketplace, as compared to being listed on a national securities exchange such as the NYSE or Nasdaq, may adversely impact your ability to sell your SPARs. See Quotation of SPARs above, and Risk Factors, page 60, for additional information. Trading in, and the exercise of, your SPARs involves significant risks. Electing to exercise your SPARs is a commitment to purchase 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 Business Combination Registration Statement prior the date on which Elections may be submitted.

Will I receive interest on any funds I deposit upon submitting an Election?

The funds received in connection with the submission of Elections will be held in a Custodial Account and will be held in cash or, at our election, 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 the Investment Company Act of 1940, as amended (the “Investment Company Act”). We expect to make and announce the decision to hold the funds in cash, or such U.S. Treasury obligations or money market funds, in the Business Combination Registration Statement, based on market, legal and other factors at such time, including (i) the relative interest rates for cash accounts and such other instruments, (ii) then-existing market practice and legal and regulatory considerations with respect to custodial accounts for SPACs and other similar vehicles (including whether holding the funds in such U.S. Treasury obligations or money market funds would require us to register as an investment company under the Investment Company Act), (iii) the willingness of banks and other depositary institutions to hold large sums in cash in light of their regulatory and business requirements, and (iv) our assessment of the credit profile of any such bank or other depositary institution willing to hold a cash account. However, you will only receive the interest earned on these funds in the event that funds are returned to you in connection with a postponement of the SPAR Holder Election Period or us abandoning or failing to consummate our business combination. Absent an extension of the Closing Period, your funds will likely be held in the Custodial Account for no longer than 30 business days, and any interest earned, if any, is likely to be minimal. In no event will funds be held longer than 10 months. If the funds held in the Custodial Account are returned to electing SPAR holders, they 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 (if any). If we consummate our business combination, any interest earned will be released to us for use in the business combination and the operation of the post-combination company.

Although we reserve the right to invest funds received in connection with the submission of Elections other than in cash as described above, we are not, we do not hold ourselves out as, and we do not propose to be engaged primarily in the business of investing, reinvesting, or trading in securities. We are, we hold ourselves out as, and we propose to be engaged primarily in the business of pursuing and consummating a business combination with an operating business. To the extent that you submit your SPARs for Election, you should do so only because you wish to invest in the operating business described in the Business Combination Registration Statement and not because we may choose to invest funds received in the U.S. Treasury obligations and/or money market funds described above.

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

 

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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, if any, 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, if any, 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 Election 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 (212) 813-3700.

 

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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 Advisor Warrants.

The dilution to our public stockholders as a result of our Sponsor Warrants and Advisor Warrants will depend on the fair market value of shares of the post-combination company (and will not be dilutive until the value of such shares exceeds 120% of the Final Exercise Price), and the total amount of dilution will not exceed 5.104%. See Proposed Business—Effect of Sponsor Warrants and Advisor Warrants on Ownership.

 

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CAPITALIZATION

The following table sets forth our capitalization at June 30, 2023, and as adjusted to the reflect (i) the fair value of the Sponsor Warrants at issuance (recorded as a liability pursuant to ASC 480 – Distinguishing liabilities from equity, and ASC 815-40 – Contracts in an entity’s own equity) and (ii) the application of the estimated net proceeds derived from the sale of the Sponsor Shares. At this time, the Company cannot reasonably estimate the number of SPARs that will be exercised, or the amount of additional Sponsor Shares and Additional Forward Purchase Shares that will be purchased, if any, and there is no guarantee that the Committed Forward Purchase will be consummated. Accordingly, the following table assumes that no additional Sponsor Shares or Additional Forward Purchase Shares are purchased, no SPARs are exercised and that the Committed Forward Purchase is not consummated.

 

     June 30, 2023  
     Actual     As Adjusted(1)(2)
(No SPARs Exercised  and
No Forward Purchase)
 

Sponsor Warrants liability

   $ —      $ 35,892,480  

Actual: Common Stock, $0.0001 par value;
500,000 shares authorized; 422,533 shares issued. As Adjusted: Common Stock, $0.0001 par value; 3,000,000,000 shares authorized; 422,533 shares issued

   $ 42     $ 42  

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

   $ —      $ —   

Additional paid-in capital

   $ 4,225,288     $  4,225,288  

Accumulated deficit

   $ (8,533,963   $ (8,533,963
  

 

 

   

 

 

 

Total shareholders’ equity (deficit)

   $ (4,308,633   $ (4,308,633
  

 

 

   

 

 

 

Total capitalization

   $ (4,308,633   $ 31,583,847  
  

 

 

   

 

 

 

 

(1)

On November 19, 2021, we amended our Charter to increase the number of authorized shares of Common Stock to 50,000. On November 10, our Sponsor purchased 1,000 Sponsor Shares; on November 22, 2021, our Sponsor purchased 22,660 Sponsor Shares; and on February 22, 2022, our Sponsor purchased 4,383 Sponsor Shares, in each case at a purchase price of $10.00 per share. On May 25, 2022, we amended our charter to increase the number of authorized shares of Common Stock to 500,000. On May 26, 2022, our Sponsor purchased 169,145 Sponsor Shares; on September 26, 2022, our Sponsor purchased 81,729 Sponsor Shares; on December 23, 2022, our Sponsor purchased 121,048 Sponsor Shares and on April 18, 2023, our Sponsor purchased 22,568 Sponsor Shares, in each case at a purchase price of $10.00 per share.

(2)

Includes 422,533 Sponsor Shares issued and outstanding as of the date of this prospectus. 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. Does not include (1) 122,222,222 Public Shares issuable upon the exercise of all SPARs or (2) 25,000,000 Committed Forward Purchase Shares.

 

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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 Warrants, 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 June 30, 2023, December 31, 2022 and December 31, 2021, we had accrued expenses related to operations of $4,318,324, $734,503 and $1,760,683, respectively. 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 date on which the SPARs are first being distributed, 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 date on which the SPARs are first being distributed, 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 current liquidity needs have been satisfied by the purchase of $4,225,330 of Sponsor Shares and the purchase of $35,892,480 Sponsor Warrants by the Sponsor. Including the $35.9 million of Sponsor Warrants that our Sponsor purchased, and after deducting initial expenses of approximately $9.7 million and the funding of approximately $5.0 million in the Segregated Account, there will be approximately $25.4 million available to us to fund our working capital expenses. We will hold these funds in cash pending use.

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 may, but is not obligated to, purchase additional Sponsor Shares.

We expect our primary liquidity requirements during that period to include approximately $9.0 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; $3.0 million for legal and accounting fees related to regulatory reporting requirements; $250,000 for OTC continued quotation fees; and approximately $500,000 for working capital that will be used for miscellaneous expenses and reserves (including franchise taxes).

 

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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. 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, 2023. 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;

 

   

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;

 

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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 funds received in connection with the submission of Elections will be held in a Custodial Account until the consummation of our business combination, or will be returned to electing SPAR holders in connection with certain events. The funds that are held in the Custodial Account will be held in cash or, at our election, will 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.

Although we reserve the right to invest funds received in connection with the submission of Elections other than in cash as described above, we are not, we do not hold ourselves out as, and we do not propose to be engaged primarily in the business of investing, reinvesting, or trading in securities. We are, we hold ourselves out as, and we propose to be engaged primarily in the business of pursuing and consummating a business combination with an operating business. To the extent that you submit your SPARs for Election, you should do so only because you wish to invest in the operating business described in the Business Combination Registration Statement and not because we may choose to invest funds received in the U.S. Treasury obligations and/or money market funds described above.

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. On February 22, 2022, our Sponsor purchased 4,383 Sponsor Shares at an aggregate price of $43,830 in a private placement. On May 26, 2022, our Sponsor purchased 169,145 Sponsor Shares at an aggregate price of $1,691,450 in a private placement. On September 26, 2022, our Sponsor purchased 81,729 Sponsor Shares at an aggregate price of $817,290 in a private placement. On December 23, 2022, our Sponsor purchased 121,048 Sponsor Shares at an aggregate price of $1,210,480 in a private placement. On April 18, 2023, our Sponsor purchased 22,568 Sponsor Shares at an aggregate price of $225,680 in a private placement. The Sponsor Shares are subject to certain transfer restrictions prior to our business combination and will have certain registration rights.

On July 28, 2023, the Sponsor purchased Sponsor Warrants for an aggregate purchase price of $35,892,480. The transaction price of the Sponsor Warrants was determined by the Company, in consultation with a third-

 

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party, nationally recognized valuation firm, based on its fair value as of the previous month-end. Prior to the date on which the SPARs were first distributed, we issued the Advisor Warrants for no cost to our Advisors. Prior to the initial purchase of Sponsor Shares, we had no tangible or intangible assets.

Once appointed, 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 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.

Our Sponsor may, but is not obligated to, purchase additional Sponsor Shares to fund our ongoing working capital needs.

Prior to the date on which the SPARs were first distributed, we entered into the Forward Purchase Agreements 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 $250.0 million of Forward Purchase Shares if the Final Exercise Price is $10.00 per share, and a proportionately greater amount up to $1.0 billion at a Final Exercise Price of $40.00 per share or greater. The Additional Forward Purchaser will have the right, but not the obligation, to purchase (the “Additional Forward Purchase”), at the Final Exercise Price, the remainder of the $3,500,000,000 of Forward Purchase Shares that is not allocated to the Committed Forward Purchase (such amount, the “Aggregate Additional Forward Purchase Amount”). The Additional Forward Purchaser may exercise the Additional Forward Purchase, at its election, in one or two tranches (each, the “First Tranche Additional Forward Purchase” and the “Second Tranche Additional Forward Purchase”, respectively), each of which would be effectuated, at the Final Exercise Price, at the time of the consummation of our business combination; provided that in no event will the number of Public Shares purchased pursuant to the First Tranche Additional Forward Purchase and the Second Tranche Additional Forward Purchase collectively exceed the quotient obtained by dividing (i) the Aggregate Additional Forward Purchase Amount by (ii) the Final Exercise Price (the “Maximum Additional Forward Purchase”). The Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the First Tranche Additional Forward Purchase, in an amount up to the Maximum Additional Forward Purchase, by written notice to us no later than five (5) business days prior to the execution of the Definitive Agreement. In the event that (i) the First Tranche Additional Forward Purchase is less than the Maximum Additional Forward Purchase and (ii) all SPARs issued and outstanding immediately prior to the commencement of the SPAR Holder Election Period are not elected to be exercised as of the end of the SPAR Holder Election Period, then the Company shall promptly notify the Additional Forward Purchaser of the number of such issued and outstanding SPARs that were not elected to be exercised (the “Unexercised SPARs”) and the Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the Second Tranche Additional Forward Purchase no later than five (5) business days after such notice, in an amount up to the aggregate number of Public Shares, at the Final Exercise Price, equal to the product of (i) two (2) and (ii) the number of Unexercised SPARs. The Committed 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 Agreements 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.

The Company reserves the right to obtain additional debt and equity financing in connection with the consummation of its business combination, including without limitation selling additional Public Shares to third parties or related parties (including the Additional Forward Purchaser), provided sales of Public Shares will be

 

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made at the Final Exercise Price and the terms of any such additional financing will be disclosed in the Business Combination Registration Statement in accordance with applicable law.

In the event that we increase the exercise price of our SPARs above the Minimum Exercise Price, we will effect a reverse stock 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.

On July 28, 2023, we sold warrants to our Sponsor (the “Sponsor Warrants”) for an aggregate purchase price of $35,892,480. The transaction price of the Sponsor Warrants was determined by the Company, in consultation with a third-party, nationally recognized valuation firm, based on its fair value as of the previous month-end. The valuation firm reviewed and discussed with us our methodology, procedures and assumptions for valuing the Sponsor Warrants. The value of the Sponsor Warrants was determined using the Black-Scholes option pricing model, subject to additional valuation adjustments reflecting certain volatility assumptions, the risk of a transaction not being consummated and other factors as described in “Description of Securities—Valuation of Sponsor Warrants.” Taking into account such consultation, we concluded that our methodology, procedures and assumptions are reasonable.

The Sponsor Warrants are exercisable, in the aggregate, for up to 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 (including without limitation Public Shares issued upon exercise of the SPARs, Public Shares issued pursuant to the Forward Purchase Agreements, Public Shares issued to the target business or its shareholders and Public Shares issuable upon the exercise of Sponsor Warrants or the conversion or exercise of then-outstanding securities of the surviving corporation, whether or not convertible or exercisable at such time). We refer to the number of Public Shares into which the Sponsor Warrants are exercisable as the “Reference Shares.” The actual percentage of the Public Shares on a fully diluted basis into which the Sponsor Warrants are exercisable will depend on the amount of funds raised by the exercise of SPARs at the closing of the business combination and the amount of the Additional Forward Purchase, if any, made by the Additional Forward Purchaser, and will be calculated by multiplying 4.95% by a fraction (the “Proration Fraction”), (i) the numerator of which is the sum of (A) the amount of funds raised by the exercise of SPARs at the closing of the business combination and (B) the amount of the Additional Forward Purchase, if any, funded by the Additional Forward Purchaser at the closing of the business combination (including, for the avoidance of doubt, pursuant to the Second Tranche Additional Forward Purchase) and (ii) the denominator of which is the amount of funds that would have been raised at the Final Exercise Price if all SPARs issued and outstanding immediately prior to the start of the SPAR Holder Election Period had been exercised at the closing of the business combination, excluding for the avoidance of doubt the amount of the Additional Forward Purchase (i.e., at the Minimum Exercise Price, and assuming all 61,111,111 SPARs are issued and outstanding immediately prior to the start of the SPAR Holder Election Period, the denominator will be $1,222,222,220). Because the Additional Forward Purchaser may exercise the Second Tranche Additional Forward Purchase at its election after the SPAR Holder Election Period as described above, the Additional Forward Purchaser (which, like our sponsor, is an affiliate of PSCM) has the ability to prevent the Proration Fraction being reduced to less than 1.0. In no event, however, will the Proration Fraction exceed 1.0; accordingly, under no circumstance will the Sponsor Warrants be exercisable, in the aggregate, for in excess of 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 “Proration”).

The Sponsor Warrants are exercisable at any time after the three-year anniversary, and on or prior to the 10-year anniversary, of the business combination and 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 SPAR holders purchase their Public Shares. If the Final Exercise Price is $10.00 per share, 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 the number of Reference Shares, multiplied by (x) the “fair market value” of a Public Share in excess of the Reference Price, divided by (y) 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.

 

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The Sponsor Warrants and 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 (except to certain permitted transferees and as described under the section of this prospectus entitled “Principal Stockholders—Restrictions on Transfers of Sponsor Warrants”) and are subject to certain adjustments and registration rights as described herein. 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 date on which the SPARs were first distributed, we issued the Advisor Warrants for no cost to our advisory board members. The Advisor Warrants are identical to the Sponsor Warrants (including with respect to the Proration), except that the Advisor Warrants (i) are exercisable, in the aggregate, for up to approximately 0.154% of the Public Shares that are outstanding as of the time immediately following the consummation of our business combination, on a fully diluted basis and (ii) expressly provide that if the percentage of Public Shares into which the Sponsor Warrants are exercisable is reduced for any reason, the percentage of Public Shares into which the Advisor Warrants are exercisable will be reduced proportionally.

In addition, in the event an advisory board member resigns for any reason prior to our business combination and at a time when we are not subject to a letter of intent (or a Definitive Agreement) with respect to our business combination, we will be entitled, at our election, to repurchase in full such advisory board member’s Advisor Warrants. The repurchase price in each case will be $1,000,000 with respect to each advisory board member, or $3,000,000 in the aggregate. The repurchase right may be assigned or transferred to one of our affiliates and must be exercised, if at all, by the date that is the later of (i) the two-year anniversary of the date on which the SPARs were first distributed pursuant to the Registration Statement and (ii) 60 days after the effective date of such advisory board member’s resignation. In the event we (or an affiliate) does not exercise the repurchase right by such time, the resigning advisory board member will retain the Advisor Warrants.

The repurchase price of the Advisor Warrants was established by our Sponsor in its discretion and was not intended to, and may not, represent the fair market value of the Advisor Warrants as of the time of issuance or any time of potential repurchase. The repurchase price and other terms of the Advisor Warrants were established in order to attract what we believe are highly experienced and capable advisory board members, and were based on the significant time commitment expected of advisory board members including with respect to assisting the company in identifying potential business combination candidates, the novel nature of our company in the public market and the risks and responsibilities attendant to untested public vehicles, the potential ten-year term of our company, the skill, expertise and business contacts of our advisory board members, and the value of our advisory board members’ respective time in light of their experience and other professional responsibilities. Our Sponsor did not assign any relative or specific weights to these factors, and instead conducted an overall analysis of the factors. The repurchase price was also established at a price the Company believes will likely be a substantial discount to the fair value of the Advisor Warrants immediately after our business combination, which we believe incentivizes our advisory board members to remain on the board over time. In the event an advisory board member elects to resign during the time periods described above, the Company currently anticipates that it or Sponsor would likely exercise its repurchase right (assuming the Company or Sponsor, as applicable, then believed that the repurchase price was less than the then fair value of the Advisor Warrants as of such time), and contemplates that any such repurchase would likely reasonably compensate such advisory board member for their service on the board. The repurchase was structured as our repurchase right (and not our obligation) to permit us to decide, at the time of any advisory board member resignation described above, whether or not the exercise of the repurchase right is advantageous to the Company in light of market and other conditions then applicable to the Company.

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 Advisor 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

 

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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.

Prior to the consummation of our business combination, our Sponsor will be permitted to transfer the Sponsor 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.

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.

On or prior to the date on which the SPARs were first distributed, we entered into a Registration Rights Agreement with our Sponsor, the Forward Purchasers and our Advisors, 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 exercise of the Sponsor Warrants, (iii) the Public Shares issuable upon exercise of the Advisor Warrants, (iv) the Public Shares issued pursuant to the Forward Purchase Agreements and (v) 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.”

Expected Accounting for the Company’s Securities

Sponsor Shares, SPARs and Forward Purchase Shares. The Company will account for the Sponsor Shares, the SPARs and the Forward Purchase Shares in accordance with the guidance contained in ASC 480—Distinguishing liabilities from equity, and ASC 815-40—Contracts in an entity’s own equity. Under this guidance, the Company currently expects the SPARs and the Forward Purchase Shares will not meet the criteria for equity treatment upon issuance; whereas it currently expects the Sponsor Shares to meet the criteria for equity treatment applicable to outstanding shares upon issuance. At June 30, 2023, December 31, 2022 and December 31, 2021, the Company had 422,533, 399,965 and 23,660 Sponsor Shares, respectively, issued and outstanding and has not issued any SPARs or Forward Purchase Shares.

The Company expects to classify the SPARs and the Forward Purchase Shares as liabilities once they are outstanding. Upon issuance, the Company will record the initial fair value of the SPAR’s and Forward Purchase Shares as an expense because such instruments will be distributed to parties other than shareholders and accordingly may not be recognized as dividends under ASC 505, Equity. These liabilities will subsequently be measured at fair value with changes in fair value reflected on the statement of operations at each reporting period. The classification of these instruments, including whether such instruments should be recorded as liabilities or as equity, will be re-assessed at the end of each reporting period.

The significant methodologies, inputs and assumptions the Company will use in arriving at fair value for the SPARs as of any date of determination are expected to include the following: (1) the probability of a business combination being successfully negotiated, (2) the anticipated timing of such business combination, (3) the negotiated value of the target interest and corresponding Final Exercise Price, if then known, (4) the “actual”

 

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value of the target interest (including both the negotiated value and the actual value may serve to capture the potential for value creation or value destruction in the business combination), if then known, and (5) the discount rate appropriate to the risk of these instruments. The Company expects to construct simulations to model the required exercise price of the SPARs in the context of simulated transactions, the exercise behavior of holders of SPARs, and the potential payoff to SPARs in connection with the value of the common shares received upon the close of the transaction. The average payoff across simulated scenarios would represent the value of the SPARs.

On July 28, 2023, the Company sold the Sponsor Warrants for an aggregate purchase price of $35,892,480. The transaction price of the Sponsor Warrants was determined by the Company, in consultation with a third-party, nationally recognized valuation firm, based on its fair value as of the previous month-end. The valuation firm reviewed and discussed the Company’s methodology, procedures and assumptions for valuing the Sponsor Warrants. The value of the Sponsor Warrants was determined using the Black-Scholes option pricing model, subject to additional valuation adjustments reflecting certain volatility assumptions, the risk of a transaction not being consummated and other factors as described in “Description of Securities—Valuation of Sponsor Warrants”.

The significant methodologies, inputs and assumptions to arrive at the fair value of the Forward Purchase Shares would be based on similar considerations. However, since the purchase price of the Forward Purchase Shares would be set based on the Final Exercise Price of the SPARs, any economic value to the Forward Purchase Shares in a potential future deal would be driven by the negotiated Final Exercise Price and the “actual” value of the target interest mentioned above. In situations where SPARC is unable to successfully close a deal, the Forward Purchase Shares would expire worthless. As a result, most of the same factors that apply to the SPARs would also apply to the Forward Purchase Agreements.

In quantifying the inputs to any of the methodologies listed above, the Company will make certain qualitative assumptions. These qualitative assumptions are expected to be informed by quantitative data. For example:

 

   

To assess the probability of the business combination being successful, the Company is expected to analyze a number of data sources, including (1) the historical probability of SPACs in sourcing deals as well as the implied probability embedded within traded SPAC instruments (both as adjusted for the differences between SPACs and SPARC), (2) the historical probability of announced M&A deals closing, and (3) the historical probability of announced IPOs closing.

 

   

To assess the timing of the business combination, the Company will analyze historical timing of SPACs in sourcing and closing deals (as adjusted for the differences in allowed search period between SPACs and the Company) and in general M&A timelines.

 

   

To assess the difference between the Final Exercise Price and the “actual” value of the target prior to the announcement of the target, the Company will analyze numerous data sources, including (1) value creation in SPAC transactions, (2) value creation in prior M&A transactions and IPOs, and (3) the prior track record of the Sponsor. After a transaction is announced, an evaluation of the specific terms of the announced transaction would be appropriate.

Additionally, many of these assumptions will depend on the state of the Company as of any date of determination: when it is initially launched, many of the assumptions above will apply; whereas once a deal is negotiated and announced to the market, the assumptions regarding the probability, timing, and size of a transaction would be informed by the specific evaluation of the announced transaction.

Sponsor and Advisor Warrants. The Company accounts for the Sponsor Warrants pursuant to applicable guidance in ASC 480 — Distinguishing liabilities from equity, and ASC 815-40 — Contracts in an entity’s own equity, under which the Sponsor Warrants will not meet the criteria for equity treatment because the number of underlying Public Shares for which the Sponsor Warrants are exercisable is dependent upon the number of Public Shares outstanding immediately following consummation of the Business Combination along with the amount of

 

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funds raised in connection therewith. Accordingly, the Sponsor Warrants’ fair value at initial measurement, was recorded as a derivative liability, and subsequent changes in fair value will be reflected on the statement of operations at each reporting period. The fair value of the Sponsor Warrants is measured using a Black-Scholes option pricing model and the Sponsor Warrants’ classification will be re-assessed at the end of each reporting period.

In contrast the Advisor Warrants are being issued for no cost to the Company’s advisory board members. Accordingly, the Company will account for the Advisor Warrants under ASC 718—Stock compensation (“ASC 718”) as the instruments are being issued in connection with services provided towards the Company’s operations and potential Business Combination by the advisory board. The Advisor Warrants have a settlement feature whereby the Company or the Sponsor has the option to purchase the warrant from the holder upon the termination of their services for $1,000,000. The settlement feature will result in liability classification at the Advisor Warrants repurchase price on grant date under ASC 718, stock-based compensation associated with equity-classified awards. Upon the consummation of the Business Combination (or vesting date), the outstanding liability will be measured at fair value.

Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results

As of June 30, 2023, December 31, 2022 and December 31, 2021, respectively, 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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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 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 June 30, 2023, 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 June 30, 2023, 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 served as sponsor of Pershing Square Tontine Holdings, Ltd. (“PSTH”), which was also a special purpose acquisition company that did not enter into an initial business combination within the prescribed time period and redeemed all of its Class A common stock and subsequently dissolved. 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 shareholder return of 18% since its merger with Justice Holdings, Ltd. in 2012 (as of June 30, 2023).

PSTH raised $4.0 billion in its initial public offering, which was consummated on July 24, 2020. PSTH did not consummate a business combination and, in July 2022, returned the funds held in its trust account to its stockholders. 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 30 years in the investment management industry, the last nearly 20 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 30 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 Advisor 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 while 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 an interest-bearing Custodial Account only during the period between the holders submitting exercise payments and Closing (which we expect will be no more than 30 business days, and will not exceed 10 months).

 

  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.

 

   

Until we approach the date that is 10 years from the date the SPARs were first distributed (at which time the SPARs will expire), we will face no deadline pressure to enter into a business combination. We believe that this improved negotiating position will assist us in completing a transaction on more favorable terms than might be the case if our company had a shorter life, and potentially enable us to do so more promptly if, as a result, a greater number of potential transactions meet our financial criteria. We will also be able to conduct a substantially longer search process for a business combination partner, if necessary.

 

   

Our Sponsor has made an initial investment of approximately $40.1 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 would otherwise potentially 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:

 

   

On July 28, 2023, our Sponsor purchased the Sponsor Warrants for an aggregate purchase price of $35,892,480. The transaction price of the Sponsor Warrants was determined by the Company, in consultation with a third-party, nationally recognized valuation firm, based on its fair value as of the previous month-end. The valuation firm reviewed and discussed with us our methodology, procedures and assumptions for valuing the Sponsor Warrants. The value of the Sponsor Warrants was determined using the Black-Scholes option pricing model, subject to additional valuation adjustments reflecting certain volatility assumptions, the risk of a transaction not being consummated and other factors as described in “Description of Securities—Valuation of Sponsor Warrants.”

 

   

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 is generally not able to transfer or sell the Sponsor Warrants, or any shares issued upon conversion, until three years after our business combination. Accordingly, the PSCM Investment Team is strongly incentivized to maximize our Sponsor’s investment by identifying a target company that will appreciate in value over the long term.

 

   

Affiliates of our Sponsor will invest a minimum of $250.0 million, and up to $3.5 billion, in our business combination at the same Final Exercise Price, and upon the same other terms, as our

 

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public investors. Our Sponsor and its affiliates 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 pre-business combination 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).

 

  6.

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

 

   

Our Sponsor Warrants and Advisor 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 target stockholders to support a proposed transaction, or increase the price at which they are willing to conduct a transaction.

 

   

Most SPACs issue IPO Warrants to the public to encourage participation in their IPO. These IPO Warrants, if exercised, are dilutive to the post-combination company, and may make the SPAC less attractive to IPO investors and market participants, and to potential business combination partners. We are not issuing conventional warrants to public stockholders.

 

   

In a business combination with our company in which the target company stockholders held 80% of the post-combination company, their ownership would be reduced to 78.3% 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 2.1%). 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.

 

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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 provided working capital by purchasing the Sponsor Shares, which are structured so that our Sponsor will have paid the same per-share price for its Public Shares that exercising SPAR holders will pay, and the Sponsor Warrants, the exercise of which will be profitable only if the share price of the post-combination company is at least 20% above the Final Exercise Price.

 

   

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 $250.0 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

 

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Purchasers are obligated to purchase $250.0 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 $40.00 per share or greater. The Additional Forward Purchaser will have the right, but not the obligation, to purchase (the “Additional Forward Purchase”), at the Final Exercise Price, the remainder of the $3,500,000,000 of Forward Purchase Shares that is not allocated to the Committed Forward Purchase (such amount, the “Aggregate Additional Forward Purchase Amount”). The Additional Forward Purchaser may exercise the Additional Forward Purchase, at its election, in one or two tranches (each, the “First Tranche Additional Forward Purchase” and the “Second Tranche Additional Forward Purchase”, respectively), each of which would be effectuated, at the Final Exercise Price, at the time of the consummation of our business combination; provided that in no event will the number of Public Shares purchased pursuant to the First Tranche Additional Forward Purchase and the Second Tranche Additional Forward Purchase collectively exceed the quotient obtained by dividing (i) the Aggregate Additional Forward Purchase Amount by (ii) the Final Exercise Price (the “Maximum Additional Forward Purchase”). The Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the First Tranche Additional Forward Purchase, in an amount up to the Maximum Additional Forward Purchase, by written notice to us no later than five (5) business days prior to the execution of the Definitive Agreement. In the event that (i) the First Tranche Additional Forward Purchase is less than the Maximum Additional Forward Purchase and (ii) all SPARs issued and outstanding immediately prior to the commencement of the SPAR Holder Election Period are not elected to be exercised as of the end of the SPAR Holder Election Period, then the Company shall promptly notify the Additional Forward Purchaser of the number of such issued and outstanding SPARs that were not elected to be exercised (the “Unexercised SPARs”) and the Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the Second Tranche Additional Forward Purchase no later than five (5) business days after such notice, in an amount up to the aggregate number of Public Shares, at the Final Exercise Price, equal to the product of (i) two (2) and (ii) the number of Unexercised SPARs. We believe that the Forward Purchase Agreements will make a transaction with our company attractive to a large capitalization, high-quality private company.

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. No minimum amount of SPARs are required to be exercised and there can be no guarantee that any SPARs will be exercised.

 

            Equity Capital Available for Business
Combination
 

Final Exercise Price

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

$10.00

   $ 1.2 B      $ 1.5 B      $ 4.7 B  

$15.00

   $ 1.8 B      $ 2.2 B      $ 5.3 B  

$20.00

   $ 2.4 B      $ 2.9 B      $ 5.9 B  

$25.00

   $ 3.1 B      $ 3.7 B      $ 6.6 B  

$50.00

   $ 6.1 B      $ 7.1 B      $ 9.6 B  

$75.00

   $ 9.2 B      $ 10.2 B      $ 12.7 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 need to pay 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

 

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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. The IPO market is also highly cyclical. In unfavorable market conditions like those occurring currently, low valuations and limited investor demand can result in a long period in which an IPO is unattractive or not possible. In a negotiated transaction, a private company seeking to raise capital or obtain liquidity may be able to find a transaction partner that values the company’s business more favorably than would public investors at a time of negative market sentiment.

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 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 due 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.

 

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Our company also does not have a conventional “sponsor promote,” which can substantially dilute stockholders of the private company. The Sponsor Shares and the Forward Purchase Shares will be purchased at the same per-share price that SPAR holders pay for their Public Shares. Our Sponsor Warrants and Advisor 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 5.104%, including the Advisor 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 $250.0 million to $1.0 billion, and up to $3.5 billion, and (ii) the minimally dilutive nature of our capital structure. 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 $250.0 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 has been particularly significant for SPACs over the past year, as unfavorable market conditions have resulted in high redemptions and greater difficulty in securing PIPE financing. In addition, prospective SEC regulations of SPACs could, among other things, decrease the willingness of investment banks to participate in raising PIPE capital.

Private companies face a similar evaluation of upside versus downside risk 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.

 

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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. We believe this is particularly true in the current market environment—with SPACs (including the post-combination public companies resulting from SPAC mergers) performing extremely poorly, with the stock market indices suffering substantial declines and the traditional initial public offering market being effectively shut down, we believe our company may present an attractive alternative for a private company to go public.

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 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.

 

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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 General Counsel and 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 served 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 30 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 Howard Hughes Holdings Inc., a member of the Board of Universal Music Group N.V., 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 a Partner at Pershing Square and joined the Investment Team in 2012, and previously served as President of PSTH. 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 and is Chief Financial Officer and a Partner at Pershing Square. Mr. Gonnella also served as Chief Financial Officer of PSTH. 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.

 

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Steve Milankov serves as our General Counsel and Corporate Secretary, and is the Assistant General Counsel and a Partner at Pershing Square. Mr. Milankov previously served as Corporate Secretary of PSTH. 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 and Chief Investment Officer 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 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.

 

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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 testimony 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 75 universities and at numerous association conferences. Dr. Blouin is frequently cited in the press, including The Wall Street Journal, The New York Times, and the Financial Times. She currently serves on the board of directors of Extra Space Storage Inc. (NYSE: EXR), and she 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 and Vice Dean for Intellectual Life at Columbia Law School. Her research focuses on financial regulation and intermediation design. She is a regular speaker at academic, industry and policy conferences in the United States and abroad. She currently serves on the Research Committee of the European Corporate Governance Institute and on the board of directors of Bread for the World, Bread for the World Institute and the Columbia Business Law Review. She has served on the Financial Research Advisory Committee of the Office of Financial Research, during which time she co-chaired the LIBOR to SOFR Working Group and the Financial Innovation Working Group. She also served as an editor of the Journal of Financial Regulation and as a member of 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 previously served as a law 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 premier voices in entrepreneurship, technology, and business transformation. As CEO and cofounder of Endeavor, she helped forge the leading global community of, by, and for high-growth entrepreneurs operating in 42 markets across the globe. She also serves as President of Endeavor Catalyst, a rules-based investment fund that invests in Endeavor companies. With $500 million in assets under management across four funds, Endeavor Catalyst has made 280 investments in 37 markets and counts 50 companies valued at more than $1 billion in its portfolio. Rottenberg currently serves as a director of Globant, a world-leader in digital transformation and software development (NYSE: GLOB); and Olo, a SaaS-based restaurant ordering platform (NYSE: OLO). She formerly served as a director of Zayo Group, a $15 billion global bandwidth infrastructure company (NYSE: ZAYO). In 2023, Rottenberg was appointed Vice Chair of the Yale President’s Council on International Activities; she is a member of YPO and the World Economic Forum. 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 Advisory Board

We have established an advisory board, the role and functions of which will be determined by the board of directors from time to time. We currently expect our advisory board to, upon the request of the directors, provide its business insights (i) as we source potential business combination targets, (ii) as we assess potential business combination targets and (iii) as we work to create additional value in the business or businesses that we acquire. The role of the advisory board is consultative in nature to support our directors and officers in operating our business, and it will not perform managerial board or committee functions. Members of the advisory board will not be subject to the fiduciary requirements to which our board of directors are subject, nor will advisory board members have any internal voting or decision making role, or any authority to act on our behalf. The board of

 

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directors is not required to follow any advice, comments or recommendations of the advisory board in relation to the matters described herein. We have not entered into any agreements governing our relationship with any members of our advisory board, and we may modify or expand our roster of advisory board members as we source potential business combination targets or work to create value in the business or businesses that we acquire.

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. Ms. Gersh previously served on the board of directors of PSTH and 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. Additionally, Mr. Ovitz previously served on the board of directors of PSTH. Mr. Ovitz is also a notable art collector and currently 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

 

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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 advisors of the Wharton School of the University of Pennsylvania. She previously served on the board of directors of PSTH and currently serves on the board of directors of Nubank, Affirm, TaskUs, and Endeavor. She also is the chairperson of the Economic Advisory Council of the Federal Reserve Bank of San Francisco. She previously served on the board of directors of Alibaba Group Holding Limited, Context Logic, 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.

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 investors 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 date on which the SPARs were first distributed, we intend to begin the process of communicating with the network of relationships of our Investment Team and our independent directors to articulate the parameters for our search for a potential target business combination and begin the process of pursuing and reviewing potential opportunities.

 

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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;

 

   

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 Business Combination 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

 

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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 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).

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 requires 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 Definitive Agreement, equal to at least 80% of the total

 

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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.” 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 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 Advisor 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 are distributing our SPARs now that the Registration Statement of which this prospectus forms a part has become effective. The SPARs are generally non-transferable at this time, and will not be exercisable.

Upon the initial 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. 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 per Public Share (a total of $20.00 to exercise each SPAR). 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, the Business Combination Registration Statement. The Business Combination Registration Statement will contain comprehensive disclosures regarding the proposed transaction, including the number of SPARs that we expect will have been distributed and are eligible for election as of the beginning of the SPAR Election Period, equivalent to the disclosures that would be included in a merger proxy statement, and will include disclosure of all payments, incentives and benefits that may be received by, and any conflicts of interest involving, our Sponsor or its affiliates in connection with the business combination. Depending on the structure our transaction

 

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takes, the Business Combination Registration Statement may be filed as a post-effective amendment to this Registration Statement or as a registration statement by a different entity. It is likely the Business Combination Registration Statement 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. Because we anticipate the closing of our business combination to occur within approximately 30 business days of the effectiveness of the Business Combination Registration Statement, 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 or our business combination partner will be able to satisfy such conditions.

Once all Disclosure Period Closing Conditions have been satisfied or waived, and the Business Combination Registration Statement has been declared effective, we will mail or otherwise make available a prospectus to all SPAR holders, and the SPAR Holder Election Period will begin. At this time, we will also obtain any necessary stockholder approvals from our Sponsor, in its capacity as our sole stockholder.

The SPARs will be generally non-transferable and will not be exercisable during the Disclosure Period.

If we amend the Charter, SPAR Rights Agreement or Definitive Agreement during this period, we will amend the Business Combination Registration Statement as necessary. SPAR holders will have no rights in connection with amendments to the Charter or Definitive Agreement, as they are not stockholders at this time. If we propose to amend the SPAR Rights 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 (e.g., 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 Disclosure Period Closing Conditions have been satisfied or waived and (iii) the Business Combination Registration Statement has been declared effective.

We expect that the SPARs will be quoted on the OTCQX marketplace of the OTC Markets Group in connection with the SPAR Holder Election Period. This will require, among other things, that at least one market maker publishes quotations for SPARs, and that a Form 211 is submitted to, and approved by, FINRA. The quotation of SPARs on the OTCQX marketplace, as compared to being listed on a national securities exchange such as the NYSE or Nasdaq, may present significant risks to the holders of SPARs, including lower availability and efficiency of market price quotations, significantly less liquidity, increased transaction costs, the absence of certain requirements regarding our corporate governance (i.e., lack of stock exchange requirements mandating a board with a majority of independent directors, independent nomination, compensation and audit committees, and stockholder approval of certain actions), and the application of state securities laws that could result in restrictions on the sale of our SPARs. See Risk Factors, page 60.

 

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The NYSE listing rules require, among other things, that listed companies have: (i) a board comprised of a majority of independent directors; (ii) nomination, compensation and audit committees composed entirely of directors that meet the independence standards applicable to such committee, and an audit committee that includes a financial expert; (iii) corporate governance guidelines and a code of business conduct and ethics that are made publicly available; (iv) meetings of independent directors in executive session; (v) annual meetings of stockholders; and (vi) stockholder approval for certain matters such as stock issuances, regardless of whether such approval is required under law or by the company’s governing documents. We will be subject to the less stringent OTCQX corporate governance requirements, that we have a board with at least two independent directors and a majority of independent directors on the audit committee members, only during the SPAR Holder Election Period. Although our Charter and SPAR Rights Agreement will require that we comply with the corporate governance provisions applicable to NYSE-listed companies (without giving effect to any exceptions applicable to controlled companies), unlike most blank check companies, we will not be subject to any external requirement that we comply with such provisions and will not be subject to delisting in the event we fail to so comply. See Risk Factors, page 60.

SPAR holders will have a period of 20 business days to submit an Election regarding the exercise of their SPARs. Elections are irrevocable, and electing SPAR holders must submit with their Election the aggregate exercise price for the number of SPARs that they have agreed to exercise. 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 held at DTC in a “rights envelope” pursuant to customary DTC rights offerings procedures, pending the consummation of the business combination. The Company expects to instruct DTC to “chill” remaining Unelected SPARs - that is, instruct DTC to no longer permit transfers of SPARs among DTC participants on the date that is two trading days before the end of the SPAR Holder Election Period.

The Elected SPARs are not actually exercised at this time—Elected SPARs will be held in the DTC “rights envelope”, and exercise payments will be held in a Custodial Account, not to be released to us except in connection with the Closing. An Election constitutes an irrevocable offer to have your exercise payment released to our company and to have your SPARs be exercised in order to acquire Public Shares. Our decision to proceed with the business combination constitutes an acceptance of an electing SPAR holder’s irrevocable offer to acquire Public Shares through the exercise of their SPARs. Our decision to abandon the business combination constitutes a rejection of the offer.

During the SPAR Holder Election Period, if we make a Materially Adverse Amendment to the Charter or Definitive Agreement, we will revoke all Elections previously made, return all funds from the Custodial Account that were tendered at the Final Exercise Price in connection with such Elections, and hold the SPAR Holder Election Period open for an additional 20 business days. Our Charter provides that amendments to the Definitive Agreement entered into during the Closing Period in order to permit us to raise additional funds to satisfy financing or other closing conditions set forth in the Definitive Agreement will not be deemed to be a Materially Adverse Amendment so long as (i) the additional funds are raised by selling additional Public Shares to third parties (or to the Additional Forward Purchaser or other of our affiliates) in private placements at the Final Exercise Price and (ii) the number of such Public Shares sold, together with the Public Shares issued in respect of Elected SPARs, does not exceed the total number of Public Shares that would have been issued had all SPARs been elected to be exercised.

If we propose a Materially Adverse Amendment to the SPAR Rights 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. In connection with the foregoing, we will revoke all Elections previously made, return all funds tendered, and hold the SPAR Holder Election Period open for an additional 20 business days.

 

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If the transaction is abandoned during the SPAR Holder Election Period, the offer constituted by the submission of an Election will be rejected, and all Elections will be disregarded. Any funds held in the Custodial Account will be promptly returned to electing SPAR holders, with interest (if any), all SPARs will expire, and we will liquidate our company. 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 extend the SPAR Holder Election Period, the length of time for which we will be able to do so will be limited by the Closing Deadline, which requires that we may not hold investor funds beyond the date that is 10 months after the start of the SPAR Holder Election Period.

Unelected SPARs will not have any value following the SPAR Holder Election Period, will generally not be transferable and will expire worthless. Accordingly, any SPAR holder who wishes to sell their SPARs must do so prior to submitting an Election and no later than two trading days prior to the end of the SPAR Holder Election Period.

Closing Period

Following the SPAR Holder Election Period, we will have up to 10 business days to determine whether or not to proceed with the business combination. This decision will be driven primarily by whether the Final Closing Conditions have been or will be satisfied as of Closing. The Final Closing Conditions include (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 any Final 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.

No later than 10 business days after the SPAR Holder Election Period ends, we will publicly disclose our decision to either (i) consummate the business combination, (ii) abandon the business combination or (iii) in very limited circumstances described below, extend the Closing Period. If all remaining closing conditions are satisfied or waived, we will promptly thereafter (within two business days), carry out the Closing. Elected SPARs will be exercised, Public Shares of the post-combination company will be issued, and Unelected SPARs will expire worthless.

If we become unable to consummate the business combination due to (i) an injunction by a governmental authority or (ii) a legal dispute with our business combination partner, only then may our Board decide to extend the Closing Period. During the Closing Period Extension, which will end on the date that is 10 months from the start of the SPAR Holder Election Period, we will seek to resolve these issues and consummate the business combination. During a Closing Period Extension, exercise payments will continue to be held in the Custodial Account. If we abandon the business combination during a Closing Period Extension, or are unable to consummate a business combination by the Closing Deadline (or, if earlier, the date that is 10 years from the date the SPARs were first distributed), we will promptly return the funds held in the Custodial Account, the SPARs will expire worthless, and we will liquidate the company.

During the Closing Period, Materially Adverse Amendments to the Charter, Definitive Agreement, and SPAR Rights Agreement would likely only arise in, and only be possible in, the limited circumstances in which we extend the Closing Period. For example, if our business combination partner breaches its obligations to consummate the transaction, we expect that we would extend the Closing Period and seek to enforce our legal rights to specific

 

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performance, and consummate the transaction on the terms set forth in the Definitive Agreement. However, it is possible that we would reach a negotiated settlement in which the Definitive Agreement is amended. If any Materially Adverse Amendments are made during the Closing Period, we will revoke all Elections previously made, return all funds tendered, and reinstitute an additional SPAR Holder Election Period for an additional 20 business days.

SPARs are not transferable during the Closing Period or a Closing Period Extension.

Our Forward Purchase Agreements

We believe our ability to complete our business combination will be enhanced by having entered into the Forward Purchase Agreements. Prior to the date on which the SPARs were distributed, we entered into the Forward Purchase Agreements 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. All shares purchased pursuant to the Forward Purchase Agreements will be purchased at the Final Exercise Price.

At the time we enter into a Definitive Agreement, we will announce the Final Exercise Price, which determines the Committed Forward Purchase amount. Also at that time, the Additional Forward Purchaser will announce the amount of the Additional Forward Purchase it will make, if any. 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. Further, 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 consummate the announced business combination.

The Committed Forward Purchasers will be obligated to invest $250.0 million if the Final Exercise Price is $10.00 per share, 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 $40.00 per share or greater. The Additional Forward Purchaser will have the right, but not the obligation, to purchase (the “Additional Forward Purchase”), at the Final Exercise Price, the remainder of the $3,500,000,000 of Forward Purchase Shares that is not allocated to the Committed Forward Purchase (such amount, the “Aggregate Additional Forward Purchase Amount”). The Additional Forward Purchaser may exercise the Additional Forward Purchase, at its election, in one or two tranches (each, the “First Tranche Additional Forward Purchase” and the “Second Tranche Additional Forward Purchase”, respectively), each of which would be effectuated, at the Final Exercise Price, at the time of the consummation of our business combination; provided that in no event will the number of Public Shares purchased pursuant to the First Tranche Additional Forward Purchase and the Second Tranche Additional Forward Purchase collectively exceed the quotient obtained by dividing (i) the Aggregate Additional Forward Purchase Amount by (ii) the Final Exercise Price (the “Maximum Additional Forward Purchase”). The Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the First Tranche Additional Forward Purchase, in an amount up to the Maximum Additional Forward Purchase, by written notice to us no later than five (5) business days prior to the execution of the Definitive Agreement. In the event that (i) the First Tranche Additional Forward Purchase is less than the Maximum Additional Forward Purchase and (ii) all SPARs issued and outstanding immediately prior to the commencement of the SPAR Holder Election Period are not elected to be exercised as of the end of the SPAR Holder Election Period, then the Company shall promptly notify the Additional Forward Purchaser of the number of such issued and outstanding SPARs that were not elected to be exercised (the “Unexercised SPARs”) and the Additional Forward Purchaser will have the right, but not the obligation, to commit to purchase the Second Tranche Additional Forward Purchase no later than five (5) business days after such notice, in an amount up to the aggregate number of Public Shares, at the Final Exercise Price, equal to the product of (i) two (2) and (ii) the number of Unexercised SPARs.

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

 

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Forward Purchase and the 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, assuming all SPARs are exercised. No minimum amount of SPARs are required to be exercised and there can be no guarantee that any SPARs will be exercised.

 

    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

  $ 250.0 M     $ 3.25 B       20.5