General
We are an early stage blank check company incorporated as a
Cayman Islands exempted company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination with one or more businesses, which we refer to throughout this report as our initial
business combination. We have no revenues to date and we will not generate operating revenues until we consummate our initial
business combination. While we may pursue an acquisition opportunity in any industry or sector, we have concentrated our efforts
on businesses that complement our management team’s expertise in the production, operation and development of crude oil
and natural gas wells and related infrastructure, and to capitalize on the ability of our management team to source, screen, evaluate,
negotiate, structure, close and manage acquisitions of energy assets or businesses globally. We have concentrated on acquiring
one or more businesses with an aggregate enterprise value of approximately $500 million to $1 billion.
Business Strategy and Deal Origination
We expect that the experience of the management team will provide
us with a robust number of acquisition or investment opportunities. In addition, target business candidates are brought to our
attention by various unaffiliated sources, which may include investment market participants, private equity groups, investment
banking firms, accounting firms, equity sponsors, lending institutions, family offices, attorneys and brokers energy sector consultants,
public and private oil and gas companies, International Oil Companies (IOCs), Governmental Licensing Authorities, and business
enterprises who seek to rationalize their existing portfolio. Since the consummation of our initial public offering, members of
our management team have communicated with their network of relationships to articulate the parameters for our search for a target
company and a potential business combination and began the process of pursuing and reviewing potential leads.
Business Combination Criteria
Consistent with our acquisition strategy, we have identified
the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We use
these criteria and guidelines in evaluating acquisition opportunities. While we intend to acquire companies that we believe exhibit
one or more of the following characteristics, we may decide to enter into our initial business combination with a target business
that does not meet these criteria and guidelines. We intend to acquire companies that we believe have the following characteristics:
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Management Control: It
will be an important factor to have operational control, or alternatively a pathway to
such operational control, rather than being a passive equity partner. Existing staff
needs to have credentials, expertise and performance that are aligned with future operational
activity. Potential should exist for local and expatriate recruitment to compliment the
special requirements of future operational activity. Furthermore, the ability to contract
specialized consultants and service companies should exist.
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Ease of Operating: Health,
Safety, Security, Environmental and Social (HSSES) standards, procedures and performance
will be a critical element of future operational activity; historical records and performance
will be an essential element in assessing suitability for future efficient and effective
performance.
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Financial Restructuring: Capital
Allocation, Cash Flow Analysis, Authority for Expenditure (AFE), Economic Modeling processes
and Corporate Finance integration will be essential processes to ensure effective and
efficient future operation. An assessment of existing processes should highlight deficiencies
and where essential restructuring modifications should not be too onerous.
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For potential E&P acquisitions, we intend to target opportunities
with:
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Subsurface materiality: Existing
production is 10,000bopd, where historical production suggests significant increases
can be achieved through, but not restricted to a variety of well interventions, infill
wells, pressure support, pattern reconfigurations and other operational activity. Independent
Reserve Audits demonstrate material Proven Undeveloped Reserves (PUD’s), together
with Probable (P2), Possible (P3) and Contingent Resources exist. Realistic Field Development
Plans (FDP’s) are in place or can be constructed. Sufficient surveillance data
and information is available to envisage significant impact can be achieved with the
implementation of various Digital Science and Analysis techniques.
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These criteria are not intended to be exhaustive. Any evaluation
relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines
as well as other considerations, factors and criteria that our management may deem relevant.
Our Business Combination Process
In evaluating a prospective target business, we conduct a thorough
due diligence review that encompasses, among other things, meetings with incumbent management and employees, document reviews,
inspection of facilities, as well as a review of financial and other information. We also utilize our operational and capital
allocation experience.
In order to execute our business strategy, we are building
a portfolio of prospects to evaluate through a process which includes, but is not limited to, the following dimensions:
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Health, Safety & Environmental
Evaluation;
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Financial Structuring; and
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After the initial business combination, our management team
intends to apply a rigorous approach to enhancing shareholder value, including evaluating the experience and expertise of incumbent
management and making changes where appropriate, examining opportunities for revenue enhancement, cost savings, operating efficiencies
and strategic acquisitions and divestitures and developing and implementing corporate strategies and initiatives to improve profitability
and long-term value. In doing so, our management team anticipates evaluating corporate governance, opportunistically accessing
capital markets and other opportunities to enhance liquidity, identifying acquisition and divestiture opportunities and properly
aligning management and board incentives with growing shareholder value. Our management team intends to pursue post-merger initiatives
through participation on the Board of Directors, through direct involvement in and operational control of the company and/or calling
upon a stable of former managers and advisors when necessary.
Our acquisition criteria, due diligence processes and value
creation methods are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination
may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our
management may deem relevant. In the event that we decide to enter into our initial business combination with a target business
that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria
in our shareholder communications related to our initial business combination, which, as discussed in this report, would be in
the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
Sourcing of Potential Business Combination Targets
We believe that the operational and transactional experience
of our management team and the relationships they have developed as a result of such experience, provides us with a substantial
number of potential business combination targets. These individuals and entities have developed a broad network of contacts and
corporate relationships around the world. This network has grown through sourcing, acquiring and financing businesses and maintaining
relationships with sellers, financing sources and target management teams. Our management team members have significant experience
in executing transactions under varying economic and financial market conditions. We believe that these networks of contacts and
relationships and this experience provides us with important sources of investment opportunities. In addition, target business
candidates may be brought to our attention from various unaffiliated sources, including investment market participants, private
equity funds and large business enterprises seeking to divest noncore assets or divisions.
We are not prohibited from pursuing an initial business combination
with a business combination target that is affiliated with funds advised by Encompass Capital Advisors LLC (“Encompass,”
and together with the pooled investment vehicles for which Encompass serves as the investment advisor and which are members of
the sponsor, the “Encompass Funds”), our sponsor, officers or directors or making the acquisition through a joint
venture or other form of shared ownership with funds advised by Encompass, our sponsor, officers or directors. In the event we
seek to complete our initial business combination with a company that is affiliated with funds advised by Encompass, our sponsor,
officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking
firm or another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or
an independent accounting firm that our initial business combination is fair to our company from a financial point of view. We
are not required to obtain such an opinion in any other context. If any of our officers or directors becomes aware of a business
combination opportunity that falls within the line of business of any entity to which he or she has then-current fiduciary or
contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting
such business combination opportunity to us, subject to his or her fiduciary duties under Cayman Islands law. Our officers and
directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties
to us. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could
raise additional proceeds to complete the acquisition by making a specified future issuance to any such entity.
Other Acquisition Considerations
Unless we complete our initial business combination with an
affiliated entity, or our Board of Directors cannot independently determine the fair market value of the target business or businesses,
we are not required to obtain an opinion from an independent investment banking firm, another independent firm that commonly renders
valuation opinions for the type of company we are seeking to acquire or from an independent accounting firm that the price we
are paying for a target is fair to our company from a financial point of view. If no opinion is obtained, our shareholders will
be relying on the business judgment of our Board of Directors, which will have significant discretion in choosing the standard
used to establish the fair market value of the target or targets, and different methods of valuation may vary greatly in outcome
from one another. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable,
related to our initial business combination.
Members of our management team directly or indirectly own our
ordinary shares and/or private placement warrants, and, accordingly, may have a conflict of interest in determining whether a
particular target business is an appropriate business with which to effectuate our initial business combination. Further, each
of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if
the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement
with respect to our initial business combination.
Each of our directors and officers presently has, and in the
future any of our directors and our officers may have additional, fiduciary or contractual obligations to other entities pursuant
to which such officer or director is or will be required to present acquisition opportunities to such entity. Accordingly, subject
to his or her fiduciary duties under Cayman Islands law, if any of our officers or directors becomes aware of an acquisition opportunity
which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will need
to honor his or her fiduciary or contractual obligations to present such acquisition opportunity to such entity, and only present
it to us if such entity rejects the opportunity. In addition, we may, at our option, pursue an Affiliated Joint Acquisition opportunity
with an entity to which Encompass (or funds advised by Encompass), an officer or director has a fiduciary or contractual obligation.
Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise
additional proceeds to complete the acquisition by making a specified future issuance to any such entity. Our amended and restated
memorandum and articles of association provide that, subject to his or her fiduciary duties under Cayman Islands law, no director
or officer shall be disqualified or prevented from contracting with the company nor shall any contract or transaction entered
into by or on behalf of the company in which any director shall have an interest be liable to be avoided. A director shall be
at liberty to vote in respect of any contract or transaction in which he is interested provided that the nature of such interest
shall be disclosed at or prior to its consideration or any vote thereon by the Board of Directors. We do not believe, however,
that any fiduciary duties or contractual obligations of our directors or officers would materially undermine our ability to complete
our business combination.
Our officers have agreed not to become an officer or director
of any other special purpose acquisition company with a class of securities registered under the Exchange Act, until we have entered
into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination
by November 29, 2021.
Initial Business Combination
NYSE rules require that we must complete one or more business
combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding
the deferred underwriting commissions and taxes payable) at the time of our signing a definitive agreement in connection with
our initial business combination. If our Board of Directors is not able to independently determine the fair market value of the
target business or businesses, we will obtain an opinion from an independent investment banking firm or another independent firm
that commonly renders valuation opinions for the type of company we are seeking to acquire or an independent accounting firm with
respect to the satisfaction of such criteria. We do not intend to purchase multiple businesses in unrelated industries in conjunction
with our initial business combination.
We may, at our option, pursue an Affiliated Joint Acquisition
with an entity affiliated with (or funds advised by) Encompass or with an entity to which an officer or director has a fiduciary
or contractual obligation. Any such parties would co-invest only if (i) permitted by applicable regulatory and other legal limitations;
(ii) we and Encompass considered a transaction to be mutually beneficial to us as well as the affiliated entity; and (iii) other
business reasons exist to do so, such as the strategic merits of including such co-investors, the need for additional capital
beyond the amount held in our trust account to fund the initial business combination and/or the desire to obtain committed capital
for closing the initial business combination. We refer to this potential future issuance, or a similar issuance to other specified
purchasers, as a “specified future issuance” throughout this report. The amount and other terms and conditions of
any such specified future issuance would be determined at the time thereof. We are not obligated to make any specified future
issuance and may determine not to do so. This is not an offer for any specified future issuance. Pursuant to the anti-dilution
provisions of our Class B ordinary shares, any such specified future issuance would result in an adjustment to the conversion
ratio such that our initial stockholders and their permitted transferees, if any, would retain their aggregate percentage ownership
at 20% of the sum of the total number of all ordinary shares outstanding plus all shares issued in the specified future issuance,
unless the holders of a majority of the then-outstanding Class B ordinary shares agreed to waive such adjustment with respect
to the specified future issuance at the time thereof. We cannot determine at this time whether a majority of the holders of our
Class B ordinary shares at the time of any such specified future issuance would agree to waive such adjustment to the conversion
ratio. They may waive such adjustment due to (but not limited to) the following: (i) closing conditions which are part of the
agreement for our initial business combination; (ii) negotiation with Class A shareholders on structuring an initial business
combination; (iii) negotiation with parties providing financing which would trigger the anti-dilution provisions of the Class
B ordinary shares; or (iv) as part of the Affiliated Joint Acquisition. If such adjustment is not waived, the specified future
issuance would not reduce the percentage ownership of holders of our Class B ordinary shares, but would reduce the percentage
ownership of holders of our Class A ordinary shares. If such adjustment is waived, the specified future issuance would reduce
the percentage ownership of holders of both classes of our ordinary shares.
We anticipate structuring our initial business combination
so that the post-transaction company in which our public shareholders own shares will own or acquire 100% of the equity interests
or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction
company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives
of the target management team or shareholders or for other reasons, including an Affiliated Joint Acquisition as described above.
However, we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required
to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even
if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our shareholders prior to
the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed
to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial
number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling
interest in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders immediately
prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business
combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the
post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes
of the 80% of net assets test. If our initial business combination involves more than one target business, the 80% of net assets
test will be based on the aggregate value of all of the target businesses. If our securities are not listed on the NYSE, we would
not be required to satisfy the 80% requirement. However, we intend to satisfy the 80% requirement even if our securities are not
listed on the NYSE at the time of our initial business combination.
Status as a Public Company
We believe our structure makes us an attractive business combination
partner to target businesses. As an existing public company, we offer a target business an alternative to the traditional initial
public offering through a merger or other business combination. In this situation, the owners of the target business would exchange
their shares of stock in the target business for our shares or for a combination of our shares and cash, allowing us to tailor
the consideration to the specific needs of the sellers. Although there are various costs and obligations associated with being
a public company, we believe target businesses will find this method a more certain and cost effective method to becoming a public
company than the typical initial public offering. In a typical initial public offering, there are additional expenses incurred
in marketing, road show and public reporting efforts that may not be present to the same extent in connection with a business
combination with us.
Furthermore, once a proposed business combination is completed,
the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters’
ability to complete the offering, as well as general market conditions, which could delay or prevent the offering from occurring.
Once public, we believe the target business would then have greater access to capital and an additional means of providing management
incentives consistent with shareholders’ interests. It can offer further benefits by augmenting a company’s profile
among potential new customers and vendors and aid in attracting talented employees.
While we believe that our structure and our management team’s
backgrounds makes us an attractive business partner, some potential target businesses may have a negative view of us since we
are a blank check company, without an operating history, and there is uncertainty relating to our ability to obtain shareholder
approval of our proposed initial business combination and retain sufficient funds in our trust account in connection therewith.
We are an “emerging growth company,” as defined
in the JOBS Act. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following
the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at
least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our ordinary
shares that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we
have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
Financial position
With funds available for a business combination in the amount
of $ 277,768,281, as of December 31, 2019, (assuming no redemptions and after payment of up to $10,062,500 of deferred underwriting
fees) before fees and expenses associated with our initial business combination, we offer a target business a variety of options
such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its operations
or strengthening its balance sheet by reducing its debt ratio. Because we are able to complete our initial business combination
using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient
combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However,
we have not taken any steps to secure third party financing and there can be no assurance it will be available to us.
Effecting our Initial Business Combination
We are not presently engaged in, and we will not engage in,
any operations until we consummate our initial business combination. We intend to effectuate our initial business combination using
cash from the proceeds of our initial public offering and the private placement of the private placement warrants, our shares,
debt or a combination of these as the consideration to be paid in our initial business combination. We may, although we do not
currently intend to, seek to complete our initial business combination with a company or business that may be financially unstable
or in its early stages of development or growth, start-up companies or companies with speculative business plans or excess leverage,
which would subject us to the numerous risks inherent in such companies and businesses.
If our initial business combination is paid for using equity
or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in connection
with our initial business combination or used for redemptions of our Class A ordinary shares, we may apply the balance of the
cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations
of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business
combination, to fund the purchase of other companies or for working capital.
We may seek to raise additional funds through a private offering
of debt or equity securities in connection with the completion of our initial business combination, and we may effectuate our
initial business combination using the proceeds of such offering rather than using the amounts held in the trust account.
In the case of an initial business combination funded with
assets other than the trust account assets, our tender offer documents or proxy materials disclosing the business combination
would disclose the terms of the financing and, only if required by law, we would seek shareholder approval of such financing.
There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business combination,
including pursuant to any specified future issuance. At this time, we are not a party to any arrangement or understanding with
any third party with respect to raising any additional funds through the sale of securities or otherwise.
Selection of a target business and structuring of our initial
business combination
NYSE rules require that we must complete one or more business
combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding
the deferred underwriting commissions and taxes payable) at the time of our signing a definitive agreement in connection with
our initial business combination. The fair market value of the target or targets will be determined by our Board of Directors
based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation or value
of comparable businesses. Our shareholders will be relying on the business judgment of our Board of Directors, which will have
significant discretion in choosing the standard used to establish the fair market value of the target or targets, and different
methods of valuation may vary greatly in outcome from one another. Such standards used will be disclosed in our tender offer documents
or proxy solicitation materials, as applicable, related to our initial business combination.
If our Board of Directors is not able to independently determine
the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm
or another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or an independent
accounting firm, with respect to the satisfaction of such criteria. We do not intend to purchase multiple businesses in unrelated
industries in conjunction with our initial business combination. Subject to these requirements, our management will have virtually
unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted
to effectuate our initial business combination with another blank check company or a similar company with nominal operations.
In any case, we will only complete an initial business combination
in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire a controlling interest
in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. If we
own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion of such business
or businesses that are owned or acquired by the post-transaction company is what will be valued for purposes of the 80% of net
assets test. There is currently no basis for investors to evaluate the possible merits or risks of any target business with which
we may ultimately complete our initial business combination.
To the extent we effect our initial business combination with
a company or business that may be financially unstable or in its early stages of development or growth we may be affected by numerous
risks inherent in such company or business. Although our management will endeavor to evaluate the risks inherent in a particular
target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In evaluating a prospective target business, we conduct a thorough
due diligence review which encompasses, among other things, meetings with incumbent management and employees, document reviews,
inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available
to us.
The time required to select and evaluate a target business
and to structure and complete our initial business combination, and the costs associated with this process, are not currently
ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective
target business with which our initial business combination is not ultimately completed will result in our incurring losses and
will reduce the funds we can use to complete another business combination.
Lack of business diversification
For an indefinite period of time after the completion of our
initial business combination, the prospects for our success may depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries,
it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line
of business. By completing our initial business combination with only a single entity, our lack of diversification may:
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subject us to negative economic, competitive
and regulatory developments, any or all of which may have a substantial adverse impact
on the particular industry in which we operate after our initial business combination;
and
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cause us to depend on the marketing
and sale of a single product or limited number of products or services.
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Limited ability to evaluate the target’s management
team
Although we intend to closely scrutinize the management of
a prospective target business when evaluating the desirability of effecting our initial business combination with that business,
our assessment of the target business’s management may not prove to be correct. In addition, the future management may not
have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of
our management team, if any, in the target business cannot presently be stated with any certainty. While it is possible that one
or more of our directors will remain associated in some capacity with us following our initial business combination, it is unlikely
that any of them will devote their full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot
assure you that members of our management team will have significant experience or knowledge relating to the operations of the
particular target business.
We cannot assure you that any of our key personnel will remain
in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel
will remain with the combined company will be made at the time of our initial business combination.
Following a business combination, we may seek to recruit additional
managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to
recruit additional managers, or that such additional managers will have the requisite skills, knowledge or experience necessary
to enhance the incumbent management.
Shareholders may not have the ability to approve our initial
business combination
We may conduct redemptions without a shareholder vote pursuant
to the tender offer rules of the SEC subject to the provisions of our amended and restated memorandum and articles of association.
However, we will seek shareholder approval if it is required by law or applicable stock exchange rule, or we may decide to seek
shareholder approval for business or other legal reasons.
Under the NYSE’s listing rules, shareholder approval
would be required for our initial business combination if, for example:
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we issue Class A ordinary shares that
will be equal to or in excess of 20% of the number of Class A ordinary shares then outstanding;
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any of our directors, officers or substantial
security holders (as defined by the NYSE rules) has a 5% or greater interest, directly
or indirectly, in the target business or assets to be acquired and if the number of Class
A ordinary shares to be issued, or if the number of Class A ordinary shares into which
the securities may be convertible or exercisable, exceeds either (a) 1% of the number
of Class A ordinary shares or 1% of the voting power outstanding before the issuance
in the case of any of our directors and officers or (b) 5% of the number of Class A ordinary
shares or 5% of the voting power outstanding before the issuance in the case of any substantial
security holders; or
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the issuance or potential issuance
of ordinary shares will result in our undergoing a change of control.
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Permitted purchases of our securities
In the event we seek shareholder approval of our initial business
combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer
rules, our sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates may purchase our Class
A ordinary shares in privately negotiated transactions or in the open market either prior to or following the completion of our
initial business combination. There is no limit on the number of shares such persons may purchase. However, they have no current
commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions.
In the event our sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates determine to make
any such purchases at the time of a shareholder vote relating to our initial business combination, such purchases could have the
effect of influencing the vote necessary to approve such transaction. None of the funds in the trust account will be used to purchase
shares in such transactions. They will not make any such purchases when they are in possession of any material non-public information
not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. Such a purchase may include
a contractual acknowledgement that such shareholder, although still the record holder of our Class A ordinary shares, is no longer
the beneficial owner thereof and therefore agrees not to exercise its redemption rights. We have adopted an insider trading policy
which requires insiders to: (i) refrain from purchasing our shares during certain blackout periods and when they are in possession
of any material non-public information and (ii) to clear all trades with our legal counsel prior to execution. We cannot currently
determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several
factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may
either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.
In the event that our sponsor, directors, officers or advisors,
the Encompass Funds, or their respective affiliates purchase our Class A ordinary shares in privately negotiated transactions
from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required
to revoke their prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute
a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private
rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject
to such rules, the purchasers will comply with such rules.
The purpose of such purchases would be to (i) vote such Class
A ordinary shares in favor of the business combination and thereby increase the likelihood of obtaining shareholder approval of
the business combination or (ii) to satisfy a closing condition in an agreement with a target that requires us to have a minimum
net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement
would otherwise not be met. This may result in the completion of our initial business combination that may not otherwise have been
possible.
In addition, if such purchases are made, the public “float”
of our ordinary shares may be reduced and the number of beneficial holders of our securities may be reduced, which may make it
difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Our sponsor, directors, officers or advisors, Encompass, or
their respective affiliates anticipate that they may identify the shareholders with whom our sponsor, directors, officers or advisors,
the Encompass Funds, or their respective affiliates may pursue privately negotiated purchases by either the shareholders contacting
us directly or by our receipt of redemption requests submitted by shareholders following our mailing of proxy materials in connection
with our initial business combination. To the extent that our sponsor, directors, officers or advisors, the Encompass Funds, or
their respective affiliates enter into a private purchase, they would identify and contact only potential selling shareholders
who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against the business
combination. Such persons would select the shareholders from whom to acquire shares based on the number of shares available, the
negotiated price per share and such other factors as any such person may deem relevant at the time of purchase. The price per share
paid in any such transaction may be different than the amount per share a public shareholder would receive if it elected to redeem
its shares in connection with our initial business combination. Our sponsor, directors, officers or advisors, the Encompass Funds,
or their respective affiliates will only purchase our shares if such purchases comply with Regulation M under the Exchange Act
and the other federal securities laws.
Any purchases by our sponsor, directors, officers or advisors,
the Encompass Funds, or their respective affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will
only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability
for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that
must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, directors, officers or advisors,
the Encompass Funds, or their respective affiliates will not make purchases of our ordinary shares if the purchases would violate
Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
Redemption rights for public shareholders upon completion
of our initial business combination
We will provide our public shareholders with the opportunity
to redeem all or a portion of their Class A ordinary shares upon the completion of our initial business combination at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the
consummation of the initial business combination, including interest (which interest shall be net of taxes payable) divided by
the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account, as
of December 31, 2019, was $287,830,781. The per-share amount we will distribute to investors who properly redeem their shares will
not be reduced by the deferred underwriting commissions we will pay to the underwriters. The redemption rights will include the
requirement that a beneficial holder must identify itself in order to validly redeem its shares. Our sponsor, officers and directors
have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect
to their founder shares and any public shares they may hold in connection with the completion of our initial business combination.
Manner of conducting redemptions
We will provide our public shareholders with the opportunity
to redeem all or a portion of their Class A ordinary shares upon the completion of our initial business combination either (i)
in connection with a shareholder meeting called to approve the business combination or (ii) by means of a tender offer. The decision
as to whether we will seek shareholder approval of a proposed business combination or conduct a tender offer will be made by us,
solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms
of the transaction would require us to seek shareholder approval under the law or stock exchange listing requirement. Under NYSE
rules, asset acquisitions and stock purchases would not typically require shareholder approval while direct mergers with our company
where we do not survive and any transactions where we issue more than 20% of our outstanding ordinary shares or seek to amend
our amended and restated memorandum and articles of association would require shareholder approval. We intend to conduct redemptions
without a shareholder vote pursuant to the tender offer rules of the SEC unless shareholder approval is required by law or stock
exchange listing requirement or we choose to seek shareholder approval for business or other legal reasons. So long as we obtain
and maintain a listing for our securities on the NYSE, we will be required to comply with NYSE rules.
If a shareholder vote is not required and we do not decide
to hold a shareholder vote for business or other legal reasons, we will, pursuant to our amended and restated memorandum and articles
of association:
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conduct the redemptions pursuant to
Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers;
and
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file tender offer documents with the
SEC prior to completing our initial business combination which contain substantially
the same financial and other information about the initial business combination and the
redemption rights as is required under Regulation 14A of the Exchange Act, which regulates
the solicitation of proxies.
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Upon the public announcement of our initial business combination,
we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase our Class A ordinary shares in
the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions pursuant to the tender
offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange
Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period.
In addition, the tender offer will be conditioned on public shareholders not tendering more than a specified number of public
shares which are not purchased by our sponsor, which number will be based on the requirement that we will only redeem our public
shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon
consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that we are
not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may
be contained in the agreement relating to our initial business combination. If public shareholders tender more shares than we
have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
If, however, shareholder approval of the transaction is required
by law or stock exchange listing requirement, or we decide to obtain shareholder approval for business or other legal reasons,
we will, pursuant to our amended and restated memorandum and articles of association:
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conduct the redemptions in conjunction
with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates
the solicitation of proxies, and not pursuant to the tender offer rules; and
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file proxy materials with the SEC.
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We expect that a final proxy statement would be mailed to public
shareholders at least 10 days prior to the shareholder vote. However, we expect that a draft proxy statement would be made available
to such shareholders well in advance of such time, providing additional notice of redemption if we conduct redemptions in conjunction
with a proxy solicitation. Although we are not required to do so, we currently intend to comply with the substantive and procedural
requirements of Regulation 14A in connection with any shareholder vote even if we are not able to maintain our NYSE listing or
Exchange Act registration.
In the event that we seek shareholder approval of our initial
business combination, we will distribute proxy materials and, in connection therewith, provide our public shareholders with the
redemption rights described above upon completion of the initial business combination.
If we seek shareholder approval, we will complete our initial
business combination only if a majority of the issued and outstanding ordinary shares voted are voted in favor of the business
combination. In such case, pursuant to the terms of a letter agreement entered into with us, our sponsor, officers and directors
have agreed (and their permitted transferees will agree) to vote any founder shares and any public shares held by them in favor
of our initial business combination. We expect that at the time of any shareholder vote relating to our initial business combination,
our sponsor and its permitted transferees will own at least 20% of our issued and outstanding ordinary shares entitled to vote
thereon. Each public shareholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed
transaction. In addition, our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they
have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the completion
of a business combination.
Our amended and restated memorandum and articles of association
provides that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least
$5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’
fees and commissions (so that we are not subject to the SEC’s “penny stock” rules). Redemptions of our public
shares may also be subject to a higher net tangible asset test or cash requirement pursuant to an agreement relating to our initial
business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target
or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the
retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event
the aggregate cash consideration we would be required to pay for all Class A ordinary shares that are validly submitted for redemption
plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate
amount of cash available to us, we will not complete the business combination or redeem any shares, and all Class A ordinary shares
submitted for redemption will be returned to the holders thereof.
Limitation on redemption upon completion of our initial
business combination if we seek shareholder approval
Notwithstanding the foregoing, if we seek shareholder approval
of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant
to the tender offer rules, our amended and restated memorandum and articles of association provide that a public shareholder, together
with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than
15% of the shares sold in our initial public offering (the “Excess Shares”). We believe this restriction will discourage
shareholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise
their redemption rights against a proposed business combination as a means to force us or our sponsor or its affiliates to purchase
their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a
public shareholder holding more than an aggregate of 15% of the shares sold in our initial public offering could threaten to exercise
its redemption rights if such holder’s shares are not purchased by us or our sponsor or its affiliates at a premium to the
then-current market price or on other undesirable terms. By limiting our shareholders’ ability to redeem no more than 15%
of the shares sold in our initial public offering our purchased thereafter through open market purchases, we believe we will limit
the ability of a small group of shareholders to unreasonably attempt to block our ability to complete our initial business combination,
particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum
net worth or a certain amount of cash. However, we would not be restricting our shareholders’ ability to vote all of their
shares (including Excess Shares) for or against our initial business combination. Our sponsor, officers and directors have, pursuant
to a letter agreement entered into with us, waived their right to have any founder shares or public shares held by them redeemed
in connection with our initial business combination. Unless any of our other affiliates acquires founder shares through a permitted
transfer from an initial shareholder, and thereby becomes subject to the letter agreement, no such affiliate is subject to this
waiver. However, to the extent any such affiliate acquires public shares, it would be a public shareholder and restricted from
seeking redemption rights with respect to any Excess Shares.
Tendering share certificates in connection with a tender
offer or redemption rights
We may require our public shareholders seeking to exercise
their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their
certificates (if any) to our transfer agent prior to the date set forth in the tender offer documents, or up to two business days
prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver
their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian)
System, rather than simply voting against the initial business combination. The tender offer or proxy materials, as applicable,
that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether
we are requiring public shareholders to satisfy such delivery requirements. Accordingly, a public shareholder would have from
the time we send out our tender offer materials until the close of the tender offer period, or up to two days prior to the vote
on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise
its redemption rights. Pursuant to the tender offer rules, the tender offer period will be not less than 20 business days and,
in the case of a shareholder vote, a final proxy statement would be mailed to public shareholders at least 10 days prior to the
shareholder vote. However, we expect that a draft proxy statement would be made available to such shareholders well in advance
of such time, providing additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. Given
the relatively short exercise period, it is advisable for shareholders to use electronic delivery of their public shares.
There is a nominal cost associated with the above-referenced
tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will
typically charge the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming
holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights
to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of
when such delivery must be effectuated.
Any request to redeem such shares, once made, may be withdrawn
at any time up to the date set forth in the tender offer materials or the date of the shareholder meeting set forth in our proxy
materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection with an election
of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may
simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds
to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion
of our initial business combination.
If our initial business combination is not approved or completed
for any reason, then our public shareholders who elected to exercise their redemption rights would not be entitled to redeem their
shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered
by public holders who elected to redeem their shares.
If our initial proposed business combination is not completed,
we may continue to try to complete a business combination with a different target by November 29, 2021.
Redemption of public shares and liquidation if no initial
business combination
Our sponsor, officers and directors have agreed that we will
have until November 29, 2021 to complete our initial business combination. If we are unable to complete our initial business combination
by November 29, 2021, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible
but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the trust account, including interest (less up to $100,000 of interest to pay dissolution
expenses (which interest shall be net of taxes payable) divided by the number of then outstanding public shares, which redemption
will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation
distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject
to the approval of our remaining shareholders and our Board of Directors, liquidate and dissolve, subject in each case to our
obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will
be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete
our initial business combination within such time period.
Our sponsor, officers and directors have entered into a letter
agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect
to their founder shares if we fail to complete our initial business combination by November 29, 2021. However, if our sponsor
acquires public shares, it will be entitled to liquidating distributions from the trust account with respect to such public shares
if we fail to complete our initial business combination within such time period.
Our sponsor, officers and directors have agreed, pursuant to
a written letter agreement with us, that they will not propose any amendment to our amended and restated memorandum and articles
of association that would (i) modify the substance or timing of our obligation to allow redemption in connection with our initial
business combination or to redeem 100% of our public shares if we do not complete our initial business combination by November
29, 2021 or (ii) with respect to the other provisions relating to shareholders’ rights or pre-business combination activity,
unless we provide our public shareholders with the opportunity to redeem their Class A ordinary shares upon approval of any such
amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including
interest (which interest shall be net of taxes payable) divided by the number of then outstanding public shares. However, we will
only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately
prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions
(so that we are not subject to the SEC’s “penny stock” rules). If this optional redemption right is exercised
with respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described
above), we would not proceed with the amendment or the related redemption of our public shares.
We expect to use the amounts held outside the trust account
($2,282,362 as of December 31, 2019) to pay for all costs and expenses associated with implementing our plan of dissolution, as
well as payments to any creditors, if we do not complete an initial business combination by November 29, 2021, although we cannot
assure you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs
and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust
account not required to pay taxes, we may request the trustee to release to us an additional amount of up to $100,000 of such
accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds of our initial
public offering and the sale of the private placement warrants, other than the proceeds deposited in the trust account, and without
taking into account interest, if any, earned on the trust account, the per-share redemption amount received by shareholders upon
our dissolution would be approximately $10.00. The proceeds deposited in the trust account could, however, become subject to the
claims of our creditors which would have higher priority than the claims of our public shareholders. We cannot assure you that
the actual per-share redemption amount received by shareholders will not be substantially less than $10.00. While we intend to
pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we will seek to have all vendors, service providers
(other than our independent auditors), prospective target businesses or other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit
of our public shareholders, there is no guarantee that they will execute such agreements or even if they execute such agreements
that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement,
breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in
each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account.
If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management
will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has
not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to
us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include
the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly
superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service
provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they
may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek
recourse against the trust account for any reason. Upon redemption of our public shares, if we are unable to complete our initial
business combination within the prescribed time frame, or upon the exercise of a redemption right in connection with our initial
business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought
against us within the 10 years following redemption. Our sponsor has agreed that it will be liable to us if and to the extent
any claims by a third party (other than our independent auditors) for services rendered or products sold to us, or a prospective
target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account
to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the
liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest which
may be withdrawn to pay taxes. This liability will not apply with respect to any claims by a third party who executed a waiver
of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters
of our initial public offering against certain liabilities, including liabilities under the Securities Act. Because we are a blank
check company, rather than an operating company, and our operations are limited to searching for prospective target businesses
to acquire, the only third parties we currently expect to engage would be vendors such as lawyers, investment bankers, computer
or information and technical services providers or prospective target businesses. In the event that an executed waiver is deemed
to be unenforceable against a third party, then our sponsor will not be responsible to the extent of any liability for such third-party
claims. We have not independently verified whether our sponsor has sufficient funds to satisfy their indemnity obligations and
believe that our sponsor’s only assets are securities of our company. None of our other officers will indemnify us for claims
by third parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds in the trust account are reduced
below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the
liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest which
may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its indemnification obligations or that it
has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal
action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors
would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that
our independent directors in exercising their business judgment may choose not to do so in any particular instance. Accordingly,
we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be substantially
less than $10.00 per share.
We will seek to reduce the possibility that our sponsor will
have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers (other than
our independent auditors), prospective target businesses or other entities with which we do business execute agreements with us
waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be
liable as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including
liabilities under the Securities Act. We may have access to use the amounts held outside the trust account ($2,282,362 as of December
31, 2019) to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently
estimated to be no more than approximately $100,000) but these amounts may be spend on expenses incurred as a result of being
a public company or due diligence expenses on prospective business combination candidates. In the event that we liquidate and
it is subsequently determined that the reserve for claims and liabilities is insufficient, shareholders who received funds from
our trust account could be liable for claims made by creditors.
If we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy
law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of
our shareholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return
$10.00 per share to our public shareholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result,
a bankruptcy court could seek to recover all amounts received by our shareholders. Furthermore, our Board of Directors may be
viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself
and our company to claims of punitive damages, by paying public shareholders from the trust account prior to addressing the claims
of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our public shareholders will be entitled to receive funds from
the trust account only upon the earlier of (i) the completion of our initial business combination, (ii) the redemption of any
public shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles
of association to (A) modify the substance or timing of our obligation to allow redemption in connection with our initial business
combination or to redeem 100% of our public shares if we do not complete our initial business combination by November 29, 2021
or (B) with respect to any other provision relating to shareholders’ rights or pre-business combination activity and (iii)
the redemption of all of our public shares if we are unable to complete our initial business combination by November 29, 2021,
subject to applicable law. In no other circumstances will a shareholder have any right or interest of any kind to or in the trust
account. In the event we seek shareholder approval in connection with our initial business combination, a shareholder’s
voting in connection with the business combination alone will not result in a shareholder’s redeeming its shares to us for
an applicable pro rata share of the trust account. Such shareholder must have also exercised its redemption rights described above.
Amended and Restated Memorandum and Articles of Association
Our amended and restated memorandum and articles of association
contain certain requirements and restrictions relating to our initial public offering that apply to us until the consummation
of our initial business combination. If we seek to amend any provisions of our amended and restated memorandum and articles of
association relating to shareholders’ rights or pre-business combination activity, we will provide dissenting public shareholders
with the opportunity to redeem their public shares in connection with any such vote. Our sponsor, officers and directors have
agreed to waive any redemption rights with respect to their founder shares and public shares in connection with the completion
of our initial business combination. Specifically, our amended and restated memorandum and articles of association provide, among
other things, that:
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prior to the consummation of our initial
business combination, we shall either (1) seek shareholder approval of our initial business
combination at a meeting called for such purpose at which shareholders may seek to redeem
their shares, regardless of whether they vote for or against the proposed business combination,
into their pro rata share of the aggregate amount then on deposit in the trust account,
including interest (which interest shall be net of taxes payable) or (2) provide our
public shareholders with the opportunity to tender their shares to us by means of a tender
offer (and thereby avoid the need for a shareholder vote) for an amount equal to their
pro rata share of the aggregate amount then on deposit in the trust account, including
interest (which interest shall be net of taxes payable) in each case subject to the limitations
described herein;
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we will consummate our initial business
combination only if we have net tangible assets of at least $5,000,001 either immediately
prior to or upon such consummation and, solely if we seek shareholder approval, a majority
of the issued and outstanding ordinary shares voted are voted in favor of the business
combination;
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if our initial business combination
is not consummated prior to November 29, 2021, then our existence will terminate and
we will distribute all amounts in the trust account; and
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prior to our initial business combination,
we may not issue additional ordinary shares that would entitle the holders thereof to
(i) receive funds from the trust account or (ii) vote on any initial business combination.
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These provisions cannot be amended without the approval of
holders of at least two-thirds of our ordinary shares. In the event we seek shareholder approval in connection with our initial
business combination, our amended and restated memorandum and articles of association provide that we may consummate our initial
business combination only if approved by a majority of the ordinary shares voted by our shareholders at a duly held shareholders
meeting.
Competition
In identifying, evaluating and selecting a target business
for our initial business combination, we encounter intense competition from other entities having a business objective similar
to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking
strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting business
combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and
other resources than us. Our ability to acquire larger target businesses will be limited by our available financial resources.
This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation
to pay cash in connection with our public shareholders who exercise their redemption rights may reduce the resources available
to us for our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may
not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully
negotiating an initial business combination.
Conflicts of interest
Although we do not believe any conflict currently exists between
us and Encompass, funds advised by Encompass, or its affiliates may compete with us for acquisition or investment opportunities.
If such entities decide to pursue an opportunity, we may be precluded from procuring such opportunity. In addition, investment
ideas generated within Encompass may be suitable for both us, and for funds advised, or separate accounts managed by, Encompass
and for an Encompass affiliate and may be directed to such entity rather than to us. Encompass will not have any obligation to
present us with any opportunity for a potential business combination of which they become aware. Encompass may be required to
present potential business combinations to future Encompass affiliates, or funds advised by, or separate accounts managed by,
Encompass, or third parties, before they present such opportunities to us. Encompass and our management team may have similar
obligations to future investment vehicles or third parties.
We may, at our option, pursue an Affiliated Joint Acquisition
opportunity with (or funds advised by) Encompass or any such fund or other investment vehicle, but such parties would co-invest
only if permitted by applicable regulatory and other legal limitations and to the extent considered appropriate. Such entity may
co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds
to complete the initial business combination by making a specified future issuance to any such fund or vehicle.
Each of our directors and officers presently has, and in the
future any of our directors and our officers may have additional, fiduciary or contractual obligations to other entities pursuant
to which such officer or director is or will be required to present acquisition opportunities to such entity. Accordingly, subject
to his or her fiduciary duties under Cayman Islands law, if any of our officers or directors becomes aware of an acquisition opportunity
which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will need
to honor his or her fiduciary or contractual obligations to present such acquisition opportunity to such entity, and only present
it to us if such entity rejects the opportunity. In addition, we may, at our option, pursue an Affiliated Joint Acquisition opportunity
with an entity to which Encompass (or funds advised by Encompass), an officer or director has a fiduciary or contractual obligation.
Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise
additional proceeds to complete the acquisition by making a specified future issuance to any such entity. Our amended and restated
memorandum and articles of association provide that, subject to his or her fiduciary duties under Cayman Islands law, no director
or officer shall be disqualified or prevented from contracting with the company nor shall any contract or transaction entered
into by or on behalf of the company in which any director shall have an interest be liable to be avoided. A director shall be
at liberty to vote in respect of any contract or transaction in which he is interested provided that the nature of such interest
shall be disclosed at or prior to its consideration or any vote thereon by the Board of Directors. We do not believe, however,
that any fiduciary duties or contractual obligations of our directors or officers would materially undermine our ability to complete
our business combination.
Members of our management team directly or indirectly own our
ordinary shares and/or private placement warrants, and, accordingly, may have a conflict of interest in determining whether a
particular target business is an appropriate business with which to effectuate our initial business combination. Further, each
of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if
the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement
with respect to our initial business combination.
Indemnity
Our sponsor has agreed that it will be liable to us if and
to the extent any claims by a third party (other than our independent auditors) for services rendered or products sold to us,
or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds
in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account
as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of
the interest which may be withdrawn to pay taxes. This liability will not apply with respect to any claims by a third party who
executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of
the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. Because
we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective
target businesses to acquire, the only third parties we currently expect to engage would be vendors such as lawyers, investment
bankers, computer or information and technical services providers or prospective target businesses. Moreover, in the event that
an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any
liability for such third party claims. We have not independently verified whether our sponsor has sufficient funds to satisfy
their indemnity obligations and believe that our sponsor’s only assets are securities of our company. We have not asked
our sponsor to reserve for such obligations.
Employees
We have three (3) officers. Aside from Daniel Barcelo, our
Chief Executive Officer, who devotes his full time to our affairs, members of our management team are not obligated to devote
any specific number of hours to our matters but they devote as much of their time as they deem necessary to our affairs until
we have completed our initial business combination. The amount of time that our officers or any other members of our management
team aside from Mr. Barcelo devote in any time period will vary based on whether a target business has been selected for our initial
business combination and the current stage of the business combination process.
Periodic reporting and financial information
We have registered our units, Class A ordinary shares and warrants
under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports
with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements audited
and reported on by our independent registered public auditors.
We will provide shareholders with audited financial statements
of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to shareholders
to assist them in assessing the target business. These financial statements may be required to be prepared in accordance with,
or be reconciled to, U.S. GAAP, or IFRS, depending on the circumstances and the historical financial statements may be required
to be audited in accordance with the PCAOB. These financial statement requirements may limit the pool of potential target businesses
we may acquire because some targets may be unable to provide such statements in time for us to disclose such statements in accordance
with federal proxy rules and complete our initial business combination within the prescribed time frame. While this may limit
the pool of potential acquisition candidates, we do not believe that this limitation will be material.
We will be required to evaluate our internal control procedures
for the fiscal year ending December 31, 2020 as required by the Sarbanes-Oxley Act. Only in the event we are deemed to be a large
accelerated filer or an accelerated filer will we be required to have our internal control procedures audited. A target company
may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development
of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs
necessary to complete any such acquisition.
We are an “emerging growth company,” as defined
in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions
from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden
parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a
less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that
an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of
the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company”
can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend
to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier
of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b)
in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated
filer, which means the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the prior
June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during
the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with
it in the JOBS Act.
You should carefully consider all of the risks described
below, together with the other information contained in this report, including the financial statements, before making a decision
to invest in our units. If any of the following risks occur, our business, financial condition or operating results may be materially
and adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your
investment.
We are an early stage company with limited operating
history and no revenues, and you have little basis on which to evaluate our ability to achieve our business objective.
We are an early stage company incorporated under the laws of
the Cayman Islands with limited operating results, and no revenues. Because we lack significant operating history, you have little
basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination with
one or more target businesses. We may be unable to complete our initial business combination. If we fail to complete our initial
business combination, we will never generate any operating revenues.
Our public shareholders may not be afforded an opportunity
to vote on our proposed business combination, which means we may complete our initial business combination even though a majority
of our public shareholders do not support such a combination.
We may not hold a shareholder vote to approve our initial business
combination unless the business combination would require shareholder approval under applicable Cayman Islands law or the rules
of the NYSE or if we decide to hold a shareholder vote for business or other reasons. Examples of transactions that would not
ordinarily require shareholder approval under Cayman Islands law or the rules of the NYSE include asset acquisitions and share
purchases, while transactions such as direct mergers with our company or transactions where we issue more than 20% of our outstanding
shares would require shareholder approval. For instance, the NYSE rules currently allow us to engage in a tender offer in lieu
of a shareholder meeting but would still require us to obtain shareholder approval if we were seeking to issue more than 20% of
our outstanding shares to a target business as consideration in any business combination. Therefore, if we were structuring a
business combination that required us to issue more than 20% of our outstanding shares, we would seek shareholder approval of
such business combination. Except as required by law or NYSE rules, the decision as to whether we will seek shareholder approval
of a proposed business combination or will allow shareholders to sell their shares to us in a tender offer will be made by us,
solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms
of the transaction would otherwise require us to seek shareholder approval. Accordingly, we may consummate our initial business
combination even if holders of a majority of the issued and outstanding Class A ordinary shares do not approve of the business
combination we consummate.
If we seek shareholder approval of our initial business
combination, our sponsor, officers and directors have agreed to vote in favor of such initial business combination, regardless
of how our public shareholders vote.
Our sponsor, officers and directors have agreed (and their
permitted transferees will agree), pursuant to the terms of a letter agreement entered into with us, to vote any founder shares
and any public shares held by them, in favor of our initial business combination. Our sponsor owns 20% of our issued and outstanding
Class A ordinary shares. As a result, in addition to our initial shareholder’s founder shares, we would need only 10,781,251,
or 37.5%, of the 28,750,000 public shares sold in our initial public offering to be voted in favor of a transaction (assuming
all outstanding shares are voted) in order to have our initial business combination approved. Accordingly, if we seek shareholder
approval of our initial business combination, it is more likely that the necessary shareholder approval will be received than
would be the case if such persons agreed to vote their founder shares in accordance with the majority of the votes cast by our
public shareholders.
Your opportunity to affect the investment decision regarding
a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless
we seek shareholder approval of the business combination.
You may not be provided with an opportunity to evaluate the
specific merits or risks of one or more target businesses. Since our Board of Directors may complete a business combination without
seeking shareholder approval, public shareholders may not have the right or opportunity to vote on the business combination, unless
we seek such shareholder approval. Accordingly, if we do not seek shareholder approval, your only opportunity to affect the investment
decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time
(which will be at least 20 business days) set forth in our tender offer documents mailed to our public shareholders in which we
describe our initial business combination.
The ability of our public shareholders to redeem their
shares for cash 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 a business combination transaction
agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount
of cash. If too many public shareholders exercise their redemption rights, we would not be able to meet such closing condition
and, as a result, would not be able to proceed with the business combination. Furthermore, we will only redeem our public shares
so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation
of our initial business combination and after payment of underwriters’ fees and commissions (so that we are not subject
to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained
in the agreement relating to our initial business combination. Consequently, if accepting all properly submitted redemption requests
would cause our net tangible assets to be less than $5,000,001 or such greater amount necessary to satisfy a closing condition,
each as described above, we would not proceed with such redemption and the related business combination and may instead search
for an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into
a business combination transaction with us.
The ability of our public shareholders to exercise redemption
rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize
our capital structure.
At the time we enter into an agreement for our initial business
combination, we will not know how many shareholders may exercise their redemption rights, and therefore we will need to structure
the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our initial business
combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us
to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements,
or arrange for third party financing. In addition, if a larger number of shares are submitted for redemption than we initially
expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange
for third party financing. Raising additional third party financing may involve dilutive equity issuances or the incurrence of
indebtedness at higher than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution provisions
of the Class B ordinary shares result in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion
of the Class B shares at the time of the initial business combination. The above considerations may limit our ability to complete
the most desirable business combination available to us or optimize our capital structure.
The ability of our public shareholders to exercise redemption
rights with respect to a large number of our shares could increase the probability that our initial business combination would
be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial business combination agreement requires us to
use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing,
the probability that our initial business combination would be unsuccessful is increased. If our initial business combination
is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you
are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares
may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material
loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are
able to sell your shares in the open market.
The requirement that we complete our initial business
combination within the prescribed time frame may give potential target businesses leverage over us in negotiating a business combination
and may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution
deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for
our shareholders.
Any potential target business with which we enter into negotiations
concerning a business combination will be aware that we must complete our initial business combination by November 29, 2021. Consequently,
such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our
initial business combination with that particular target business, we may be unable to complete our initial business combination
with any target business. This risk will increase as we get closer to the timeframe described above. In addition, we may have
limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected
upon a more comprehensive investigation.
We may not be able to complete our initial business combination
within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would
redeem our public shares and liquidate, in which case our public shareholders may only receive $10.01 per share or less than such
amount in certain circumstances, based on the balance of our trust account (as of December 31, 2019), and our warrants will expire
worthless.
Our sponsor, officers and directors have agreed that we must
complete our initial business combination by November 29, 2021. We may not be able to find a suitable target business and complete
our initial business combination within such time period. If we have not completed our initial business combination within such
time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but
not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable, and less up to
$100,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will
completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of our remaining shareholders and our Board of Directors, liquidate and dissolve, subject in each case to our obligations under
Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In such case, our public shareholders
may only receive $10.01 per share, or less than such amount in certain circumstances, based on the balance of our trust account
(as of December 31, 2019), and our warrants will expire worthless.
If we seek shareholder approval of our initial business
combination, our sponsor, directors, officers, advisors and their affiliates may elect to purchase shares from public shareholders,
which may influence a vote on a proposed business combination and reduce the public “float” of our Class A ordinary
shares.
If we seek shareholder approval of our initial business combination
and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor,
directors, officers or advisors, the Encompass Funds, or their respective affiliates may purchase our Class A ordinary shares in
privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination,
although they are under no obligation to do so. Such a purchase may include a contractual acknowledgement that such shareholder,
although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its
redemption rights. In the event that our sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates
purchase our shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption
rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The price per share
paid in any such transaction may be different than the amount per share a public shareholder would receive if it elected to redeem
its shares in connection with our initial business combination. The purpose of such purchases could be to vote such shares in favor
of the business combination and thereby increase the likelihood of obtaining shareholder approval of the business combination or
to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of
cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. This
may result in the completion of our initial business combination that may not otherwise have been possible.
In addition, if such purchases are made, the public “float”
of our Class A ordinary shares and the number of beneficial holders of our securities may be reduced, possibly making it difficult
to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
If a shareholder fails to receive notice of our offer
to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering
its shares, such shares may not be redeemed.
We will comply with the tender offer rules or proxy rules,
as applicable, when conducting redemptions in connection with our initial business combination. Despite our compliance with these
rules, if a shareholder fails to receive our tender offer or proxy materials, as applicable, such shareholder may not become aware
of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as applicable, that we will
furnish to holders of our public shares in connection with our initial business combination will describe the various procedures
that must be complied with in order to validly tender or redeem public shares. In the event that a shareholder fails to comply
with these procedures, its shares may not be redeemed.
You will not have any rights or interests in funds from
the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell
your public shares or warrants, potentially at a loss.
Our public shareholders will be entitled to receive funds from
the trust account only upon the earlier to occur of: (i) the completion of our initial business combination, (ii) the redemption
of any public shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and
articles of association to (A) modify the substance or timing of our obligation to allow redemption in connection with our initial
business combination or to redeem 100% of our public shares if we do not complete our initial business combination by November
29, 2021 or (B) with respect to any other provision relating to shareholders’ rights or pre-business combination activity
and (iii) the redemption of all of our public shares if we are unable to complete our initial business combination by November
29, 2021, subject to applicable law and as further described herein. In no other circumstances will a public shareholder have
any right or interest of any kind in the trust account. Accordingly, to liquidate your investment, you may be forced to sell your
public shares or warrants, potentially at a loss.
The NYSE may delist our securities from trading on its
exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading
restrictions.
Our securities are listed on the NYSE. We cannot assure you
that our securities will continue to be listed on the NYSE in the future or prior to our initial business combination. In order
to continue listing our securities on the NYSE prior to our initial business combination, we must maintain certain financial,
distribution and stock price levels. Generally, we must maintain a minimum number of holders of our securities (400 public holders).
Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with NYSE’s
initial listing requirements, which are more rigorous than NYSE’s continued listing requirements, in order to continue to
maintain the listing of our securities on NYSE. For instance, our stock price would generally be required to be at least $4 per
share. We cannot assure you that we will be able to meet those initial listing requirements at that time. If the NYSE delists
our securities from trading on its exchange and we are not able to list our securities on another national securities exchange,
we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:
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a limited availability of market quotations
for our securities;
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reduced liquidity for our securities;
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a determination that our Class A ordinary
shares are a “penny stock” which will require brokers trading in our Class
A ordinary shares to adhere to more stringent rules and possibly result in a reduced
level of trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst
coverage; and
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a decreased ability to issue additional
securities or obtain additional financing in the future.
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The National Securities Markets Improvement Act of 1996, which
is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as
“covered securities.” Since our units, Class A ordinary shares and warrants are listed on the NYSE, they are covered
securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states
to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states
can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers
to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities
regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale
of securities of blank check companies in their states. Further, if we were no longer listed on the NYSE, our securities would
not be covered securities and we would be subject to regulation in each state in which we offer our securities, including in connection
with our initial business combination.
Our shareholders will not be entitled to protections
normally afforded to investors of many other blank check companies.
Since the net proceeds of our initial public offering and the
sale of the private placement warrants are intended to be used to complete an initial business combination with a target business
that was not then identified, we may be deemed to be a “blank check” company under the United States securities laws.
However, because we had net tangible assets in excess of $5,000,000 at the time of our initial public offering, 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 our units were immediately tradable
and we have a longer period of time to complete our initial business combination than do companies subject to Rule 419. Moreover,
if this offering were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust
account to us unless and until the funds in the trust account were released to us in connection with our completion of an initial
business combination.
If we seek shareholder approval of our initial business
combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of shareholders
are deemed to hold in excess of 15% of our Class A ordinary shares, you will lose the ability to redeem all such shares in excess
of 15% of our Class A ordinary shares.
If we seek shareholder approval of our initial business combination
and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our
amended and restated memorandum and articles of association provide that a public shareholder, together with any affiliate of
such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under
Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15%
of the shares sold in our initial public offering, which we refer to as the “Excess Shares.” However, we would not
be restricting our shareholders’ ability to vote all of their shares (including Excess Shares) for or against our initial
business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial
business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions.
Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our initial business
combination. And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares,
would be required to sell your shares in open market transactions, potentially at a loss.
Because of our limited resources and the significant
competition for business combination opportunities, it may be more difficult for us to complete our initial business combination.
If we are unable to complete our initial business combination, our public shareholders may receive only approximately $10.01 per
share (as of December 31, 2019), or less in certain circumstances, on our redemption, and our warrants will expire worthless.
We expect to encounter intense competition from other entities
having a business objective similar to ours, including private investors (which may be individuals or investment partnerships),
other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to
acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting,
directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors
possess greater technical, human and other resources or more local industry knowledge than we do and our financial resources will
be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses
we could potentially acquire with the net proceeds of our initial public offering and the sale of the private placement warrants,
our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available
financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target
businesses. Furthermore, if we are obligated to pay cash for the Class A ordinary shares redeemed and, in the event we seek shareholder
approval of our initial business combination, we make purchases of our Class A ordinary shares, potentially reducing the resources
available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully
negotiating a business combination. If we are unable to complete our initial business combination, our public shareholders may
only receive $10.01 per share (as of December 31, 2019), or less than such amount in certain circumstances, based on the balance
of our trust account (as of December 31, 2019), and our warrants will expire worthless.
If the net proceeds of our initial public offering not
being held in the trust account are insufficient to allow us to operate until November 29, 2021, we may be unable to complete
our initial business combination.
The funds available to us outside of the trust account may
not be sufficient to allow us to operate until November 29, 2021, assuming that our initial business combination is not completed
during that time. We expect to incur significant costs in pursuit of our acquisition plans. Our affiliates are not obligated to
make loans to us in the future, and we may not be able to raise additional financing from unaffiliated parties necessary to fund
our expenses. Any such event in the future may negatively impact the analysis regarding our ability to continue as a going concern
at such time.
We believe that the funds currently available to us outside
of the trust account, will be sufficient to allow us to operate until November 29, 2021; however, we cannot assure you that our
estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants
to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop”
provision (a provision in letters of intent designed to keep target businesses from “shopping” around for transactions
with other companies 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 a letter of intent where we paid for the right to receive
exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or
otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
If we are unable to complete our initial business combination, our public shareholders may only receive $10.01 per share, or less
than such amount in certain circumstances, based on the balance of our trust account (as of December 31, 2019), and our warrants
will expire worthless.
If the funds available outside of the trust account are
insufficient, it could limit the amount available to fund our search for a target business or businesses and complete our initial
business combination and we will depend on loans from our sponsor or management team to fund our search, to pay our taxes and
to complete our initial business combination. If we are unable to obtain these loans, we may not be able to complete our initial
business combination.
As of December 31, 2019, we had $2,282,362 held outside the
trust account that is available to us to fund our working capital requirements. If we are required to seek additional capital,
we would need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to liquidate.
Neither our sponsor, members of our management team nor any of their affiliates is under any obligation to advance funds to us
in such circumstances. Any such advances would be repaid only from funds held outside the trust account or from funds released
to us upon completion of our initial business combination. If we are unable to complete our initial business combination because
we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. If we
are unable to complete our initial business combination, our public shareholders may only receive $10.01 per share, or less than
such amount in certain circumstances, based on the balance of our trust account (as of December 31, 2019), and our warrants will
expire worthless.
Subsequent to the completion of our initial 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 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 post-combination debt financing. Accordingly, any shareholders who choose to remain shareholders following
the business combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy
for such reduction in value.
If third parties bring claims against us, the proceeds
held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $10.00
per share.
Our placing of funds in the trust account may not protect those
funds from third-party claims against us. Although we have sought and will continue to seek to have all vendors, service providers
(other than our independent auditors), prospective target businesses or other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit
of our public shareholders, such parties may not execute such agreements, or even if they execute such agreements they may not
be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary
responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order
to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party
refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis
of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if
management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
Examples of possible instances where we may engage a third
party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills
are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or
in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee
that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations,
contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public
shares, if we are unable to complete our initial business combination within the prescribed timeframe, or upon the exercise of
a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of
creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share
redemption amount received by public shareholders could be less than the $10.00 per share initially held in the trust account,
due to claims of such creditors.
Our sponsor has agreed that it will be liable to us if and
to the extent any claims by a vendor (other than our independent auditors) for services rendered or products sold to us, or a
prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in
the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account
as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of
the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all
rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of our initial
public offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed
waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability
for such third party claims. We have not independently verified whether our sponsor has sufficient funds to satisfy their indemnity
obligations and believe that our sponsor’s only assets are securities of our company. Our sponsor may not have sufficient
funds available to satisfy those obligations. We have not asked our sponsor to reserve for such obligations, and therefore, no
funds are currently set aside to cover any such obligations. As a result, if any such claims were successfully made against the
trust account, the funds available for our initial business combination and redemptions could be reduced to less than $10.00 per
public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser
amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify us
for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce the indemnification
obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to
our public shareholders.
In the event that the proceeds in the trust account are reduced
below the lesser of (i) $10.00 per public share or (ii) such lesser amount per share held in the trust account as of the date
of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which
may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification
obligations related to a particular claim, our independent directors would determine whether to take legal action against our
sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal
action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent
directors in exercising their business judgment may choose not to do so in any particular instance. If our independent directors
choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to
our public shareholders may be reduced below $10.00 per share.
If, after we distribute the proceeds in the trust account
to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our Board of Directors may be viewed as having
breached their fiduciary duties to our creditors, thereby exposing the members of our Board of Directors and us to claims of punitive
damages.
If, after we distribute the proceeds in the trust account to
our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed,
any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a
“preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover
all amounts received by our shareholders. In addition, our Board of Directors may be viewed as having breached its fiduciary duty
to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public
shareholders from the trust account prior to addressing the claims of creditors.
If, before distributing the proceeds in the trust account
to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the per-share
amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the trust account to
our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed,
the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate
and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims
deplete the trust account, the per-share amount that would otherwise be received by our shareholders in connection with our liquidation
may be reduced.
If we are deemed to be an investment company under the
Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted,
which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company under the Investment
Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments;
and
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restrictions on the issuance of securities;
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each of which may make it difficult
for us to complete our initial business combination.
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In addition, we may have imposed upon us burdensome requirements,
including:
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registration as an investment company;
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adoption of a specific form of corporate
structure; and
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reporting, record keeping, voting,
proxy and disclosure requirements and other rules and regulations.
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We do not believe that our principal activities subject us
to the Investment Company Act. The proceeds held in the trust account may be invested by the trustee only in United States government
treasury bills with a maturity of 185 days or less or in money market funds investing solely in United States Treasuries and meeting
certain conditions under Rule 2a-7 under the Investment Company Act. Because the investment of the proceeds will be restricted
to these instruments, we believe we will meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment
Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens
would require additional expenses for which we have not allotted funds and may hinder our ability to complete a business combination.
If we are unable to complete our initial business combination, our public shareholders may only receive $10.01 per share, or less
than such amount in certain circumstances, based on the balance of our trust account (as of December 31, 2019), and our warrants
will expire worthless.
Changes in laws or regulations, or a failure to comply
with any laws and regulations, may adversely affect our business, investments and results of operations.
We are subject to laws and regulations enacted by national,
regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance
with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations
and their interpretation and application may also change from time to time and those changes could have a material adverse effect
on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations,
as interpreted and applied, could have a material adverse effect on our business and results of operations.
If we are unable to consummate our initial business combination
by November 29, 2021, our public shareholders may be forced to wait beyond November 29, 2021 before redemption from our trust
account.
If we are unable to consummate our initial business combination
by November 29, 2021, we will distribute the aggregate amount then on deposit in the trust account (less up to $100,000 of the
net interest earned thereon to pay dissolution expenses), pro rata to our public shareholders by way of redemption and cease all
operations except for the purposes of winding up of our affairs, as further described herein. Any redemption of public shareholders
from the trust account shall be effected automatically by function of our amended and restated memorandum and articles of association
prior to any voluntary winding up. If we are required to windup, liquidate the trust account and distribute such amount therein,
pro rata, to our public shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply
with the applicable provisions of the Companies Law. In that case, investors may be forced to wait beyond November 29, 2021 before
the redemption proceeds of our trust account become available to them and they receive the return of their pro rata portion of
the proceeds from our trust account. We have no obligation to return funds to investors prior to the date of our liquidation unless
we consummate our initial business combination prior thereto or an amendment is made to our amended and restated memorandum and
articles of association to modify the substance or timing of our obligation to allow redemption in connection with our initial
business combination or to redeem 100% of our public shares if we do not complete our initial business combination by November
29, 2021 and only then in cases where investors have sought to redeem their Class A ordinary shares. Only upon our liquidation
or aforementioned amendment to ur amended and restated articles of association will public shareholders be entitled to distributions
if we are unable to complete our initial business combination.
Our shareholders may be held liable for claims by third
parties against us to the extent of distributions received by them upon redemption of their shares.
If we are forced to enter into an insolvent liquidation, any
distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the
date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business.
As a result, a liquidator could seek to recover all amounts received by our shareholders. Furthermore, our directors may be viewed
as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, and thereby exposing themselves
and our company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors. We
cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who knowingly
and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to pay
our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable to a fine of up
to $18,292 and to imprisonment for five years in the Cayman Islands.
We may not hold an annual meeting of shareholders until
after the consummation of our initial business combination. Our public shareholders will not have the right to appoint directors
prior to the consummation of our initial business combination.
In accordance with NYSE corporate governance requirements,
we are not required to hold an annual meeting until no later than one full year after our first fiscal year end following our
listing on the NYSE (or until December 31, 2020). There is no requirement under the Companies Law for us to hold annual general
meetings in order to appoint directors. Until we hold an annual meeting of shareholders, public shareholders may not be afforded
the opportunity to discuss company affairs with management. In addition, as holders of our Class A ordinary shares, our public
shareholders will not have the right to vote on the appointment of directors prior to consummation of our initial business combination.
We have not registered the Class A ordinary shares issuable
upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not
be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants
except on a cashless basis and potentially causing such warrants to expire worthless.
We have not registered the Class A ordinary shares issuable
upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms of
the warrant agreement, we have agreed that as soon as practicable, but in no event later than 15 business days after the closing
of our initial business combination, we will use our best efforts to file, and within 60 business days following our initial business
combination to have declared effective, a registration statement covering such shares and maintain a current prospectus relating
to the Class A ordinary shares issuable upon exercise of the warrants, until the expiration of the warrants in accordance with
the provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events
arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial
statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares
issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise
their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be
obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise
is registered or qualified under the securities laws of the state of the exercising holder, or an exemption is available. Notwithstanding
the foregoing, if a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not
effective within a specified period following the consummation of our initial business combination, warrant holders may, until
such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective
registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities
Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be
able to exercise their warrants on a cashless basis. We will use our best efforts to register or qualify the shares under applicable
blue sky laws to the extent an exemption is not available. In no event will we be required to net cash settle any warrant, or
issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the
shares underlying the warrants under applicable state securities laws and no exemption is available. If the issuance of the shares
upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such
warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event,
holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the
Class A ordinary shares included in the units. If and when the warrants become redeemable by us, we may not exercise our redemption
right if the issuance of shares upon exercise of the warrants is not exempt from registration or qualification under applicable
state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register or
qualify such shares under the blue sky laws of the state of residence in those states in which the warrants were offered by us
in our initial public offering.
The grant of registration rights to our sponsor and holders
of our private placement warrants may make it more difficult to complete our initial business combination, and the future exercise
of such rights may adversely affect the market price of our Class A ordinary shares.
Pursuant to the agreement entered into concurrently with the
issuance and sale of the securities in our initial public offering, our sponsor and its permitted transferees can demand that
we register their founder shares, after those shares convert to our Class A ordinary shares at the time of our initial business
combination. In addition, holders of our private placement warrants and their permitted transferees can demand that we register
the private placement warrants and the Class A ordinary shares issuable upon exercise of the private placement warrants, and holders
of warrants that may be issued upon conversion of working capital loans, may demand that we register such warrants or the Class
A ordinary shares issuable upon exercise of such warrants. We 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 may have an adverse effect on the
market price of our Class A ordinary shares. In addition, the existence of the registration rights may make our initial business
combination more costly or difficult to conclude. This is because the shareholders 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
our Class A ordinary shares that is expected when the Class A ordinary shares owned by our sponsor, holders of our private placement
warrants or holders of our working capital loans or their respective permitted transferees are registered.
Because we are not limited to a particular industry or
any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits
or risks of any particular target business’s operations.
We may pursue acquisition opportunities in any one of numerous
industries, except that we will not, under our amended and restated memorandum and articles of association, be permitted to effectuate
our business combination with another blank check company or similar company with nominal operations. To the extent we complete
our business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For
example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we
may be affected by the risks inherent in the business and operations of a financially unstable or an early stage entity. Although
our officers and directors 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 units will
ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business
combination target. Accordingly, any shareholders who choose to remain shareholders following the business combination could suffer
a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they
are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other
fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the tender offer
materials or proxy statement relating to the business combination contained an actionable material misstatement or material omission.
Past performance by our management team and their respective
affiliates may not be indicative of future performance of an investment in us.
Information regarding performance by, or businesses associated
with, our management team and Encompass and their affiliates is presented for informational purposes only. Past performance by
our management team and Encompass, including their affiliates’ past performance, is not a guarantee either (i) of success
with respect to any business combination we may consummate or (ii) that we will be able to locate a suitable candidate for our
initial business combination. You should not rely on the historical record of our management team and their affiliates as indicative
of our future performance and you may lose all or part of your invested capital. Additionally, in the course of their respective
careers, members of our management team and Encompass have been involved in businesses and deals that were unsuccessful. Aside
from John Wu, one of our directors, our officers and directors have not had management experience with blank check companies or
special purpose acquisition corporations in the past.
We may seek acquisition opportunities in industries or
sectors that may be outside of our management’s areas of expertise.
We will consider a business combination outside of our management’s
areas of expertise if a business combination candidate is presented to us and we determine that such candidate offers an attractive
acquisition opportunity for our company. In the event we elect to pursue an acquisition outside of the areas of our management’s
expertise, our management’s expertise may not be directly applicable to its evaluation or operation, and the information
contained in this report regarding the areas of our management’s expertise would not be relevant to an understanding of
the business that we elect to acquire. As a result, our management may not be able to adequately ascertain or assess all of the
significant risk factors. Accordingly, any shareholders who choose to remain shareholders following our initial business combination
could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value.
Although we have identified general criteria and guidelines
that we believe are important in evaluating prospective target businesses, we may enter into our initial 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
initial 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 initial business
combination will not have all of these positive attributes. If we complete our initial business combination with a target that
does not meet some or all of these 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, a greater number of shareholders may exercise their redemption rights,
which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net
worth or a certain amount of cash. In addition, if shareholder approval of the transaction is required by law, or we decide to
obtain shareholder approval for business or other legal reasons, it may be more difficult for us to attain shareholder approval
of our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable
to complete our initial business combination, our public shareholders may only receive $10.01 per share, or less than such amount
in certain circumstances, based on the balance of our trust account (as of December 31, 2019), and our warrants will expire worthless.
We may seek acquisition opportunities with a financially
unstable business or an entity lacking an established record of revenue or earnings.
To the extent we complete our initial business combination
with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by numerous
risks inherent in the operations of the business with which we combine. These risks include volatile revenues or earnings and
difficulties in obtaining and retaining key personnel. Although our officers and directors endeavor to evaluate the risks inherent
in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors and we
may not 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 are not required to obtain an opinion from an independent
investment banking or from an independent accounting firm, and consequently, you may have no assurance from an independent source
that the price we are paying for the business is fair to our company from a financial point of view.
Unless we complete our business combination with an affiliated
entity, or our Board of Directors cannot independently determine the fair market value of the target business or businesses, we
are not required to obtain an opinion from an independent investment banking firm or another independent firm that commonly renders
valuation opinions for the type of company we are seeking to acquire or from an independent accounting firm that the price we
are paying for a target is fair to our company from a financial point of view. If no opinion is obtained, our shareholders will
be relying on the judgment of our Board of Directors, who will determine fair market value based on standards generally accepted
by the financial community. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials,
as applicable, related to our initial business combination. However, if our Board of Directors is unable to determine the fair
value of an entity with which we seek to complete an initial business combination based on such standards, we will be required
to obtain an opinion.
We may issue additional Class A ordinary or preference
shares to complete our initial business combination or under an employee incentive plan after completion of our initial business
combination. We may also issue Class A ordinary shares upon the conversion of the Class B ordinary shares at a ratio greater than
one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended
and restated memorandum and articles of association. Any such issuances would dilute the interest of our shareholders and likely
present other risks.
Our amended and restated memorandum and articles of association
authorizes the issuance of up to 200,000,000 Class A ordinary shares, par value $0.0001 per share, 20,000,000 Class B ordinary
shares, par value $0.0001 per share and 2,000,000 undesignated preference shares, par value $0.0001 per share. As of December
31, 2019, there were 148,125,000 and 12,812,500 authorized but unissued Class A and Class B ordinary shares available, respectively,
for issuance, which amount takes into account shares reserved for issuance upon exercise of outstanding warrants but not upon
conversion of the Class B ordinary shares. Class B ordinary shares are convertible into Class A ordinary shares, initially at
a one-for-one ratio but subject to adjustment as set forth herein and in our amended and restated memorandum and articles of association.
There are no preference shares issued and currently outstanding.
We may issue a substantial number of additional Class A ordinary
shares, and may issue preference shares, in order to complete our initial business combination (including pursuant to any specified
future issuance) or under an employee incentive plan after completion of our initial business combination. We may also issue Class
A ordinary shares upon conversion of the Class B ordinary shares at a ratio greater than one-to-one at the time of our initial
business combination as a result of the anti-dilution provisions contained in our amended and restated memorandum and articles
of association. However, our amended and restated memorandum and articles of association provide, among other things, that prior
to our initial business combination, we may not issue additional Class A ordinary shares that would entitle the holders thereof
to (i) receive funds from the trust account or (ii) vote on any initial business combination. The issuance of additional Class
A ordinary shares or preference shares:
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may significantly dilute the equity
interest of investors in our initial public offering;
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may subordinate the rights of holders
of Class A ordinary shares if preference shares are issued with rights senior to those
afforded our Class A ordinary shares;
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could cause a change in control if
a substantial number of Class A ordinary 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 officers and directors; and
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may adversely affect prevailing market
prices for our units, Class A ordinary shares and/or warrants.
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We may be a passive foreign investment company, or “PFIC,”
which could result in adverse U.S. federal income tax consequences to U.S. investors.
If we are determined to be a PFIC (under
the rules described below) for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder (as
defined below) of our Class A ordinary shares or warrants, the U.S. Holder may be subject to adverse U.S. federal income tax consequences
and may be subject to additional reporting requirements. The term “U.S. Holder” means a beneficial owner of Class
A ordinary shares or warrants who or that is for U.S. federal income tax purposes: (i) an individual citizen or resident of the
United States, (ii) a corporation (or other entity treated as a corporation for United States federal income tax purposes) that
is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the
District of Columbia, (iii) an estate the income of which is subject to United States federal income taxation regardless of its
source or (iv) a trust if (A) a court within the United States is able to exercise primary supervision over the administration
of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (B) it has
in effect a valid election to be treated as a U.S. person.
A foreign (i.e., non-U.S.) corporation will be a PFIC for U.S.
tax purposes if at least 75% of its gross income in a taxable year, including its pro rata share of the gross income of any corporation
in which it is considered to own at least 25% of the shares by value, is passive income. Alternatively, a foreign corporation
will be a PFIC if at least 50% of its assets in a taxable year of the foreign corporation, ordinarily determined based on fair
market value and averaged quarterly over the year, including its pro rata share of the assets of any corporation in which it is
considered to own at least 25% of the shares by value, are held for the production of, or produce, passive income. Passive income
generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of
a trade or business) and gains from the disposition of passive assets.
Because we are a blank check company, with no current active
business, we believe that it is likely that we will meet the PFIC asset or income test for our current taxable year. However,
pursuant to a start-up exception, a corporation will not be a PFIC for the first taxable year the corporation has gross income
(the “start-up year”), if (1) no predecessor of the corporation was a PFIC; (2) the corporation satisfies the IRS
that it will not be a PFIC for either of the two taxable years following the start-up year; and (3) the corporation is not in
fact a PFIC for either of those years. The applicability of the start-up exception to us will not be known until after the close
of our current taxable year. After the acquisition of a company or assets in a business combination, we may still meet one of
the PFIC tests depending on the timing of the acquisition and the amount of our passive income and assets as well as the passive
income and assets of the acquired business. If the company that we acquire in a business combination is a PFIC, then we will likely
not qualify for the start-up exception and will be a PFIC for our current taxable year. Our actual PFIC status for our current
taxable year or any future taxable year, however, will not be determinable until after the end of such taxable year. Accordingly,
there can be no assurance with respect to our status as a PFIC for our current taxable year or any future taxable year.
If we are determined to be a PFIC for any taxable year (or
portion thereof) that is included in the holding period of a U.S. Holder of our Class A ordinary shares or warrants and, in the
case of our Class A ordinary shares, the U.S. Holder did not make either a timely qualified electing fund (“QEF”)
election for our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) Class A ordinary shares or
a timely “mark to market” election, each as described below, such holder generally will be subject to special rules
with respect to:
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any
gain recognized by the U.S. Holder on the sale or other disposition of its Class A ordinary
shares or warrants; and
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any
“excess distribution” made to the U.S. Holder (generally, any distributions
to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125%
of the average annual distributions received by such U.S. Holder in respect of the Class
A ordinary shares during the three preceding taxable years of such U.S. Holder or, if
shorter, such U.S. Holder’s holding period for the Class A ordinary shares).
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Under
these rules,
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the
U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S.
Holder’s holding period for the Class A ordinary shares and warrants (as applicable);
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the
amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized
the gain or received the excess distribution, or to the period in the U.S. Holder’s
holding period before the first day of our first taxable year in which we are a PFIC,
will be taxed as ordinary income;
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the
amount allocated to other taxable years (or portions thereof) of the U.S. Holder and
included in its holding period will be taxed at the highest tax rate in effect for that
year and applicable to the U.S. Holder; and
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the
interest charge generally applicable to underpayments of tax will be imposed in respect
of the tax attributable to each such other taxable year of the U.S. Holder.
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In general, if we are determined to be a PFIC, a U.S. Holder
may avoid the PFIC tax consequences described above in respect to our Class A ordinary shares (but not our warrants) by making
a timely QEF election (if eligible to do so) to include in income its pro rata share of our net capital gains (as long-term capital
gain) and other earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed, in the
taxable year of the U.S. Holder in which or with which our taxable year ends. A U.S. Holder generally may make a separate election
to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be
subject to an interest charge.
A U.S. Holder may not make a QEF election with respect to its
warrants to acquire our Class A ordinary shares. As a result, if a U.S. Holder sells or otherwise disposes of such warrants (other
than upon exercise of such warrants), any gain recognized generally will be subject to the special tax and interest charge rules
treating the gain as an excess distribution, as described above, if we were a PFIC at any time during the period the U.S. Holder
held the warrants. If a U.S. Holder that exercises such warrants properly makes a QEF election with respect to the newly acquired
Class A ordinary shares (or has previously made a QEF election with respect to our Class A ordinary shares), the QEF election
will apply to the newly acquired Class A ordinary shares, but the adverse tax consequences relating to PFIC shares, adjusted to
take into account the current income inclusions resulting from the QEF election, will continue to apply with respect to such newly
acquired Class A ordinary shares (which generally will be deemed to have a holding period for purposes of the PFIC rules that
includes the period the U.S. Holder held the warrants), unless the U.S. Holder makes a purging election. The purging election
creates a deemed sale of such shares at their fair market value. The gain recognized by the purging election will be subject to
the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the
purging election, the U.S. Holder will have a new basis and holding period in the Class A ordinary shares acquired upon the exercise
of the warrants for purposes of the PFIC rules.
The QEF election is made on a shareholder-by-shareholder basis
and, once made, can be revoked only with the consent of the IRS. A QEF election may not be made with respect to our warrants.
A U.S. Holder generally makes a QEF election by attaching a completed IRS Form 8621 (Return by a Shareholder of a Passive Foreign
Investment Company or Qualified Electing Fund), including the information provided in a PFIC annual information statement, to
a timely filed U.S. federal income tax return for the tax year to which the election relates. Retroactive QEF elections generally
may be made only by filing a protective statement with such return and if certain other conditions are met or with the consent
of the IRS. U.S. Holders should consult their own tax advisors regarding the availability and tax consequences of a retroactive
QEF election under their particular circumstances.
In order to comply with the requirements of a QEF election,
a U.S. Holder must receive a PFIC annual information statement from us. If we determine we are a PFIC for any taxable year, we
will endeavor to provide to a U.S. Holder such information as the IRS may require, including a PFIC annual information statement,
in order to enable the U.S. Holder to make and maintain a QEF election. However, there is no assurance that we will have timely
knowledge of our status as a PFIC in the future or of the required information to be provided.
If a U.S. Holder has made a QEF election with respect to our
Class A ordinary shares, and the special tax and interest charge rules do not apply to such shares (because of a timely QEF election
for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) such shares or a purge of the PFIC
taint pursuant to a purging election, as described above), any gain recognized on the sale of our Class A ordinary shares generally
will be taxable as capital gain and no interest charge will be imposed under the PFIC rules. As discussed above, U.S. Holders
of a QEF are currently taxed on their pro rata shares of its earnings and profits, whether or not distributed. In such case, a
subsequent distribution of such earnings and profits that were previously included in income generally should not be taxable as
a dividend to such U.S. Holders. The tax basis of a U.S. Holder’s shares in a QEF will be increased by amounts that are
included in income, and decreased by amounts distributed but not taxed as dividends, under the above rules.
Although a determination as to our PFIC status will be made
annually, an initial determination that our company is a PFIC will generally apply for subsequent years to a U.S. Holder who held
Class A ordinary shares or warrants while we were a PFIC, whether or not we meet the test for PFIC status in those subsequent
years. A U.S. Holder who makes the QEF election discussed above for our first taxable year as a PFIC in which the U.S. Holder
holds (or is deemed to hold) our Class A ordinary shares, however, will not be subject to the PFIC tax and interest charge rules
discussed above in respect to such shares. In addition, such U.S. Holder will not be subject to the QEF inclusion regime with
respect to such shares for any taxable year of us that ends within or with a taxable year of the U.S. Holder and in which we are
not a PFIC. On the other hand, if the QEF election is not effective for each of our taxable years in which we are a PFIC and the
U.S. Holder holds (or is deemed to hold) our Class A ordinary shares, the PFIC rules discussed above will continue to apply to
such shares unless the holder makes a purging election, as described above, and pays the tax and interest charge with respect
to the gain inherent in such shares attributable to the pre-QEF election period.
Alternatively, if a U.S. Holder, at the close of its taxable
year, owns shares in a PFIC that are treated as marketable stock, the U.S. Holder may make a mark-to-market election with respect
to such shares for such taxable year. If the U.S. Holder makes a valid mark-to-market election for the first taxable year of the
U.S. Holder in which the U.S. Holder holds (or is deemed to hold) Class A ordinary shares in us and for which we are determined
to be a PFIC, such holder generally will not be subject to the PFIC rules described above in respect to its Class A ordinary shares.
Instead, in general, the U.S. Holder will include as ordinary income each year the excess, if any, of the fair market value of
its Class A ordinary shares at the end of its taxable year over the adjusted basis in its Class A ordinary shares. The U.S. Holder
also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its Class A ordinary
shares over the fair market value of its Class A ordinary shares at the end of its taxable year (but only to the extent of the
net amount of previously included income as a result of the mark-to-market election). The U.S. Holder’s basis in its Class
A ordinary shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other
taxable disposition of the Class A ordinary shares will be treated as ordinary income. Currently, a mark-to-market election likely
may not be made with respect to our warrants.
The mark-to-market election is available only for stock that
is regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission, including
the Nasdaq Capital Market, or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the
market price represents a legitimate and sound fair market value. U.S. Holders should consult their own tax advisors regarding
the availability and tax consequences of a mark-to-market election in respect to our Class A ordinary shares under their particular
circumstances.
If we are a PFIC and, at any time, have a foreign subsidiary
that is classified as a PFIC, U.S. Holders generally would be deemed to own a portion of the shares of such lower-tier PFIC, and
generally could incur liability for the deferred tax and interest charge described above if we receive a distribution from, or
dispose of all or part of our interest in, the lower-tier PFIC or the U.S. Holders otherwise were deemed to have disposed of an
interest in the lower-tier PFIC. We will endeavor to cause any lower-tier PFIC to provide to a U.S. Holder the information that
may be required to make or maintain a QEF election with respect to the lower-tier PFIC. However, there is no assurance that we
will have timely knowledge of the status of any such lower-tier PFIC. In addition, we may not hold a controlling interest in any
such lower-tier PFIC and thus there can be no assurance we will be able to cause the lower-tier PFIC to provide the required information.
U.S. Holders are urged to consult their own tax advisors regarding the tax issues raised by lower-tier PFICs.
A U.S. Holder that owns (or is deemed to own) shares in a PFIC
during any taxable year of the U.S. Holder, may have to file an IRS Form 8621(whether or not a QEF or market-to-market election
is made) and such other information as may be required by the U.S. Treasury Department.
The rules dealing with PFICs and with the QEF and mark-to-market
elections are very complex and are affected by various factors in addition to those described above. Accordingly, U.S. Holders
of our Class A ordinary shares or warrants should consult their own tax advisors concerning the application of the PFIC rules
to our Class A ordinary shares or warrants under their particular circumstances.
We may reincorporate in another jurisdiction in connection
with our initial business combination and such reincorporation may result in taxes imposed on shareholders.
We may, in connection with our initial business combination
and subject to requisite shareholder approval under the Companies Law, reincorporate in the jurisdiction in which the target company
or business is located. The transaction may require a shareholder to recognize taxable income in the jurisdiction in which the
shareholder 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 shareholders to pay such taxes. Shareholders may be subject to withholding taxes or other taxes with
respect to their ownership of us after the reincorporation.
Resources could be wasted in researching acquisitions
that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another
business. If we are unable to complete our initial business combination, our public shareholders may only receive $10.01 per share,
or less than such amount in certain circumstances, based on the balance of our trust account (as of December 31, 2019), and our
warrants will expire worthless.
The investigation of each specific target business and the
negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments requires substantial management
time and attention and substantial costs for accountants, attorneys and others. The costs incurred up to the point that we decide
not to complete a specific initial business combination likely would not be recoverable. Furthermore, if we reach an agreement
relating to a specific target business, we may fail to complete our initial 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. If we are unable to complete our initial business
combination, our public shareholders may only receive $10.01 per share, or less than such amount in certain circumstances, based
on the balance of our trust account (as of December 31, 2019), and our warrants will expire worthless.
We are dependent upon our officers and directors and
their departure could adversely affect our ability to operate.
Our operations are dependent upon a relatively small group
of individuals and, in particular, Mr. Barcelo our Chief Executive Officer, who devotes his full time to our affairs, as well
as Messrs. De’Ath and Kalugin and our other officers and directors. We believe that our success depends on the continued
service of our officers and directors, at least until we have completed our initial business combination. In addition, our officers
and directors are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of
interest in allocating management time among various business activities, including identifying potential business combinations
and monitoring the related due diligence. 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 ability to successfully effect our initial business
combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may
join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability
of our post-combination business.
Our ability to successfully effect our initial business combination
is dependent upon the efforts of our key personnel. The role of our 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 initial business combination, it is likely that some or all of the management of the target business will remain
in place. While we intend to closely scrutinize any individuals we engage after our initial business combination, we cannot assure
you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements
of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar
with such requirements.
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 initial 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 the company after
the completion of our initial business combination only if they are able to negotiate employment or consulting agreements in connection
with the business combination. Such negotiations would take place simultaneously with the negotiation of the 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 the business combination. The personal and financial interests of such individuals
may influence their motivation in identifying and selecting a target business, subject to his or her fiduciary duties under Cayman
Islands law. However, we believe the ability of such individuals to remain with us after the completion of our initial 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 initial
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 initial
business combination.
In addition, the officers and directors of an initial business
combination candidate may resign upon completion of our initial business combination. The departure of an initial business combination
target’s key personnel could negatively impact the operations and profitability of our post-combination business. The role
of an initial business combination candidate’s key personnel upon the completion of our initial business combination cannot
be ascertained at this time. Although we contemplate that certain members of an initial business combination candidate’s
management team will remain associated with the initial business combination candidate following our initial business combination,
it is possible that members of the management of an initial business combination candidate will not wish to remain in place. The
loss of key personnel could negatively impact the operations and profitability of our post-combination business.
We may have a limited ability to assess the management
of a prospective target business and, as a result, may affect our initial business combination with a target business whose management
may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting our initial 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 shareholders who choose to remain shareholders following
the business combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy
for such reduction in value.
Aside from Daniel Barcelo, our officers and directors
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 initial business combination.
Aside from Daniel Barcelo, our Chief Executive Officer, our
officers and directors are not required to, and do 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 a business combination and their other businesses.
Aside from Daniel Barcelo, our Chief Executive Officer, we do not intend to have any full-time employees prior to the completion
of our initial business combination. Aside from Daniel Barcelo, our Chief Executive Officer, each of our officers is engaged in
several 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. Our independent directors also serve as officers and board
members for other entities. If our officers’ and directors’ 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 initial business combination.
Certain of our officers and directors 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 determining to which entity a particular business opportunity should
be presented.
Until we consummate our initial business combination, we intend
to engage in the business of identifying and combining with one or more businesses. Our sponsor and officers and directors are,
or may in the future become, affiliated with entities (such as operating companies or investment vehicles) that are engaged in
making and managing investments in a similar business, although they may not participate in the formation of, or become an officer
or director of, any other special purpose acquisition companies with a class of securities registered under the Exchange Act until
we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial
business combination by November 29, 2021.
Our officers and directors also may become aware of business
opportunities which may be appropriate for presentation to us and the other entities to which they owe certain fiduciary or contractual
duties. Accordingly, they 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 other entities
prior to its presentation to us, subject to his or her fiduciary duties under Cayman Islands law.
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. In fact, we may enter into
a business combination with a target business that is affiliated with our sponsor, our directors or officers, although we do not
intend to do so, or we may acquire a target business through an Affiliated Joint Acquisition with one or more affiliates of (or
funds advised by) Encompass, although we do not intend to do that either. Nor do we 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.
In particular, Encompass and its affiliates also are focused
on investments in the energy industry. As a result, there may be substantial overlap between companies that would be a suitable
business combination for us and companies that would make an attractive target for such other affiliates.
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, officers and directors
with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, officers and directors. 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 a business combination and such transaction was approved by
a majority of our disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm
or another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or an independent
accounting firm, regarding the fairness to our company from a financial point of view of a business combination with one or more
domestic or international businesses affiliated with our officers, directors or existing holders, potential conflicts of interest
still may exist and, as a result, the terms of the business combination may not be as advantageous to our public shareholders
as they would be absent any conflicts of interest.
We may acquire a target business through an Affiliated
Joint Acquisition with one or more affiliates of (or funds advised by) Encompass, although we do not currently intend to do this.
This may result in conflicts of interest as well as dilutive issuances of our securities.
We may, at our option, pursue an Affiliated Joint Acquisition
opportunity with an entity affiliated with (or funds advised by) Encompass, although we do not currently intend to do that. Any
such parties would co-invest only if (i) permitted by applicable regulatory and other legal limitations; (ii) we and Encompass
considered a transaction to be mutually beneficial to us as well as the affiliated entity; and (iii) other business reasons exist
to do so, such as the strategic merits of including such co-investors, the need for additional capital beyond the amount held
in our trust account to fund the initial business combination and/or the desire to obtain committed capital for closing the initial
business combination. An Affiliated Joint Acquisition may be effected through a co-investment with us in the target business at
the time of our initial business combination, or we could raise additional proceeds to complete the initial business combination
by issuing to such parties a class of equity or equity-linked securities. Accordingly, such persons or entities may have a conflict
between their interests and ours.
In addition, any specified future issuance in connection with
Affiliated Joint Acquisition would trigger the anti-dilution provisions of our Class B ordinary shares, which, unless waived,
would result in an adjustment to the conversion ratio of our Class B ordinary shares such that our initial shareholders and their
permitted transferees, if any, would retain their aggregate percentage ownership at 20% of the sum of the total number of all
Class A ordinary shares outstanding plus all shares issued in the specified future issuance. They may waive such adjustment due
to (but not limited to) the following: (i) closing conditions which are part of the agreement for our initial business combination;
(ii) negotiation with Class A shareholders on structuring an initial business combination; (iii) negotiation with parties providing
financing which would trigger the anti-dilution provisions of the Class B ordinary shares; or (iv) as part of the Affiliated Joint
Acquisition. If such adjustment is not waived, the specified future issuance would not reduce the percentage ownership of holders
of our Class B ordinary shares, but would reduce the percentage ownership of holders of our Class A ordinary shares. The issuance
of the forward purchase securities will not result in such an adjustment to the conversion of our Class B ordinary shares.
Since our sponsor, officers and directors will lose their
entire investment in us if our initial business combination is not completed, a conflict of interest may arise in determining
whether a particular business combination target is appropriate for our initial business combination.
As of the date of this report, our sponsor, officers and directors
own an aggregate of 7,187,500 founder shares. In addition, our sponsor owns 8,750,000 private placement warrants, each private
placement warrant exercisable into one whole Class A ordinary share at $11.50 per share, subject to adjustment as provided herein.
Such founder shares and private placement warrants will be worthless if we do not complete an initial business combination.
The founder shares are identical to the Class A ordinary shares
included in the units being sold in our initial public offering except that (i) holders of the founder shares have the right to
vote on the appointment of directors prior to our initial business combination, (ii) the founder shares are subject to certain
transfer restrictions, (iii) our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which
they have agreed (A) to waive their redemption rights with respect to their founder shares and public shares in connection with
the completion of our initial business combination and (B) to waive their rights to liquidating distributions from the trust account
with respect to their founder shares if we fail to complete our initial business combination by November 29, 2021 (although they
will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to
complete our initial business combination within the prescribed time frame) and (iv) the founder shares will automatically convert
into our Class A ordinary shares at the time of our initial business combination, or earlier at the option of the holder, on a
one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described herein and in our amended and
restated memorandum and articles of association.
The personal and financial interests of our officers and directors
may influence their motivation in identifying and selecting a target business combination, completing an initial business combination
and influencing the operation of the business following the initial business combination.
Since our sponsor, officers and directors, and Encompass
or any of their respective affiliates, will be reimbursed for any bona-fide, documented out-of-pocket expenses if our initial
business combination is not completed, a conflict of interest may arise in determining whether a particular business combination
target is appropriate for our initial business combination.
At the closing of our initial business combination, our sponsor,
officers and directors, and Encompass or any of their respective affiliates, will be reimbursed for any bona-fide, documented
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. There is no cap or ceiling on the reimbursement of out-of-pocket expenses
incurred in connection with activities on our behalf. These financial interests of our sponsor, officers and directors may influence
their motivation in identifying and selecting a target business combination and completing an initial business combination.
Our initial business combination will require approval
of Encompass.
Our sponsor has agreed to provide Encompass with the right
to consent to any potential business combination. Unless we receive the requisite consent of Encompass, we will not be able to
enter into any agreements relating to our initial business combination.
We may issue notes or other debt securities, or otherwise
incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and
thus negatively impact the value of our shareholders’ investment in us.
Although we have no commitments as of the date of this report
to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur substantial debt to
complete our initial business combination. We have agreed that we will not incur any indebtedness unless we have obtained from
the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account. As such,
no issuance of debt will affect the per-share amount available for redemption from the trust account. Nevertheless, the incurrence
of debt could have a variety of negative effects, including:
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default and foreclosure on our assets
if our operating revenues after an initial business combination are insufficient to repay
our debt obligations;
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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;
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our immediate payment of all principal
and accrued interest, if any, if the debt security is payable on demand;
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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;
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our inability to pay dividends on our
Class A ordinary shares;
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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 Class A ordinary shares if declared, expenses, capital expenditures,
acquisitions and other general corporate purposes;
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limitations on our flexibility in planning
for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse
changes in general economic, industry and competitive conditions and adverse changes
in government regulation; and
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limitations on our ability to borrow
additional amounts for expenses, capital expenditures, acquisitions, debt service requirements,
execution of our strategy and other purposes and other disadvantages compared to our
competitors who have less debt.
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We may only be able to complete one business combination
with the proceeds of our initial public offering and the sale of the private placement warrants, which will cause us to be solely
dependent on a single business which may have a limited number of products or services. This lack of diversification may negatively
impact our operations and profitability.
As of December 31, 2019, $277,768,281 was available for completing
our initial business combination (which includes up to approximately $10,062,500 for the payment of deferred underwriting commission).
We may effectuate our initial business combination with a single
target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able to
effectuate our initial business combination with more than one target business because 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 initial business combination with only a single entity our lack of diversification may subject us to numerous economic,
competitive and regulatory risks. 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. Accordingly, the prospects for our success may be:
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solely dependent upon the performance
of a single business, property or asset; or
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dependent upon the development or market
acceptance of a single or limited number of products, processes or services.
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This lack of diversification may subject us to numerous economic,
competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which
we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete business combinations
with multiple prospective targets, which may hinder our ability to complete our initial 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 initial 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 may attempt to complete our initial business combination
with a private company about which little information is 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 acquisition strategy, we may seek to effectuate
our initial 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 initial business combination on the
basis of limited information, which may result in a business combination with a company that is not as profitable as we suspected,
if at all.
Our management may not be able to maintain control of
a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business,
new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure a business combination so that the post-transaction
company in which our public shareholders own shares will own less than 100% of the equity interests or assets of a target business,
but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for us not to be required
to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet
such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target, our shareholders
prior to the business combination may collectively own a minority interest in the post business combination company, depending
on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction
in which we issue a substantial number of new Class A ordinary shares in exchange for all of the outstanding capital stock of
a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial
number of new Class A ordinary shares, our shareholders immediately prior to such transaction could own less than a majority of
our issued and outstanding Class A ordinary shares subsequent to such transaction. In addition, other minority shareholders may
subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s stock
than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our control
of the target business. We cannot provide assurance that, upon loss of control of a target business, new management will possess
the skills, qualifications or abilities necessary to profitably operate such business.
We do not have a specified maximum redemption threshold.
The absence of such a redemption threshold may make it possible for us to complete a business combination with which a substantial
majority of our shareholders do not agree.
Our amended and restated memorandum and articles of association
do not provide a specified maximum redemption threshold, except that we will only redeem our public shares so long as (after such
redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial
business combination and after payment of underwriters’ fees and commissions (such that we are not subject to the SEC’s
“penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement
relating to our initial business combination. As a result, we may be able to complete our initial business combination even though
a substantial majority of our public shareholders do not agree with the transaction and have redeemed their shares or, if we seek
shareholder approval of our initial business combination and do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our
sponsor, directors, officers or advisors, the Encompass Funds, or their respective affiliates. In the event the aggregate cash
consideration we would be required to pay for all Class A ordinary shares that are validly submitted for redemption plus any amount
required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of
cash available to us, we will not complete the business combination or redeem any shares, all Class A ordinary shares submitted
for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
A provision of our warrant agreement may make it more
difficult for us to consummate an initial business combination.
If
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(i)
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we issue additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per Class A ordinary share (the “Newly Issued Price”);
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(ii)
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the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions), and
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(iii)
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the volume weighted average trading price of the Company’s Class A Shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a Business Combination (such price, the “Market Value”) is below $9.20 per share,
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then the exercise price of the warrants will be adjusted to
be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price
will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price. This
may make it more difficult for us to consummate an initial business combination with a target business.
In order to effectuate an initial business combination,
blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments.
We cannot assure you that we will not seek to amend our amended and restated memorandum and articles of association or governing
instruments in a manner that will make it easier for us to complete our initial business combination that our shareholders may
not support.
In order to effectuate a business combination, blank check companies
have, in the past, amended various provisions of their charters and modified governing instruments. For example, blank check companies
have amended the definition of business combination, increased redemption thresholds and extended the period of time in which it
had to consummate a business combination. We cannot assure you that we will not seek to amend our amended and restated memorandum
and articles of association or governing instruments or extend the time in which we have to consummate a business combination through
amending our amended and restated memorandum and articles of association which will require at least a special resolution of our
shareholders as a matter of Cayman Islands law.
The provisions of our amended and restated memorandum
and articles of association that relate to our pre-initial business combination activity (and corresponding provisions of the agreement
governing the release of funds from our trust account), including an amendment to permit us to withdraw funds from the trust account
such that the per share amount investors will receive upon any redemption or liquidation is substantially reduced or eliminated,
may be amended with the approval of holders of at least two-thirds of our ordinary shares who attend and vote in a general meeting,
which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend
our amended and restated memorandum and articles of association and the trust agreement to facilitate the completion of an initial
business combination that some of our shareholders may not support.
Some other blank check companies have a provision in their charter
which prohibits the amendment of certain of its provisions, including those which relate to a company’s pre-initial business
combination activity, without approval by a certain percentage of the company’s shareholders. In those companies, amendment
of these provisions requires approval by between 90% and 100% of the company’s public shareholders. Our amended and restated
memorandum and articles of association provide that any of its provisions, including those related to pre-initial business combination
activity (including the requirement to deposit proceeds of our initial public offering and the private placement of warrants into
the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public shareholders
as described herein and in our amended and restated memorandum and articles of association or an amendment to permit us to withdraw
funds from the trust account such that the per share amount investors will receive upon any redemption or liquidation is substantially
reduced or eliminated), but excluding the provision of the articles relating to the appointment of directors, may be amended if
approved by holders of at least two-thirds of our ordinary shares who attend and vote in a general meeting, and corresponding provisions
of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our
Class A ordinary shares. Should our sponsor vote all its shares in favor of any such amendment, we would require 16,171,875, or
56.3%, of the public shares issued in our initial public offering to be voted in favor of any such amendment for its approval.
We may not issue additional securities that can vote on amendments to our amended and restated memorandum and articles of association.
Our sponsor, which beneficially owns 20% of our Class A ordinary shares, will participate in any vote to amend our amended and
restated memorandum and articles of association and/or trust agreement and will have the discretion to vote in any manner it chooses.
As a result, we may be able to amend the provisions of our amended and restated memorandum and articles of association which govern
our pre-business combination behavior more easily than some other blank check companies, and this may increase our ability to complete
a business combination with which you do not agree. Our shareholders may pursue remedies against us for any breach of our amended
and restated memorandum and articles of association.
Certain agreements related to our initial public offering
may be amended without shareholder approval.
Certain agreements, including the investment management trust
agreement between us and Continental Stock Transfer & Trust Company, the letter agreement among us and our sponsor, officers
and directors, the registration rights agreement among us and our sponsor and the administrative services agreement between us
and our sponsor, may be amended without shareholder approval. These agreements contain various provisions that our public shareholders
might deem to be material. While we do not expect our board to approve any amendment to any of these agreements prior to our initial
business combination, it may be 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 in connection with the consummation of our initial business combination.
Any such amendment may have an adverse effect on the value of our securities.
We may be unable to obtain additional financing to complete
our initial 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.
If the net proceeds of our initial public offering and the
sale of the private placement warrants prove to be insufficient to allow us to complete our initial business combination, either
because of the size of our initial business combination, the depletion of the available net proceeds in search of a target business,
the obligation to redeem for cash a significant number of shares from shareholders who elect redemption in connection with our
initial business combination or the terms of negotiated transactions to purchase shares in connection with our initial business
combination, 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 initial 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 initial 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. None of our officers, directors or shareholders is required to provide any financing
to us in connection with or after our initial business combination. If we are unable to complete our initial business combination,
our public shareholders may only receive $10.01 per share, or less than such amount in certain circumstances, based on the balance
of our trust account (as of December 31, 2019), and our warrants will expire worthless.
The Encompass Funds’ obligation to purchase warrants
in the open market may support the market price of the warrants during such period and, accordingly, the termination of the support
provided by such warrant purchases may materially adversely affect the market price of the warrants.
The Encompass Funds have entered into letter agreement with
us, in accordance with the guidelines of Rule 10b5-1 under the Exchange Act, to place limit orders, through an independent broker-dealer
registered under Section 15 of the Exchange Act which is not affiliated with us nor part of the underwriting or selling group
of our initial public offering, to purchase an aggregate of up to 4,500,000 of our warrants in the open market at market prices,
and not to exceed $0.75 per warrant during the period commencing on the later of (i) the date separate trading of the warrants
commences or (ii) sixty calendar days after the end of the “restricted period” under Regulation M, continuing until
the date that is the earlier of (a) November 29, 2020 and (b) the date that we announce that we have entered into a definitive
agreement in connection with our initial business combination, or earlier in certain circumstances as described in the limit order
agreement. Such warrant purchases may serve to support the market price of the warrants during such period at a price above that
which would prevail in the absence of such purchases by the Encompass Funds. However, the agreement to purchase warrants shall
terminate at the end of such period or the earlier purchase of the maximum number of warrants by the Encompass Funds. The termination
of the support provided by the warrant purchases may materially adversely affect the market price of the warrants.
Our sponsor will control the appointment of our Board
of Directors until consummation of our initial business combination and will hold a substantial interest in us. As a result, it
will appoint all of our directors and may exert a substantial influence on actions requiring shareholder vote, potentially in
a manner that you do not support.
Our sponsor owns 20% of our issued and outstanding Class A ordinary
shares. In addition, the founder shares, all of which are held by our sponsor, will entitle the sponsor to appoint all of our directors
prior to our initial business combination. Holders of our public shares will have no right to vote on the appointment of directors
during such time. These provisions of our amended and restated memorandum and articles of association may only be amended by a
special resolution passed by at least 90% of our ordinary shares voting in a general meeting. As a result, you will not have any
influence over the appointment of directors prior to our initial business combination.
Neither our sponsor nor, to our knowledge, any of our officers
or directors, have any current intention to purchase additional securities, other than as disclosed in this filing. Factors that
would be considered in making such additional purchases would include consideration of the current trading price of our Class A
ordinary shares. In addition, as a result of its substantial ownership in our company, our sponsor may exert a substantial influence
on other actions requiring a shareholder vote, potentially in a manner that you do not support, including amendments to our amended
and restated memorandum and articles of association and approval of major corporate transactions. If our sponsor purchases any
additional Class A ordinary shares in the aftermarket or in privately negotiated transactions, this would increase its influence
over these actions. Accordingly, our sponsor will exert significant influence over actions requiring a shareholder vote at least
until the completion of our initial business combination.
We may amend the terms of the warrants in a manner that
may be adverse to holders of public warrants with the approval by the holders of at least a majority of the then outstanding public
warrants.
Our warrants were issued in registered form under a warrant
agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that
the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision,
but requires the approval by the holders of at least a majority of the then outstanding public warrants to make any change that
adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public
warrants in a manner adverse to a holder if holders of at least a majority of the then outstanding public warrants approve of
such amendment. As the Encompass Funds have purchased units in our initial public offering and may purchase public warrants on
the open market, such purchases will result in this threshold being easier to meet. Although our ability to amend the terms of
the public warrants with the consent of at least a majority of the then outstanding public warrants is unlimited, examples of
such amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise
period or decrease the number of Class A ordinary shares purchasable upon exercise of a warrant.
We may redeem your unexpired warrants prior to their
exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem outstanding warrants at any time
after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported
sales price of our Class A ordinary shares equal or exceed $18.00 per share (as adjusted for share splits, share capitalizations,
rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day
period ending on the third trading day prior to the date we send the notice of redemption to the warrant holders. If and when
the warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares upon exercise of the
warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such
registration or qualification. We will use our best efforts to register or qualify such shares under the blue sky laws of the
state of residence in those states in which the warrants were offered by us in our initial public offering. Redemption of the
outstanding warrants could force you (i) to exercise your warrants and pay the exercise price therefor at a time when it may be
disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to
hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for
redemption, is likely to be substantially less than the market value of your warrants. None of the private placement warrants,
and none of the public warrants purchased by the Encompass Funds, will be redeemable by us so long as they are held by our sponsor
or its permitted transferees, or the Encompass Funds, respectively.
Our management’s ability to require holders of
our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer Class A ordinary shares upon their
exercise of the warrants than they would have received had they been able to exercise their warrants for cash.
If we call our public warrants for redemption after the redemption
criteria described elsewhere in this report have been satisfied, our management will have the option to require any holder that
wishes to exercise his warrant (including any warrants held by our sponsor, officers or directors, other purchasers of our founders’
units, or their permitted transferees) to do so on a “cashless basis.” If our management chooses to require holders
to exercise their warrants on a cashless basis, the number of Class A ordinary shares received by a holder upon exercise will
be fewer than it would have been had such holder exercised his warrant for cash. This will have the effect of reducing the potential
“upside” of the holder’s investment in our company.
Our warrants and founder shares may have an adverse effect
on the market price of our Class A ordinary shares and make it more difficult to effectuate our initial business combination.
We sold warrants to purchase 14,375,000 Class A ordinary shares,
at a price of $11.50 per share (subject to adjustment as provided herein), as part of the units offered in our initial public
offering and, simultaneously with the closing of our initial public offering, we issued 8,750,000 private placement warrants,
each exercisable to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment. Prior to our initial
public offering, our sponsor purchased an aggregate of 7,187,500 founder shares in a private placement. The founder shares are
convertible into Class A ordinary shares on a one-for-one basis, subject to adjustment as set forth herein and in our amended
and restated memorandum and articles of association. In addition, if our sponsor makes any working capital loans, up to $1,500,000
of such loans may be converted into warrants, at the price of $1.00 per warrant at the option of the lender. Such warrants would
be identical to the private placement warrants. To the extent we issue Class A ordinary shares to effectuate a business transaction,
the potential for the issuance of a substantial number of additional Class A ordinary shares upon exercise of these warrants or
conversion rights could make us a less attractive acquisition vehicle to a target business. Any such issuance will increase the
number of issued and outstanding Class A ordinary shares and reduce the value of the Class A ordinary shares issued to complete
the business transaction. Therefore, our warrants and founder shares may make it more difficult to effectuate a business combination
or increase the cost of acquiring the target business.
The private placement warrants are identical to the warrants
sold as part of the units in our initial public offering except that, so long as they are held by our sponsor or its permitted
transferees, (i) they will not be redeemable by us, (ii) they (including the Class A ordinary shares issuable upon exercise of
these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the sponsor until 30 days
after the completion of our initial business combination and (iii) they may be exercised by the holders on a cashless basis.
A market for our securities may not fully develop, which
would adversely affect the liquidity and price of our securities.
The price of our securities may vary significantly due to one
or more potential business combinations and general market or economic conditions. Furthermore, an active trading market for our
securities may not be sustained. You may be unable to sell your securities unless a market can be fully developed and sustained.
Because we must furnish our shareholders with target
business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with
some prospective target businesses.
The federal proxy rules require that a proxy statement with
respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma financial
statement disclosure in periodic reports. We will include the same financial statement disclosure in connection with our tender
offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to
be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America,
or U.S. GAAP, or international financing reporting standards as issued by the International Accounting Standards Board, or IFRS,
depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards
of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit
the pool of potential target businesses we may acquire because some targets may be unable to provide such statements in time for
us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within the
prescribed time frame.
We are an emerging growth company within the meaning
of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth
companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance
with other public companies.
We are an “emerging growth company” within the
meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to,
not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not
previously approved. As a result, our shareholders 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 Class A ordinary shares held by non-affiliates exceeds $700 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 accountant standards used.
Compliance obligations under the Sarbanes-Oxley Act may
make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources,
and increase the time and costs of completing an acquisition.
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, 2020.
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. The fact that we are a blank check company
makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies
because a target company with which we seek to complete our initial 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 acquisition.
Because we are incorporated under the laws of the Cayman
Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. Federal
courts may be limited.
We are an exempted company incorporated under the laws of the
Cayman Islands. As a result, it may be difficult for investors to effect service of process within the United States upon our
directors or officers, or enforce judgments obtained in the United States courts against our directors or officers.
Our corporate affairs are governed by our amended and restated
memorandum and articles of association, the Companies Law (as the same may be supplemented or amended from time to time) and the
common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders
and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common
law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent
in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not
binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under
Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United
States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain
states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman
Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States.
We have been advised by our Cayman Islands legal counsel that
the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States
predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original
actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the
federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in
nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the
United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent
jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the
judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign
judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not
be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable
on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the
public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy).
A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
As a result of all of the above, public shareholders may have
more difficulty in protecting their interests in the face of actions taken by management, members of the Board of Directors or
controlling shareholders than they would as public shareholders of a United States company.
Provisions in our amended and restated memorandum and
articles of association may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future
for our Class A ordinary shares and could entrench management.
Our amended and restated memorandum and articles of association
contain provisions that may discourage unsolicited takeover proposals that shareholders may consider to be in their best interests.
These provisions include two-year director terms and the ability of the Board of Directors to designate the terms of and issue
new series of preference shares, which may make more difficult the removal of management and may discourage transactions that
otherwise could involve payment of a premium over prevailing market prices for our securities.
After our initial 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 initial 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 we effect our initial 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 initial 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:
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costs and difficulties inherent in
managing cross-border business operations;
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rules and regulations regarding currency
redemption;
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complex corporate withholding taxes
on individuals;
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laws governing the manner in which
future business combinations may be effected;
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tariffs and trade barriers;
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regulations related to customs and
import/export matters;
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tax issues, such as tax law changes
and variations in tax laws as compared to the United States;
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currency fluctuations and exchange
controls;
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challenges in collecting accounts receivable;
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cultural and language differences;
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employment regulations;
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crime, strikes, riots, civil disturbances,
terrorist attacks and wars; and
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deterioration of political relations
with the United States.
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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.
We may seek energy acquisition opportunities in foreign
countries that are subject to political, economic, and other uncertainties.
We may seek energy acquisitions opportunities that have operations
outside the United States. As a result, we could face political and economic risks and other uncertainties with respect these
potential international operations. These risks may include the following, among other things:
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loss of revenue, property, and equipment
or delays in operations as a result of hazards such as expropriation, war, piracy, acts
of terrorism, insurrection, civil unrest, and other political risks, including tension
and confrontations among political parties;
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transparency issues in general and,
more specifically, the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and
other anti-corruption compliance laws and issues;
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increases in taxes and governmental
royalties;
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unilateral renegotiation of contracts
by governmental entities;
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redefinition of international boundaries
or boundary disputes;
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difficulties enforcing our rights against
a governmental agency because of the doctrine of sovereign immunity and foreign sovereignty
over international operations;
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difficulties enforcing our rights against
a governmental agency in the absence of an appropriate and adequate dispute resolution
mechanism to address contractual disputes, such as international arbitration;
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changes in laws and policies governing
operations of foreign-based companies;
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foreign-exchange restrictions; and
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international monetary fluctuations
and changes in the relative value of the U.S. dollar as compared to the currencies of
other countries in which we conduct business.
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Outbreaks of civil and political unrest and acts of terrorism
have occurred in countries in Europe, Africa, South America, and the Middle East, including countries close to or where we may
seek an acquisition. Continued or escalated civil and political unrest and acts of terrorism in the countries in which we may
operate could result in our curtailing operations or delays in project completions. In the event that countries in which we may
operate experience civil or political unrest or acts of terrorism, especially in events where such unrest leads to an unseating
of the established government, our operations could be materially impaired. Our potential international operations may also be
adversely affected, directly or indirectly, by laws, policies, and regulations of the United States affecting foreign trade and
taxation, including U.S. trade sanctions. Realization of any of the factors listed above could materially and adversely affect
our financial condition, results of operations, or cash flows.
If our management following our initial 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 initial business combination, any or all of our
management could resign from their positions as officers of the Company, and the management of the target business at the time
of the business combination will remain in place. Management of the target business may not be familiar with United States securities
laws. If new management is unfamiliar with United States securities laws, they may have to expend time and resources becoming
familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely
affect our operations.
After our initial business combination, substantially
all of our assets may be located in a foreign country and substantially all of our revenue will be derived from our operations
in such country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic,
political and legal 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 initial business combination and if we effect our initial business
combination, the ability of that target business to 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, all 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 initial 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 initial 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.
Because we intend to seek a business combination with
a target business in the energy industry, we expect our future operations to be subject to risks associated with this industry.
We intend to focus our search for a target business in the
energy industry. Because we have not yet entered into any agreement with a target business, we cannot provide specific risks of
any business combination. However, risks inherent in investments in the energy industry include, but are not limited to, the following:
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Volatility of oil and natural gas prices;
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Changes in global supply and demand
and prices for commodities;
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The speculative nature of and high
degree of risk involved in investments in the exploration and development sector, including
relying on estimates of oil and gas reserves and the impacts of regulatory and tax changes;
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Drilling, exploration and development
risks, including encountering unexpected formations or pressures, premature declines
of reservoirs, blow-outs, equipment failures and other accidents, cratering, sour gas
releases, uncontrollable flows of oil, natural gas or well fluids, adverse weather conditions,
pollution, fires, spills and other environmental risks, any of which could lead to environmental
damage, injury and loss of life or the destruction of property;
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Proximity and capacity of oil, natural
gas and other transportation and support infrastructure to production facilities;
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Availability of key inputs, such as
strategic consumables, raw materials and drilling and processing equipment;
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Impact of energy conservation efforts;
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Technological advances affecting energy
production and consumption;
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Overall domestic and global economic
conditions;
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Significant federal, state and local
regulation, taxation and regulatory approval processes as well as changes in applicable
laws and regulations;
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Availability of, and potential disputes
with, independent contractors;
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Price and availability of alternative
fuels, such as solar, coal, nuclear and wind energy;
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Natural disasters, terrorist acts and
similar dislocations; and
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Value of U.S. dollar relative to the
currencies of other countries.
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Any of the foregoing could have an adverse impact on our operations
following a business combination. However, our efforts in identifying prospective target businesses will not be limited to energy
industry. Accordingly, if we acquire a target business in another industry, these risks will likely not affect us and we will
be subject to other risks attendant with the specific industry in which we operate or target business which we acquire, none of
which can be presently ascertained.
Our search for a business combination may be significantly
adversely affected by the recent outbreak of COVID-19.
On January 30, 2020, the International Health Regulations Emergency
Committee of the World Health Organization (WHO) declared the coronavirus disease 2019 (COVID-19) outbreak a public health emergency
of international concern and on March 12, 2020 the WHO announced the outbreak was a pandemic . On January 31, 2020 the U.S. Health
and Human Services Secretary Mr. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community
in responding to COVID-19. If the COVID-19 outbreak lasts for an extended period of time, it may impact our ability to search
for and acquire a target company. Potential target companies may defer or end discussions for a potential business combination
with us if the COVID-19 virus materially adversely affects their business operations and, therefore, the valuation of their business.
Although this depression in valuation, may assist us in finding attractive transactions, we may be unable to complete a business
combination if continued concerns relating to COVID-19 virus restrict travel or the target company’s personnel, vendors
and services providers are unavailable to negotiate and consummate a transaction in a timely manner. If the disruptions posed
by COVID-19 or other matters of global concern continue for an unexpectedly long period of time, our ability to consummate a business
combination may be materially adversely affected.