Item 1A. Risk Factors
Ownership of our
securities involves a high degree of risk. If any of the following events occur, our business, financial condition and operating
results may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose
all or part of your investment. This report also contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors,
including the risks described below.
We are a blank check company with
no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a newly incorporated
company established under the laws of the Cayman Islands with no operating results to date. Because we lack an operating history,
you have no 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 law or stock exchange rules or if we decide to hold a shareholder vote for business or other reasons.
For instance, the rules of the NYSE 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 issued and 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 issued and outstanding shares, we would seek shareholder approval of such business
combination. However, except as required by applicable law or stock exchange 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 ordinary shares do not approve of the business combination
we consummate.
If we seek shareholder approval of
our initial business combination, our initial shareholders, officers and directors have agreed to vote in favor of such initial
business combination, regardless of how our public shareholders vote.
Unlike many other blank
check companies in which the initial shareholders agree to vote their founder shares in accordance with the majority of the votes
cast by the public shareholders in connection with an initial business combination, our initial shareholders have agreed (and their
permitted transferees will agree), pursuant to the terms of a letter agreement entered into with us, to vote their founder shares
and any public shares held by them in favor of our initial business combination. As a result, in addition to our initial shareholders’
founder shares and the ordinary shares underlying the units that affiliates of our sponsor purchased in our initial public offering,
we would need 8,281,251, or 28.8%, of the 28,750,000 public shares sold in our initial public offering to be voted in favor of
a transaction (assuming all issued and outstanding shares are voted), subject to any higher threshold as is required by Cayman
Islands or other applicable law, in order to have such initial business combination approved. Our directors and officers have entered
into letter agreements similar to the one signed by our initial shareholders with respect to public shares acquired by them, if
any. We expect that our initial shareholders and their permitted transferees will own at least 27% of our issued and outstanding
ordinary shares at the time of any such shareholder vote. 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 only 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 such business combination.
You may not be provided
with an opportunity to evaluate the specific merits or risks of any target businesses. Additionally, 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,
in no event will we redeem our public shares in an amount that would cause our net tangible assets, after payment of the deferred
underwriting commissions, to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock”
rules), or any greater net tangible asset or cash requirement that 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 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
is 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.
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 increases.
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 limit the time we have in which to conduct due diligence on potential business combination targets,
in particular 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 April 8, 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 end
of the prescribed time frame. 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 receive only $10.00
per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our sponsor, officers
and directors have agreed that we must complete our initial business combination by April 8, 2021. We may not be able to find
a suitable target business and complete our initial business combination within such time period. Our ability to complete our initial
business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the
other risks described herein.
If we have not completed
our initial business combination within such time period, we will: (1) cease all operations except for the purpose of winding
up; (2) as promptly as reasonably possible but not more than 10 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 and which interest shall be net of taxes payable), divided by the number of then issued
and outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including
the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, dissolve
and liquidate, 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 receive only $10.00 per share, or less than $10.00 per share,
on the redemption of their shares, and our warrants will expire worthless. See “—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” and other risk factors herein.
If we seek shareholder approval of
our initial business combination, our sponsor, directors, officers, advisors or any of 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 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, advisors or any of their affiliates may purchase 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, advisors or any of their affiliates purchase 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 our
initial business combination and thereby increase the likelihood of obtaining shareholder approval of our initial 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 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 earliest to occur of: (1) the completion of our initial
business combination, and then only in connection with those ordinary shares that such shareholder properly elected to redeem,
subject to the limitations described elsewhere in this report, (2) the redemption of any public shares properly submitted
in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify
the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination
by April 8, 2021 or (B) with respect to any other provision relating to shareholders’ rights or pre-initial business
combination activity and (3) the redemption of our public shares if we are unable to complete our initial business combination
by April 8, 2021, subject to applicable law and as further described elsewhere in this report. In no other circumstances will
a public shareholder have any right or interest of any kind in the trust account. Holders of warrants will not have any right to
the proceeds held in the trust account with respect to the warrants. 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 units, ordinary
shares and warrants are currently 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 share price levels. Generally, we must
maintain a minimum number of holders of our securities. Additionally, in connection with our initial business combination, we will
be required to demonstrate compliance with the NYSE’s initial listing requirements, which are more rigorous than the NYSE’s
continued listing requirements, in order to continue to maintain the listing of our securities on the NYSE. For instance, our share
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.
On August 15,
2019, we received the Notice from the staff of NYSE Regulation indicating that we are not currently in compliance with Section 802.01B
of the Manual, which requires us to maintain a minimum of 300 public shareholders on a continuous basis. Pursuant to the Notice,
we are subject to the procedures set forth in Sections 801 and 802 of the Manual. We submitted a business plan that demonstrates
how we expect to return to compliance with the minimum public shareholders requirement within 18 months of receipt of the Notice.
We anticipate that we will satisfy this listing requirement within such time period once we consummate our initial business combination.
On October 24, 2019, we were notified by the staff of NYSE Regulation that the NYSE’s Listings Operations Committee
agreed to accept our business plan, and we are currently subject to quarterly monitoring for compliance with such plan. Our ordinary
shares, warrants and units will continue to be listed and traded on the NYSE during the cure period, subject to our compliance
with the NYSE’s other applicable continued listing standards, and will bear the indicator “.BC” on the consolidated
tape to indicate noncompliance with the NYSE’s continued listing standards.
If the NYSE delists
any of our securities from trading on its exchange and we are not able to list our securities on another national securities exchange,
we expect such securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:
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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 ordinary shares are a “penny stock” which will require brokers
trading in our 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.” Because our units, ordinary shares and warrants are listed
on the NYSE, our units, ordinary shares and warrants are covered securities under such statute. 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 qualify as covered securities under
such statute and we would be subject to regulation in each state in which we offer our securities.
Our security holders are not 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 has not been identified, we may be deemed to be a “blank check” company under
the U.S. securities laws. However, because we had net tangible assets in excess of $5,000,000 upon the completion of our initial
public offering and the private placement and filed a Current Report on Form 8-K, including an audited balance sheet
demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such
as Rule 419. Accordingly, our security holders are not afforded the benefits or protections of those rules. Among other things,
this means our units were immediately tradable upon consummation of our initial public offering and we have a longer period of
time to complete our initial business combination than do companies subject to Rule 419. Moreover, offerings subject to Rule 419
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 ordinary shares, you will lose the ability to redeem all such shares
in excess of 15% of our 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
$10.00 per share, or less in certain circumstances, on our redemption of their shares, 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, in the event we seek shareholder approval of our initial
business combination and we are obligated to pay cash for our ordinary shares, it will potentially reduce 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
receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our
warrants will expire worthless. See “—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” and other
risk factors herein.
If the funds not being held in the
trust account are insufficient to allow us to operate until April 8, 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 April 8, 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.
Management’s plans to address this need for capital and potential loans from certain of our affiliates are discussed in the
section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
However, 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 available to us outside of the trust account, will be sufficient to allow us to operate until April 8, 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 or investors on terms more favorable to such target businesses)
with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered
into 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 receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of
our trust account and our warrants will expire worthless. See “—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” and other risk factors herein.
If the net proceeds of our initial
public offering and the sale of the private placement warrants not being held in 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. Our sponsor is not obligated to fund such loans.
As of December 31,
2019, we had approximately $1.6 million outside of the trust account, approximately $4.6 million of investment income available
in the trust account to pay for tax obligations (less up to $100,000 of interest to pay dissolution expenses), and a working capital
surplus of approximately $1.6 million. 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 loan funds to us in such circumstances. Any such loans 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. In such case, our public shareholders may receive only $10.00 per
share, or less in certain circumstances, and our warrants will expire worthless. See “—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” and other risk factors herein.
Subsequent to our 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 the price of our securities,
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 identify all
material issues that may be present with 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 shareholder or warrant
holder who chooses to remain a shareholder or warrant holder following our initial business combination could suffer a reduction
in the value of their securities. Such shareholders and warrant holders 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 enter into an agreement with a third party
that has not executed a waiver only 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 we are 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 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 (1) $10.00 per public share or (2) 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
its 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 (1) $10.00 per public share or (2) 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 insolvency laws as a voidable performance. As a result, a liquidator could seek to recover some or 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 by paying public shareholders from the trust account prior to addressing the claims of creditors, thereby
exposing itself and us to claims of punitive damages.
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 winding up petition or winding up petition is filed
against us that is not dismissed, the proceeds held in the trust account could be subject to applicable insolvency law, and may
be included in our liquidation estate and subject to the claims of third parties with priority over the claims of our shareholders.
To the extent any liquidation claims deplete the trust account, the per-share amount that would otherwise be received by our shareholders
in connection with our liquidation would 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.
In addition, we may
have imposed upon us burdensome requirements, including:
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registration as an investment company with the SEC;
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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 anticipated principal activities will subject us to the Investment Company Act. The proceeds held in the trust account may
be invested by the trustee only in U.S. government treasury bills with a maturity of 180 days or less or in money market funds
investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act. Because
the investment of the proceeds is restricted to these instruments, we believe we 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 receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust
account 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, including our ability to negotiate and complete
our initial business combination, and results of operations.
We are subject to laws
and regulations enacted by national, regional and local governments. In particular, we are required to comply with certain SEC
and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming
and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes
could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with
applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our
ability to negotiate and complete our initial business combination, and results of operations.
If we are unable to consummate our
initial business combination by April 8, 2021, our public shareholders may be forced to wait beyond April 8, 2021 before
redemption from our trust account.
If we are unable to
consummate our initial business combination by April 8, 2021, we will distribute the aggregate amount then on deposit in the
trust account, including interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net
of taxes payable), 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 elsewhere in this report. 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 (2016 Revision) of the Cayman Islands, or the Companies Law. In that case, investors
may be forced to wait beyond April 8, 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 redemption or liquidation unless we consummate our initial business combination prior thereto
and then only in cases where investors have sought to redeem their ordinary shares. Only upon our redemption or any liquidation
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 some or 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 approximately $15,000 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.
In accordance with
the NYSE corporate governance requirements, we are not required to hold an annual meeting until no later than one year after our
first fiscal year end following our listing on the NYSE. There is no requirement under the Companies Law for us to hold annual
or general meetings to elect directors. Until we hold an annual meeting of shareholders, public shareholders may not be afforded
the opportunity to discuss company affairs with management.
We have not registered the ordinary
shares issuable upon exercise of the warrants under the Securities Act or any state securities laws, 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 ordinary shares issuable upon exercise of the warrants under the Securities Act or any state securities laws. However, under
the terms of the warrant agreement, we have agreed, as soon as practicable, but in no event later than 15 business days after the
closing of our initial business combination, to use our best efforts to file a registration statement under the Securities
Act covering the issuance of such shares and maintain a current prospectus relating to the 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 from registration is available. Notwithstanding the above, if our ordinary shares
are, at the time of any exercise of a warrant, not listed on a national securities exchange such that it satisfies the definition
of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders
of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of
the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement,
but 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 ordinary shares included in the units. If and when the warrants
become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying ordinary
shares for sale under all applicable state securities laws.
The grant of registration rights
to our initial shareholders and their permitted transferees 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 ordinary shares.
Pursuant to an agreement
entered into on April 3, 2019, our initial shareholders and their permitted transferees can demand that we register the resale
of their founder shares. In addition, our sponsor and its permitted transferees can demand that we register the resale of the private
placement warrants and the 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 the resale of such warrants or the 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
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 ordinary shares that is expected
when the ordinary shares owned by our initial shareholders or their permitted transferees, our private placement warrants or warrants
issued in connection working capital loans are registered for resale.
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.
Although we have initially
focused our search for a target business in Argentina and/or Brazil focused on industries that we believe have favorable prospects
and a high likelihood of generating strong risk-adjusted returns for our shareholders, including, but not limited to, the consumer,
telecommunications and technology, energy, financial services and real estate sectors, we may seek to complete a business combination
with an operating company in any industry or sector. However, we will not, under our amended and restated memorandum and articles
of association, be permitted to effectuate our initial business combination with another blank check company or similar company
with nominal operations. Accordingly, there is no current basis for you to evaluate the possible merits or risks of the particular
industry in which we may ultimately operate or the target business which we may ultimately acquire. To the extent we complete our
initial 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 development 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 securities 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 shareholder who chooses to remain a shareholder following our initial business combination could suffer
a reduction in the value of their securities. Such shareholders are unlikely to have a remedy for such reduction in value.
Past performance by our management
team and their affiliates may not be indicative of future performance of an investment in our company.
Information regarding
performance by our management team and their affiliates is presented for informational purposes only. Past performance by our management
team and their affiliates is not a guarantee either (1) that we will be able to identify a suitable candidate for our initial
business combination or (2) of success with respect to any business combination we may consummate. You should not rely on
the historical record of our management team and their affiliates as indicative of our future performance of an investment in the
company or the returns the company will, or is likely to, generate going forward.
We may seek acquisition opportunities
outside the Latin America opportunity sectors, which may be outside of our management’s areas of expertise.
We will consider a
business combination outside the Latin America opportunity sectors, which may be 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 elsewhere 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 relevant
to such acquisition. Accordingly, any shareholder who chooses to remain a shareholder following our initial business combination
could suffer a reduction in the value of their securities. 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 criteria and guidelines, such combination may not be as successful
as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective
business combination with a target that does not meet our general criteria and guidelines, 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 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 receive only approximately $10.00 per
share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
We may seek acquisition opportunities
with an early stage company, 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 an early stage company, 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 investing in a business without a proven business model and with limited historical financial data, volatile
revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel. Although our officers and
directors will 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 firm or from an independent accounting firm, and consequently, you may have no assurance
from an independent source that the price we are paying for the business is fair to our company from a financial point of view.
Unless we complete
our initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment
banking firm that is a member of FINRA, or from an independent accounting firm, that the price we are paying is fair to our company
from a financial point of view. If 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.
We may issue additional ordinary
shares or preferred shares to complete our initial business combination or under an employee incentive plan after completion of
our initial business combination. Any such issuances would substantially 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 ordinary shares, par value $0.0001 per share,
and 2,000,000 undesignated preferred shares, par value $0.0001 per share. As of March 25, 2020, there were 141,937,500
and 2,000,000 authorized but unissued ordinary shares and preferred shares, respectively, available for issuance, which amount
takes into account shares reserved for issuance upon exercise of outstanding warrants.
We may issue a substantial
number of additional ordinary shares, and may issue preferred shares, in order to complete our initial business combination or
under an employee incentive plan after completion of our initial business combination. 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
ordinary shares that would entitle the holders thereof to (1) receive funds from the trust account or (2) vote on any
initial business combination. The issuance of additional ordinary shares or preferred shares:
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may significantly dilute the equity interest of our current security holders;
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may subordinate the rights of holders of ordinary shares if preferred shares are issued with rights
senior to those afforded our ordinary shares;
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could cause a change in control if a substantial number of 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, 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 a PFIC for
any taxable year (or portion thereof) that is included in the holding period of a U.S. holder of our 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.
Our PFIC status for our current and subsequent taxable years may depend on whether we qualify for the PFIC start-up exception.
Depending on the particular circumstances, the application of the start-up exception is uncertain, and there can be no assurance
that we will qualify for the start-up exception. Accordingly, there can be no assurances with respect to our status as a PFIC for
our current taxable year or any subsequent taxable year. Our actual PFIC status for any taxable year will not be determinable until
after the end of such taxable year. Moreover, 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 Internal Revenue Service (“IRS”) may require, including a PFIC annual information
statement, in order to enable the U.S. holder to make and maintain a “qualified electing fund” election, but there
can be no assurance that we will timely provide such required information, and such election would likely be unavailable with respect
to our warrants in all cases. We urge U.S. holders to consult their tax advisors regarding the possible application of the PFIC
rules to holders of our ordinary shares and warrants.
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 or in another jurisdiction. 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 receive only
approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation of our trust account 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. If
we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction
likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete
our 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 receive only
approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account 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, Edmond Safra and Gregorio Werthein, our Co-Chief Executive
Officers, Gerardo Werthein, a member of our advisory board, and Leonardo Madcur and Ezra Cohen, two of our 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 their time among various business activities, including identifying
potential business combinations and monitoring the related due diligence. Moreover, certain of our officers and directors have
time and attention requirements for investment funds of which affiliates of our sponsor are the investment managers. 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.
We may have limited ability to assess
the management of a prospective target business and, as a result, may effect 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,
shareholders who choose to remain shareholders following our initial business combination could suffer a reduction in the value
of their securities. Such shareholders are unlikely to have a remedy for such reduction in value.
The officers and directors
of an acquisition candidate may resign upon completion of our initial business combination. The departure of a business combination
target’s key personnel could negatively impact the operations and profitability of our post-combination business. The role
of an acquisition 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 acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial business combination, it is possible that members of the management of an
acquisition candidate will not wish to remain in place.
Our officers and directors will allocate
their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our
affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our officers and directors
are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating
their time between our operations and our search for a business combination and their other businesses. We do not intend to have
any full-time employees prior to the completion of our initial business combination. Each of our officers is engaged in several
other business endeavors for which he 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.
Following the completion
of our initial public offering and until we consummate our initial business combination, we have engaged and will continue 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 that are engaged in a similar business, and they are not prohibited from sponsoring,
or otherwise becoming involved with, other blank check companies prior to us completing our initial business combination. Moreover,
certain of our officers and directors have time and attention requirements for investment funds of which affiliates of our sponsor
are the investment managers.
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.
EMS Capital LP and its personnel
are subject to extensive regulatory requirements and oversight.
EMS Capital LP
is an investment manager and, as such, it and its personnel are subject to extensive regulation and oversight by the SEC and other
regulatory authorities, including requirements under the Investment Advisers Act of 1940. Any violations, or alleged allegations,
by EMS Capital LP or its personnel of these regulatory requirements could harm our ability to complete an initial business
combination, including by making prospective target companies less likely to consummate a business combination with us.
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. 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, affiliates
of our sponsor have invested in industries as diverse as consumer, media & entertainment, telecommunications and technology,
industrials, energy, financial services, insurance, agribusiness, vineyards and real estate. 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 or directors
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. Our officers and directors also serve as officers and board members for other entities. Such entities
may compete with us for business combination opportunities. 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 independent and disinterested directors.
Despite our agreement to obtain an opinion from an independent investment banking firm that is a member of FINRA, or from an independent
accounting firm, regarding the fairness to our company from a financial point of view of a business combination with one or more
domestic or international businesses affiliated with our sponsor, officers or directors, 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.
Since our initial shareholders 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.
In December 2018,
our sponsor subscribed for an aggregate of 7,187,500 founder shares for an aggregate purchase price of $25,000, or approximately
$0.003 per share. In March 2019, our sponsor transferred 25,000 founder shares to each of two of our independent directors
and 40,000 founder shares to our third independent director. The founder shares will be worthless if we do not complete an initial
business combination. In addition, our sponsor purchased an aggregate of 7,750,000 private placement warrants for a purchase price
of $7,750,000 in the aggregate, or $1.00 per warrant, that will also be worthless if we do not complete a business combination.
Each private placement warrant may be exercised for one ordinary share at a price of $11.50 per share, subject to adjustment.
The founder shares
are identical to the ordinary shares included in the units sold in our initial public offering except that: (1) the founder
shares are subject to certain transfer restrictions; (2) our initial shareholders 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 any public
shares held by them 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 April 8, 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 (3) the
founder shares are entitled to registration rights. In addition, our officers and directors have entered into letter agreements
similar to the one signed by our initial shareholders with respect to any public shares acquired by them, if any.
The personal and financial
interests of our sponsor, 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. This risk may become more acute as April 8, 2021 nears, which is the deadline for the completion of 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.
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 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 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 be able to complete only 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.
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 our
initial 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 complete such business combination only if the post-transaction
company owns or acquires 50% or more of the issued and 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 our initial 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 ordinary shares in exchange
for all of the issued and 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 ordinary shares, our shareholders immediately prior to such
transaction could own less than a majority of our issued and outstanding 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 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 in no event will we
redeem our public shares in an amount that would cause our net tangible assets, after payment of the deferred underwriting commissions,
to be less than $5,000,001 (such that we do not then become subject to the SEC’s “penny stock’ rules), or any
greater net tangible asset or cash requirement that 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, officers, directors, advisors or any of their affiliates.
In the event the aggregate cash consideration we would be required to pay for all 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 ordinary
shares submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial
business combination, blank check companies have, in the 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 some of
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 changed industry focus. We cannot assure you that we will not seek to amend our amended and restated memorandum and articles
of association or governing instruments in order to effectuate our initial business combination, though amending our amended and
restated memorandum and articles of association will require at least a special resolution of our shareholders as a matter of Cayman
Islands law.
Certain provisions of our amended
and restated memorandum and articles of association that relate to our pre-business combination activity (and corresponding provisions
of the agreement governing the release of funds from our trust account) may be amended with the approval of holders of at least
two-thirds of our ordinary shares who attend and vote at 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-business combination activity, without approval by holders of a certain percentage of the company’s
shares. In those companies, amendment of these provisions typically requires approval by holders holding between 90% and 100% of
the company’s public shares. Our amended and restated memorandum and articles of association provide that any provisions,
including those related to pre-business combination activity (including the requirement to deposit proceeds of our initial public
offering and the sale of the private placement of warrants into the trust account and not release such amounts except in specified
circumstances), 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 ordinary shares. Our initial shareholders, who collectively beneficially own 27% of our ordinary
shares, may 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 they choose. 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 our initial business combination with which you do not agree.
However, our amended and restated memorandum and articles of association prohibit any amendment (a) that would modify the
substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination
by April 8, 2021 or (b) with respect to any other provision relating to shareholders’ rights or pre-initial business
combination activity, unless we provide public shareholders with the opportunity to redeem their public shares. Furthermore, our
sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose such an amendment
unless we provide our public shareholders with the opportunity to redeem their public shares. In certain circumstances, our shareholders
may pursue remedies against us for any breach of our amended and restated memorandum and articles of association.
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, 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 receive
only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account, and our warrants
will expire worthless.
Our initial shareholders hold a substantial
interest in us. As a result, they may exert a substantial influence on actions requiring shareholder vote, potentially in a manner
that you do not support.
Our initial shareholders
collectively beneficially own 27% of our issued and outstanding ordinary shares. As a result of their substantial ownership in
our company, our initial shareholders may exert a substantial influence on 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 initial shareholders purchase any additional ordinary shares in the aftermarket or in privately
negotiated transactions, this would increase their influence over these actions. Accordingly, our initial shareholders 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. 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 ordinary shares
purchasable upon exercise of a warrant.
A provision of our warrant agreement
may make it more difficult for us to consummate an initial business combination.
Unlike most blank check
companies, if
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we issue additional 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, or the Newly Issued
Price, of less than $9.20 per ordinary share;
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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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the volume weighted average trading price of our ordinary shares during the 20 trading day period
starting on the trading day prior to the day on which we consummate our initial business combination, or 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.
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 ordinary shares equals or exceeds $18.00 per share (as adjusted for
share splits, share dividends, 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 exercise our redemption right even if we are unable to register
or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants
could force you to: (1) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous
for you to do so; (2) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants;
or (3) 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 will be redeemable by us
so long as they are held by our sponsor or its permitted transferees.
Our warrants and founder shares may
have an adverse effect on the market price of our ordinary shares and make it more difficult to effectuate our initial business
combination.
We issued warrants
to purchase 14,375,000 ordinary shares, at a price of $11.50 per whole share (subject to adjustment), as part of the units sold
in our initial public offering and an aggregate of 7,750,000 private placement warrants, each exercisable to purchase one ordinary
share at a price of $11.50 per share, subject to adjustment. Our initial shareholders currently hold 7,187,500 founder shares.
In addition, if our sponsor, an affiliate of our sponsor or certain of our officers and directors make 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 ordinary shares to effectuate a business
transaction, the potential for the issuance of a substantial number of additional 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 ordinary shares and reduce the value of the 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: (1) they will not be redeemable by us; (2) they (including the ordinary
shares issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold
by our sponsor until 30 days after the completion of our initial business combination; (3) they may be exercised by the
holders on a cashless basis; and (4) they (including the ordinary shares issuable upon exercise of these warrants) are entitled
to registration rights.
A market for our securities may not
fully develop or be sustained, 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. An active
trading market for our securities may not fully develop or be sustained. Additionally, if our securities become delisted from the
NYSE for any reason, and are quoted on the OTC Pink Sheets, an inter-dealer automated quotation system for equity securities not
listed on a national exchange, the liquidity and price of our securities may be more limited than if we were listed on the NYSE
or another national exchange. 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, U.S. GAAP or IFRS, depending on the circumstances
and the historical financial statements may be required to be audited in accordance with the standards of 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 financial statements in time for us to disclose such financial 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 ordinary shares held by non-affiliates exceeds $700 million
as of the end of any second quarter of a fiscal year, in which case we would no longer be an emerging growth company as of the
end of such fiscal year. 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 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 business 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, shareholders may face difficulties in protecting their interests, and their ability to protect
their 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 holders of our securities 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 (1) 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 (2) 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 our 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 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 our board of directors
to designate the terms of and issue new series of preferred 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.
Our search for a business combination may be materially
adversely affected by the recent coronavirus (COVID-19) outbreak.
In December 2019,
a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout
China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the
outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31,
2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid
the U.S. healthcare community in responding to COVID-19. A significant outbreak of COVID-19 and other infectious diseases could
result in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and potential
target companies may defer or end discussions for a potential business combination with us if COVID-19 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
restrict travel or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate
a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business combination will depend on future
developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity
of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. 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.
If we effect our initial business
combination with a company located in Argentina and/or Brazil, we would be subject to a variety of additional risks that may negatively
impact our operations.
We have initially focused
our search for target businesses located in Argentina and/or Brazil. If we acquired a company in Argentina, Brazil or in another
jurisdiction 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 and complying with
commercial and legal requirements of overseas markets;
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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, including termination or reduction of tax and other incentives
that the applicable government provides to domestic companies, 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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public health or safety concerns and governmental restrictions, including those caused by outbreaks of pandemic disease such as
the recent coronavirus (COVID-19) outbreak;
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crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;
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deterioration of political relations with the United States;
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energy shortages and tariffs resulting in unpredictable availability and costs;
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economic stability; and
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government appropriation of assets.
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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.
If we effect a business combination
with a company located outside of the United States, the laws applicable to such company will likely govern all of our material
agreements and we may not be able to enforce our legal rights.
If we effect a business
combination with a company located outside of the United States, the laws of the country in which such company operates will likely
govern almost all of the material agreements relating to its operations. We cannot assure you that the target business will be
able to enforce any of its material agreements or that remedies will be available in this new jurisdiction. The system of laws
and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the
United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss
of business, business opportunities or capital.
If our management following our initial
business combination is unfamiliar with U.S. 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 could remain in place. Management of the target business may not
be familiar with U.S. securities laws. If new management is unfamiliar with U.S. 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, social and government policies, developments and conditions in the country in which we operate.
The economic, political
and social conditions, as well as government policies, of the country in which our operations are located could affect our business.
Economic growth could be uneven, both geographically and among various sectors of the economy and such growth may not be sustained
in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected, there
may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially
and adversely affect our ability to find an attractive target business with which to consummate our initial business combination
and if we effect our initial business combination, the ability of that target business to become profitable.
Risks
Relating to Argentina and Brazil
Business combinations
with companies with operations in Argentina or Brazil entail special considerations and risks. If we complete a business combination
with a target business with operations in Argentina or Brazil, we will be subject to, and possibly adversely affected by, the risks
set forth below. However, our efforts in identifying prospective target businesses will not be limited to a particular industry
or geographic location. Accordingly, if we acquire a target business in another geographic location, these risks will likely not
affect us and we will be subject to other risks attendant with the specific industry or location of the target business which we
acquire, none of which can be presently ascertained.
Our business will be largely dependent
upon economic conditions in Argentina.
If we complete a business
combination with a target located in Argentina, the ultimate success of our business may, to a large extent, be dependent upon
economic conditions prevailing in Argentina. The changes in economic, political and regulatory conditions in Argentina and measures
taken by the Argentine government are expected to have a significant impact on the success of a business combination with a target
located in Argentina.
The Argentine economy
has experienced significant volatility in past decades, including numerous periods of low or negative growth and high and variable
levels of inflation and currency devaluation. Since the second quarter of 2018, the economy has experienced GDP declines. No assurances
can be given that growth will resume in subsequent quarters or years or that the national economy will not suffer a deeper recession.
If economic conditions in Argentina were to slow down, or contract, if inflation were to accelerate further, or if the Argentine
government’s measures to attract or retain foreign investment and international financing in the future are unsuccessful,
such developments could adversely affect Argentina’s economic growth and in turn affect our financial condition and results
of operations.
Argentina has confronted
and continues to confront inflationary pressures. According to inflation data published by the National Statistics Institute (Instituto
Nacional de Estadística y Censos) (“INDEC”), in 2017 the Argentine alternative consumer price index (“CPI”)
and the wholesale price index (“WPI”) increased by 24.8% and 18.8%, respectively. In 2018, the Argentina CPI and WPI
increased by 47.6% and 73.5%, respectively. In 2019, the Argentina CPI and WPI increased by 53.8% and 58.5%, respectively. High
interest rates or the increase of inflation rates in Argentina could negatively impact our financial condition and results of operations.
Argentine economic
conditions are dependent on a variety of factors, including, but not limited to, the following:
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domestic production, international demand and prices for Argentina’s principal commodity
exports;
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stability and competitiveness of the peso against foreign currencies;
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Argentine fiscal deficit;
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competitiveness and efficiency of domestic industries and services;
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levels of consumer consumption;
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foreign and domestic investment and financing; and
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The Argentine economy
is also sensitive to local political developments. Despite significant measures taken by the Argentine government that was elected
on December 10, 2015, such as the elimination of exchange restrictions, the partial adjustment of gas and electricity prices
and the elimination or reduction of export taxes for certain products, Argentina’s economy continues to face challenges.
Inflation remains a challenge for Argentina given its persistent nature in recent years and adjustment of price distortions from
prior administrations. The Argentine government has announced its intention to reduce the primary fiscal deficit as a percentage
of GDP over time (and also reduce the government’s reliance on Central Bank financing). Inflation can also lead to an increase
in the Argentine’s debt and have an adverse effect on the government’s ability to service its debt, principally in
the medium and long term when most inflation-indexed debt matures. In addition, weaker fiscal results could have a material adverse
effect on the government’s ability to access long term financing, which, in turn, could adversely Argentina’s economy.
Furthermore, considering that the government’s current macroeconomic program has required and is expected to continue to
require domestic and international financing, Argentina may not be able to access international or domestic capital markets, and
the government’s ability to service its outstanding public debt could be adversely affected, and consequently adversely affect
Argentina’s economy and our financial health and results of operations.
Argentina’s economy
is also vulnerable to adverse developments affecting its principal trading partners. A deterioration of economic conditions in
Brazil, Argentina’s main trading partner, and a deterioration of the economies of Argentina’s other major trading partners,
such as China or the United States, could have a material adverse impact on Argentina’s balance of trade and adversely affect
Argentina’s economic growth and may consequently adversely affect our financial health and the results of our initial business
combination. Furthermore, a significant devaluation of the currencies of Argentina’s trading partners or trade competitors
may adversely affect the country’s competitiveness and consequently adversely affect Argentina’s economy.
In 2005, Argentina
restructured a substantial portion of its bond indebtedness with approximately 76% of its bondholders, and in 2006 it settled all
of its debt with the International Monetary Fund (“IMF”). In June 2010, Argentina restructured additional defaulted
bond indebtedness that was not swapped in 2005. As a result of the 2005 and 2010 debt swaps, over 92% of the bond indebtedness
on which Argentina had defaulted in 2002 has been restructured. Certain holders of bonds that were not swapped in the debt restructuring
sued Argentina for payment. After several years, in February 2016, Argentina negotiated and reached agreements in principle
with respect to a substantial number of the holdout bondholders. On April 22, 2016, Argentina issued US$16.5 billion
of new debt securities in the international capital markets, and applied US$9.3 billion to satisfy settlement payments on
agreements with holders of approximately US$8.2 billion principal amount of defaulted bonds.
On June 20, 2018,
the IMF approved a three-year Stand-by Arrangement (“SBA”) for Argentina amounting to US$50 billion, and on September 26,
2018, increased the total amount available under the program, bringing it to US$57.1 billion. The arrangement is subject to
a strict monetary and fiscal program, which includes 0% primary fiscal deficit for 2019, 1% primary surplus in 2020 and limited
foreign exchange intervention from the Central Bank only to prevent disorderly conditions, among other requirements. Austerity
measures implemented to comply with requirements under the IMF agreement could slow down or contract Argentine economic conditions.
Furthermore, deterioration of economic conditions could have a material adverse impact on the country’s capacity to repay
or roll-over the debt outstanding under the SBA in 2021.
Certain risks are inherent in any
investment in a company operating in an emerging market such as Argentina.
Argentina is an emerging
market economy, and investing in emerging markets generally carries risks. These risks include political, social and economic instability
that may affect Argentina’s economic results which can stem from many factors, including the following:
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abrupt changes in currency values;
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high levels of inflation;
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exchange and capital controls;
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wage and price controls;
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regulations to import equipment and other necessities relevant for operations;
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changes in governmental economic or tax policies; and
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political and social tensions.
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Any of these factors,
as well as volatility in the capital and foreign exchange markets, may adversely affect our financial condition and results of
operations or the liquidity, marketability and value of our securities.
The Argentine economy has been adversely
affected by economic developments in other markets.
Financial and
securities markets in Argentina, and also the Argentine economy, are influenced by economic and market conditions in other
markets worldwide. Argentina’s economy remains vulnerable to external shocks, including those relating to a potential
trade war between China and the United States or those caused by outbreaks of pandemic disease, such as the recent coronavirus (COVID-19) outbreak. Although economic conditions vary from country to country, investors’
reactions to events occurring in one country sometimes demonstrate a “contagion” effect in which an entire region
or class of investment is disfavored by international investors. Consequently, there can be no assurance that the Argentine
financial system and securities markets will not continue to be adversely affected by events in developed countries’
economies or events in other emerging markets, which could in turn, adversely affect the Argentine economy and, indirectly,
our business, financial condition and results of operations, and the market value of our securities.
Corruption investigations in Argentina
could have an impact on the development of the economy and investors’ confidence, which could adversely affect our business,
financial condition and the results of our operations.
As of the date of this
report, more than twenty Argentine businessmen and approximately fifteen former government officials are being investigated in
connection with their involvement in an alleged bribery scheme during the Kirchner Administration (Argentina’s prior government).
As a result of these investigations, several businessmen and former public officials have been prosecuted, including the former
president and current vice president of Argentina, Mrs. Cristina Fernández de Kirchner, who was prosecuted for illicit
association and seized for the sum of Ps. 4,000 million on September 17, 2018.
Depending on the results
of such investigations and the time it takes to conclude them, the companies involved could face, among other consequences, a decrease
in their credit rating, be subject to demands by their investors, as well as experiencing restrictions on financing through the
capital market and have a reduction in their financial condition. These negative effects could hamper the ability of these companies,
with a potential contagion effect to other businesses, to meet their financial obligations. As a result, the limitation on obtaining
financing in the future could affect the carrying out projects or works currently in execution.
In addition, the effects
of these investigations could affect the investment levels in infrastructure in Argentina, as well as the continuation, development
and completion of public works and Public-Private Participation projects, which could ultimately lead to lower growth in the Argentine
economy.
As of the date of this
report, we have not estimated the impact that this investigation could have on the Argentine economy. It is possible the corruption
charges against Kirchner will have no impact during her Vice Presidency. Likewise, we cannot predict for how long corruption investigations
could continue, what other companies might be involved, or how significant the effects of these investigations might be on the
Argentine economy. In turn, the decrease in investors’ confidence, among other factors, could have a significant adverse
impact on the development of the Argentine economy, which could adversely affect our business, financial condition and the results
of our operations.
A decrease in international prices
for commodities exported by Argentina could negatively affect Argentina’s economic condition, lead to additional pressures
on the exchange market and have a material adverse effect on our prospects.
Argentina’s economic
recovery since the crisis of 2001 and 2002 has occurred within the context of an increase in prices of Argentine exportable goods,
such as soy beans. The high prices of commodities contributed to increase Argentine export revenues since the third quarter of
2002, and to increase Argentine government tax income, principally export withholding taxes. Nonetheless, as of early 2015, international
prices for commodities that comprise Argentina’s main basic product exports have decreased, which in turn, adversely affected
Argentina’s economic growth. If the international prices for commodities continue to decrease, Argentina’s economy
could be adversely affected further. Moreover, agriculture production—which represent an important source of Argentina’s
export income—could be negatively affected due to adverse climate conditions.
These circumstances
may have a negative impact on Argentina’s revenues, on the availability of foreign currency, and on Argentina’s ability
to repay its debt, and in addition, could generate recession and inflationary pressures depending on the Argentine government’s
reaction. Any such results may adversely affect Argentina’s economic growth and as a result, could adversely affect our business,
results of operations and financial condition.
We may be exposed to fluctuations
in foreign exchange rates.
Our results of operations
will be exposed to currency fluctuations, and any devaluation of the peso against the U.S. dollar and other hard currencies may
adversely affect our business and results of operations. The value of the peso has fluctuated significantly in the past, such as
in January 2014 when the peso declined approximately 23% against the U.S. dollar. In 2015, the peso lost approximately 52%
of its value with respect to the U.S. dollar, including a 37.3% devaluation during the last quarter of 2015, mainly concentrated
after December 16, 2015. In 2016 and 2017 the peso lost approximately 22% and 18.4%, respectively, of its value with respect
to the U.S. dollar. Between January 1, 2018 and December 31, 2018, the peso lost approximately 101% of its value with
respect to the U.S. dollar. Between January 1, 2019 and December 31, 2019, the peso lost approximately 62.5% of its value
with respect to the U.S. dollar. The peso may fluctuate in the future.
We are unable to predict
whether, and to what extent, the value of the peso may further depreciate or appreciate against the U.S. dollar and how any such
fluctuations could affect our initial business combination or the value of our securities.
We could be subject to exchange and
capital controls.
In the past, Argentina
imposed exchange controls and transfer restrictions substantially limiting the ability of companies to retain foreign currency
or make payments abroad. Beginning in 2011, additional foreign exchange controls have been imposed that restrict or limit purchases
of foreign currency and transfers of foreign currency abroad. In December 2015, the administration eliminated certain exchange
controls imposed by the previous administration, such as (i) the requirement that foreign currency be deposited and exchanged
in Argentina in respect of finance transactions outside Argentina, and (ii) the requirement that 30% of funds in U.S. dollars
held in Argentina be frozen pursuant to Decree No. 616/05. There can be no assurance that future regulatory changes related
to exchange and capital controls will not adversely affect our financial condition or results of operations, our ability to meet
our obligations denominated in foreign currency or our ability to execute our financing and capital expenditure plans.
Our access to international capital
markets are influenced by the perception of risk in Argentina and other emerging economies.
International investors
consider Argentina to be an emerging market. Economic and market conditions in other emerging market countries, especially those
in Latin America, influence the market for securities issued by Argentine companies. Volatility in securities markets in Latin
America and in other emerging market countries may have a negative impact on the trading value of our securities and on our ability
and the terms on which we are able to access international capital markets.
We cannot assure that
the perception of risk in Argentina and other emerging markets may not have a material adverse effect on our ability to raise capital,
which would negatively affect our investments plans and consequently our financial condition and results of operations, and also
have a negatively impact on the trading values of our securities. We can give no assurance as to potential adverse impact of the
factors discussed above on our financial condition and/or results of operations.
The Brazilian government has exercised,
and continues to exercise, significant influence over the Brazilian economy, which, together with Brazilian political and economic
conditions, may adversely affect us.
If we complete a business
combination with a target located in Brazil, we may be adversely affected by the following factors, as well as the Brazilian federal
government’s response to these factors:
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economic and social instability;
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increase in interest rates;
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exchange controls and restrictions on remittances abroad;
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restrictions and taxes on agricultural exports;
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exchange rate fluctuations;
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volatility and liquidity in domestic capital and credit markets;
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expansion or contraction of the Brazilian economy, as measured by GDP growth rates;
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allegations of corruption against political parties, elected officials or other public officials,
including allegations made in relation to the Lava Jato investigation;
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government policies related to our sectors;
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fiscal or monetary policy and amendments to tax legislation; and other political, diplomatic, social
or economic developments in or affecting Brazil; and
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Historically, the Brazilian
government has frequently intervened in the Brazilian economy and has occasionally made significant changes in economic policies
and regulations, including, among others, the imposition of a tax on foreign capital entering Brazil (IOF tax), changes in monetary,
fiscal and tax policies, currency devaluations, capital controls and limits on imports.
The Brazilian economy
has been experiencing a slowdown—GDP growth rates were 3.9%, 1.8%, 2.7% and 0.1%, in 2011, 2012, 2013 and 2014, respectively,
and GDP decreased 3.8% in 2015, decreased 3.6% in 2016, increased 1.0% in 2017, increased 1.1% in 2018 and increased 1.2% in the
first nine months of 2019.
As a result of investigations
carried out in connection with the Lava Jato (Car Wash) operation into corruption in Brazil, a number of senior
politicians, including congressmen, and executive officers of some of the major state-owned companies in Brazil have resigned or
been arrested, while others are being investigated for allegations of unethical and illegal conduct. The matters that have come,
and may continue to come, to light as a result of, or in connection with, the Lava Jato operation and other similar
operations have adversely affected, and we expect that they will continue to adversely affect, the Brazilian economy, markets and
trading prices of securities issued by Brazilian issuers in the near future.
The ultimate outcome
of these investigations is uncertain, but they have already had an adverse effect on the image and reputation of the implicated
companies, and on the general market perception of the Brazilian economy, the political environment and the Brazilian capital markets.
The development of these investigations may adversely affect us. We cannot predict whether these investigations will bring further
political or economic instability to Brazil, or whether new allegations will be raised against high-level members of the Brazilian
federal government. In addition, we cannot predict the results of these investigations, nor their effects on the Brazilian economy.
In addition, on December 2,
2015, the Brazilian Congress opened impeachment proceedings against Brazilian President Dilma Rousseff for allegedly breaking federal
budget laws during her term. On August 31, 2016, following a trial by the Senate, President Dilma Rousseff was impeached and
Vice-President Michel Temer was sworn in as president. In addition, a number of requests for impeachment were filed against Mr. Temer,
as well as criminal charges by the Brazilian Federal Prosecutor’s Office after allegations surfaced that Mr. Temer had
allegedly been leading a political corruption related criminal organization. Furthermore, a Brazilian federal appeals court unanimously
upheld the conviction of former president Luís Inácio Lula da Silva on corruption charges uncovered by the Lava
Jato operation; however, this decision has been appealed to the Brazilian Supreme Court. On April 7, 2018, Luís
Inácio Lula da Silva began his prison sentence and, on August 31, 2018, the Superior Electoral Court barred Luís
Inácio Lula da Silva from participating in Brazil’s 2018 presidential election. In November 2019, Luís
Inácio Lula da Silva was released from prison following a ruling by the Brazilian Supreme Court that allows defendants to
remain free while their appeals are pending. We cannot predict whether these investigations and lawsuits will bring about further
economic and political instability or if new allegations against high officers of the Brazilian Federal Government will arise in
the future, nor can we predict the results of any such investigations, including their effects over the Brazilian economy.
In addition, political
demonstrations in Brazil over the last few years have affected the development of the Brazilian economy and investors’ perceptions
of Brazil. For example, street protests, which started in mid-2013 and continued through 2016, demonstrated the public’s
dissatisfaction with the worsening Brazilian economic condition (including an increase in inflation and fuel prices as well as
rising unemployment), and the perception of widespread corruption.
On October 28,
2018, the presidential elections were held in Brazil, with the conservative candidate, Jair Bolsonaro, as the winner in the final
round with 55.1% of the votes. President Bolsonaro took office on January 1, 2019. We cannot predict the impact of the policies
of the Bolsonaro administration on the global economy or the Brazilian economy.
Any of the above factors
may create additional political uncertainty, which could harm the Brazilian economy and, consequently, our business and the price
of our ordinary shares.
Inflation, coupled with the Brazilian
government’s measures to fight inflation, may hinder Brazilian economic growth and increase interest rates, which could have
a material adverse effect on us.
Brazil has in the past
experienced significantly high rates of inflation. As a result, the Brazilian government adopted monetary policies that resulted
in Brazilian interest rates being among the highest in the world. The Central Bank’s Monetary Policy Committee (Comitê
de Política Monetária do Banco Central, or "COPOM"), establishes an official interest rate target for
the Brazilian financial system based on the level of economic growth, inflation rate and other economic indicators in Brazil. Between
2004 and 2010, the official Brazilian interest rate varied from 19.75% to 8.75% per year. In response to an increase in inflation
in 2010, the Brazilian government increased the official Brazilian interest rate, the SELIC rate, which was 10.75% per year as
or December 31, 2010. The SELIC rate has increased and decreased since then and, as of December 31, 2019, it was 4.50%
per year. The inflation rates, as measured by the General Market Price Index (Índice Geral de Preços-Mercado,
or IGP-M), and calculated by Fundação Getúlio Vargas, or FGV, were 3.67% in 2014, 10.54% in 2015,
7.18% in 2016, (0.52)% in 2017, 7.54% in 2018 and 7.32% in 2019.
Inflation and the government
measures to fight inflation have had and may continue to have significant effects on the Brazilian economy and our business. In
addition, the Brazilian government’s measures to control inflation have often included maintaining a tight monetary policy
with high interest rates, thereby restricting the availability of credit and slowing economic growth. On the other hand, an easing
of monetary policies of the Brazilian government may trigger increases in inflation. In the event of an increase in inflation,
we may not be able to adjust our daily rates to offset the effects of inflation on our cost structure, which may materially and
adversely affect us.
A deterioration in general economic
and market conditions or the perception of risk in other countries, principally in emerging countries or the United States, may
have a negative impact on the Brazilian economy and us.
Economic and market
conditions in other countries, including United States and Latin American and other emerging market countries, may affect the Brazilian
economy and the market for securities issued by Brazilian companies. Although economic conditions in these countries may differ
significantly from those in Brazil, investors’ reactions to developments in these other countries, including as a result of the recent coronavirus (COVID-19) outbreak, may have an adverse effect
on the market value of securities of Brazilian issuers. Crises in other emerging market countries could dampen investor enthusiasm
for securities of Brazilian issuers, including ours, which could adversely affect the market price of our ordinary shares. In the
past, the adverse development of economic conditions in emerging markets resulted in a significant flow of funds out of the country
and a decrease in the quantity of foreign capital invested in Brazil. Changes in the prices of securities of public companies,
lack of available credit, reductions in spending, general slowdown of the global economy, exchange rate instability and inflationary
pressure may adversely affect, directly or indirectly, the Brazilian economy and securities market. Global economic downturns and
related instability in the international financial system have had, and may continue to have, a negative effect on economic growth
in Brazil. Global economic downturns reduce the availability of liquidity and credit to fund the continuation and expansion of
business operations worldwide.
In addition, the Brazilian
economy is affected by international economic and market conditions generally, especially economic conditions in the United States.
Share prices on B3 S.A.—Brasil, Bolsa, Balcão (also known as the “B3”), for example, have historically
been sensitive to fluctuations in U.S. interest rates and the behavior of the major U.S. stock indexes. An increase in interest
rates in other countries, especially the United States, may reduce global liquidity and investors’ interest in the Brazilian
capital markets, adversely affecting the price of our ordinary shares.
Infrastructure and workforce deficiency
in Brazil may impact economic growth and have a material adverse effect on us.
Our performance depends
on the overall health and growth of the Brazilian economy. Brazilian GDP growth has fluctuated over the past few years, with growth
of 3.0% in 2013 but decreasing to 0.5% in 2014, a contraction of 3.8% in 2015, a contraction of 3.6% in 2016, growth of 1.0% in
2017, growth of 1.1% in 2018 and growth of 1.2% in the first nine months of 2019. Growth is limited by inadequate infrastructure,
including potential energy shortages and deficient transportation, logistics and telecommunication sectors, the lack of a qualified
labor force, and the lack of private and public investments in these areas, which limit productivity and efficiency. Any of these
factors could lead to labor market volatility and generally impact income, purchasing power and consumption levels, which could
limit growth and ultimately have a material adverse effect on us.
Exchange rate instability may have
adverse effects on the Brazilian economy, us and the price of our ordinary shares.
The Brazilian currency
has been historically volatile and has been devalued frequently over the past three decades. Throughout this period, the Brazilian
government has implemented various economic plans and used various exchange rate policies, including sudden devaluations, periodic
mini-devaluations (during which the frequency of adjustments has ranged from daily to monthly), exchange controls, dual exchange
rate markets and a floating exchange rate system. Although long-term depreciation of the real is generally linked
to the rate of inflation in Brazil, depreciation of the real occurring over shorter periods of time has resulted
in significant variations in the exchange rate between the real, the U.S. dollar and other currencies. The real depreciated
against the U.S. dollar by 32.0% at year-end 2015 as compared to year-end 2014, and by 11.8% at year-end 2014 as compared to year-end
2013. The real/U.S. dollar exchange rate reported by the Central Bank was R$3.9048 per U.S. dollar on December 31,
2015 and R$3.2591 per U.S. dollar on December 31, 2016, which reflected a 16.5% appreciation in the real against
the U.S. dollar during 2016. The real/U.S. dollar exchange rate reported by the Central Bank was R$3.308 per U.S. dollar
on December 31, 2017, which reflected a 1.5% depreciation in the real against the U.S. dollar during 2017.
The real/U.S. dollar exchange rate reported by the Central Bank was R$3.874 per US$1.00 on December 31, 2018,
which reflected a 17.1% depreciation in the real against the U.S. dollar during 2018. The real/U.S. dollar
exchange rate reported by the Central Bank was R$4.031 per US$1.00 on December 31, 2019, which reflected a 4.1% depreciation
in the real against the U.S. dollar during 2019. There can be no assurance that the real will not again
depreciate against the U.S. dollar or other currencies in the future.
A devaluation of the real relative
to the U.S. dollar could create inflationary pressures in Brazil and cause the Brazilian government to, among other measures, increase
interest rates. Any depreciation of the real may generally restrict access to the international capital markets.
It would also reduce the U.S. dollar value of our results of operations. Restrictive macroeconomic policies could reduce the stability
of the Brazilian economy and harm our results of operations and profitability. In addition, domestic and international reactions
to restrictive economic policies could have a negative impact on the Brazilian economy. These policies and any reactions to them
may harm us by curtailing access to foreign financial markets and prompting further government intervention. A devaluation of the real relative
to the U.S. dollar may also, as in the context of the current economic slowdown, decrease consumer spending, increase deflationary
pressures and reduce economic growth.
On the other hand,
an appreciation of the real relative to the U.S. dollar and other foreign currencies may deteriorate the Brazilian
foreign exchange current accounts. Changes in the value of the U.S. dollar compared to other currencies may affect the costs of
goods and services that Brazilian entities purchase from countries outside Brazil. Depending on the circumstances, either devaluation
or appreciation of the real relative to the U.S. dollar and other foreign currencies could restrict the growth
of the Brazilian economy, as well as our business, results of operations and profitability.
Any further downgrading of Brazil’s
credit rating could reduce the trading price of our ordinary shares.
We may be harmed by
investors’ perceptions of risks related to Brazil’s sovereign debt credit rating. Rating agencies regularly evaluate
Brazil and its sovereign ratings, which are based on a number of factors including macroeconomic trends, fiscal and budgetary conditions,
indebtedness metrics and the perspective of changes in any of these factors.
The rating agencies
began to review Brazil’s sovereign credit rating in September 2015. Subsequently, the three major rating agencies downgraded
Brazil’s investment-grade status:
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Standard & Poor’s initially downgraded Brazil’s credit rating from BBB-negative
to BB-positive and subsequently downgraded it again from BB-positive to BB, maintaining its negative outlook, citing a worse credit
situation since the first downgrade. On January 11, 2018, Standard & Poor’s further downgraded Brazil’s
credit rating from BB to BB-negative. On December 11, 2019, Standard & Poor’s affirmed Brazil’s credit
rating and changed the outlook to positive.
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In December 2015, Moody’s placed Brazil’s Baa3’s issue and bond ratings
under review for downgrade and subsequently downgraded the issue and bond ratings to below investment grade, at Ba2 with a negative
outlook, citing the prospect of a further deterioration in Brazil’s debt indicators, taking into account the low growth environment
and the challenging political scenario. On April 9, 2018, Moody’s affirmed Brazil’s issue and bond ratings at
Ba2 and changed the outlook from negative to stable.
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Fitch downgraded Brazil’s sovereign credit rating to BB-positive with a negative outlook,
citing the rapid expansion of the country’s budget deficit and the worse-than-expected recession. In February 2018,
Fitch downgraded Brazil’s sovereign credit rating again to BB-negative, citing, among other reasons, fiscal deficits, the
increasing burden of public debt and an inability to implement reforms that would structurally improve Brazil’s public finances.
Brazil’s sovereign credit rating is currently rated below investment grade by the three main credit rating agencies. Consequently,
the prices of securities offered by companies with significant operations in Brazil have been negatively affected. A prolongation
or worsening of the current Brazilian recession and continued political uncertainty, among other factors, could lead to further
ratings downgrades. Any further downgrade of Brazil’s sovereign credit ratings could heighten investors’ perception
of risk and, as a result, cause the trading price of our ordinary shares to decline.
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