References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Altimeter Growth Corp. 2. References to our "management" or
our "management team" refer to our officers and directors, references to the
"Sponsor" refer to Altimeter Growth Holdings 2. The following discussion and
analysis of the Company's financial condition and results of operations should
be read in conjunction with the unaudited condensed financial statements and the
notes thereto contained elsewhere in this Quarterly Report. Certain information
contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" that are not
historical facts and involve risks and uncertainties that could cause actual
results to differ materially from those expected and projected. All statements,
other than statements of historical fact included in this Quarterly Report
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are
forward-looking
statements. Words such as "expect," "believe," "anticipate," "intend,"
"estimate," "seek" and variations and similar words and expressions are intended
to identify such forward-looking statements. Such forward-looking statements
relate to future events or future performance, but reflect management's current
beliefs, based on information currently available. A number of factors could
cause actual events, performance or results to differ materially from the
events, performance and results discussed in the forward-looking statements. For
information identifying important factors that could cause actual results to
differ materially from those anticipated in the forward-looking statements,
please refer to the Risk Factors section of the Company's Annual Report on Form
10-K
for the year ending December 31, 2021 filed with the U.S. Securities and
Exchange Commission (the "SEC") on March 25, 2022. The Company's securities
filings can be accessed on the EDGAR section of the SEC's website at
www.sec.gov. Except as expressly required by applicable securities law, the
Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
Overview
We are a blank check company incorporated on October 14, 2020 as a Cayman
Islands exempted company for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses or entities (the "Business
Combination"). We have not selected any business combination target and we have
not, nor has anyone on our behalf, initiated any substantive discussions,
directly or indirectly, with any business combination target. We intend to
effectuate our initial business combination using cash from the proceeds of our
Initial Public Offering and the sale of our shares, debt or a combination of
cash, equity and debt.
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ALTIMETER GROWTH CORP. 2
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception to September 30, 2022, were organizational
activities, those necessary to prepare for the Initial Public Offering,
described below, and, after the Initial Public Offering, identifying a target
company for a Business Combination. We do not expect to generate any operating
revenues until after the completion of our Business Combination. We may generate
non-operating income in the form of interest income on marketable securities
held in the Trust Account. We incur expenses as a result of being a public
company (for legal, financial reporting, accounting and auditing compliance), as
well as for due diligence expenses in connection with completing a Business
Combination.
For the three months ended September 30, 2022, we had a net income of
$1,773,530, which consisted of interest earned on marketable securities held in
the trust account of $2,034,887, offset by formation and operating expenses of
$231,274 and a loss on the value of the FPA asset of $30,083.
For the three months ended September 30, 2021, we had net income of $941,482,
which consisted of a gain on the value of the FPA of $1,627,867 and interest
earned on marketable securities held in the trust account of $6,914 offset by
formation and operating expenses of $693,299.
For the nine months ended September 30, 2022, we had a net income of $1,366,599,
which consisted of formation and operating expenses of $947,771 and a loss on
the value of the FPA asset of $396,409, offset by interest earned on marketable
securities held in the trust account of $2,710,779.
For the nine months ended September 30, 2021, we had net loss of $702,772 which
consisted of a loss on the value of the FPA of $471,389 and formation and
operating expenses of $1,193,776, offset by $19,615 of interest earned on
marketable securities held in the trust account.
Liquidity, Capital Resources and Going Concern
Until the consummation of the Initial Public Offering, our only source of
liquidity was an initial purchase of Class B ordinary shares by our Sponsor and
advances from our Sponsor.
On January 11, 2021, we consummated our Initial Public Offering of 45,000,000
shares, which included the full exercise by the underwriters of the
over-allotment option to purchase an additional 5,000,000 shares, at $10.00 per
share, generating gross proceeds of $450,000,000 (the "Initial Public
Offering"). Simultaneously with the closing of the Initial Public Offering, we
consummated the sale of an aggregate of 1,100,000 Private Placement Shares to
our sponsor at a price of $10.00 per share, generating gross proceeds of
$11,000,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Placement Shares, a total of $450,000,000
was placed in the Trust Account, and we had $1,995,000 of cash held outside of
the Trust Account, after payment of costs related to the Initial Public
Offering, and available for working capital purposes. We incurred $25,304,775 in
transaction costs, including $9,000,000 of underwriting fees, $15,750,000 of
deferred underwriting fees and $554,775 of other offering costs.
For the nine months ended September 30, 2022, net cash used in operating
activities was $499,835. The net income of $1,366,599 was offset by the interest
earned on marketable securities held in trust of $2,710,779 and changes in value
of the FPA asset of $396,409 and in operating assets and liabilities used
$447,936 of cash from operating activities.
For the nine months ended September 30, 2021, net cash used in operating
activities was $1,013,769. The net loss of $702,772 was offset by the interest
earned on marketable securities held in trust of $19,615 and changes in value of
the FPA asset of $471,389 and changes in operating assets and liabilities used
$180,007 of cash from operating activities.
At September 30, 2022 and December 31, 2021, we had cash held in the Trust
Account of $452,738,926 and $450,028,147, respectively. We intend to use
substantially all of the funds held in the Trust Account, including any amounts
representing interest earned on the Trust Account (less taxes payable (if
applicable) and deferred underwriting commissions) and the proceeds from the
sale of the forward purchase shares to complete our Business Combination. To the
extent that our shares or debt is used, in whole or in part, as consideration to
complete our Business Combination, the remaining proceeds held in the Trust
Account will be used as working capital to finance the operations of the
post-Business Combination entity, make other acquisitions and pursue our growth
strategies.
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ALTIMETER GROWTH CORP. 2
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
At September 30, 2022 and December 31, 2021, we had cash of $46,196 and
$398,681, held outside of the Trust Account, respectively. We intend to use the
funds held outside the Trust Account primarily to identify and evaluate target
businesses, perform business due diligence on prospective target businesses,
travel to and from the offices, properties or similar locations of prospective
target businesses or their representatives or owners, review corporate documents
and material agreements of prospective target businesses, and structure,
negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our Sponsor or an affiliate of our
Sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required. On June 10, 2022, amended and restated on
August 11, 2022, the Company issued an unsecured promissory note (the "Note") to
the Sponsor, pursuant to which the Company may borrow up to an aggregate
principal amount of $1,000,000. The Note is non-interest bearing and payable
upon consummation of a Business Combination. As of September 30, 2022, $147,350
is outstanding. If we complete a Business Combination, we would repay such
loaned amounts. In the event that a Business Combination does not close, we may
use a portion of the working capital held outside the Trust Account to repay
such loaned amounts but no proceeds from our Trust Account would be used for
such repayment. Up to $2,000,000 of such loans may be convertible into shares of
the post-Business Combination entity at a price of $10.00 per share at the
option of the lender.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating and consummating a Business Combination are less than the actual
amount necessary to do so, we may have insufficient funds available to operate
our business prior to our Business Combination. Moreover, we may need to obtain
additional financing either to complete our Business Combination or because we
become obligated to redeem a significant number of our public shares upon
consummation of our Business Combination, in which case we may issue additional
securities or incur debt in connection with such Business Combination. Subject
to compliance with applicable securities laws, we would only complete such
financing simultaneously with the completion of our Business Combination. If we
are unable to complete our Business Combination because we do not have
sufficient funds available to us, we will be forced to cease operations and
liquidate the Trust Account. In addition, following our Business Combination, if
cash on hand is insufficient, we may need to obtain additional financing in
order to meet our obligations.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 2022 and December 31, 2021.
We do not participate in transactions that create relationships with
unconsolidated entities or financial partnerships, often referred to as variable
interest entities, which would have been established for the purpose of
facilitating off-balance sheet arrangements. We have not entered into any
off-balance sheet financing arrangements, established any special purpose
entities, guaranteed any debt or commitments of other entities, or purchased any
non- financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay affiliate
of the Sponsor a monthly fee of $20,000 for office space, utilities and
secretarial, and administrative and support services. We began incurring these
fees on January 11, 2021 and will continue to incur these fees monthly until the
earlier of the completion of the Business Combination and our liquidation.
The underwriters are entitled to a deferred fee of $0.35 per share, or
$15,750,000 in the aggregate. The deferred fee will become payable to the
underwriters from the amounts held in the Trust Account solely in the event that
we complete a Business Combination, subject to the terms of the underwriting
agreement.
We entered into a forward purchase agreement which will provide for the purchase
of a certain number of shares (the "forward purchase shares"), up to 5,000,000
forward purchase shares for $10.00 per share, or an aggregate purchase price of
$50,000,000 in a private placement to close concurrently with the closing of a
Business Combination.
Critical Accounting Estimates
This management's discussion and analysis of our financial condition and results
of operations is based on our unaudited condensed financial statements, which
have been prepared in accordance with United States Generally Accepted
Accounting Polices ("GAAP"). The preparation of our unaudited condensed
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses and the
disclosure of contingent assets and liabilities in our unaudited condensed
financial statements. On an ongoing basis, we evaluate our estimates and
judgments, including those related to fair value of financial instruments and
accrued expenses. We base our estimates on historical experience, known trends
and events and various other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. The Company has identified the following as its
critical accounting policies:
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ALTIMETER GROWTH CORP. 2
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
FPA
The Company accounts for the Forward Purchase Agreement ("FPA") as a derivative
instrument based on an assessment of the specific terms of the FPA and
applicable authoritative guidance in Financial Accounting Standards Board
("FASB") Accounting Standards Codification ("ASC") 480, Distinguishing
Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and Hedging ("ASC
815"). This assessment, which requires the use of professional judgment, is
conducted at the time of execution of the FPA and as of each subsequent
quarterly period end date while the FPA is outstanding. Changes in the estimated
fair value of the FPA between reporting periods is recognized as a non-cash gain
or loss on the statement of operations. The inputs used by the Company to value
its FPA require estimation by the Company. To demonstrate the sensitivity to the
most judgmental areas of this estimate, a 1% increase in the present value of
the security input would increase the Company's FPA asset by approximately
$350,000.
Recent Accounting Standards
In August 2020, the FASB issued Accounting Standards Update ("ASU") 2020-06,
Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06")
to simplify accounting for certain financial instruments. ASU 2020-06 eliminates
the current models that require separation of beneficial conversion and cash
conversion features from convertible instruments and simplifies the derivative
scope exception guidance pertaining to equity classification of contracts in an
entity's own equity. The new standard also introduces additional disclosures for
convertible debt and freestanding instruments that are indexed to and settled in
an entity's own equity. ASU 2020-06 amends the diluted earnings per share
guidance, including the requirement to use the if-converted method for all
convertible instruments. ASU 2020-06 is effective for fiscal years beginning
after December 15, 2023, including interim periods within those fiscal years,
with early adoption permitted. The Company is currently evaluating the impact of
the accounting pronouncement and therefore has not yet adopted as of September
30, 2022. Management does not believe that any other recently issued, but not
yet effective, accounting standards, if currently adopted, would have a material
effect on our unaudited condensed financial statements.
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