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 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, 2020 filed with the U.S. Securities and Exchange Commission (the
"SEC") on March 26, 2021. 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.
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 March 31, 2021 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 March 31, 2021, we had a net loss of $1,914,524,
which consisted of formation and operating expenses of $256,296 and a loss on
the value of the FPA liability of $1,664,090 offset by interest earned on
marketable securities held in the trust account of $5,862.
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Liquidity and Capital Resources
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 three months ended March 31, 2021, net cash used in operating activities
was $854,703. The net loss of $1,914,524 was offset by the change in value of
the FPA liability of $1,664,090 and interest earned on marketable securities
held in trust of $5,862. Changes in operating assets and liabilities used
$598,407 of cash from operating activities.
At March 31, 2021, we had cash held in the Trust Account of $450,000,000. 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.
At March 31, 2021, we had cash of $610,522 held outside of the Trust Account. 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. 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.
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Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of March 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 Policies
The preparation of unaudited condensed financial statements and related
disclosures in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements, and
income and expenses during the periods reported. Actual results could materially
differ from those estimates. We have identified the following critical
accounting policies:
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Class A ordinary shares subject to
mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable ordinary shares (including ordinary shares
that features redemption rights that is either within the control of the holder
or subject to redemption upon the occurrence of uncertain events not solely
within our control) is classified as temporary equity. At all other times,
ordinary shares are classified as shareholders' equity. Our ordinary shares
feature certain redemption rights that are considered to be outside of our
control and subject to occurrence of uncertain future events. Accordingly,
Class A ordinary shares subject to possible redemption is presented as temporary
equity, outside of the shareholders' equity section of our unaudited condensed
balance sheet.
FPA Liability
The Company accounts for the Forward Purchase Agreement ("FPA") as a
liability-classified 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"). The assessment considers whether the FPA is a freestanding financial
instrument pursuant to ASC 480 and meets the definition of a liability pursuant
to ASC 480. 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
Net Income (Loss) Per Ordinary Share
We apply the two-class method in calculating earnings per share. Net income per
ordinary share, basic and diluted for Class A redeemable ordinary shares is
calculated by dividing the interest income earned on the Trust Account by the
weighted average number of Class A redeemable ordinary shares outstanding since
original issuance. Net loss per common share, basic and diluted for Class B
non-redeemable ordinary shares is calculated by dividing the net income (loss),
less income attributable to Class A redeemable ordinary shares, by the weighted
average number of Class B non-redeemable ordinary shares outstanding for the
periods presented.
Recent Accounting Standards
Management does not believe that any 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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