Filing summary
Issuer and period: The filing is Cartesian Growth Corporation’s Form 10-Q for the quarter ended September 30, 2022, signed November 4, 2022. Despite the request metadata, this is not an Alti Global, Inc. operating-company filing; Cartesian was a SPAC proposing a combination involving Alvarium, Tiedemann Wealth Management and TIG.
Business context and transaction
Cartesian had not begun operating activities and reported no operating revenue. Its activity was limited to seeking and pursuing a business combination. It had announced a proposed combination intended to create Alvarium Tiedemann Holdings. The SEC declared the transaction registration statement effective on October 17, 2022, and the shareholder meeting was scheduled for November 17, 2022.
After quarter-end, on October 25, the parties amended and restated the merger agreement, setting an outside date of January 4, 2023 and adding sponsor-share cancellation and non-redeeming-shareholder bonus-share provisions. The agreement also provides for potential termination fees of $5.5 million from Alvarium or $11 million from TWMH and the TIG Entities, in specified circumstances. The proposed PIPE was approximately $165 million for about 16.84 million shares at $9.80 each, subject to closing conditions.
Financial results and liquidity
| Metric | Q3 2022 / Sep. 30, 2022 | Comparable period / prior balance |
|---|---|---|
| Operating revenue | None | None |
| Operating costs | $298,358 for Q3; $948,203 for nine months | $239,380 for Q3 2021; $537,871 for nine months 2021 |
| Net income (loss) | $8,215,430 for Q3; $17,877,195 for nine months | $(5,863,746) for Q3 2021; $(1,519,632) for nine months 2021 |
| Cash outside trust | $463,990 | $551,258 at Dec. 31, 2021 |
| Trust assets | $347,105,214 | $345,031,308 at Dec. 31, 2021 |
| Current assets / current liabilities | $483,029 / $491,688 | $621,664 / $182,120 at Dec. 31, 2021 |
| Total liabilities | $19,408,804 | $35,350,728 at Dec. 31, 2021 |
| Operating cash flow | $(587,268) for nine months | $(744,166) for nine months 2021 |
Profit was driven principally by noncash fair-value gains on warrant liabilities: $6.98 million in Q3 and $16.73 million for the first nine months. Trust-account interest was $1.54 million in Q3 and $2.10 million year to date. These gains and interest do not represent operating revenue; there is no meaningful operating margin to assess.
All 34.5 million public Class A shares remained redeemable and were carried as temporary equity at $347.1 million, approximately $10.06 per share. The trust funds were primarily reserved for a business combination or shareholder redemptions, not ordinary operating liquidity. The company had a $8,659 working-capital deficit and a $477,038 sponsor working-capital note balance, net of discount. It also reported a $12.075 million deferred underwriting fee payable only if a business combination closes. No conventional long-term debt was reported.
Changes, outlook and risks
- Net income turned positive versus losses in 2021, principally because warrant-liability fair-value movements and trust interest differed substantially; results should not be read as evidence of an operating business becoming profitable.
- Operating costs rose year over year, while cash used in operations declined for the nine-month period. Trust assets increased with interest earned.
- Management expected the proposed combination to close before the February 26, 2023 mandatory liquidation date, but stated that failure to complete it raises substantial doubt about the company’s ability to continue as a going concern. The merger remained conditional; no assurance of closing was given.
- The filing identifies possible exposure to the Inflation Reduction Act’s 1% stock-repurchase excise tax for redemptions after December 31, 2022; application to a delayed transaction or liquidation was uncertain. COVID-19, the Russia-Ukraine conflict, market volatility and financing availability were also cited as uncertainties.
- Disclosure controls were deemed ineffective due to a material weakness in accounting for complex financial instruments, including the classification of redeemable Class A shares. Management reported additional review and planned remediation, without assurance the measures would be effective.
- No legal proceedings were reported. The filing disclosed no other material risk-factor changes beyond the excise-tax and regulatory matters discussed.
Important facts for investors to verify
- Confirm the issuer identity: this is Cartesian Growth Corporation, not Alti Global, Inc.; review the final transaction structure and post-combination company disclosures.
- Check whether shareholders approved the merger, whether PIPE financing and regulatory conditions were satisfied, and whether the transaction closed by the applicable dates.
- Review redemption levels and the resulting cash available at closing, including deferred underwriting fees, sponsor-share provisions and any excise-tax consequences.
- Assess the company’s going-concern exposure if the merger did not close before the SPAC’s liquidation deadline, and the recoverability of sponsor support or indemnities.
- Monitor remediation of the material weakness and the effect of warrant fair-value accounting on reported earnings.