Business context and reporting period
This is Cartesian Growth Corporation’s unaudited Form 10-Q for the quarter ended March 31, 2022, not an operating-company filing under the name Alti Global, Inc. Cartesian was a blank-check company and had not commenced business operations; its activity consisted of pursuing a business combination. It reported no operating revenue.
The proposed combination with Tiedemann Wealth Management Holdings, TIG entities and Alvarium Investments would result in a combined company intended to be named Alvarium Tiedemann Holdings. The agreement’s outside date was extended to July 29, 2022.
Financial results and position
- Quarterly result: Net income was $9.92 million, or $0.23 per Class A and Class B share, compared with a $4.90 million net loss, or $0.24 loss per share, in Q1 2021.
- Drivers and expenses: Operating costs were $478,573, versus $87,220 a year earlier. Other income was $10.40 million, principally a $10.26 million noncash gain from the change in fair value of warrant liabilities, plus $119,996 of trust interest and a $19,810 unrealized Treasury-bill gain. The filing reports no operating margin; it is not meaningful for this pre-combination SPAC.
- Cash flow: Cash used in operating activities was $442,018, compared with $569,102 in Q1 2021. There were no investing or financing cash flows in Q1 2022. Cash outside the trust account declined to $109,240 from $551,258 at year-end.
- Liquidity and liabilities: Trust assets were $345.17 million, generally unavailable before a business combination. Current liabilities were $212,641, including accounts payable and accrued expenses; the company disclosed a $39,029 working-capital deficit. Total liabilities were $25.12 million, including $12.08 million of deferred underwriting fees and $12.83 million of warrant liabilities. The company reported no long-term debt.
- Equity and redemptions: All 34.5 million public Class A shares remained subject to possible redemption, carried at $345.15 million. Shareholders’ deficit was $24.93 million.
Changes, outlook and key risks
- Year-over-year net income improved by $14.82 million, mainly because the warrant-liability fair-value movement swung from an $874,300 loss in Q1 2021 to a $10.26 million gain in Q1 2022. The profit therefore largely reflects a noncash valuation change, rather than operating revenue.
- Management expected the proposed combination to close in Q3 2022, subject to shareholder approval, an effective Form S-4, regulatory approvals and other closing conditions. The related PIPE agreements provided for approximately $165.0 million of investment at $9.80 per share, subject to their conditions.
- The SPAC’s deadline to complete a business combination was February 26, 2023. Management said the anticipated transaction would address going-concern concerns, but disclosed substantial doubt about the company’s ability to continue as a going concern through one year if the transaction does not close. Failure to complete a deal by the deadline would require winding up and redeeming public shares, subject to applicable obligations.
- Management cited possible adverse effects from COVID-19 and the Russia-Ukraine war, with the specific impact not determinable. The filing also discusses proposed SEC SPAC rules that could increase transaction disclosure, cost and timing burdens. Sponsor loans to cover working-capital needs were possible but not committed.
- Disclosure controls were deemed ineffective due to a material weakness in accounting for complex financial instruments, including redeemable shares. Management described remediation efforts but gave no assurance they would succeed. No legal proceedings or material subsequent events were reported.
Important facts for investors to verify
- Confirm the filing entity and its relationship, if any, to Alti Global, Inc.; this filing is for Cartesian Growth Corporation.
- Check the transaction’s status, satisfaction of closing conditions, shareholder vote, regulatory approvals and actual closing timing against the Q3 2022 expectation.
- Verify the PIPE funding and other available financing, redemption levels, and cash accessible outside the trust account; trust funds were generally restricted before closing.
- Assess whether the going-concern risk, February 26, 2023 liquidation deadline and limited operating cash changed in subsequent filings.
- Review the warrant-liability valuation’s effect on reported earnings and the progress of remediation of the material control weakness.