Filing and business context
Important entity mismatch: The supplied filing is Apollo Strategic Growth Capital’s Form 10-Q for the quarter ended March 31, 2021—not a filing by Global Business Travel Group, Inc. It describes a blank-check company (SPAC) seeking an initial business combination; it contains no operating results for Global Business Travel Group.
Financial results and position
- Revenue: $0 for Q1 2021 and Q1 2020. The company had not commenced operations and expected no operating revenue before a business combination.
- Net income: $20.3 million in Q1 2021, versus a $1,854 loss in Q1 2020. The 2021 result included a $24.8 million non-cash gain from the decrease in fair value of warrant liabilities, partly offset by $4.6 million of expenses and $0.1 million of trust-account interest. The MD&A gives a different net-income figure ($24.8 million); the financial statements report $20.3 million.
- Margins: Not meaningful because the company had no revenue.
- Cash flow: Operating cash outflow was $0.4 million in Q1 2021, compared with zero in Q1 2020. Financing provided $0.4 million; quarter-end cash outside the trust was $0.3 million.
- Liquidity and assets: Trust-account investments were $817.1 million at March 31, 2021, principally U.S. government securities. These funds were restricted for the business combination and related permitted uses. Total assets were $818.4 million.
- Debt and liabilities: Sponsor notes totaled $2.3 million, with $4,222 of related-party advances. Total liabilities were $85.3 million, including $49.9 million of warrant liabilities and $28.6 million of deferred underwriting compensation. The deferred fee is payable only upon completion of a business combination.
Changes, accounting matters, and outlook
- Warrant liabilities fell from $74.6 million at December 31, 2020 to $49.9 million at March 31, 2021, producing the $24.8 million gain that drove reported quarterly income. The filing says the SEC staff’s April 2021 warrant guidance prompted liability classification and recurring fair-value accounting.
- Management reported a material weakness in disclosure controls and concluded controls were not effective at quarter-end, relating to the warrant accounting and other complex financial instruments. It reported no material change in internal control during the quarter.
- No operating guidance or specific business-combination target outlook is provided. Management said available funds should support operations for at least one year from issuance of the statements and that it did not expect to need additional funds for current operating needs, while noting financing could be needed to complete a transaction.
- The SPAC was required to complete a business combination within its completion window—generally 24 months after the October 2020 IPO, potentially 27 months if specified agreement conditions were met. Failure to complete a transaction would require liquidation and redemption of public shares; warrants could expire worthless.
- Management said COVID-19 could negatively affect the company’s financial position, operations, or target search, but the impact was not readily determinable. The filing reports no legal proceedings and no material changes to previously disclosed risk factors.
Most important facts to verify
- Confirm the intended issuer: this document is Apollo Strategic Growth Capital’s filing, not Global Business Travel Group’s.
- Reconcile the $20.3 million net income in the financial statements with the $24.8 million figure stated in MD&A.
- Review the warrant-liability reclassification, valuation assumptions, and any related restatement history.
- Assess the material weakness and any remediation disclosed in subsequent filings.
- Verify the business-combination deadline, transaction financing needs, and redemption terms applicable to public shareholders.