BLUE OWL CAPITAL INC. quarterly report, Q3 FY2020

Full document

Business context and reporting period

Filing identity: Despite the request metadata naming BLUE OWL CAPITAL INC., the supplied Form 10-Q is for Altimar Acquisition Corporation, a Cayman Islands blank-check company (SPAC). It covers the period from incorporation on August 20, 2020 through September 30, 2020; it is not a Blue Owl Capital filing. The company had not begun operations and was seeking a business combination.

Financial results and position

  • Revenue: None. Management expected no operating revenue before a business combination.
  • Profit: Net loss of $5,000, consisting of formation and operating costs; basic and diluted loss per share was reported as $0.00 loss.
  • Cash flow: No cash at September 30, 2020; net cash used in operating activities was zero. The reported loss was offset in the cash flow reconciliation by formation costs paid through founder-share issuance.
  • Balance sheet: Assets were $136,760, all deferred offering costs. Liabilities were $116,760, including $59,510 of accrued offering costs and a $57,250 related-party promissory note. Shareholders’ equity was $20,000.
  • Debt and liquidity: No long-term debt or working-capital loans were reported. The $57,250 Sponsor note was outstanding at quarter-end. The filing reports no cash or cash equivalents at September 30.
  • Margins and comparable results: Not meaningful for this pre-operating company. There is no prior comparable period because the company was formed in August 2020.

Material developments after quarter-end

  • On October 27, 2020, the company completed an IPO of 25 million units at $10 each, raising $250 million gross, and sold 4,666,667 private-placement warrants for $7 million.
  • On November 9, it sold another 2.5 million units and 333,333 private warrants, raising $25.5 million gross. Total funds placed in the trust account reached $275 million.
  • Reported transaction costs were $15,714,288, including $5.5 million of underwriting fees, $9.625 million of deferred underwriting fees, and $589,288 of other offering costs. The deferred fee is payable only if a business combination is completed.
  • At October 27, $1,872,011 was held outside the trust account for offering costs and working capital. The Sponsor note was repaid after the IPO.
  • On December 7, the remaining over-allotment option expired and 312,500 founder shares were forfeited. The filing reports 27.5 million Class A and 6.875 million Class B shares outstanding as of that date.

Outlook, risks and contingencies

  • The company had until October 27, 2022 to complete a business combination. If it fails, it must redeem public shares, subject to the filing’s terms; warrants may expire worthless.
  • Completion is not assured. The SPAC must meet a minimum target-value test and maintain at least $5,000,001 in net tangible assets; public shareholders may redeem shares in connection with a transaction.
  • Management expected continued costs for the search, due diligence, public-company reporting and transaction work. It stated it did not expect to need additional funds for ordinary expenditures, but acknowledged that cost overruns or transaction financing needs could require additional financing or securities issuance.
  • A Sponsor affiliate was to receive $10,000 per month for administrative support from October 22 until a business combination or liquidation. The Sponsor may, but is not obligated to, provide working-capital loans.
  • Management said COVID-19 could adversely affect the company’s financial position, operations or target search, but the impact was not determinable. No adjustment was made to the financial statements for this uncertainty.
  • The trust was to be invested in short-term U.S. government securities or qualifying Treasury money-market funds; management considered interest-rate exposure immaterial. Disclosure controls were assessed as effective, with no material internal-control changes reported. No legal proceedings were reported.

Most important facts to verify

  1. Confirm the filing is the intended company: the supplied document is Altimar Acquisition Corporation, not Blue Owl Capital Inc.
  2. Reconcile the September 30 balance sheet with the subsequent IPO, over-allotment, trust funding, offering costs and repayment of the Sponsor note.
  3. Verify founder-share counts and forfeitures, particularly the December 7 expiration of the remaining over-allotment option.
  4. Review the SPAC’s redemption, business-combination deadline, warrant and potential financing terms, as well as the COVID-19 uncertainty disclosed by management.