Business context and reporting period
This is Apollo Strategic Growth Capital’s Form 10-K for the fiscal year ended December 31, 2021, filed March 1, 2022. The registrant was a SPAC and shell company—not the operating travel business Global Business Travel Group (GBT)—and reported no operating activity or revenue. It had a pending agreement to combine with GBT and become Global Business Travel Group, Inc.; the transaction had not closed as of the filing.
Key financial metrics
| Metric | 2021 | 2020 comparable |
|---|---|---|
| Revenue | $0 | $0 |
| Net income (loss) | $6.2 million | $(19.6) million |
| Operating costs | $12.9 million | $0.6 million |
| Cash used in operating activities | $4.0 million | $2.4 million |
| Trust-account investments at year end | $817.4 million | $817.0 million |
| Cash outside trust at year end | $161,277 | $257,872 |
| Total liabilities at year end | $98.9 million | $105.5 million |
The 2021 profit was driven principally by an $18.7 million noncash gain from the change in fair value of warrant liabilities, plus $0.4 million of trust interest; it was offset by operating costs and interest expense. It should not be read as operating profitability. Warrant liabilities were $55.9 million at year end, versus $74.6 million in 2020. The filing reports a $13.7 million working-capital deficit and says liquidity was insufficient to meet anticipated obligations over the next year without sponsor support. No operating margins are meaningful because the SPAC had no revenue. It reported no long-term debt, but had $5.8 million of sponsor notes outstanding and $2.0 million due to related parties at year end.
Material changes versus the prior comparable period
- Net results improved from a $19.6 million loss in 2020 to $6.2 million income in 2021, largely because the warrant fair-value movement reversed direction; this is a noncash accounting swing.
- Operating costs rose by $12.3 million, primarily from professional fees and diligence on prospective business combinations.
- Cash outside the trust declined from $258,000 to $161,000, while sponsor-note principal increased from $1.5 million to $5.8 million.
- The company reclassified redeemable public shares as temporary equity and restated previously issued 2020 and 2021 interim financial statements. The filing identifies a material weakness in accounting for complex financial instruments.
Outlook, transaction, risks, and unusual items
- The proposed GBT combination included a $335 million PIPE investment at $10 per share and required at least $300 million of available cash at closing, subject to the agreement’s terms. HSR waiting-period clearance and U.K. NSIA clearance had been obtained by the filing date; shareholder approval and other closing conditions remained.
- The transaction contemplated an Up-C structure, with continuing GBT owners retaining majority voting control and majority economic interest in GBT. Up to 15 million earnout shares depended on specified stock-price or change-of-control targets.
- Management identified substantial doubt about the SPAC’s ability to continue as a going concern if it failed to complete a business combination by its deadline. The filing states sponsor funds were expected to support working capital, but the sponsor was not obligated to provide further advances.
- Principal risks include transaction failure or high shareholder redemptions, inadequate cash or financing, dilution, the business-combination deadline, sponsor and management conflicts, and potential claims against trust assets. Sponsor indemnification may be difficult to collect; the company had not verified the sponsor’s capacity to pay.
- The auditor issued an adverse opinion on internal control over financial reporting because of the material weakness. Management reported remediation steps, but no assurance they would be effective.
- Contingent fees included approximately $7.0 million payable to a service provider only if the GBT transaction closed, as well as contingent placement fees. The $28.6 million deferred underwriting commission was also payable only upon a completed business combination.
- No GBT operating-company guidance or forecast is provided in this filing; it is a SPAC annual report, and the filing text does not provide a clear operating outlook for GBT.
Important facts for investors to verify
- Whether the GBT transaction closed, the final redemption level, and the resulting cash available to the combined company.
- GBT’s actual operating results, debt, liquidity, and current guidance in its relevant filings; this 10-K does not report GBT’s standalone financial metrics.
- Completion of remediation for the complex-financial-instrument material weakness and the reliability of any restated financial statements.
- The final transaction capitalization, dilution from warrants, options and earnouts, and the effects of the dual-class voting and Up-C structure.
- The amount and terms of sponsor financing, transaction-related fees, and any claims or other liabilities that could reduce trust funds.