Filing summary
Issuer identity: The supplied filing is for Kayne Anderson Acquisition Corp., not Kinetik Holdings Inc. It is a Form 10-Q for the quarter ended September 30, 2017; investors should verify that this is the intended filing.
Business context and reporting period
Kayne Anderson Acquisition Corp. was a blank-check company formed to pursue a business combination, with a stated focus on the energy industry. It had not begun operating activities or generated operating revenue. The company completed its IPO in April 2017 and held most offering proceeds in trust while searching for a target.
Financial results and position
| Metric | Three months ended September 30, 2017 | Nine months ended September 30, 2017 |
|---|---|---|
| Revenue | $0 | $0 |
| General and administrative expense | $276,956 | $1,340,902 |
| Franchise tax expense | $55,900 | $98,900 |
| Trust investment income | $809,858 | $1,353,883 |
| Net income (loss) | $220,657 | $(512,613) |
| Basic earnings (loss) per share | $0.02 | $(0.05) |
- At September 30, 2017, total assets were $378.97 million, including $378.28 million in trust investments and $555,254 in cash outside the trust.
- Total liabilities were $14.03 million, including $13.21 million of deferred underwriting compensation payable only if a business combination is completed. Stockholders’ equity was $5.00 million; $359.94 million of Class A shares were classified as subject to possible redemption.
- For the first nine months, operating cash use was $789,629; financing provided $378.66 million, and cash outside the trust ended at $555,254. The filing reports no debt outstanding at quarter-end.
- Profit margins are not meaningful for this pre-combination company with no revenue.
Changes, outlook, and risks
- The IPO raised $377.32 million gross. The company reported significant due-diligence spending on potential acquisitions it was no longer pursuing: $153,000 in the quarter and $1.045 million year to date.
- Compared with December 31, 2016, cash increased from $7,500 and trust investments from zero following the April IPO. The filing does not provide a prior-year comparable operating-results period.
- Management said cash outside the trust was insufficient to meet current obligations, but expected sponsor funding to cover working-capital needs for at least one year from issuance of the financial statements. Further sponsor or affiliate loans could be needed.
- The company had 24 months from the IPO closing to complete a business combination; otherwise, it generally must redeem public shares and liquidate. The filing provides no transaction-specific guidance or identified target.
- Public shareholders may redeem shares in connection with a business combination, subject to a $5,000,001 minimum net tangible asset condition. Trust assets may also be exposed to creditor claims.
- Potential future equity or debt financing could dilute holders or add repayment, covenant, and other risks. Trust investments were short-term U.S. government-focused money market funds; management reported no material interest-rate exposure. Disclosure controls were judged effective, and no material internal-control changes or legal proceedings were reported.
Key facts for investors to verify
- Confirm the issuer: this filing names Kayne Anderson Acquisition Corp., not Kinetik Holdings Inc.
- Confirm the intended reporting period and whether a later filing reports a completed business combination or liquidation.
- Review the trust balance, redemption provisions, deadline, and deferred underwriting fee conditions.
- Assess dependence on sponsor funding given limited cash outside the trust and management’s liquidity disclosure.
- Review prospective transaction dilution, warrant terms, and any subsequent changes to risk factors.