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Item 1A. Risk Factors

2023-11-14 compared with 2023-08-14 · 53 added, 1 removed, 18 unchanged (75% of the section changed)

2 unchanged sentences

There are no assurances that the approval of the Charter Amendment or the execution of the Business Combination Agreement will enable us to complete our proposed Business Combination.

In connection with the Charter Amendment, our Amended and Restated Memorandum and Articles of Association were amended to, among other things, (i) extend the date by which the Company must consummate its initial business combination from January 22, 2023 to the Extended Date and (ii) in the event that the Company has not consummated an initial business combination by the Extended Date, to allow the Company, by resolution of the Board and, without any approval of the Company’s shareholders, upon five days’ advance notice prior to the Extended Date, to extend the Extended Date up to six times (with each such extension being upon five days’ advance notice), each by one additional month (for a total of up to six additional months to complete a business combination), provided that the Lenders will deposit into the Trust Account for each Additional Extension Date the lesser of (a) US $140,000 or (b) $0.04 for each Public Share that is then-outstanding, in exchange for one or more non-interest bearing, unsecured promissory notes issued by the Company to the Lender.

In connection with the Charter Amendment, our amended and restated memorandum and articles of association were amended to, among other things, (i) extend the date by which the Company must consummate its initial Business Combination from January 22, 2023 to the Extended Date and (ii) in the event that the Company has not consummated an initial Business Combination by the Extended Date, to allow the Company, by resolution of the Board and, without any approval of the Company’s shareholders, upon five days’ advance notice prior to the Extended Date, to extend the Extended Date up to six times (with each such extension being upon five days’ advance notice), each by one additional month (for a total of up to six additional months to complete a business combination), provided that the Lenders will deposit into the Trust Account for each Additional Extension Date the lesser of (a) $140,000 or (b) $0.04 for each Public Share that is then-outstanding, in exchange for one or more non-interest bearing, unsecured promissory notes issued by the Company to the Lender.

The purpose of the Charter Amendment is to allow the Company more time to complete its initial Business Combination and reduce the amount of funds to be deposited in the Trust Account to secure the extension.

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There can be no assurance that such fees and expenses will not be greater than expected or that there will be no unexpected costs related to the Business Combination.

If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial Business Combination.

If we are deemed to be an investment company under the Investment Company Act of 1940 (the “Investment Company Act”), our activities may be restricted, including:

restrictions on the nature of our investments;

restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial Business Combination.

In addition, we may have imposed upon us burdensome requirements, including:

registration as an investment company with the SEC;

adoption of a specific form of corporate structure;

reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are currently not subject to.

In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our assets (exclusive of U.S.

government securities and cash items) on an unconsolidated basis.

We do not believe that our principal activities and the Business Combination will subject us to the Investment Company Act.

To this end, the proceeds held in the Trust Account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S.

government treasury obligations.

Pursuant to the trust agreement, the Trustee is not permitted to invest in other securities or assets.

By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act.

An investment in our securities is not intended for persons who are seeking a return on investments in government securities or investment securities.

The Trust Account is intended as a holding place for funds pending the earliest to occur of either:

(i) the completion of our initial Business Combination (which shall be the Business Combination pursuant to the Business Combination Agreement should it occur);

(ii) the redemption of any Class A ordinary shares properly tendered in connection with a shareholder vote to amend the Existing Charter (a) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial Business Combination (which shall be the Business Combination pursuant to the Business Combination Agreement should it occur) or to redeem 100% of our Class A ordinary shares if we do not complete our initial Business Combination by July 22, 2024 (assuming the Sponsor deposits the required amount into the Trust Account for each Additional Extension Date and unless shareholders approve one or more further Additional Extensions) or (b) with respect to any other provision relating to the rights of holders of our Class A ordinary shares;

or (iii) absent an initial Business Combination (which shall be the Business Combination pursuant to the Business Combination Agreement should it occur) by July 22, 2024 (assuming the Sponsor deposits the required amount into the Trust Account for each Additional Extension Date and unless shareholders approve one or more further Additional Extensions), our return of the funds held in the Trust Account to the public shareholders as part of our redemption of the Class A ordinary shares.

If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act.

If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete a Business Combination.

If we are unable to complete a Business Combination, the public shareholders may only receive their pro rata portion of the funds in the Trust Account that are available for distribution to the public shareholders, and our warrants will expire worthless.

If we are deemed to be an investment company for purposes of the Investment Company Act, we may be forced to abandon our efforts to complete an initial Business Combination and instead be required to liquidate ESGEN.

To mitigate the risk of that result, on or about the 24-month anniversary of the effective date of the IPO Registration Statement, we will instruct the Trustee to liquidate the securities held in the Trust Account and instead hold all funds in the Trust Account in cash.

As a result, following such change, we will likely receive minimal, if any, interest, on the funds held in the Trust Account, which would reduce the dollar amount that the public shareholders would have otherwise received upon any redemption or liquidation of ESGEN if the assets in the Trust Account had remained in U.S.

government securities or money market funds.

On March 30, 2022, the SEC issued proposals (the “SPAC Rule Proposals”), relating, among other things, to circumstances in which SPACs such as us could potentially be subject to the Investment Company Act and the regulations thereunder.

The SPAC Rule Proposals would provide a safe harbor for such companies from the definition of “investment company” under Section 3(a)(1)(A) of the Investment Company Act, provided that a SPAC satisfies certain criteria.

To comply with the duration limitation of the proposed safe harbor, a SPAC would have a limited time period to announce and complete a Business Combination transaction.

Specifically, to comply with the safe harbor, the SPAC Rule Proposals would require a company to file a report on Form 8-K announcing that it has entered into an agreement with a target company for an initial Business Combination no later than 18 months after the effective date of the registration statement filed in connection with the IPO (the “IPO Registration Statement”).

ESGEN would then be required to complete its initial Business Combination no later than 24 months after the date of the IPO Registration Statement.

There is currently uncertainty concerning the applicability of the Investment Company Act to a SPAC, such as ESGEN.

As indicated above, we completed the IPO in October 2021 and have operated as a blank check company searching for a target business with which to consummate an initial Business Combination since such time (or approximately 24 months after the effective date of the IPO, as of the date hereof).

As a result, it is possible that a claim could be made that we have been operating as an unregistered investment company.

Furthermore, in connection with the approval of the Extension Proposal, the Company has until July 22, 2024 to consummate an initial Business Combination, which is a total of up to 33 months from the consummation of the Company’s IPO to complete an initial Business Combination.

If we were deemed to be an investment company for purposes of the Investment Company Act, we might be forced to abandon our efforts to complete an initial Business Combination and instead be required to liquidate ESGEN.

If we are required to liquidate ESGEN, our investors would not be able to realize the benefits of owning shares in a successor operating business, including the potential appreciation in the value of our shares and warrants or rights following such a transaction, and our warrants or rights would expire worthless.

The funds in the Trust Account have, since the IPO, been held only in cash or U.S.

government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in money market funds investing solely in U.S.

government treasury obligations and meeting certain conditions under Rule 2a-7 under the Investment Company Act.

To mitigate the risk of us being deemed to have been operating as an unregistered investment company under the Investment Company Act, prior to October 22, 2023, we instructed the Trustee with respect to the Trust Account, to liquidate the U.S.

government securities or money market funds held in the Trust Account and thereafter to hold all funds in the Trust Account in cash (i.e., in one or more bank accounts) until the earliest of ESGEN’s completion of an initial Business Combination or July 22, 2024, as applicable.

Following such liquidation of the assets in the Trust Account, we will likely receive minimal interest, if any, on the funds held in the Trust Account, which would reduce the dollar amount the public shareholders would have otherwise received upon any redemption or liquidation of ESGEN if the assets in the Trust Account had remained in U.S.

government securities or money market funds.

This means that the amount available for redemption will not increase at the same rate in the future.

In addition, even prior to the 24-month anniversary of the effective date of the IPO Registration Statement, we may be deemed to be an investment company.

The longer that the funds in the Trust Account are held in short-term U.S.

government treasury obligations or in money market funds invested exclusively in such securities, even prior to the 24-month anniversary of the effective date of the IPO Registration Statement, the greater the risk that we may be considered an unregistered investment company under Section 3(a)(1)(A) of the Investment Company Act, in which case we may be required to liquidate ESGEN.

If we are required to liquidate, our shareholders will miss the opportunity to benefit from an investment in a target company and the potential appreciation in value of such investment through a Business Combination.

Additionally, if we are required to liquidate, there will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless in the event of our winding up.

The risk of being deemed subject to the Investment Company Act may increase the longer ESGEN holds securities, and also may increase to the extent the funds in the Trust Account are not held in cash (which may include an interest-bearing demand deposit account at a national bank).

Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors