10-Q: Cartesian Growth Corporation II Faces Nasdaq Delisting After Missing Business Combination Deadline

Cartesian Growth Corporation II reports its financial results for the quarter ended March 31, 2025, while also announcing its impending delisting from Nasdaq due to the failure to complete a business combination within the required timeframe.

Summary

• Cartesian Growth Corporation II, a blank check company, released its financial results for the quarter ended March 31, 2025.
• The company reported net income of $559,864 for the quarter, primarily driven by interest earned on trust account securities and changes in the fair value of warrant liabilities and convertible promissory notes.
• Operating and formation costs amounted to $195,387 for the quarter.
• The company's cash and marketable securities held in trust totaled $85,688,408 as of March 31, 2025.
• The company is facing delisting from Nasdaq after failing to complete a business combination within 36 months of its IPO registration statement's effectiveness.
• Shareholders previously approved extensions to the business combination deadline, with the sponsor contributing funds to the trust account in exchange for promissory notes.
• The company's management has expressed substantial doubt about its ability to continue as a going concern.
• The company has extended the date to consummate a business combination for up to an additional twelve months, from November 10, 2024 to up to November 5, 2025.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the impending delisting from Nasdaq and the management's concern about the company's ability to continue as a going concern. While the company reported net income for the quarter, the overall outlook is uncertain.

Positives

• The company reported net income for the quarter ended March 31, 2025.
• The trust account holds a substantial amount of cash and marketable securities.

Negatives

• The company is facing delisting from Nasdaq.
• Management has expressed substantial doubt about the company's ability to continue as a going concern.
• The company has a working capital deficit of $3,682,958 as of March 31, 2025.

Risks

• The company's failure to complete a business combination within the required timeframe has led to its delisting from Nasdaq.
• The company's management has expressed substantial doubt about its ability to continue as a going concern, raising concerns about its long-term viability.
• The company's ability to consummate an initial Business Combination may be dependent on the ability to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all.
• The company is subject to regulation in each state in which it offers its securities.

Future Outlook

The company intends to effectuate its initial business combination using cash from the net proceeds of its initial public offering, the sale of the private placement warrants, the sponsor loan, its share capital or a combination of cash, share capital and debt. The company expects its securities to be quoted on the over-the-counter market following delisting from Nasdaq.

Industry Context

The report reflects the challenges faced by SPACs in the current market, particularly the difficulty in completing business combinations within the specified timeframe. The delisting from Nasdaq highlights the potential consequences of failing to meet these deadlines.

Comparison to Industry Standards

• Given the impending delisting, it's difficult to compare Cartesian Growth Corporation II to industry standards for listed SPACs.
• However, the high redemption rate ($99,613,642) in connection with the Second Extension suggests a lack of investor confidence, which is worse than the average redemption rates seen in other SPACs seeking extensions.
• The company's inability to secure a business combination within the allotted time contrasts with successful SPACs like DraftKings (through Diamond Eagle Acquisition Corp) or Opendoor (through Social Capital Hedosophia II), which completed mergers and maintained their listings.

Related Party Transactions

• The Sponsor has provided loans to the company in the form of promissory notes to extend the business combination period.
• The company pays the Sponsor $10,000 per month for administrative services.

Stakeholder Impact

• Shareholders face the risk of further losses due to the delisting and uncertainty surrounding the company's future.
• The company's employees and service providers face uncertainty due to the company's financial situation and potential liquidation.
• The company's creditors face the risk of non-payment if the company is unable to complete a business combination and is forced to liquidate.

Next Steps

• The company expects its securities to be quoted on the over-the-counter market following delisting from Nasdaq.
• The company intends to continue seeking a business combination until November 5, 2025.

Key Dates

Keywords

business combination, SPAC, delisting, trust account, redemption, warrants, promissory note, going concern, extension, Nasdaq, financial results, Cartesian Growth Corporation II