Ares Acquisition Corporation II reported a net loss of $1.5 million for the quarter ended March 31, 2024, with total assets of $10.5 million and total liabilities of $1.5 million. The company’s unaudited condensed financial statements show a decrease in revenue and an increase in operating expenses during the quarter. The company has not yet commenced any business operations and is currently focused on identifying and evaluating potential acquisition opportunities.
Ares Acquisition Corporation II is a blank check company formed on March 15, 2021 to complete a merger, acquisition, or similar business deal with one or more businesses. As of March 31, 2024, the company had $1.6 million in its operating bank account.
The company completed its initial public offering (IPO) on April 25, 2023, raising $500 million in gross proceeds by selling 50 million units at $10 per unit. The IPO included 5 million over-allotment units. After offering costs, net proceeds were $471.4 million.
Simultaneously with the IPO, the company completed a private placement of 14.3 million warrants at $1 per warrant for gross proceeds of $14.3 million.
For the quarter ended March 31, 2024, Ares had net income of $6.4 million. This consisted entirely of $6.8 million in investment income earned on the IPO proceeds held in trust, offset by $0.45 million in general and administrative expenses.
The company has no operating revenues and expects to continue incurring increased expenses related to being a public company and searching for an acquisition target.
Balance Sheet Item | March 31, 2024 |
---|---|
Cash in Operating Account | $1.6 million |
Working Capital | $1.7 million |
Ares has met expenses so far through:
The company may receive additional working capital loans from its sponsor or affiliates if needed to finance an acquisition.
If Ares does not complete a business combination by April 25, 2025, it will be forced to liquidate the trust account and return funds to shareholders.
Management believes they can complete a deal within the required timeframe and receive financing from the sponsor as needed. However, there is no committed financing, so substantial doubt exists around Ares’ ability to continue as a going concern without completing a deal.
Persistent inflation, rising rates, financial instability, and conflicts in the Middle East and Ukraine could negatively impact Ares’ ability to complete a business combination.
Management cannot predict the likelihood, duration, or magnitude of these potential impacts.
Ares has incurred or may incur the following fees:
Ares’ critical estimates relate to:
Class A Shares Subject to Redemption: All 50 million Class A shares are presented as temporary equity at redemption value, since they can be redeemed by shareholders.
Net Income (Loss) Per Share: Income and losses are shared pro rata between Class A and Class B shares. Losses are excluded related to Class A shares since their redemption value approximates fair value.
Ares does not expect any recently issued accounting standards will have a material impact if adopted.
As an emerging growth company, Ares is delaying adoption of new standards and may elect other reduced reporting requirements. This means financial statements may not be comparable to non-emerging growth companies.
Management concluded disclosure controls were effective as of March 31, 2024. There were no changes to internal control over financial reporting during the quarter that materially affected controls.