Fortress Value Acquisition Corp. IV (FVIV) is a blank check company that was formed in 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The company's sponsor is Fortress Value Acquisition Sponsor IV LLC, an independent subsidiary of SoftBank.
Business Overview
FVIV was incorporated in Delaware in October 2020 and completed its initial public offering (IPO) in March 2021, raising $650 million. The company is focused on identifying and completing a business combination with a target that can benefit from its management team's ability to identify, acquire and operate a business. FVIV has not yet identified a specific target for its initial business combination.Financials
For the year ended December 31, 2022, FVIV reported net income of $31,623,826, with no revenue generated. The company's annual operating cash flow and free cash flow were both -$899,230 for the year.On a quarterly basis, FVIV reported net income of $2,174,376 for the three months ended September 30, 2022, compared to net income of $6,541,895 in the prior year period. The company did not generate any revenue in the third quarter of 2022 or the prior year period. Operating cash flow and free cash flow for the third quarter of 2022 were both -$255,348, compared to -$246,032 in the prior year period.
The company's balance sheet remains strong, with $983,164 in cash and $653,667,934 in investments held in the trust account as of September 30, 2022. However, FVIV does not believe it has sufficient liquidity to meet its future estimated financial obligations.
Liquidity
As of September 30, 2022, FVIV had $983,164 in cash, $436,670 of accounts payable and accrued expenses, $54,589 of franchise tax payable, and $508,845 of income tax payable. The company does not believe it has sufficient liquidity to meet its future estimated financial obligations.FVIV's sponsor or an affiliate of the sponsor, or certain of the company's officers and directors may, but are not obligated to, provide working capital loans to the company as may be required. If the company completes a business combination, it would repay the working capital loans out of the proceeds of the trust account released to it. There were no working capital loans outstanding as of September 30, 2022.
Additionally, if FVIV's estimates of the costs of undertaking in-depth due diligence and negotiating its initial business combination are less than the actual amount necessary to do so, or the amount of interest and dividends available to it from the trust account is less than it expects as a result of the current interest rate environment, the company may have insufficient funds available to operate its business prior to its initial business combination.
Mandatory Redemption and Liquidation
On November 1, 2022, FVIV filed a definitive proxy statement relating to a special meeting of shareholders to approve an amendment to the company's amended and restated certificate of incorporation and an amendment to the Investment Management Trust Agreement. If approved, these amendments would allow FVIV to redeem all of its outstanding public shares in advance of the company's contractual expiration date of March 18, 2023.If the proposals are approved, and because FVIV will not be able to complete an initial business combination by the amended termination date, the company will immediately cease all operations, except for the purpose of winding up, and as promptly as reasonably possible, but not more than ten business days thereafter, redeem all public shares. The company expects to complete the mandatory redemption on or around November 23, 2022, if shareholders approve the proposals.
Risks and Challenges
FVIV faces several risks and uncertainties that could impact its ability to complete a successful business combination. These include the company's ability to identify and complete a suitable target, obtain necessary financing, navigate regulatory requirements, and integrate the target business effectively.Additionally, the recent COVID-19 pandemic has created significant economic uncertainty, which could adversely affect FVIV's future financial results, cash flows, and/or search for a target company. The company continues to evaluate the impact of the pandemic, but the specific impact is not readily determinable as of the date of the financial statements.
Furthermore, changes in laws or regulations, or a failure to comply with applicable laws and regulations, may also adversely affect FVIV's business, including its ability to negotiate and complete a business combination, investments, and results of operations.