Ares Acquisition Corporation (AAC): history, ownership, mission, how it works & makes money

A Brief History of Ares Acquisition Corporation

Ares Acquisition Corporation (AAC) was incorporated in the Cayman Islands on January 24, 2020. The purpose of the Company is to effect a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. The Company is not restricted to a particular geographic region for purposes of consummating a Business Combination.

On February 4, 2021, AAC consummated its Initial Public Offering (IPO) of 100,000,000 units at a price of $10.00 per unit, generating gross proceeds of approximately $1.0 billion. This IPO included 13,000,000 over-allotment units. The total offering costs incurred were approximately $55.9 million, of which $35.0 million was for deferred underwriting commissions.

As of September 30, 2023, the Company had not engaged in any substantive operations and had generated no operating revenues. The entire activity from inception to this date has been focused on the formation and preparation for the Initial Public Offering, and subsequently, the search for a prospective initial Business Combination.

Financial Overview

As of September 30, 2023, AAC reported the following financial metrics:

As of September 30, 2023, AAC had approximately $487.1 million held in the Trust Account, consisting primarily of cash and a money market fund that invests solely in U.S. government securities. This amount may be used to pay taxes and dissolution expenses.

Challenges and Developments

Management has indicated that the Company faced significant challenges, including rising interest rates and financial market instability. These factors raised substantial doubt about AAC's ability to continue as a going concern through November 6, 2023, the date by which it was required to consummate a Business Combination.

On October 31, 2023, AAC and X-energy entered into a Termination Agreement, mutually agreeing to terminate their Business Combination Agreement due to challenging market conditions. This termination also led to the dissolution of several related agreements.

As of November 3, 2023, AAC had issued 45,604,260 Class A ordinary shares and 25,000,000 Class B ordinary shares.

A Who Owns Ares Acquisition Corporation (AAC)

Ownership Structure

Ares Acquisition Corporation (AAC) has a unique ownership structure consisting of two classes of ordinary shares: Class A and Class B. As of September 30, 2023, the ownership breakdown is as follows:

Major Shareholders

The major shareholders of Ares Acquisition Corporation include:

• Ares Acquisition Holdings L.P. - The Sponsor, holding a significant portion of Class B shares, has a vested interest in the company’s operations.
• Independent Directors - Each independent director was allocated 50,000 Class B shares as part of their compensation structure.

Financial Overview

As of September 30, 2023, the total assets of Ares Acquisition Corporation amounted to $487,248,536, with a significant portion held in a Trust Account amounting to $487,130,034. The company’s liabilities were reported as $82,512,720, leading to a shareholders' deficit of $82,294,218.

Shareholder Composition

The composition of shareholders is critical to understanding the control dynamics within AAC. The Class B shares are designed to convert into Class A shares upon the completion of a business combination, which effectively allows the Sponsor to maintain control until a merger is finalized.

Warrants and Financial Instruments

Ares Acquisition Corporation has issued a total of 35,333,333 warrants, which include:

• 20,000,000 Public Warrants
• 15,333,333 Private Placement Warrants

The Public Warrants are exercisable at $11.50 per share and can only be exercised following a business combination.

Recent Financial Performance

For the three months ending September 30, 2023, AAC reported a net income of $7,327,055, with net income per share for Class A ordinary shares at $0.10 and for Class B at $0.10. The company experienced a loss from operations amounting to $3,993,893 for the same period.

Future Outlook

Ares Acquisition Corporation is actively seeking a business combination, with a requirement that the target business has a fair market value of at least 80% of the assets held in the Trust Account. The ongoing financial management and strategic decisions by the Sponsor will play a pivotal role in shaping the future ownership structure and operational success of the company.

Ares Acquisition Corporation (AAC) Mission Statement

Company Overview

Ares Acquisition Corporation (AAC) was incorporated in the Cayman Islands on January 24, 2020. The company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. As of September 30, 2023, AAC had not commenced any operations, and all activity related to its formation and the search for a prospective initial business combination.

Mission Statement

The mission of Ares Acquisition Corporation is to seek and acquire high-quality businesses with strong growth potential. The company aims to leverage the extensive experience and capital resources of its management team to drive operational efficiencies and create long-term shareholder value. AAC is not limited to a particular geographic region or industry in its pursuit of target businesses, focusing instead on opportunities that align with its strategic vision.

Financial Highlights

As of September 30, 2023, Ares Acquisition Corporation reported total assets of $487,248,536, which includes cash and investments held in a Trust Account amounting to $487,130,034. The company’s current liabilities stood at $31,157,387, while warrant liabilities were reported at $23,355,333. The shareholders’ deficit was $82,294,218, reflecting an accumulated deficit of $82,296,718.

Key Financial Metrics

Initial Public Offering

Ares Acquisition Corporation completed its Initial Public Offering (IPO) on February 4, 2021, raising gross proceeds of $1.0 billion by offering 100,000,000 units at $10.00 per unit. Each unit consisted of one Class A ordinary share and one-fifth of a redeemable warrant. The IPO incurred offering costs of approximately $55.9 million.

Business Combination Strategy

The company intends to identify and complete a business combination with a target company that has a fair market value of at least 80% of the assets held in the Trust Account at the time of the agreement. Ares Acquisition Corporation has until November 6, 2023, to consummate its initial business combination. If unable to do so, the company will liquidate and redeem its shares.

Recent Developments

As of September 30, 2023, shareholders had elected to redeem an aggregate of 54,395,740 Class A ordinary shares for approximately $553.7 million. Additionally, the company has entered into contingent fee arrangements with service providers, amounting to approximately $13.2 million, contingent upon the consummation of a business combination.

Shareholder Structure

As of September 30, 2023, Ares Acquisition Corporation had 45,604,260 Class A ordinary shares and 25,000,000 Class B ordinary shares issued and outstanding. The Class B shares are entitled to one vote per share.

How Ares Acquisition Corporation (AAC) Works

Company Structure

Ares Acquisition Corporation (AAC) was incorporated in the Cayman Islands on January 24, 2020. The primary purpose of the company is to effect a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses.

Initial Public Offering

The company completed its Initial Public Offering (IPO) on February 4, 2021, selling 100,000,000 units at $10.00 per unit, which generated gross proceeds of approximately $1.0 billion. The offering costs were around $55.9 million, of which $35.0 million was for deferred underwriting commissions.

Financial Performance

As of September 30, 2023, AAC reported the following financial performance metrics:

Balance Sheet Overview

As of September 30, 2023, the balance sheet revealed the following key figures:

Shareholder Equity

The company had the following shareholder equity metrics as of September 30, 2023:

Warrant Liabilities

AAC's warrant liabilities consist of:

• Public Warrants: 20,000,000
• Private Placement Warrants: 15,333,333

The fair value of the Public Warrants was reported at $13,220,000 as of September 30, 2023, and the Private Placement Warrants at $10,135,333.

Trust Account Management

The trust account, holding investments of approximately $487.1 million, is primarily invested in U.S. government securities. Interest earned may be used to pay taxes and certain dissolution expenses.

Business Combination Activity

AAC has not yet consummated any business combinations as of September 30, 2023. The company aims to acquire businesses with a fair market value of at least 80% of the trust account assets.

Recent Developments

As of October 31, 2023, AAC entered into a termination agreement regarding its business combination with X-energy due to challenging market conditions. Consequently, the company plans to redeem all outstanding public shares.

How Ares Acquisition Corporation (AAC) Makes Money

Business Model Overview

Ares Acquisition Corporation (AAC) operates as a special purpose acquisition company (SPAC), primarily aiming to identify and merge with a prospective business. The company does not generate operating revenues until the completion of its initial business combination.

Sources of Income

The primary sources of income for AAC include:

• Interest income on investments held in the Trust Account.
• Gains from the change in fair value of warrant liabilities.
• Gains from extinguishment of deferred underwriting commissions allocated to warrant liabilities.

Financial Performance Metrics

As of September 30, 2023, AAC reported the following financial performance metrics:

Investment and Trust Account Holdings

As of September 30, 2023, AAC had the following in its Trust Account:

Warrant Liabilities

The company issues warrants as part of its initial public offering (IPO) and private placement. As of September 30, 2023, the fair value of these warrants was as follows:

Liquidity and Capital Resources

As of September 30, 2023, AAC reported the following liquidity metrics:

Recent Developments

AAC's business combination efforts have faced challenges, leading to the termination of a planned merger with X-energy. As a result, the company will initiate a mandatory liquidation of its assets if an initial business combination is not consummated by November 6, 2023.