DEF 14A of Quartzsea Acquisition Corp
Filed May 29, 20260001829126-26-005762
Interests of the Company’s Directors and Officers
Interests of the Company’s Directors and Officers When you consider the recommendation of the Board, you should keep in mind that the Sponsor and our officers and directors have interests that may be different from, or in addition to, your interests as a shareholder. These interests include, among other things:
Interests of the Company’s Directors and Officers
| ● | If the Extension Amendment Proposal and the Trust Amendment Proposal are approved, the Company may extend the date by which it must consummate an initial business combination from June 19, 2026 to October 19, 2026, or such earlier date as may be determined by the Board, by allowing the Company to extend such date on a month-to-month basis for up to four one-month extensions. In connection with each one-month extension, the Company will deposit into the Trust Account $0.033 for each then-outstanding public share. Any Monthly Contribution funded by the Sponsor, its affiliates or designees may be structured as a non-interest-bearing, unsecured loan to the Company, repayable only upon the consummation of an initial business combination. If the Company consummates an initial business combination, such loans are expected to be repaid at closing, which would reduce the funds available to the post-combination company. If the Company does not complete an initial business combination and instead liquidates, the Sponsor would not be repaid for any such loans from the Trust Account; |
Interests of the Company’s Directors and Officers
| ● | Unless the Company consummates an initial business combination, the Company’s officers and directors and the Sponsor will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceed the amount of available proceeds from the IPO and private placement not deposited in the Trust Account; |
Interests of the Company’s Directors and Officers
| ● | With certain limited exceptions, 50% of the Founder Shares will not be transferred, assigned, sold or released from escrow until the earlier of (i) six months after the consummation of our initial business combination or (ii) the date on which the closing price of our ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations or other similar transactions) for any 20 trading days within any 30-trading day period commencing after our initial business combination. The remaining 50% of the Founder Shares will not be transferred, assigned, sold or released from escrow until six months after the consummation of our initial business combination, or earlier in either case if, following our initial business combination, the Company completes a liquidation, merger, share exchange or other similar transaction that results in all of our public shareholders having the right to exchange their ordinary shares for cash, securities or other property; |
Interests of the Company’s Directors and Officers
| ● | The Sponsor will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to public shareholders rather than liquidate; |
Interests of the Company’s Directors and Officers
| ● | Because of these interests, the Sponsor and the Company’s directors and officers could benefit from the completion of an initial business combination even if the transaction is not favorable to the Company’s public shareholders. They may therefore be incentivized to complete a business combination with a less favorable target or on terms less favorable to public shareholders rather than liquidate. In particular, based on the Sponsor’s purchase price of $0.0062 per Founder Share, as compared to the $10.00 price paid by public investors for each unit in the IPO, the Sponsor may achieve a positive return on its investment even if the trading price of the Company’s ordinary shares following the initial business combination is substantially below the IPO price, while public shareholders could experience a negative return; |
Interests of the Company’s Directors and Officers
| ● | The Sponsor and the Company’s directors and officers purchased an aggregate of 4,025,000 Founder Shares for $25,000 in the aggregate (or approximately $0.0062 per share). Based on the $10.00 per share valuation used to determine the merger consideration in connection with a potential initial business combination, these Founder Shares could have a value of approximately $40.25 million at the time of the business combination. As a result, the Sponsor and the Company’s directors and officers could realize a substantial return on their investment even if public shareholders experience significant losses following the business combination. In addition, the Founder Shares have no redemption rights and will be worthless if the Company does not complete an initial business combination and instead liquidates; |
Interests of the Company’s Directors and Officers
| ● | The fact that the Sponsor currently holds 285,000 private placement units, which were purchased at a price of $10.00 per unit, for an aggregate purchase price of $2,850,000. These securities have no redemption rights upon the Company’s liquidation and will be worthless if the Company does not consummate an initial business combination; and |
Interests of the Company’s Directors and Officers
| ● | The fact that the Sponsor has agreed not to redeem any of its Founder Shares or private placement securities in connection with any shareholder vote to approve an initial business combination. |
Interests of the Company’s Directors and Officers
Additionally, if the Extension Amendment Proposal and the Trust Amendment Proposal are approved and the Company subsequently consummates an initial business combination, our officers and directors may have interests in such business combination that are different from, or in addition to, the interests of public shareholders. Any such interests will be described in the proxy statement or other applicable disclosure document prepared in connection with the proposed business combination. We may not be able to complete an initial business combination with a U.S. target company since such initial business combination may be subject to U.S. foreign investment regulations and review by a U.S. government entity such as the Committee on Foreign Investment in the United States (“CFIUS”), or ultimately prohibited. Each of our directors and officers may not be citizens of the United States, and the Sponsor is a non-U.S. entity. Although we do not believe that the nature of our business or that of a potential target necessarily makes any initial business combination subject to review by the Committee on Foreign Investment in the United States (“CFIUS”), it is possible that CFIUS could determine that our proposed initial business combination is within its jurisdiction. Under the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”) and its implementing regulations, CFIUS has authority to review certain non-passive, non-controlling investments in U.S. businesses involving critical technology, critical infrastructure, or sensitive personal data, as well as certain real estate transactions, and some categories of transactions require mandatory filings. If our initial business combination falls within CFIUS’s jurisdiction, we may be required to submit a mandatory filing, elect to make a voluntary notice, or proceed without notifying CFIUS and risk CFIUS intervention before or after closing. CFIUS may delay, impose mitigation conditions on, or prohibit the completion of our initial business combination, or may require the combined company to divest certain assets. As a result, we may be unable to complete an otherwise advantageous business combination or may be prevented from pursuing certain target companies, which could limit our pool of potential targets and place us at a competitive disadvantage relative to other special purpose acquisition companies that do not have similar foreign ownership considerations. Moreover, any government review process, whether by CFIUS or another U.S. governmental authority, could be lengthy, and the Company has a limited amount of time to complete its initial business combination. If we are unable to complete our initial business combination by October 19, 2026, assuming the Extension Amendment Proposal is approved and implemented (the “Termination Date”), and any applicable regulatory review extends beyond such timeframe or ultimately results in the proposed business combination being prohibited or subject to mitigation measures that are unacceptable to the Company or the target, we may be required to liquidate. In such event, public shareholders would lose the opportunity to invest in a target company and the chance to realize any future gains through price appreciation of the combined company’s ordinary shares. If we were deemed to be an investment company for purposes of the Investment Company Act of 1940, as amended (the “Investment Company Act”), we may be forced to abandon our efforts to complete an initial business combination and instead be required to liquidate the Company. To avoid that result, we may determine, in our discretion, to liquidate the securities held in the trust account. There is currently uncertainty concerning the applicability of the Investment Company Act to a special purpose acquisition company (“SPAC”) and we may in the future be subject to a claim that we have been operating as an unregistered investment company. If we are 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. If we are required to liquidate, our investors would not be able to realize the benefits of owning stock in a successor operating business, including the potential appreciation in the value of our stock and warrants following such a transaction, and our warrants would expire worthless. The funds in the Trust Account have, since our initial public offering, been held only in U.S. government securities within the meaning of Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in money market funds that invest solely in U.S. government treasury obligations and that comply with the conditions of Rule 2a-7 under the Investment Company Act. To mitigate the risk that the Company could be deemed to be operating as an unregistered investment company (including under the subjective “investment company” test in Section 3(a)(1)(A) of the Investment Company Act), the Company may, in its discretion, instruct Continental Stock Trust Company, the trustee of the Trust Account, to liquidate the U.S. government securities or money market funds held in the Trust Account and hold all funds in cash until the completion of an initial business combination. If we take this action, the amount of funds available for redemption would no longer increase through interest, which may reduce the per-share amount received by public shareholders upon redemption or liquidation. In addition, the longer that funds in the Trust Account are invested in short-term U.S. government securities or in money market funds that hold such securities, the greater the risk that the Company could be considered an unregistered investment company. If the Company were deemed an unregistered investment company, it might be required to liquidate. Accordingly, the Company may determine, in its discretion, to liquidate the securities held in the Trust Account at any time and maintain the Trust Account in cash until the completion of an initial business combination. The Company may be affected by the Excise Tax included in the Inflation Reduction Act of 2022. On August 16, 2022, the IR Act became law and, among other things, imposed a 1% excise tax on certain repurchases of stock by a “covered corporation” occurring after December 31, 2022 (the “Excise Tax”). The Excise Tax generally applies to repurchases of stock by U.S. corporations whose securities are traded on an established securities market, and may also apply to repurchases by certain non-U.S. corporations that are treated as “surrogate foreign corporations” or that engage in repurchases that are funded by, or effectively treated as repurchases by, an affiliated U.S. corporation. Although the Company is a Cayman Islands exempted company and therefore is not itself a “covered corporation,” the Excise Tax could nevertheless apply to redemptions of our ordinary shares in connection with an initial business combination, an amendment to our Second Amended and Restated Memorandum of Association (the “Charter”), an extension vote or otherwise, if such redemptions are viewed as repurchases that fall within the scope of the IR Act or any implementing Treasury guidance. The application of the Excise Tax to redemptions by non-U.S. corporations remains uncertain and may be affected by future regulations or other guidance issued by the U.S. Department of the Treasury (“Treasury”), which has broad authority to implement, interpret and prevent the avoidance of the Excise Tax.
Interests of the Company’s Directors and Officers
If the Excise Tax applies, it would be payable by the Company and not by redeeming shareholders. Issuances of securities by the Company in the same taxable year as redemptions, for example, in connection with a PIPE financing or other equity issuances, may reduce the amount of any Excise Tax due. However, there can be no assurance that any such issuances would offset the full amount of any potential liability. Whether and to what extent the Company would be subject to the Excise Tax in connection with a business combination, an extension vote or otherwise would depend on a number of factors, including: (i) the fair market value of any redemptions or repurchases; (ii) the structure of the initial business combination; (iii) the nature and amount of any “PIPE” or other equity issuances effected in the same taxable year; and (iv) the content of future regulations or other guidance issued by Treasury. Consequently, the potential applicability of the Excise Tax may make a transaction with the Company less attractive to potential business combination targets. Based on interim guidance issued by the Internal Revenue Service and Treasury in Notice 2023-2, and subject to certain exceptions, the Excise Tax should not apply in the event of the Company’s complete liquidation. Payment of the Excise Tax if the Company is subject to the Excise Tax. We will not be permitted to use any portion of the funds held in the Trust Account, including any interest earned thereon, to pay any Excise Tax that may be imposed under the IR Act in connection with redemptions of our ordinary shares or any other repurchases by the Company.