ITEM 1. BUSINESS
In this Annual Report on Form 10-K (the
“Form 10-K”), references to the “Company” and to “we,” “us,” “our” and
refer to Liberty Resources Acquisition Corp.
Overview
We are a blank check company incorporated in Delaware
on April 22, 2021. The Company was formed 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 “Business Combination”). We are
an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies.
We believe that there are many target companies
that could become attractive public companies we intend to focus on industries that complement our management team’s background,
and to capitalize on the ability of our management team to identify and acquire a business, focusing on the oil and gas sectors, where
our management team has extensive experience.
Our management team is led by our Chief Executive
Officer, Dato’ Maznah Binti Abdul Jalil, who has over 30 years of investment banking experience in a merchant Bank and DRB-HICOM
Berhad Group of Companies. She is currently working as a director at several companies, including: Malayan Flour Mill Berhad (“MFLOUR”),
since November 2019, Boustead Heavy Industrial Corporation Berhad (“BHIC”), since August 2019, Innature Berhad
(“INNATURE”), since March 2019, Lembaga Angkatan Tentera (“LTAT”), since November 2018, Opus Asset Management
SDN. BHD, since November 2017, and Pavilion REIT Management SDN. BHD, since July 2011. From December 2012 until April 2019
she was the Executive Director and Chief Financial Officer of Sona Petroleum Berhad. From 2007 to 2011 she held two positions, one as
Executive Vice President at Kenanga Investment Bank Berhad and as Head of Corporate Finance at Hong Leong Financial Group. Prior to that
she worked 14 years as Senior Group Director in Corporate Finance & Advisory at DRB-HICOM BERHAD (From June 1992 to
July 2005) where she was responsible of corporate finance & advisory work for Master-Carriage Group and DRB-HICOM Group
including restructuring proposals of companies’ mergers and acquisitions floatation of companies and overseeing investment related
activities of the Group. She previously held several directorships in publicly listed companies as well as non-listed companies.
The Company’s sponsor is Liberty Fields
LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public
Offering was declared effective on November 3, 2021. On November 8, 2021, the Company consummated its Initial Public Offering
of 10,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the
“Public Shares”), at $10.00 per Unit, generating gross proceeds of $100,000,000 (see Note 6) (the “Initial Public
Offering”). The Company granted the underwriter a 45-day option to purchase up to an additional 1,500,000 Units at the Initial Public
Offering price to cover over-allotments, if any.
Simultaneously with the consummation of the closing
of the Offering, the Company consummated the private placement of an aggregate of 477,775 units (the “Placement Units”) to
the Sponsor at a price of $10.00 per Placement Unit, generating total gross proceeds of $4,777,750 (the “Private Placement”).
Subsequently, on November 8, 2021, the underwriters
exercised the over-allotment option in full, and the closing of the issuance and sale of the additional Units occurred (the “Over-allotment
Option Units”). The total aggregate issuance by the Company of 1,500,000 units at a price of $10.00 per unit resulted in total gross
proceeds of $1,500,000. On November 8, 2021, simultaneously with the sale of the Over-allotment Option Units, the Company consummated
the private sale of an additional 52,500 Placement Units, generating gross proceeds of $525,000. The Placement Units were issued pursuant
to Section 4(a)(2) of the Securities Act of 1933, as amended, as the transactions did not involve a public offering.
A total of $116,725,000, comprised of the proceeds
from the Offering and the proceeds of private placements that closed on November 8, 2021, net of the underwriting commissions, discounts,
and offering expenses, was deposited in a trust account established for the benefit of the Company’s public stockholders.
Our Business Strategy
We believe that acquiring a leading high-growth
company or assets in the natural resources, oil, or gas industry will provide a platform to fund consolidation and fuel growth for our
company. There is no restriction in the geographic location of targets we can pursue, although we intend to initially prioritize Central
Asia as the geographical focus. Our aim is to become a mid-size independent operator targeting producing onshore assets with attractive
fiscal regimes and offers a high dividend policy
We believe that there is a large pool of quality
initial business combination targets looking for exit opportunities with an increasing number of private equity (or PE) and venture capital
(or VC) activities in the certain regions, which provides us opportunities given what we believe are the limited exit options for mid-market
companies in the region. We believe that there are many resources in Central Asia that have been left stranded because domestic investors
have less access to cheap capital. This is reflected in the high interest rates in a number of prospective regions, as indicated below:
Kazakhstan | |
| 9.3 | % |
Uzbekistan | |
| 14.0 | % |
Azerbaijan | |
| 13.9 | % |
Tajikstan | |
| 13.0 | % |
Turkmenistan | |
| 12.0 | % |
Kyrgystan | |
| 7.5 | % |
In addition, these same countries face volatile
exchange rates, further increasing the difficulty in securing foreign funding / loans.
As noted, we believe that the natural resources
industry, specifically the oil and gas sectors, represent a particularly attractive deal sourcing environment that will allow us to leverage
our team’s skill sets and experience to identify an initial business combination which can potentially serve as a strong platform
for future add-on acquisitions. Our investment thesis is supported by what we believe are the following trends in our target sectors:
Strong
Core Industry Fundamental: Despite the uncertainties, we believe that the U.S. oil and gas sectors can be profitably developed
and/or produced at low break-even costs. As such, drilling and other exploration and production focused investments will continue to present
viable opportunities to investors in 2021. Additionally, we believe that natural gas is generally viewed as a bridge fuel to more sustainable
and environmentally friendly forms of electrical generation. The U.S. has recently become a leader in natural gas resource development
and is a growing LNG exporter. We believe that investors have fundamentally changed their investment criteria for the exploration and
production industry from high production growth targets to disciplined growth, focusing primarily on total returns and returns of cash
to investors. The U.S. upstream sector is in a period of evolutionary change. We believe that the operators that accept the new climate
and evolve to meet the challenges of 2021 and beyond will emerge successfully, strengthened by their resilient business models in the
face of commodity price fluctuations, and serve a vital role in providing for the world’s energy needs.
Targeting
of Fastest Growing Industries. The main industry we are targeting is the natural resources industry, specifically the oil
and gas sectors. This is not just a function of our expertise in these fields, but it is also because these sectors are highly fragmented
with hundreds of companies ranging from large established corporations to smaller start-ups. Many non-investment grade companies have
struggled with excess leverage and have been forced to restructure their operations, while other companies have sought to reduce their
leverage through asset sales. Historically, the exploration and production industry has used asset sales as one of its key sources of
funding. The lack of access to capital and an active M&A market lead us to believe that many companies within our target industries
currently lack the financial health and operating capabilities to succeed in today’s environment.
Lack
of Competition. Recent sustained low commodity prices have deeply impacted the financial health and access to capital for
both public and private companies within our target sectors. We believe the exodus of capital providers and changing market sentiments
have created an opportunity for natural resources focused SPACs to fill the void and pursue acquisition targets in a buyer’s market.
Operator-Led
SPACs outperform their Sectors: According to McKinsey & Company, SPACs that are led by executives with past C-Suite experience
tend to outperform other SPACs (by about 40%) and their industry peers (by about 10%) after at least 18 months of publicly available
trading data.
Our Acquisition Criteria
Consistent with our strategy, we have identified
the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these
criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business combination with
a target business that does not meet these criteria and guidelines.
| · | Target Size: Consistent with our investment thesis as described above, we plan to target
businesses with total enterprise values ranging from $200.0 million to $2.0 billion in the natural resources industry, specifically within
the oil and gas sectors. |
| · | Ownership: Liberty plans to outsource most of its downstream activities and prefers to use
cash for dividends payments or new fields acquisition. We also propose to pursue an asset light policy while maintaining an optimal asset
ownership plan. But at the same time, we will maintain a high degree of management control over the assets within acquired fields. Such
an asset light strategy offers higher profit and greater flexibility for the Company. |
| · | Businesses with Revenue and Earnings Growth Potential. We will seek to acquire one or more
businesses that have the potential for significant revenue and earnings growth through a combination of increased production capacity,
expense reduction, and synergistic follow-on acquisitions resulting in increased operating leverage. |
| · | Businesses with Potential for Strong Free Cash Flow Generation. We will seek to acquire
one or more businesses that have the potential to generate strong, stable, and increasing free cash flow. We intend to focus on one or
more businesses that have predictable revenue streams and definable low working capital and capital expenditure requirements. We may also
seek to prudently leverage this cash flow in order to enhance stockholder value. |
| · | Strong Management. We will seek companies with strong management teams already in place.
We will spend significant time assessing a company’s leadership and human fabric and maximizing its efficiency over time. |
| · | Benefit from Being a Public Company. We intend to acquire one or more businesses that
will benefit from being publicly traded and can effectively utilize the broader access to capital and the public profile that are associated
with being a publicly traded company. |
| · | Appropriate Valuations and Upside Potential. We intend to apply rigorous, criteria-based,
disciplined, and valuation-centric metrics. We intend to acquire a target on terms that we believe provide significant upside potential
while seeking to limit risk to our investors. |
These criteria are not intended to be exhaustive.
Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general
guidelines as well as other considerations, factors and criteria that from time to time our management may deem relevant.
Our Acquisition Process
In evaluating a potential target business, we
expect to conduct a comprehensive due diligence review to seek to determine a company’s quality and its intrinsic value. That due
diligence review may include, among other things, financial statement analysis, detailed document reviews, technology diligence, multiple
meetings with management, consultations with relevant industry and academic experts, competitors, customers and suppliers, as well as
a review of additional information that we will seek to obtain as part of our analysis of a target company.
We are not prohibited from pursuing an initial
business combination with a business that is affiliated with our sponsor, officers or directors. In the event we seek to complete our
initial business combination with a business that is affiliated with our sponsor, officers or directors, we, or a committee of independent
directors, will obtain an opinion from either an independent investment banking firm that is a member of the Financial Industry Regulatory
Authority (“FINRA”) or an independent accounting firm that our initial business combination is fair to our company from a
financial point of view. Furthermore, in the event that we seek such a business combination, we expect that the independent members of
our board of directors would be involved in the process for considering and approving the transaction.
Members of our management team, including our
officers and directors, will directly or indirectly own our securities following this offering and, accordingly, may have a conflict of
interest in determining whether a particular target company is an appropriate business with which to effectuate our initial business combination.
Each of our officers and directors, as well as our management team, may have a conflict of interest with respect to evaluating a particular
business combination, including if the retention or resignation of any such officers, directors, and management team members was included
by a target business as a condition to any agreement with respect to such business combination.
We have not selected any specific business combination
target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business
combination target.
Each of our directors, director nominees and officers
presently have and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which
such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers or
directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary
or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity.
We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our
ability to identify and pursue business combination opportunities or complete our initial business combination.
Our amended and restated certificate of incorporation
provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly
offered to such person solely in his or her capacity as a director or officer of our company, and such opportunity is one we are legally
and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer
is permitted to refer that opportunity to us without violating another legal obligation.
Our founder, sponsor, officers, and directors
may sponsor, form or participate in other blank check companies similar to ours during the period in which we are seeking an initial business
combination and their respective participation in any such companies may present additional conflicts of interest in respect of determining
to which such company a particular business combination opportunity should be presented, particularly in the event there is overlap among
the investment mandates of such companies. Additionally, one of our directors, Mr. Stein, has invested in other blank check companies.
We do not believe Mr. Stein’s investments would affect our ability to identify and pursue business opportunities or complete
our initial business combination.
Moreover, because our management team has significant
experience in identifying and executing multiple acquisition opportunities simultaneously and we are not limited by industry or geography
in terms of the acquisition opportunities we can pursue, except with respect to our prohibition from seeking target acquisitions in China
and Hong Kong. In addition, our founder, sponsor, officers, and directors are not required to commit any specified amount of time to our
affairs and, accordingly, will have conflicts of interest in allocating management time among various business activities, including identifying
potential business combinations and monitoring the related due diligence.
Initial Business Combination
Nasdaq rules require that we complete one
or more initial business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust
account (excluding the deferred underwriting commissions and taxes payable on interest earned on the trust account) at the time of our
signing a definitive agreement in connection with our initial business combination. Our board of directors will make the determination
as to the fair market value of our initial business combination.
If our board of directors is not able to independently
determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking
firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. While we
consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our
initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target
or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects.
We anticipate structuring our initial business
combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests
or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction
company owns or acquires less than 100% of such interests or assets of the target business for the post-acquisition company to meet certain
objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if
the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires an
interest in the target or assets sufficient for it not to be required to register as an investment company under the Investment Company
Act of 1940, as amended, or the Investment Company Act of 1940, as amended.
Even if the post-transaction company owns or acquires
50% or more of the voting securities of the target, our stockholders prior to the initial business combination may collectively own a
minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the initial business combination.
For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding
capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance
of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority
of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target
business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned
or acquired is what will be valued for purposes of the 80% of net assets test. If the initial business combination involves more than
one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses and we will treat
the target businesses together as the initial business combination for the purposes of a tender offer or for seeking stockholder approval,
as applicable.
The net proceeds of this offering and the sale
of the placement units released to us from the trust account upon the closing of our initial business combination may be used as consideration
to pay the sellers of a target business with which we complete our initial business combination. If our initial business combination is
paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration
in connection with our initial business combination or used for redemption of our public shares, we may use the balance of the cash released
to us from the trust account following the closing for general corporate purposes, including for maintenance or expansion of operations
of the post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business
combination, to fund the purchase of other companies or for working capital. In addition, we may be required to obtain additional financing
in connection with the closing of our initial business combination to be used following the closing for general corporate purposes as
described above.
There is no limitation on our ability to raise
funds through the issuance of equity or equity-linked securities or through loans, advances or other indebtedness in connection with our
initial business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously
with the completion of our initial business combination. At this time, we are not a party to any arrangement or understanding with any
third party with respect to raising any additional funds through the sale of securities or otherwise. None of our sponsors, officers,
directors or stockholders is required to provide any financing to us in connection with or after our initial business combination. We
may also obtain financing prior to the closing of our initial business combination to fund our working capital needs and transaction costs
in connection with our search for and completion of our initial business combination.
Our amended and restated certificate of incorporation
will provide that, following this offering and prior to the consummation of our initial business combination, we will be prohibited from
issuing additional securities that would entitle the holders thereof to (i) receive funds from the trust account; or (ii) vote
as a class with our public shares: (a) on any initial business combination, or (b) to approve an amendment to our amended and
restated certificate of incorporation to: (x) extend the time we have to consummate a business combination from the closing of this
offering, or (y) amend the foregoing provisions, unless (in connection with any such amendment to our amended and restated certificate
of incorporation) we offer our public stockholders the opportunity to redeem their public shares
Corporate Information
Our
executive offices are located at 78 SW 7th Street Suite 500 Miami, Florida 33130, and our telephone number is 1-305-809-7217.