DEFM14A 1 d59484ddefm14a.htm DEFM14A DEFM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

(Amendment No.     )

 

 

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material under §240.14a-12

CIIG MERGER CORP.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

     

  (2)  

Aggregate number of securities to which transaction applies:

 

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

  (4)  

Proposed maximum aggregate value of transaction:

 

     

  (5)  

Total fee paid:

 

     

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


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LOGO    LOGO

CIIG Merger Corp.

40 West 57th Street

29th Floor

New York, New York 10019

Dear CIIG Merger Corp. Stockholders:

You are cordially invited to attend the special meeting of stockholders of CIIG Merger Corp., which we refer to as “we,” “us,” “our,” or “CIIG,” at 10:00 a.m., Eastern time, on March 19, 2021, at www.virtualshareholdermeeting.com/CIIC2021SM. At the special meeting of stockholders, our stockholders will be asked to consider and vote upon a proposal, which we refer to as the “Business Combination Proposal,” to approve and adopt the business combination agreement, dated November 18, 2020 (as may be amended, supplemented, or otherwise modified from time to time, the “Business Combination Agreement”), by and among CIIG, Arrival S.à r.l. (“Arrival”), ARSNL Merger Sub Inc. (“Merger Sub”), and Arrival Group (“Holdco”) and the Business Combination (as defined below) contemplated thereby.

Holdco is a direct wholly-owned subsidiary of Arrival and Merger Sub is a direct wholly-owned subsidiary of Holdco. Pursuant to the Business Combination, (i) the existing ordinary and preferred shareholders of Arrival have each concurrently entered into separate exchange agreements (the “Exchange Agreements”) to contribute their respective equity interests in Arrival to Holdco in exchange for Holdco Ordinary Shares (as defined below) (the “Exchanges”), which Arrival shares are deemed to have a value of approximately US $5.3 billion (the “Aggregate Exchange Consideration”), and (ii) following the Exchanges, CIIG will merge with and into Merger Sub and all shares of CIIG common stock will be exchanged for Holdco Ordinary Shares (the “Merger”). Upon consummation of the Business Combination, Arrival and CIIG will become direct wholly-owned subsidiaries of Holdco. Holdco is expected to issue an aggregate of 606,178,750 Holdco Ordinary Shares upon consummation of the Exchanges and the Merger.

In connection with the Business Combination, CIIG has obtained commitments from institutional investors (each a “Subscriber”) to purchase 40,000,000 shares of CIIG Class A Common Stock at a purchase price of $10.00 per share in a private placement, which will be converted into Holdco Ordinary Shares in connection with the Closing (the “PIPE Shares).

CIIG’s class A common stock and CIIG’s units and warrants are currently listed on The Nasdaq Stock Market (“Nasdaq”) under the symbols “CIIC,” “CIICU” and “CIICW,” respectively. Holdco intends to apply to list the Holdco Ordinary Shares and Holdco Warrants on Nasdaq in connection with the Closing. We cannot assure you that the Holdco Ordinary Shares or the Holdco Warrants will be approved for listing on Nasdaq.

Upon consummation of the Business Combination, Kinetik S.à r.l., the majority shareholder of Arrival, will own 76.43% of the outstanding Holdco Ordinary Shares and will have the right to propose for appointment a majority of the board of directors until it owns less than 30% of the Holdco Ordinary Shares. Accordingly, Holdco will be a “controlled company” under Nasdaq corporate governance rules. Holdco is a “foreign private issuer” and an “emerging growth company” under the applicable Securities and Exchange Commission rules and will be eligible for reduced public company disclosure requirements.

We are providing this proxy statement/prospectus and accompanying proxy cards to our stockholders in connection with the solicitation of proxies to be voted at the special meeting of stockholders and at any adjournments or postponements of the special meeting of stockholders. Whether or not you plan to attend the special meeting, we urge you to read this proxy statement/prospectus (and any documents incorporated into this proxy statement/prospectus by reference) carefully. Please pay particular attention to the section entitled “Risk Factors,” beginning on page 45.

Our board of directors has unanimously approved and adopted the Business Combination Agreement and unanimously recommends that our stockholders vote FOR all of the proposals presented to our stockholders. When you consider the board of directors’ recommendation of these proposals, you should keep in mind that certain of our directors and our officers have interests in the Business Combination that may conflict with your interests as a stockholder. See the section entitled “The Business Combination—Interests of CIIG’s Directors and Officers in the Business Combination.

On behalf of our board of directors, I thank you for your support and look forward to the successful completion of the Business Combination.

 

   Sincerely,

 

  

/s/   F. Peter Cuneo

February 26, 2021

  

F. Peter Cuneo

Chief Executive Officer and Chairman

This proxy statement/prospectus is dated February 26, 2021 and is first being mailed to the stockholders of CIIG on or about that date.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS OR ANY OF THE SECURITIES TO BE ISSUED IN THE BUSINESS COMBINATION, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.


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LOGO   

LOGO

CIIG Merger Corp.

40 West 57th Street

29th Floor

New York, New York 10019

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON March 19, 2021

To the Stockholders of CIIG Merger Corp.:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the “special meeting of stockholders”) of CIIG Merger Corp., a Delaware corporation (“CIIG”), will be held on March 19, 2021, at 10:00 a.m., Eastern time, at www.virtualshareholdermeeting.com/CIIC2021SM. You are cordially invited to attend the special meeting of stockholders for the following purposes:

 

  (1)

The Business Combination Proposal: to consider and vote upon a proposal to approve and adopt the Business Combination Agreement, dated as of November 18, 2020, as may be amended, (the “Business Combination Agreement”), by and among CIIG, Arrival S.à r.l., a limited liability company (société à responsabilité limitée) governed by the laws of the Grand Duchy of Luxembourg (“Arrival”), ARSNL Merger Sub Inc., a Delaware corporation (“Merger Sub”) and Arrival Group, a joint stock company (société anonyme) governed by the laws of the Grand Duchy of Luxembourg (“Holdco”), pursuant to which each of the following transactions occurred, or will occur, in the following order:

 

   

pursuant to separate contribution and exchange agreements that each holder of Arrival’s preferred A convertible preference shares, with a nominal value of EUR 0.25 per share (the “Arrival Preferred Shares”, and such holders of Arrival Preferred Shares, the “Arrival Preferred Shareholders”), entered into with Holdco concurrently with the execution of the Business Combination Agreement (the “Arrival Preferred Shareholder Exchange Agreements”), on January 4, 2021, each Arrival Preferred Shareholder contributed its respective Arrival Preferred Shares to Holdco, in each case, in exchange for a number of ordinary shares of Holdco (“Holdco Ordinary Shares”) based on an exchange ratio of 0.5581634737 Holdco Ordinary Shares for one Arrival Preferred Share (the “First Exchange”);

 

   

(a) pursuant to separate contribution and exchange agreements that each holder of Arrival’s ordinary shares, with a nominal value of EUR 0.25 per share (the “Arrival Ordinary Shares”, and together with the Arrival Preferred Shares, the “Arrival Shares” and such holders of Arrival Ordinary Shares, the “Arrival Ordinary Shareholders”), entered into with Holdco concurrently with the execution of the Business Combination Agreement (the “Arrival Ordinary Shareholder Exchange Agreements”, and, together with the Arrival Preferred Shareholder Exchange Agreements, the “Exchange Agreements”), on the day immediately preceding the Merger, each Arrival Ordinary Shareholder will contribute its respective Arrival Ordinary Shares to Holdco in exchange for Holdco Ordinary Shares based on an exchange ratio of 0.5581634737 Holdco Ordinary Shares for one Arrival Ordinary Share (the “Second Exchange”, and, together with the First Exchange, the “Exchanges”), (b) as of the effectivenss of the Second Exchange (the “Second Exchange Effective Time”), the valuation of the Arrival Shares contributed to Holdco by the Arrival Shareholders against new Holdco Ordinary Shares pursuant to the Exchanges is deemed to be US $5,338,350,000 (the “Aggregate Exchange Consideration”) and (c) immediately following the Second Exchange Effective Time, Arrival will be a direct wholly-owned subsidiary of Holdco;

 

   

on the first business day following the Second Exchange Effective Time and immediately prior to the Merger, each share of CIIG’s class B common stock, par value $0.0001 per share (the “CIIG


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Class B Common Stock”), outstanding immediately prior to the Merger will be converted into one share of CIIG’s class A common stock, par value $0.0001 per share (the “CIIG Class A Common Stock”, and together with the CIIG Class B Common Stock, the “CIIG Common Stock”) (the “CIIG Class B Conversion”);

 

   

immediately following the CIIG Class B Conversion, Merger Sub will merge with and into CIIG, with CIIG surviving such merger as a direct wholly-owned subsidiary of Holdco, and, in connection therewith, CIIG’s corporate name will change to “Arrival Vault USA, Inc.” (the “Merger”, and the surviving corporation of the Merger, the “Surviving Corporation”) and, as a result of the Merger, each share of CIIG Class A Common Stock will be exchanged for one Holdco Ordinary Share as set forth in the Business Combination Agreement (collectively, the “Business Combination Proposal”); and

 

   

If CIIG’s stockholders approve the Business Combination Proposal and the parties consummate the Business Combination: (i) Holdco is expected to issue an aggregate of 606,178,750 Holdco Ordinary Shares upon consummation of the Exchanges and the Merger; (ii) the current holders of CIIG common stock issued and outstanding immediately prior to the effective time of the Merger (other than any redeemed shares) will receive one Holdco Ordinary Share in exchange for each share of CIIG common stock held by them, or an aggregate of 32,343,750 Holdco Ordinary Shares (assuming no shares of CIIG common stock are redeemed); and (iii) each Arrival Shareholder will receive its pro rata portion of Aggregate Exchange Consideration in the form of Holdco Ordinary Shares valued at $10.00 per Holdco Ordinary Share.

 

  (2)

The Nasdaq Proposal: to consider and vote upon a proposal to approve, for purposes of complying with applicable listing rules of The Nasdaq Stock Market, or Nasdaq Listing Rules, the issuance of more than 20% of the current total issued and outstanding shares of CIIG Common Stock (the “Nasdaq Proposal”) to the Subscribers of the PIPE Shares; and

 

  (3)

The Stockholder Adjournment Proposal: to consider and vote upon a proposal to adjourn the special meeting of stockholders to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting of stockholders, there are not sufficient votes to approve one or more proposals presented to stockholders for vote or Public Stockholders have elected to redeem an amount of CIIG Class A Common Stock such that the minimum available cash condition to the obligation to closing of the Business Combination (as described below) would not be satisfied (the “Stockholder Adjournment Proposal”).

Only holders of record of our common stock at the close of business on February 16, 2021 are entitled to notice of the special meeting of stockholders and to vote at the special meeting of stockholders and any adjournments or postponements of the special meeting of stockholders. A complete list of our stockholders of record entitled to vote at the special meeting of stockholders will be available for ten days before the special meeting of stockholders (i) on a reasonably accessible electronic network or (ii) at our principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane to the special meeting of stockholders.

Pursuant to CIIG’s amended and restated certificate of incorporation (“the CIIG Amended and Restated Certificate of Incorporation”), we are providing the holders of CIIG’s Class A common stock (the “Public Stockholders”) with the opportunity to redeem their shares of CIIG Class A Common Stock for cash equal to their pro rata share of the aggregate amount on deposit in the trust account which holds the proceeds of our initial public offering as of two business days prior to the consummation of the business combination contemplated by the Business Combination Agreement (the “Business Combination”), including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, upon the consummation of the Business Combination. For illustrative purposes, based on funds in the trust account of approximately $259,847,182 on November 18, 2020, the estimated per share redemption price would have been approximately $10.04. The Public Stockholders may elect to redeem their shares even if they vote for the Business Combination Proposal and any of the other proposals presented. A Public Stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming his, her or its shares with


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respect to more than an aggregate of 15% of the CIIG Class A Common Stock. Holders of our outstanding warrants to purchase shares of our CIIG Class A Common Stock do not have redemption rights with respect to such warrants in connection with the Business Combination. All of the holders of the CIIG Class B Common Stock have agreed to waive their redemption rights with respect to their CIIG Class B Common Stock. The CIIG Class B Common Stock will be excluded from the pro rata calculation used to determine the per-share redemption price. Currently, CIIG Management LLC (the “Sponsor”) owns approximately 18% of our issued and outstanding shares of common stock, consisting of 90% of the CIIG Class B Common Stock. CIIG’s Sponsor, officers and directors have agreed to vote their CIIG Class B Shares, which represent approximately 18% of the issued and outstanding shares of CIIG common stock as of December 31, 2020, and any shares of CIIG common stock acquired during or after our initial public offering in favor of the Business Combination Proposal.

The Business Combination Proposal will be consummated only if a majority of the shares of CIIG Common Stock are voted at the special meeting of stockholders. We have no specified maximum redemption threshold under our amended and restated certificate of incorporation. It is a condition to closing under the Business Combination Agreement, however, that CIIG has, in the aggregate, cash (held both in and outside of the trust account) equal to or greater than the sum of $400 million. If redemptions by CIIG’s public stockholders cause CIIG to be unable to meet this closing condition, then Arrival will not be required to consummate the Business Combination, although it may, in its sole discretion, waive this condition. In the event that Arrival waives this condition, CIIG does not intend to seek additional stockholder approval or to extend the time period in which its public stockholders can exercise their redemption rights. In no event, however, will CIIG redeem CIIG Class A Common Stock in an amount that would cause CIIG’s net tangible assets to be less than $5,000,001.

Your vote is very important, regardless of the number of shares you own. Please vote as soon as possible to ensure that your vote is counted, regardless of whether you expect to attend the special meeting of stockholders. Please complete, sign, date and return the enclosed proxy card in the postage-paid envelope provided. You may also submit a proxy by telephone or via the internet by following the instructions printed on your proxy card. If you are a holder of record of CIIG’s class A common stock, you may also cast your vote virtually at the special meeting.

If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the special meeting. A failure to vote your shares will have the same effect as a vote “AGAINST” the Business Combination Proposal and will have no effect on the outcome of the vote on the Nasdaq Proposal or the Stockholder Adjournment Proposal.

If you sign and return your proxy card without indicating how you wish to vote, your proxy will be voted in favor of each of the proposals presented at the special meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the special meeting in person, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the special meeting of stockholders and, if a quorum is present, will have the same effect as a vote “AGAINST” the Business Combination Proposal but will have no effect on the other proposals.

Your attention is directed to the proxy statement/prospectus accompanying this notice (including the financial statements and annexes attached thereto) for a more complete description of the proposed Business Combination and related transactions and each of our proposals. We encourage you to read this proxy statement/prospectus carefully. The special meeting will be completely virtual. There will be no physical meeting location and the special meeting will only be conducted via live webcast at the following address: www.virtualshareholdermeeting.com/CIIC2021SM. If you have any questions or need assistance voting your shares, please call our proxy solicitor, D.F. King & Co., Inc., at (877) 536-1561, and banks and brokers may reach D.F. King & Co., Inc., at (212) 269-5550, or email at Arrival@dfking.com.

 

   By Order of the Board of Directors,

 

  

/s/ F. Peter Cuneo

February 26, 2021   

F. Peter Cuneo

   Chief Executive Officer and Chairman


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TABLE OF CONTENTS

 

ABOUT THIS PROXY STATEMENT/PROSPECTUS

     1  

MARKET AND INDUSTRY DATA

     1  

FREQUENTLY USED TERMS

     2  

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION

     6  

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

     20  

SELECTED HISTORICAL FINANCIAL DATA OF CIIG

     38  

SELECTED HISTORICAL FINANCIAL DATA OF ARRIVAL

     39  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     40  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     43  

RISK FACTORS

     45  

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

     89  

COMPARATIVE PER SHARE DATA

     99  

THE SPECIAL MEETING OF CIIG STOCKHOLDERS

     101  

THE BUSINESS COMBINATION

     106  

THE BUSINESS COMBINATION AGREEMENT

     121  

CERTAIN AGREEMENTS RELATED TO THE BUSINESS COMBINATION

     132  

MATERIAL LUXEMBOURG INCOME TAX CONSIDERATIONS

     135  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     138  

CIIG STOCKHOLDER PROPOSAL NO. 1—THE BUSINESS COMBINATION PROPOSAL

     151  

CIIG STOCKHOLDER PROPOSAL NO. 2—THE NASDAQ PROPOSAL

     151  

CIIG STOCKHOLDER PROPOSAL NO. 3—THE STOCKHOLDER ADJOURNMENT PROPOSAL

     152  

INFORMATION ABOUT ARRIVAL

     153  

MANAGEMENT OF ARRIVAL

     171  

ARRIVAL MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     176  

CERTAIN ARRIVAL RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

     189  

INFORMATION ABOUT CIIG

     190  

CIIG MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     204  

CERTAIN CIIG RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

     209  

MANAGEMENT OF HOLDCO AFTER THE BUSINESS COMBINATION

     212  

DESCRIPTION OF HOLDCO’S SECURITIES

     217  

COMPARISON OF STOCKHOLDER RIGHTS

     222  

SHARES ELIGIBLE FOR FUTURE SALE

     238  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     240  

PRICE RANGE OF SECURITIES AND DIVIDENDS

     246  

ADDITIONAL INFORMATION

     247  

LEGAL MATTERS

     247  

EXPERTS

     247  

WHERE YOU CAN FIND MORE INFORMATION

     248  

INDEX TO FINANCIAL STATEMENTS

     F-1  

ANNEXES

     A-1  

 

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission (the “SEC”) by Holdco, constitutes a prospectus of Holdco under Section 5 of the Securities Act, with respect to the Holdco Ordinary Shares to be issued to the CIIG stockholders if the Business Combination described herein is consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) with respect to the special meeting of CIIG stockholders at which CIIG stockholders will be asked to consider and vote upon a proposal to approve the Business Combination by the approval and adoption of the Business Combination Agreement, among other matters.

This document does not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction or to any person to whom it would be unlawful to make such offer.

The securities are not intended to be offered, sold or otherwise made available to, and should not be offered, sold or otherwise made available to, any persons in member states of the European Economic Area which apply Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (this Regulation together with any implementing measures in any member state, the “Prospectus Regulation”), unless they are qualified investors for the purposes of the Prospectus Regulation in such member state or in any other circumstances falling within Article 1(4) of the Prospectus Regulation, and no person in member states of the European Economic Area that is not a relevant person or qualified investor may act or rely on this document or any of its contents.

This proxy statement/prospectus includes trademarks, tradenames and service marks, certain of which belong to us or Arrival and others that are the property of other organizations. Solely for convenience, trademarks, tradenames and service marks referred to in this proxy statement/prospectus appear without the ®, TM and SM symbols, but the absence of those symbols is not intended to indicate, in any way, that we or Arrival will not assert our or their rights or that the applicable owner will not assert its rights to these trademarks, tradenames and service marks to the fullest extent under applicable law. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

MARKET AND INDUSTRY DATA

This proxy statement/prospectus contains estimates, projections, and other information concerning Arrival’s industry and business, as well as data regarding market research, estimates, and forecasts prepared by Arrival’s management. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. The industry in which Arrival operates is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled “Risk Factors.” Unless otherwise expressly stated, Arrival obtained this industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry and general publications, government data, and similar sources. In some cases, Arrival does not expressly refer to the sources from which this data is derived. In that regard, when Arrival refers to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph is derived from sources which Arrival paid for, sponsored, or conducted, unless otherwise expressly stated or the context otherwise requires. While Arrival has compiled, extracted, and reproduced industry data from these sources, Arrival has not independently verified the data. Forecasts and other forward-looking information with respect to industry, business, market, and other data are subject to the same qualifications and additional uncertainties regarding the other forward-looking statements in this proxy statement/prospectus. See “Cautionary Note Regarding Forward-Looking Statements.

 

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FREQUENTLY USED TERMS

In this document:

“Aggregate Exchange Consideration” means an amount equal to US $5,338,350,000.

“Arrival” means Arrival S.à r.l., a limited liability company (société à responsabilité limitée) governed by the laws of the Grand Duchy of Luxembourg having its registered office at 1, rue Peternelchen, L-2370 Howald, Grand Duchy of Luxembourg, registered with the Luxembourg register of commerce and companies (Registre de Commerce et des Sociétés de Luxembourg) under number B 200789.

“Arrival Ordinary Shareholder Exchange Agreements” means those certain Contribution and Exchange Agreements, dated as of November 18, 2020, by and between Holdco and each Arrival Ordinary Shareholder.

“Arrival Ordinary Shareholders” means holders of Arrival Ordinary Shares.

“Arrival Ordinary Shares” means ordinary shares of Arrival, with a nominal value of EUR 0.25 per share.

“Arrival Preferred Shareholder Exchange Agreements” means those certain Contribution and Exchange Agreements, dated as of November 18, 2020, by and between Holdco and each Arrival Preferred Shareholder.

“Arrival Preferred Shareholders” means holders of Arrival Preferred Shares.

“Arrival Preferred Shares” means preferred A convertible preference shares of Arrival, with a nominal value of EUR 0.25 per share.

“Arrival Shareholders” means the Arrival Ordinary Shareholders and Arrival Preferred Shareholders.

“Assignment, Assumption and Amendment Agreement” means that certain agreement attached to the Business Combination Agreement as Exhibit E.

“Business Combination” means the transactions contemplated by the Business Combination Agreement, including the Exchanges, the Class B Conversion and the Merger.

“Business Combination Agreement” means the Business Combination Agreement, dated as of November 18, 2020, as may be amended, by and among CIIG, Arrival, Holdco, and ARSNL Merger Sub Inc.

“Business Combination Proposal” means the proposal to approve the adoption of the Business Combination Agreement and the Business Combination.

“CIIG” refers to CIIG Merger Corp., a Delaware corporation.

“CIIG Class A Common Stock” means CIIG’s Class A common stock, par value $0.0001 per share.

“CIIG Class B Common Stock” means CIIG’s Class B common stock, par value $0.0001 per share.

“CIIG Common Stock” means the CIIG Class A Common Stock and the CIIG Class B Common Stock, collectively.

“CIIG Units” means the 25,875,000 units issued in connection with the IPO, each of which consisted of one share of CIIG Class A Common Stock and one-half of one Public Warrant.

 

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“CIIG Warrants” means the Public Warrants and the Private Placement Warrants.

“Class B Conversion” means the automatic conversion immediately prior to the Merger Effective Time pursuant to the Business Combination Agreement of each share of CIIG Class B Common Stock into a number of validly issued, fully paid and nonassessable shares of CIIG Class A Common Stock equal to the Class B Conversion Ratio.

“Class B Conversion Ratio” means the ratio at which the shares of CIIG Class B Common Stock are automatically convertible into shares of CIIG Class A Common Stock pursuant to Section 4.3(b) of the Amended and Restated Certificate of Incorporation, taking into account the waiver by the CIIG Holders of the provisions of Section 4.3(b)(ii) of the CIIG Amended and Restated Certificate of Incorporation relating to the adjustment of the Class B Conversion Ratio pursuant to Section 2(a) of the Transaction Support Agreement. As of the date of this proxy statement/prospectus, each share of CIIG Class B Common Stock converts into CIIG Class A Common Stock on a one-for-one basis.

“Closing” means the consummation of the Business Combination.

“Closing Date” means the date upon which the Closing is to occur.

“Code” means the Internal Revenue Code of 1986, as amended.

“Combined Company” means Holdco and its consolidated subsidiaries after giving effect to the Business Combination.

“Continental” means Continental Stock Transfer & Trust Company, CIIG’s transfer agent and warrant agent.

“DGCL” means the Delaware General Corporation Law.

“D.F. King” means D.F. King & Co., Inc.

“EVs” means electric vehicles.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Agreements” means the Arrival Ordinary Shareholder Exchange Agreements and the Arrival Preferred Shareholder Exchange Agreements.

“Exchanges” means the transactions contemplated by the First Exchange and the Second Exchange.

“First Exchange” means the Arrival Preferred Shareholders’ contribution and exchange, effective as of January 4, 2021, of their respective Arrival Preferred Shares for a number of Holdco Ordinary Shares based on an exchange ratio of 0.5581634737, as contemplated by and pursuant to the Arrival Preferred Shareholder Exchange Agreements.

“FMVSS” means the U.S. Federal Motor Vehicle Safety Standards.

“GAAP” means United States generally accepted accounting principles.

“GHG” means greenhouse gas.

“HKMC” means Hyundai Motor Company and Kia Motors Corporation, collectively.

 

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“Holdco” means Arrival Group, a joint stock company (société anonyme) governed by the laws of the Grand Duchy of Luxembourg having its registered office at 1, rue Peternelchen L-2370 Howald, Grand Duchy of Luxembourg, registered with the Luxembourg register of commerce and companies (Registre de Commerce et des Sociétés de Luxembourg) under number B 248209.

“Holdco Ordinary Shares” means the ordinary shares of Holdco.

“Holdco Warrant Agreement” means the warrant agreement by and between Holdco and Continental Stock Transfer & Trust Company, a warrant agent, governing the Holdco Warrants, to be entered into at the Closing.

“Holdco Warrants” means the former CIIG Warrants converted at the Merger Effective Time into a right to acquire one Holdco Ordinary Share on substantially the same terms as were in effect immediately prior to the Merger Effective Time under the terms of the Warrant Agreement.

“Hyundai” means Hyundai Motor Company.

“ICCT” means the International Council on Clean Transportation.

“ICE” means internal combustion engine.

“Initial Stockholders” means the holders of shares of CIIG Class B Common Stock.

“IPO” means CIIG’s initial public offering of units, consummated on December 17, 2019.

“ISO” means the International Standards Organization.

“JOBS Act” means the Jumpstart Our Business Startups Act of 2012, as amended.

“Kia” means Kia Motors Corporation.

“LCVs” means light commercial vehicles.

“Merger” means the merging of ARSNL Merger Sub Inc. with and into CIIG, with CIIG surviving the Merger as a wholly owned subsidiary of Holdco. In connection therewith, CIIG’s corporate name will change to “Arrival Vault USA, Inc.”

“Merger Effective Time” means 12:01 a.m. New York time on the business day immediately following the day of the filing of the Certificate of Merger

“Merger Sub” means ARSNL Merger Sub Inc., a Delaware corporation.

“Nasdaq” means The Nasdaq Stock Market LLC.

“Nasdaq Proposal” means the proposal to approve, for purposes of complying with applicable listing rules of Nasdaq, the issuance of more than 20% of the current total issued and outstanding shares of CIIG Common Stock to the Subscribers of PIPE Shares.

“NHTSA” means the U.S. National Highway Traffic Safety Administration.

“Nomination Agreement” means that certain form of agreement attached to the Business Combination Agreement as Exhibit D.

“OEMs” means original equipment manufacturers.

“PCAOB” means the Public Company Accounting Oversight Board.

“PIPE” means the private placement pursuant to which the Subscribers will purchase shares of CIIG Class A Common Stock, for a purchase price of $10.00 per share, which will be converted into Holdco Ordinary Shares in connection with the Closing.

“Private Placement Warrants” means the warrants to purchase CIIG Class A Common Stock purchased in a private placement in connection with the IPO.

 

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“Prospectus” means the proxy statement/prospectus included in the Registration Statement on Form F-4 (Registration No. 333-251339) filed with the SEC.

“Public Shares” means shares of CIIG Class A Common Stock issued as part of the units sold in the IPO.

“Public Stockholders” means the holders of shares of CIIG Class A Common Stock.

“Public Warrants” means the warrants included in the units sold in CIIG’s IPO, each of which is exercisable for one share of CIIG Class A Common Stock, in accordance with its terms.

“Registration Rights and Lock-Up Agreement” means that certain form of agreement attached to the Business Combination Agreement as Exhibit A.

“SEC” means the U.S. Securities and Exchange Commission.

“Second Exchange” means the Arrival Ordinary Shareholders’ contribution and exchange, effective as of the Second Exchange Effective Time, of their respective Arrival Ordinary Shares for a number of Holdco Ordinary Shares based on an exchange ratio of 0.5581634737, as contemplated by and pursuant to the Arrival Ordinary Shareholder Exchange Agreements.

“Second Exchange Effective Time” means the business day immediately preceding the Closing Date.

“Securities Act” means the Securities Act of 1933, as amended.

“Sponsor” means CIIG Management LLC, a Delaware limited liability company.

“Stockholder Adjournment Proposal” means a proposal to adjourn the special meeting of the stockholders of CIIG to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders for vote at such special meeting or Public Stockholders have elected to redeem an amount of Public Shares such that the minimum available cash condition to the obligation to closing of the Business Combination would not be satisfied.

“Subscribers” means the institutional investors that have committed to purchase shares of CIIG Class A Common Stock in the PIPE.

“Surviving Corporation” means Arrival Vault USA, Inc., a Delaware corporation.

“Surviving Corporation Exchange” means the exchange in which each share of Merger Sub will be converted into one share of the Surviving Corporation.

“Transaction Support Agreement” means the Transaction Support Agreement, dated as of November 1, 2020, by and among CIIG, Holdco, Arrival, and the holders of the CIIG Class B Common Stock, a copy of which is included as Exhibit 10.4 to CIIG’s Current Report on Form 8-K, filed with the SEC on November 18, 2020.

“TAM” means total addressable market.

“Trust Account” means the trust account that holds a portion of the proceeds of the IPO and the concurrent sale of the Private Placement Warrants.

“Warrant Agreement” means the warrant agreement, dated December 12, 2019, by and between CIIG and Continental Stock Transfer & Trust Company, as warrant agent, governing CIIG’s outstanding warrants.

 

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QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION

The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the special meeting of stockholders, including with respect to the proposed Business Combination. The following questions and answers may not include all the information that is important to CIIG’s stockholders. Stockholders are urged to read carefully this entire proxy statement/prospectus, including the financial statements and annexes attached hereto and the other documents referred to herein.

Questions and Answers About the Special Meeting of CIIG’s Stockholders and the Related Proposals

 

Q.

Why am I receiving this proxy statement/prospectus?

 

A.

CIIG has entered into the Business Combination Agreement with Holdco, Merger Sub and Arrival, which provides for the Business Combination in which, among other transactions, Arrival will become a direct wholly-owned subsidiary of Holdco, and CIIG will become a direct wholly-owned subsidiary of Holdco. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A.

As a result of the Business Combination: (i) the holders of all shares of CIIG Class A Common Stock issued and outstanding immediately prior to the Merger Effective Time will receive one validly issued, fully paid and nonassessable Holdco Ordinary Share in exchange for each share of CIIG Class A Common Stock held by them; and (ii) the shareholders of Arrival will receive an aggregate of 533,835,000 Holdco Ordinary Shares. Please see “The Business Combination Agreement—Ownership of the Combined Company Upon Completion of the Business Combination” and “Unaudited Pro Forma Condensed Combined Financial Information” for further information.

CIIG stockholders are being asked to consider and vote upon the Business Combination Proposal to approve the adoption of the Business Combination Agreement and the Business Combination, among other proposals at a special stockholder meeting. You are receiving this proxy statement/prospectus because you hold CIIG Common Stock as of the record date for the special stockholder meeting.

The CIIG Class A Common Stock, Public Warrants and CIIG Units are currently listed on Nasdaq under the symbols “CIIC,” “CIICW” and “CIICU,” respectively. Upon the closing of the Business Combination, Holdco is expected to be renamed “Arrival”. Holdco intends to apply to list its Holdco Ordinary Shares and Holdco Warrants on Nasdaq in connection with the Closing. All outstanding CIIG Units will be separated into their underlying securities immediately prior to the Closing. Accordingly, Holdco will not have units outstanding following consummation of the Business Combination.

This proxy statement/prospectus and its annexes contain important information about the proposed Business Combination and the proposals to be acted upon at the special meeting. You should read this proxy statement/prospectus and its annexes carefully and in their entirety. This document also constitutes a prospectus of Holdco with respect to the Holdco Ordinary Shares issuable in connection with the Business Combination.

 

Q.

When and where is the special meeting?

 

A.

The special meeting will be held at 10:00 a.m., Eastern time, on March 19, 2021, via live webcast at www.virtualshareholdermeeting.com/CIIC2021SM. The special meeting will be completely virtual.

 

Q.

What matters will stockholders consider at the special meeting of stockholders?

 

A.

At the CIIG special meeting of stockholders, CIIG will ask its stockholders to vote in favor of the following proposals:

The Business Combination Proposal—a proposal to approve and adopt the Business Combination Agreement and the Business Combination.

 

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The Nasdaq Proposal—a proposal to approve the issuance of more than 20% of the current total issued and outstanding shares of CIIG Common Stock to the Subscribers of the PIPE Shares, for purposes of complying with the applicable listing rules of Nasdaq.

The Stockholder Adjournment Proposal—a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders for vote or Public Stockholders have elected to redeem an amount of Public Shares such that the minimum available cash condition to the obligation to closing of the Business Combination would not be satisfied.

 

Q.

Are any of the proposals conditioned on one another?

 

A.

The Nasdaq Proposal is conditioned on the approval of the Business Combination Proposal. The Stockholder Adjournment Proposal does not require the approval of the Business Combination Proposal and Business Combination to be effective. It is important to note that in the event that the Business Combination Proposal is not approved, then CIIG will not consummate the Business Combination. If CIIG does not consummate the Business Combination and fails to complete an initial business combination by December 17, 2021, or amend the CIIG Amended and Restated Certificate of Incorporation to extend the date by which CIIG must consummate an initial business combination, CIIG will be required to dissolve and liquidate.

 

Q.

What will happen in the Business Combination?

 

A.

Pursuant to the Business Combination Agreement, each of the following transactions occurred, or will occur, in the following order: (i) pursuant to the Arrival Preferred Shareholder Exchange Agreements, the First Exchange was consummated on January 4, 2021; (ii) (a) pursuant to the Arrival Ordinary Shareholder Exchange Agreements, at the Second Exchange Effective Time, Holdco and the Arrival Ordinary Shareholders will consummate the transactions contemplated by the Second Exchange, (b) as of the Second Exchange Effective Time, the valuation of the Arrival Shares contributed to Holdco by the Arrival Shareholders against new Holdco Ordinary Shares pursuant to the Exchanges shall be deemed to be equal to the Aggregate Exchange Consideration and (c) immediately following the Second Exchange Effective Time, Arrival will be a direct wholly-owned subsidiary of Holdco; (iii) on the first business day following the Second Exchange Effective Time and immediately prior to the Merger Effective Time, each share of CIIG Class B Common Stock issued and outstanding immediately prior to the Merger Effective Time shall automatically be converted into and exchanged for a number of validly issued, fully paid and nonassessable shares of CIIG Class A Common Stock equal to the Class B Conversion Ratio; and (iv) at the Merger Effective Time, immediately following the CIIG Class B Conversion, Merger Sub will merge with and into CIIG, with CIIG surviving such merger as a direct wholly-owned subsidiary of Holdco. In connection therewith, CIIG’s corporate name will change to “Arrival Vault USA, Inc.”

In connection with the Business Combination:

 

   

the Arrival Shareholders will receive an aggregate of 533,835,000 Holdco Ordinary Shares pursuant to the Exchanges;

 

   

each outstanding share of CIIG Common Stock will be exchanged for one Holdco Ordinary Share;

 

   

each issued and outstanding CIIG Warrant will cease to represent a right to acquire shares of CIIG Common Stock and will instead represent the right to acquire the same number of Holdco Ordinary Shares, at the same exercise price and on the same terms as in effect immediately prior to the Closing; and

 

   

each share of Merger Sub will be converted into one share of the Surviving Corporation (the “Surviving Corporation Exchange”), such that, following the Surviving Corporation Exchange, each of the Surviving Corporation and Arrival are direct wholly-owned subsidiaries of Holdco.

 

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Q.

Why is CIIG proposing the Business Combination Proposal?

 

A.

CIIG was organized for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. CIIG is not limited to any particular industry or sector.

CIIG received $258,750,000 from its IPO and sale of the Private Placement Warrants, which was placed into the Trust Account immediately following the IPO. In accordance with CIIG’s Amended and Restated Certificate of Incorporation, the funds held in the Trust Account will be released upon the consummation of the Business Combination. See the question entitled “What happens to the funds held in the Trust Account upon consummation of the Business Combination?”

There currently are 32,343,750 shares of CIIG Common Stock issued and outstanding, consisting of 25,875,000 shares of CIIG Class A Common Stock originally sold as part of the CIIG Units in CIIG’s IPO and 6,468,750 CIIG Class B Common Stock that were issued to the Initial Stockholders prior to CIIG’s IPO. In addition, there currently are 20,112,500 CIIG Warrants issued and outstanding, including 12,937,500 Public Warrants and 7,175,000 Private Placement Warrants that were sold by CIIG to the Sponsor and subsidiaries of BlackRock, Inc. in a private sale simultaneously with CIIG’s IPO. Each whole CIIG Warrant entitles the holder thereof to purchase one share of CIIG Class A Common Stock at a price of $11.50 per share. The CIIG Warrants will become exercisable 30 days after the completion of CIIG’s initial business combination, and expire at 5:00 p.m., New York City time, five years after the completion of CIIG’s initial business combination or earlier upon redemption or liquidation. The Private Placement Warrants are non-redeemable so long as they are held by their initial purchasers or their permitted transferees. There are no shares of CIIG preferred stock issued and outstanding.

Under CIIG’s Amended and Restated Certificate of Incorporation, CIIG must provide all holders of Public Shares with the opportunity to have their Public Shares redeemed upon the consummation of CIIG’s initial business combination either in conjunction with a tender offer or in conjunction with a stockholder vote.

 

Q.

Why is CIIG proposing the Nasdaq Proposal?

 

A.

CIIG is proposing the Nasdaq Proposal in order to comply with Nasdaq Listing Rules 5635(a), (b) and (d), which require stockholder approval of the issuance of securities in certain transactions that result in (1) the issuance of 20% or more of the voting power outstanding or shares of common stock outstanding before issuance of securities, (2) the issuance or potential issuance will result in a change of control of the registrant or (3) the sale or issuance of common stock (or securities convertible into or exercisable for common stock) at a price that is less than the lower of (i) the closing price immediately preceding the signing of the binding agreement or (ii) the average closing price of the common stock for the five trading days immediately preceding the signing of the binding agreement if the number of shares of common stock to be issued is or may be equal to 20% or more of the common stock, or 20% or more of the voting power, outstanding before the issuance. CIIG anticipates that the 40,000,000 shares of CIIG Class A Common Stock to be issued pursuant to the Subscription Agreements in the PIPE will (1) constitute more than 20% of the CIIG Class A Common Stock then outstanding, (2) constitute a change of control of the registrant and (3) be sold for a purchase price of $10.00 per share of CIIG Class A Common Stock, which will be less than the lower of (i) the closing price immediately preceding the signing of the binding agreement or (ii) the average closing price of the common stock for the five trading days immediately preceding the signing of the binding agreement. As a result, CIIG is required to obtain stockholder approval of such issuances pursuant to Nasdaq Listing Rules 5635(a), (b) and (d). For more information, see the section entitled “CIIG Stockholder Proposal No. 2—The Nasdaq Proposal.” The Nasdaq Proposal is conditioned on the approval of the Business Combination Proposal.

 

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Q.

Who is Arrival?

 

A.

Arrival’s mission is to transform the design, assembly and distribution of commercial electric vehicles and accelerate the mass adoption of electric vehicles (EVs) globally. Founded in 2015, and now with over 1,500 employees, Arrival develops vertically integrated technologies and products that create a new approach to the design and assembly of electric vehicles. Arrival believes its proprietary in-house developed components, materials, software and robotic technologies, when combined with its low capital expenditure, scalable microfactories, will enable it to produce EVs that are competitively priced to fossil fuel variants and with a substantially lower total cost of ownership to its customers. Arrival’s vehicles are in the development stage with the first vehicle expected to be produced in the fourth quarter of 2021.

 

Q.

What equity stake will current CIIG stockholders and Arrival Shareholders have in Holdco after the Closing?

 

A.

It is anticipated that, upon completion of the Business Combination, (i) CIIG’s existing stockholders, including the Sponsor, will own approximately 5.3% of the issued and outstanding shares of Holdco, including 6,468,750 shares held by the Initial Stockholders that will be subject to certain lock-up arrangements pursuant to the Registration Rights and Lock-Up Agreement, (ii) Arrival’s existing shareholders will own approximately 88.1% of the issued and outstanding Holdco Ordinary Shares and (iii) the Subscribers in the PIPE will own approximately 6.6% of the issued and outstanding Holdco Ordinary Shares. These relative percentages assume that (i) none of CIIG’s existing Public Stockholders exercise their redemption rights, (ii) the Initial Stockholders exchange all outstanding CIIG Class B Common Stock for shares of CIIG Class A Common Stock that are converted into Holdco Ordinary Shares upon completion of the Business Combination, and (iii) no additional equity securities of CIIG are issued at or prior to Closing, other than the 40,000,000 shares of CIIG Class A Common Stock currently subscribed for and to be issued in connection with the PIPE. If the actual facts are different than these assumptions, the percentage ownership retained by CIIG’s existing stockholders will be different. Certain figures included in this section have been rounded for ease of presentation and, as a result, percentages may not sum to 100%.

The following table illustrates the ownership levels in Holdco (excluding the impact of the shares underlying the Holdco Warrants) immediately after the Closing based on the assumptions described above:

 

     No Redemptions  
     Number      Percentage  

CIIG’s Initial Stockholders

     6,468,750        1.07

CIIG’s existing Public Stockholders

     25,875,000        4.27

PIPE Subscribers

     40,000,000        6.60

Arrival’s existing shareholders

     533,835,000        88.07
  

 

 

    

Total

     606,178,750     
  

 

 

    

 

Q.

Who will be the officers and directors of Holdco if the Business Combination is consummated?

 

A.

It is anticipated that, at the Closing, Holdco’s board of directors will be composed of Peter Cuneo, Alain Kinsch, Kristen O’Hara, Jae Oh, Avinash Rugoobur and two other directors who are expected to be identified and appointed prior to the Closing. Holdco’s executive management team will be led by the current management of Arrival. We are in the process of identifying the other individuals who will be members of the Holdco board of directors. See the section titled “Management of Holdco After the Business Combination” for additional information.

 

Q.

What conditions must be satisfied to complete the Business Combination?

 

A.

There are a number of closing conditions in the Business Combination Agreement, including that CIIG’s stockholders have approved and adopted the Business Combination Agreement. For a summary of the conditions that must be satisfied or waived prior to completion of the Business Combination, please see the section entitled “The Business Combination Agreement.”

 

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Q.

What happens if I sell my shares of CIIG Common Stock before the special meeting of stockholders?

 

A.

The record date for the special meeting of stockholders will be earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of CIIG Common Stock after the record date, but before the special meeting of stockholders, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the special meeting of stockholders. However, you will not be entitled to receive any Holdco Ordinary Shares following the Closing because only CIIG’s stockholders on the date of the Closing will be entitled to receive Holdco Ordinary Shares in connection with the Closing.

 

Q.

What vote is required to approve the proposals presented at the special meeting of stockholders?

 

A.

The approval of the Business Combination Proposal requires the affirmative vote of the holders of at least a majority of all then outstanding shares of CIIG Common Stock entitled to vote thereon at the special meeting of stockholders. Accordingly, a CIIG stockholder’s failure to vote by proxy or to vote in person at the special meeting of stockholders, or an abstention from voting, will have the same effect as a vote “AGAINST” the Business Combination Proposal.

The approval of each of the Nasdaq Proposal and the Stockholder Adjournment Proposal requires the affirmative vote of the holders of a majority of the shares of CIIG Common Stock that are voted thereon at the special meeting of stockholders. Accordingly, a CIIG stockholder’s failure to vote by proxy or to vote in person at the special meeting of stockholders, or an abstention from voting, will have no effect on the outcome of any vote on the Nasdaq Proposal or the Stockholder Adjournment Proposal.

 

Q.

Do Arrival Shareholders need to approve the Business Combination?

 

A.

It is a condition to Closing that Arrival Shareholders approve the Exchanges and related transactions. Arrival’s shareholders have approved the Exchanges and related transactions in the Contribution and Exchange Agreements, as further described below.

Concurrently with the execution of the Business Combination Agreement, each Arrival Preferred Shareholder entered into a Contribution and Exchange Agreement with Arrival and Holdco pursuant to which, among other things, each Arrival Preferred Shareholder (i) consented to the Business Combination and, consequently, agreed to contribute its Arrival Preferred Shares to Holdco in exchange for Holdco Ordinary Shares pursuant to the First Exchange, (ii) agreed not to transfer any of its Arrival Preferred Shares before the earlier to occur of the First Exchange and the termination of the Business Combination Agreement pursuant to its terms (subject to limited exceptions applying to certain Arrival Preferred Shareholders) and (iii) agreed not to transfer any of the Holdco Ordinary Shares it receives pursuant to the First Exchange before the earlier to occur of the Second Exchange and the termination of the Business Combination Agreement pursuant to its terms, as further described herein.

Each Arrival Ordinary Shareholder (together with the Arrival Preferred Shareholders, the “Arrival Shareholders”) entered into a Contribution and Exchange Agreement with Arrival and Holdco pursuant to which, among other things, each Arrival Ordinary Shareholder (i) consented to the Business Combination and, consequently, agreed to contribute its Arrival Ordinary Shares to Holdco in exchange for Holdco Ordinary Shares pursuant to the Second Exchange and (ii) agreed not to transfer any of its Holdco Ordinary Shares before the earlier to occur of the Second Exchange and the termination of the Business Combination Agreement pursuant to its terms, as further described herein.

 

Q.

May CIIG, the Sponsor or CIIG’s directors, officers or advisors, or their affiliates, purchase shares in connection with the Business Combination?

 

A.

In connection with the stockholder vote to approve the proposed Business Combination, CIIG may privately negotiate transactions to purchase shares prior to the Closing from stockholders who would have otherwise elected to have their shares redeemed in conjunction with a proxy solicitation pursuant to the proxy rules for

 

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  a per-share pro rata portion of the Trust Account without the prior written consent of Arrival. None of the Sponsor or CIIG’s directors, officers or advisors, or their respective affiliates, will make any such purchases when they are in possession of any material non-public information not disclosed to the seller. Such a purchase would include a contractual acknowledgement that such stockholder, although still the record holder of such shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the Sponsor or CIIG’s directors, officers or advisors, or their affiliates, purchase shares in privately negotiated transactions from Public Stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. Any such privately negotiated purchases may be effected at purchase prices that are in excess of the per-share pro rata portion of the Trust Account. The purpose of these purchases would be to increase the amount of cash available to CIIG for use in the Business Combination.

 

Q.

Will CIIG or Holdco issue additional equity securities in connection with the consummation of the Business Combination?

 

A.

Holdco or CIIG may enter into equity financings in connection with the proposed Business Combination with their respective affiliates or any third parties if CIIG determines that the issuance of additional equity is necessary or desirable in connection with the consummation of the Business Combination. The purposes of any such financings may include increasing the likelihood of CIIG meeting the minimum available cash condition to consummation of the Business Combination. Any equity issuances could result in dilution of the relative ownership interest of the non-redeeming Public Stockholders or the former equity holders of Arrival. In connection with the Business Combination, CIIG has obtained commitments from the Subscribers to purchase $400.0 million in shares of CIIG Class A Common Stock, which will be converted into Holdco Ordinary Shares in connection with the Closing (the “PIPE Shares”), at a purchase price of $10.00 per share.

 

Q.

How many votes do I have at the special meeting of stockholders?

 

A.

CIIG’s stockholders are entitled to one vote at the special meeting for each share of CIIG Common Stock held of record as of the record date. As of the close of business on the record date, there were 32,343,750 outstanding shares of CIIG Common Stock.

 

Q.

How will the CIIG Sponsor, directors and officers vote?

 

A.

In connection with CIIG’s IPO, CIIG entered into agreements with CIIG’s Sponsor, officers and directors, pursuant to which each agreed to vote their CIIG Class B Common Stock and any other shares acquired during and after the IPO in favor of the Business Combination Proposal. Currently, the Sponsor holds approximately 18% of the issued and outstanding shares of CIIG Common Stock.

 

Q.

What interests do CIIG’s current officers and directors have in the Business Combination?

 

A.

CIIG’s directors and executive officers may have interests in the Business Combination that are different from, in addition to, or in conflict with, yours. These interests include:

 

   

the beneficial ownership of the Sponsor and certain of CIIG’s directors of an aggregate of 5,821,875 shares of CIIG Class B Common Stock, acquired in September 2019 for an aggregate purchase price of $25,000, which shares would become worthless if CIIG does not complete a business combination within the applicable time period, as the Initial Stockholders have waived any right to redemption with respect to these shares. Such shares have an aggregate market value of approximately $159,170,063 based on the closing price of CIIG Class A Common Stock of $27.34 on Nasdaq on February 16, 2021, the record date for the special meeting of stockholders;

 

   

CIIG’s directors will not receive reimbursement for any out-of-pocket expenses incurred by them on CIIG’s behalf incident to identifying, investigating and consummating a business combination to the extent such expenses exceed the amount not required to be retained in the Trust Account, unless a business combination is consummated. As of December 31, 2020, no out-of-pocket expenses have been incurred by CIIG’s directors incident to identifying, investigating and consummating a business combination;

 

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the potential continuation of certain of CIIG’s directors as directors of Holdco; and

 

   

the continued indemnification of current directors and officers of CIIG and the continuation of directors’ and officers’ liability insurance after the Business Combination.

These interests may influence CIIG’s directors in making their recommendation to vote in favor of the approval of the Business Combination Proposal. Please read the section entitled “The Business Combination—Interests of CIIG’s Directors and Officers in the Business Combination.

 

Q.

What interests do the Subscribers of the PIPE Shares have in the Business Combination?

 

A.

In connection with the Business Combination, CIIG entered into separate subscription agreements with each Subscriber, pursuant to which the Subscribers agreed to purchase, and CIIG agreed to sell to the Subscribers, an aggregate of 40,000,000 shares of CIIG Class A Common Stock, for a fixed purchase price of $10.00 per share, and an aggregate purchase price of $400,000,000. Such shares have an aggregate market value of approximately $1,093,600,000 based on the closing price of CIIG Class A Common Stock of $27.34 on Nasdaq on February 16, 2021, the record date for the special meeting of stockholders.

 

    

Such shares of CIIG Class A Common Stock will automatically be exchanged for the right to receive Holdco Ordinary Shares on a one-for-one basis immediately prior to the Merger Effective Time. These PIPE Shares will not be outstanding on the record date and will not be entitled to vote at the special meeting of stockholders. The issuance of the PIPE Shares pursuant to the Subscription Agreements is contingent upon, among other customary closing conditions, the substantially concurrent consummation of the Business Combination.

CIIG anticipates that the 40,000,000 shares of CIIG Class A Common Stock to be issued pursuant to the Subscription Agreements in the PIPE will (1) constitute more than 20% of the CIIG Class A Common Stock then outstanding, (2) constitute a change of control of the registrant and (3) be sold for a purchase price of $10.00 per share of CIIG Class A Common Stock, which will be less than the lower of (i) the closing price immediately preceding the signing of the binding agreement or (ii) the average closing price of the common stock for the five trading days immediately preceding the signing of the binding agreement. As a result, CIIG is required to obtain stockholder approval of such issuances pursuant to Nasdaq Listing Rules. For more information, see the section entitled “CIIG Stockholder Proposal No. 2—The Nasdaq Proposal.

 

Q.

Did CIIG’s board of directors obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

 

A.

CIIG’s board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. CIIG’s board of directors believes that based upon the financial skills and background of its directors, it was qualified to conclude that the Business Combination was fair from a financial perspective to its stockholders. The board of directors also determined, without seeking a valuation from a financial advisor, that Arrival’s fair market value was at least 80% of CIIG’s net assets (excluding deferred underwriting discounts and commissions). Accordingly, investors will be relying on the judgment of CIIG’s board of directors as described above in valuing the Arrival business and assuming the risk that the board of directors may not have properly valued such business.

 

Q.

What happens if the Business Combination Proposal is not approved?

 

A.

If the Business Combination Proposal is not approved and CIIG does not consummate a business combination by December 17, 2021, or amend the CIIG Amended and Restated Certificate of Incorporation to extend the date by which CIIG must consummate an initial business combination, CIIG will be required to dissolve and liquidate the Trust Account.

 

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Q.

Do I have redemption rights?

 

A.

If you are a holder of Public Shares, you may redeem your Public Shares for cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account, which holds the proceeds of CIIG’s IPO, as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the Trust Account and not previously released to CIIG to pay its franchise and income taxes, upon the consummation of the Business Combination. The per-share amount CIIG will distribute to holders who properly redeem their shares will not be reduced by the deferred underwriting commissions CIIG will pay to the underwriters of its IPO if the Business Combination is consummated. Holders of the outstanding Public Warrants do not have redemption rights with respect to such warrants in connection with the Business Combination. All of the Initial Stockholders have agreed to waive their redemption rights with respect to their CIIG Class B Common Stock in connection with the completion of CIIG’s initial business combination. The CIIG Class B Common Stock will be excluded from the pro rata calculation used to determine the per-share redemption price. For illustrative purposes, based on funds in the trust account of approximately $259,847,182 on November 18, 2020, the estimated per share redemption price would have been approximately $10.04. This is greater than the $10.00 IPO price of the CIIG Units. Additionally, Public Shares properly tendered for redemption will only be redeemed if the Business Combination is consummated; otherwise, holders of such shares will only be entitled to a pro rata portion of the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to CIIG to pay franchise and income taxes (less $100,000 of interest to pay dissolution expenses), in connection with the liquidation of the Trust Account.

 

Q.

Is there a limit on the number of shares I may redeem?

 

A.

A Public Stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption rights with respect to 15% or more of the Public Shares. Accordingly, all shares in excess of 15% of the Public Shares owned by a holder will not be redeemed. On the other hand, a Public Stockholder who holds less than 15% of the Public Shares may redeem all of the Public Shares held by him or her for cash.

 

Q.

Will how I vote affect my ability to exercise redemption rights?

 

A.

No. You may exercise your redemption rights whether you vote your Public Shares for or against the Business Combination Proposal or any other proposal described in this proxy statement/prospectus, or do not vote your shares. As a result, the Business Combination Proposal and the Nasdaq Proposal can be approved by stockholders who will redeem their Public Shares and no longer remain stockholders, leaving stockholders who choose not to redeem their Public Shares holding shares in a company with a less liquid trading market, fewer stockholders, less cash and the potential inability to meet the listing standards of Nasdaq.

It is a condition to closing under the Business Combination Agreement, however, that CIIG has, in the aggregate, cash (held both in and outside of the Trust Account) that is equal to or greater than $400.0 million, without any breach or inaccuracy of the representations or warranties or failure to perform any of the covenants set forth in the Business Combination Agreement. If redemptions by Public Stockholders cause CIIG to be unable to meet this closing condition, then Arrival will not be required to consummate the Business Combination, although it may, in its sole discretion, waive this condition.

 

Q.

How do I exercise my redemption rights?

 

A.

In order to exercise your redemption rights, you must, prior to 4:30 p.m. Eastern time on March 17, 2021 (two business days before the special meeting), (i) submit a written request to Continental Stock Transfer & Trust Company, CIIG’s transfer agent, that CIIG redeem your Public Shares for cash, and (ii) deliver your stock

 

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  to CIIG’s transfer agent physically or electronically through the Depository Trust Company (“DTC”). The address of CIIG’s transfer agent is listed under the question “Who can help answer my questions?” below. CIIG requests that any requests for redemption include the identity as to the beneficial owner making such request. Electronic delivery of your stock generally will be faster than delivery of physical stock certificates.

A physical stock certificate will not be needed if your stock is delivered to CIIG’s transfer agent electronically. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, DTC and CIIG’s transfer agent will need to act to facilitate the request. It is CIIG’s understanding that stockholders should generally allot at least one week to obtain physical certificates from the transfer agent. However, because CIIG does not have any control over this process or over the brokers or DTC, it may take significantly longer than one week to obtain a physical stock certificate. If it takes longer than anticipated to obtain a physical certificate, stockholders who wish to redeem their shares may be unable to obtain physical certificates by the deadline for exercising their redemption rights and thus will be unable to redeem their shares.

Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with CIIG’s consent, until the vote is taken with respect to the Business Combination. If you delivered your shares for redemption to CIIG’s transfer agent and decide within the required timeframe not to exercise your redemption rights, you may request that CIIG’s transfer agent return the shares (physically or electronically). Such requests may be made by contacting CIIG’s transfer agent at the phone number or address listed under the question “Who can help answer my questions?”

 

Q.

What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A.

CIIG stockholders who exercise their redemption rights to receive cash from the Trust Account in exchange for their Public Shares generally will be required to treat the transaction as a sale of such shares and recognize gain or loss upon the redemption in an amount equal to the difference, if any, between the amount of cash received and the tax basis of the shares of CIIG Common Stock redeemed. Such gain or loss should be treated as capital gain or loss if such shares were held as a capital asset on the date of the redemption. A stockholder’s tax basis in his, her or its shares of CIIG Common Stock generally will equal the cost of such shares. A stockholder who purchased CIIG Units will have to allocate the cost between the shares of CIIG Common Stock or CIIG Warrants comprising the CIIG Units based on their relative fair market values at the time of the purchase. Please see the section entitled “Material U.S. Federal Income Tax Considerations.”

 

Q:

If I hold CIIG Warrants, can I exercise redemption rights with respect to my warrants?

 

A:

No. There are no redemption rights with respect to the CIIG Warrants.

 

Q.

If I hold CIIG Warrants, what are the U.S. federal income tax consequences of my CIIG Warrants converting into Holdco Warrants?

 

A.

In connection with the Business Combination, each issued and outstanding CIIG Warrant will cease to represent a right to acquire shares of CIIG Common Stock and will instead represent the right to acquire the same number of Holdco Ordinary Shares, at the same exercise price and on the same terms as in effect immediately prior to the Closing of the Business Combination.

If the Merger qualifies as a “reorganization” under Section 368 of the Code, subject to Section 367(a) of the Code, a U.S. holder of CIIG Warrants generally should not recognize any gain or loss upon the Closing of the Business Combination; the aggregate tax basis of such U.S. holder’s basis in the Holdco Warrants will be the same as the aggregate tax basis of such U.S. holder’s CIIG Warrants immediately before the closing of the Business Combination; and the holding period of such warrants will continue, provided that the CIIG Warrants are held as capital assets on the effective date of the closing of the Business Combination. However, it is unclear whether the requirements of Section 368 of the Code can be satisfied and such qualification is not a condition of the Business Combination.

 

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If the Merger does not qualify as a “reorganization” under Section 368 of the Code, a U.S. holder of CIIG Warrants could be treated as transferring its CIIG Warrants to Holdco in exchange for Holdco Warrants in an exchange governed only by Section 351 of the Code. If so treated, a U.S. holder should be required to recognize gain (but not loss) in an amount equal to the lesser of (i) the amount of gain realized by such holder (generally, the excess of (x) the sum of the fair market values of the Holdco Warrants treated as received by such holder and the Holdco Ordinary Shares received by such holder, if any, over (y) such holder’s aggregate adjusted tax basis in the CIIG Warrants and CIIG common stock, if any, exchanged therefor) and (ii) the fair market value of the Holdco Warrants received by such holder in such exchange.

Akin Gump Strauss Hauer & Feld LLP is unable to opine with respect to the Merger’s qualification as a reorganization under Section 368 of the Code. See Risk Factors, “There may be tax consequences of the Warrant Amendment or the Business Combination that may adversely affect holders of CIIG Warrants.” For an additional discussion of the U.S. federal income tax treatment of CIIG Warrants in connection with the Merger, see the section entitled “Material U.S. Federal Income Tax Considerations—U.S. Holders.”

 

Q:

Do I have appraisal rights if I object to the proposed Business Combination?

 

A:

No. There are no appraisal rights available to holders of shares of CIIG Common Stock in connection with the Business Combination.

 

Q:

What happens to the funds held in the Trust Account upon consummation of the Business Combination?

 

A:

If the Business Combination is consummated, the funds held in the Trust Account will be released to pay (i) CIIG stockholders who properly exercise their redemption rights and (ii) cash consideration pursuant to the Business Combination Agreement. Any additional funds available for release from the Trust Account will be used for general corporate purposes of Holdco following the Business Combination.

 

Q:

What happens if the Business Combination is not consummated?

 

A:

There are certain circumstances under which the Business Combination Agreement may be terminated. See the section entitled “The Business Combination Agreement” for information regarding the parties’ specific termination rights.

If, as a result of the termination of the Business Combination Agreement or otherwise, CIIG is unable to complete a business combination by December 17, 2021, or amend the CIIG Amended and Restated Certificate of Incorporation to extend the date by which CIIG must consummate an initial business combination, CIIG’s Amended and Restated Certificate of Incorporation provides that CIIG will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to us to pay our franchise and income taxes (less $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of CIIG’s remaining stockholders and CIIG’s board of directors, dissolve and liquidate, subject in each case to CIIG’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. See the section entitled “Risk Factors—Risks Related to CIIG and the Business Combination—CIIG may not be able to complete the business combination within the prescribed time frame, in which case CIIG would cease all operations except for the purpose of winding up and CIIG would redeem its public shares and liquidate, in which case CIIG’s public stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and CIIG’s warrants will expire worthless.” and “—CIIG’s stockholders may be held liable for claims by third parties against CIIG to the extent of distributions received by them upon

 

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redemption of their shares.” Holders of CIIG Class B Common Stock have waived any right to any liquidation distribution with respect to those shares.

In the event of liquidation, there will be no distribution with respect to outstanding CIIG Warrants. Accordingly, the CIIG Warrants will expire worthless.

 

Q:

When is the Business Combination expected to be completed?

 

A:

It is currently anticipated that the Business Combination will be consummated promptly following the special meeting of stockholders, provided that all other conditions to the consummation of the Business Combination have been satisfied or waived.

For a description of the conditions to the completion of the Business Combination, see the section entitled “CIIG Stockholder Proposal No. 1—The Business Combination Proposal.”

 

Q:

What do I need to do now?

 

A:

You are urged to carefully read and consider the information contained in this proxy statement/prospectus, including the financial statements and annexes attached hereto, and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

 

Q:

How do I vote?

 

A:

If you were a holder of record of CIIG Common Stock on February 16, 2021, the record date for the special meeting of stockholders, you may vote with respect to the applicable proposals in person at the special meeting of stockholders or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, your broker, bank or other nominee will send you separate instructions describing the procedure for voting your shares. If applicable, simply complete, sign and date your voting instruction card and return it in the postage-paid envelope provided to ensure that your vote is counted. Alternatively, you may vote by telephone or over the internet as instructed by your broker, bank or other nominee. If you wish to attend the special meeting of stockholders and vote in person, you must obtain a proxy from your broker, bank or nominee. Holders of CIIG Common Stock are encouraged to vote in advance of the special meeting of stockholders.

 

    

If you have any questions or need assistance voting your shares, please call our proxy solicitor, D.F. King at (877) 536-1561 or email at Arrival@dfking.com.

 

Q:

What will happen if I abstain from voting or fail to vote at the special meeting?

 

A:

At the special meeting of stockholders, CIIG will count a properly executed proxy marked “ABSTAIN” with respect to a particular proposal as present for purposes of determining whether a quorum is present. For purposes of approval, an abstention or failure to vote will have the same effect as a vote “AGAINST” the Business Combination Proposal and will have no effect on the Nasdaq Proposal or the Stockholder Adjournment Proposal. If you sign and return your proxy card without indicating how you wish to vote, your proxy will be voted in favor of each of the proposals presented at the special meeting.

 

Q:

What will happen if I sign and return my proxy card without indicating how I wish to vote?

 

A:

Signed and dated proxies received by CIIG without an indication of how the stockholder intends to vote on a proposal will be voted in favor of each proposal presented to the stockholders.

 

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Q.

Do I need to attend the special meeting of stockholders to vote my shares?

 

A.

No. You are invited to attend the special meeting to vote on the proposals described in this proxy statement/prospectus. However, you do not need to attend the special meeting of stockholders to vote your shares. Instead, you may submit your proxy by signing, dating and returning the applicable enclosed proxy card(s) in the pre-addressed postage-paid envelope. Your vote is important. CIIG encourages you to vote as soon as possible after carefully reading this proxy statement/prospectus.

 

Q.

If I am not going to attend the special meeting of stockholders virtually, should I return my proxy card instead?

 

A.

Yes. After carefully reading and considering the information contained in (and incorporated by reference into) this proxy statement/prospectus, please submit your proxy, as applicable, by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

 

Q.

If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

 

A.

No. If your broker holds your shares in its name and you do not give the broker voting instructions, under the applicable stock exchange rules, your broker may not vote your shares on any of the proposals.

 

Q.

May I change my vote after I have mailed my signed proxy card?

 

A.

Yes. If you are a shareholder of record, you may change your vote by sending a later-dated, signed proxy card to D.F. King, at 48 Wall Street, 22nd Floor, New York, NY 10005 prior to the vote at the special meeting of stockholders, or attend the special meeting and vote virtually. You also may revoke your proxy by sending a notice of revocation to D.F. King, provided such revocation is received prior to the vote at the special meeting. If your shares are held in street name by a broker or other nominee, you must contact the broker or nominee to change your vote.

 

Q.

What should I do if I receive more than one set of voting materials?

 

A.

You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

 

Q.

What is the quorum requirement for the special meeting of stockholders?

 

A.

A quorum will be present at the special meeting of stockholders if a majority of the CIIG Common Stock outstanding and entitled to vote at the meeting is represented in person or by proxy. In the absence of a quorum, a majority of CIIG’s stockholders, present in person or represented by proxy, and voting thereon will have the power to adjourn the special meeting.

Your shares will be counted towards the quorum only if you submit a valid proxy (or your broker, bank or other nominee submits one on your behalf) or if you vote in person at the special meeting of stockholders. Abstentions will be counted towards the quorum requirement. If there is no quorum, a majority of the shares represented by stockholders present at the special meeting or by proxy may authorize adjournment of the special meeting to another date.

 

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Q.

What happens to CIIG Warrants I hold if I vote my shares of CIIG Class A Common Stock against approval of the Business Combination Proposal and Nasdaq Proposal and validly exercise my redemption rights?

 

A.

Properly exercising your redemption rights as a CIIG stockholder does not result in either a vote “FOR” or “AGAINST” the Business Combination Proposal or any of the other proposals described in this proxy statement/prospectus. If the Business Combination is completed, all of your CIIG Warrants will automatically convert into warrants to purchase Holdco Ordinary Shares as described in this proxy statement/prospectus. If the Business Combination is not completed, you will continue to hold your CIIG Warrants, and if CIIG does not otherwise consummate an initial business combination by December 17, 2021, or amend the CIIG Amended and Restated Certificate of Incorporation to extend the date by which CIIG must consummate an initial business combination, CIIG will be required to dissolve and liquidate, and your warrants will expire worthless.

 

Q.

Who will solicit and pay the cost of soliciting proxies?

 

A.

CIIG will pay the cost of soliciting proxies for the special meeting. CIIG has engaged D.F. King to assist in the solicitation of proxies for the special meeting. CIIG has agreed to pay D.F. King a fee of $12,500. CIIG will reimburse D.F. King for reasonable out-of-pocket expenses and will indemnify D.F. King and its affiliates against certain claims, liabilities, losses, damages and expenses. CIIG also will reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of CIIG Common Stock for their expenses in forwarding soliciting materials to beneficial owners of CIIG Common Stock and in obtaining voting instructions from those owners. CIIG’s directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

Q.

Who can help answer my questions?

 

A.

If you have questions about the stockholder proposals, or if you need additional copies of this proxy statement/prospectus, or the proxy cards you should contact CIIG’s proxy solicitor:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, NY 10005

Telephone: (877) 536 -1561

Banks and brokers: (212) 269-5550

Email: Arrival@dfking.com

You may also contact CIIG at:

CIIG Merger Corp.

40 West 57th Street

29th Floor

New York, New York 10019

(212) 796-4796

Attention: F. Peter Cuneo

To obtain timely delivery, CIIG’s stockholders and warrant holders must request the materials no later than five business days prior to the special meeting.

You may also obtain additional information about CIIG from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”

 

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The accompanying proxy statement/prospectus incorporates important business and financial information about CIIG and Arrival from documents that are not included in or delivered with the accompanying proxy statement/prospectus. This information is available to you without charge upon your request. You can obtain documents incorporated by reference into the accompanying proxy statement/prospectus (other than certain exhibits or schedules to these documents) by requesting them in writing or by telephone from the appropriate company. Requests made to CIIG should be directed to the addresses and telephone numbers listed above. Requests made to Arrival should be directed to the address and telephone number noted below:

Arrival S.à r.l.

1, rue Peternelchen

L-2370 Howald

Grand Duchy of Luxembourg

+352 621 266 815

Attention: Daniel Chin

If you intend to seek redemption of your Public Shares, you will need to send a letter demanding redemption and deliver your stock (either physically or electronically) to CIIG’s transfer agent prior to 4:30 p.m., New York time, on the second business day prior to the special meeting of stockholders. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company

1 State Street, 30th Floor

New York, NY 10004

Attention: Mark Zimkind

Email: Mzimkind@continentalstock.com

 

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the Business Combination and the proposals to be considered at the special meeting, you should read this entire proxy statement/prospectus carefully, including the annexes. See also the section entitled “Where You Can Find More Information.” Certain figures included in this section have been rounded for ease of presentation and, as a result, percentages may not sum to 100%.

Parties to the Business Combination

CIIG Merger Corp.

CIIG is a blank check company formed in Delaware on September 19, 2019, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, without limitation as to business, industry or sector.

CIIG’s units, class A common stock, and warrants trade on Nasdaq under the symbols “CIICU,” “CIIC” and “CIICW,” respectively. At the Closing, the outstanding shares of CIIG Class A Common Stock will be converted into Holdco Ordinary Shares.

The mailing address of CIIG’s principal executive office is 40 West 57th Street, 29th Floor, New York, New York 10019, and its telephone number is (212) 796-4796.

Arrival

Arrival is a limited liability company (société à responsabilité limitée) governed by the laws of the Grand Duchy of Luxembourg with its registered office at 1, rue Peternelchen, L-2370 Howald, Grand Duchy of Luxembourg and registered with the Luxembourg trade and companies register (Registre de Commerce et des Sociétés, Luxembourg) under number B200789.

Arrival was founded with a mission to transform the design, assembly and distribution of commercial electric vehicles (“EVs”) and accelerate the mass adoption of EVs globally. The initial focus for Arrival is the production of commercial electric vehicle vans and buses. Arrival believes this segment of the automotive market is currently underserved by other electric vehicle manufacturers and is a global market with significant scale opportunities.

The mailing address of Arrival’s principal executive office is 1, rue Peternelchen, L-2370 Howald, Grand Duchy of Luxembourg and its telephone number is +352 621 266 815.

For more information about Arrival, see the sections entitled “Information About Arrival” and “Arrivals Management’s Discussion and Analysis of Financial Condition and Results of Operation.”

Holdco

Arrival Group was incorporated under the laws of the Grand Duchy of Luxembourg on October 27, 2020 as a joint stock company (société anonyme) having its registered office at 1, rue Peternelchen L-2370 Howald, Grand Duchy of Luxembourg, registered with the Luxembourg register of commerce and companies (Registre de Commerce et des Sociétés de Luxembourg) under number B 248209. Holdco owns no material assets and does not operate any business. Prior to the consummation of the Business Combination, the directors of Holdco are Gilles Dusemon, Csaba Horváth and Michael Anatolitis.



 

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Holdco expects to apply to list its Holdco Ordinary Shares and Holdco Warrants on Nasdaq under the symbols “ARVL” and “ARVLW”, respectively.

The address of Holdco’s registered office is 1, rue Peternelchen, L-2370 Howald, Grand Duchy of Luxembourg. After the consummation of the Business Combination, its principal executive office will remain at 1, rue Peternelchen, L-2370 Howald, Grand Duchy of Luxembourg.

Upon the effectiveness of the registration statement of which this prospectus forms a part, Holdco will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Even after Holdco no longer qualifies as an emerging growth company, as long as Holdco continues to qualify as a foreign private issuer under the Exchange Act, Holdco will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

 

   

the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

 

   

the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

 

   

the rules under the Exchange Act requiring the filing with the Securities and Exchange Commission, or SEC, of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events.

In addition, Holdco will not be required to file annual reports and financial statements with the SEC as promptly as U.S. domestic companies whose securities are registered under the Exchange Act, and are not required to comply with Regulation FD, which restricts the selective disclosure of material information.

As a foreign private issuer, Holdco will be permitted to follow home country corporate governance practices instead of certain corporate governance practices required by the Nasdaq for U.S. domestic issuers. Also, upon completion of the Business Combination, Holdco will be a “controlled company” within the meaning of the Nasdaq corporate governance standards and eligible to take advantage of exemptions from certain Nasdaq corporate governance standards, although it currently does not intend to do so.

Merger Sub

ARSNL Merger Sub Inc. is a Delaware corporation and a direct wholly owned subsidiary of Holdco. Merger Sub was formed solely in contemplation of the Business Combination, has not commenced any operations, has only nominal assets and has no liabilities or contingent liabilities, nor any outstanding commitments other than in connection with the Business Combination.

The mailing address of Merger Sub’s principal executive office is 1, rue Peternelchen, L-2370 Howald, Grand Duchy of Luxembourg, c/o Arrival.

The Business Combination

The Business Combination Agreement

On November 18, 2020, CIIG, Arrival, Holdco and Merger Sub entered into the Business Combination Agreement pursuant to which, following the effectiveness of the transactions contemplated by the Exchanges, the parties will consummate the Business Combination and Arrival and CIIG will become direct wholly-owned



 

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subsidiaries of Holdco. Pursuant to the Business Combination Agreement, each of the following transactions occurred, or will occur, in the following order:

 

   

pursuant to the Arrival Preferred Shareholder Exchange Agreements, the First Exchange was consummated on January 4, 2021;

 

   

(a) pursuant to the Arrival Ordinary Shareholder Exchange Agreements, on the day immediately preceding the Merger, Holdco and the Arrival Ordinary Shareholders will consummate the transactions contemplated by the Second Exchange, (b) as of the Second Exchange Effective Time, the valuation of the Arrival Shares contributed to Holdco by the Arrival Shareholders against new Holdco Ordinary Shares pursuant to the Exchanges is equal to the Aggregate Exchange Consideration and

  (c) immediately following the Second Exchange Effective Time, Arrival will be a direct wholly-owned subsidiary of Holdco;

 

   

on the first business day following the Second Exchange Effective Time and immediately prior to the Merger, each share of CIIG Class B Common Stock outstanding immediately prior to the Merger will be converted into a number of shares of CIIG Class A Common Stock equal to the Class B Conversion Ratio; and

 

   

immediately following the CIIG Class B Conversion, Merger Sub will merge with and into CIIG, with CIIG surviving the Merger as a direct wholly owned subsidiary of Holdco. In connection therewith, CIIG’s corporate name will change to “Arrival Vault USA, Inc.”

The Merger is to become effective by the filing of a certificate of merger (the “Certificate of Merger”) with the Secretary of State of the State of Delaware immediately following the consummation of the Second Exchange. The Certificate of Merger will specify that the Merger will become effective at 12:01 a.m. New York time on the business day immediately following the day of the filing of the Certificate of Merger (the “Merger Effective Time”). The parties will hold the Closing on the date of the Merger Effective Time, following the satisfaction or waiver (to the extent such waiver is permitted by applicable law) of the conditions set forth in the Business Combination Agreement (other than those conditions that by their nature are to be satisfied at Closing, but subject to the satisfaction or waiver of those conditions at such time).

At the Merger Effective Time, immediately following the CIIG Class B Conversion, by virtue of the Merger and the Holdco Requisite Approvals (as defined in the Business Combination Agreement), subject to the Third Holdco Auditor Report (as defined in the Business Combination Agreement), and without any further action on the part of CIIG, Merger Sub, Holdco or Arrival or the holders of any of the following securities:

 

   

each share of CIIG Class A Common Stock issued and outstanding immediately prior to the Merger Effective Time (other than CIIG Class A Common Stock held in treasury by CIIG (“Excluded Shares”)) shall automatically be exchanged with Holdco for one Holdco Ordinary Share (an aggregate of 72,343,750 Holdco Ordinary Shares) (the “Holdco Ordinary Shares Merger Issuance”), following a share capital increase realized by Holdco by virtue of the Merger, to be subscribed by the contributing holders of CIIG Class A Common Stock;

 

   

upon the Holdco Ordinary Shares Merger Issuance, all shares of CIIG Class A Common Stock (other than the Excluded Shares) shall be cancelled and shall cease to be outstanding;

 

   

each Excluded Share shall, by virtue of the Merger and without any further action on the part of CIIG, Merger Sub, Holdco or Arrival or the holder thereof, cease to be outstanding, shall be cancelled without payment of any consideration therefor and shall cease to exist; and

 

   

each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Merger Effective Time shall be converted into and exchanged for one share of the Surviving Corporation.



 

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For more information, see the section entitled “The Business Combination Agreement—The Structure of the Business Combination.

Consideration to be Received in the Business Combination

Each Arrival Shareholder will receive its pro rata portion, based on the exchange ratio, of the Aggregate Exchange Consideration in the form of Holdco Ordinary Shares valued at $10.00 per Holdco Ordinary Share as of the Second Exchange Effective Time. At the Merger Effective Time, each share of CIIG Class A Common Stock issued and outstanding immediately prior to the Merger Effective Time will automatically be converted into and exchanged for the right to receive one Holdco Ordinary Share, which will be valued at $10.00 per share.

For more information, see the section entitled “The Business Combination Agreement—Consideration to be Received in the Business Combination.

Conditions to the Closing

General Conditions

Under the Business Combination Agreement, the obligations of the parties to consummate the Business Combination are conditioned on the satisfaction or waiver (where permissible) of the following conditions at or prior to the Second Exchange Effective Time and at or prior to the Closing: (a) the Business Combination Proposal and Nasdaq Proposal will have been approved and adopted by the requisite affirmative vote of CIIG’s stockholders; (b) the Holdco Requisite Approval shall have been obtained and delivered to CIIG; (c) a Luxembourg statutory independent auditor (réviseur d’entreprises agréé) of Holdco shall have issued appropriate reports regarding the contributions relating to the Holdco Preferred Shares and the Holdco Ordinary Shares and to the CIIG Class A Common Stock that will be exchanged for Holdco Ordinary Shares as set forth in the Business Combination Agreement; (d) no governmental authority shall have enacted, issued, promulgated, enforced or entered any law, rule, regulation, judgment, decree, executive order or award which is then in effect and has the effect of making the Business Combination illegal or otherwise prohibiting consummation of the Business Combination; (e) all waiting periods applicable to the consummation of the Business Combination under the HSR Act (or any extension thereof) shall have expired or been terminated and all required filings shall have been made and all required approvals obtained (or waiting periods expired or terminated) under applicable antitrust law; (f) the registration statement of which this proxy statement/prospectus forms a part shall have been declared effective under the Securities Act and no stop order or proceedings seeking a stop order shall have been initiated by the SEC and not withdrawn; (g) the Holdco Ordinary Shares shall have been approved for listing on Nasdaq, subject to official notice of issuance; and (h) all parties to each of the Registration Rights and Lock-Up Agreement and the Nomination Agreement shall have delivered, or cause to be delivered, copies of such agreement, duly executed by all such parties.

CIIG Conditions to Closing

The obligations of CIIG to consummate the Business Combination are subject to the satisfaction or waiver (where permissible) of the following additional conditions at or prior to the Second Exchange Effective Time (except for the condition described in clause (g) below) and at or prior to the Closing:

 

  a)

certain representations and warranties of Arrival shall each be true and correct in all respects as of the Second Exchange Effective Time and as of the Closing and all other representations and warranties of Arrival shall be true and correct as of the Second Exchange Effective Time and as of the Closing, except where the failure of such representations and warranties to be true and correct does not result in a Company Material Adverse Effect (as defined in the Business Combination Agreement);



 

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  b)

certain representations and warranties of Holdco and Merger Sub shall each be true and correct in all respects as of the Second Exchange Effective Time and as of the Closing and all other representations and warranties of Holdco and Merger Sub shall be true and correct as of the Second Exchange Effective Time and as of the Closing, except where the failure of such representations and warranties to be true and correct would be materially adverse to Holdco or Merger Sub;

 

  c)

Arrival, Holdco and Merger Sub shall have performed or complied in all material respects with all agreements and covenants required by the Business Combination Agreement, except that Holdco shall have performed or complied in all respects with certain agreements and covenants required by Section 7.01(c) of the Business Combination Agreement;

 

  d)

Arrival, Holdco and Merger Sub shall have delivered to CIIG a certificate, signed by an officer of the Arrival, certifying as to the satisfaction of the conditions specified in Section 9.02(a), Section 9.02(b) and Section 9.02(d) of the Business Combination Agreement;

 

  e)

no Company Material Adverse Effect (as defined in the Business Combination Agreement) shall have occurred;

 

  f)

all of the Arrival Preferred Shareholders shall have contributed their Arrival Preferred Shares in exchange for Holdco Ordinary Shares pursuant to the First Exchange, each such Arrival Preferred Shareholder shall have continued to hold such Holdco Ordinary Shares, and no Arrival Preferred Shareholder shall have breached or defaulted on certain obligations under its respective Arrival Preferred Shareholder’s Exchange Agreement; and

 

  g)

Arrival, the Arrival Ordinary Shareholders and Holdco shall have consummated the Second Exchange.

Arrival, Holdco and Merger Sub Conditions to Closing

The obligations of Arrival, Holdco and Merger Sub to consummate the transactions are subject to the satisfaction or waiver (where permissible) of the following additional conditions at or prior to the Exchange Effective Time and at or prior to the Closing:

 

  a)

certain representations and warranties of CIIG shall each be true and correct in all respects as of the Second Exchange Effective Time and as of the Closing and all other representations and warranties of CIIG shall be true and correct as of the Second Exchange Effective Time and as of the Closing, except where the failure of such representations and warranties to be true and correct does not result in a CIIG Material Adverse Effect (as defined in the Business Combination Agreement);

 

  b)

CIIG shall have performed or complied in all material respects with all agreements and covenants required by the Business Combination Agreement;

 

  c)

CIIG shall have delivered to Arrival a certificate, signed by an officer of CIIG, certifying as to the satisfaction of the conditions specified in Section 9.03(a), Section 9.03(b) and Section 9.03(d) of the Business Combination Agreement;

 

  d)

no CIIG Material Adverse Effect shall have occurred;

 

  e)

CIIG shall have delivered to Arrival a properly executed certification that the shares of CIIG Common Stock are not “United States real property interests” in accordance with the Treasury Regulations under Sections 897 and 1445 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), together with a notice to the U.S. Internal Revenue Service (the “IRS”) (which shall be filed by CIIG with the IRS following the Closing) in accordance with the provisions of Section 1.897-2(h)(2) of the Treasury Regulations;

 

  f)

after giving effect to the exercise of the redemption rights and payments related thereto, CIIG shall have at least an aggregate of four hundred million dollars ($400,000,000) of cash held either in or outside the Trust Account; and



 

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  g)

all officers and directors of CIIG shall have executed written resignations effective as of the Merger Effective Time.

For more information, see the section entitled “The Business Combination Agreement—Conditions to Closing the Business Combination.

Termination Rights

The Business Combination Agreement may be terminated and the Business Combination may be abandoned at any time prior to the Merger Effective Time, notwithstanding any requisite approval and adoption of the Business Combination Agreement and the Business Combination by the stockholders of Arrival or CIIG, as follows:

 

  a)

by mutual written consent of CIIG and Arrival;

 

  b)

by either CIIG or Arrival if the Merger Effective Time shall not have occurred prior to March 31, 2021, provided that the terminating party is not, either directly or indirectly through its affiliates, in breach or violation of any representation, warranty, covenant, agreement or obligation under the Business Combination Agreement and such breach or violation is the principal cause of the failure of a condition set forth in the Business Combination Agreement on or prior to March 31, 2021;

 

  c)

by either CIIG or Arrival if any governmental authority will have enacted, issued, promulgated, enforced or entered any injunction, order, decree or ruling (whether temporary, preliminary or permanent) which has become final and non-appealable and has the effect of making consummation of the Business Combination illegal or otherwise preventing or prohibiting consummation of the Business Combination;

 

  d)

by either CIIG or Arrival if any of the proposals set forth in this proxy statement/prospectus will fail to receive the requisite vote for approval at CIIG’s special meeting of stockholders;

 

  e)

by CIIG upon any breach of any representation, warranty, covenant or agreement set forth in the Business Combination Agreement on the part of the Arrival, Holdco or Merger Sub that remains uncured for more than 30 days after written notice of such breach is provided by CIIG to Arrival, or if any representation or warranty of Arrival, Holdco or Merger Sub shall have become untrue, in either case such that the conditions set forth in Section 9.02(a) and Section 9.02(b) of the Business Combination Agreement would not be satisfied;

 

  f)

by Arrival upon any breach of any representation, warranty, covenant or agreement set forth in the Business Combination Agreement on the part of CIIG that remains uncured for more than 30 days after written notice of such breach is provided by Arrival to CIIG, or if any representation or warranty of CIIG shall have become untrue, in either case such that the conditions set forth in Section 9.03(a) and Section 9.03(b) of the Business Combination Agreement would not be satisfied; and

 

  g)

by CIIG upon any breach or default by any Arrival Shareholder of any of the transfer or voting provisions of any Exchange Agreement, or upon termination by an Arrival Shareholder of such Arrival Shareholder’s Exchange Agreement prior to the Merger Effective Time.

In the event that the Business Combination Agreement is validly terminated, all transaction expenses incurred in connection with the Business Combination Agreement, the Ancillary Agreements (as defined in the Business Combination Agreement), and the Business Combination will be paid by the party incurring such transaction expenses, except that CIIG shall pay all fees and expenses incurred in connection with any filing under the HSR Act or other applicable antitrust laws. If the Business Combination is consummated, subject to Section 3.01(a) of the Business Combination Agreement, Holdco will bear the reasonable and documented transaction expenses of all of the parties.



 

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For more information, see the section entitled “The Business Combination Agreement—Termination of the Business Combination Agreement.

Other Agreements Related to the Business Combination Agreement

Arrival Preferred Shareholder Contribution and Exchange Agreements

Concurrently with the execution of the Business Combination Agreement, each Arrival Preferred Shareholder entered into an Arrival Preferred Shareholder Exchange Agreement with Arrival and Holdco pursuant to which, among other things, each Arrival Preferred Shareholder consented to the Business Combination and, consequently, agreed to (i) contribute its Arrival Preferred Shares to Holdco in exchange for Holdco Ordinary Shares pursuant to the First Exchange, (ii) not transfer any of its Arrival Preferred Shares before the earlier to occur of the First Exchange and the termination of the Business Combination Agreement pursuant to its terms (subject to limited exceptions applying to certain Arrival Preferred Shareholders) and (iii) not transfer, subject to certain limited exceptions, any of the Holdco Ordinary Shares it receives pursuant to the First Exchange before the earlier to occur of the Second Exchange and the termination of the Business Combination Agreement pursuant to its terms. The Arrival Preferred Shareholders who entered into Arrival Preferred Shareholder Exchange Agreements collectively represent 100% of the issued and outstanding Arrival Preferred Shares.

The Arrival Preferred Shareholder Exchange Agreements are subject to customary conditions, covenants, representations and warranties.

For more information about the Arrival Preferred Shareholder Exchange Agreements, see the section entitled “Certain Agreements Related to the Business Combination—Arrival Preferred Shareholder Contribution and Exchange Agreements.

Arrival Ordinary Shareholder Contribution and Exchange Agreements

Concurrently with the execution of the Business Combination Agreement, each Arrival Ordinary Shareholder entered into an Arrival Ordinary Shareholder Exchange Agreement with Arrival and Holdco pursuant to which, among other things, each Arrival Ordinary Shareholder consented to the Business Combination and, consequently, agreed to (i) contribute its Arrival Ordinary Shares to Holdco in exchange for Holdco Ordinary Shares pursuant to the Second Exchange and (ii) not transfer any of its Arrival Ordinary Shares before the earlier to occur of the Second Exchange and the termination of the Business Combination Agreement pursuant to its terms. The Arrival Ordinary Shareholders who entered into Arrival Ordinary Shareholder Exchange Agreements collectively represent 100% of the issued and outstanding Arrival Ordinary Shares.

The Arrival Ordinary Shareholder Exchange Agreements are subject to customary conditions, covenants, representations and warranties.

For more information about the Arrival Ordinary Shareholder Contribution and Exchange Agreements, see the section entitled “Certain Agreements Related to the Business Combination—Arrival Ordinary Shareholder Exchange Agreements.

Subscription Agreements

In connection with the execution of the Business Combination Agreement, CIIG entered into separate subscription agreements (collectively, the “Subscription Agreements”) with a number of institutional investors (collectively, the “Subscribers”), pursuant to which the Subscribers agreed to purchase, and CIIG agreed to sell to the Subscribers, an aggregate of 40,000,000 shares of CIIG Class A Common Stock, for a purchase price of $10.00



 

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per share and an aggregate purchase price of $400,000,000, which shares of CIIG Class A Common Stock will automatically be exchanged with Holdco for the right to receive Holdco Ordinary Shares (the “PIPE Shares”) immediately prior to the Merger Effective Time. Such shares have an aggregate market value of approximately $1,093,600,000 based on the closing price of CIIG Class A Common Stock of $27.34 on Nasdaq on February 16, 2021, the record date for the special meeting of stockholders.

The issuance of the PIPE Shares pursuant to the Subscription Agreements is contingent upon, among other customary closing conditions, the substantially concurrent consummation of the Business Combination. The purpose of the PIPE is to fund growth of the Combined Company.

Pursuant to the Subscription Agreements, Holdco agreed that, within 30 calendar days after the Closing Date, it will file with the SEC (at Holdco’s sole cost and expense) a registration statement registering the resale of the PIPE Shares, and Holdco will use its commercially reasonable efforts to have the registration statement declared effective as soon as practicable after the filing thereof, but no later than the earlier of (i) the 90th calendar day (or 120th calendar day if the SEC notifies Holdco that it will “review” the registration statement) following the closing of the sale of the PIPE Shares and (ii) the 10th business day after the date Holdco is notified (orally or in writing, whichever is earlier) by the SEC that the Registration Statement will not be “reviewed” or will not be subject to further review.

For more information about the Subscription Agreements, see the section entitled “Certain Agreements Related to the Business Combination—Subscription Agreements.

Transaction Support Agreement

On November 18, 2020, concurrently with the execution of the Business Combination Agreement, CIIG, the Sponsor and certain investors in CIIG (together with the Sponsor, the “CIIG Holders”), holding shares of CIIG Class B Common Stock representing approximately 18% of the issued and outstanding shares of CIIG Common Stock, executed a transaction support agreement with Arrival and Holdco (the “Transaction Support Agreement”), pursuant to which, among other things, such CIIG Holders:

 

   

agreed to vote their shares of CIIG Common Stock in favor of the Business Combination Agreement, the Business Combination, and any other matter reasonably necessary to consummate the transactions contemplated by the Business Combination Agreement;

 

   

agreed not to transfer or pledge any of their shares (or enter into any arrangement with respect thereto) after the execution of the Business Combination Agreement and prior to the Closing Date, subject to certain customary conditions and exceptions; and

 

   

waived (i) the provisions of the CIIG Amended and Restated Certificate of Incorporation relating to the anti-dilution adjustment applicable in connection with the additional issuance of equity securities in connection with the Business Combination, (ii) their rights to redeem their CIIG Class B Common Stock in connection with the Business Combination and (iii) any rights to convert working capital loans into warrants exercisable for securities of CIIG, Holdco or any of their affiliates or their successors or assigns.

For more information about the Transaction Support Agreement, see the section entitled “Certain Agreements Related to the Business Combination—Transaction Support Agreement.

Registration Rights and Lock-Up Agreement

In connection with the Closing, Holdco, certain persons and entities holding CIIG’s Class B Shares (the “Original Holders”) and all shareholders of Arrival, other than the Arrival employees holding Arrival Ordinary



 

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Shares granted under the Arrival Restricted Share Plan 2020 (the “New Holders”), will enter into a Registration Rights and Lock-Up Agreement which provides customary demand and piggyback registration rights. Pursuant to the Registration Rights and Lock-Up Agreement, Holdco agreed that, within 30 calendar days after the Closing Date, it will file with the SEC (at Holdco’s sole cost and expense) a registration statement registering the resale of certain Holdco Ordinary Shares held by the Original Holders and the New Holders, and Holdco will use its commercially reasonable efforts to have the registration statement declared effective as soon as practicable after the filing thereof, but no later than 90th calendar day (or 120th calendar day if the SEC notifies Holdco that it will “review” the registration statement) following the Closing.

The Holdco Ordinary Shares held by the Original Holders which were previously shares of CIIG Class B Common Stock will be locked-up for one year following the Closing, subject to earlier release on (i) the last consecutive trading day where the sale price of the Holdco Ordinary Shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Closing, or (ii) such date on which Holdco completes a liquidation, merger, stock exchange or other similar transaction that results in all of Holdco’s stockholders having the right to exchange their Holdco Ordinary Shares for cash, securities or other property.

The securities held by the New Holders will be locked-up for 180 days after the Closing, subject to earlier release on (i) the last consecutive trading day where the sale price of the Holdco Ordinary Shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Closing or (ii) such date on which Holdco completes a liquidation, merger, stock exchange or other similar transaction that results in all of Holdco’s stockholders having the right to exchange their shares of Holdco Ordinary Shares for cash, securities or other property. Except as provided in (ii) in the immediately preceding sentence, until December 31, 2022, Kinetik S.à r.l. has agreed to maintain beneficial ownership of at least 50% of the outstanding voting securities of Holdco.

For more information about the Registration Rights and Lock-Up Agreement, see the section entitled “Certain Agreements Related to the Business Combination—Registration Rights and Lock-Up Agreement.

Assignment, Assumption and Amendment Agreement

In connection with the Closing, Holdco will enter into an Assignment, Assumption and Amendment Agreement with CIIG and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (the “Warrant Agent”) (the “Warrant Amendment”) to assume CIIG’s obligations under the existing Warrant Agreement, dated December 12, 2019 with respect to CIIG’s public and private warrants.

For more information about the Assignment, Assumption and Amendment Agreement, see the section entitled “Certain Agreements Related to the Business Combination—Assignment, Assumption and Amendment Agreement.

Nomination Agreement

In connection with the Closing, Holdco and Kinetik S.à r.l., the majority Arrival Shareholder, shall enter into a Nomination Agreement pursuant to which, in connection with any general meeting at which directors of Holdco are to be elected, or any adjournment or postponement thereof, Kinetik S.à r.l. shall have the right to propose for appointment a number of directors that equals a majority of the board (each such Director proposed for appointment by Kinetik S.à r.l., a “Shareholder Director”). At least one-half of the Shareholder Directors must qualify as independent directors under applicable stock exchange rules, subject to any independence requirements established by the listing rules of the stock exchange on which the Holdco Ordinary Shares are listed that would require a greater number of Shareholder Directors to qualify as independent directors, provided that Kinetik S.à r.l. will not be required to nominate any additional independent directors unless and until all of



 

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the directors, other than the Shareholder Directors, qualify as independent directors. In addition, the Audit Committee, Compensation Committee and Nominating Committee of the Board shall include at least one Shareholder Director so long as he or she is independent. The Nomination Agreement will terminate when Kinetik S.à r.l. and its permitted assigns beneficially own less than 30% of the outstanding shares of Holdco.

For more information about the Nomination Agreement, see the section entitled “Certain Agreements Related to the Business Combination—Nomination Agreement.

Interests of Certain Persons in the Business Combination

In considering the recommendation of CIIG’s board of directors to vote in favor of the Business Combination, CIIG’s stockholders should be aware that, aside from their interests as stockholders, the Sponsor and CIIG’s directors and officers have interests in the Business Combination that are different from, or in addition to, those of other stockholders and warrantholders generally. CIIG’s directors were aware of and considered these interests, among other matters, in evaluating the Business Combination, and in recommending to stockholders that they approve the Business Combination. Stockholders should take these interests into account in deciding whether to approve the Business Combination. These interests include, among other things:

 

   

the beneficial ownership of the Sponsor and certain of CIIG’s directors of an aggregate of 5,821,875 CIIG Class B Common Stock, acquired in September 2019 for an aggregate purchase price of $25,000, which shares would become worthless if CIIG does not complete a business combination within the applicable time period, as the Initial Stockholders have waived any right to redemption with respect to these shares. Such shares have an aggregate market value of approximately $159,170,063 based on the closing price of CIIG Class A Common Stock of $27.34 on Nasdaq on February 16, 2021, the record date for the special meeting of stockholders;

 

   

CIIG’s directors will not receive reimbursement for any out-of-pocket expenses incurred by them on CIIG’s behalf incident to identifying, investigating and consummating a business combination to the extent such expenses exceed the amount not required to be retained in the Trust Account, unless a business combination is consummated. As of December 31, 2020, no out-of-pocket expenses have been incurred by CIIG’s directors incident to identifying, investigating and consummating a business combination;

 

   

the potential continuation of certain of CIIG’s directors as directors of Holdco; and

 

   

the continued indemnification of current directors and officers of CIIG and the continuation of directors’ and officers’ liability insurance after the Business Combination.

These interests may influence CIIG’s directors in making their recommendation to vote in favor of the approval of the Business Combination Proposal and the other proposals described in this proxy statement/prospectus. You should also read the section entitled “The Business Combination—Interests of CIIG’s Directors and Officers in the Business Combination.

Reasons for the Approval of the Business Combination

After careful consideration, CIIG’s board of directors recommends that CIIG’s stockholders vote “FOR” each proposal being submitted to a vote of the CIIG stockholders at the special meeting. For a description of CIIG’s reasons for the approval of the Business Combination and the recommendation of CIIG’s board of directors, see the section entitled “The Business Combination—CIIG’s Board of Directors’ Reasons for the Approval of the Business Combination”.



 

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Redemption Rights

Pursuant to CIIG’s Amended and Restated Certificate of Incorporation, any holders of Public Shares may demand that such shares be redeemed in exchange for a pro rata share of the aggregate amount on deposit in the Trust Account, less franchise and income taxes payable, calculated as of two business days prior to the consummation of the Business Combination. If demand is properly made and the Business Combination is consummated, these shares, immediately prior to the Business Combination, will cease to be outstanding and will represent only the right to receive a pro rata share of the aggregate amount on deposit in the Trust Account which holds the proceeds of CIIG’s IPO as of two business days prior to the consummation of the Business Combination, less franchise and income taxes payable, upon the consummation of the Business Combination. For illustrative purposes, based on funds in the trust account of approximately $259,847,182 on November 18, 2020, the estimated per share redemption price would have been approximately $10.04.

If you exercise your redemption rights, your shares of CIIG Class A Common Stock will cease to be outstanding immediately prior to the Business Combination and will only represent the right to receive a pro rata share of the aggregate amount on deposit in the Trust Account. You will no longer own those shares. You will be entitled to receive cash for these shares only if you properly demand redemption. See the section entitled “The Special Meeting of CIIG Stockholders—Redemption Rights”.

Impact of the Business Combination on Holdco’s Public Float

It is anticipated that, upon completion of the Business Combination, (i) CIIG’s existing stockholders, including the Sponsor, will own approximately 5.3% of the issued and outstanding Holdco Ordinary Shares, including 6,468,750 shares held by the Initial Stockholders that will be subject to certain lock-up arrangements pursuant to the Registration Rights and Lock-Up Agreement, (ii) Arrival’s existing shareholders will own approximately 88.1% of the issued and outstanding Holdco Ordinary Shares and (iii) the Subscribers in the PIPE will own approximately 6.6% of the issued and outstanding Holdco Ordinary Shares. These relative percentages assume (i) that none of CIIG’s existing Public Stockholders exercise their redemption rights, (ii) that the Initial Stockholders exchange all outstanding CIIG Class B Common Stock for shares of Holdco Ordinary Shares upon completion of the Business Combination, and (iii) no additional equity securities of CIIG are issued at or prior to Closing, other than the 40,000,000 shares of CIIG Class A Common Stock currently subscribed for and to be issued in connection with the PIPE. If the actual facts are different than these assumptions, the percentage ownership retained by CIIG’s existing stockholders will be different.

The following table illustrates the ownership levels in Holdco (excluding the impact of the shares underlying the Holdco Warrants) immediately after the Closing based on the assumptions described above:

 

     No Redemptions of Public Shares  
         Number              Percentage      

Initial Stockholders

     6,468,750        1.07

CIIG existing Public Stockholders

     25,875,000        4.27

Arrival existing shareholders

     533,835,000        88.07

PIPE Subscribers

     40,000,000        6.60
  

 

 

    

Total

     606,178,750     

For more information, see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”



 

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Organizational Structure

Prior to the Business Combination

The following diagram shows the current ownership structure of CIIG Merger Corp. (excluding the impact of the shares underlying the CIIG Warrants).

 

LOGO

 

(1)

For more information about the ownership interests of our Initial Stockholders, including the Sponsor, prior to the Business Combination, please see the section entitled—“Security Ownership Of Certain Beneficial Owners and Management



 

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The following diagram shows the current ownership structure of Arrival S.à r.l.

 

LOGO

 

(1)

For more information about the ownership interests of Arrival S.à r.l., prior to the Business Combination, please see the section entitled– “Security Ownership of Certain Beneficial Owners and Management

(2)

The diagram above only shows select subsidiaries of Arrival S.à r.l.



 

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Following the Business Combination

The following diagram shows the pro forma ownership percentages (excluding the impact of the shares underlying the Holdco Warrants) and structure of Holdco immediately following the consummation of the Business Combination.

 

LOGO

 

(1)

The diagram above only shows select subsidiaries of Arrival S.à r.l.

Upon completion of the Business Combination, Kinetik S.à r.l. will own 76.43% of the outstanding Holdco Ordinary Shares. As long as Kinetik S.à r.l. or its affiliates beneficially own at least 30% in the aggregate of the outstanding shares of Holdco, Kinetik S.à r.l. has the right to propose for appointment a majority of the board of directors, at least one-half of whom must be independent under Nasdaq rules, and the right to appoint a director to each of the audit, compensation and nominating committees of the Holdco Board.

Board of Directors of Holdco Following the Business Combination

CIIG and Arrival anticipate that the current executive officers of Arrival will become the executive officers of Holdco and certain directors of CIIG and Arrival will become the directors of Holdco. Following the Business Combination, Holdco’s board of directors will expand to seven members and will consist of Peter Cuneo, Alain Kinsch, Kristen O’Hara, Jae Oh, Avinash Rugoobur and two other directors who are expected to be identified and appointed prior to the Closing. We believe a majority of our board of directors will meet the independence standards under the applicable Nasdaq rules. Please see the section entitled “Management of Holdco After the Business Combination”.

Material Tax Consequences

For a detailed discussion of certain U.S. federal income tax consequences and Luxembourg tax consequences of the Business Combination, see the sections titled “Material U.S. Federal Income Tax Considerations” and “Material Luxembourg Income Tax Considerations” in this proxy statement/prospectus.



 

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Accounting Treatment

The Business Combination will be accounted for as a “reverse merger” in accordance with IFRS as issued by the IASB. Under this method of accounting, CIIG will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the assumptions that Arrival’s shareholders will hold a majority of the voting power of the Combined Company, Arrival’s operations will substantially comprise the ongoing operations of the Combined Company, Arrival’s designees are expected to comprise a majority of the governing body of the Combined Company, and Arrival’s senior management will comprise the senior management of the Combined Company. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Arrival issuing shares for the net assets of CIIG, accompanied by a recapitalization. Accordingly, the transaction is accounted for within the scope of IFRS 2 (“Share-based payment”). The net assets of CIIG will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be deemed to be those of Arrival.

Other Stockholder Proposals

In addition to the Business Combination Proposal, CIIG stockholders will be asked to vote on the Nasdaq Proposal and the Stockholder Adjournment Proposal. For more information about these proposals, see the sections entitled “CIIG Stockholder Proposal No. 2—The Nasdaq Proposal”, and “CIIG Stockholder Proposal No. 3—The Stockholder Adjournment Proposal”.

Appraisal or Dissenters’ Rights

No appraisal or dissenters’ rights are available to holders of shares of CIIG Common Stock or CIIG Warrants in connection with the Business Combination.

Date, Time and Place of Special Meeting

The special meeting of stockholders of CIIG will be held at 10:00 a.m., Eastern time, on March 19, 2021, at www.virtualshareholdermeeting.com/CIIC2021SM, or such other date, time and place to which such meetings may be adjourned or postponed, for the purpose of considering and voting upon the proposals. The special meeting will be completely virtual.

Record Date and Voting

You will be entitled to vote or direct votes to be cast at the special meeting of stockholders if you owned shares of CIIG Common Stock at the close of business on February 16, 2021, which is the record date for the special meeting of stockholders. You are entitled to one vote for each share of CIIG Common Stock that you owned as of the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. On the record date, there were 32,343,750 shares of CIIG Common Stock outstanding, of which 25,875,000 are shares of CIIG Class A Common Stock and 6,468,750 are CIIG Class B Common Stock held by CIIG’s Initial Stockholders and 12,937,500 outstanding Public Warrants.

CIIG’s Sponsor, officers and directors have agreed to vote all of their CIIG Class B Common Stock and any Public Shares acquired by them in favor of the Business Combination Proposal and the other proposals described in this proxy statement/prospectus. CIIG’s issued and outstanding warrants do not have voting rights at the special meeting of stockholders.

Proxy Solicitation

Proxies may be solicited by mail. CIIG has engaged D.F. King to assist in the solicitation of proxies. If a stockholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the special meeting. A stockholder may also change its vote by submitting a later-dated proxy as described in the section entitled “The Special Meeting of CIIG Stockholders—Revocability of Proxies.”



 

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Quorum and Required Vote for Proposals for the Special Meeting

A quorum of CIIG’s stockholders is necessary to hold a valid meeting. A quorum will be present at the special meeting of stockholders if a majority of the CIIG Common Stock outstanding and entitled to vote at the meeting is represented in person or by proxy.

The approval of the Business Combination Proposal requires the affirmative vote of the holders of at least a majority of all then outstanding shares of CIIG Common Stock entitled to vote thereon at the special meeting of stockholders. Each of the Nasdaq Proposal and the Stockholder Adjournment Proposal, if presented, require the affirmative vote of the holders of a majority of the shares of CIIG Common Stock that are voted thereon at the special meeting of stockholders. Accordingly, a CIIG stockholder’s failure to vote by proxy or to vote in person at the special meeting of stockholders, or an abstention from voting, will have the same effect as a vote “AGAINST” the Business Combination Proposal and will have no effect on the outcome of any vote on the Nasdaq Proposal or the Stockholder Adjournment Proposal.

Recommendation to CIIG Stockholders

CIIG’s board of directors believes that each of the Business Combination Proposal, the Nasdaq Proposal, and the Stockholder Adjournment Proposal, is in the best interests of CIIG and its stockholders and recommends that its stockholders vote “FOR” each of the proposals to be presented at the special meeting.

Risk Factors

In evaluating the proposals set forth in this proxy statement/prospectus, you should carefully read this proxy statement/prospectus, including the annexes, and especially consider the factors discussed in the section entitled “Risk Factors.” Some of the risks related to CIIG and Arrival are summarized below:

CIIG

 

   

CIIG may not be able to complete its initial business combination prior to December 17, 2021, in which case CIIG would cease all operations except for the purpose of winding up and CIIG would redeem its public shares and liquidate, in which case CIIG’s public stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and its warrants will expire worthless.

 

   

The ability of the Public Stockholders to exercise redemption rights with respect to a large number of shares of CIIG Class A Common Stock could increase the probability that the Business Combination will be unsuccessful and that CIIG’s stockholders will have to wait for liquidation in order to redeem their Public Shares.

 

   

If a stockholder fails to receive notice of CIIG’s offer to redeem its Public Shares in connection with the Business Combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.

 

   

You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.

 

   

The Sponsor and CIIG’s directors, officers, advisors or their affiliates may elect to purchase shares from Public Stockholders, which may influence a vote on a proposed business combination and reduce the public “float” of CIIG Class A Common Stock.

 

   

If a stockholder or a “group” of stockholders are deemed to hold in excess of 15% of CIIG Class A Common Stock, such stockholder or group will lose the ability to redeem all such shares in excess of 15% of CIIG Class A Common Stock.



 

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CIIG’s stockholders cannot be sure of the market value of the Holdco Ordinary Shares to be issued upon completion of the Business Combination.

 

   

The Holdco Ordinary Shares to be received by CIIG’s stockholders as a result of the Business Combination will have different rights from shares of CIIG Common Stock.

 

   

CIIG’s Sponsor, officers and directors have agreed to vote in favor of the Business Combination, regardless of how the Public Stockholders vote.

 

   

CIIG’s board of directors did not obtain a fairness opinion in determining whether or not to proceed with the Business Combination and, as a result, the terms may not be fair from a financial point of view to the Public Stockholders.

 

   

The Sponsor and CIIG’s executive officers and directors have potential conflicts of interest in recommending that stockholders vote in favor of approval of the Business Combination Proposal and approval of the other proposals described in the Registration Statement of which this proxy statement/prospectus is a part.

 

   

If CIIG fails to consummate the PIPE, it may not have enough funds to complete the Business Combination.

 

   

Subsequent to the completion of the Business Combination, Holdco may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on Holdco’s financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment.

 

   

CIIG’s stockholders will have a reduced ownership and voting interest after consummation of the Business Combination and will exercise less influence over management.

Arrival

 

   

Arrival is an early stage company with a history of losses, and expects to incur significant expenses and continuing losses for the foreseeable future.

 

   

Arrival has a limited operating history and has not yet manufactured or sold any production vehicles to customers and may never develop or manufacture any vehicles.

 

   

The period of time from the receipt of orders to implementation and delivery is long and the orders are subject to the risks of cancellation or postponement of the orders.

 

   

Arrival’s growth is dependent upon the willingness of operators of commercial vehicle fleets and small to medium sized businesses to adopt electric vehicles and on Arrival’s ability to produce, sell and service vehicles that meet their needs.

 

   

The UPS order constitutes all of the current orders for Arrival vehicles. If this order is cancelled, modified or delayed, Arrival’s prospects, results of operations, liquidity and cash flow will be materially adversely affected.

 

   

Certain of Arrival’s strategic, development and deployment arrangements could be terminated or may not materialize into long-term contract partnership arrangements and may restrict or limit Arrival from developing electric vehicles with other strategic partners.

 

   

Arrival’s ability to execute its microfactory production model on a large scale is unproven and still evolving and such production model may lead to increased costs, delayed and/or reduced production of its vehicles and adversely affect Arrival’s ability to operate its business.

 

   

Arrival may encounter obstacles outside of its control that slow market adoption of electric vehicles, such as regulatory requirements or infrastructure limitations.



 

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As Arrival expands into new territories, many of which will be international territories, it may encounter stronger market resistance than it currently expects, including from incumbent competitors in those territories.

 

   

Arrival is dependent on its suppliers, some of which are single or limited source suppliers, and the inability of these suppliers to deliver the raw materials and components of Arrival’s vehicles in a timely manner and at prices and volumes acceptable to it could have a material adverse effect on its business, prospects and operating results.

 

   

There are complex software and technology systems that need to be developed in coordination with vendors and suppliers in order to reach production for Arrival’s electric vehicles, and there can be no assurance such systems will be successfully developed.

 

   

The discovery of defects in Arrival vehicles may result in delays in new model launches, recall campaigns or increased warranty costs.

 

   

Arrival may become subject to product liability claims which could harm its financial condition and liquidity if it is not able to successfully defend or insure against such claims.

 

   

Arrival will rely on complex robotic assembly and component manufacturing for its production, which involves a significant degree of risk and uncertainty in terms of operational performance and costs.

 

   

Arrival is likely to face competition from a number of sources, which may impair its revenues, increase its costs to acquire new customers, and hinder its ability to acquire new customers.

 

   

Arrival is highly dependent on the services of its senior management team (including Denis Sverdlov, its Founder and Chief Executive Officer), and if Arrival is unable to retain some or all of this team, its ability to compete could be harmed.



 

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SELECTED HISTORICAL FINANCIAL DATA OF CIIG

The following tables summarize the relevant financial data for CIIG’s business and should be read in conjunction with the section entitled “CIIG Management’s Discussion and Analysis of Financial Condition and Results of Operations” and CIIG’s audited financial statements, and the notes related thereto, which are included elsewhere in this proxy statement/prospectus.

CIIG’s balance sheet data as of June 30, 2020 and statement of operations data for the six months ended June 30, 2020 are derived from CIIG’s unaudited financial statements. CIIG’s balance sheet data as of December 31, 2020 and December 31, 2019, and statement of operations data for the year ended December 31, 2020 and the period from September 19, 2019 (inception) through December 31, 2019 are derived from CIIG’s audited financial statements included elsewhere in this proxy statement/prospectus.

The historical results presented below are not necessarily indicative of the results to be expected for any future period. You should read the following selected financial information in conjunction with CIIG’s financial statements and related notes and the section entitled “CIIG Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this proxy statement/prospectus.

(in thousands of U.S. Dollars, except share and per share data)

 

Income Statement Data:

   Year Ended
December 31,
2020
     Six Months
Ended

June 30,
2020
     For the
Period from
September 19,
2019

(inception)
Through
December 31,
2019
 

Revenue

   $ —        $ —        $ —    

Loss from operations

     (6,220      (370      (92

Interest income on marketable securities

     1,108        995        140  

Provision for income taxes

     (190      (118      (18

Net (loss) income

     (5,302      437        30  

Basic and diluted net income per share

     0.03        0.03        0.00  

Weighted average shares outstanding—basic and diluted

     25,875,000        25,875,000        25,875,000  

 

Balance Sheet Data:

   December 31,
2020
     June 30,
2020
     December 31,
2019
 

Working capital

   $ (4,840    $ 810      $ 1,438  

Trust account

     259,865        259,805        258,890  

Total assets

     260,310        261,066        260,477  

Total liabilities

     14,340        9,357        9,205  

Value of ordinary shares subject to redemption

     240,969        246,709        246,272  

Shareholders’ equity

     5,000        5,000        5,000  


 

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SELECTED HISTORICAL FINANCIAL DATA OF ARRIVAL

The information presented below is derived from Arrival’s unaudited condensed consolidated financial statements and audited consolidated financial statements included elsewhere in this proxy statement/prospectus as of and for the six months ended June 30, 2020 and 2019 and the fiscal years ended December 31, 2019 and 2018. The information presented below should be read alongside Arrival’s consolidated financial statements and accompanying footnotes included elsewhere in this proxy statement/prospectus. You should read the following financial data together with “Risks Related to Arrival’s Business,” and “Arrival Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

The following table highlights key measures of Arrivals’s financial condition and results of operations (Euros in thousands, except per share amounts):

 

     Six Months Ended
June 30,
     Year Ending
December 31,
 
(in thousands)    2020
€’000
     2019
€’000
     2019
€’000
     2018
€’000
 

Statement of Income Data:

           

Revenue

     —          —          —          —    

Cost of Revenue

     —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross Profit/(Loss)

     —          —          —          —    

Administrative Expenses

     (24,159      (11,567      (31,392      (16,769

Research and Development Expenses

     (4,723      (3,705      (11,149      (6,219

Impairment Expense

     (34      (2,131      (4,972      (9,347

Other Income/(Expenses), Net

     792        (113      (4,328      1,154  
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating Loss

     (28,124      (17,516      (51,841      (31,181

Net Finance Income/(Expense)

     (1,214      (1,001      (3,184      41  
  

 

 

    

 

 

    

 

 

    

 

 

 

Loss Before Tax

     (29,338      (18,517      (55,025      (31,140

Tax Income

     4,873        2,882        6,929        951  
  

 

 

    

 

 

    

 

 

    

 

 

 

Loss for the Period

     (24,465      (15,635      (48,096      (30,189
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic and Diluted Loss Per Share

     (0.03)        (0.02)        (0.05)        (0.03)  

Balance Sheet Data:

           

Total Assets

     215,475        93,737        243,167        56,324  

Total Equity

     174,003        83,865        199,245        49,956  

Share Capital

     228,067        151,197        227,333        16  


 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

CIIG is providing the following selected unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the transactions.

The following selected unaudited pro forma condensed combined statement of position combines the unaudited historical condensed consolidated balance sheet of Arrival as of June 30, 2020 with the unaudited historical condensed balance sheet of CIIG as of June 30, 2020, giving effect to the transactions as if they had been consummated as of that date.

The following selected unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2020 combines the unaudited historical condensed consolidated statement of profit or loss and other comprehensive income of Arrival for the six months ended June 30, 2020 with the unaudited condensed statement of operations of CIIG for the six months ended June 30, 2020, giving effect to the transactions as if they had occurred as of the earliest period presented.

The following selected unaudited pro forma condensed combined statement of operations for the year ended December 31, 2019 combines the audited historical consolidated statement of profit or loss and other comprehensive income of Arrival for the year ended December 31, 2019 with the audited statement of operations of CIIG for the period from September 19, 2019 (inception) through December 31, 2019, giving effect to the transactions as if they had occurred as of the earliest period presented.

The selected unaudited pro forma condensed combined financial information has been prepared assuming two alternative levels of redemption of CIIG common stock into cash:

 

   

Assuming No Redemptions: This presentation assumes that no CIIG stockholders exercise redemption rights with respect to their shares of CIIG Class A common stock upon consummation of the Business Combination; and

 

   

Assuming Maximum Redemptions: This presentation assumes that CIIG stockholders exercise their redemption rights with respect to 23,344,330 shares of CIIG Class A common stock upon consummation of the Business Combination at a redemption price of approximately US$10.04 per share. The maximum redemption amount is derived so that there is a minimum of US$400,000,000 of cash held either in or outside of the trust account, including the aggregate amount of any proceeds from the PIPE, after giving effect to the payments to redeeming stockholders.

The adjustments presented in the selected unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company upon consummation of the transactions.

The historical financial statements of CIIG have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The historical financial statements of Arrival have been prepared in accordance with IFRS, as adopted by the International Accounting Standards Board. The historical financial information of CIIG has been adjusted to give effect to the differences between U.S. GAAP and IFRS as issued by the IASB for the purposes of the selected unaudited pro forma condensed combined financial information. No adjustments were required to convert CIIG’s financial statements from U.S. GAAP to IFRS for purposes of the selected unaudited pro forma condensed combined financial information, except to reclassify CIIG’s Class A common stock subject to redemption to non-current liabilities under IFRS.

The historical financial information of CIIG was derived from the historical unaudited financial statements of CIIG for the six months ended June 30, 2020 which have been translated into Euros as described under “The



 

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Business Combination — Unaudited Pro Forma Combined Financial Information.” The historical financial information of CIIG was derived from the historical audited financial statements of CIIG for the period from September 19, 2019 (inception) through December 31, 2019 which have been translated into Euros as described under “The Business Combination — Unaudited Pro Forma Combined Financial Information” at the rate on June 30, 2020 of US$1.00 to €0.88915.

The historical financial information of Arrival was derived from the historical unaudited condensed consolidated financial statements of Arrival for the six months ended June 30, 2020 and 2019 which are included elsewhere in this proxy statement. The historical financial information of Arrival was derived from the historical audited consolidated financial statements of Arrival for the years ended December 31, 2019 and 2018 which are included elsewhere in this proxy statement. This information should be read together with CIIG’s and Arrival’s financial statements and related notes, “Other Information Related to CIIG—CIIG’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Arrival’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information included elsewhere in this proxy statement/prospectus.

The selected unaudited pro forma condensed combined financial information is presented for illustrative purposes only. Such information is only a summary and should be read in conjunction with the section titled “Unaudited Pro Forma Combined Financial Information.” The financial results may have been different had the companies always been combined. You should not rely on the selected unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience.



 

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Selected Unaudited Pro Forma Condensed Combined Financial Information

(in Euros and in thousands, except share and per share data)

 

in thousands, except share and per share data

   Assuming No
Redemptions
     Assuming
Maximum
Redemptions
 

Selected Unaudited Pro Forma Condensed Combined Statement of Operations – Six Months Ended June 30, 2020

     

Total expenses

   28,461      28,461  

Operating loss

   (28,461    (28,461

Net loss

   (24,802    (24,802

Loss per share

   (0.04    (0.04

Weighted average shares outstanding – basic and diluted

     606,178,750        582,834,420  

Selected Unaudited Pro Forma Condensed Combined Statement of Operations – Year Ended December 31, 2019

     

Total expenses

   805,280      140,480  

Operating loss

   (805,280    (140,480

Net loss

   (801,535    (136,735

Loss per share

   (1.32    (0.23

Weighted average shares outstanding – basic and diluted

     606,178,750        582,834,420  

Selected Unaudited Pro Forma Condensed Combined Statement of Financial Position as of June 30, 2020

     

Total current assets

   584,905      376,493  

Total assets

   749,912      541,500  

Total current liabilities

   18,808      18,808  

Total liabilities

   41,654      41,654  

Total stockholders’ equity

   708,258      499,846  


 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this proxy statement/prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this proxy statement/prospectus may include, for example, statements about:

 

   

our ability to consummate the Business Combination;

 

   

the benefits of the Business Combination;

 

   

the Combined Company’s financial performance following the Business Combination;

 

   

the ability to obtain or maintain the listing of the Holdco Ordinary Shares or Holdco Warrants on Nasdaq, following the Business Combination;

 

   

changes in Arrival’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans;

 

   

Arrival’s strategic advantages and the impact those advantages will have on future financial and operational results;

 

   

expansion plans and opportunities;

 

   

Arrival’s ability to grow its business in a cost-effective manner;

 

   

the advantages and expected benefits of Arrival’s microfactories;

 

   

Arrival’s product development timeline and estimated start of production;

 

   

the implementation, market acceptance and success of Arrival’s business model;

 

   

developments and projections relating to Arrival’s competitors and industry;

 

   

Arrival’s approach and goals with respect to technology;

 

   

Arrival’s expectations regarding its ability to obtain and maintain intellectual property protection and not infringe on the rights of others;

 

   

the impact of the COVID-19 pandemic on Arrival’s business;

 

   

changes in applicable laws or regulations; and

 

   

the outcome of any known and unknown litigation and regulatory proceedings.

These forward-looking statements are based on information available as of the date of this proxy statement/prospectus, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

You should not place undue reliance on these forward-looking statements in deciding how to vote your proxy or instruct how your vote should be cast on the proposals set forth in this proxy statement/prospectus. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be

 

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materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

 

   

the occurrence of any event, change or other circumstances that could delay the Business Combination or give rise to the termination of the Business Combination Agreement;

 

   

the outcome of any legal proceedings that may be instituted against CIIG, Holdco or Arrival following announcement of the proposed Business Combination and transactions contemplated thereby;

 

   

the inability to complete the Business Combination due to the failure to obtain approval of the stockholders of CIIG or to satisfy other conditions to the Closing in the Business Combination Agreement;

 

   

the ability to obtain or maintain the listing of the Holdco Ordinary Shares on Nasdaq following the Business Combination;

 

   

the risk that the proposed Business Combination disrupts current plans and operations of Arrival as a result of the announcement and consummation of the transactions described herein;

 

   

our ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of Arrival to grow and manage growth profitably following the Business Combination;

 

   

costs related to the Business Combination;

 

   

changes in applicable laws or regulations;

 

   

the effects of the COVID-19 pandemic on Arrival’s business;

 

   

the lack of a third-party valuation in determining whether or not to pursue the proposed transaction;

 

   

the ability to implement business plans, forecasts, and other expectations after the completion of the proposed transaction, and identify and realize additional opportunities;

 

   

the risk of downturns and the possibility of rapid change in the highly competitive industry in which Arrival operates;

 

   

the risk that Arrival and its current and future collaborators are unable to successfully develop and commercialize Arrival’s products or services, or experience significant delays in doing so;

 

   

the risk that the post-combination company may never achieve or sustain profitability;

 

   

the risk that the post-combination company will need to raise additional capital to execute its business plan, which may not be available on acceptable terms or at all;

 

   

the risk that the post-combination company experiences difficulties in managing its growth and expanding operations;

 

   

the risk that third-party suppliers and manufacturers are not able to fully and timely meet their obligations;

 

   

the risk that the utilization of microfactories will not provide the expected benefits due to, among other things, the inability to locate appropriate buildings to use as microfactories, microfactories needing a larger than anticipated factory footprint, and the inability of Arrival to deploy microfactories in the anticipated time frame;

 

   

that Arrival has identified a material weakness in its internal control over financial reporting which, if not corrected, could affect the reliability of Arrival’s financial statements;

 

   

the risk that Arrival is unable to secure or protect its intellectual property;

 

   

the possibility that CIIG or Arrival may be adversely affected by other economic, business, and/or competitive factors; and

 

   

other risks and uncertainties described in this proxy statement/prospectus, including those under the section entitled “Risk Factors.”

 

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RISK FACTORS

In addition to the other information contained in (or incorporated by reference into) this proxy statement/prospectus, including the matters addressed under the heading “Forward-Looking Statements,” you should carefully consider the following risk factors in deciding how to vote on the proposals presented in this proxy statement/prospectus. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may have a material adverse effect on Holdco’s business, reputation, revenue, financial condition, results of operations and future prospects, in which event the market price of the Holdco Ordinary Shares could decline, and you could lose part or all of your investment. Unless otherwise indicated, reference in this section and elsewhere in this proxy statement/prospectus to the Arrival business being adversely affected, negatively impacted or harmed will include an adverse effect on, or a negative impact or harm to, the business, reputation, financial condition, results of operations, revenue and future prospects of Holdco.

Risks Related to Arrival

Arrival is an early stage company with a history of losses, and expects to incur significant expenses and continuing losses for the foreseeable future.

Arrival has incurred losses in the operation of its business related to research and development activities since its inception. Arrival anticipates that its expenses will increase and that it will continue to incur losses in the future until at least the time it begins significant deliveries of its vehicles, which is not expected to occur before 2022. Even if Arrival is able to successfully develop and sell or lease its vehicles, there can be no assurance that they will be commercially successful and achieve or sustain profitability.

Arrival expects the rate at which it will incur losses to be significantly higher in future periods as it, among other things, designs, develops and manufactures its vehicles; deploys its microfactories; builds up inventories of parts and components for its vehicles; increases its sales and marketing activities, develops its distribution infrastructure; and increases its general and administrative functions to support its growing operations. Arrival may find that these efforts are more expensive than it currently anticipates or that these efforts may not result in revenues, which would further increase Arrival’s losses.

Arrival has a limited operating history and has not yet manufactured or sold any production vehicles to customers and may never develop or manufacture any vehicles.

Arrival was incorporated in October 2015 and has a limited operating history in the automobile industry, which is continuously evolving. Arrival vehicles are in the development stage and Arrival does not expect its first vehicle to be produced until the fourth quarter of 2021, if at all. Arrival has no experience as an organization in high volume manufacturing of the planned electric vehicles. Arrival cannot assure you that it or its partners will be able to develop efficient, automated, cost-efficient manufacturing capability and processes, and reliable sources of component supplies that will enable Arrival to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully mass market its electric vehicles. You should consider Arrival’s business and prospects in light of the risks and significant challenges it faces as a new entrant into its industry, including, among other things, with respect to its ability to:

 

   

design and produce safe, reliable and quality vehicles on an ongoing basis;

 

   

obtain the necessary regulatory approvals in a timely manner;

 

   

build a well-recognized and respected brand;

 

   

establish and expand its customer base;

 

   

successfully market not just Arrival’s vehicles but also the other services it intends to provide;

 

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properly price its services, including its charging solutions, financing and lease options, and successfully anticipate the take-rate and usage of such services by users;

 

   

successfully service its vehicles after sales and maintain a good flow of spare parts and customer goodwill;

 

   

improve and maintain its operational efficiency;

 

   

successfully execute its microfactory production model and maintain a reliable, secure, high-performance and scalable technology infrastructure;

 

   

predict its future revenues and appropriately budget for its expenses;

 

   

attract, retain and motivate talented employees;

 

   

anticipate trends that may emerge and affect its business;

 

   

anticipate and adapt to changing market conditions, including technological developments and changes in competitive landscape; and

 

   

navigate an evolving and complex regulatory environment.

If Arrival fails to adequately address any or all of these risks and challenges, its business may be materially and adversely affected.

Arrival’s forecasted operating and financial results rely in large part upon assumptions and analyses developed by Arrival. If these assumptions and analyses prove to be incorrect, Arrival’s actual operating and financial results may be significantly below its forecasts.

The projected financial and operating information appearing elsewhere in this proxy statement reflects current estimates of future performance. Whether actual operating and financial results and business developments will be consistent with Arrival’s expectations and assumptions as reflected in its forecast depends on a number of factors, many of which are outside Arrival’s control, including, but not limited to:

 

   

whether Arrival can obtain sufficient capital to begin production and grow its business;

 

   

Arrival’s ability to manage its growth;

 

   

whether Arrival can manage relationships with key suppliers;

 

   

whether Arrival can rapidly deploy its microfactories and successfully execute its production methodologies in such microfactories (including its robotic assembly process and composite manufacturing);

 

   

the ability to obtain necessary regulatory approvals;

 

   

demand for Arrival products and services;

 

   

the timing and costs of new and existing marketing and promotional efforts;

 

   

competition, including from established and future competitors;

 

   

Arrival’s ability to retain existing key management, to integrate recent hires and to attract, retain and motivate qualified personnel;

 

   

the overall strength and stability of the economies in the markets in which it operates or intends to operate in the future; and

 

   

regulatory, legislative and political changes;

Unfavorable changes in any of these or other factors, most of which are beyond Arrival’s control, could materially and adversely affect its business, results of operations and financial results.

 

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In addition, Arrival’s production methodologies (including robotic assembly processes and composite manufacturing) are still being tested and its assumptions may not be accurate. If Arrival is unable to successfully implement its production methodologies, or the assumptions on which such production methodologies are based prove to be incorrect, Arrival’s business, prospects, financial condition and operating results could be adversely effected.

Arrival may need to raise additional funds and these funds may not be available to it when it needs them, or may only be available on unfavorable terms. As a result, Arrival may be unable to meet its future capital requirements which could limit its ability to grow and jeopardize its ability to continue its business operations.

The design, production, sale and servicing of Arrival’s electric vehicles is capital-intensive. Arrival expects that following the closing of the Business Combination, no additional capital will be needed to achieve profitability (assuming satisfaction of the minimum available cash condition). However, Arrival may subsequently determine that additional funds are necessary earlier than anticipated. This capital may be necessary to fund Arrival’s ongoing operations, continue research, development and design efforts and improve infrastructure. Arrival may raise additional funds through the issuance of equity, equity related or debt securities or through obtaining credit from government or financial institutions. Arrival cannot be certain that additional funds will be available to it on favorable terms when required, or at all. If Arrival cannot raise additional funds when it needs them, its business, prospects, financial condition and operating results could be materially adversely affected.

While Arrival has received orders for vehicles, the period of time from the receipt of orders to implementation and delivery is long, potentially spanning over several months, and the orders are subject to the risks of cancellation or postponement of the orders.

Arrival vehicles are in the development stage and Arrival does not expect its first vehicle to be produced until the fourth quarter of 2021. Even after Arrival begins production of its vehicles, due to the nature of large commercial fleet orders, the anticipated lead time between receipt of orders for Arrival’s electric vehicles and implementation and delivery of its electric vehicles is long, potentially spanning over several months. Given this anticipated lead time, there is a heightened risk that customers that have ordered vehicles may not ultimately take delivery due to potential changes in customer preferences, competitive developments and other factors. As a result, no assurance can be made that orders will not be cancelled or postponed, or that orders will ultimately result in the purchase or lease of electric vehicles. Any cancellations or postponements could harm Arrival’s financial condition, business, prospects and operating results. Currently no customers have paid deposits or will be required to pay any penalties for cancellations, or, other than UPS, have made any commitments to purchase Arrival vehicles. Arrival anticipates contracting with customers on terms which require the payment of a deposit and are not cancellable for convenience; however, in certain cases, Arrival and a customer may agree to commercial terms which include (amongst other things) the ability for the customer to modify or terminate the vehicle order and the parties may agree that a deposit is not required.

In addition, Arrival’s business model is initially focused on building relationships with commercial bus and van fleet customers. Even if Arrival is able to obtain binding orders, customers may limit their volume of purchases initially as they assess Arrival’s vehicles and whether to make a broader transition to electric vehicles. This may be a long process and will depend on the safety, reliability, efficiency and quality of Arrival’s vehicles, as well as the support and service that Arrival offers. It will also depend on factors outside of Arrival’s control, such as general market conditions and broader trends in fleet management and vehicle electrification, that could impact customer buying decisions. As a result, there is significant uncertainty regarding demand for Arrival’s products and the pace and levels of growth that Arrival will be able to achieve.

 

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Arrival’s growth is dependent upon the willingness of operators of commercial vehicle fleets and small to medium sized businesses to adopt electric vehicles and on Arrival’s ability to produce, sell and service vehicles that meet their needs. If the market for commercial electric vehicles does not develop as Arrival expects or develops slower than Arrival expects, Arrival’s business, prospects, financial condition and operating results will be adversely affected.

Arrival’s growth is dependent upon the adoption of electric vehicles by operators of commercial vehicle fleets and on Arrival’s ability to produce, sell and service vehicles that meet their needs. The entry of commercial electric vehicles into the medium-duty commercial vehicle market is a relatively new development, particularly in the United States, and is characterized by rapidly changing technologies and evolving government regulation, industry standards and customer views of the merits of using electric vehicles in their businesses. This process has been slow to date. As part of Arrival’s sales efforts, Arrival must educate fleet managers as to what Arrival believes are the economical savings during the life of the vehicle and the lower “total cost of ownership” of Arrival’s vehicles. As such, Arrival believes that operators of commercial vehicle fleets will consider many factors when deciding whether to purchase Arrival’s commercial electric vehicles (or commercial electric vehicles generally) or vehicles powered by internal combustion engines, particularly diesel-fueled or natural gas-fueled vehicles. Arrival believes these factors include:

 

   

the difference in the initial purchase prices of commercial electric vehicles with comparable vehicles powered by internal combustion engines, both including and excluding the effect of government and other subsidies and incentives designed to promote the purchase of electric vehicles;

 

   

the total cost of ownership of the vehicle over its expected life, which includes the initial purchase price and ongoing operating and maintenance costs;

 

   

the availability and terms of financing options for purchases of vehicles and, for commercial electric vehicles, financing options for battery systems;

 

   

the availability of tax and other governmental incentives to purchase and operate electric vehicles and future regulations requiring increased use of nonpolluting vehicles;

 

   

government regulations and economic incentives promoting fuel efficiency and alternate forms of energy;

 

   

fuel prices, including volatility in the cost of diesel or a prolonged period of low gasoline and natural gas costs that could decrease incentives to transition to electric vehicles;

 

   

the cost and availability of other alternatives to diesel fueled vehicles, such as vehicles powered by natural gas;

 

   

corporate sustainability initiatives;

 

   

commercial electric vehicle quality, performance and safety (particularly with respect to lithium-ion battery packs);

 

   

the quality and availability of service for the vehicle, including the availability of replacement parts;

 

   

the limited range over which commercial electric vehicles may be driven on a single battery charge;

 

   

access to charging stations and related infrastructure costs, and standardization of electric vehicle charging systems;

 

   

electric grid capacity and reliability; and

 

   

macroeconomic factors.

If, in weighing these factors, operators of commercial vehicle fleets determine that there is not a compelling business justification for purchasing commercial electric vehicles, particularly those that Arrival will produce and sell, then the market for commercial electric vehicles may not develop as Arrival expects or may develop more slowly than Arrival expects, which would adversely affect Arrival’s business, prospects, financial condition and operating results.

 

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In addition, any reduction, elimination or selective application of tax and other governmental incentives and subsidies because of policy changes, the reduced need for such subsidies and incentives due to the perceived success of the electric vehicle, fiscal tightening or other reasons may result in the diminished competitiveness of the electric vehicle industry generally or Arrival’s electric vehicles in particular, which would adversely affect Arrival’s business, prospects, financial condition and operating results. Further, Arrival cannot assure that the current governmental incentives and subsidies available for purchasers of electric vehicles will remain available.

The UPS order constitutes all of the current orders for Arrival vehicles. If this order is cancelled, modified or delayed, Arrival’s prospects, results of operations, liquidity and cash flow will be materially adversely affected.

The UPS order for 10,000 vehicles (with a UPS option to purchase up to an additional 10,000 vehicles) constitutes the only agreement in place with respect to the order of Arrival vehicles with other potential orders as either letters of intent or in late stage sales discussions. The vehicle volumes to be purchased pursuant to the UPS order may be modified or cancelled by UPS at any time in its sole discretion without penalty. If the UPS order is cancelled or modified, or any other arrangements are terminated, and Arrival has not received additional orders from other customers, its business, prospects, financial condition and operating results will be materially adversely affected. Arrival has letters of intent for the Arrival Bus but does not currently have any agreement in place with respect to the order of the Arrival Bus, as orders typically require a trial which is expected to occur in the second quarter of 2021.

Certain of Arrival’s strategic, development and deployment arrangements could be terminated or may not materialize into long-term contract partnership arrangements and may restrict or limit Arrival from developing electric vehicles with other strategic partners.

Arrival has arrangements with strategic, development and deployment partners and collaborators. Some of these arrangements are evidenced by memorandums of understanding, non-binding letters of intent, early stage agreements that are used for design and development purposes but will require renegotiation at later stages of development or production or master agreements that have yet to be implemented under separately negotiated statements of work, each of which could be terminated or may not materialize into next-stage contracts or long-term contract partnership arrangements. In addition, Arrival does not currently have arrangements in place that will allow it to fully execute its business plan, including, without limitation, final supply and manufacturing agreements and fleet service and management agreements. Moreover, existing or future arrangements may contain limitations on Arrival’s ability to enter into strategic, development and deployment arrangements with other partners. For example, the Business Collaboration Agreement with Hyundai Motor Company (“Hyundai”) and Kia Motors Corporation (“Kia”, and together with Hyundai, “HKMC”), pursuant to which Arrival and Hyundai have agreed, among things to jointly develop vehicles using Arrival’s technologies, prevents Arrival from developing electric vehicles with other traditional original equipment manufacturers (“OEMs”) until November 3, 2022. If Arrival is unable to maintain such arrangements and agreements, or if such agreements or arrangements contain other restrictions from or limitations on developing electric vehicles with other strategic partners, its business, prospects, financial condition and operating results may be materially and adversely affected.

Arrival’s ability to execute its microfactory production model on a large scale is unproven and still evolving and such production model may lead to increased costs, delayed and/or reduced production of its vehicles and adversely affect Arrival’s ability to operate its business.

Arrival’s business model depends in large part on its ability to execute its plans to manufacture, market, deploy and service its electric vehicles at microfactories. Arrival’s reliance on this production model will be subject to risks, including that Arrival:

 

   

may require a larger than anticipated factory footprint, which would increase Arrival’s costs of setting up the microfactories and would significantly delay production of its vehicles;

 

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may not be able to reach its rate of production targets within its microfactories for its primary products, which would reduce its ability to be profitable;

 

   

may not be able to locate existing buildings meeting the requirements for its microfactories with respect to size, shape, power supply, and strength of construction, which would increase its costs of setting up the microfactories and would significantly delay production of its vehicles;

 

   

may not be able to build the expected number of microfactories, which would reduce its production targets and have a material adverse impact on its results of operations and financial condition; and

 

   

may experience higher local wages and supplier costs than expected in local regions, resulting in higher operating costs and reducing its ability to be profitable.

Arrival currently has two microfactories in active development, one in Rock Hill, South Carolina, USA and one in Bicester, UK. These microfactories are expected to start production in the fourth quarter of 2021 and the third quarter of 2022, respectively. Arrival plans to have four microfactories in operation by the end of 2022, 11 by the end of 2023 and 31 by the end of 2024. Due to the relatively short commissioning times of the Arrival microfactory, the exact locations of the microfactories that will follow Rock Hill, South Carolina, USA and Bicester, UK are yet to be determined.

In addition, Arrival intends to establish a “back office” in each microfactory to handle customary administrative and support services such as local payroll processes and tax and company registrations. Any inability to do so, or delays in doing so, could adversely affect Arrival’s ability to operate its business and delay productions of its vehicles.

If any of the foregoing issues occur, and Arrival is unable to execute on its microfactory production business model, Arrival’s business, prospects, financial condition and operating results may be materially and adversely affected.

Arrival may encounter obstacles outside of its control that slow market adoption of electric vehicles, such as regulatory requirements or infrastructure limitations.

Arrival’s growth is highly dependent upon the adoption of electric vehicles by the commercial and municipal fleet industry. The target demographics for Arrival’s electric vehicles are highly competitive. If the market for electric vehicles does not develop at the rate or in the manner or to the extent that Arrival expects, or if critical assumptions Arrival has made regarding the efficiency of its electric vehicles are incorrect or incomplete, Arrival’s business, prospects, financial condition and operating results will be harmed. The fleet market for electric vehicles is new and untested and is characterized by rapidly changing technologies, price competition, numerous competitors, including OEMs, evolving government regulation and industry standards and uncertain customer demands and behaviors.

Arrival’s growth depends upon Arrival’s ability to maintain relationships with Arrival’s existing suppliers, source suppliers for Arrival’s critical components, and complete building out Arrival’s supply chain, while effectively managing the risks due to such relationships.

Arrival’s growth will be dependent upon Arrival’s ability to enter into supplier agreements and maintain its relationships with suppliers who are critical and necessary to the output and production of Arrival’s vehicles. Arrival also relies on a small group of suppliers to provide Arrival with the components for Arrival’s vehicles. The supply agreements Arrival has or may enter into with key suppliers in the future may have provisions where such agreements can be terminated in various circumstances, including potentially without cause. If these suppliers become unable to provide or experience delays in providing components or the supply agreements Arrival has in place are terminated, it may be difficult to find replacement components. Changes in business conditions, pandemics, governmental changes, and other factors beyond Arrival’s control or that Arrival does not presently anticipate could affect Arrival’s ability to receive components from Arrival’s suppliers.

 

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However, Arrival has not secured supply agreements for all of its components. Arrival may be at a disadvantage in negotiating supply agreements for the production of its vehicles due to its limited operating history. In addition, there is the possibility that finalizing the supply agreements for the parts and components of Arrival’s vehicles will cause significant disruption to Arrival’s operations, or such supply agreements could be at costs that make it difficult for Arrival to operate profitably.

If Arrival does not enter into long-term supply agreements with guaranteed pricing for critical parts or components, Arrival may be exposed to fluctuations in components, materials and equipment prices. Substantial increases in the prices for such components, materials and equipment would increase Arrival’s operating costs and could reduce Arrival’s margins if Arrival cannot recoup the increased costs. Any attempts to increase the announced or expected prices of Arrival’s vehicles in response to increased costs could be viewed negatively by Arrival’s potential customers and could adversely affect Arrival’s business, prospects, financial condition or operating results.

Arrival currently targets many customers, suppliers and partners that are large corporations with substantial negotiating power, exacting product, quality and warranty standards and potentially competitive internal solutions. If Arrival is unable to sell its products to these customers or is unable to enter into agreements with suppliers and partners on satisfactory terms, its prospects and results of operations will be adversely affected.

Many of Arrival’s current and potential customers, suppliers and partners are large, multinational corporations with substantial negotiating power relative to it and, in some instances, may have internal solutions that are competitive to Arrival’s products. These large, multinational corporations also have significant development resources, which may allow them to acquire or develop independently, or in partnership with others, competitive technologies. Meeting the technical requirements and securing design wins with any of these companies will require a substantial investment of Arrival’s time and resources. Arrival cannot assure you that its products will secure design wins from these or other companies or that it will generate meaningful revenue from the sales of its products to these key potential customers. If Arrival’s products are not selected by these large corporations or if these corporations develop or acquire competitive technology, it will have an adverse effect on Arrival’s business.

If Arrival is unable to establish and maintain confidence in its long-term business prospects among customers and analysts and within its industry or is subject to negative publicity, then its financial condition, operating results, business prospects and access to capital may suffer materially.

Customers may be less likely to purchase Arrival’s commercial electric vehicles if they are not convinced that Arrival’s business will succeed or that its service and support and other operations will continue in the long term. Similarly, suppliers and other third parties will be less likely to invest time and resources in developing business relationships with Arrival if they are not convinced that its business will succeed. Accordingly, in order to build and maintain its business, Arrival must maintain confidence among customers, suppliers, analysts, ratings agencies and other parties in its electric vehicles, long-term financial viability and business prospects. Maintaining such confidence may be particularly complicated by certain factors including those that are largely outside of Arrival’s control, such as its limited operating history, customer unfamiliarity with its electric vehicles, any delays in scaling production, delivery and service operations to meet demand, competition and uncertainty regarding the future of electric vehicles, including Arrival’s electric vehicles and Arrival’s production and sales performance compared with market expectations.

As Arrival expands into new territories, many of which will be international territories, it may encounter stronger market resistance than it currently expects, including from incumbent competitors in those territories.

Arrival will face risks associated with any potential international expansion of its operations into new territories, including possible unfavorable regulatory, political, tax and labor conditions, which could harm its

 

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business. In addition, in certain of these markets, Arrival may encounter incumbent competitors with established technologies and customer bases, lower prices or costs, and greater brand recognition. Arrival anticipates having international operations and subsidiaries that are subject to the legal, political, regulatory and social requirements and economic conditions in these jurisdictions. However, Arrival has no experience to date selling or leasing and servicing its vehicles internationally, and such expansion would require Arrival to make significant expenditures, including the hiring of local employees and establishing facilities, in advance of generating any revenue. Arrival will be subject to a number of risks associated with international business activities that may increase its costs, impact its ability to sell its electric vehicles and require significant management attention. These risks include:

 

   

conforming Arrival’s electric vehicles to various international regulatory requirements where its electric vehicles are sold which requirements may change over time;

 

   

difficulties in obtaining or complying with various licenses, approvals, certifications and other governmental authorizations necessary to manufacture, sell or service its electric vehicles in any of these jurisdictions;

 

   

difficulty in staffing and managing foreign operations;

 

   

difficulties attracting customers in new jurisdictions;

 

   

foreign government taxes, regulations and permit requirements, including foreign taxes that Arrival may not be able to offset against taxes imposed upon Arrival in the U.S.;

 

   

a heightened risk of failure to comply with corporation and employment tax laws;

 

   

fluctuations in foreign currency exchange rates and interest rates, including risks related to any interest rate swap or other hedging activities Arrival undertakes;

 

   

U.S. and foreign government trade restrictions, tariffs and price or exchange controls;

 

   

foreign labor laws, regulations and restrictions;

 

   

changes in diplomatic and trade relationships;

 

   

political instability, natural disasters, global health concerns, including health pandemics such as the COVID-19 pandemic, war or events of terrorism; and

 

   

the strength of international economies.

If Arrival fails to successfully address these risks, Arrival’s business, prospects, financial condition and operating results could be materially harmed.

Factors that may influence the fleet market adoption of electric vehicles include:

 

   

perceptions about electric vehicle quality, safety, design, performance, reliability and cost, especially if adverse events or accidents occur that are linked to the quality or safety of electric vehicles;

 

   

perceptions about vehicle safety in general, including the use of advanced technology, such as vehicle electronics, batteries and regenerative braking systems;

 

   

the decline of vehicle efficiency and/or range resulting from deterioration over time in the ability of the battery to hold a charge;

 

   

changes or improvements in the fuel economy of internal combustion engines, the vehicle and the vehicle controls or competitors’ electrified systems;

 

   

the availability of service, charging and fueling and other associated costs for electric vehicles;

 

   

access to sufficient charging infrastructure;

 

   

the risk that government support for electric vehicles and infrastructure may not continue;

 

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volatility in the cost of energy, electricity, oil and gasoline could affect buying decisions;

 

   

government regulations and economic incentives promoting fuel efficiency and alternate forms of energy, including new regulations mandating zero tailpipe emissions compared to overall carbon reduction;

 

   

the availability of tax and other governmental incentives to purchase and operate electric vehicles or future regulation requiring increased use of nonpolluting vehicles; and

 

   

macroeconomic factors.

As an example, the market price of oil has dropped since January 2020, and it is unknown to what extent any corresponding decreases in the cost of fuel may impact the market for electric vehicles. Moreover, travel restrictions and social distancing efforts in response to the COVID-19 pandemic may negatively impact the commercial bus and van fleet industry, for an unknown, but potentially lengthy, period of time. Additionally, Arrival may become subject to regulations that may require it to alter the design of its electric vehicles, which could negatively impact customer interest in Arrival’s products.

Arrival has grown its business rapidly, and expects to continue to expand its operations significantly. Any failure to manage its growth effectively could adversely affect its business, prospects, operating results and financial condition.

Any failure to manage Arrival’s growth effectively could materially and adversely affect Arrival’s business, prospects, operating results and financial condition. Arrival intends to expand its operations significantly. Arrival expects its future expansion to include:

 

   

expanding the management team;

 

   

hiring and training new personnel;

 

   

leveraging consultants to assist with company growth and development;

 

   

forecasting production and revenue;

 

   

controlling expenses and investments in anticipation of expanded operations;

 

   

establishing or expanding design, production, sales and service facilities;

 

   

implementing and enhancing administrative infrastructure, systems and processes; and

 

   

expanding into international markets.

Arrival intends to continue to hire a significant number of additional personnel, including software engineers, design and production personnel and service technicians for its electric vehicles. Because Arrival’s electric vehicles are based on a different technology platform than traditional internal combustion engines, individuals with sufficient training in electric vehicles may not be available to hire, and as a result, Arrival will need to expend significant time and expense training any newly hired employees. Competition for individuals with experience designing, producing and servicing electric vehicles and their software is intense, and Arrival may not be able to attract, integrate, train, motivate or retain additional highly qualified personnel. The failure to attract, integrate, train, motivate and retain these additional employees could seriously harm Arrival’s business, prospects, financial condition and operating results.

Arrival’s business may be adversely affected by labor and union activities.

Although none of Arrival’s employees are currently represented by a labor union, it is common throughout the automobile industry generally for many employees at automobile companies to belong to a union, which can result in higher employee costs and increased risk of work stoppages. Arrival may also directly and indirectly

 

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depend upon other companies with unionized work forces, such as parts suppliers and trucking and freight companies, and work stoppages or strikes organized by such unions could have a material adverse impact on Arrival’s business, financial condition or operating results.

Arrival’s limited operating history makes it difficult for Arrival to evaluate Arrival’s future business prospects.

Arrival is a company with an extremely limited operating history, and has generated no revenue to date. As Arrival attempts to transition from research and development activities to commercial production and sales, it is difficult, if not impossible, to forecast Arrival’s future results, and Arrival has limited insight into trends that may emerge and affect Arrival’s business. The estimated costs and timelines that Arrival has developed to reach full scale commercial production are subject to inherent risks and uncertainties involved in the transition from a start-up company focused on research and development activities to the large-scale manufacture and sale of vehicles. There can be no assurance that Arrival’s estimates related to the costs and timing necessary to complete design and engineering of its electric vehicles and to tool its microfactories will prove accurate. These are complex processes that may be subject to delays, cost overruns and other unforeseen issues. For example, the tooling required within Arrival’s microfactories may be more expensive to produce than predicted, or have a shorter lifespan, resulting in additional replacement and maintenance costs, particularly relating to composite panel tooling, which could have a material adverse impact on our results of operations and financial condition. Similarly, Arrival may experience higher raw material waste in the composite process than it expects, resulting in higher operating costs and hampering its ability to be profitable.

In addition, Arrival has engaged in limited marketing activities to date, so even if Arrival is able to bring its electric vehicles to market on time and on budget, there can be no assurance that fleet customers will embrace Arrival’s products in significant numbers. Market conditions, many of which are outside of Arrival’s control and subject to change, including general economic conditions, the availability and terms of financing, the impacts and ongoing uncertainties created by the COVID-19 pandemic, fuel and energy prices, regulatory requirements and incentives, competition and the pace and extent of vehicle electrification generally, will impact demand for Arrival’s electric vehicles, and ultimately Arrival’s success.

Arrival is dependent on its suppliers, some of which are single or limited source suppliers, and the inability of these suppliers to deliver the raw materials and components of Arrival’s vehicles in a timely manner and at prices and volumes acceptable to it could have a material adverse effect on its business, prospects and operating results.

While Arrival plans to obtain raw materials and components from multiple sources whenever possible, some of the raw materials and components used in its vehicles will be purchased by Arrival from a single or limited source, such as LG Energy Solution, Ltd. (as assignee of LG Chem Ltd., “LG Chem”) who has agreed to manufacture and supply lithium ion battery cells for Arrival’s vehicles. While Arrival believes that it may be able to establish alternate supply relationships and can obtain or engineer replacement raw materials and components for its single or limited source raw materials and components, Arrival may be unable to do so in the short term (or at all) at prices or quality levels that are acceptable to it, leaving Arrival susceptible to supply shortages, long lead times for components and cancellations and supply changes. In addition, Arrival could experience delays if its suppliers do not meet agreed upon timelines or experience capacity constraints.

Any disruption in the supply of raw materials or components, whether or not from a single or limited source supplier, could temporarily disrupt production of Arrival’s vehicles until an alternative supplier is able to supply the required raw materials or components. Changes in business conditions, unforeseen circumstances, governmental changes, and other factors beyond Arrival’s control or which it does not presently anticipate, could also affect its suppliers’ ability to deliver raw materials or components to Arrival on a timely basis. Any of the foregoing could materially and adversely affect Arrival’s results of operations, financial condition and prospects.

 

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As Arrival grows rapidly and expands into multiple global markets, there is a risk that Arrival will fail to maintain an effective system of internal controls and its ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected. Arrival may identify material weaknesses in its internal controls over financing reporting which it may not be able to remedy in a timely manner.

As a public company, Arrival will operate in an increasingly demanding regulatory environment, which requires it to comply with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the regulations of Nasdaq, the rules and regulations of the SEC, expanded disclosure requirements, accelerated reporting requirements and more complex accounting rules. Company responsibilities required by the Sarbanes-Oxley Act include establishing corporate oversight and adequate internal control over financial reporting and disclosure controls and procedures. Effective internal controls are necessary for Arrival to produce reliable financial reports and are important to help prevent financial fraud. Commencing with its fiscal year ending the year in which the Business Combination is completed, Arrival must perform system and process evaluation and testing of its internal controls over financial reporting to allow management to report on the effectiveness of its internal controls over financial reporting in its Form 20-F filing for that year, as required by Section 404 of the Sarbanes-Oxley Act. Prior to the closing of the Business Combination, Arrival has never been required to test its internal controls within a specified period and, as a result, it may experience difficulty in meeting these reporting requirements in a timely manner.

Arrival anticipates that the process of building its accounting and financial functions and infrastructure will require significant additional professional fees, internal costs and management efforts. Arrival expects that it will need to implement a new internal system to combine and streamline the management of its financial, accounting, human resources and other functions. However, such a system would likely require Arrival to complete many processes and procedures for the effective use of the system or to run its business using the system, which may result in substantial costs. Any disruptions or difficulties in implementing or using such a system could adversely affect Arrival’s controls and harm its business. Moreover, such disruption or difficulties could result in unanticipated costs and diversion of management’s attention. Arrival’s internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

If Arrival is not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if it is unable to maintain proper and effective internal controls, Arrival may not be able to produce timely and accurate financial statements. If Arrival cannot provide reliable financial reports or prevent fraud, its business and results of operations could be harmed, investors could lose confidence in its reported financial information and Arrival could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities.

Arrival has identified material weaknesses in its internal control over financial reporting. This could result in material misstatements in Arrival’s historical financial reports and, if Arrival or Holdco is unable to successfully remediate the material weaknesses, the accuracy and timing of Holdco’s financial reporting may be adversely affected, investors may lose confidence in the accuracy and completeness of Holdco’s financial reports, and the market price of Holdco Ordinary Shares may be materially and adversely affected.

Although Arrival is not yet subject to the certification or attestation requirements of Section 404 of the Sarbanes-Oxley Act, in connection with the audit of Arrival’s consolidated financial statements as of and for the years ended December 31, 2019 and 2018, in preparation for this proxy statement/prospectus, Arrival’s management and its independent registered public accounting firm identified deficiencies that Arrival concluded represented material weaknesses in its internal control over financial reporting primarily attributable to its lack of

 

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an effective control structure and sufficient financial reporting and accounting personnel. SEC guidance defines a material weakness as a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.

Arrival is in the process of designing and implementing measures to improve its internal control over financial reporting to remediate the material weaknesses related to its financial reporting as of the years ended December 31, 2019 and 2018 primarily by implementing additional review procedures within its accounting and finance department, hiring additional accounting and compliance staff and designing and implementing information technology and application controls in its financially significant systems, engaging consultants to assist it in documenting and improving its system of internal controls, as well as by implementing appropriate accounting infrastructure. At the time of this proxy statement/prospectus, these material weaknesses have not been remediated.

While Arrival is designing and implementing measures to remediate the material weaknesses, it cannot predict the success of such measures or the outcome of its assessment of these measures at this time. Arrival can give no assurance that these measures will remediate either of the deficiencies in internal control or that additional material weaknesses in its internal control over financial reporting will not be identified in the future. Holdco’s failure to implement and maintain effective internal control over financial reporting could result in errors in its financial statements that may lead to a restatement of its financial statements or cause it to fail to meet its reporting obligations. If a material weakness was identified and Holdco is unable to assert that its internal control over financial reporting is effective, or when required in the future, if Holdco’s independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of the internal control over financial reporting, investors may lose confidence in the accuracy and completeness of Holdco’s financial reports, the market price of Holdco Ordinary Shares could be adversely affected and Holdco could become subject to litigation or investigations by Nasdaq, the SEC, or other regulatory authorities, which could require additional financial and management resources.

There are complex software and technology systems that need to be developed in coordination with vendors and suppliers in order to reach production for Arrival’s electric vehicles, and there can be no assurance such systems will be successfully developed.

Arrival vehicles will use a substantial amount of third-party and in-house software codes and complex hardware to operate. The development of such advanced technologies is inherently complex, and Arrival will need to coordinate with its vendors and suppliers in order to reach production for its electric vehicles. Defects and errors may be revealed over time and Arrival’s control over the performance of third-party services and systems may be limited. Thus, Arrival’s potential inability to develop the necessary software and technology systems may harm its competitive position.

Arrival is relying on third-party suppliers to develop a number of emerging technologies for use in its products, including lithium ion battery technology. These technologies are not today, and may not ever be, commercially viable. There can be no assurances that Arrival’s suppliers will be able to meet the technological requirements, production timing, and volume requirements to support its business plan. In addition, the technology may not comply with the cost, performance useful life and warranty characteristics Arrival anticipates in its business plan. As a result, Arrival’s business plan could be significantly impacted, and Arrival may incur significant liabilities under warranty claims which could adversely affect its business, prospects, and results of operations.

 

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The discovery of defects in Arrival vehicles may result in delays in new model launches, recall campaigns or increased warranty costs. Additionally, discovery of such defects may result in a decrease in the residual value of its vehicles, which may materially harm its business.

Arrival’s electric vehicles may contain defects in design and production that may cause them not to perform as expected or may require repair. Arrivals’ products (including vehicles and components) have not completed testing and Arrival currently has a limited frame of reference by which to evaluate the performance of its electric vehicles upon which its business prospects depend. There can be no assurance that Arrival will be able to detect and fix any defects in its electric vehicles. Arrival may experience recalls in the future, which could adversely affect Arrival’s brand and could adversely affect its business, prospects, financial condition and operating results. Arrival’s electric vehicles may not perform consistent with customers’ expectations or consistent with other vehicles which may become available. Any product defects or any other failure of Arrival’s electric vehicles and software to perform as expected could harm Arrival’s reputation and result in a significant cost due to warranty replacement and other expenses, a loss of customer goodwill due to failing to meet maintenance targets in Arrival’s total cost of ownership calculations, adverse publicity, lost revenue, delivery delays, product recalls and product liability claims and could have a material adverse impact on Arrival’s business, prospects, financial condition and operating results. Additionally, discovery of such defects may result in a decrease in the residual value of Arrival’s vehicles, which may materially harm its business. Moreover, problems and defects experienced by other electric vehicle companies could by association have a negative impact on perception and customer demand for Arrival’s electric vehicles.

Arrival may become subject to product liability claims, which could harm its financial condition and liquidity if it is not able to successfully defend or insure against such claims.

Product liability claims, even those without merit or those that do not involve Arrival’s products, could harm Arrival’s business, prospects, financial condition and operating results. The automobile industry in particular experiences significant product liability claims, and Arrival faces inherent risk of exposure to claims in the event Arrival’s electric vehicles do not perform or are claimed to not have performed as expected. As is true for other commercial vehicle suppliers, Arrival expects in the future that its electric vehicles may be involved in crashes resulting in death or personal injury. Additionally, product liability claims that affect Arrival’s competitors may cause indirect adverse publicity for Arrival and its products.

A successful product liability claim against Arrival could require Arrival to pay a substantial monetary award. Arrival’s risks in this area are particularly pronounced given the relatively limited number of electric vehicles delivered to date and limited field experience of Arrival’s products. Moreover, a product liability claim against Arrival or its competitors could generate substantial negative publicity about Arrival’s products and business and could have a material adverse effect on Arrival’s brand, business, prospects, financial condition and operating results. In most jurisdictions, Arrival generally self-insures against the risk of product liability claims for vehicle exposure, meaning that any product liability claims will likely have to be paid from company funds, not by insurance.

If Arrival is sued for infringing or misappropriating intellectual property rights of third parties, litigation could be costly and time consuming and could prevent Arrival from developing or commercializing its future products.

Companies, organizations, or individuals, including Arrival’s competitors, may hold or obtain patents, trademarks or other proprietary rights that would prevent, limit or interfere with Arrival’s ability to make, use, develop, sell or market its vehicles or components, which could make it more difficult for Arrival to operate its business. From time to time, Arrival may receive communications from holders of patents or trademarks regarding their proprietary rights. Companies holding patents or other intellectual property rights may bring suits alleging infringement of such rights or otherwise assert their rights and urge Arrival to take licenses. Arrival’s applications and uses of trademarks relating to its design, software or technologies could be found to infringe

 

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upon existing trademark ownership and rights. In addition, if Arrival is determined to have infringed upon a third party’s intellectual property rights, it may be required to do one or more of the following:

 

   

cease selling, incorporating certain components into, or using vehicles or offering goods or services that incorporate or use the challenged intellectual property;

 

   

pay substantial damages;

 

   

seek a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms, or at all;

 

   

redesign its vehicles or other goods or services; or

 

   

establish and maintain alternative branding for its products and services.

In the event of a successful claim of infringement against Arrival and Arrival’s failure or inability to obtain a license to the infringed technology or other intellectual property right, Arrival’s business, prospects, operating results and financial condition could be materially and adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention.

Arrival may incur significant costs and expenses in connection with protecting and enforcing its intellectual property rights, including through litigation. Additionally, even if Arrival is able to take measures to protect its intellectual property, third-parties may independently develop technologies that are the same or similar to Arrival.

Arrival may not be able to prevent others from unauthorized use of its intellectual property, which could harm its business and competitive position. Arrival relies on a combination of patents, trade secrets (including know-how), employee and third-party nondisclosure agreements, copyrights, trademarks, intellectual property licenses, and other contractual rights to establish and protect its rights in its technology. Despite Arrival’s efforts to protect its proprietary rights, third parties may attempt to copy or otherwise obtain and use Arrival’s intellectual property or seek court declarations that they do not infringe upon its intellectual property rights. Monitoring unauthorized use of Arrival’s intellectual property is difficult and costly, and the steps Arrival has taken or will take may not prevent misappropriation. From time to time, Arrival may have to resort to litigation to enforce its intellectual property rights, which could result in substantial costs and diversion of its resources.

Patent, trademark, and trade secret laws vary significantly throughout the world. A number of foreign countries do not protect intellectual property rights to the same extent as do the laws of the United States. Therefore, Arrival’s intellectual property rights may not be as strong or as easily enforced outside of the United States. Failure to adequately protect Arrival’s intellectual property rights could result in its competitors offering similar products, potentially resulting in the loss of some of Arrival’s competitive advantage and a decrease in its revenue which, would adversely affect its business, prospects, financial condition and operating results.

Patent applications which have been submitted to the authorities may not result in granted patents or may require the applications to be modified in order for patent coverage to be obtained.

Arrival cannot be certain that it is the first inventor of the subject matter to which it has filed a particular patent application, or if it is the first party to file such a patent application. If another party has filed a patent application to the same subject matter as Arrival has, Arrival may not be entitled to the protection sought by the patent application. Further, the scope of protection of issued patent claims is often difficult to determine. As a result, Arrival cannot be certain that the patent applications that it files will issue, that the authorities will not require the applications to be modified in order for patent coverage to be obtained or that our issued patents will afford protection against competitors with similar technology. In addition, Arrival’s competitors may design around its issued patents, which may adversely affect its business, prospects, financial condition or operating results.

 

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Arrival vehicles will make use of lithium-ion battery cells, which can be dangerous under certain circumstances (including the possibility that such cells catch fire or vent smoke and flame).

The battery packs within Arrival’s electric vehicles will make use of lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. While the battery pack is designed to contain any single cell’s release of energy without spreading to neighboring cells, a field or testing failure of Arrival’s vehicles or other battery packs that it produces could occur, which could subject Arrival to lawsuits, product recalls, or redesign efforts, all of which would be time consuming and expensive. Also, negative public perceptions regarding the suitability of lithium-ion cells for automotive applications or any future incident involving lithium-ion cells, such as a vehicle or other fire, even if such incident does not involve Arrival’s vehicles, could seriously harm its business and reputation.

In addition, Arrival intends to store its battery packs in its microfactories prior to installation in its electric vehicles. Any mishandling of battery cells may cause disruption to the operation of Arrival’s microfactories. While Arrival has implemented safety procedures related to the handling of the cells, a safety issue or fire related to the cells could disrupt its operations. Such damage or injury could lead to adverse publicity and potentially a safety recall. Moreover, any failure of a competitor’s electric vehicle or energy storage product may cause indirect adverse publicity for Arrival and its products. Such adverse publicity could negatively affect Arrival’s brand and harm its business, prospects, financial condition and operating results.

Arrival will rely on complex robotic assembly and component manufacturing for its production, which involves a significant degree of risk and uncertainty in terms of operational performance and costs.

Arrival will rely on complex robotic assembly and component manufacturing for the production and assembly of its electric vehicles, which will involve a significant degree of uncertainty and risk in terms of operational performance and costs. Arrival’s microfactories will contain large-scale machinery combining many components. These components may suffer unexpected malfunctions from time to time and will depend on repairs and spare parts to resume operations, which may not be available when needed. Unexpected malfunctions of these components may significantly affect the intended operational efficiency. In addition, Arrival may encounter technical and/or validation difficulties with its components that it is unable to overcome and as a result Arrival may have to source more external components than planned and/or may not be able to achieve target prices in production components. Operational performance and costs can be difficult to predict and are often influenced by factors outside of Arrival’s control, such as, but not limited to, scarcity of natural resources, environmental hazards and remediation, costs associated with decommissioning of machines, labor disputes and strikes, difficulty or delays in obtaining governmental permits, damages or defects in electronic systems, industrial accidents, fire, seismic activity and natural disasters. Should operational risks materialize, it may result in the personal injury to or death of workers, the loss of production equipment, damage to production facilities, monetary losses, delays and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs and potential legal liabilities, all which could have a material adverse effect on Arrival’s business, prospects, financial condition or operating results.

Arrival may not succeed in establishing, maintaining and strengthening the Arrival brand, which would materially and adversely affect customer acceptance of its vehicles and components and its business, revenues and prospects.

Arrival’s business and prospects heavily depend on its ability to develop, maintain and strengthen the Arrival brand. If Arrival is not able to establish, maintain and strengthen its brand, it may lose the opportunity to build a critical mass of customers. Arrival’s ability to develop, maintain and strengthen the Arrival brand will depend heavily on the success of its marketing efforts. The automobile industry is intensely competitive, and Arrival may not be successful in building, maintaining and strengthening its brand. Arrival’s current and potential competitors, particularly automobile manufacturers headquartered in the United States, Japan, the

 

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European Union and China, have greater name recognition, broader customer relationships and substantially greater marketing resources than Arrival does. If Arrival does not develop and maintain a strong brand, its business, prospects, financial condition and operating results will be materially and adversely impacted.

The efficiency of a battery’s use over time when driving electric vehicles will decline over time, which may negatively influence potential customers’ decisions whether to purchase Arrival’s electric vehicles.

The cells used in the Arrival battery modules degrade over time, influenced primarily by the age of the cells and the total energy throughput over the life of the electric vehicle. This cell degradation results in a corresponding reduction in the vehicle’s range. During typical use, the degradation is 2-3% per year, which can result in the vehicle having only 70% of its original range after ten years. Although common to all electric vehicles, cell degradation, and the related decrease in range, may negatively influence potential customer’s electric vehicle purchase decisions.

Arrival is likely to face competition from a number of sources, which may impair its revenues, increase its costs to acquire new customers, and hinder its ability to acquire new customers.

The vehicle electrification market has expanded significantly since Arrival was founded in 2015. The commercial vehicle electrification market in which Arrival operates features direct competition which includes traditional OEMs producing electric vehicles, including but not limited to Daimler AG, Volkswagen, Fiat, Ford and General Motors and electrification solution providers such as Rivian, Hyliion, Workhorse Group Inc., Nikola, Proterra and Evobus, OEMs that have traditionally focused on the consumer market may expand into the commercial markets. If these companies or other OEMs or providers of electrification solutions expand into the commercial markets, Arrival will face increased direct competition, which may impair Arrival’s revenues, increase its costs to acquire new customers, hinder its ability to acquire new customers, have a material adverse effect on Arrival’s product prices, market share, revenue and profitability.

Arrival may not be able to accurately estimate the supply and demand for its vehicles, which could result in a variety of inefficiencies in its business and hinder its ability to generate revenue. If Arrival fails to accurately predict its manufacturing requirements, it could incur additional costs or experience delays.

It is difficult to predict Arrival’s future revenues and appropriately budget for its expenses, and Arrival may have limited insight into trends that may emerge and affect its business. Arrival will be required to provide forecasts of its demand to its suppliers several months prior to the scheduled delivery of products to its prospective customers. Currently, there is no historical basis for making judgments on the demand for Arrival’s vehicles or its ability to develop, manufacture, and deliver vehicles, or Arrival’s profitability in the future. If Arrival overestimates its requirements, its suppliers may have excess inventory, which indirectly would increase Arrival’s costs. If Arrival underestimates its requirements, its suppliers may have inadequate inventory, which could interrupt manufacturing of its products and result in delays in shipments and revenues. In addition, lead times for materials and components that Arrival’s suppliers order may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given time. If Arrival fails to order sufficient quantities of product components in a timely manner, the delivery of vehicles to its customers could be delayed, which would harm Arrival’s business, financial condition and operating results.

The markets in which Arrival operates are highly competitive, and it may not be successful in competing in these industries. Arrival currently faces competition from new and established domestic and international competitors and expects to face competition from others in the future, including competition from companies with new technologies.

Both the automobile industry generally, and the electric vehicle segment in particular, are highly competitive, and Arrival will be competing for sales with both internal combustion engine vehicles and other electric vehicles. Many of Arrival’s current and potential competitors have significantly greater financial,

 

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technical, manufacturing, marketing and other resources than Arrival does and may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of their products, including their electric vehicles. Arrival expects competition for electric vehicles to intensify due to increased demand and a regulatory push for alternative fuel vehicles, continuing globalization, and consolidation in the worldwide automotive industry. Factors affecting competition include product quality and features, innovation and development time, pricing, reliability, safety, fuel economy, customer service, and financing terms. Continued or increased price competition in the automotive industry generally, and in “green” vehicles in particular, may harm Arrival’s business. Increased competition may lead to lower vehicle unit sales and increased inventory, which may result in downward price pressure and adversely affect Arrival’s business, financial condition, operating results, and prospects.

The automotive industry and its technology are rapidly evolving and may be subject to unforeseen changes. Developments in alternative technologies, including but not limited to hydrogen, may adversely affect the demand for Arrival’s electric vehicles.

Arrival may be unable to keep up with changes in electric vehicle technology or alternatives to electricity as a fuel source and, as a result, its competitiveness may suffer. Developments in alternative technologies, such as advanced diesel, ethanol, fuel cells, or compressed natural gas, or improvements in the fuel economy of the internal combustion engine, may materially and adversely affect Arrival’s business and prospects in ways Arrival does not currently anticipate. Any failure by Arrival to successfully react to changes in existing technologies could materially harm its competitive position and growth prospects.

Arrival’s electric vehicles will compete for market share with vehicles powered by other vehicle technologies that may prove to be more attractive than Arrival’s vehicle technologies.

Arrival’s target market currently is serviced by manufacturers with existing customers and suppliers using proven and widely accepted fuel technologies. Additionally, Arrival’s competitors are working on developing technologies that may be introduced in Arrival’s target market. Similarly, improvement in competitor performance or technology may result in the infrastructure required to operate Arrival vehicles, such as for charging, becoming comparatively expensive and reducing the economic attractiveness of our vehicles. If any of these alternative technology vehicles can provide lower fuel costs, greater efficiencies, greater reliability or otherwise benefit from other factors resulting in an overall lower total cost of ownership, this may negatively affect the commercial success of Arrival’s vehicles or make Arrival’s vehicles uncompetitive or obsolete.

If any of Arrival’s suppliers become economically distressed or go bankrupt, Arrival may be required to provide substantial financial support or take other measures to ensure supplies of components or materials, which could increase its costs, affect its liquidity or cause production disruptions.

Arrival expects to purchase various types of equipment, raw materials and manufactured component parts from its suppliers. If these suppliers experience substantial financial difficulties, cease operations, or otherwise face business disruptions, Arrival may be required to provide substantial financial support to ensure supply continuity or would have to take other measures to ensure components and materials remain available. Any disruption could affect Arrival’s ability to deliver vehicles and could increase Arrival’s costs and negatively affect its liquidity and financial performance.

Increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion battery cells, could harm Arrival’s business.

Arrival and its suppliers may experience increases in the cost of or a sustained interruption in the supply or shortage of materials. Any such increase, supply interruption or shortage could materially and negatively impact Arrival’s business, prospects, financial condition and operating results. Arrival and its suppliers use various

 

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materials in their businesses and products, including for example lithium-ion battery cells and steel, and the prices for these materials fluctuate. The available supply of these materials may be unstable, depending on market conditions and global demand, including as a result of increased production of electric vehicles by Arrival’s competitors, and could adversely affect Arrival’s business and operating results. For instance, Arrival is exposed to multiple risks relating to lithium-ion battery cells. These risks include:

 

   

an increase in the cost, or decrease in the available supply, of materials used in the cells;

 

   

disruption in the supply of cells due to quality issues or recalls by battery cell manufacturers; and

 

   

fluctuations in the value of any foreign currencies in which battery cell and related raw material purchases are or may be denominated against the purchasing entity’s operating currency.

Arrival’s business is dependent on the continued supply of battery cells for the battery packs used in Arrival’s electric vehicles. While Arrival has entered into an agreement with LG Chem to provide it with lithium ion battery cells, Arrival may have limited flexibility in changing its supplier in the event of any disruption in the supply of battery cells which could disrupt production of Arrival’s electric vehicles. Furthermore, fluctuations or shortages in petroleum and other economic conditions may cause Arrival to experience significant increases in freight charges and material costs. Substantial increases in the prices for Arrival’s materials or prices charged to it, such as those charged by battery cell suppliers, would increase Arrival’s operating costs, and could reduce its margins if the increased costs cannot be recouped through increased commercial vehicle sales prices. Any attempts to increase product prices in response to increased material costs could result in cancellations of orders and therefore materially and adversely affect Arrival’s brand, image, business, prospects and operating results.

Arrival is subject to governmental export and import control laws and regulations. Arrival’s failure to comply with these laws and regulations could have an adverse effect on its business, prospects, financial condition and operating results.

Arrival’s products and solutions are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control. U.S. export control laws and regulations and economic sanctions prohibit the shipment of certain products and services to U.S. embargoed or sanctioned countries, governments and persons. In addition, complying with export control and sanctions regulations for a particular sale may be time-consuming and result in the delay or loss of sales opportunities.

Exports of Arrival’s products and technology must be made in compliance with these laws and regulations. For example, Arrival may require one or more licenses to import or export certain vehicles, components or technologies to its research and development teams in various countries and may experience delays in obtaining the requisite licenses to do so. Audits in connection with the application for licenses may increase areas of noncompliance that could result in delays or additional costs. If Arrival fails to comply with these laws and regulations, Arrival and certain of its employees could be subject to additional audits, substantial civil or criminal penalties, including the possible loss of export or import privileges, fines, which may be imposed on Arrival and responsible employees or managers and, in extreme cases, the incarceration of responsible employees or managers.

As Arrival expands its microfactories globally, it may encounter unforeseen import/export charges, which could increase its costs and hamper its profitability. In addition, changes in Arrival’s products or solutions or changes in applicable export or import laws and regulations may create delays in the introduction and sale of Arrival’s products and solutions in international markets, increase costs due to changes in import and export duties and taxes, prevent Arrival’s customers from deploying Arrival’s products and solutions or, in some cases, prevent the export or import of Arrival’s products and solutions to certain countries, governments or persons altogether. Any change in export or import laws and regulations, shift in the enforcement or scope of existing laws and regulations, or change in the countries, governments, persons or technologies targeted by such laws and

 

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regulations, could also result in decreased use of Arrival’s products and solutions or in Arrival’s decreased ability to export or sell its products and solutions to customers. Any decreased use of Arrival’s products and solutions or limitation on its ability to export or sell its products and solutions would likely adversely affect Arrival’s business, prospects, financial condition and operating results.

The United Kingdom’s withdrawal from the European Union, or Brexit, could result in increased regulatory, economic and political uncertainty, and impose additional challenges in securing regulatory approval of Arrival’s electric vehicles in the European Union and the rest of Europe.

The United Kingdom withdrew from the European Union effective as of January 31, 2020 and is now in a period of transition until the end of 2020. The transition period maintains all existing trading arrangements. During the transition period, the United Kingdom and the European Union will negotiate future trading arrangements. Until a final agreement has been reached, an exit without a trade agreement in place, which would result in the United Kingdom losing access to free trade agreements for goods and services with the European Union and other countries, continues to be a risk. An exit by the United Kingdom from the European Union without an agreement in place would likely lead to regulatory, political and economic uncertainty, and potentially divergent laws and regulations between the United Kingdom and the European Union.

Arrival has two microfactories in active development, one in Rock Hill, South Carolina, USA and one in Bicester, UK, and has employees in the US, UK and other European countries. Arrival cannot predict whether or not the United Kingdom will significantly alter its current laws and regulations in respect of the electric vehicle industry and, if so, what impact any such alteration would have on Arrival or its business. Moreover, Arrival cannot predict the impact that Brexit will have on (i) the marketing of its electric vehicles or (ii) the process to obtain regulatory approval in the United Kingdom for its electric vehicles. As a result of Brexit, Arrival may experience adverse impacts on customer demand and profitability in the UK and other markets. Depending on the terms of Brexit and any subsequent trade agreement, the UK could also lose access to the single EU market, or specific countries in the EU, resulting in a negative impact on the general and economic conditions in the UK and the EU. Changes may occur in regulations that Arrival is required to comply with as well as amendments to treaties governing tax, duties, tariffs, etc. which could adversely impact its operations and require it to modify its financial and supply arrangements. For example, the imposition of any import restrictions and duties levied on its electric vehicles may make its electric vehicles more expensive and less competitive from a pricing perspective. To avoid such impacts, Arrival may have to restructure or relocate some of its operations which would be costly and negatively impact its profitability and cash flow.

Additionally, political instability in the European Union as a result of Brexit may result in a material negative effect on credit markets, currency exchange rates and foreign direct investments and any subsequent trade agreement in the EU and UK. This deterioration in economic conditions could result in increased unemployment rates, increased short- and long-term interest rates, adverse movements in exchange rates, consumer and commercial bankruptcy filings, a decline in the strength of national and local economies, and other results that negatively impact household incomes.

Furthermore, as a result of Brexit, other European countries may seek to conduct referenda with respect to their continuing membership with the European Union. Given these possibilities and others Arrival may not anticipate, as well as the absence of comparable precedent, it is unclear what financial, regulatory and legal implications the withdrawal of the United Kingdom from the European Union would have and how such withdrawal would affect Arrival, and the full extent to which its business could be adversely affected.

Arrival is subject to risks related to health epidemics and pandemics, including the ongoing COVID-19 pandemic, which could adversely affect Arrival’s business and operating results.

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including, but not limited to, its impact on general economic conditions, trade and financing markets, changes in customer behavior and continuity in business operations creates significant uncertainty. The spread of COVID-19 also disrupted the manufacturing, delivery and overall supply chain of vehicle manufacturers and suppliers, and has led to a global decrease in vehicle sales in markets around the world. In particular, the COVID-19 crisis may cause a decrease in demand for Arrival’s vehicles if fleet operators delay purchases of vehicles or if fuel prices for internal combustion engine vehicles remain low, an increase in costs resulting from Arrival’s efforts to mitigate the effects of COVID-19, delays in Arrival’s schedule to full commercial production of electric vehicles and disruptions to Arrival’s supply chain, among other negative effects.

The pandemic has resulted in government authorities implementing many measures to contain the spread of COVID-19, including travel bans and restrictions, quarantines, shelter-in-place and stay-at-home orders, and business shutdowns. These measures may be in place for a significant period of time and may be reinstituted if conditions deteriorate, which could adversely affect Arrival’s start-up and manufacturing plans. Measures that have been relaxed may be reimplemented if COVID-19 continues to spread. If, as a result of these measures, Arrival has to limit the number of employees and contractors at any microfactory at a given time, it could cause a delay in tooling efforts or in the production schedule of its electric vehicles. Further, Arrival’s sales and marketing activities may be adversely affected due to the cancellation or reduction of in-person sales activities, meetings, events and conferences. If Arrival’s workforce is unable to work effectively, including due to illness, quarantines, government actions or other restrictions in connection with COVID-19, Arrival’s operations will be adversely affected.

The extent to which the COVID-19 pandemic may continue to affect Arrival’s business will depend on continued developments, which are uncertain and cannot be predicted. Even after the COVID-19 pandemic has subsided, Arrival may continue to suffer an adverse effect to Arrival’s business due to its global economic effect, including any economic recession. If the immediate or prolonged effects of the COVID-19 pandemic have a significant adverse impact on government finances, it would create uncertainty as to the continuing availability of incentives related to electric vehicle purchases and other governmental support programs.

Arrival is highly dependent on the services of its senior management team (including Denis Sverdlov, its Founder and Chief Executive Officer), and if Arrival is unable to retain some or all of this team, its ability to compete could be harmed.

Arrival’s success depends, in part, on its ability to retain its key personnel. Arrival is highly dependent on the services of its senior management team (including Denis Sverdlov, its Founder and Chief Executive Officer). If members of the senior management team were to discontinue their service to Arrival due to death, disability or any other reason, Arrival would be significantly disadvantaged in the event Arrival was unable to appoint suitable replacements in a timely manner. The unexpected loss of or failure to retain one or more of Arrival’s key employees could adversely affect Arrival’s business. Arrival does not currently maintain key man life insurance policies with respect to Mr. Sverdlov or any other officer and following the completion of the Business Combination, Arrival will evaluate whether to obtain such key man life insurance policies. Any failure by Arrival’s management team and Arrival’s employees to perform as expected may have a material adverse effect on Arrival’s business, prospects, financial condition and operating results.

Arrival’s success depends, in part, on its ability to attract and recruit key personnel. If Arrival is unable to attract key employees and hire qualified management, technical and vehicle engineering personnel, its ability to compete could be harmed.

Arrival’s success depends, in part, on its continuing ability to identify, hire, attract, train and develop other highly qualified personnel, Experienced and highly skilled employees are in high demand and competition for these employees can be intense. Arrival may not be able to attract, assimilate, develop or retain qualified personnel in the future, and its failure to do so could adversely affect Arrival’s business, including the execution of its global business strategy.

 

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CIIG’s ability to successfully effect the Business Combination, and the Combined Company’s ability to successfully operate the business thereafter, will be largely dependent upon the efforts of certain key personnel of Arrival.

CIIG’s ability to successfully effect the Business Combination, and the Combined Company’s ability to successfully operate the business thereafter, is dependent upon the efforts of key personnel of Arrival. It is possible that the Combined Company will lose some key personnel, the loss of which could negatively impact the operations and profitability of the Combined Company. Although Arrival anticipates that all of its senior management will remain in place following the Business Combination, the loss of key personnel could negatively impact the operations and profitability of the Combined Company and its financial condition could suffer as a result.

Arrival may be subject to damages resulting from claims that it or its employees have wrongfully used or disclosed alleged trade secrets of its employees’ former employers.

Many of Arrival’s employees were previously employed by other automotive companies or by suppliers to automotive companies. Arrival may be subject to claims that it or these employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If Arrival fails in defending such claims, in addition to paying monetary damages, it may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent Arrival’s ability to commercialize its products, which could severely harm its business. Even if Arrival is successful in defending against these claims, litigation could result in substantial costs and demand on management resources.

Arrival is subject to stringent and changing privacy laws, regulations and standards, information security policies and contractual obligations related to data privacy and security. Arrival’s actual or perceived failure to comply with such obligations could harm its business.

Arrival has legal and contractual obligations regarding the protection of confidentiality and appropriate use of personally identifiable information. Arrival is subject to a variety of federal, state, local and international laws, directives and regulations relating to the collection, use, retention, security, disclosure, transfer and other processing of personally identifiable information. The regulatory framework for privacy and security issues worldwide is rapidly evolving and, as a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. Arrival publicly posts documentation regarding its practices concerning the collection, processing, use and disclosure of data.

Although Arrival endeavors to comply with its published policies and documentation, it may at times fail to do so or be alleged to have failed to do so. The publication of its privacy policy and other documentation that provide promises and assurances about privacy and security can subject Arrival to potential state and federal action if they are found to be deceptive, unfair or misrepresentative of its actual practices. Any failure by Arrival, its suppliers or other parties with whom it does business to comply with this documentation or with federal, state, local or international regulations could result in proceedings against Arrival by governmental entities or others. In many jurisdictions, enforcement actions and consequences for noncompliance are rising. In the United States, these include enforcement actions in response to rules and regulations promulgated under the authority of federal agencies and state attorneys general and legislatures and consumer protection agencies. In addition, privacy advocates and industry groups have regularly proposed, and may propose in the future, self-regulatory standards with which Arrival must legally comply or that contractually apply to it. If Arrival fails to follow these security standards even if no customer information is compromised, it may incur significant fines or experie