Overview

Chenghe Acquisition I Co. (formerly known as LatAmGrowth SPAC) is a blank check company incorporated in the Cayman Islands for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. The company completed its initial public offering (IPO) in January 2022, raising $130 million.

Proposed Business Combination with Femco Steel Technology Co., Ltd.

On December 22, 2023, Chenghe Acquisition I Co. entered into a Business Combination Agreement with Femco Steel Technology Co., Ltd. (FST). Under the agreement, Chenghe’s merger subsidiary will merge with and into Chenghe, with Chenghe being the surviving company and a wholly-owned subsidiary of a new Cayman Islands holding company called CayCo. The combined company will be renamed “FST Ltd.”

The transaction is subject to various closing conditions, including:

• Accuracy of representations and warranties
• Material compliance with pre-closing covenants
• No material adverse effect for FST
• FST’s Company Acquisition Percentage reaching at least 90%
• Completion of the FST Restructuring
• Receipt of Taiwan DIR Approval
• Shareholder approvals
• Listing of new shares on a stock exchange
• Chenghe having at least $5,000,001 in net tangible assets after redemptions

Results of Operations

As of September 30, 2024, Chenghe has not commenced any operations. All activity has related to its formation, IPO, and the search for a target company to acquire. The company has generated non-operating income in the form of interest on the IPO proceeds held in a trust account.

For the nine months ended September 30, 2024, Chenghe had a net loss of $408,688, consisting of $1,565,985 in formation and operating costs, offset by $1,445,297 in trust interest income and a $288,000 unrealized loss on the change in fair value of warrants.

For the nine months ended September 30, 2023, Chenghe had net income of $3,961,115, which included $3,069,235 in trust interest income, a $1,726,560 unrealized gain on warrants, and $186,550 in other income from the reduction of deferred underwriting fees.

Liquidity, Capital Resources and Going Concern

As of September 30, 2024, Chenghe had no cash on hand and a working capital deficit of $4,471,356. The company has been relying on funding from the New Sponsor, including a $1,497,479 promissory note outstanding as of September 30, 2024, to fund its operations and extension payments into the trust account.

Chenghe has until November 27, 2024 (or April 27, 2025 with additional extension deposits) to consummate its initial business combination before facing mandatory liquidation. Management has determined that this raises substantial doubt about the company’s ability to continue as a going concern. The financial statements do not include any adjustments that may result from this uncertainty.

Risks and Uncertainties

Chenghe is monitoring the potential impact of the Israel-Hamas conflict and Russia-Ukraine war, but the specific impact on the company’s financial position and operations is not yet determinable.

Critical Accounting Estimates

Key accounting estimates include the fair value of Chenghe’s warrant liabilities, over-allotment liability, and Class B ordinary shares. These are assessed using a combination of quoted market prices and valuation models.

Chenghe has elected to take advantage of the JOBS Act provisions that allow it to delay adoption of new or revised accounting standards as an emerging growth company.