Legato Merger Corp. III Reports $2.6M Net Income, $209.5M in Assets in First Quarter

Legato Merger Corp. III, incorporated on November 6, 2023, is a shell company focused on acquiring one or more businesses through various business combinations, particularly in the infrastructure, engineering, construction, industrial, and renewables sectors. As of August 31, 2024, the company reported total assets of $209.5 million, with $207.5 million held in a Trust Account from its Initial Public Offering (IPO) completed on February 8, 2024.

The IPO raised gross proceeds of $201.3 million from the sale of 20,125,000 units at $10.00 each, including an over-allotment option. The company also generated $5.6 million from a private placement of 555,625 units. Total transaction costs associated with the IPO amounted to $11.7 million, which included underwriting fees and other offering costs.

For the three months ended August 31, 2024, Legato reported net income of $2.6 million, with interest income from investments in the Trust Account contributing $2.8 million. Operating costs for the same period were $284,948. For the nine months ended August 31, 2024, net income totaled $5.8 million, with interest income reaching $6.3 million and operating costs of $506,106. The basic and diluted net income per share for the nine-month period was $0.22.

The company had cash and cash equivalents of $1.7 million as of August 31, 2024, with working capital of $1.98 million. It utilized a loan of $146,785 from Eric Rosenfeld, the Chief SPAC Officer, to meet liquidity needs prior to the IPO, which was settled shortly after the offering. Post-IPO, liquidity has been supported by net proceeds held outside the Trust Account, intended for business acquisitions and related expenses.

Legato has not commenced any operations or generated revenues to date, focusing solely on organizational activities and searching for a target business. The company has a defined Combination Period to complete its initial business combination, failing which it will liquidate and redeem public shares. As of the reporting date, there were no outstanding working capital loans, and the company has no long-term debt or capital lease obligations.

The company is classified as an "emerging growth company" under the JOBS Act, allowing it to benefit from certain reporting exemptions. It has adopted various accounting standards updates, including ASU 2020-06 and ASU 2016-13, which did not materially affect its financial position or results.