| Item 4.02 | Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. |
On December 2, 2021, the Audit Committee of the Board of Directors (the “Audit Committee”) of Oaktree Acquisition Corp. II (the “Company”) concluded, in discussion with the Company’s management, that the Company’s previously issued (i) audited balance sheet as of September 21, 2020 (the “Post IPO Balance Sheet”), as previously restated in the Company’s Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2020, filed with the SEC on May 19, 2021(“2020 Form 10-K/A No. 1”), (ii) audited financial statements included in the 2020 Form 10-K/A No. 1, (iii) unaudited interim financial statements included in the Form 10-Q for the quarterly period ended September 30, 2020 as previously restated in the 2020 Form 10-K/A No. 1 (iv) unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with the SEC on May 20, 2021; (v) unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed with the SEC on August 16, 2021, and (vi) Note 2 to the unaudited interim financial statements and Item 4 of Part 1 included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, filed with the SEC on November 15, 2021 (the “Q3 10-Q”), should no longer be relied upon.
In connection with the preparation of the Company’s financial statements as of September 30, 2021, the Company concluded it should restate its financial statements to classify all Class A ordinary shares issued in connection with its initial public offering in temporary equity. ASC 480, paragraph 10-S99 provides that redemption provisions not solely within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent equity. The Company previously determined the Class A ordinary shares subject to possible redemption to be equal to the redemption value of $10.00 per share of Class A ordinary shares while also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001. Previously, the Company did not consider redeemable shares classified as temporary equity as part of net tangible assets. Effective with the financial statements for the quarter ended September 30, 2021, the Company revised this interpretation to include temporary equity in net tangible assets. Accordingly, the Company will present all shares of redeemable Class A ordinary shares as temporary equity.
In connection with the change in presentation for the Class A ordinary shares subject to possible redemption, the Company revised its earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares. This presentation differs from the previously presented method of earnings per share, which was similar to the two-class method.
The Company plans to reflect the restatement of its temporary and permanent equity (and other related changes) for the Post IPO Balance Sheet, the audited financial statements included in the 2020 Form 10-K/A No. 1, and the unaudited interim financial statements for the quarterly period ended September 30, 2020 in an amendment to its Annual Report on Form 10-K as of and for the year ended December 31, 2020 and will amend the unaudited interim financial statements for the quarterly periods ended March 31, 2021 and June 30, 2021 and footnote 2 to the unaudited interim financial statements and Item 4 of Part 1 included in the Q3 10-Q in an amendment to the Q3 10-Q. The restatement does not have any impact on the Company’s cash position or cash held in its trust account.
The Company’s management has concluded that in light of the classification error described above, a material weakness exists in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures were not effective. The Company’s remediation plan with respect to such material weakness will be described in more detail in the amended Q3 10-Q.
