| PROSPECTUS SUPPLEMENT NO. 5 |
Filed pursuant to Rule
424(b)(3) |
| (To
prospectus dated October 21, 2021) |
Registration No. 333-260094 |
ARCHAEA ENERGY INC.
110,334,394 SHARES OF CLASS A COMMON STOCK
7,021,000 WARRANTS TO PURCHASE SHARES OF CLASS A COMMON
STOCK
This prospectus supplement is being filed to update and supplement
the information contained in the prospectus dated October 21, 2021
(the “Prospectus”), with the information contained in our (i)
Current Report on Form 8-K filed with the Securities and Exchange
Commission (the “SEC”) on December 28, 2021 (the “Current Report”),
(ii) Amendment No. 2 to the Annual Report on Form 10-K/A for the
fiscal year ended December 31, 2020 filed with the SEC on December
28, 2021 (the “Amended 10-K”), (iii) Amendment No. 1 to the
Quarterly Report on Form 10-Q/A for the quarterly period ended
March 31, 2021 filed with the SEC on December 28, 2021 (the
“Amended 1Q21 10-Q”), and (iv) Amendment No. 1 to the Quarterly
Report on Form 10-Q/A for the quarterly period ended June 30, 2021
filed with the SEC on December 28, 2021 (the “Amended 2Q21 10-Q”
and, together with the Amended 1Q21 10-Q, the “Amended 10-Qs”).
Accordingly, we have attached the Current Report, the Amended 10-K
and the Amended 10-Qs to this prospectus supplement.
The Prospectus and this prospectus supplement relate to the
issuance by us of up to 18,883,492 shares of our Class A common
stock, par value $0.0001 per share (the “Class A Common Stock”),
which consist of (i) 11,862,492 shares that may be issued upon the
exercise of the 11,862,492 warrants (the “Public Warrants”)
originally sold as part of the units issued in the initial public
offering (the “IPO”) of Rice Acquisition Corp. (“RAC”), (ii)
6,771,000 shares of Class A Common Stock that may be issued upon
the exercise of the 6,771,000 warrants originally issued to Rice
Acquisition Sponsor LLC (the “Sponsor”) and Atlas Point Energy
Infrastructure Fund, LLC (“Atlas”) in a private placement that
closed simultaneously with the consummation of the IPO (the
“Private Placement Warrants”) and (iii) 250,000 shares of Class A
Common Stock that may be issued upon the exercise of the 250,000
warrants issued to Atlas in a private placement that closed
simultaneously with the consummation of the Business Combinations
(as defined in the Prospectus) (the “Forward Purchase Warrants”
and, together with the Public Warrants and the Private Placement
Warrants, the “Warrants”). Each Warrant is exercisable to purchase
for $11.50 one share of Class A Common Stock, subject to
adjustment.
In addition, the Prospectus and this prospectus supplement relate
to the resale from time to time of 6,771,000 Private Placement
Warrants, 250,000 Forward Purchase Warrants and 110,334,394 shares
of Class A Common Stock by the selling security holders named in
the Prospectus or their permitted transferees (each a “Selling
Securityholder” and, collectively, the “Selling Securityholders”).
The 110,334,394 shares of Class A Common Stock consist of (i)
29,166,667 shares of Class A Common Stock issued in a private
placement that closed concurrently with the consummation of the
Business Combinations, (ii) 2,500 shares of Class A Common Stock
issued to the Sponsor in a private placement prior to the
consummation of the IPO, (iii) 18,883,492 shares of Class A Common
Stock issuable upon exercise of the Warrants, (iv) 5,931,350 shares
of Class A Common Stock issuable upon redemption of the 5,931,350
Class A units of LFG Acquisition Holdings LLC (f/k/a Rice
Acquisition Holdings LLC) (“Opco”) held by the initial stockholders
of RAC, all of which were issued prior to the consummation of the
IPO, (v) 23,000,000 shares of Class A Common Stock issuable upon
redemption of the 23,000,000 Opco Class A units issued as partial
consideration upon consummation of the Aria Merger (as defined in
the Prospectus) and (vi) 33,350,385 shares of Class A Common Stock
issuable upon redemption of the 33,350,385 Opco Class A units
issued as consideration upon consummation of the Archaea Merger (as
defined in the Prospectus).
This prospectus supplement updates and supplements the information
in the Prospectus and is not complete without, and may not be
delivered or utilized except in combination with, the Prospectus,
including any other amendments or supplements thereto. This
prospectus supplement should be read in conjunction with the
Prospectus and if there is any inconsistency between the
information in the Prospectus and this prospectus supplement, you
should rely on the information in this prospectus supplement.
The Class A Common Stock is listed on the New York Stock Exchange
(“NYSE”) under the symbol “LFG.” On December 27, 2021, the last
sale price of the Class A Common Stock as reported on the NYSE was
$17.96 per share.
_______________________
Investing in our securities involves certain risks, including
those that are described in the “Risk Factors” section beginning on
page 7 of the Prospectus.
Neither the SEC nor any state securities commission has approved or
disapproved of the securities to be issued under the Prospectus or
determined if the Prospectus or this prospectus supplement is
truthful or complete. Any representation to the contrary is a
criminal offense.
_______________________
The date of this prospectus supplement is December 28,
2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION |
| |
Washington, D.C. 20549
__________________ |
|
|
FORM 8-K
___________________
Current Report
Pursuant to Section 13 or 15(d) of the securities exchange act of
1934
Date of Report (Date of earliest event reported): December 28,
2021
|
ARCHAEA ENERGY INC.
(Exact name of registrant as specified in its
charter) |
|
Delaware |
|
001-39644 |
|
85-2867266 |
| (State or other jurisdiction of
incorporation) |
|
(Commission File Number) |
|
(I.R.S. Employer Identification
No.) |
|
4444 Westheimer Road, Suite G450
Houston, Texas
|
|
77027
|
| (Address of principal executive
offices) |
|
(Zip Code) |
(346) 708-8272
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last
report)
__________________
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐ Written communications pursuant to Rule 425 under
the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under
the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
|
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
| Class
A common stock, par value $0.0001 per share |
|
LFG |
|
The
New York Stock Exchange |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the
Securities Act of 1933 (§230.405 of this chapter) or
Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2
of this chapter).
Emerging growth company
☒
If
an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Item 2.02 Results of Operations and Financial Condition.
The information set forth below in Item 4.02 and Item 7.01 is
incorporated by reference into this Item 2.02.
Item 4.02 Non-Reliance on Previously Issued Financial Statements or
a Related Audit Report or Completed Interim Review.
In light of recent comment letters issued by the Securities and
Exchange Commission (the “SEC”) to several other special purpose
acquisition companies, the management of Archaea Energy Inc. (the
“Company,” “Archaea” or “we”) has re-evaluated the Company’s
application of Accounting Standards Codification (“ASC”) Topic 480,
“Distinguishing Liabilities from Equity” to its accounting
classification of the redeemable shares of Class A common stock of
the Company (the “Public Shares”) issued as part of the units sold
in the Company’s initial public offering. The Company had
previously classified a portion of the Public Shares as permanent
equity because the Company’s amended and restated certificate of
incorporation prior to the consummation of its initial business
combination (the “charter”) provided that the Company shall not
redeem the Public Shares to the extent that such redemption would
result in the Company’s failure to have net tangible assets in
excess of $5 million or any greater net tangible asset or cash
requirement which may be contained in the agreement relating to the
Company’s initial business combination. Based on such
re-evaluation, the Company’s management determined that
the Public Shares include
certain redemption features not solely within the Company’s control
that, under ASC 480-10-S99, require such shares to be
classified as temporary equity in their entirety.
Therefore, on December 28, 2021, the Audit Committee of the
Company’s Board of Directors (the “Audit Committee”), after
discussion with the Company’s management, concluded that the
Company’s previously issued (i) audited balance sheet as of October
26, 2020 included in the Company’s Annual Report on Form 10-K/A
filed with the SEC on May 13, 2021, (ii) audited financial
statements as of December 31, 2020 and for the period from
September 1, 2020 (inception) through December 31, 2020 included in
the Company’s Annual Report on Form 10-K/A filed with the SEC on
May 13, 2021, (iii) unaudited interim financial statements as of
and for the three months ended March 31, 2021 included in the
Company’s Quarterly Report on Form 10-Q filed with the SEC on May
26, 2021 and (iv) unaudited interim financial statements as of and
for the three and six months ended June 30, 2021 included in the
Company’s Quarterly Report on Form 10-Q filed with the SEC on
August 13, 2021 should be restated to report all of the Public
Shares as temporary equity, and as a result, such financial
statements, as well as portions of any communication that describe
or are based on such financial statements, should no longer be
relied upon.
Additionally, on December 28, 2021, the Audit Committee, after
discussion with the Company’s management, concluded that the
Company’s previously issued unaudited interim financial statements
as of and for the three and nine months ended September 30, 2021
(together with the financial statements referred to in the
immediately preceding paragraph, the “Affected Financial
Statements”) included in the Company’s Quarterly Report on Form
10-Q filed with the SEC on November 15, 2021 should no longer be
relied upon due to an error related to the transactions recorded as
part of the reverse recapitalization, which understated general and
administrative expenses and accounts payable reported in such
financial statements by $2.8 million. The error related to a
duplicate entry recorded as part of the reverse recapitalization.
Portions of any communication that describe or are based on such
financial statements also should no longer be relied upon.
The Company plans to file an amendment to each of the reports
referred above to restate the Affected Financial Statements.
The Audit Committee has discussed the matters disclosed in the
first, second and fourth paragraphs in this Item 4.02 with
WithumSmith+Brown, PC (the Company’s independent registered public
accounting firm from September 1, 2020 (inception) through
September 20, 2021) and the matters disclosed in the above four
paragraphs with KPMG LLP (the Company’s current independent
registered public accounting firm).
Item 7.01 Regulation FD Disclosure.
Due to the restatements referred in Item 4.02, portions of any
communication that describe or are based on any of the Affected
Financial Statements should no longer be relied upon. In addition
to other changes not described herein, the Company’s net income and
Adjusted EBITDA, on a combined basis, for the three and nine months
ended September 30, 2021 would differ from the amounts previously
reported in the Company’s press release regarding its third quarter
of 2021 results, which was issued on November 15, 2021 (the “Third
Quarter 2021 Earnings Release”), as set forth in the table below.
The full year 2021 combined Adjusted EBITDA guidance range of $72.5
- $77.5 million disclosed in the Third Quarter 2021 Earnings
Release remains unchanged. As described in the Third Quarter 2021
Earnings Release, financial information presented on a “combined
basis” is the sum of the historical financial results of the
Company for the full period shown and Aria Energy LLC for periods
prior to the business combinations closing date, but only includes
the impact of purchase accounting as of September 15, 2021.
| (in thousands) |
|
As Previously Reported |
|
|
Adjustment |
|
|
As Restated |
|
| Three Months Ended September 30,
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined basis - Net income (loss) |
|
$ |
(21,875 |
) |
|
$ |
(2,836 |
) |
|
$ |
(24,711 |
) |
| Combined basis -
Adjusted EBITDA(1) |
|
$ |
22,291 |
|
|
$ |
(2,836 |
) |
|
$ |
19,455 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended September 30,
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
| Combined basis -
Net income (loss) |
|
$ |
52,750 |
|
|
$ |
(2,836 |
) |
|
$ |
49,914 |
|
| Combined basis -
Adjusted EBITDA(1) |
|
$ |
59,804 |
|
|
$ |
(2,836 |
) |
|
$ |
56,968 |
|
______
|
(1) |
Adjusted EBITDA is commonly used as a supplemental financial
measure by our management and external users of our consolidated
financial statements to assess the financial performance of our
assets without regard to financing methods, capital structures, or
historical cost basis. Adjusted EBITDA is not intended to represent
cash flows from operations or net income (loss) as defined by U.S.
GAAP and is not necessarily comparable to similarly titled measures
reported by other companies. |
We believe Adjusted EBITDA provides relevant and useful information
to management, investors, and other users of our financial
information in evaluating the effectiveness of our operating
performance in a manner that is consistent with management’s
evaluation of financial and operating performance.
Adjusted EBITDA is calculated by taking net income (loss), before
taxes, interest expense, and depreciation, amortization and
accretion, and adjusting for the effects of certain non-cash items,
other non-operating income or expense items, and other items not
otherwise predictive or indicative of ongoing operating
performance, including gains and losses on disposal of assets,
impairment charges, debt forbearance costs, changes in the fair
value of derivatives, non-cash compensation expense, and
non-recurring costs related to our business combinations. We
believe the exclusion of these items enables investors and other
users of our financial information to assess our sequential and
year-over-year performance and operating trends on a more
comparable basis and is consistent with management’s own evaluation
of performance.
The table below reconciles Adjusted EBITDA to net income (loss). A
reconciliation of expected full year 2021 combined Adjusted EBITDA
to net income (loss) cannot be provided without unreasonable
efforts due to the inherent difficulty in quantifying certain
amounts, including changes in fair value of warrant derivatives,
due to a variety of factors including the unpredictability of
underlying price movements, which may be significant.
| (in thousands) |
|
Three Months Ended
September 30, 2021
|
|
|
Nine Months Ended
September 30, 2021
|
|
| Net income (loss) |
|
$ |
(24,711) |
|
|
$ |
49,914 |
|
| Adjustments: |
|
|
|
|
|
|
|
|
| Interest
expense |
|
$ |
3,639 |
|
|
$ |
12,335 |
|
|
Depreciation, amortization and accretion |
|
$ |
7,776 |
|
|
$ |
20,025 |
|
| EBITDA |
|
$ |
(13,296 |
) |
|
$ |
82,274 |
|
| Amortization of
intangibles and below-market contracts |
|
$ |
580 |
|
|
$ |
2,488 |
|
| Amortization of
equity method investments basis difference |
|
$ |
428 |
|
|
$ |
428 |
|
| Net (gains) losses
from changes in fair value of derivatives |
|
$ |
9,839 |
|
|
$ |
9,284 |
|
| Share-based
compensation |
|
$ |
2,708 |
|
|
$ |
2,886 |
|
| Gain on disposal
of assets |
|
$ |
- |
|
|
$ |
(1,347 |
) |
| Gain on
extinguishment of debt |
|
$ |
- |
|
|
$ |
(61,411 |
) |
|
Acquisition transaction costs |
|
$ |
19,197 |
|
|
$ |
22,367 |
|
| Adjusted
EBITDA |
|
$ |
19,455 |
|
|
$ |
56,968 |
|
Note: Totals may not sum due to rounding.
Item 8.01 Other Events.
The Company’s Board of Directors expects to hold the 2022 Annual
Meeting of Stockholders (the “Annual Meeting”) on May 18,
2022. The time and location of the Annual Meeting will be set
forth in the Company’s definitive proxy statement for the Annual
Meeting to be filed with the SEC. The Company has set January
18, 2022 as the deadline for the receipt of proposals to be
considered for inclusion in the Company’s proxy statement for the
Annual Meeting pursuant to Rule 14a-8 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). All stockholder
proposals submitted in accordance with Rule 14a-8 under the
Exchange Act must be directed to the attention of the Corporate
Secretary, at 4444 Westheimer Road, Suite G450, Houston, Texas,
77027. Pursuant to the Company’s Bylaws, stockholders seeking to
bring business before the Annual Meeting or nominate candidates for
election as directors at the Annual Meeting must deliver such
proposals or nomination in accordance with the notice requirements
contained in the Company’s Bylaws to the principal executive
offices of the Company at 4444 Westheimer Road, Suite G450,
Houston, Texas, 77027, Attention: Corporate Secretary, no
earlier than the close of business on January 18, 2022 and no later
than the close of business on February 17, 2022. Any
stockholder proposal or director nomination must also comply with
the requirements of Delaware law, the rules and regulations
promulgated by the SEC and the Bylaws, as applicable.
FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K contains certain statements that
may include forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Exchange Act. Statements that do not relate strictly to
historical or current facts are forward-looking and usually
identified by the use of words such as “anticipate,” “estimate,”
“could,” “would,” “should,” “will,” “may,” “forecast,”
“approximate,” “expect,” “project,” “intend,” “plan,” “believe” and
other similar words. Forward-looking statements may relate to
expectations for future financial performance, business strategies
or expectations for Archaea’s business. Specifically,
forward-looking statements may include statements concerning market
conditions and trends, earnings, performance, strategies, prospects
and other aspects of Archaea’s business. Forward looking statements
are based on current expectations, estimates, projections, targets,
opinions and/or beliefs of Archaea, and such statements involve
known and unknown risks, uncertainties and other factors.
The risks and uncertainties that could cause those actual results
to differ materially from those expressed or implied by these
forward looking statements include, but are not limited to: (a) the
ability to recognize the anticipated benefits of the business
combinations and any transactions contemplated thereby, which may
be affected by, among other things, competition, the ability of
Archaea to grow and manage growth profitably and retain its
management and key employees; (b) the possibility that Archaea may
be adversely affected by other economic, business and/or
competitive factors; (c) Archaea’s ability to develop and operate
new projects; (d) the reduction or elimination of government
economic incentives to the renewable energy market; (e) delays in
acquisition, financing, construction and development of new
projects; (f) the length of development cycles for new projects,
including the design and construction processes for Archaea’s
projects; (g) Archaea’s ability to identify suitable locations for
new projects; (h) Archaea’s dependence on landfill operators; (i)
existing regulations and changes to regulations and policies that
affect Archaea’s operations; (j) decline in public acceptance and
support of renewable energy development and projects; (k) demand
for renewable energy not being sustained; (l) impacts of climate
change, changing weather patterns and conditions, and natural
disasters; (m) the ability to secure necessary governmental and
regulatory approvals; (n) the Company’s expansion into new business
lines; and (o) other risks and uncertainties indicated in the
Registration Statement on Form S-1 (File No. 333-260094),
originally filed by Archaea with the SEC on October 6, 2021, as
subsequently amended on October 18, 2021 and declared effective by
the SEC on October 21, 2021, including those under “Risk Factors”
therein, and other documents filed or to be filed with the SEC by
Archaea.
Accordingly, forward-looking statements should not be relied upon
as representing Archaea’s views as of any subsequent date. Archaea
does 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.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
| Date: December 28, 2021 |
|
|
| |
ARCHAEA ENERGY INC. |
| |
|
|
| |
By: |
/s/ Chad Bellah |
| |
Name: |
Chad Bellah |
| |
Title: |
Chief Accounting Officer |
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K/A
(Amendment No. 2)
(Mark
One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2020
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For
the transition period
from to
ARCHAEA
ENERGY INC. (formerly known as Rice Acquisition
Corp.)
(Exact name
of registrant as specified in its charter)
|
Delaware
|
|
001-39644
|
|
85-2867266
|
(State
or other jurisdiction of
incorporation or organization) |
|
(Commission
File Number) |
|
(I.R.S.
Employer
Identification Number) |
|
4444 Westheimer Road, Suite G450
Houston, Texas
|
|
77027
|
|
(Address
of principal executive offices) |
|
(Zip
Code) |
Registrant’s
telephone number, including area code: (346)
708-8272
Securities
registered pursuant to Section 12(b) of the Act:
|
Title of Each
Class: |
|
Trading Symbol: |
|
Name of Each Exchange on Which
Registered: |
|
Shares of Class A common stock, par
value $0.0001 per share |
|
LFG |
|
The New York Stock Exchange |
Securities
registered pursuant to Section 12(g) of the Act:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes ☐ No
☒
Indicate
by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes
☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes ☒ No
☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See definition of “large
accelerated filer,” “accelerated filer, “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange
Act.
|
Large
accelerated filer |
☐ |
Accelerated
filer |
☐ |
|
Non-accelerated
filer |
☒ |
Smaller
reporting company |
☒ |
|
|
|
Emerging
growth company |
☒ |
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and
attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b)
of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes ☒ No
☐
As of
June 30, 2020, the last business day of the registrant’s most
recently completed second fiscal quarter, the registrant’s
securities were not publicly traded. The registrant’s units began
trading on The New York Stock Exchange (“NYSE”) on October 22, 2020
and the registrant’s shares of Class A common stock, par value
$0.0001 (the “Class A common stock”) and warrants began trading on
the NYSE on December 14, 2020. The aggregate market value of the
common stock outstanding, other than shares held by persons who may
be deemed affiliates of the registrant, computed by reference to
the closing sales price for the shares of common stock on March 19,
2021, as reported on the NYSE, was $127,909,348 (based on the
closing sales price of the Class A common stock on March 19, 2021
of $10.27).
As of
March 19, 2021, 23,727,500 shares of Class A common stock, par
value $0.0001, and 5,931,350 shares of Class B common stock, par
value $0.0001, were issued and outstanding.
Documents
Incorporated by Reference: None.
EXPLANATORY
NOTE
Archaea Energy Inc., formerly known as Rice Acquisition Corp. (the
“Company”), is filing this Amendment No. 2 on Form 10-K/A (this
“Amendment No. 2”) to amend and restate certain items in its Annual
Report on Form 10-K as of December 31, 2020 and for the period from
September 1, 2020 (inception) through December 31, 2020, as
originally filed with the U.S. Securities and Exchange Commission
(the “SEC”) on March 30, 2021 (the “Original Filing”) and
subsequently amended on May 13, 2021 (“Amendment No. 1”).
On September 15, 2021, the
Company consummated the previously announced business combinations
pursuant to (i) the Business Combination Agreement, dated April 7,
2021 (as amended, the “Aria Merger Agreement”), by and among Rice
Acquisition Corp., a Delaware corporation (“RAC”), Rice Acquisition
Holdings LLC, a Delaware limited liability company and direct
subsidiary of RAC (“RAC Opco”), LFG Intermediate Co, LLC, a
Delaware limited liability company and direct subsidiary of RAC
Opco (“RAC Intermediate”), LFG Buyer Co, LLC, a Delaware limited
liability company and direct subsidiary of RAC Intermediate (“RAC
Buyer”), Inigo Merger Sub, LLC, a Delaware limited liability
company and direct subsidiary of RAC Buyer (“Aria Merger Sub”),
Aria Energy LLC, a Delaware limited liability company (“Aria”), and
Aria Renewable Energy Systems LLC, a Delaware limited liability
company, pursuant to which, among other things, Aria Merger Sub was
merged with and into Aria, with Aria surviving the merger and
becoming a direct subsidiary of RAC Buyer, on the terms and subject
to the conditions set forth therein (the transactions contemplated
by the Aria Merger Agreement, the “Aria Merger”), and (ii) the
Business Combination Agreement, dated April 7, 2021 (as amended,
the “Archaea Merger Agreement” and, together with the Aria Merger
Agreement, the “Business Combination Agreements”), by and among
RAC, RAC Opco, RAC Intermediate, RAC Buyer, Fezzik Merger Sub, LLC,
a Delaware limited liability company and direct subsidiary of RAC
Buyer (“Archaea Merger Sub”), Archaea Energy LLC, a Delaware
limited liability company, and Archaea Energy II LLC, a Delaware
limited liability company (“Legacy Archaea”), pursuant to which,
among other things, Archaea Merger Sub was merged with and into
Legacy Archaea, with Legacy Archaea surviving the merger and
becoming a direct subsidiary of RAC Buyer, on the terms and subject
to the conditions set forth therein (the transactions contemplated
by the Archaea Merger Agreement, the “Archaea Merger” and, together
with the Aria Merger, the “Business Combinations”). As further
discussed in Note 4 - Business Combinations and Reverse
Recapitalization, Legacy Archaea was determined to be the
accounting acquirer of the Business Combinations, and Aria was the
predecessor to the Company.
Pursuant to the terms and subject to the conditions set forth in
the Business Combination Agreement, on September 15, 2021 (the
“Closing Date”), the Business Combination was consummated (the
“Closing”).
As a result of the Business Combination, among other things,
Nicholas Stork was appointed as Chief Executive Officer of the
Company and Eric Javidi was appointed as Chief Financial Officer of
the Company, effective as of the Closing.
Unless stated otherwise, this report contains information about RAC
before the consummation of the Business
Combination. References to the “Company” in this report refer
to RAC before the consummation of the Business Combination or
Archaea Energy Inc. after the Business Combination, as the context
suggests.
Second Restatement Background
In the Company’s previously
issued financial statements, a portion of the redeemable shares of
Class A common stock of the Company (the “public shares”) issued as
part of the units sold in the Company’s initial public offering
were classified as permanent equity to maintain stockholders’
equity greater than $5,000,000 on the basis that the Company will
consummate its initial business combination only if the Company has
net tangible assets of at least $5,000,001. Thus, the Company can
only complete a merger and continue to exist as a public company if
there are sufficient public shares that do not redeem at the merger
and so it is appropriate to classify the portion of its public
shares required to keep its stockholders’ equity above the
$5,000,000 threshold as “shares not subject to
redemption.”
Following the preparation of the Company’s unaudited condensed
financial statements as of and for quarterly period ended
September 30, 2021, the Company further evaluated the SEC and
its staff’s guidance on redeemable equity instruments in ASC
480-10-S99. Previously, the Company did not consider redeemable
stock classified as temporary equity as part of net tangible
assets. Effective with these financial statements, the Company
revised this interpretation to include temporary equity in net
tangible assets. As a result, the Company determined that the
public shares include certain redemption provisions not solely
within the control of the Company that, under ASC 480-10-S99,
require such shares to be classified outside of permanent equity.
In addition, in connection with the change in presentation of Class
A common stock, the Company determined it should restate its
earnings per share calculation to allocate income and losses shares
pro rata between the two classes of shares. This presentation
contemplates a Business Combination as the most likely outcome, in
which case, both classes of shares share pro rata in the income and
losses of the Company.
Therefore, on December 28, 2021, the audit committee of the
Company’s board of directors (the “Audit Committee”), after
discussion with the Company’s management, concluded that the
Company’s previously issued (i) audited balance sheet as of
October 26, 2020 included in Amendment No. 1, (ii) audited
financial statements as of December 31, 2020 and for the period
from September 1, 2020 (inception) through December 31, 2020
included in Amendment No. 1, (iii) unaudited interim financial
statements as of and for the three months ended March 31, 2021
included in the Company’s Quarterly Report on Form 10-Q filed with
the SEC on May 26, 2021 and (iv) unaudited interim financial
statements as of and for the three and six months ended June 30,
2021 included in the Company’s Quarterly Report on Form 10-Q filed
with the SEC on August 13, 2021 should be restated to report all
public shares as temporary equity and should no longer be relied
upon.
Items Amended in this Amendment No. 2
For the convenience of the reader, this Amendment No. 2 amends and
restates Amendment No. 1 in its entirety (which had amended and
restated the Original Filing in its entirety). As a result, this
Amendment No. 2 includes both items that have been changed as a
result of the restatement described above and the restatement
described in Amendment No. 1 as well as items that are unchanged
from the Original Filing. The following items have been amended in
this Amendment No. 2 to reflect the restatement described
above:
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Part I, Item 1A. Risk
Factors |
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Part II, Item 7.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations |
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Part II, Item 8. Financial
Statements and Supplementary Data |
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Part II, Item 9A.
Controls and Procedures |
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Part IV, Item 15. Exhibits,
Financial Statement Schedules |
In addition, in accordance with applicable SEC rules, this
Amendment No. 2 includes new certifications required by Sections
302 and 906 of the Sarbanes-Oxley Act from our Chief Executive
Officer (as principal executive officer) and our Chief Financial
Officer (as principal financial officer) dated as of the filing
date of this Amendment No. 2.
Amendment No. 1 had amended and restated the Original Filing in its
entirety, and the only items that were amended in Amendment No. 1
were those listed below. Amendment No. 1 also included
certifications from the Company’s principal executive officer and
principal financial officer, which were dated as of the filing date
of Amendment No. 1.
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Part I, Item 1A. Risk Factors |
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Part II, Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of
Operations |
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Part II, Item 8. Consolidated Financial
Statements and Supplementary Data |
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Part II, Item 9A. Controls and
Procedures |
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Part IV, Item 15. Exhibits, Financial Statement
Schedules |
Except as described above, this Amendment No. 2 does not amend,
update or change any other items or disclosures in Amendment No. 1.
This Amendment No. 2 does not purport to reflect any information or
events subsequent to the filing date of the Original Filing (except
as noted in Amendment No. 1 with respect to the restatement
described therein). As such, this Amendment No. 2 speaks only as of
the date the Original Filing was filed, and we have not undertaken
herein to amend, supplement or update any information contained in
the Original Filing to give effect to any subsequent events.
Accordingly, this Amendment No. 2 should be read in conjunction
with our filings made with the SEC subsequent to the filing of the
Original Filing.
TABLE
OF CONTENTS
CERTAIN
TERMS
Unless
otherwise stated in this Annual Report on Form 10-K (this
“Report”), or the context otherwise requires, references
to:
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“Affiliated
Joint Acquisition” are to an acquisition opportunity jointly with
our sponsor, or one or more affiliates, including Rice Investment
Group and/or one or more of its portfolio companies; |
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“Atlas
Point Fund” are to Atlas Point Energy Infrastructure Fund, LLC, a
Delaware limited liability company; |
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“Common
stock” are to our Class A common stock and our Class B common
stock, collectively; |
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“equity-linked
securities” are to any securities of our company or any of our
subsidiaries which are convertible into, or exchangeable or
exercisable for, equity securities of our company or such
subsidiary, including any securities issued by our company or any
of our subsidiaries which are pledged to secure any obligation of
any holder to purchase equity securities of our company or any of
our subsidiaries, and including Opco Units; |
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“forward
purchase agreement” are to the agreement that provides for the sale
of the forward purchase securities to Atlas Point Fund in a private
placement that will close simultaneously with the closing of our
initial business combination; |
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“forward
purchase securities” are to either the forward purchase units
valued at $10.00 per unit or the forward purchase shares valued at
$9.67 per share, which may be issued at our discretion pursuant to
the forward purchase agreement; |
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“forward
purchase shares” are to our Class A common stock that may be issued
pursuant to the forward purchase agreement; |
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“forward
purchase units” are to the units, consisting of one share of our
Class A common stock and one-third of one warrant that may be
issued pursuant to the forward purchase agreement; |
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“forward
purchase warrants” are to the warrants that may be sold as part of
the forward purchase units pursuant to the forward purchase
agreement; |
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“founder
shares” are to the Class B Units of Opco initially issued in a
private placement to our sponsor prior to our initial public
offering (or the Class A Units of Opco into which such Class B
Units will convert) and a corresponding number of shares of our
non-economic Class B common stock; |
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“initial
stockholders” are to holders of our founder shares and sponsor
shares prior to our initial public offering, including Atlas Point
Energy Infrastructure Fund, LLC; |
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“management”
or our “management team” are to our officers and
directors; |
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“Opco”
is to Rice Acquisition Holdings LLC; |
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“Opco
Units” are to the Class A Units and Class B Units of
Opco; |
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“private
placement warrants” are to the warrants issued to our sponsor and
Atlas Point Fund in private placements simultaneously with the
closing of our initial public offering; |
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“public
shares” are to shares of our Class A common stock sold as part of
the units in our initial public offering and, unless otherwise
stated herein, the 2,500 shares of our Class A common stock forming
part of the sponsor shares, which collectively represent 100% of
the economic interests in Rice Acquisition Corp.; |
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“public
stockholders” are to the holders of our public shares, including
our initial stockholders and management team to the extent our
initial stockholders and/or members of our management team purchase
public shares, provided that each initial stockholder’s and member
of our management team’s status as a “public stockholder” shall
only exist with respect to such public shares; |
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“public
warrants” are to the warrants sold as part of the units in our
initial public offering; |
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“Rice
Investment Group” is a multi-strategy fund controlled by the Rice
family and other members of our management focused on a diverse
array of energy related investments, including energy transition
investments; |
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“sponsor”
are to Rice Acquisition Sponsor LLC, a Delaware limited liability
company. Our sponsor is controlled by its managing members, Daniel
Joseph Rice, IV and J. Kyle Derham, and owned by members of our
management and other individuals, and is an affiliate of Rice
Investment Group; |
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“sponsor
shares” are to the 100 Class A Units of Opco and corresponding
number of shares of our non-economic Class B common stock (which
together will be exchangeable into shares of Class A common stock
after our initial business combination on a one-for-one basis) and
the 2,500 shares of our Class A common stock purchased by our
sponsor in a private placement prior to our initial public
offering; and |
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“we,”
“us,” “company” or “our company” are to Rice Acquisition Corp. and
Opco. |
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This
Report, including, without limitation, statements under the heading
“Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” includes forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, (the “Securities Act”) and Section 21E of the
Securities Exchange Act of 1934, as amended, (the “Exchange Act”).
These forward-looking statements can be identified by the use of
forward-looking terminology, including the words “believes,”
“estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,”
“will,” “potential,” “projects,” “predicts,” “continue,” or
“should,” or, in each case, their negative or other variations or
comparable terminology. There can be no assurance that actual
results will not materially differ from expectations. Such
statements include, but are not limited to, any statements relating
to our ability to consummate any acquisition or other business
combination and any other statements that are not statements of
current or historical facts. These statements are based on
management’s current expectations, but actual results may differ
materially due to various factors, including, but not limited
to:
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our
ability to select an appropriate target business or
businesses; |
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our
ability to complete an initial business combination; |
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our
expectations around the performance of the prospective target
business or businesses; |
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our
success in retaining or recruiting, or changes required in, our
officers, key employees or directors following our initial business
combination; |
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our
officers and directors allocating their time to other businesses
and potentially having conflicts of interest with our business or
in approving our initial business combination; |
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our
potential ability to obtain additional financing to complete our
initial business combination; |
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our
pool of prospective target businesses; |
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our
ability to consummate an initial business combination due to the
uncertainty resulting from the recent COVID-19 pandemic and other
events (such as terrorist attacks, natural disasters or other
significant outbreaks of infectious diseases); |
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the
ability of our officers and directors to generate a number of
potential investment opportunities; |
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our
public securities’ potential liquidity and trading; |
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the
lack of a market for our securities; |
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the
use of proceeds not held in the trust account or available to us
from interest income on the trust account balance; |
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the
trust account not being subject to claims of third parties;
or |
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our
financial performance following our initial public
offering. |
The
forward-looking statements contained in this Report are based on
our current expectations and beliefs concerning future developments
and their potential effects on us. Future developments affecting us
may not be those that we have anticipated. These forward-looking
statements involve a number of risks, uncertainties (some of which
are beyond our control) and other assumptions that may cause actual
results or performance to be materially different from those
expressed or implied by these forward-looking statements. These
risks and uncertainties include, but are not limited to, those
factors described under the heading “Risk Factors.” Should one or
more of these risks or uncertainties materialize, or should any of
our assumptions prove incorrect, actual results may vary in
material respects from those projected in these forward-looking
statements. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws. These risks and others described under
“Risk Factors” may not be exhaustive.
By
their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. We caution
you that forward-looking statements are not guarantees of future
performance and that our actual results of operations, financial
condition and liquidity, and developments in the industry in which
we operate may differ materially from those made in or suggested by
the forward-looking statements contained in this Report. In
addition, even if our results or operations, financial condition
and liquidity, and developments in the industry in which we operate
are consistent with the forward-looking statements contained in
this Report, those results or developments may not be indicative of
results or developments in subsequent periods.
SUMMARY OF RISK
FACTORS
The following
is a summary of the principal risks described below in Part I, Item
1A “Risk Factors” in this Annual Report on Form 10-K. We believe
that the risks described in the “Risk Factors” section are material
to investors, but other factors not presently known to us or that
we currently believe are immaterial may also adversely affect us.
The following summary should not be considered an exhaustive
summary of the material risks facing us, and it should be read in
conjunction with the “Risk Factors” section and the other
information contained in this Annual Report on Form
10-K.
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We
are a recently formed blank check company with no operating history
and no revenues, and you have no basis on which to evaluate our
ability to achieve our business objective. |
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Past
performance by the Rice family, Rice Investment Group and its
portfolio companies and our management team may not be indicative
of future performance of an investment in the Company. In addition,
none of our officers or directors have served as a sponsor,
director or officer of any blank check companies or special purpose
acquisition companies in the past. |
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Our
public stockholders may not be afforded an opportunity to vote on
our proposed business combination, which means we may complete our
initial business combination even though a majority of our public
stockholders do not support such a combination. |
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In
evaluating a prospective target business for our initial business
combination, our management may consider the availability of funds
from the sale of the forward purchase securities, which may be used
as part of the consideration to the sellers in the initial business
combination. If Atlas Point Fund decides not to accept our offer to
purchase the forward purchase securities, we may decide not to
consummate our initial business combination, or if we decide to, we
may lack sufficient funds to consummate our initial business
combination. |
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Your
only opportunity to affect the investment decision regarding a
potential business combination may be limited to the exercise of
your right to redeem your shares from us for cash. |
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If we
seek stockholder approval of our initial business combination, our
initial stockholders and management team have agreed to vote in
favor of such initial business combination, regardless of how our
public stockholders vote. |
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The
ability of our public stockholders to redeem their shares for cash
may make our financial condition unattractive to potential business
combination targets, which may make it difficult for us to enter
into a business combination with a target. |
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The
ability of our public stockholders to exercise redemption rights
with respect to a large number of our shares may not allow us to
complete the most desirable business combination or optimize our
capital structure. |
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The
ability of our public stockholders to exercise redemption rights
with respect to a large number of our shares could increase the
probability that our initial business combination would be
unsuccessful and that you would have to wait for liquidation in
order to redeem your stock. |
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Our
search for a business combination, and any target business with
which we ultimately consummate a business combination, may be
materially adversely affected by the recent coronavirus (COVID-19)
outbreak and the status of debt and equity markets. |
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We
may not be able to complete our initial business combination within
the 24 months after the closing of our initial public offering, in
which case we would cease all operations except for the purpose of
winding up and we would redeem our public shares and liquidate, in
which case our public stockholders may receive only their pro rata
portion of the funds in the trust account that are available for
distribution to public stockholders, and our warrants will expire
worthless. |
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If we
seek stockholder approval of our initial business combination, our
sponsor, directors, officers, advisors and their affiliates may
elect to purchase shares or public warrants from public
stockholders or public warrantholders, which may influence a vote
on a proposed business combination and reduce the public “float” of
our Class A common stock. |
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If a
stockholder fails to receive notice of our offer to redeem our
public shares in connection with our business combination, or fails
to comply with the procedures for tendering its shares, such shares
may not be redeemed. |
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You
will not have any rights or interests in funds from the trust
account, except under certain limited circumstances. Therefore, to
liquidate your investment, you may be forced to sell your public
shares or warrants, potentially at a loss. |
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The
NYSE may delist our securities from trading on its exchange, which
could limit investors’ ability to make transactions in our
securities and subject us to additional trading
restrictions. |
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If we
seek stockholder approval of our initial business combination and
we do not conduct redemptions pursuant to the tender offer rules,
and if you or a “group” of stockholders are deemed to hold in
excess of 20% of our Class A common stock, you will lose the
ability to redeem all such shares in excess of 20% of our Class A
common stock. |
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Because
of our limited resources and the significant competition for
business combination opportunities, it may be more difficult for us
to complete our initial business combination. If we do not complete
our initial business combination, our public stockholders may
receive only their pro rata portion of the funds in the trust
account that are available for distribution to public stockholders,
and our warrants will expire worthless. |
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If
the net proceeds of our initial public offering and the sale of the
private placement warrants not being held in the trust account are
insufficient to allow us to operate for at least the next 24
months, we may be unable to complete our initial business
combination, in which case our public stockholders may only receive
$10.00 per share, or less than such amount in certain
circumstances, and our warrants will expire worthless. |
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If
the net proceeds of our initial public offering and the sale of the
private placement warrants not being held in the trust account are
insufficient to allow us to operate for at least the next 24
months, it could limit the amount available to fund our search for
a target business or businesses and complete our initial business
combination and we will depend on loans from our sponsor or
management team to fund our search for a business combination, to
pay franchise and income taxes of the Company or Opco and to
complete our initial business combination. If we are unable to
obtain these loans, we may be unable to complete our initial
business combination. |
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Subsequent
to our completion of our initial business combination, we may be
required to take write-downs or write-offs, restructuring and
impairment or other charges that could have a significant negative
effect on our financial condition, results of operations and our
stock price, which could cause you to lose some or all of your
investment. |
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If
third parties bring claims against us, the proceeds held in the
trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per
share. |
PART I
Overview
We
are a blank check company incorporated in Delaware for the purpose
of effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with
one or more businesses, which we refer to throughout this Report as
our initial business combination. We are an early stage and
emerging growth company and, as such, we are subject to all of the
risks associated with early stage and emerging growth
companies.
In
September 2020, our Sponsor paid $25,000 to cover certain of our
expenses in exchange for (i) 5,750,100 shares of our Class B common
stock, par value $0.0001 per share, and (ii) 2,500 shares of our
Class A common stock, par value $0.0001 per share. Also in
September 2020, the Sponsor received 5,750,000 Class B Units of
Opco (which are profits interest units only). In October 2020, the
Sponsor forfeited 90,000 Class B Units of Opco, and 30,000 Class B
Units of Opco were issued to each of the independent directors. The
Sponsor transferred a corresponding number of shares of Class B
common stock to the independent directors. In October 2020, the
Company effected a dividend, resulting in an aggregate of (i)
6,181,350 shares of our Class B common stock, and (ii) 2,500 shares
of our Class A common stock outstanding. All shares and associated
amounts have been retroactively restated to reflect the dividend.
Upon a liquidation of Opco, distributions generally will be made to
the holders of Opco Units on a pro rata basis, subject to certain
limitations with respect to the Class B Units of Opco, including
that, prior to the completion of the initial business combination,
such Class B Units will not be entitled to participate in a
liquidating distribution.
On
October 26, 2020, the Company consummated its initial public
offering of 23,725,000 units, including 2,225,000 units that were
issued pursuant to the underwriters’ partial exercise of their
over-allotment option, at $10.00 per unit, generating gross
proceeds of approximately $237.3 million, and incurring offering
costs of approximately $12.5 million, inclusive of $7.6 million in
deferred underwriting commissions. Of the 23,725,000 units sold,
affiliates of our Sponsor and Atlas Point Fund had purchased
1,980,000 units (the “Affiliated Units”) and 2,128,500 units (the
“Atlas Units”), respectively, at the initial public offering price.
The underwriters did not receive any underwriting discounts or
commissions on the 1,980,000 Affiliated Units. Each unit consists
of one share of Class A common stock and one-half of one redeemable
warrant (each, a “Public Warrant”). Each whole Public Warrant
entitles the holder to purchase one share of our Class A common
stock at a price of $11.50 per share, subject to
adjustment.
Simultaneously
with the closing of our initial public offering, we consummated the
private placement (“Private Placement”) of 6,771,000 warrants
(each, a “Private Placement Warrant” and collectively, the “Private
Placement Warrants”) to the Sponsor and Atlas Point Fund, at a
price of $1.00 per Private Placement Warrant, generating gross
proceeds of approximately $6.8 million. Each Private Placement
Warrant is exercisable to purchase one share of our Class A common
stock or, in certain circumstances, one Class A Unit of Opco
together with a corresponding number of shares of our non-economic
Class B common stock, subject to certain adjustments.
Market
Opportunity
We
intend to focus our search for a target business in the broadly
defined energy transition or sustainability arena. Specifically, we
plan to concentrate our search on supply-side solutions and
innovations that enable the economy to decarbonize in sectors that
include renewable fuels, sustainable chemical production and
feedstocks, carbon capture, utilization and storage technology and
equipment, applications, infrastructure and technology focused on
reducing the carbon intensity of fuels, energy production methods,
and industrial processes. We believe the recent capital market and
investment activity directed at energy transition has focused on
end-market applications such as vehicle electrification, energy
efficiency for consumers and sustainable and eco-conscious
products. These trends are important to the overall success of the
energy transition; however, their adoption and commercial
development require more focus on the production and supply of
clean fuels, sustainable energy and industrial applications and
infrastructure. We believe traditional renewable electricity
generation from wind and solar will continue growing market share.
These sources are ultimately limited by geography and
intermittency, and will not solve the renewable energy needs of
several sub-sectors of the economy less likely to electrify. Our
focus on renewable fuels and sustainable chemical production will
serve to bolster and complement the rapid development of wind and
solar. Our management’s history and track-record of owning and
building successful energy production companies provides us with
unique and differentiated insights into how the traditional fossil
fuel-based energy value chain is changing to accommodate for a
lower carbon footprint and a more sustainable future.
The
potential growth in the production and consumption of sustainable
fuels, including renewable natural gas (“RNG”), blue and green
hydrogen, renewable diesel, renewable jet fuel, low or zero-carbon
synthetic fuels and fuels that incorporate carbon capture,
utilization and storage represents a significant market
opportunity. We believe the widespread adoption of renewable fuels
by major sectors of the economy such as freight, air and marine
transportation, residential and industrial heating and power
generation and energy storage will create a profound disruption
resulting in a very large addressable market. The carbon intensity
of energy and industrial production methods is one of the main
drivers for the adoption of renewable and low-carbon fuels. For
example, traditional cement and steel production is very energy
intensive and pollutant and can be decarbonized using clean fuels
in heat generation and carbon capture, utilization and storage to
reduce process-related emissions.
In
addition, the infrastructure, industrial and technological
requirements to increase the market penetration of sustainable
fuels also present tremendous opportunity. Equipment, applications
and installations such as anaerobic digesters that produce RNG,
biodiesel plants that manufacture renewable diesel and
electrolyzers that generate clean hydrogen need to be scaled up to
handle increased demand and compete in markets including and beyond
the transportation sector.
Large
publicly traded companies in the energy, utility and waste
management sectors have made significant investments in renewable
energy production and infrastructure projects to meet their own
emission reduction targets and adapt to changing regulatory
frameworks and customer preferences. The advent of RNG, renewable
diesel and blue and green hydrogen and technologies on carbon
capture, utilization and storage will further increase the range of
applications and use cases for renewable and zero-emission fuels
over the longer term.
Furthermore,
sustainable chemicals and materials also represent large
addressable markets that displace carbon intensive fossil
fuel-based products with lower emission sustainable alternatives.
Petrochemicals can be replaced using biomass and recycled waste
products as feedstock. The production of building materials can be
decarbonized using recycling technologies and novel circular
production methods that convert traditional waste products into
valuable energy and/or feedstock sources.
Business
Strategy
Our
acquisition and value creation strategy is to identify, acquire
and, after our initial business combination, build a company whose
principal effort is developing and advancing the objectives of
global decarbonization while generating attractive risk adjusted
returns for our shareholders. Our acquisition strategy leverages
our management team’s and Rice Investment Group’s network of
potential proprietary and public transaction sources where we
believe a combination of our relationships, knowledge and
experience in the renewable and energy industries could effect a
positive transformation or augmentation of existing businesses or
properties. Our goal is to build a focused business with multiple
competitive advantages that have the potential to improve the
target business’s overall value proposition. We plan to utilize the
network and industry experience of our management team and Rice
Investment Group in seeking an initial business combination and
employing our acquisition strategy. Over the course of their
careers, the members of our management team and their affiliates,
including Rice Investment Group, have developed a broad network of
contacts and corporate relationships that we believe will serve as
a useful source of acquisition opportunities. In addition to
industry and lending community relationships, we plan to leverage
relationships with management teams of public and private
companies, investment bankers, restructuring advisers, attorneys
and accountants, which we believe should provide us with a number
of business combination opportunities.
Our
management team and board of directors have an extensive network of
contacts that they will leverage in their efforts in identifying an
attractive target with operations in a Sustainability related
sector. We believe this existing network and long history of
working together are advantages in sourcing potential business
combination targets. We also believe that our management team’s
reputation, experience and track record will make us a preferred
counterparty for public and private companies with operations in a
Sustainability related sector. We also believe many privately held
and publicly traded companies consider the Rice Investment Group to
be a trustworthy partner and recognize the firm’s ability to
support value and enhance returns.
Acquisition
Criteria
Consistent
with our business strategy, we have identified the following
general criteria and guidelines that we believe are important in
evaluating prospective targets for our initial business
combination. We use these criteria and guidelines in evaluating
acquisition opportunities, but we may decide to enter into our
initial business combination with a target that does not meet these
criteria and guidelines. We intend to acquire target businesses
that we believe:
|
|
● |
operate
in high growth, large addressable markets with favorable long-term
market dynamics; |
|
|
● |
display
differentiated business attributes and/or product offerings that
provide us confidence on the long-term prospects and profitability
of the company; |
|
|
● |
are
fundamentally sound and can benefit from a partnership with us by
leveraging the operational, transactional, financial, managerial
and investment experience of our management team and Rice
Investment Group; |
|
|
● |
can
utilize the extensive networks and insights that our management
team and Rice Investment Group have built in the renewable and
energy industry; |
|
|
● |
are
at an inflection point, such as requiring additional management
expertise, are able to innovate through new operational techniques,
or where we believe we can drive improved financial
performance; |
|
|
● |
exhibit
unrecognized value or other characteristics, desirable returns on
capital, and a need for capital to achieve the company’s growth
strategy, that we believe have been misevaluated by the marketplace
based on our analysis and due diligence review; and |
|
|
● |
will
offer an attractive risk-adjusted return for our
stockholders. |
Potential
upside from growth in the target business and an improved capital
structure will be weighed against any identified downside
risks.
These
criteria are not intended to be exhaustive. Any evaluation relating
to the merits of a particular initial business combination may be
based, to the extent relevant, on these general guidelines as well
as other considerations, factors and criteria that our management
may deem relevant. In the event that we decide to enter into our
initial business combination with a target business that does not
meet the above criteria and guidelines, we will disclose that the
target business does not meet the above criteria in our stockholder
communications related to our initial business combination, which,
as discussed in this Report, would be in the form of proxy
solicitation or tender offer materials that we would file with the
U.S. Securities and Exchange Commission (the “SEC”).
Initial
Business Combination
The
NYSE rules require that we must complete one or more business
combinations having an aggregate fair market value of at least 80%
of the net assets held in trust (net of amounts disbursed to
management for working capital purposes and excluding the amount of
any deferred underwriting discount held in trust) at the time of
the agreement to enter into the initial business combination. Our
board will make the determination as to the fair market value of a
target business or businesses. If our board is not able to
independently determine the fair market value of a target business
or businesses, we will obtain an opinion from an independent
investment banking firm which is a member of the Financial Industry
Regulatory Authority Inc., or FINRA, or an independent accounting
firm with respect to the satisfaction of such criteria. While we
consider it unlikely that our board will not be able to make an
independent determination of the fair market value of a target
business or businesses, it may be unable to do so if the board is
less familiar or experienced with the target company’s business or
there is a significant amount of uncertainty as to the value of the
company’s assets or prospects.
We
may pursue an acquisition opportunity jointly with our sponsor, or
one or more affiliates, including Rice Investment Group and/or one
or more of its portfolio companies, which we refer to as an
“Affiliated Joint Acquisition.” Any such parties may co-invest with
us in the target business at the time of our initial business
combination, or we could raise additional proceeds to complete the
acquisition by issuing to such parties a class of equity or
equity-linked securities. Our sponsor and its affiliates have no
obligation to make any such investment, and may compete with us for
potential business combinations. Any such issuance of equity or
equity-linked securities would, on a fully diluted basis, reduce
the percentage ownership of our then-existing stockholders.
Notwithstanding the foregoing, pursuant to the anti-dilution
provisions of our founder shares, issuances or deemed issuances of
our Class A common stock or equity-linked securities would result
in an adjustment to the number of Class A Units of Opco into which
the Class B Units of Opco will convert (unless the holders of a
majority of the outstanding founder shares agree to waive such
adjustment with respect to any such issuance or deemed issuance) so
that, after all founder shares have been exchanged for shares of
our Class A common stock, the aggregate number of shares of our
Class A common stock received by holders in exchange for founder
shares would equal 20% of the sum of the total outstanding shares
of common stock following the completion of our initial public
offering plus all shares of our Class A common stock and
equity-linked securities issued or deemed issued in connection with
the business combination (excluding the forward purchase securities
and any shares or equity-linked securities issued, or to be issued,
to any seller in the business combination and excluding the sponsor
shares).
We
anticipate structuring our initial business combination either (i)
in such a way so that we will control 100% of the equity interests
or assets of the target business or businesses or (ii) in such a
way so that we control less than 100% of such interests or assets
of the target business in order to meet certain objectives of the
target management team or stockholders or for other reasons,
including an Affiliated Joint Acquisition as described above.
However, we will only complete a business combination if we control
50% or more of the outstanding voting securities of the target or
otherwise are not required to register as an investment company
under the Investment Company Act of 1940, as amended (the
“Investment Company Act”). Even if we control 50% or more of the
voting securities of the target, our stockholders prior to the
business combination may collectively own a minority interest in
the post-transaction company, depending on valuations ascribed to
the target and us in the business combination transaction. For
example, we could pursue a transaction in which we issue a
substantial number of new shares in exchange for all of the
outstanding capital stock, shares or other equity interests of a
target. In this case, we would acquire a 100% controlling interest
in the target. However, as a result of the issuance of a
substantial number of new shares, our stockholders immediately
prior to our initial business combination could own less than a
majority of our outstanding shares subsequent to our initial
business combination. If we control less than 100% of the equity
interests or assets of a target business or businesses, the portion
of such business or businesses that is controlled is what will be
valued for purposes of the 80% of net assets test. If the business
combination involves more than one target business, the 80% of net
assets test will be based on the aggregate value of all of the
transactions and we will treat the target businesses together as
the initial business combination for seeking stockholder approval
or for purposes of a tender offer, as applicable.
Our
Acquisition Process
In
evaluating a prospective target business, we expect to conduct a
thorough due diligence review that will encompass, among other
things, meetings with incumbent management and employees, document
reviews, inspection of facilities, as well as a review of financial
and other information that will be made available to us. We will
also utilize our transactional, financial, managerial and
investment experience.
We
are not prohibited from pursuing an initial business combination
with or from a company that is affiliated with our sponsor,
officers or directors, including a portfolio company of Rice
Investment Group, or from entering into an agreement with our
sponsor, officers or directors or their affiliates with respect to
the operation of any business we acquire in connection with the
initial business combination. In the event we seek to complete our
initial business combination with a business combination target
that is affiliated with our sponsor, officers or directors, we, or
a committee of independent directors, would obtain an opinion from
an independent investment banking firm which is a member of FINRA
or from an independent accounting firm that such initial business
combination is fair to our company from a financial point of
view.
Members
of our management team and our independent directors directly or
indirectly own founder shares, sponsor shares and/or private
placement warrants and, accordingly, may have a conflict of
interest in determining whether a particular target business is an
appropriate business with which to effectuate our initial business
combination. Further, each of our officers and directors may have a
conflict of interest with respect to evaluating a particular
business combination if the retention or resignation of any such
officers and directors was included by a target business as a
condition to any agreement with respect to our initial business
combination.
Each
of our officers and directors presently has, and any of them in the
future may have additional, fiduciary or contractual obligations to
other entities pursuant to which such officer or director is or
will be required to present a business combination opportunity.
Accordingly, if any of our officers or directors becomes aware of a
business combination opportunity which is suitable for an entity to
which he or she has then-current fiduciary or contractual
obligations, he or she will honor his or her fiduciary or
contractual obligations to present such opportunity to such other
entity. We do not believe, however, that the fiduciary duties or
contractual obligations of our officers or directors will
materially affect our ability to complete our business combination.
In addition, we may pursue an Affiliated Joint Acquisition
opportunity with an entity to which an officer or director has a
fiduciary or contractual obligation. Any such entity may co-invest
with us in the target business at the time of our initial business
combination, or we could raise additional proceeds to complete the
acquisition by issuing to such entity a class of equity or
equity-linked securities. Our amended and restated certificate of
incorporation provides that we renounce our interest in any
corporate opportunity offered to any director or officer unless
such opportunity is expressly offered to such person solely in his
or her capacity as a director or officer of our company and such
opportunity is one we are legally and contractually permitted to
undertake and would otherwise be reasonable for us to
pursue.
In
addition, members of our sponsor, as well as Rice Investment Group
and its portfolio companies may sponsor other blank check companies
similar to ours during the period in which we are seeking an
initial business combination, and members of our management team
may participate in such blank check companies. In particular, an
affiliate of Rice Investment Group has formed Rice Acquisition
Corp. II (“Rice II”), a blank check company like our company that
was formed to consummate an initial business combination. Like us,
Rice II intends to focus its search for a target business in the
energy transition or sustainability arena. As of the date of this
filing, Rice II has not completed its initial public offering and
does not have a class of securities registered under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Any such
companies, including Rice II, may present additional conflicts of
interest in pursuing an acquisition target, particularly in the
event there is overlap among the management teams. Mr. Rice also
serves as a director and officer of Rice II, and Mr. Derham also
serves as an officer and is a director nominee of Rice II. However,
we do not believe that any such potential conflicts would
materially affect our ability to complete our initial business
combination. Each of Mr. Rice and Mr. Derham has agreed not to
become an officer or director of any other special purpose
acquisition company with a class of securities registered under the
Exchange Act, until we have entered into a definitive agreement
regarding our initial business combination or we have failed to
complete our initial business combination within 24 months after
the closing of our initial public offering. Neither Mr. Rice nor
Mr. Derham has been involved with any blank check companies prior
to our company.
We
have filed a Registration Statement on Form 8-A with the SEC to
voluntarily register our securities under Section 12 of the
Exchange Act. As a result, we are subject to the rules and
regulations promulgated under the Exchange Act. We have no current
intention of filing a Form 15 to suspend our reporting or other
obligations under the Exchange Act prior or subsequent to the
consummation of our initial business combination.
Our
Management Team
Members
of our management team are not obligated to devote any specific
number of hours to our matters but they intend to devote as much of
their time as they deem necessary to our affairs until we have
completed our initial business combination. The amount of time that
any members of our management team will devote in any time period
will vary based on whether a target business has been selected for
our initial business combination and the current stage of the
business combination process.
We
believe our management team’s operating and transaction experience
and relationships with companies will provide us with a substantial
number of potential business combination targets. Over the course
of their careers, the members of our management team have developed
a broad network of contacts and corporate relationships around the
world. This network has grown through the activities of our
management team sourcing, acquiring and financing businesses, our
management team’s relationships with sellers, financing sources and
target management teams and the experience of our management team
in executing transactions under varying economic and financial
market conditions. See the section of this Report entitled
“Directors, Executive Officers and Corporate Governance” for a more
complete description of our management team’s
experience.
Status
as a Public Company
We
believe our structure will make us an attractive business
combination partner to target businesses. As an existing public
company, we offer a target business an alternative to the
traditional initial public offering through a merger or other
business combination with us. In a business combination transaction
with us, the owners of the target business may, for example,
exchange their shares of stock, shares or other equity interests in
the target business for shares of our Class A common stock (or
shares of a new holding company), Opco Units (and corresponding
shares of our Class B common stock) or for a combination of shares
of our Class A common stock, Opco Units (and corresponding shares
of our Class B common stock) and cash, allowing us to tailor the
consideration to the specific needs of the sellers. Although there
are various costs and obligations associated with being a public
company, we believe target businesses will find this method a more
certain and cost effective method to becoming a public company than
the typical initial public offering. The typical initial public
offering process takes a significantly longer period of time than
the typical business combination transaction process, and there are
significant expenses in the initial public offering process,
including underwriting discounts and commissions, that may not be
present to the same extent in connection with a business
combination with us.
Furthermore,
once a proposed business combination is completed, the target
business will have effectively become public, whereas an initial
public offering is always subject to the underwriters’ ability to
complete the offering, as well as general market conditions, which
could delay or prevent the offering from occurring or could have
negative valuation consequences. Once public, we believe the target
business would then have greater access to capital, an additional
means of providing management incentives consistent with
stockholders’ interests and the ability to use its equity as
currency for acquisitions. Being a public company can offer further
benefits by augmenting a company’s profile among potential new
customers and vendors and aid in attracting talented
employees.
While
we believe that our structure and our management team’s backgrounds
make us an attractive business partner, some potential target
businesses may view our status as a blank check company, such as
our lack of an operating history and our ability to seek
stockholder approval of any proposed initial business combination,
negatively.
We
are an “emerging growth company,” as defined in Section 2(a) of the
Securities Act, as modified by the JOBS Act. As such, we are
eligible to take advantage of certain exemptions from various
reporting requirements that are applicable to other public
companies that are not “emerging growth companies” including, but
not limited to, not being required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in
our periodic reports and proxy statements, and exemptions from the
requirements of holding a non-binding advisory vote on executive
compensation and stockholder approval of any golden parachute
payments not previously approved. If some investors find our
securities less attractive as a result, there may be a less active
trading market for our securities and the prices of our securities
may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an
“emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities
Act for complying with new or revised accounting standards. In
other words, an “emerging growth company” can delay the adoption of
certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the
benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the
last day of the fiscal year (a) following the fifth anniversary of
the completion of our initial public offering, (b) in which we have
total annual gross revenue of at least $1.07 billion (as adjusted
for inflation pursuant to SEC rules from time to time), or (c) in
which we are deemed to be a large accelerated filer, which means
the market value of our Class A common stock that is held by
non-affiliates exceeds $700 million as of the prior June 30th, and
(2) the date on which we have issued more than $1.0 billion in
non-convertible debt securities during the prior three-year
period.
Additionally,
we are a “smaller reporting company” as defined in Item 10(0(1) of
Regulation S-K. Smaller reporting companies may take advantage of
certain reduced disclosure obligations, including, among other
things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of
the fiscal year in which (i) the market value of our common stock
held by non-affiliates exceeds $250 million as of the end of that
year’s second fiscal quarter or (ii) our annual revenues exceeded
$100 million during such completed fiscal year and the market value
of our common stock held by non-affiliates exceeds $700 million as
of the end of that year’s second fiscal quarter.
Financial
Position
Upon
the closing of our initial public offering, approximately $237.3
million of the net proceeds were placed in a trust account (“Trust
Account”) located in the United States with Continental Stock
Transfer & Trust Company acting as trustee, and invested only
in U.S. “government securities” within the meaning of Section
2(a)(16) of the Investment Company Act having a maturity of 185
days or less or in money market funds meeting certain conditions
under Rule 2a-7 promulgated under the Investment Company Act which
invest only in direct U.S. government treasury obligations, as
determined by us, until the earlier of: (i) the completion of a
Business Combination and (ii) the distribution of the Trust
Account. Because we are able to complete our business combination
using our cash, debt or equity securities, or a combination of the
foregoing, we have the flexibility to use the most efficient
combination that will allow us to tailor the consideration to be
paid to the target business to fit its needs and desires. However,
we have not taken any steps to secure third party financing and
there can be no assurance it will be available to us.
Effecting
Our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any
operations for an indefinite period of time following our initial
public offering. We intend to effectuate our initial business
combination using cash from the proceeds of our initial public
offering and the private placement warrants and forward purchase
securities, our capital stock, debt or a combination of the
foregoing. We may seek to complete our initial business combination
with a company or business that may be financially unstable or in
its early stages of development or growth, which would subject us
to the numerous risks inherent in such companies and businesses.
Although our management will assess the risks inherent in a
particular target business with which we may combine, we cannot
assure you that this assessment will result in our identifying all
risks that a target business may encounter. Furthermore, some of
those risks may be outside of our control, meaning that we can do
nothing to control or reduce the chances that those risks will
adversely affect a target business.
If
our initial business combination is paid for using equity or debt
securities, or not all of the funds released from the trust account
are used for payment of the consideration in connection with our
business combination or used for redemptions of purchases of our
Class A common stock, we may apply the balance of the cash released
to us from the trust account for general corporate purposes,
including for maintenance or expansion of operations of the
post-transaction company, the payment of principal or interest due
on indebtedness incurred in completing our initial business
combination, to fund the purchase of other companies or for working
capital.
We
may need to obtain additional financing to complete our initial
business combination, either because the transaction requires more
cash than is available from the proceeds held in our trust account
or because we become obligated to redeem a significant number of
our public shares upon completion of the business combination, or
if Atlas Point Fund decides not to exercise its right to purchase
all of the forward purchase securities, in which case we may issue
additional securities or incur debt in connection with such
business combination. In the case of an initial business
combination funded with assets other than the trust account assets,
our tender offer documents or proxy materials disclosing the
business combination would disclose the terms of the financing and,
only if required by applicable law, we would seek stockholder
approval of such financing. There are no prohibitions on our
ability to issue securities or incur debt in connection with our
initial business combination. We are not currently a party to any
arrangement or understanding with any third party with respect to
raising any additional funds through the sale of securities, the
incurrence of debt or otherwise.
Sources
of Target Businesses
Target
businesses may be brought to our attention by such unaffiliated
sources as a result of being solicited by us through calls or
mailings. These sources may also introduce us to target businesses
in which they think we may be interested on an unsolicited basis,
since many of these sources will have read this Report and know
what types of businesses we are targeting. Our officers and
directors, as well as their affiliates, may also bring to our
attention target business candidates that they become aware of
through their business contacts as a result of formal or informal
inquiries or discussions they may have, as well as attending trade
shows or conventions. In addition, we expect to receive a number of
proprietary deal flow opportunities that would not otherwise
necessarily be available to us as a result of the track record and
business relationships of our officers and directors. While we do
not presently anticipate engaging the services of professional
firms or other individuals that specialize in business acquisitions
on any formal basis, we may engage these firms or other individuals
in the future, in which event we may pay a finder’s fee, consulting
fee or other compensation to be determined in an arm’s length
negotiation based on the terms of the transaction. We will engage a
finder only to the extent our management determines that the use of
a finder may bring opportunities to us that may not otherwise be
available to us or if finders approach us on an unsolicited basis
with a potential transaction that our management determines is in
our best interest to pursue. Payment of a finder’s fee is
customarily tied to completion of a transaction, in which case any
such fee will be paid out of the funds held in the trust account.
We have agreed to pay our sponsor a total of $10,000 per month for
office space, utilities, secretarial support and administrative
services and to reimburse our sponsor for any out-of-pocket
expenses related to identifying, investigating and completing an
initial business combination. Some of our officers and directors
may enter into employment or consulting agreements with the
post-transaction company following our initial business
combination. The presence or absence of any such fees or
arrangements will not be used as a criterion in our selection
process of an acquisition candidate.
We
are not prohibited from pursuing an initial business combination
with or from a company that is affiliated with our sponsor,
officers or directors, including a portfolio company of Rice
Investment Group, or making the acquisition through a joint venture
or other form of shared ownership with our sponsor, officers or
directors or their affiliates, including Rice Investment Group
and/or one or more of its portfolio companies. We are also not
prohibited from entering into an agreement with our sponsor,
officers or directors or their affiliates with respect to the
operation of any business we acquire in connection with the initial
business combination. In the event we seek to complete our initial
business combination with a business combination target that is
affiliated with our sponsor, officers or directors, we, or a
committee of independent directors, would obtain an opinion from an
independent investment banking firm which is a member of FINRA or
from an independent accounting firm that such initial business
combination is fair to our company from a financial point of view.
We are not required to obtain such an opinion in any other
context.
As
more fully discussed in the section of this Report entitled
“Certain Relationships and Related Transactions, and Director
Independence,” if any of our officers or directors becomes aware of
a business combination opportunity that falls within the line of
business of any entity to which he or she has pre-existing
fiduciary or contractual obligations, he or she may be required to
present such business combination opportunity to such entity prior
to presenting such business combination opportunity to us. Our
officers and directors currently have certain relevant fiduciary
duties or contractual obligations that may take priority over their
duties to us. We may pursue an Affiliated Joint Acquisition
opportunity with an entity to which an officer or director has a
fiduciary or contractual obligation. Any such entity may co-invest
with us in the target business at the time of our initial business
combination, or we could raise additional proceeds to complete the
acquisition by issuing to such entity a class of equity or
equity-linked securities.
Selection
of a Target Business and Structuring of our Initial Business
Combination
The
NYSE rules require that our initial business combination must occur
with one or more target businesses that together have an aggregate
fair market value of at least 80% of the net assets held in trust
(net of amounts disbursed to management for working capital
purposes and excluding the amount of any deferred underwriting
discount held in trust) at the time of the agreement to enter into
the initial business combination. The fair market value of the
target or targets will be determined by our board of directors
based upon one or more standards generally accepted by the
financial community, such as discounted cash flow valuation or
value of comparable businesses. If our board is not able to
independently determine the fair market value of the target
business or businesses, we will obtain an opinion from an
independent investment banking firm that is a member of FINRA or
from an independent accounting firm with respect to the
satisfaction of such criteria. We do not intend to purchase
multiple businesses in unrelated industries in conjunction with our
initial business combination. Subject to this requirement, our
management will have virtually unrestricted flexibility in
identifying and selecting one or more prospective target
businesses, although we will not be permitted to effectuate our
initial business combination with another blank check company or a
similar company with nominal operations.
In
any case, we will only complete an initial business combination in
which we control 50% or more of the outstanding voting securities
of the target or otherwise are not required to register as an
investment company under the Investment Company Act. If we control
less than 100% of the equity interests or assets of a target
business or businesses, the portion of such business or businesses
that are controlled is what will be valued for purposes of the
NYSE’s 80% of net assets test. There is no basis for investors to
evaluate the possible merits or risks of any target business with
which we may ultimately complete our business
combination.
To
the extent we effect our business combination with a company or
business that may be financially unstable or in its early stages of
development or growth, we may be affected by numerous risks
inherent in such company or business. Although our management will
endeavor to evaluate the risks inherent in a particular target
business, we cannot assure you that we will properly ascertain or
assess all significant risk factors.
In
evaluating a prospective target business, we expect to conduct a
thorough due diligence review, which may encompass, among other
things, meetings with incumbent management and employees, document
reviews, interviews of customers and suppliers, inspection of
facilities, as applicable, as well as a review of financial,
operational, legal and other information which will be made
available to us. If we determine to move forward with a particular
target, we will proceed to structure and negotiate the terms of the
business combination transaction.
Any
costs incurred with respect to the identification and evaluation
of, and negotiation with, a prospective target business with which
our business combination is not ultimately completed will result in
our incurring losses and will reduce the funds we can use to
complete another business combination. The Company will not pay any
consulting fees to members of our management team, or any of their
respective affiliates, for services rendered to or in connection
with our initial business combination.
Redemption
Rights for Public Stockholders upon Completion of our Initial
Business Combination
We
will provide our public stockholders with the opportunity to redeem
all or a portion of their shares of our Class A common stock upon
the completion of our initial business combination at a per-share
price, payable in cash, equal to the aggregate amount then on
deposit in the trust account calculated as of two business days
prior to the consummation of the initial business combination
including interest earned on the funds held in the trust account
and not previously released to pay franchise and income taxes of
the Company or Opco, divided by the number of then outstanding
public shares and Class A Units of Opco (other than those held by
Rice Acquisition Corp.), subject to the limitations described
herein. The amount in the trust account is initially anticipated to
be approximately $10.00 per public share. The per-share amount we
will distribute to investors who properly redeem their shares will
not be reduced by the deferred underwriting discounts and
commissions we will pay to the underwriters. Pursuant to the Opco
LLC Agreement and a letter agreement that our sponsor, Atlas Point
Fund, officers and directors have entered into with us, they have
agreed that any founder shares and sponsor shares held by them will
not be entitled to redemption rights, and they will waive any such
redemption rights for any public shares held by them, in connection
with the completion of our business combination. In connection with
the redemption of any public shares, a corresponding number of
Class A Units of Opco held by us will also be redeemed.
Limitations
on Redemptions
Our
amended and restated certificate of incorporation provides that in
no event will we redeem our public shares in an amount that would
cause our net tangible assets to be less than $5,000,001 upon
consummation of our initial business combination and after payment
of underwriters’ fees and commissions (so that we are not subject
to the SEC’s “penny stock” rules). However, the proposed business
combination may require (i) cash consideration to be paid to the
target or its owners, (ii) cash to be transferred to the target for
working capital or other general corporate purposes or (iii) the
retention of cash to satisfy other conditions in accordance with
the terms of the proposed business combination. In the event the
aggregate cash consideration we would be required to pay for all
shares of our Class A common stock that are validly submitted for
redemption plus any amount required to satisfy cash conditions
pursuant to the terms of the proposed business combination exceed
the aggregate amount of cash available to us, we will not complete
the business combination or redeem any shares, and all shares of
our Class A common stock submitted for redemption will be returned
to the holders thereof.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem
all or a portion of their shares of our Class A common stock upon
the completion of our initial business combination either (i) in
connection with a stockholder meeting called to approve the
business combination or (ii) by means of a tender offer. The
decision as to whether we will seek stockholder approval of a
proposed business combination or conduct a tender offer will be
made by us, solely in our discretion, and will be based on a
variety of factors such as the timing of the transaction and
whether the terms of the transaction would require us to seek
stockholder approval under applicable law or stock exchange listing
requirement. Asset acquisitions and stock purchases would not
typically require stockholder approval while direct mergers with
our company where we do not survive and any transactions where we
issue more than 20% of our outstanding common stock or seek to
amend our amended and restated certificate of incorporation would
require stockholder approval. If we structure a business
combination transaction with a target business in a manner that
requires stockholder approval, we will not have discretion as to
whether to seek a stockholder vote to approve the proposed business
combination. We currently intend to conduct redemptions in
connection with a stockholder vote unless stockholder approval is
not required by applicable law or stock exchange listing
requirement and we choose to conduct redemptions pursuant to the
tender offer rules of the SEC for business or other legal
reasons.
If we
hold a stockholder vote to approve our initial business
combination, we will, pursuant to our amended and restated
certificate of incorporation:
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conduct
the redemptions in conjunction with a proxy solicitation pursuant
to Regulation 14A of the Exchange Act, which regulates the
solicitation of proxies, and not pursuant to the tender offer
rules, and |
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file
proxy materials with the SEC. |
In
the event that we seek stockholder approval of our initial business
combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption
rights described above upon completion of the initial business
combination.
If we
seek stockholder approval, we will complete our initial business
combination only if a majority of the outstanding shares of common
stock voted are voted in favor of the business combination. A
quorum for such meeting will consist of the holders present in
person or by proxy of shares of outstanding capital stock of the
company representing a majority of the voting power of all
outstanding shares of capital stock of the company entitled to vote
at such meeting. Our initial stockholders will count toward this
quorum and have agreed to vote their founder shares and any public
shares in favor of our initial business combination. For purposes
of seeking approval of the majority of our outstanding shares of
common stock voted, non-votes will have no effect on the approval
of our initial business combination once a quorum is obtained. As a
result, in addition to our initial stockholders’ founder shares and
sponsor shares, we would need 8,896,875, or 37.5%, of the
23,725,000 public shares sold in our initial public offering to be
voted in favor of a transaction (assuming all outstanding shares
are voted) in order to have our initial business combination
approved. We intend to give approximately 30 days (but not less
than 10 days nor more than 60 days) prior written notice of any
such meeting, if required, at which a vote shall be taken to
approve our initial business combination. These quorum and voting
thresholds, and the voting agreements of our initial stockholders,
may make it more likely that we will consummate our initial
business combination. Each public stockholder may elect to redeem
its public shares irrespective of whether it votes for or against
the proposed transaction. In addition, pursuant to the Opco LLC
Agreement and a letter agreement that our sponsor, Atlas Point
Fund, officers and directors have entered into with us, they have
agreed that any founder shares and sponsor shares held by them will
not be entitled to redemption rights, and they will waive any such
redemption rights for any public shares held by them, in connection
with the completion of a business combination.
If we
conduct redemptions pursuant to the tender offer rules of the SEC,
we will, pursuant to our amended and restated certificate of
incorporation:
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conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the
Exchange Act, which regulate issuer tender offers, and |
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file
tender offer documents with the SEC prior to completing our initial
business combination which contain substantially the same financial
and other information about the initial business combination and
the redemption rights as is required under Regulation 14A of the
Exchange Act, which regulates the solicitation of proxies. Although
we are not required to do so, we currently intend to comply with
the substantive and procedural requirements of Regulation 14A in
connection with any stockholder vote even if we are not able to
maintain our NYSE listing or Exchange Act registration. |
Upon
the public announcement of our business combination, we or our
sponsor will terminate any plan established in accordance with Rule
10b5-1 to purchase shares of our Class A common stock in the open
market if we elect to redeem our public shares through a tender
offer, to comply with Rule 14e-5 under the Exchange Act.
In
the event we conduct redemptions pursuant to the tender offer
rules, our offer to redeem will remain open for at least 20
business days, in accordance with Rule 14e-1(a) under the Exchange
Act, and we will not be permitted to complete our initial business
combination until the expiration of the tender offer period. In
addition, the tender offer will be conditioned on public
stockholders not tendering more than the number of public shares we
are permitted to redeem. If public stockholders tender more shares
than we have offered to purchase, we will withdraw the tender offer
and not complete the initial business combination.
Limitation
on Redemption upon Completion of our Initial Business Combination
if we Seek Stockholder Approval
If we
seek stockholder approval of our initial business combination and
we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our amended and
restated certificate of incorporation provides that a public
stockholder, together with any affiliate of such stockholder or any
other person with whom such stockholder is acting in concert or as
a “group” (as defined under Section 13 of the Exchange Act), will
be restricted from seeking redemption rights with respect to more
than an aggregate of 20% of the shares sold in our initial public
offering, which we refer to as the “Excess Shares.” We believe this
restriction will discourage stockholders from accumulating large
blocks of shares, and subsequent attempts by such holders to use
their ability to exercise their redemption rights against a
proposed business combination as a means to force us or our
management to purchase their shares at a significant premium to the
then-current market price or on other undesirable terms. Absent
this provision, a public stockholder holding more than an aggregate
of 20% of the shares sold in our initial public offering could
threaten to exercise its redemption rights if such holder’s shares
are not purchased by us, our sponsor or our management at a premium
to the then-current market price or on other undesirable terms. By
limiting our stockholders’ ability to redeem no more than 20% of
the shares sold in our initial public offering without our prior
consent, we believe we will limit the ability of a small group of
stockholders to unreasonably attempt to block our ability to
complete our business combination, particularly in connection with
a business combination with a target that requires as a closing
condition that we have a minimum net worth or a certain amount of
cash. However, we would not be restricting our stockholders’
ability to vote all of their shares (including Excess Shares) for
or against our business combination.
Tendering
Stock Certificates in Connection with a Tender Offer or Redemption
Rights
Public
stockholders seeking to exercise their redemption rights, whether
they are record holders or hold their shares in “street name,” are
required to either tender their certificates to our transfer agent
prior to the date set forth in the proxy solicitation or tender
offer materials (as applicable) mailed to such holders, or up to
two business days prior to the initially scheduled vote on the
proposal to approve the business combination in the event we
distribute proxy materials, or to deliver their shares to the
transfer agent electronically using the Depository Trust Company’s
DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s
option. The proxy solicitation or tender offer materials (as
applicable) that we will furnish to holders of our public shares in
connection with our initial business combination will indicate the
applicable delivery requirements. Accordingly, a public stockholder
would have from the time we send out our tender offer materials
until the close of the tender offer period, or up to two days prior
to the vote on the business combination if we distribute proxy
materials, as applicable, to tender its shares if it wishes to seek
to exercise its redemption rights. Given the relatively short
period in which to exercise redemption rights, it is advisable for
stockholders to use electronic delivery of their public
shares.
There
is a nominal cost associated with the above-referenced tendering
process and the act of certificating the shares or delivering them
through the DWAC System. The transfer agent will typically charge
the tendering broker a fee of approximately $80.00 and it would be
up to the broker whether or not to pass this cost on to the
redeeming holder. However, this fee would be incurred regardless of
whether or not we require holders seeking to exercise redemption
rights to tender their shares. The need to deliver shares is a
requirement of exercising redemption rights regardless of the
timing of when such delivery must be effectuated.
The
foregoing is different from the procedures used by many blank check
companies. In order to perfect redemption rights in connection with
their business combinations, many blank check companies would
distribute proxy materials for the stockholders’ vote on an initial
business combination, and a holder could simply vote against a
proposed business combination and check a box on the proxy card
indicating such holder was seeking to exercise his or her
redemption rights. After the business combination was approved, the
company would contact such stockholder to arrange for him or her to
deliver his or her certificate to verify ownership. As a result,
the stockholder then had an “option window” after the completion of
the business combination during which he or she could monitor the
price of the company’s stock in the market. If the price rose above
the redemption price, he or she could sell his or her shares in the
open market before actually delivering his or her shares to the
company for cancellation. As a result, the redemption rights, to
which stockholders were aware they needed to commit before the
stockholder meeting, would become “option” rights surviving past
the completion of the business combination until the redeeming
holder delivered its certificate. The requirement for physical or
electronic delivery prior to the meeting ensures that a redeeming
holder’s election to redeem is irrevocable once the business
combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any
time up to the date set forth in the tender offer materials or the
date of the stockholder meeting set forth in our proxy materials,
as applicable. Furthermore, if a holder of a public share delivered
its certificate in connection with an election of redemption rights
and subsequently decides prior to the applicable date not to elect
to exercise such rights, such holder may simply request that the
transfer agent return the certificate (physically or
electronically). It is anticipated that the funds to be distributed
to holders of our public shares electing to redeem their shares
will be distributed promptly after the completion of our business
combination.
If
our initial business combination is not approved or completed for
any reason, then our public stockholders who elected to exercise
their redemption rights would not be entitled to redeem their
shares for the applicable pro rata share of the trust account. In
such case, we will promptly return any certificates delivered by
public holders who elected to redeem their shares.
If
our initial proposed business combination is not completed, we may
continue to try to complete a business combination with a different
target until 24 months from the closing of our initial public
offering.
Redemption
of Public Shares and Liquidation if no Initial Business
Combination
Our
amended and restated certificate of incorporation provides that we
will have only 24 months from the closing of our initial public
offering to complete our initial business combination. If we do not
complete our business combination within such 24-month period, we
will: (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than ten
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 pay
franchise and income taxes of the Company or Opco (less up to
$100,000 of interest to pay dissolution expenses), divided by the
number of then outstanding public shares and Class A Units of Opco
(other than those held by Rice Acquisition Corp.), which redemption
will completely extinguish public stockholders’ rights as
stockholders (including the right to receive further liquidating
distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably possible following such redemption, subject
to the approval of our remaining stockholders and our board of
directors, dissolve and liquidate, subject in each case to our
obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. There will be no
redemption rights or liquidating distributions with respect to our
warrants, which will expire worthless if we fail to complete our
business combination within the 24-month time period.
Pursuant
to the Opco LLC Agreement and a letter agreement that our sponsor,
Atlas Point Fund, officers and directors have entered into with us,
they have agreed that any founder shares held by them are subject
to forfeiture, and thus will not be entitled to liquidating
distributions from the trust account, and they will waive any such
rights to liquidating distributions for any founder shares if we
fail to complete our initial business combination within 24 months
from the closing of our initial public offering. However, if our
sponsor, officers or directors acquire public shares in or after
our initial public offering, they will be entitled to liquidating
distributions from the trust account with respect to such public
shares and the sponsor shares, if we fail to complete our initial
business combination within the allotted 24-month time
period.
Our
sponsor, Atlas Point Fund, officers, and directors have agreed,
pursuant to a written agreement with us, that they will not propose
any amendment to our amended and restated certificate of
incorporation that would affect the substance or timing of our
obligation to redeem 100% of our public shares if we have not
consummated an initial business combination within 24 months from
the closing of our initial public offering, unless we provide our
public stockholders with the opportunity to redeem their shares of
our Class A common stock upon approval of any such amendment 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
pay franchise and income taxes of the Company or Opco, divided by
the number of then outstanding public shares and Class A Units of
Opco (other than those held by Rice Acquisition Corp.). However, we
may not redeem our public shares in an amount that would cause our
net tangible assets to be less than $5,000,001 upon consummation of
our initial business combination and after payment of underwriters’
fees and commissions (so that we are not subject to the SEC’s
“penny stock” rules). If this optional redemption right is
exercised with respect to an excessive number of public shares such
that we cannot satisfy the net tangible asset requirement, we would
not proceed with the amendment or the related redemption of our
public shares at such time. Pursuant to our amended and restated
certificate of incorporation, such an amendment would need to be
approved by the affirmative vote of the holders of at least 65% of
all then outstanding shares of our common stock.
All
costs and expenses associated with implementing our plan of
dissolution, as well as payments to any creditors, will be funded
from amounts remaining as part of the estimated $1,000,000 of cash
held outside of the trust account, although we cannot assure you
that there will be sufficient funds for such purpose. However, if
those funds are not sufficient to cover the costs and expenses
associated with implementing our plan of dissolution, to the extent
that there is any interest accrued in the trust account not
required to pay franchise and income taxes on interest income
earned on the trust account balance, we may request the trustee to
release to us an additional amount of up to $100,000 of such
accrued interest to pay those costs and expenses.
If we
were to expend all of the net proceeds of our initial public
offering and the sale of the private placement warrants, other than
the proceeds deposited in the trust account, and without taking
into account interest, if any, earned on the trust account, the
per-share redemption amount received by stockholders upon our
dissolution would be approximately $10.00. The proceeds deposited
in the trust account could, however, become subject to the claims
of our creditors which would have higher priority than the claims
of our public stockholders. We cannot assure you that the actual
per-share redemption amount received by stockholders will not be
substantially less than $10.00. Under Section 281(b) of the DGCL,
our plan of dissolution must provide for all claims against us to
be paid in full or make provision for payments to be made in full,
as applicable, if there are sufficient assets. These claims must be
paid or provided for before we make any distribution of our
remaining assets to our stockholders. While we intend to pay such
amounts, if any, we cannot assure you that we will have funds
sufficient to pay or provide for all creditors’ claims.
Although
we seek to have all vendors (other than our independent registered
public accounting firm), service providers, prospective target
businesses and other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of
any kind in or to any monies held in the trust account for the
benefit of our public stockholders, there is no guarantee that they
will execute such agreements or even if they execute such
agreements that they would be prevented from bringing claims
against the trust account including but not limited to fraudulent
inducement, breach of fiduciary responsibility or other similar
claims, as well as claims challenging the enforceability of the
waiver, in each case in order to gain an advantage with respect to
a claim against our assets, including the funds held in the trust
account. If any third party refuses to execute an agreement waiving
such claims to the monies held in the trust account, our management
will perform an analysis of the alternatives available to it and
will only enter into an agreement with a third party that has not
executed a waiver if management believes that such third party’s
engagement would be significantly more beneficial to us than any
alternative. Examples of possible instances where we may engage a
third party that refuses to execute a waiver include the engagement
of a third party consultant whose particular expertise or skills
are believed by management to be significantly superior to those of
other consultants that would agree to execute a waiver or in cases
where management is unable to find a service provider willing to
execute a waiver. In addition, there is no guarantee that such
entities will agree to waive any claims they may have in the future
as a result of, or arising out of, any negotiations, contracts or
agreements with us and will not seek recourse against the trust
account for any reason. Our sponsor has agreed that it will be
liable to us if and to the extent any claims by a third party
(other than our independent public accountants) for services
rendered or products sold to us, or a prospective target business
with which we have entered into a written letter of intent,
confidentiality or other similar agreement or business combination
agreement, reduce the amount of funds in the trust account to below
(i) $10.00 per public share or (ii) such lesser amount per public
share held in the trust account as of the date of the liquidation
of the trust account, due to reductions in value of the trust
assets, in each case net of the amount of interest which may be
withdrawn to pay taxes, except as to any claims by a third party or
prospective target business who executed a waiver of any and all
rights to the monies held in the trust account (whether or not such
waiver is enforceable) and except as to any claims under our
indemnity of the underwriters of our initial public offering
against certain liabilities, including liabilities under the
Securities Act. However, we have not asked our sponsor to reserve
for such indemnification obligations, nor have we independently
verified whether our sponsor has sufficient funds to satisfy its
indemnity obligations, and we believe that our sponsor’s only
assets are securities of our company. Therefore, we cannot assure
you that our sponsor would be able to satisfy those obligations. As
a result, if any such claims were successfully made against the
trust account, the funds available for our initial business
combination and redemptions could be reduced to less than $10.00
per public share. In such event, we may not be able to complete our
initial business combination, and you would receive such lesser
amount per share in connection with any redemption of your public
shares. None of our officers or directors will indemnify us for
claims by third parties including, without limitation, claims by
vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below
(i) $10.00 per public share or (ii) such lesser amount per public
share held in the trust account as of the date of the liquidation
of the trust account, due to reductions in value of the trust
assets, in each case net of the amount of interest which may be
withdrawn to pay taxes, and our sponsor asserts that it is unable
to satisfy its indemnification obligations or that it has no
indemnification obligations related to a particular claim, our
independent directors would determine whether to take legal action
against our sponsor to enforce its indemnification obligations.
While we currently expect that our independent directors would take
legal action on our behalf against our sponsor to enforce its
indemnification obligations to us, it is possible that our
independent directors in exercising their business judgment may
choose not to do so if, for example, the cost of such legal action
is deemed by the independent directors to be too high relative to
the amount recoverable or if the independent directors determine
that a favorable outcome is not likely. We have not asked our
sponsor to reserve for such indemnification obligations and we
cannot assure you that our sponsor would be able to satisfy those
obligations. Accordingly, we cannot assure you that due to claims
of creditors the actual value of the per-share redemption price
will not be less than $10.00 per public share.
We
will seek to reduce the possibility that our sponsor will have to
indemnify the trust account due to claims of creditors by
endeavoring to have all vendors, service providers (other than our
independent registered public accounting firm), prospective target
businesses or other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of
any kind in or to monies held in the trust account. Our sponsor
will also not be liable as to any claims under our indemnity of the
underwriters of our initial public offering against certain
liabilities, including liabilities under the Securities Act. We
will have access to up to approximately $1,000,000 from the
proceeds of our initial public offering with which to pay any such
potential claims (including costs and expenses incurred in
connection with our liquidation, currently estimated to be no more
than approximately $100,000). In the event that we liquidate and it
is subsequently determined that the reserve for claims and
liabilities is insufficient, stockholders who received funds from
our trust account could be liable for claims made by creditors. In
the event that our offering expenses exceed our estimate of
$1,000,000, we may fund such excess with funds from the funds not
to be held in the trust account. In such case, the amount of funds
we intend to be held outside the trust account would decrease by a
corresponding amount. Conversely, in the event that the offering
expenses are less than our estimate of $1,000,000, the amount of
funds we intend to be held outside the trust account would increase
by a corresponding amount.
Under
the DGCL, stockholders may be held liable for claims by third
parties against a corporation to the extent of distributions
received by them in a dissolution. The pro rata portion of our
trust account distributed to our public stockholders upon the
redemption of our public shares in the event we do not complete our
business combination within 24 months from the closing of our
initial public offering may be considered a liquidating
distribution under Delaware law. If the corporation complies with
certain procedures set forth in Section 280 of the DGCL intended to
ensure that it makes reasonable provision for all claims against
it, including a 60-day notice period during which any third-party
claims can be brought against the corporation, a 90-day period
during which the corporation may reject any claims brought, and an
additional 150-day waiting period before any liquidating
distributions are made to stockholders, any liability of
stockholders with respect to a liquidating distribution is limited
to the lesser of such stockholder’s pro rata share of the claim or
the amount distributed to the stockholder, and any liability of the
stockholder would be barred after the third anniversary of the
dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our
public stockholders upon the redemption of our public shares in the
event we do not complete our business combination within 24 months
from the closing of our initial public offering is not considered a
liquidating distribution under Delaware law and such redemption
distribution is deemed to be unlawful, then pursuant to Section 174
of the DGCL, the statute of limitations for claims of creditors
could then be six years after the unlawful redemption distribution,
instead of three years, as in the case of a liquidating
distribution. If we do not complete our business combination within
24 months from the closing of our initial public offering, we will:
(i) cease all operations except for the purpose of winding up, (ii)
as promptly as reasonably possible but not more than ten 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 pay franchise and
income taxes of the Company or Opco (less up to $100,000 of
interest to pay dissolution expenses), divided by the number of
then outstanding public shares and Class A Units of Opco (other
than those held by Rice Acquisition Corp.), which redemption will
completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidating distributions,
if any), subject to applicable law, and (iii) as promptly as
reasonably possible following such redemption, subject to the
approval of our remaining stockholders and our board of directors,
dissolve and liquidate, subject in each case to our obligations
under Delaware law to provide for claims of creditors and the
requirements of other applicable law. Accordingly, it is our
intention to redeem our public shares as soon as reasonably
possible following our 24” month, and, therefore, we do not intend
to comply with those procedures. As such, our stockholders could
potentially be liable for any claims to the extent of distributions
received by them (but no more) and any liability of our
stockholders may extend well beyond the third anniversary of such
date.
Because
we will not be complying with Section 280, Section 281(b) of the
DGCL requires us to adopt a plan, based on facts known to us at
such time that will provide for our payment of all existing and
pending claims or claims that may be potentially brought against us
within the subsequent 10 years. However, because we are a blank
check company, rather than an operating company, and our operations
are limited to searching for prospective target businesses to
acquire, the only likely claims to arise would be from our vendors
(such as lawyers, investment bankers, etc.) or prospective target
businesses. As described above, pursuant to the obligation
contained in our underwriting agreement, we will seek to have all
vendors, service providers (other than our independent registered
public accounting firm), prospective target businesses or other
entities with which we do business execute agreements with us
waiving any right, title, interest or claim of any kind in or to
any monies held in the trust account. As a result of this
obligation, the claims that could be made against us are
significantly limited and the likelihood that any claim that would
result in any liability extending to the trust account is remote.
Further, our sponsor may be liable only to the extent necessary to
ensure that the amounts in the trust account are not reduced below
(i) $10.00 per public share or (ii) such lesser amount per public
share held in the trust account as of the date of the liquidation
of the trust account, due to reductions in value of the trust
assets, in each case net of the amount of interest withdrawn to pay
taxes and will not be liable as to any claims under our indemnity
of the underwriters of our initial public offering against certain
liabilities, including liabilities under the Securities Act. In the
event that an executed waiver is deemed to be unenforceable against
a third party, our sponsor will not be responsible to the extent of
any liability for such third-party claims.
If we
file a bankruptcy petition or an involuntary bankruptcy petition is
filed against us that is not dismissed, the proceeds held in the
trust account could be subject to applicable bankruptcy law, and
may be included in our bankruptcy estate and subject to the claims
of third parties with priority over the claims of our stockholders.
To the extent any bankruptcy claims deplete the trust account, we
cannot assure you we will be able to return $10.00 per share to our
public stockholders. Additionally, if we file a bankruptcy petition
or an involuntary bankruptcy petition is filed against us that is
not dismissed, any distributions received by stockholders could be
viewed under applicable debtor/creditor and/or bankruptcy laws as
either a “preferential transfer” or a “fraudulent conveyance.” As a
result, a bankruptcy court could seek to recover some or all
amounts received by our stockholders. Furthermore, our board of
directors may be viewed as having breached its fiduciary duty to
our creditors and/or may have acted in bad faith, and thereby
exposing itself and our company to claims of punitive damages, by
paying public stockholders from the trust account prior to
addressing the claims of creditors. We cannot assure you that
claims will not be brought against us for these reasons.
Our
public stockholders will be entitled to receive funds from the
trust account only (i) in the event of the redemption of our public
shares and any Class A Units of Opco (other than those held by Rice
Acquisition Corp.) if we do not complete our business combination
within 24 months from the closing of our initial public offering,
subject to applicable law, (ii) in connection with a stockholder
vote to approve an amendment to our amended and restated
certificate of incorporation that would affect the substance or
timing of our obligation to redeem 100% of our public shares if we
have not consummated an initial business combination within 24
months from the closing of our initial public offering or (iii) if
they redeem their respective shares for cash upon the completion of
the initial business combination. In no other circumstances will a
stockholder have any right or interest of any kind to or in the
trust account. In the event we seek stockholder approval in
connection with our initial business combination, a stockholder’s
voting in connection with the business combination alone will not
result in a stockholder’s redeeming its shares to us for an
applicable pro rata share of the trust account. Such stockholder
must have also exercised its redemption rights described above.
These provisions of our amended and restated certificate of
incorporation, like all provisions of our amended and restated
certificate of incorporation, may be amended with a stockholder
vote.
Competition
In
identifying, evaluating and selecting a target business for our
business combination, we may encounter intense competition from
other entities having a business objective similar to ours,
including other blank check companies, private equity groups and
leveraged buyout funds, and operating businesses seeking strategic
acquisitions. Many of these entities are well established and have
extensive experience identifying and effecting business
combinations directly or through affiliates. Moreover, many of
these competitors possess greater financial, technical, human and
other resources than we do. Our ability to acquire larger target
businesses is limited by our available financial resources. This
inherent limitation gives others an advantage in pursuing the
acquisition of a target business. Furthermore, our obligation to
pay cash in connection with our public stockholders who exercise
their redemption rights may reduce the resources available to us
for our initial business combination and our outstanding warrants,
and the future dilution they potentially represent, may not be
viewed favorably by certain target businesses. Either of these
factors may place us at a competitive disadvantage in successfully
negotiating an initial business combination.
Facilities
Our
executive offices are located at 102 East Main Street, Second
Story, Carnegie, Pennsylvania 15106, and our telephone number is
(713) 446-6259. The cost for our use of this space is included in
the $10,000 per month fee we pay to our sponsor for office space,
utilities, secretarial support and administrative services. We
consider our current office space adequate for our current
operations.
Employees
and Human Capital Resources
We
currently have three officers. These individuals are not obligated
to devote any specific number of hours to our matters but they
intend to devote as much of their time as they deem necessary to
our affairs until we have completed our initial business
combination. The amount of time that they will devote in any time
period will vary based on whether a target business has been
selected for our initial business combination and the stage of the
business combination process we are in.
Periodic
Reporting and Financial Information
We
have registered our units, Class A common stock and warrants under
the Exchange Act and have reporting obligations, including the
requirement that we file annual, quarterly and current reports with
the SEC. In accordance with the requirements of the Exchange Act,
our annual reports will contain financial statements audited and
reported on by our independent registered public
accountants.
We
will provide stockholders with audited financial statements of the
prospective target business as part of the proxy solicitation or
tender offer materials (as applicable) sent to stockholders. These
financial statements may be required to be prepared in accordance
with GAAP, or reconciled to, GAAP, or IFRS, depending on the
circumstances, and the historical financial statements may be
required to be audited in accordance with the standards of the
PCAOB. These financial statement requirements may limit the pool of
potential target businesses we may acquire because some targets may
be unable to provide such statements in time for us to disclose
such statements in accordance with federal proxy rules and complete
our initial business combination within the prescribed time frame.
We cannot assure you that any particular target business identified
by us as a potential acquisition candidate will have financial
statements prepared in accordance with the requirements outlined
above, or that the potential target business will be able to
prepare its financial statements in accordance with the
requirements outlined above. To the extent that any applicable
requirements cannot be met, we may not be able to acquire the
proposed target business. While this may limit the pool of
potential acquisition candidates, we do not believe that this
limitation is material.
We
are required to evaluate our internal control procedures for the
fiscal year ending December 31, 2021 as required by the
Sarbanes-Oxley Act. Only in the event we are deemed to be a large
accelerated filer or an accelerated filer will we be required to
have our internal control procedures audited. A target business may
not be in compliance with the provisions of the Sarbanes-Oxley Act
regarding adequacy of their internal controls. The development of
the internal controls of any such entity to achieve compliance with
the Sarbanes-Oxley Act may increase the time and costs necessary to
complete any such acquisition.
We
have filed a Registration Statement on Form 8-A with the SEC to
voluntarily register our securities under Section 12 of the
Exchange Act. As a result, we are subject to the rules and
regulations promulgated under the Exchange Act. We have no current
intention of filing a Form 15 to suspend our reporting or other
obligations under the Exchange Act prior or subsequent to the
consummation of our initial business combination.
We
are an “emerging growth company,” as defined in Section 2(a) of the
Securities Act, as modified by the JOBS Act. As such, we are
eligible to take advantage of certain exemptions from various
reporting requirements that are applicable to other public
companies that are not “emerging growth companies” including, but
not limited to, not being required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in
our periodic reports and proxy statements, and exemptions from the
requirements of holding a non-binding advisory vote on executive
compensation and shareholder approval of any golden parachute
payments not previously approved. If some investors find our
securities less attractive as a result, there may be a less active
trading market for our securities and the prices of our securities
may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an
“emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities
Act for complying with new or revised accounting standards. In
other words, an “emerging growth company” can delay the adoption of
certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the
benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (i) the
last day of the fiscal year (a) following the fifth anniversary of
the completion of our initial public offering, (b) in which we have
total annual gross revenue of at least $1.07 billion (as adjusted
for inflation pursuant to SEC rules from time to time), or (c) in
which we are deemed to be a large accelerated filer, which means
the market value of our Class A common stock that is held by
non-affiliates exceeds $700 million as of the prior June 30th, and
(ii) the date on which we have issued more than $1.0 billion in
non-convertible debt during the prior three-year period.
Additionally,
we are a “smaller reporting company” as defined in Item 10(t)(1) of
Regulation S-K. Smaller reporting companies may take advantage of
certain reduced disclosure obligations, including, among other
things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of
the fiscal year in which (i) the market value of our common stock
held by non-affiliates exceeds $250 million as of the end of that
year’s second fiscal quarter or (ii) our annual revenues exceeded
$100 million during such completed fiscal year and the market value
of our common stock held by non-affiliates exceeds $700 million as
of the end of that year’s second fiscal quarter.
An
investment in our securities involves a high degree of risk. You
should consider carefully all of the risks described below,
together with the other information contained in this Report and
the final prospectus associated with our initial public offering,
before making a decision to invest in our securities. If any of the
following events occur, our business, financial condition and
operating results may be materially adversely affected. In that
event, the trading price of our securities could decline, and you
could lose all or part of your investment.
We
are a recently formed blank check company with no operating history
and no revenues, and you have no basis on which to evaluate our
ability to achieve our business objective.
We
are a recently formed company with no operating results. Because we
lack an operating history, you have no basis upon which to evaluate
our ability to achieve our business objective of completing our
initial business combination with one or more target businesses. We
may be unable to complete our business combination. If we fail to
complete our business combination, we will never generate any
operating revenues.
Past
performance by the Rice family, Rice Investment Group and its
portfolio companies and our management team may not be indicative
of future performance of an investment in the Company. In addition,
none of our officers or directors have served as a sponsor,
director or officer of any blank check companies or special purpose
acquisition companies in the past.
Information
regarding performance by, or businesses associated with, the Rice
family, Rice Investment Group and its portfolio companies and our
management team is presented for informational purposes only. Past
performance by the Rice family, Rice Investment Group and its
portfolio companies or our management team is not a guarantee
either (i) of success with respect to any business combination we
may consummate or (ii) that we will be able to locate a suitable
candidate for our initial business combination. You should not rely
on the historical record of the Rice family, Rice Investment Group
and its portfolio companies or our management team as indicative of
our future performance or of an investment in the company or the
returns the company will, or is likely to, generate going forward.
In addition, none of our officers or directors have served as a
sponsor, director or officer of any blank check companies or
special purpose acquisition companies in the past.
Our
public stockholders may not be afforded an opportunity to vote on
our proposed business combination, which means we may complete our
initial business combination even though a majority of our public
stockholders do not support such a combination.
We
may choose not to hold a stockholder vote to approve our initial
business combination if the business combination would not require
stockholder approval under applicable law or stock exchange listing
requirements. Except as required by applicable law or stock
exchange requirement, the decision as to whether we will seek
stockholder approval of a proposed business combination or will
allow stockholders to sell their shares to us in a tender offer
will be made by us, solely in our discretion, and will be based on
a variety of factors, such as the timing of the transaction and
whether the terms of the transaction would otherwise require us to
seek stockholder approval. Accordingly, we may complete our initial
business combination even if holders of a majority of our public
shares do not approve of the business combination we
complete.
In
evaluating a prospective target business for our initial business
combination, our management may consider the availability of funds
from the sale of the forward purchase securities, which may be used
as part of the consideration to the sellers in the initial business
combination. If Atlas Point Fund decides not to accept our offer to
purchase the forward purchase securities, we may decide not to
consummate our initial business combination, or if we decide to, we
may lack sufficient funds to consummate our initial business
combination.
We
have entered into a forward purchase agreement pursuant to which
Atlas Point Fund, which is a fund managed by CIBC National Trust
but is not affiliated with us or our sponsor, agreed to purchase up
to $75,000,000 of either (i) a number of forward purchase units for
$10.00 per unit or (ii) a number of forward purchase shares for
$9.67 per share, in a private placement that closed simultaneously
with the closing of our initial business combination. Whether we
will issue Atlas Point Fund forward purchase units valued at $10.00
per unit or forward purchase shares valued at $9.67 per share will
be determined at our election, and in our sole discretion, at least
10 business days prior to the closing of our initial business
combination. The funds from the sale of the forward purchase
securities are expected to be used as part of the consideration to
the sellers in our initial business combination, and to pay
expenses in connection with our initial business combination and
may be used for working capital in the post-transaction
company.
The
obligations under the forward purchase agreement will not depend on
whether any public stockholders elect to redeem their shares in
connection with our initial business combination. However, if the
sale of the forward purchase securities does not close, for
example, by reason of the failure of Atlas Point Fund to fund the
purchase price for its forward purchase securities, we may lack
sufficient funds to consummate our initial business combination.
Atlas Point Fund’s obligation to purchase the forward purchase
securities will, among other things, be conditioned on Atlas Point
Fund giving us its irrevocable written consent to purchase the
forward purchase securities no later than five days after we notify
it of our intention to meet to consider entering into a definitive
agreement for a proposed business combination and on a requirement
that such initial business combination is approved by a majority of
our board and a majority of the independent directors of our board.
Accordingly, if Atlas Point Fund does not consent to the purchase,
or if the initial business combination is not approved by a
majority of our board and a majority of the independent directors
of our board, Atlas Point Fund would not be obligated to purchase
any forward purchase securities.
Additionally,
Atlas Point Fund’s obligations to purchase the forward purchase
securities will be subject to termination prior to the closing of
the sale of such securities by mutual written consent of us and
Atlas Point Fund, or automatically: (i) if our initial business
combination is not consummated within 24 months from the closing of
our initial public offering or (ii) if we become subject to any
voluntary or involuntary petition under the United States federal
bankruptcy laws or any state insolvency law, in each case which is
not withdrawn within 60 days after being filed, or a receiver,
fiscal agent or similar officer is appointed by a court for
business or property of us or Atlas Point Fund, in each case which
is not removed, withdrawn or terminated within 60 days after such
appointment. In addition, Atlas Point Fund’s obligations to
purchase the forward purchase securities will be subject to
fulfillment of customary closing conditions, including that our
initial business combination must be consummated substantially
concurrently with the purchase of the forward purchase securities.
If Atlas Point Fund decides not to accept our offer to purchase the
forward purchase securities, we may decide not to consummate our
initial business combination, or if we decide to, we may lack
sufficient funds to consummate our initial business
combination.
Your
only opportunity to affect the investment decision regarding a
potential business combination may be limited to the exercise of
your right to redeem your shares from us for cash.
At
the time of your investment in us, you will not be provided with an
opportunity to evaluate the specific merits or risks of our initial
business combination. Since our board of directors may complete a
business combination without seeking stockholder approval, public
stockholders may not have the right or opportunity to vote on the
business combination, unless we seek such stockholder vote.
Accordingly, if we do not seek stockholder approval, your only
opportunity to affect the investment decision regarding a potential
business combination may be limited to exercising your redemption
rights within the period of time (which will be at least 20
business days) set forth in our tender offer documents mailed to
our public stockholders in which we describe our initial business
combination.
If
we seek stockholder approval of our initial business combination,
our initial stockholders and management team have agreed to vote in
favor of such initial business combination, regardless of how our
public stockholders vote.
Our
initial stockholders own 20% of our shares of common stock
following the completion of our initial public offering. Our
initial stockholders and management team also may from time to time
purchase shares of our Class A common stock prior to our initial
business combination. Our amended and restated certificate of
incorporation provide that, if we seek stockholder approval of an
initial business combination, such initial business combination
will be approved if we receive the affirmative vote of a majority
of the shares voted at such meeting, including the founder shares
and sponsor shares. As a result, in addition to our initial
stockholders’ founder shares and sponsor shares, we would need
8,896,875, or 37.5%, of the 23,725,000 public shares sold in our
initial public offering to be voted in favor of an initial business
combination in order to have our initial business combination
approved. Accordingly, if we seek stockholder approval of our
initial business combination, the agreement by our initial
stockholders and management team to vote in favor of our initial
business combination will increase the likelihood that we will
receive the requisite stockholder approval for such initial
business combination.
The
ability of our public stockholders to redeem their shares for cash
may make our financial condition unattractive to potential business
combination targets, which may make it difficult for us to enter
into a business combination with a target.
We
may seek to enter into a business combination transaction agreement
with a prospective target that requires as a closing condition that
we have a minimum net worth or a certain amount of cash. If too
many public stockholders exercise their redemption rights, we would
not be able to meet such closing condition and, as a result, would
not be able to proceed with the business combination. Furthermore,
in no event will we redeem our public shares in an amount that
would cause our net tangible assets to be less than $5,000,001.
Consequently, if accepting all properly submitted redemption
requests would cause our net tangible assets to be less than
$5,000,001 upon consummation of our initial business combination or
such greater amount necessary to satisfy a closing condition as
described above, we would not proceed with such redemption and the
related business combination and may instead search for an
alternate business combination. Prospective targets will be aware
of these risks and, thus, may be reluctant to enter into a business
combination transaction with us.
The
ability of our public stockholders to exercise redemption rights
with respect to a large number of our shares may not allow us to
complete the most desirable business combination or optimize our
capital structure.
At
the time we enter into an agreement for our initial business
combination, we will not know how many stockholders may exercise
their redemption rights, and therefore will need to structure the
transaction based on our expectations as to the number of shares
that will be submitted for redemption. If our business combination
agreement requires us to use a portion of the cash in the trust
account to pay the purchase price, or requires us to have a minimum
amount of cash at closing, we will need to reserve a portion of the
cash in the trust account to meet such requirements, or arrange for
third party financing. In addition, if a larger number of shares
are submitted for redemption than we initially expected, we may
need to restructure the transaction to reserve a greater portion of
the cash in the trust account or arrange for third party financing.
Raising additional third party financing may involve dilutive
equity issuances or the incurrence of indebtedness at higher than
desirable levels. The above considerations may limit our ability to
complete the most desirable business combination available to us or
optimize our capital structure.
The
ability of our public stockholders to exercise redemption rights
with respect to a large number of our shares could increase the
probability that our initial business combination would be
unsuccessful and that you would have to wait for liquidation in
order to redeem your stock.
If
our business combination agreement requires us to use a portion of
the cash in the trust account to pay the purchase price, or
requires us to have a minimum amount of cash at closing, the
probability that our initial business combination would be
unsuccessful is increased. If our initial business combination is
unsuccessful, you would not receive your pro rata portion of the
trust account until we liquidate the trust account. If you are in
need of immediate liquidity, you could attempt to sell your stock
in the open market; however, at such time our stock may trade at a
discount to the pro rata amount per share in the trust account. In
either situation, you may suffer a material loss on your investment
or lose the benefit of funds expected in connection with our
redemption until we liquidate or you are able to sell your stock in
the open market.
The
requirement that we complete our initial business combination
within 24 months after the closing of our initial public offering
may give potential target businesses leverage over us in
negotiating a business combination and may limit the time we have
to conduct due diligence on potential business combination targets
as we approach our dissolution deadline, which could undermine our
ability to complete our business combination on terms that would
produce value for our stockholders.
Any
potential target business with which we enter into negotiations
concerning a business combination will be aware that we must
complete our initial business combination within 24 months from the
closing of our initial public offering. Consequently, such target
business may obtain leverage over us in negotiating a business
combination, knowing that if we do not complete our initial
business combination with that particular target business, we may
be unable to complete our initial business combination with any
target business. This risk will increase as we get closer to the
timeframe described above. In addition, we may have limited time to
conduct due diligence and may enter into our initial business
combination on terms that we would have rejected upon a more
comprehensive investigation.
Our
search for a business combination, and any target business with
which we ultimately consummate a business combination, may be
materially adversely affected by the recent coronavirus (COVID-19)
outbreak and the status of debt and equity markets.
In
December 2019, a novel strain of coronavirus was reported to have
surfaced in Wuhan, China, which has and is continuing to spread
throughout China and other parts of the world, including the United
States. On January 30, 2020, the World Health Organization declared
the outbreak of the coronavirus disease (COVID-19) a “Public Health
Emergency of International Concern.” On January 31, 2020, U.S.
Health and Human Services Secretary Alex M. Azar II declared a
public health emergency for the United States to aid the U.S.
healthcare community in responding to COVID-19, and on March 11,
2020 the World Health Organization characterized the outbreak as a
“pandemic”. The COVID-19 outbreak has resulted, and a significant
outbreak of other infectious diseases could result, in a widespread
health crisis that has adversely affected, in the case of COVID-19,
and could adversely affect, in the case of future outbreaks of
infectious diseases, the economies and financial markets worldwide,
and the business of any potential target business with which we
consummate a business combination could be materially and adversely
affected. Furthermore, we may be unable to complete a business
combination if continued concerns relating to COVID-19 continues to
restrict travel, limit the ability to have meetings with potential
investors or the target company’s personnel, vendors and services
providers are unavailable to negotiate and consummate a transaction
in a timely manner. The extent to which COVID-19 impacts our search
for a business combination will depend on future developments,
which are highly uncertain and cannot be predicted, including new
information which may emerge concerning the severity of COVID-19
and the actions to contain COVID-19 or treat its impact, among
others. If the disruptions posed by COVID-19 or other matters of
global concern continue for an extensive period of time, our
ability to consummate a business combination, or the operations of
a target business with which we ultimately consummate a business
combination, may be materially adversely affected.
In
addition, our ability to consummate a transaction may be dependent
on the ability to raise equity and debt financing which may be
impacted by COVID-19 and other events, including as a result of
increased market volatility, decreased market liquidity and
third-party financing being unavailable on terms acceptable to us
or at all. Furthermore, the impact of COVID-19 may increase the
other risks identified herein.
We
may not be able to complete our initial business combination within
the 24 months after the closing of our initial public offering, in
which case we would cease all operations except for the purpose of
winding up and we would redeem our public shares and liquidate, in
which case our public stockholders may receive only their pro rata
portion of the funds in the trust account that are available for
distribution to public stockholders, and our warrants will expire
worthless.
We
may not be able to find a suitable target business and complete our
initial business combination within 24 months after the closing of
our initial public offering. Our ability to complete our initial
business combination may be negatively impacted by general market
conditions, volatility in the capital and debt markets and the
other risks described herein including the impact of COVID-19. If
we have not completed our initial business combination within such
time period, we will (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but
not more than ten 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 pay franchise and income taxes of the
Company or Opco (less up to $100,000 of interest to pay dissolution
expenses), divided by the number of then outstanding public shares
and Class A Units of Opco (other than those held by Rice
Acquisition Corp.), which redemption will completely extinguish
public stockholders’ rights as stockholders (including the right to
receive further liquidating distributions, if any), subject to
applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining
stockholders and our board of directors, dissolve and liquidate,
subject in each case to our obligations under Delaware law to
provide for claims of creditors and the requirements of other
applicable law. In such case, our public stockholders may only
receive $10.00 per share, and our warrants will expire worthless.
In certain circumstances, our public stockholders may receive less
than $10.00 per share on the redemption of their shares.
If
we seek stockholder approval of our initial business combination,
our sponsor, directors, officers, advisors and their affiliates may
elect to purchase shares or public warrants from public
stockholders or public warrantholders, which may influence a vote
on a proposed business combination and reduce the public “float” of
our Class A common stock.
If we
seek stockholder approval of our initial business combination and
we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our sponsor, Atlas
Point Fund, directors, officers, advisors or their affiliates may
purchase shares or public warrants or a combination thereof in
privately negotiated transactions or in the open market either
prior to or following the completion of our initial business
combination, although they are under no obligation to do so. There
is no limit on the number of shares our sponsor, Atlas Point Fund,
directors, officers, advisors or their affiliates may purchase in
such transactions, subject to compliance with applicable law and
the rules of the NYSE. However, other than as expressly stated
herein, they have no current commitments, plans or intentions to
engage in such transactions and have not formulated any terms or
conditions for any such transactions. None of the funds in the
trust account will be used to purchase shares or public warrants in
such transactions.
In
the event that our sponsor, Atlas Point Fund, directors, officers,
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. The purpose of any such purchases of shares
could be to vote such shares in favor of the business combination
and thereby increase the likelihood of obtaining stockholder
approval of the business combination or to satisfy a closing
condition in an agreement with a target that requires us to have a
minimum net worth or a certain amount of cash at the closing of our
business combination, where it appears that such requirement would
otherwise not be met. The purpose of any such purchases of public
warrants could be to reduce the number of public warrants
outstanding or to vote such warrants on any matters submitted to
the warrantholders for approval in connection with our initial
business combination. Any such purchases of our securities may
result in the completion of our business combination that may not
otherwise have been possible. Any such purchases will be reported
pursuant to Section 13 and Section 16 of the Exchange Act to the
extent the purchasers are subject to such reporting
requirements.
In
addition, if such purchases are made, the public “float” of our
Class A common stock or public warrants and the number of
beneficial holders of our securities may be reduced, possibly
making it difficult to maintain or obtain the quotation, listing or
trading of our securities on a national securities
exchange.
If
a stockholder fails to receive notice of our offer to redeem our
public shares in connection with our business combination, or fails
to comply with the procedures for tendering its shares, such shares
may not be redeemed.
We
will comply with the proxy rules or tender offer rules, as
applicable, when conducting redemptions in connection with our
business combination. Despite our compliance with these rules, if a
stockholder fails to receive our proxy solicitation or tender offer
materials, as applicable, such stockholder may not become aware of
the opportunity to redeem its shares. In addition, the proxy
solicitation or tender offer materials, as applicable, that we will
furnish to holders of our public shares in connection with our
initial business combination will describe the various procedures
that must be complied with in order to validly redeem or tender
public shares. For example, we may require our public stockholders
seeking to exercise their redemption rights, whether they are
record holders or hold their shares in “street name,” to either
tender their certificates to our transfer agent prior to the date
set forth in the proxy solicitation or tender offer materials
mailed to such holders, or up to two business days prior to the
vote on the proposal to approve the business combination in the
event we distribute proxy materials, or to deliver their shares to
the transfer agent electronically. In the event that a stockholder
fails to comply with these or any other procedures, its shares may
not be redeemed.
You
will not have any rights or interests in funds from the trust
account, except under certain limited circumstances. Therefore, to
liquidate your investment, you may be forced to sell your public
shares or warrants, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the
trust account only upon the earliest to occur of: (i) the
redemption of any public shares properly submitted in connection
with our completion of an initial business combination (including
the release of funds to pay any amounts due to any public
stockholders who properly exercise their redemption rights in
connection therewith), (ii) the redemption of any public shares
properly submitted in connection with a stockholder vote to approve
an amendment to our amended and restated certificate of
incorporation that would modify the substance or timing of our
obligation to redeem 100% of our public shares if we have not
consummated an initial business combination within 24 months from
the closing of our initial public offering, or (iii) the redemption
of our public shares and any Class A Units of Opco (other than
those held by Rice Acquisition Corp.) if we do not complete an
initial business combination within 24 months from the closing of
our initial public offering, subject to applicable law and as
further described herein. In addition, if we do not complete an
initial business combination within 24 months from the closing of
our initial public offering for any reason, compliance with
Delaware law may require that we submit a plan of dissolution to
our then-existing stockholders for approval prior to the
distribution of the proceeds held in our trust account. In that
case, public stockholders may be forced to wait beyond 24 months
from the closing of our initial public offering before they receive
funds from our trust account. In no other circumstances will a
public stockholder have any right or interest of any kind in the
trust account. Holders of warrants will not have any right to the
proceeds held in the trust account with respect to the warrants.
Accordingly, to liquidate your investment, you may be forced to
sell your public shares or warrants, potentially at a
loss.
The
NYSE may delist our securities from trading on its exchange, which
could limit investors’ ability to make transactions in our
securities and subject us to additional trading
restrictions.
Our
securities are currently listed on the NYSE. However, we cannot
assure you that our securities will be, or will continue to be,
listed on the NYSE in the future or prior to our initial business
combination. In order to continue listing our securities on the
NYSE prior to our initial business combination, we must maintain
certain financial, distribution and stock price levels. Generally,
we must maintain a minimum number of holders of our securities
(generally 300 round lot holders). Additionally, in connection with
our initial business combination, we will be required to
demonstrate compliance with the NYSE’s initial listing
requirements, which are more rigorous than the NYSE’s continued
listing requirements, in order to continue to maintain the listing
of our securities on the NYSE. For instance, our stock price would
generally be required to be at least $4.00 per share, our aggregate
market value would be required to be at least $100,000,000, and the
market value of our publicly-held shares would be required to be at
least $80,000,000. We cannot assure you that we will be able to
meet those initial listing requirements at that time.
If
the NYSE delists our securities from trading on its exchange and we
are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on an
over-the-counter market. If this were to occur, we could face
significant material adverse consequences, including:
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a
limited availability of market quotations for our
securities; |
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reduced
liquidity for our securities; |
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a
determination that our Class A common stock is a “penny stock”
which will require brokers trading in our Class A common stock to
adhere to more stringent rules and possibly result in a reduced
level of trading activity in the secondary trading market for our
securities; |
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a
limited amount of news and analyst coverage; and |
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a
decreased ability to issue additional securities or obtain
additional financing in the future. |
The
National Securities Markets Improvement Act of 1996, which is a
federal statute, prevents or preempts the states from regulating
the sale of certain securities, which are referred to as “covered
securities.” Because our Class A common stock and warrants are
listed on the NYSE, our units, Class A common stock and warrants
are covered securities. Although the states are preempted from
regulating the sale of our securities, the federal statute does
allow the states to investigate companies if there is a suspicion
of fraud, and, if there is a finding of fraudulent activity, then
the states can regulate or bar the sale of covered securities in a
particular case. While we are not aware of a state having used
these powers to prohibit or restrict the sale of securities issued
by blank check companies, other than the state of Idaho, certain
state securities regulators view blank check companies unfavorably
and might use these powers, or threaten to use these powers, to
hinder the sale of securities of blank check companies in their
states. Further, if we were no longer listed on the NYSE, our
securities would not be covered securities and we would be subject
to regulation in each state in which we offer our
securities.
If
we seek stockholder approval of our initial business combination
and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of stockholders are deemed to hold
in excess of 20% of our Class A common stock, you will lose the
ability to redeem all such shares in excess of 20% of our Class A
common stock.
If we
seek stockholder approval of our initial business combination and
we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our
amended and restated certificate of incorporation provide that a
public stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert
or as a “group” (as defined under Section 13 of the Exchange Act),
will be restricted from seeking redemption rights with respect to
more than an aggregate of 20% of the shares sold in our initial
public offering without our prior consent, which we refer to as the
“Excess Shares.” However, we would not be restricting our
stockholders’ ability to vote all of their shares (including Excess
Shares) for or against our business combination. Your inability to
redeem the Excess Shares will reduce your influence over our
ability to complete our business combination and you could suffer a
material loss on your investment in us if you sell Excess Shares in
open market transactions. Additionally, you will not receive
redemption distributions with respect to the Excess Shares if we
complete our business combination. And as a result, you will
continue to hold that number of shares exceeding 20% and, in order
to dispose of such shares, would be required to sell your stock in
open market transactions, potentially at a loss.
As
the number of special purpose acquisition companies evaluating
targets increases, attractive targets may become scarcer and there
may be more competition for attractive targets. This could increase
the cost of our initial business combination and could even result
in our inability to find a target or to consummate an initial
business combination.
In
recent years, the number of special purpose acquisition companies
that have been formed has increased substantially. Many potential
targets for special purpose acquisition companies have already
entered into an initial business combination, and there are still
many special purpose acquisition companies seeking targets for
their initial business combination, as well as many such companies
currently in registration. As a result, at times, fewer attractive
targets may be available, and it may require more time, more effort
and more resources to identify a suitable target and to consummate
an initial business combination. In addition, because there are
more special purpose acquisition companies seeking to enter into an
initial business combination with available targets, the
competition for available targets with attractive fundamentals or
business models may increase, which could cause target companies to
demand improved financial terms. Attractive deals could also become
scarcer for other reasons, such as economic or industry sector
downturns, geopolitical tensions or increases in the cost of
additional capital needed to close business combinations or operate
targets post-business combination. This could increase the cost of,
delay or otherwise complicate or frustrate our ability to find and
consummate an initial business combination, and may result in our
inability to consummate an initial business combination on terms
favorable to our investors altogether.
Because
of our limited resources and the significant competition for
business combination opportunities, it may be more difficult for us
to complete our initial business combination. If we do not complete
our initial business combination, our public stockholders may
receive only their pro rata portion of the funds in the trust
account that are available for distribution to public stockholders,
and our warrants will expire worthless.
We
expect to encounter intense competition from other entities having
a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank
check companies and other entities, domestic and international,
competing for the types of businesses we intend to acquire. Many of
these individuals and entities are well-established and have
extensive experience in identifying and effecting, directly or
indirectly, acquisitions of companies operating in or providing
services to various industries. Many of these competitors possess
greater technical, human and other resources or more local industry
knowledge than we do and our financial resources will be relatively
limited when contrasted with those of many of these competitors.
While we believe there are numerous target businesses we could
potentially acquire with the net proceeds of our initial public
offering and the sale of the private placement warrants, our
ability to compete with respect to the acquisition of certain
target businesses that are sizable will be limited by our available
financial resources. This inherent competitive limitation gives
others an advantage in pursuing the acquisition of certain target
businesses. Furthermore, we are obligated to offer holders of our
public shares the right to redeem their shares for cash at the time
of our initial business combination, in conjunction with a
stockholder vote or via a tender offer. Target businesses will be
aware that this may reduce the resources available to us for our
initial business combination. Any of these obligations may place us
at a competitive disadvantage in successfully negotiating a
business combination. If we do not complete our initial business
combination, our public stockholders may receive only their pro
rata portion of the funds in the trust account that are available
for distribution to public stockholders, and our warrants will
expire worthless. In certain circumstances, our public stockholders
may receive less than $10.00 per share upon our liquidation. See “—
If third parties bring claims against us, the proceeds held in the
trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share” and
other risk factors below.
If
the net proceeds of our initial public offering and the sale of the
private placement warrants not being held in the trust account are
insufficient to allow us to operate for at least the next 24
months, we may be unable to complete our initial business
combination, in which case our public stockholders may only receive
$10.00 per share, or less than such amount in certain
circumstances, and our warrants will expire
worthless.
The
funds available to us outside of the trust account may not be
sufficient to allow us to operate for at least the next 24 months,
assuming that our initial business combination is not completed
during that time. We believe that, upon the closing of our initial
public offering, the funds available to us outside of the trust
account will be sufficient to allow us to operate for at least the
next 24 months; however, we cannot assure you that our estimate is
accurate. Of the funds available to us, we could use a portion of
the funds available to us to pay fees to consultants to assist us
with our search for a target business. We could also use a portion
of the funds as a down payment or to fund a “no-shop” provision (a
provision in letters of intent or merger agreements designed to
keep target businesses from “shopping” around for transactions with
other companies on terms more favorable to such target businesses)
with respect to a particular proposed business combination,
although we do not have any current intention to do so. If we
entered into a letter of intent or merger agreement where we paid
for the right to receive exclusivity from a target business and
were subsequently required to forfeit such funds (whether as a
result of our breach or otherwise), we might not have sufficient
funds to continue searching for, or conduct due diligence with
respect to, a target business. If we do not complete our initial
business combination, our public stockholders may receive only
approximately $10.00 per share on the liquidation of our trust
account and our warrants will expire worthless. In certain
circumstances, our public stockholders may receive less than $10.00
per share upon our liquidation. See “— If third parties bring
claims against us, the proceeds held in the trust account could be
reduced and the per-share redemption amount received by
stockholders may be less than $10.00 per share” and other risk
factors below.
If
the net proceeds of our initial public offering and the sale of the
private placement warrants not being held in the trust account are
insufficient to allow us to operate for at least the next 24
months, it could limit the amount available to fund our search for
a target business or businesses and complete our initial business
combination and we will depend on loans from our sponsor or
management team to fund our search for a business combination, to
pay franchise and income taxes of the Company or Opco and to
complete our initial business combination. If we are unable to
obtain these loans, we may be unable to complete our initial
business combination.
Of
the net proceeds of our initial public offering and the sale of the
private placement warrants, only approximately $1,000,000 is
available to us outside the trust account to fund our working
capital requirements. If we are required to seek additional
capital, we would need to borrow funds from our sponsor, management
team or other third parties to operate or we may be forced to
liquidate. None of our sponsor, members of our management team nor
any of their affiliates is under any obligation to advance funds to
us in such circumstances. Any such advances would be repaid only
from funds held outside the trust account or from funds released to
us upon completion of our initial business combination. Up to
$1,500,000 of such loans may be convertible into warrants of the
post-business combination entity at a price of $1.00 per warrant at
the option of the lender. The warrants would be identical to the
private placement warrants. Prior to the completion of our initial
business combination, we do not expect to seek loans from parties
other than our sponsor or an affiliate of our sponsor as we do not
believe third parties will be willing to loan such funds and
provide a waiver against any and all rights to seek access to funds
in our trust account. If we do not complete our initial business
combination because we do not have sufficient funds available to
us, we will be forced to cease operations and liquidate the trust
account. Consequently, our public stockholders may only receive an
estimated $10.00 per share, or possibly less, on our redemption of
our public shares, and our warrants will expire worthless. See “—
If third parties bring claims against us, the proceeds held in the
trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share” and
other risk factors below.
Subsequent
to our completion of our initial business combination, we may be
required to take write-downs or write-offs, restructuring and
impairment or other charges that could have a significant negative
effect on our financial condition, results of operations and our
stock price, which could cause you to lose some or all of your
investment.
Even
if we conduct extensive due diligence on a target business with
which we combine, we cannot assure you that this diligence will
surface all material issues in relation to a particular target
business, that it would be possible to uncover all material issues
through a customary amount of due diligence, or that factors
outside of the target business and outside of our control will not
later arise. As a result of these factors, we may be forced to
later write-down or write-off assets, restructure our operations,
or incur impairment or other charges that could result in our
reporting losses. Even if our due diligence successfully identifies
certain risks, unexpected risks may arise and previously known
risks may materialize in a manner not consistent with our
preliminary risk analysis. Even though these charges may be
non-cash items and not have an immediate impact on our liquidity,
the fact that we report charges of this nature could contribute to
negative market perceptions about us or our securities. In
addition, charges of this nature may cause us to violate net worth
or other covenants to which we may be subject as a result of
assuming pre-existing debt held by a target business or by virtue
of our obtaining post-combination debt financing. Accordingly, any
stockholders who choose to remain stockholders following the
business combination could suffer a reduction in the value of their
securities. Such stockholders are unlikely to have a remedy for
such reduction in value unless they are able to successfully claim
that the reduction was due to the breach by our officers or
directors of a duty of care or other fiduciary duty owed to them,
or if they are able to successfully bring a private claim under
securities laws that the proxy solicitation or tender offer
materials, as applicable, relating to the business combination
contained an actionable material misstatement or material
omission.
The
securities in which we invest the funds held in the trust account
could bear a negative rate of interest, which could reduce the
value of the assets held in trust such that the per-share
redemption amount received by public stockholders may be less than
$10.00 per share.
The
proceeds held in the trust account will be invested only in U.S.
government treasury obligations with a maturity of 185 days or less
or in money market funds meeting certain conditions under Rule 2a-7
under the Investment Company Act, which invest only in direct U.S.
government treasury obligations. While short-term U.S. government
treasury obligations currently yield a positive rate of interest,
they have briefly yielded negative interest rates in recent years.
Central banks in Europe and Japan pursued interest rates below zero
in recent years, and the Open Market Committee of the Federal
Reserve has not ruled out the possibility that it may in the future
adopt similar policies in the United States. In the event that we
do not complete our initial business combination or make certain
amendments to our amended and restated certificate of
incorporation, our public stockholders are entitled to receive
their pro rata share of the proceeds held in the trust account,
plus any interest income, net of taxes paid or payable (less, in
the case we do not complete our initial business combination,
$100,000 of interest). Negative interest rates could reduce the
value of the assets held in trust such that the per-share
redemption amount received by public stockholders may be less than
$10.00 per share.
If
third parties bring claims against us, the proceeds held in the
trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per
share.
Our
placing of funds in the trust account may not protect those funds
from third-party claims against us. Although we will seek to have
all vendors, service providers (other than our independent
registered public accounting firm), prospective target businesses
and other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in
or to any monies held in the trust account for the benefit of our
public stockholders, such parties may not execute such agreements,
or even if they execute such agreements, they may not be prevented
from bringing claims against the trust account, including, but not
limited to, fraudulent inducement, breach of fiduciary
responsibility or other similar claims, as well as claims
challenging the enforceability of the waiver, in each case in order
to gain advantage with respect to a claim against our assets,
including the funds held in the trust account. If any third party
refuses to execute an agreement waiving such claims to the monies
held in the trust account, our management will perform an analysis
of the alternatives available to it and will only enter into an
agreement with a third party that has not executed a waiver if
management believes that such third party’s engagement would be
significantly more beneficial to us than any alternative. Making
such a request of potential target businesses may make our
acquisition proposal less attractive to them and, to the extent
prospective target businesses refuse to execute such a waiver, it
may limit the field of potential target businesses that we might
pursue.
Examples
of possible instances where we may engage a third party that
refuses to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills are believed by
management to be significantly superior to those of other
consultants that would agree to execute a waiver or in cases where
management is unable to find a service provider willing to execute
a waiver. In addition, there is no guarantee that such entities
will agree to waive any claims they may have in the future as a
result of, or arising out of, any negotiations, contracts or
agreements with us and will not seek recourse against the trust
account for any reason. Upon redemption of our public shares, if we
do not complete our business combination within the prescribed
timeframe, or upon the exercise of a redemption right in connection
with our business combination, we will be required to provide for
payment of claims of creditors that were not waived that may be
brought against us within the 10 years following redemption.
Accordingly, the per-share redemption amount received by public
stockholders could be less than the $10.00 per public share
initially held in the trust account, due to claims of such
creditors. Pursuant to the letter agreement the form of which is
filed as an exhibit to the registration statement on Form S-1 that
was filed in connection with our initial public offering, our
sponsor has agreed that it will be liable to us if and to the
extent any claims by a third party (other than our independent
public accountants) for services rendered or products sold to us,
or a prospective target business with which we have entered into a
written letter of intent, confidentiality or other similar
agreement or business combination agreement, reduce the amount of
funds in the trust account to below the lesser of (i) $10.00 per
public share and (ii) the actual amount per public share held in
the trust account as of the date of the liquidation of the trust
account, if less than $10.00 per share due to reductions in the
value of the trust assets, in each case net of the interest which
may be withdrawn to pay taxes, provided that such liability will
not apply to any claims by a third party or prospective target
business who executed a waiver of any and all rights to the monies
held in the trust account (whether or not such waiver is
enforceable) nor will it apply to any claims under our indemnity of
the underwriters of our initial public offering against certain
liabilities, including liabilities under the Securities Act.
However, we have not asked our sponsor to reserve for such
indemnification obligations, nor have we independently verified
whether our sponsor has sufficient funds to satisfy its indemnity
obligations and we believe that our sponsor’s only assets are
securities of our company. Therefore, we cannot assure you that our
sponsor would be able to satisfy those obligations. As a result, if
any such claims were successfully made against the trust account,
the funds available for our initial business combination and
redemptions could be reduced to less than $10.00 per public share.
In such event, we may not be able to complete our initial business
combination, and you would receive such lesser amount per share in
connection with any redemption of your public shares. None of our
officers or directors will indemnify us for claims by third parties
including, without limitation, claims by vendors and prospective
target businesses.
Our
directors may decide not to enforce the indemnification obligations
of our sponsor, resulting in a reduction in the amount of funds in
the trust account available for distribution to our public
stockholders.
In
the event that the proceeds in the trust account are reduced below
the lesser of (i) $10.00 per public share and (ii) the actual
amount per public share held in the trust account as of the date of
the liquidation of the trust account, if less than $10.00 per share
due to reductions in the value of the trust assets, in each case
net of the interest which may be withdrawn to pay taxes, and our
sponsor asserts that it is unable to satisfy its obligations or
that it has no indemnification obligations related to a particular
claim, our independent directors would determine whether to take
legal action against our sponsor to enforce its indemnification
obligations.
While
we currently expect that our independent directors would take legal
action on our behalf against our sponsor to enforce its
indemnification obligations to us, it is possible that our
independent directors in exercising their business judgment and
subject to their fiduciary duties may choose not to do so in any
particular instance. If our independent directors choose not to
enforce these indemnification obligations, the amount of funds in
the trust account available for distribution to our public
stockholders may be reduced below $10.00 per share.
If
after we distribute the proceeds in the trust account to our public
stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, a
bankruptcy court may seek to recover such proceeds, and the members
of our board of directors may be viewed as having breached their
fiduciary duties to our creditors, thereby exposing the members of
our board of directors and us to claims of punitive
damages.
If,
after we distribute the proceeds in the trust account to our public
stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, any
distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a
“preferential transfer” or a “fraudulent conveyance.” As a result,
a bankruptcy court could seek to recover some or all amounts
received by our stockholders. In addition, our board of directors
may be viewed as having breached its fiduciary duty to our
creditors and/or having acted in bad faith, thereby exposing itself
and us to claims of punitive damages, by paying public stockholders
from the trust account prior to addressing the claims of
creditors.
If
before distributing the proceeds in the trust account to our public
stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the
claims of creditors in such proceeding may have priority over the
claims of our stockholders and the per-share amount that would
otherwise be received by our stockholders in connection with our
liquidation may be reduced.
If,
before distributing the proceeds in the trust account to our public
stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the
proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and
subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims
deplete the trust account, the per-share amount that would
otherwise be received by our stockholders in connection with our
liquidation may be reduced.
If
we are deemed to be an investment company under the Investment
Company Act, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make
it difficult for us to complete our business
combination.
If we
are deemed to be an investment company under the Investment Company
Act, our activities may be restricted, including:
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restrictions
on the nature of our investments; and |
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restrictions
on the issuance of securities, each of which may make it difficult
for us to complete our business combination. |
In
addition, we may have imposed upon us burdensome requirements,
including:
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registration
as an investment company; |
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adoption
of a specific form of corporate structure; and |
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reporting,
record keeping, voting, proxy and disclosure requirements and other
rules and regulations. |
In
order not to be regulated as an investment company under the
Investment Company Act, unless we can qualify for an exclusion, we
must ensure that we are engaged primarily in a business other than
investing, reinvesting or trading of securities and that our
activities do not include investing, reinvesting, owning, holding
or trading “investment securities” constituting more than 40% of
our assets (exclusive of U.S. government securities and cash items)
on an unconsolidated basis. Our business is to identify and
complete a business combination and thereafter to operate the
post-transaction business or assets for the long term. We do not
plan to buy businesses or assets with a view to resale or profit
from their resale. We do not plan to buy unrelated businesses or
assets or to be a passive investor.
We do
not believe that our anticipated principal activities will subject
us to the Investment Company Act. To this end, the proceeds held in
the trust account may only be invested in United States “government
securities” within the meaning of Section 2(a)(16) of the
Investment Company Act having a maturity of 185 days or less or in
money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act which invest only in
direct U.S. government treasury obligations. Pursuant to the trust
agreement, the trustee is not permitted to invest in other
securities or assets. By restricting the investment of the proceeds
to these instruments, and by having a business plan targeted at
acquiring and growing businesses for the long term (rather than on
buying and selling businesses in the manner of a merchant bank or
private equity fund), we intend to avoid being deemed an
“investment company” within the meaning of the Investment Company
Act. Our initial public offering is not intended for persons who
are seeking a return on investments in government securities or
investment securities. The trust account is intended as a holding
place for funds pending the earliest to occur of: (i) the
completion of our initial business combination; (ii) the redemption
of any public shares properly submitted in connection with a
stockholder vote to approve an amendment to our amended and
restated certificate of incorporation that would affect the
substance or timing of our obligation to redeem 100% of our public
shares if we have not consummated an initial business combination
within 24 months from the closing of our initial public offering;
or (iii) the redemption of our public shares and any Class A Units
of Opco (other than those held by Rice Acquisition Corp.) if we do
not complete our business combination within 24 months from the
closing of our initial public offering, subject to applicable law.
If we do not invest the proceeds as discussed above, we may be
deemed to be subject to the Investment Company Act. If we were
deemed to be subject to the Investment Company Act, compliance with
these additional regulatory burdens would require additional
expenses for which we have not allotted funds and may hinder our
ability to complete a business combination, or may result in our
liquidation. If we do not complete our initial business
combination, our public stockholders may only receive their pro
rata portion of the funds in the trust account that are available
for distribution to public stockholders, and our warrants will
expire worthless.
Changes
in laws or regulations, or a failure to comply with any laws and
regulations, may adversely affect our business, including our
ability to negotiate and complete our initial business combination,
and results of operations.
We
are subject to laws and regulations enacted by national, regional
and local governments. In particular, we are required to comply
with certain SEC and other legal requirements and numerous complex
tax laws. Compliance with, and monitoring of, applicable laws and
regulations may be difficult, time consuming and costly.
Those
laws and regulations and their interpretation and application may
also change from time to time and those changes could have a
material adverse effect on our business, investments and results of
operations. In addition, a failure to comply with applicable laws
or regulations, as interpreted and applied, could have a material
adverse effect on our business, including our ability to negotiate
and complete our initial business combination, and results of
operations.
Our
stockholders may be held liable for claims by third parties against
us to the extent of distributions received by them upon redemption
of their shares.
Under
the DGCL, stockholders may be held liable for claims by third
parties against a corporation to the extent of distributions
received by them in a dissolution. The pro rata portion of our
trust account distributed to our public stockholders upon the
redemption of our public shares in the event we do not complete our
initial business combination within 24 months from the closing of
our initial public offering may be considered a liquidating
distribution under Delaware law. If a corporation complies with
certain procedures set forth in Section 280 of the DGCL intended to
ensure that it makes reasonable provision for all claims against
it, including a 60-day notice period during which any third-party
claims can be brought against the corporation, a 90-day period
during which the corporation may reject any claims brought, and an
additional 150-day waiting period before any liquidating
distributions are made to stockholders, any liability of
stockholders with respect to a liquidating distribution is limited
to the lesser of such stockholder’s pro rata share of the claim or
the amount distributed to the stockholder, and any liability of the
stockholder would be barred after the third anniversary of the
dissolution. However, it is our intention to redeem our public
shares as soon as reasonably possible following the 24th
month from the closing of our initial public offering in the event
we do not complete our business combination and, therefore, we do
not intend to comply with the foregoing procedures.
Because
we will not comply with Section 280, Section 281(b) of the DGCL
requires us to adopt a plan, based on facts known to us at such
time that will provide for our payment of all existing and pending
claims or claims that may be potentially brought against us within
the 10 years following our dissolution. However, because we are a
blank check company, rather than an operating company, and our
operations will are limited to searching for prospective target
businesses to acquire, the only likely claims to arise would be
from our vendors (such as lawyers, investment bankers, etc.) or
prospective target businesses. If our plan of distribution complies
with Section 281(b) of the DGCL, any liability of stockholders with
respect to a liquidating distribution is limited to the lesser of
such stockholder’s pro rata share of the claim or the amount
distributed to the stockholder, and any liability of the
stockholder would likely be barred after the third anniversary of
the dissolution. We cannot assure you that we will properly assess
all claims that may be potentially brought against us. As such, our
stockholders could potentially be liable for any claims to the
extent of distributions received by them (but no more) and any
liability of our stockholders may extend beyond the third
anniversary of such date. Furthermore, if the pro rata portion of
our trust account distributed to our public stockholders upon the
redemption of our public shares in the event we do not complete our
initial business combination within 24 months from the closing of
our initial public offering is not considered a liquidating
distribution under Delaware law and such redemption distribution is
deemed to be unlawful, then pursuant to Section 174 of the DGCL,
the statute of limitations for claims of creditors could then be
six years after the unlawful redemption distribution, instead of
three years, as in the case of a liquidating
distribution.
We
may not hold an annual meeting of stockholders until after the
consummation of our initial business combination, which could delay
the opportunity for our stockholders to elect
directors.
In
accordance with the NYSE corporate governance requirements, we are
not required to hold an annual meeting until no later than one year
after our first fiscal year end following our listing on the NYSE.
Under Section 211(b) of the DGCL, we are, however, required to hold
an annual meeting of stockholders for the purposes of electing
directors in accordance with our bylaws unless such election is
made by written consent in lieu of such a meeting. We may not hold
an annual meeting of stockholders to elect new directors prior to
the consummation of our initial business combination, and thus, we
may not be in compliance with Section 211(b) of the DGCL, which
requires an annual meeting. Therefore, if our stockholders want us
to hold an annual meeting prior to the consummation of our initial
business combination, they may attempt to force us to hold one by
submitting an application to the Delaware Court of Chancery in
accordance with Section 211(c) of the DGCL.
We
have not registered the shares of Class A common stock issuable
upon exercise of the warrants under the Securities Act or any state
securities laws at this time, and such registration may not be in
place when an investor desires to exercise warrants, thus
precluding such investor from being able to exercise its warrants
except on a cashless basis and potentially causing such warrants to
expire worthless.
We
have not registered the shares of Class A common stock issuable
upon exercise of the warrants under the Securities Act or any state
securities laws at this time. However, under the terms of the
warrant agreement, we have agreed that as soon as practicable, but
in no event later than 15 business days, after the closing of our
initial business combination, we will use our best efforts to file
a registration statement under the Securities Act covering such
shares and maintain a current prospectus relating to the Class A
common stock issuable upon exercise of the warrants, until the
expiration of the warrants in accordance with the provisions of the
warrant agreement. We cannot assure you that we will be able to do
so if, for example, any facts or events arise which represent a
fundamental change in the information set forth in the registration
statement or prospectus, the financial statements contained or
incorporated by reference therein are not current or correct or the
SEC issues a stop order. If the shares issuable upon exercise of
the warrants are not registered under the Securities Act, we will
be required to permit holders to exercise their warrants on a
cashless basis, in which case, the number of shares of Class A
common stock that you will receive upon cashless exercise will be
based on a formula subject to a maximum amount of shares equal to
0.361 shares of Class A common stock per warrant (subject to
adjustment). However, no warrant will be exercisable for cash or on
a cashless basis, and we will not be obligated to issue any shares
to holders seeking to exercise their warrants, unless the issuance
of the shares upon such exercise is registered or qualified under
the securities laws of the state of the exercising holder, or an
exemption from registration is available. Notwithstanding the
above, if our Class A common stock is at the time of any exercise
of a warrant not listed on a national securities exchange such that
it satisfies the definition of a “covered security” under Section
18(b)(1) of the Securities Act, we may, at our option, require
holders of public warrants who exercise their warrants to do so on
a “cashless basis” in accordance with Section 3(a)(9) of the
Securities Act and, in the event we so elect, we will not be
required to file or maintain in effect a registration statement,
but we will be required to use our best efforts to register or
qualify the shares under applicable blue sky laws to the extent an
exemption is not available. In no event will we be required to net
cash settle any warrant, or issue securities or other compensation
in exchange for the warrants in the event that we are unable to
register or qualify the shares underlying the warrants under the
Securities Act or applicable state securities laws, and there is no
exemption available. If the issuance of the shares upon exercise of
the warrants is not so registered or qualified or exempt from
registration or qualification, the holder of such warrant shall not
be entitled to exercise such warrant and such warrant may have no
value and expire worthless. In such event, holders who acquired
their warrants as part of a purchase of units will have paid the
full unit purchase price solely for the shares of our Class A
common stock included in the units. If and when the warrants become
redeemable by us, we may exercise our redemption right even if we
are unable to register or qualify the underlying shares of our
Class A common stock for sale under all applicable state securities
laws.
The
grant of registration rights to our initial stockholders may make
it more difficult to complete our initial business combination, and
the future exercise of such rights may adversely affect the market
price of our Class A common stock.
Pursuant
to the agreement entered into concurrently with the issuance and
sale of the securities in our initial public offering, our initial
stockholders and their permitted transferees can demand that we
register the shares of our Class A common stock into which founder
shares and sponsor shares are exchangeable, holders of our private
placement warrants and their permitted transferees can demand that
we register the private placement warrants and the shares of our
Class A common stock issuable upon exercise of the private
placement warrants or upon exchange of any Class A Units of Opco
issued upon exercise of the private placement warrants and holders
of warrants that may be issued upon conversion of working capital
loans may demand that we register such warrants or the Class A
common stock issuable upon exercise of such warrants or upon
exchange of any Class A Units of Opco issued upon exercise of such
warrants. Assuming the founder shares and sponsor shares are
exchanged on a one for one basis and no warrants are issued upon
conversion of working capital loans, an aggregate of up to
5,940,096 shares of our Class A common stock and up to 6,771,000
warrants are subject to registration under these agreements. We
will bear the cost of registering these securities. The
registration and availability of such a significant number of
securities for trading in the public market may have an adverse
effect on the market price of our Class A common stock. In
addition, the existence of the registration rights may make our
initial business combination more costly or difficult to conclude.
This is because the stockholders of the target business may
increase the equity stake they seek in the combined entity or ask
for more cash consideration to offset the negative impact on the
market price of our Class A common stock that is expected when the
securities owned by our initial stockholders, holders of our
private placement warrants, holders of working capital loans or
their respective permitted transferees are registered.
Because
we are not limited to a particular industry, sector or any specific
target businesses with which to pursue our initial business
combination, you will be unable to ascertain the merits or risks of
any particular target business’s operations.
Although
we expect to focus our search for a target business in the broadly
defined energy transition or sustainability arena, we may complete
a business combination with an operating company in any industry or
sector. However, we are not, under our amended and restated
certificate of incorporation, be permitted to effectuate our
business combination solely with another blank check company or
similar company with nominal operations. Because we have not yet
selected or approached any specific target business with respect to
a business combination, there is no basis to evaluate the possible
merits or risks of any particular target business’s operations,
results of operations, cash flows, liquidity, financial condition
or prospects. To the extent we complete our business combination,
we may be affected by numerous risks inherent in the business
operations with which we combine. For example, if we combine with a
financially unstable business or an entity lacking an established
record of revenues or earnings, we may be affected by the risks
inherent in the business and operations of a financially unstable
or a development stage entity. Although our officers and directors
will endeavor to evaluate the risks inherent in a particular target
business, we cannot assure you that we will properly ascertain or
assess all of the significant risk factors or that we will have
adequate time to complete due diligence. Furthermore, some of these
risks may be outside of our control and leave us with no ability to
control or reduce the chances that those risks will adversely
impact a target business. We also cannot assure you that an
investment in our units will ultimately prove to be more favorable
to investors than a direct investment, if such opportunity were
available, in a business combination target. Accordingly, any
stockholders who choose to remain stockholders following the
business combination could suffer a reduction in the value of their
securities. Such stockholders are unlikely to have a remedy for
such reduction in value unless they are able to successfully claim
that the reduction was due to the breach by our officers or
directors of a duty of care or other fiduciary duty owed to them,
or if they are able to successfully bring a private claim under
securities laws that the proxy solicitation or tender offer
materials (as applicable) relating to the business combination
contained an actionable material misstatement or material
omission.
We
may seek acquisition opportunities outside of our target industries
or sectors (which industries or sectors may or may not be outside
of our management’s areas of expertise).
Although
we intend to focus on identifying business combination candidates
in the broad energy transition or sustainability arena that may
advance the objectives of global decarbonization, we will consider
a business combination outside of our target industries or sectors
if a business combination candidate is presented to us and we
determine that such candidate offers an attractive acquisition
opportunity for our company or we are unable to identify a suitable
candidate in our target industries or sectors after having expended
a reasonable amount of time and effort in an attempt to do so.
Although our management will endeavor to evaluate the risks
inherent in any particular business combination candidate, we
cannot assure you that we will adequately ascertain or assess all
of the significant risk factors. We also cannot assure you that an
investment in our units will not ultimately prove to be less
favorable to investors in our initial public offering than a direct
investment, if an opportunity were available, in a business
combination candidate. In the event we elect to pursue an
acquisition outside of our target industries or sectors, our
management’s expertise may not be directly applicable to its
evaluation or operation, and the information contained in this
Report regarding our target industries or sectors would not be
relevant to an understanding of the business that we elect to
acquire. As a result, our management may not be able to adequately
ascertain or assess all of the significant risk factors.
Accordingly, any stockholders who choose to remain stockholders
following our business combination could suffer a reduction in the
value of their shares. Such stockholders are unlikely to have a
remedy for such reduction in value.
Although
we have identified general criteria and guidelines that we believe
are important in evaluating prospective target businesses, we may
enter into our initial business combination with a target that does
not meet such criteria and guidelines, and as a result, the target
business with which we enter into our initial business combination
may not have attributes entirely consistent with our general
criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating
prospective target businesses, it is possible that a target
business with which we enter into our initial business combination
will not have all of these positive attributes. If we complete our
initial business combination with a target that does not meet some
or all of these guidelines, such combination may not be as
successful as a combination with a business that does meet all of
our general criteria and guidelines. In addition, if we announce a
prospective business combination with a target that does not meet
our general criteria and guidelines, a greater number of
stockholders may exercise their redemption rights, which may make
it difficult for us to meet any closing condition with a target
business that requires us to have a minimum net worth or a certain
amount of cash. In addition, if stockholder approval of the
transaction is required by law, or we decide to obtain stockholder
approval for business or other legal reasons, it may be more
difficult for us to attain stockholder approval of our initial
business combination if the target business does not meet our
general criteria and guidelines. If we do not complete our initial
business combination, our public stockholders may only receive
their pro rata portion of the funds in the trust account that are
available for distribution to public stockholders, and our warrants
will expire worthless.
We
may seek business combination opportunities with a financially
unstable business or an entity lacking an established record of
revenue or earnings, which could subject us to volatile revenues,
cash flows or earnings or difficulty in retaining key
personnel.
To
the extent we complete our initial business combination with a
financially unstable business or an entity lacking an established
record of revenues, cash flows or earnings, we may be affected by
numerous risks inherent in the operations of the business with
which we combine. These risks include volatile revenues, cash flows
or earnings and difficulties in obtaining and retaining key
personnel. Although our officers and directors will endeavor to
evaluate the risks inherent in a particular target business, we may
not be able to properly ascertain or assess all of the significant
risk factors and we may not have adequate time to complete due
diligence. Furthermore, some of these risks may be outside of our
control and leave us with no ability to control or reduce the
chances that those risks will adversely impact a target
business.
We
are not required to obtain an opinion from an independent
investment banking firm or from an independent accounting firm, and
consequently, you may have no assurance from an independent source
that the price we are paying for the business is fair to our
company from a financial point of view.
Unless
we complete our business combination with an affiliated entity, we
are not required to obtain an opinion from an independent
investment banking firm that is a member of FINRA or from an
independent accounting firm that the price we are paying is fair to
our company from a financial point of view. If no opinion is
obtained, our stockholders will be relying on the judgment of our
board of directors, who will determine fair market value based on
standards generally accepted by the financial community. Such
standards used will be disclosed in our proxy solicitation or
tender offer materials, as applicable, related to our initial
business combination. If our board of directors is not able to
independently determine the fair market value of our initial
business combination, we will obtain an opinion from an independent
investment banking firm. However, our stockholders may not be
provided with a copy of such opinion, nor will they be able to rely
on such opinion.
We
may issue additional shares of our Class A common stock, preferred
stock or Opco Units (and a corresponding number of shares of our
Class B common stock) to complete our initial business combination
or under an employee incentive plan after completion of our initial
business combination. The number of Class A Units of Opco into
which the Class B Units of Opco will convert may be adjusted after
the time of our initial business combination as a result of the
anti-dilution provisions contained in our amended and restated
certificate of incorporation. Any such issuances would dilute the
interest of our stockholders and likely present other
risks.
Our
amended and restated certificate of incorporation authorizes the
issuance of up to 250,000,000 shares of our Class A common stock,
par value $0.0001 per share, 20,000,000 shares of our Class B
common stock, par value $0.0001 per share, and 1,000,000
undesignated shares of preferred stock, par value $0.0001 per
share. There are 226,272,500 and 14,068,650 authorized but unissued
shares of our Class A common stock and Class B common stock,
respectively, available for issuance, which amount does not take
into account shares of our Class A common stock reserved for
issuance upon exercise of outstanding warrants, or shares issuable
upon exchange of founder shares or other Class A Units of Opco (and
corresponding shares of our Class B common stock). There are no
shares of preferred stock issued and outstanding. The Class A Units
of Opco (and corresponding shares of our Class B common stock) are
exchangeable for shares of our Class A common stock at a
one-for-one ratio but subject to adjustment as set forth
herein.
We
may issue a substantial number of additional Opco Units (and
corresponding shares of our Class B common stock), shares of our
Class A common stock or preferred stock to complete our initial
business combination or under an employee incentive plan after
completion of our initial business combination. We may also issue
additional shares of our Class A common stock upon exchange of the
founder shares, as a result of adjustments to the number of Class A
Units of Opco into which the Class B Units of Opco will convert
after the time of our initial business combination as a result of
the anti-dilution provisions contained in our amended and restated
certificate of incorporation. However, our amended and restated
certificate of incorporation provide, among other things, that
prior to our initial business combination, we may not issue
additional shares of capital stock that would entitle the holders
thereof to (i) receive funds from the trust account or (ii) vote on
any initial business combination. These provisions of our amended
and restated certificate of incorporation, like all provisions of
our amended and restated certificate of incorporation, may be
amended with a stockholder vote.
The
issuance of additional Opco Units (and corresponding shares of our
Class B common stock), shares of Class A common stock or preferred
stock:
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may
significantly dilute the equity interest of investors in our
initial public offering; |
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may
subordinate the rights of holders of common stock if preferred
stock is issued with rights senior to those afforded our common
stock; |
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could
cause a change in control if a substantial number of shares of our
common stock are issued, which may affect, among other things, our
ability to use our net operating loss carry forwards, if any, and
could result in the resignation or removal of our present officers
and directors; and |
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may
adversely affect prevailing market prices for our units, Class A
common stock and/or warrants. |
Unlike
some other similarly structured blank check companies, our initial
stockholders will receive additional Class A Units of Opco if we
issue shares to consummate an initial business
combination.
The
founder shares consist of Class B Units of Opco (and any Class A
Units of Opco into which such Class B Units are converted) and a
corresponding number of shares of our Class B common stock, which
together will be exchangeable for shares of our Class A common
stock after the time of our initial business combination on a
one-for-one basis, subject to adjustment for stock splits, stock
dividends, reorganizations, recapitalizations and the like and
subject to further adjustment as provided herein. In the case that
additional shares of our Class A common stock or equity-linked
securities convertible or exercisable for shares of our Class A
common stock are issued or deemed issued in excess of the amounts
sold in our initial public offering and related to the closing of
our initial business combination (other than the forward purchase
securities), the number of Class A Units of Opco into which the
Class B Units of Opco will convert may be adjusted so that, after
all founder shares have been exchanged for shares of our Class A
common stock, the aggregate number of shares of our Class A common
stock received by holders in exchange for founder shares would
equal 20% of our total outstanding common stock upon completion of
our initial public offering plus the number of shares of our Class
A common stock and equity-linked securities issued or deemed issued
in connection with our initial business combination, excluding any
shares of our Class A common stock or equity-linked securities
issued, or to be issued, to any seller in our initial business
combination, and excluding the sponsor shares. In addition, the
number of outstanding shares of our Class B common stock will be
adjusted through a stock split or stock dividend so that the total
number of outstanding shares of our Class B common stock
corresponds to the total number of Class A Units of Opco
outstanding (other than those held by Rice Acquisition Corp.) plus
the total number of Class A Units of Opco into which the Class B
Units of Opco are entitled to convert.
Resources
could be wasted in researching business combinations that are not
completed, which could materially adversely affect subsequent
attempts to locate and acquire or merge with another business. If
we do not complete our initial business combination, our public
stockholders may only receive their pro rata portion of the funds
in the trust account that are available for distribution to public
stockholders, and our warrants will expire
worthless.
We
anticipate that the investigation of each specific target business
and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial
management time and attention and substantial costs for
accountants, attorneys, consultants and others. If we decide not to
complete a specific initial business combination, the costs
incurred up to that point for the proposed transaction likely would
not be recoverable. Furthermore, if we reach an agreement relating
to a specific target business, we may fail to complete our initial
business combination for any number of reasons including those
beyond our control. Any such event will result in a loss to us of
the related costs incurred which could materially adversely affect
subsequent attempts to locate and acquire or merge with another
business. If we do not complete our initial business combination,
our public stockholders may only receive their pro rata portion of
the funds in the trust account that are available for distribution
to public stockholders, and our warrants will expire
worthless.
We
are dependent upon our officers and directors, and their loss could
adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of
individuals and, in particular, our officers and directors. We
believe that our success depends on the continued service of our
officers and directors, at least until we have completed our
initial business combination. In addition, our officers and
directors are not required to commit any specified amount of time
to our affairs and, accordingly, will have conflicts of interest in
allocating their time among various business activities, including
identifying potential business combinations and monitoring the
related due diligence. We do not have an employment agreement with,
or key-man insurance on the life of, any of our directors or
officers. The unexpected loss of the services of one or more of our
directors or officers could have a detrimental effect on
us.
Our
ability to successfully effect our initial business combination and
to be successful thereafter will be totally dependent upon the
efforts of our key personnel, some of whom may join us following
our initial business combination. The loss of key personnel could
negatively impact the operations and profitability of our
post-combination business.
Our
ability to successfully effect our business combination is
dependent upon the efforts of our key personnel. The role of our
key personnel in the target business, however, cannot presently be
ascertained. Although some of our key personnel may remain with the
target business in senior management or advisory positions
following our business combination, it is likely that some or all
of the management of the target business will remain in place.
While we intend to closely scrutinize any individuals we engage
after our initial business combination, we cannot assure you that
our assessment of these individuals will prove to be correct. These
individuals may be unfamiliar with the requirements of operating a
company regulated by the SEC, which could cause us to have to
expend time and resources helping them become familiar with such
requirements.
In
addition, the officers and directors of an acquisition candidate
may resign upon completion of our initial business combination. The
departure of a business combination target’s key personnel could
negatively impact the operations and profitability of our
post-combination business. The role of an acquisition candidate’s
key personnel upon the completion of our initial business
combination cannot be ascertained at this time. Although we
contemplate that certain members of an acquisition candidate’s
management team will remain associated with the acquisition
candidate following our initial business combination, it is
possible that members of the management of an acquisition candidate
will not wish to remain in place. The loss of key personnel could
negatively impact the operations and profitability of our
post-combination business.
Our
key personnel may negotiate employment or consulting agreements
with a target business in connection with a particular business
combination, and a particular business combination may be
conditioned on the retention or resignation of such key personnel.
These agreements may provide for them to receive compensation
following our business combination and as a result, may cause them
to have conflicts of interest in determining whether a particular
business combination is the most advantageous.
Our
key personnel may be able to remain with our company after the
completion of our business combination only if they are able to
negotiate employment or consulting agreements in connection with
the business combination. Such negotiations would take place
simultaneously with the negotiation of the business combination and
could provide for such individuals to receive compensation in the
form of cash payments and/or our securities for services they would
render to us after the completion of the business combination. Such
negotiations also could make such key personnel’s retention or
resignation a condition to any such agreement. The personal and
financial interests of such individuals may influence their
motivation in identifying and selecting a target
business.
Our
current officers may not remain in their positions following our
business combination. We may have a limited ability to assess the
management of a prospective target business and, as a result, may
effect our initial business combination with a target business
whose management may not have the skills, qualifications or
abilities to manage a public company, which could, in turn,
negatively impact the value of our stockholders’ investment in
us.
When
evaluating the desirability of effecting our initial business
combination with a prospective target business, our ability to
assess the target business’s management may be limited due to a
lack of time, resources or information. Our assessment of the
capabilities of the target business’s management, therefore, may
prove to be incorrect and such management may lack the skills,
qualifications or abilities we suspected. Should the target
business’s management not possess the skills, qualifications or
abilities necessary to manage a public company, the operations and
profitability of the post-combination business may be negatively
impacted. Accordingly, any stockholders who choose to remain
stockholders following the business combination could suffer a
reduction in the value of their securities. Such stockholders are
unlikely to have a remedy for such reduction in value unless they
are able to successfully claim that the reduction was due to the
breach by our officers or directors of a duty of care or other
fiduciary duty owed to them, or if they are able to successfully
bring a private claim under securities laws that the proxy
solicitation or tender offer materials (as applicable) relating to
the business combination contained an actionable material
misstatement or material omission.
The
officers and directors of an acquisition candidate may resign upon
completion of our initial business combination. The loss of a
business combination target’s key personnel could negatively impact
the operations and profitability of our post-combination
business.
The
role of an acquisition candidate’s key personnel upon the
completion of our initial business combination cannot be
ascertained at this time. Although we contemplate that certain
members of an acquisition candidate’s management team will remain
associated with the acquisition candidate following our initial
business combination, it is possible that members of the management
of an acquisition candidate will not wish to remain in
place.
Our
officers and directors will allocate their time to other businesses
thereby causing conflicts of interest in their determination as to
how much time to devote to our affairs. This conflict of interest
could have a negative impact on our ability to complete our initial
business combination.
Our
officers and directors are not required to, and will not, commit
their full time to our affairs, which may result in a conflict of
interest in allocating their time between our operations and our
search for a business combination and their other businesses. We do
not intend to have any full-time employees prior to the completion
of our initial business combination. Each of our officers is
engaged in several other business endeavors for which he may be
entitled to substantial compensation, and our officers are not
obligated to contribute any specific number of hours per week to
our affairs. Our independent directors may also serve as officers
or board members for other entities. If our officers’ and
directors’ other business affairs require them to devote
substantial amounts of time to such affairs in excess of their
current commitment levels, it could limit their ability to devote
time to our affairs which may have a negative impact on our ability
to complete our initial business combination.
Certain
of our officers and directors are now, and all of them may in the
future become, affiliated with entities engaged in business
activities similar to those intended to be conducted by us and,
accordingly, may have conflicts of interest in allocating their
time and determining to which entity a particular business
opportunity should be presented.
Until
we consummate our initial business combination, we are in the
process of identifying and combining with one or more businesses.
Our sponsor and officers and directors are, and may in the future
become, affiliated with entities that are engaged in a similar
business, including Rice Investment Group and its portfolio
companies and Rice II. Our officers and directors also may become
aware of business opportunities which may be appropriate for
presentation to us and the other entities to which they owe certain
fiduciary or contractual duties.
Accordingly,
they may have conflicts of interest in determining to which entity
a particular business opportunity should be presented. These
conflicts may not be resolved in our favor and a potential target
business may be presented to another entity prior to its
presentation to us. Our amended and restated certificate of
incorporation provides that we renounce our interest in any
corporate opportunity offered to any director or officer unless
such opportunity is expressly offered to such person solely in his
or her capacity as a director or officer of our company and such
opportunity is one we are legally and contractually permitted to
undertake and would otherwise be reasonable for us to pursue, and
to the extent the director or officer is permitted to refer that
opportunity to us without violating another legal
obligation.
Our
officers, directors, security holders and their respective
affiliates may have competitive pecuniary interests that conflict
with our interests.
We
have not adopted a policy that expressly prohibits our directors,
officers, security holders or affiliates from having a direct or
indirect pecuniary or financial interest in any investment to be
acquired or disposed of by us or in any transaction to which we are
a party or have an interest. In fact, we may enter into a business
combination with a target business that is affiliated with our
sponsor, our directors or officers, although we do not intend to do
so, or we may acquire a target business through an Affiliated Joint
Acquisition with one or more affiliates of our sponsor, including
Rice Investment Group and/or one or more of its portfolio
companies. We do not have a policy that expressly prohibits any
such persons from engaging for their own account in business
activities of the types conducted by us. Accordingly, such persons
or entities may have a conflict between their interests and
ours.
In
particular, members of our sponsor and its affiliates, including
Rice Investment Group and its portfolio companies and Rice II, are
focused on investments in the energy industry. As a result, there
may be substantial overlap between companies that would be a
suitable business combination for us and companies that would make
an attractive target for such affiliates.
We
may engage in a business combination with one or more target
businesses that have relationships with entities that may be
affiliated with our sponsor, officers, directors or existing
holders which may raise potential conflicts of
interest.
In
light of the involvement of our sponsor, officers and directors
with other entities, we may decide to acquire one or more
businesses affiliated with our sponsor, officers, directors or
existing holders, including one or more portfolio companies of Rice
Investment Group. Our officers and directors also serve as officers
and board members for other entities. They may also have
investments in target businesses. Such entities may compete with us
for business combination opportunities. Although we will not be
specifically focusing on, or targeting, any transaction with any
affiliated entities, we would pursue such a transaction if we
determined that such affiliated entity met our criteria for a
business combination and such transaction was approved by a
majority of our independent and disinterested directors. Despite
our obligation to obtain an opinion from an independent investment
banking firm that is a member of FINRA or from an independent
accounting firm regarding the fairness to our company from a
financial point of view of a business combination with one or more
domestic or international businesses affiliated with our sponsor,
officers or directors, potential conflicts of interest still may
exist and, as a result, the terms of the business combination may
not be as advantageous to our public stockholders as they would be
absent any conflicts of interest.
Moreover,
we may pursue an Affiliated Joint Acquisition opportunity with one
or more affiliates of our sponsor, including Rice Investment Group
and/or one or more of its portfolio companies. Any such parties may
co-invest with us in the target business at the time of our initial
business combination, or we could raise additional proceeds to
complete the business combination by issuing to such parties a
class of equity or equity-linked securities. Accordingly, such
persons or entities may have a conflict between their interests and
ours.
Since
our sponsor, officers and directors will lose their entire
investment in us if our business combination is not completed
(other than with respect to sponsor shares and public shares they
have acquired during or may acquire after our initial public
offering), a conflict of interest may arise in determining whether
a particular business combination target is appropriate for our
initial business combination.
In
September 2020, our Sponsor paid $25,000 to cover certain of our
expenses in exchange for (i) 5,750,100 shares of our Class B common
stock, par value $0.0001 per share, and (ii) 2,500 shares of our
Class A common stock, par value $0.0001 per share. Also in
September 2020, the Sponsor received 5,750,000 Class B Units of
Opco (which are profits interest units only). In October 2020, the
Sponsor forfeited 90,000 Class B Units of Opco, and 30,000 Class B
Units of Opco were issued to each of the independent directors. The
Sponsor transferred a corresponding number of shares of Class B
common stock to the independent directors. In October 2020, the
Company effected a dividend, resulting in an aggregate of (i)
6,181,350 shares of our Class B common stock, and (ii) 2,500 shares
of our Class A common stock outstanding. All shares and associated
amounts have been retroactively restated to reflect the dividend.
Upon a liquidation of Opco, distributions generally will be made to
the holders of Opco Units on a pro rata basis, subject to certain
limitations with respect to the Class B Units of Opco, including
that, prior to the completion of the initial business combination,
such Class B Units will not be entitled to participate in a
liquidating distribution. On October 26, 2020, the Company
consummated its initial public offering of 23,725,000 units,
including 2,225,000 units that were issued pursuant to the
underwriters’ partial exercise of their over-allotment option, at
$10.00 per unit, generating gross proceeds of approximately $237.3
million, and incurring offering costs of approximately $12.5
million, inclusive of $7.6 million in deferred underwriting
commissions. Of the 23,725,000 units sold, affiliates of our
Sponsor and Atlas Point Fund had purchased 1,980,000 units and
2,128,500 units at the initial public offering price. The founder
shares will be worthless if we do not complete an initial business
combination. The underwriters did not receive any underwriting
discounts or commissions on the 1,980,000 Affiliated Units. Each
unit consists of one share of Class A common stock and one-half of
one redeemable warrant. Each whole Public Warrant entitles the
holder to purchase one share of our Class A common stock at a price
of $11.50 per share, subject to adjustment. The personal and
financial interests of our officers and directors may influence
their motivation in identifying and selecting a target business
combination, completing an initial business combination and
influencing the operation of the business following our initial
business combination. This risk may become more acute as the
24-month anniversary of the closing of our initial public offering
nears, which is the deadline for our completion of an initial
business combination.
We
may issue notes or other debt securities, or otherwise incur
substantial debt, to complete a business combination, which may
adversely affect our leverage and financial condition and thus
negatively impact the value of our stockholders’ investment in
us.
We
may choose to incur substantial debt to complete our business
combination. We and our officers have agreed that we will not incur
any indebtedness unless we have obtained from the lender a waiver
of any right, title, interest or claim of any kind in or to the
monies held in the trust account. As such, no issuance of debt will
affect the per share amount available for redemption from the trust
account. Nevertheless, the incurrence of debt could have a variety
of negative effects, including:
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default
and foreclosure on our assets if our operating revenues after an
initial business combination are insufficient to repay our debt
obligations; |
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acceleration
of our obligations to repay the indebtedness even if we make all
principal and interest payments when due if we breach certain
covenants that require the maintenance of certain financial ratios
or reserves without a waiver or renegotiation of that
covenant; |
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our
immediate payment of all principal and accrued interest, if any, if
the debt security is payable on demand; |
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our
inability to obtain necessary additional financing if the debt
security contains covenants restricting our ability to obtain such
financing while the debt security is outstanding; |
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our
inability to pay dividends on our common stock; |
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using
a substantial portion of our cash flow to pay principal and
interest on our debt, which will reduce the funds available for
dividends on our common stock if declared, to pay expenses, make
capital expenditures and acquisitions and fund other general
corporate purposes; |
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limitations
on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate; |
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increased
vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government
regulation; |
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limitations
on our ability to borrow additional amounts for expenses, capital
expenditures, acquisitions, debt service requirements, and
execution of our strategy; and |
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other
disadvantages compared to our competitors who have less
debt. |
We
may only be able to complete one business combination with the
proceeds of our initial public offering and the sale of the private
placement warrants, which will cause us to be solely dependent on a
single business which may have a limited number of products or
services. This lack of diversification may negatively impact our
operations and profitability.
Of
the net proceeds from our initial public offering and the sale of
the private placement warrants, up to approximately $237.3 million
is available to complete our business combination and pay related
fees and expenses. Of the up to approximately $237.3 million,
approximately $1.0 million will be held outside the trust account
for business, legal and accounting due diligence on prospective
acquisitions and continuing general and administrative
expenses.
We
may effectuate our business combination with a single target
business or multiple target businesses simultaneously or within a
short period of time. However, we may not be able to effectuate our
business combination with more than one target business because of
various factors, including the existence of complex accounting
issues and the requirement that we prepare and file pro forma
financial statements with the SEC that present operating results
and the financial condition of several target businesses as if they
had been operated on a combined basis.
By
completing our initial business combination with only a single
entity, our lack of diversification may subject us to numerous
economic, competitive and regulatory developments. Further, we
would not be able to diversify our operations or benefit from the
possible spreading of risks or offsetting of losses, unlike other
entities which may have the resources to complete several business
combinations in different industries or different areas of a single
industry. In addition, we are focusing our search for an initial
business combination in a single industry. Accordingly, the
prospects for our success may be:
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solely
dependent upon the performance of a single business, property or
asset, or |
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dependent
upon the development or market acceptance of a single or limited
number of products, processes or services. |
This
lack of diversification may subject us to numerous economic,
competitive and regulatory risks, any or all of which may have a
substantial adverse impact upon the particular industry in which we
may operate subsequent to our business combination.
We
may attempt to simultaneously complete business combinations with
multiple prospective targets, which may hinder our ability to
complete our business combination and give rise to increased costs
and risks that could negatively impact our operations and
profitability.
If we
determine to simultaneously acquire several businesses that are
owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the
simultaneous closings of the other business combinations, which may
make it more difficult for us, and delay our ability, to complete
our initial business combination. With multiple business
combinations, we could also face additional risks, including
additional burdens and costs with respect to possible multiple
negotiations and due diligence investigations (if there are
multiple sellers) and the additional risks associated with the
subsequent assimilation of the operations and services or products
of the acquired companies in a single operating business. If we are
unable to adequately address these risks, it could negatively
impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a
private company about which little information is available, which
may result in a business combination with a company that is not as
profitable as we suspected, if at all.
In
pursuing our business combination strategy, we may seek to
effectuate our initial business combination with a privately held
company. Very little public information generally exists about
private companies, and we could be required to make our decision on
whether to pursue a potential initial business combination on the
basis of limited information, which may result in a business
combination with a company that is not as profitable as we
suspected, if at all.
Our
management may not be able to maintain control of a target business
after our initial business combination. We cannot provide assurance
that, upon loss of control of a target business, new management
will possess the skills, qualifications or abilities necessary to
profitably operate such business.
We
may structure a business combination so that we will control less
than 100% of the equity interests or assets of a target business,
but we will only complete such business combination if we control
50% or more of the outstanding voting securities of the target or
otherwise are not required to register as an investment company
under the Investment Company Act. We will not consider any
transaction that does not meet such criteria. Even if we control
50% or more of the voting securities of the target, our
stockholders prior to the business combination may collectively own
a minority interest in the post business combination company,
depending on valuations ascribed to the target and us in the
business combination transaction. For example, we could pursue a
transaction in which we issue a substantial number of new shares in
exchange for all of the outstanding capital stock, shares or other
equity interests of a target. In this case, we would acquire a 100%
interest in the target. However, as a result of the issuance of a
substantial number of new shares, our stockholders immediately
prior to such transaction could own less than a majority of our
outstanding shares of common stock subsequent to such transaction.
In addition, other minority stockholders may subsequently combine
their holdings resulting in a single person or group obtaining a
larger share of the company’s stock than we initially acquired.
Accordingly, this may make it more likely that our management will
not be able to maintain control of the target business.
We
do not have a specified maximum redemption threshold. The absence
of such a redemption threshold may make it possible for us to
complete a business combination with which a substantial majority
of our stockholders do not agree.
Our
amended and restated certificate of incorporation will not provide
a specified maximum redemption threshold, except that in no event
will we redeem our public shares in an amount that would cause our
net tangible assets to be less than $5,000,001 upon consummation of
our initial business combination and after payment of underwriters’
fees and commissions (such that we are not subject to the SEC’s
“penny stock” rules). As a result, we may be able to complete our
business combination even though a substantial majority of our
public stockholders do not agree with the transaction and have
redeemed their shares or, if we seek stockholder approval of our
initial business combination and do not conduct redemptions in
connection with our business combination pursuant to the tender
offer rules, have entered into privately negotiated agreements to
sell their shares to our sponsor, Atlas Point Fund, officers,
directors, advisors or any of their affiliates. In the event the
aggregate cash consideration we would be required to pay for all
shares of our Class A common stock that are validly submitted for
redemption plus any amount required to satisfy cash conditions
pursuant to the terms of the proposed business combination exceed
the aggregate amount of cash available to us, we will not complete
the business combination or redeem any shares, all shares of our
Class A common stock submitted for redemption will be returned to
the holders thereof, and we instead may search for an alternate
business combination.
The
exercise price for the public warrants is higher than in some other
blank check company offerings, and accordingly, the warrants are
more likely to expire worthless.
The
exercise price of the public warrants is higher than in some other
blank check companies. For example, historically, the exercise
price of a warrant was often a fraction of the purchase price of
the units in the initial public offering. The exercise price for
our public warrants is $11.50 per share, subject to adjustments as
provided herein. As a result, the warrants are less likely to ever
be in the money and more likely to expire worthless.
In
order to effectuate our initial business combination, we may seek
to amend our amended and restated certificate of incorporation or
other governing instruments in a manner that will make it easier
for us to complete our initial business combination but that our
stockholders or warrantholders may not support.
In
order to effectuate a business combination, we may amend various
provisions of our charter and governing instruments, including the
warrant agreement, the underwriting agreement relating to our
initial public offering, the letter agreement among us and our
sponsor, Atlas Point Fund, officers and directors, and the
registration rights agreement among us and our initial
stockholders. These agreements contain various provisions that our
public stockholders might deem to be material. While we do not
expect our board to approve any amendment to any of these
agreements prior to our initial business combination, it may be
possible that our board, in exercising its business judgment and
subject to its fiduciary duties, chooses to approve one or more
amendments to any such agreement in connection with the
consummation of our initial business combination. Except in
relation to the charter, any such amendments would not require
approval from our stockholders and may have an adverse effect on
the value of an investment in our securities. We cannot assure you
that we will not seek to amend our charter or other governing
instruments or change our industry focus in order to effectuate our
initial business combination.
The
provisions of our amended and restated certificate of incorporation
that relate to our pre-business combination activity (and
corresponding provisions of the agreement governing the release of
funds from our trust account) may be amended with the approval of
holders of 65% of our common stock, which is a lower amendment
threshold than that of some other blank check companies. It may be
easier for us, therefore, to amend our amended and restated
certificate of incorporation and the trust agreement to facilitate
the completion of an initial business combination that some of our
stockholders may not support.
Some
other blank check companies have a provision in their charter which
prohibits the amendment of certain of its provisions, including
those which relate to a company’s pre-business combination
activity, without approval by a certain percentage of the company’s
stockholders. In those companies, amendment of these provisions
requires approval by between 90% and 100% of the company’s public
stockholders. Our amended and restated certificate of incorporation
provides that any of its provisions (other than amendments relating
to the election of directors, which require the approval of a
majority of at least 90% of our common stock voting at a
stockholder meeting) related to pre-business combination activity
(including the requirement to deposit proceeds of our initial
public offering and the private placement warrants into the trust
account and not release such amounts except in specified
circumstances, and to provide redemption rights to public
stockholders as described herein) may be amended if approved by
holders of 65% of our common stock entitled to vote thereon, and
corresponding provisions of the trust agreement governing the
release of funds from our trust account may be amended if approved
by holders of 65% of our common stock entitled to vote thereon. In
all other instances, our amended and restated certificate of
incorporation may be amended by holders of a majority of our
outstanding common stock entitled to vote thereon, subject to
applicable provisions of the DGCL or applicable stock exchange
rules. Our initial stockholders, who will collectively beneficially
own 20% of the total outstanding common stock, will participate in
any vote to amend our amended and restated certificate of
incorporation and/or trust agreement and will have the discretion
to vote in any manner they choose. As a result, we may be able to
amend the provisions of our amended and restated certificate of
incorporation which govern our pre-business combination behavior
more easily than some other blank check companies, and this may
increase our ability to complete a business combination with which
you do not agree. Our stockholders may pursue remedies against us
for any breach of our amended and restated certificate of
incorporation.
Our
sponsor, Atlas Point Fund, officers, and directors have agreed,
pursuant to a written agreement with us, that they will not propose
any amendment to our amended and restated certificate of
incorporation that would affect the substance or timing of our
obligation to redeem 100% of our public shares if we have not
consummated an initial business combination within 24 months from
the closing of our initial public offering, unless we provide our
public stockholders with the opportunity to redeem their shares of
our Class A common stock upon approval of any such amendment 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
pay franchise and income taxes of the Company or Opco, divided by
the number of then outstanding public shares and Class A Units of
Opco (other than those held by Rice Acquisition Corp.). These
agreements are contained in a letter agreement that we have entered
into with our sponsor, Atlas Point Fund, officers, and directors.
Our stockholders are not parties to, or third-party beneficiaries
of, these agreements and, as a result, will not have the ability to
pursue remedies against our sponsor, Atlas Point Fund, officers,
and directors for any breach of these agreements. As a result, in
the event of a breach, our stockholders would need to pursue a
stockholder derivative action, subject to applicable
law.
We
may be unable to obtain additional financing to complete our
initial business combination or to fund the operations and growth
of a target business, which could compel us to restructure or
abandon a particular business combination. If we do not complete
our initial business combination, our public stockholders may only
receive their pro rata portion of the funds in the trust account
that are available for distribution to public stockholders, and our
warrants will expire worthless.
Although
we believe that the net proceeds of our initial public offering and
the sale of the private placement warrants and the forward purchase
securities are sufficient to allow us to complete our initial
business combination, we cannot ascertain the capital requirements
for any particular transaction. If the net proceeds of our initial
public offering and the sale of the private placement warrants and
the forward purchase securities prove to be insufficient, either
because of the size of our initial business combination, the
depletion of the available net proceeds in search of a target
business, the obligation to redeem for cash a significant number of
shares from stockholders who elect redemption in connection with
our initial business combination or the terms of negotiated
transactions to purchase shares in connection with our initial
business combination, or if Atlas Point Fund decides not to
exercise its right to purchase all of the forward purchase
securities, we may be required to seek additional financing or to
abandon the proposed business combination. We cannot assure you
that such financing will be available on acceptable terms, if at
all. To the extent that additional financing proves to be
unavailable when needed to complete our initial business
combination, we would be compelled to either restructure the
transaction or abandon that particular business combination and
seek an alternative target business candidate. If we do not
complete our initial business combination, our public stockholders
may only receive their pro rata portion of the funds in the trust
account that are available for distribution to public stockholders,
and our warrants will expire worthless. In addition, even if we do
not need additional financing to complete our business combination,
we may require such financing to fund the operations or growth of
the target business. The failure to secure additional financing
could have a material adverse effect on the continued development
or growth of the target business. None of our officers, directors
or stockholders is required to provide any financing to us in
connection with or after our business combination.
Our
initial stockholders control the election of our board of directors
until consummation of our initial business combination and hold a
substantial interest in us. As a result, they elect all of our
directors prior to our initial business combination and may exert a
substantial influence on actions requiring a stockholder vote,
potentially in a manner that you do not support.
After
the closing of our initial public offering, our initial
stockholders own shares representing 20% of our shares of common
stock. In addition, the founder shares, all of which are held by
our initial stockholders, will entitle the holders to elect all of
our directors prior to our initial business combination. Holders of
our public shares will have no right to vote on the election of
directors during such time. These provisions of our amended and
restated certificate of incorporation may only be amended by a
special resolution passed by a majority of at least 90% of our
common stock voting at a stockholder meeting. As a result, you will
not have any influence over the election of directors prior to our
initial business combination. Accordingly, our initial stockholders
may exert a substantial influence on actions requiring a
stockholder vote, potentially in a manner that you do not support,
including amendments to our amended and restated certificate of
incorporation and approval of major corporate transactions. If our
initial stockholders purchase any units in our initial public
offering or if our initial stockholders purchase any additional
shares of common stock in the aftermarket or in privately
negotiated transactions, this would increase their control. Neither
our initial stockholders nor, to our knowledge, any of our officers
or directors have any current intention to purchase additional
securities, other than as disclosed in our initial public offering.
Factors that would be considered in making such additional
purchases would include consideration of the current trading price
of our Class A common stock. In addition, our board of directors,
whose members were elected by our initial stockholders, is divided
into three classes, each of which will generally serve for a term
of three years with only one class of directors being elected in
each year. We may not hold an annual meeting to elect new directors
prior to the completion of our business combination, in which case
all of the current directors will continue in office until at least
the completion of the business combination. If there is an annual
meeting, as a consequence of our “staggered” board of directors,
only a minority of the board of directors will be considered for
election and our initial stockholders, because of their ownership
position, will have considerable influence regarding the outcome.
Accordingly, our initial stockholders will continue to exert
control at least until the completion of our business combination.
The forward purchase securities will not be issued until completion
of our initial business combination, and, accordingly, will not be
included in any stockholder vote until such time.
We
may amend the terms of the warrants in a manner that may be adverse
to holders of public warrants with the approval by the holders of
at least 50% of the then outstanding public warrants. As a result,
the exercise price of your warrants could be increased, the warrant
could be converted into cash or stock (at a ratio different than
initially provided), the exercise period could be shortened and the
number of shares of our Class A common stock purchasable upon
exercise of a warrant could be decreased, all without your
approval.
Our
warrants were issued in registered form under a warrant agreement
between Continental Stock Transfer & Trust Company, as warrant
agent, and us. The warrant agreement provides that the terms of the
warrants may be amended without the consent of any holder to cure
any ambiguity or correct any defective provision or mistake
(including to conform the terms of the warrants to those described
herein), but requires the approval by the holders of at least 50%
of the then outstanding public warrants to make any change that
adversely affects the interests of the registered holders of public
warrants and 50% of the registered holders of the private warrants
to make any change to the terms of the private warrants.
Accordingly, we may amend the terms of the public warrants in a
manner adverse to a holder if holders of at least 50% of the then
outstanding public warrants approve of such amendment. Although our
ability to amend the terms of the public warrants with the consent
of at least 50% of the then outstanding public warrants is
unlimited, examples of such amendments could be amendments to,
among other things, increase the exercise price of the warrants,
convert the warrants into cash or stock (at a ratio different than
initially provided), shorten the exercise period or decrease the
number of shares of our Class A common stock purchasable upon
exercise of a warrant.
We
may redeem your unexpired warrants prior to their exercise at a
time that is disadvantageous to you, thereby making your warrants
worthless.
We
have the ability to redeem outstanding warrants at any time after
they become exercisable and prior to their expiration, at a price
of $0.01 per warrant, provided that the last reported sales price
of our Class A common stock equals or exceeds $18.00 per share (as
adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within a 30
trading-day period ending on the third trading day prior to the
date on which we give proper notice of such redemption and provided
certain other conditions are met. If and when the warrants become
redeemable by us, we may exercise our redemption right even if we
are unable to register or qualify the underlying securities for
sale under all applicable state securities laws. Redemption of the
outstanding warrants could force you (i) to exercise your warrants
and pay the exercise price therefor at a time when it may be
disadvantageous for you to do so, (ii) to sell your warrants at the
then-current market price when you might otherwise wish to hold
your warrants or (iii) to accept the nominal redemption price
which, at the time the outstanding warrants are called for
redemption, is likely to be substantially less than the market
value of your warrants. None of the private placement warrants will
be redeemable by us so long as they are held by the sponsor, Atlas
Point Fund or their permitted transferees.
In
addition, we may redeem your warrants at any time after they become
exercisable and prior to their expiration at a price of $0.10 per
warrant upon a minimum of 30 days’ prior written notice of
redemption provided that holders will be able to exercise their
warrants prior to redemption for a number of shares of our Class A
common stock determined based on the redemption date and the fair
market value of our Class A common stock. Any such redemption may
have similar consequences to a cash redemption described above. The
value received upon exercise of the warrants (1) may be less than
the value the holders would have received if they had exercised
their warrants at a later time where the underlying stock price is
higher and (2) may not compensate the holders for the value of the
warrants because the number of shares of Class A common stock
received is capped at 0.361 shares of Class A common stock per
warrant (subject to adjustment) irrespective of the remaining life
of the warrants.
Our
ability to require holders of our warrants to exercise such
warrants on a cashless basis after we call the warrants for
redemption or if there is no effective registration statement
covering the Class A common stock issuable upon exercise of these
warrants will cause holders to receive fewer shares of our Class A
common stock upon their exercise of the warrants than they would
have received had they been able to pay the exercise price of their
warrants in cash.
If
the shares of our Class A common stock are at the time of any
exercise of a warrant not listed on a national securities exchange
such that the shares of our Class A common stock satisfy the
definition of a “covered security” under Section 18(b)(I) of the
Securities Act, we may, at our option, require holders of public
warrants who exercise their warrants to do so on a “cashless basis”
in accordance with Section 3(a)(9) of the Securities Act and, in
the event we so elect, we will not be required to file or maintain
in effect a registration statement, but we will be required to use
our best efforts to register or qualify the shares under applicable
blue sky laws to the extent an exemption is not available.
“Cashless exercise” means the warrant holder pays the exercise
price by giving up some of the shares for which the warrant is
being exercised, with those shares valued at the then current
market price. Accordingly, each holder would pay the exercise price
by surrendering the warrants for that number of shares of our Class
A common stock equal to the quotient obtained by dividing (x) the
product of the number of shares of our Class A common stock
underlying the warrants, multiplied by the difference between the
exercise price of the warrants and the “fair market value” by (y)
the fair market value. The “fair market value” shall mean volume
weighted average price of our Class A common stock as reported
during 10 trading days ending on the third trading day prior to the
date on which the notice of redemption is sent to the holders of
warrants.
In
addition, if a registration statement covering the shares of our
Class A common stock issuable upon exercise of the warrants is not
effective within a specified period following the consummation of
our initial business combination, warrantholders may, until such
time as there is an effective registration statement and during any
period when we shall have failed to maintain an effective
registration statement, exercise warrants on a cashless basis, For
purposes of calculating the number of shares issuable upon such
cashless exercise, the “fair market value” of warrants shall be
calculated using the volume weighted average sale price of the
Class A common stock for the 10 trading days ending on the trading
day prior to the date on which notice of exercise is received by
the warrant agent.
If we
choose to require holders to exercise their warrants on a cashless
basis, which we may do at our sole discretion, or if holders elect
to do so when there is no effective registration statement, the
number of shares of our Class A common stock received by a holder
upon exercise will be fewer than it would have been had such holder
exercised his or her warrant for cash. For example, if the holder
is exercising 875 public warrants at $11.50 per share through a
cashless exercise when the shares of our Class A common stock have
a fair market value per share of $17.50 per share, then upon the
cashless exercise, the holder will receive 300 shares of our Class
A common stock. The holder would have received 875 shares of our
Class A common stock if the exercise price was paid in cash. This
will have the effect of reducing the potential “upside” of the
holder’s investment in our company because the warrant holder will
hold a smaller number of shares of our Class A common stock upon a
cashless exercise of the warrants they hold.
Our
warrants and founder shares may have an adverse effect on the
market price of our Class A common stock and make it more difficult
to effectuate our business combination.
We
issued warrants to purchase 11,862,500 shares of our Class A common
stock as part of the units offered by our initial public offering
and, simultaneously with the closing of our initial public
offering, we issued in private placements an aggregate of 6,771,000
private placement warrants, each exercisable to purchase for $11.50
either one share of our Class A common stock or, in certain
circumstances, one Class A Unit of Opco (and corresponding share of
our Class B common stock). In addition, we may issue up to
approximately 7.8 million shares of Class A common stock to Atlas
Point Fund in connection with our initial business combination
pursuant to the forward purchase agreement. The founder shares are
exchangeable for shares of our Class A common stock on a
one-for-one basis, subject to adjustment for stock splits, stock
dividends, reorganizations, recapitalizations and the like and
subject to further adjustment as set forth herein. In addition, if
our sponsor makes any working capital loans, it may convert those
loans into up to an additional 1,000,000 private placement
warrants, at the price of $1.00 per warrant. To the extent we issue
shares of our Class A common stock to effectuate a business
combination, the potential for the issuance of a substantial number
of additional shares of our Class A common stock upon exercise of
these warrants and exchange rights could make us a less attractive
acquisition vehicle to a target business. Any such issuance will
increase the number of issued and outstanding shares of our Class A
common stock and reduce the value of the shares of our Class A
common stock issued to complete the business combination.
Therefore, our warrants and founder shares may make it more
difficult to effectuate a business combination or increase the cost
of acquiring the target business.
A provision of our warrant agreement may make it more difficult for
us to consummate an initial business
combination.
If we
issue additional shares of common stock or equity-linked securities
or capital raising purposes in connection with the closing of our
initial business combination at a newly issued price of less than
$9.20 per share of common stock, then the exercise price of the
warrants will be adjusted to equal 115% of the newly issued price.
This may make it more difficult for us to consummate an initial
business combination with a target business.
The
market for our securities may not develop, which would adversely
affect the liquidity and price of our securities.
The
price of our securities may vary significantly due to one or more
potential business combinations and general market or economic
conditions. Furthermore, an active trading market for our
securities may never develop or, if developed, it may not be
sustained. You may be unable to sell your securities unless a
market can be established and sustained.
Because
we must furnish our stockholders with target business financial
statements, we may lose the ability to complete an otherwise
advantageous initial business combination with some prospective
target businesses.
The
federal proxy rules require that a proxy statement with respect to
a vote on a business combination meeting certain financial
significance tests include target historical and/or pro forma
financial statement disclosure. We will include the same financial
statement disclosure in connection with our tender offer documents,
whether or not they are required under the tender offer rules.
These financial statements may be required to be prepared in
accordance with, or be reconciled to, accounting principles
generally accepted in the United States of America, or GAAP, or
international financial reporting standards as issued by the
International Accounting Standards Board, or IFRS, depending on the
circumstances and the historical financial statements may be
required to be audited in accordance with the standards of the
Public Company Accounting Oversight Board (United States), or
PCAOB. These financial statement requirements may limit the pool of
potential target businesses we may acquire because some targets may
be unable to provide such financial statements in time for us to
disclose such financial statements in accordance with federal proxy
rules and complete our initial business combination within the
prescribed time frame.
We
are an emerging growth company and a smaller reporting company
within the meaning of the Securities Act, and if we take advantage
of certain exemptions from disclosure requirements available to
emerging growth companies or smaller reporting companies, this
could make our securities less attractive to investors and may make
it more difficult to compare our performance with other public
companies.
We
are an “emerging growth company” within the meaning of the
Securities Act, as modified by the JOBS Act, and we may take
advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging
growth companies including, but not limited to, not being required
to comply with the auditor attestation requirements of Section 404
of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a
nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved.
As a result, our stockholders may not have access to certain
information they may deem important. We could be an emerging growth
company for up to five years, although circumstances could cause us
to lose that status earlier, including if the market value of our
Class A common stock held by non-affiliates exceeds $700 million as
of any June 30 before that time, in which case we would no longer
be an emerging growth company as of the following December 31. We
cannot predict whether investors will find our securities less
attractive because we will rely on these exemptions. If some
investors find our securities less attractive as a result of our
reliance on these exemptions, the trading prices of our securities
may be lower than they otherwise would be, there may be a less
active trading market for our securities and the trading prices of
our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies
from being required to comply with new or revised financial
accounting standards until private companies (that is, those that
have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the
Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a
company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth
companies but any such an election to opt out is irrevocable. We
have elected not to opt out of such extended transition period,
which means that when a standard is issued or revised and it has
different application dates for public or private companies, we, as
an emerging growth company, can adopt the new or revised standard
at the time private companies adopt the new or revised standard.
This may make comparison of our financial statements with another
public company which is neither an emerging growth company nor an
emerging growth company which has opted out of using the extended
transition period difficult or impossible because of the potential
differences in accounting standards used.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of
Regulation S-K. Smaller reporting companies may take advantage of
certain reduced disclosure obligations, including, among other
things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of
the fiscal year in which (i) the market value of our common stock
held by non-affiliates exceeds $250 million as of the end of that
year’s second fiscal quarter or (ii) our annual revenues exceeded
$100 million during such completed fiscal year and the market value
of our common stock held by non-affiliates exceeds $700 million as
of the end of that year’s second fiscal quarter. To the extent we
take advantage of such reduced disclosure obligations, it may also
make comparison of our financial statements with other public
companies difficult or impossible.
We have identified material weaknesses in our internal control
over financial reporting. We may identify additional material
weaknesses in the future or otherwise fail to maintain an effective
system of internal controls, which may result in material
misstatements of our financial statements or cause us to fail to
meet our reporting obligations.
Following the issuance of the SEC Staff Statement on April 12,
2021, after consultation with our management, our audit committee
concluded that, in light of the SEC Statement, it was appropriate
to restate our previously issued (i) audited balance sheet dated as
of October 26, 2020 which was related to its initial public
offering and (ii) audited financial statements as of December 31,
2020 and for the period from September 1, 2020 (inception) through
December 31, 2020 as reported in the Company’s Annual Report on
Form 10-K filed with the SEC on May 13, 2021 (collectively, the
“Affected Periods Amendment No. 1”).
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting designed to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with GAAP. Our management is likewise
required, on a quarterly basis, to evaluate the effectiveness of
our internal controls and to disclose any changes and material
weaknesses identified through such evaluation of those internal
controls. A material weakness is a deficiency, or a
combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a
material misstatement of our annual or interim financial statements
will not be prevented or detected on a timely basis.
As described in Amendment No. 1, we identified a material weakness
in our internal control over financial reporting related to the
accounting for a significant and unusual transaction related to the
warrants we issued in connection with our initial public offering
in October 2020. As a result of this material weakness, our
management concluded that our internal control over financial
reporting was not effective as of December 31, 2020. This
material weakness resulted in a material misstatement of our
derivative warrant liabilities, change in fair value of derivative
warrant liabilities, Class A common stock subject to possible
redemption, accumulated deficit and related financial disclosures
for the Affected Periods Amendment No. 1. For a discussion of
management’s consideration of the material weakness identified
related to our accounting for a significant and unusual transaction
related to the warrants we issued in connection with our initial
public offering, see “Note 2—Restatement of Previously Issued
Financial Statements” to the financial statements in Amendment No.
1, as well as Part II, Item 9A. “Controls and Procedures”
included in this Annual Report.
As described elsewhere in this Amendment No. 2, we have identified
a material weakness in our internal control over financial
reporting related to the Company’s application of ASC 480-10-S99-3A
to its accounting classification of the public shares. As a result
of this material weakness, our management has concluded that our
internal control over financial reporting was not effective as of
December 31, 2020. Historically, a portion of the public shares was
classified as permanent equity to maintain stockholders’ equity
greater than $5 million on the basis that the Company will not
redeem its public shares in an amount that would cause its net
tangible assets to be less than $5,000,001, as described in the
Charter. Previously, the Company did not consider redeemable stock
classified as temporary equity as part of net tangible assets.
Effective with these financial statements, the Company revised this
interpretation to include temporary equity in net tangible assets.
For a discussion of management’s consideration of the material
weakness identified related to the Company’s application of ASC
480-10-S99-3A to its accounting classification of the Public Share,
see Note 2 to the accompanying financial statements, as well as
Part II, Item 9A. “Controls and Procedures” included in this
Amendment No. 2.
As described in Part II, Item 9A. “Controls and Procedures,” we
have concluded that our internal control over financial reporting
was ineffective as of December 31, 2020 because material weaknesses
existed in our internal control over financial reporting. We have
taken a number of measures to remediate the material weaknesses
described therein; however, if we are unable to remediate our
material weaknesses in a timely manner or we identify additional
material weaknesses, we may be unable to provide required financial
information in a timely and reliable manner and we may incorrectly
report financial information. Likewise, if our financial statements
are not filed on a timely basis, we could be subject to sanctions
or investigations by the stock exchange on which our Class A common
stock are listed, the SEC or other regulatory authorities. Failure
to timely file will cause us to be ineligible to utilize short form
registration statements on Form S-3 or Form S-4, which may impair
our ability to obtain capital in a timely fashion to execute our
business strategies or issue shares to effect an acquisition. In
either case, there could result a material adverse effect on our
business. The existence of material weaknesses or significant
deficiencies in internal control over financial reporting could
adversely affect our reputation or investor perceptions of us,
which could have a negative effect on the trading price of our
stock. In addition, we will incur additional costs to remediate
material weaknesses in our internal control over financial
reporting, as described in Part II, Item 9A. “Controls and
Procedures.”
We can give no assurance that the measures we have taken and plan
to take in the future will remediate the material weaknesses
identified or that any additional material weaknesses or
restatements of financial results will not arise in the future due
to a failure to implement and maintain adequate internal control
over financial reporting or circumvention of these controls. In
addition, even if we are successful in strengthening our controls
and procedures, in the future those controls and procedures may not
be adequate to prevent or identify irregularities or errors or to
facilitate the fair presentation of our financial statements.
The warrants are accounted for as a liability and the changes in
fair value of the warrants may have an adverse effect on our
financial results and the market price of our common stock.
On April 12, 2021, the Staff of the SEC released a statement
informing market participants that warrants issued by special
purpose acquisition companies may require classification as a
liability of the entity measured at fair value, with changes in
fair value each period reported in earnings. As a result such
statement, we reevaluated the accounting treatment of our warrants,
which were classified as equity, and determined to classify the
warrants as a liability measured at fair value, with changes in
fair value each period reported in earnings. Due to the recurring
fair value measurement, we expect to recognize non-cash gains or
losses on the warrants each reporting period, and the amount of
such gains or losses could be material, which may cause our
consolidated financial statements and results of operations to
fluctuate quarterly and may have an adverse impact on the market
price of our common stock.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult
for us to effectuate our business combination, require substantial
financial and management resources, and increase the time and costs
of completing our initial business combination.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report
on our system of internal controls beginning with our Annual Report
on Form 10-K for the year ending December 31, 2021. Only in the
event we are deemed to be a large accelerated filer or an
accelerated filer will we be required to comply with the
independent registered public accounting firm attestation
requirement on our internal control over financial reporting.
Further, for as long as we remain an emerging growth company, we
will not be required to comply with the independent registered
public accounting firm attestation requirement on our internal
control over financial reporting. The fact that we are a blank
check company makes compliance with the requirements of the
Sarbanes-Oxley Act particularly burdensome for us as compared to
other public companies because a target business with which we seek
to complete our business combination may not be in compliance with
the provisions of the Sarbanes-Oxley Act regarding adequacy of its
internal controls. The development of the internal control of any
such entity to achieve compliance with the Sarbanes-Oxley Act may
increase the time and costs necessary to complete any such
acquisition.
Provisions
in our amended and restated certificate of incorporation and
Delaware law may inhibit a takeover of us, which could limit the
price investors might be willing to pay in the future for our Class
A common stock and could entrench management.
Our
amended and restated certificate of incorporation contains
provisions that may discourage unsolicited takeover proposals that
stockholders may consider to be in their best interests. These
provisions include a staggered board of directors and the ability
of the board of directors to designate the terms of and issue new
series of preferred stock, which may make the removal of management
more difficult and may discourage transactions that otherwise could
involve payment of a premium over prevailing market prices for our
securities.
We
are also subject to anti-takeover provisions under Delaware law,
which could delay or prevent a change of control. Together these
provisions may make the removal of management more difficult and
may discourage transactions that otherwise could involve payment of
a premium over prevailing market prices for our
securities.
Provisions
in our amended and restated certificate of incorporation and
Delaware law may have the effect of discouraging lawsuits against
our directors and officers.
Our
amended and restated certificate of incorporation requires, to the
fullest extent permitted by law, that derivative actions brought in
our name, actions against directors, officers and employees for
breach of fiduciary duty and other similar actions (other than
actions arising under the Securities Act or the Exchange Act) may
be brought only in the Court of Chancery in the State of Delaware
(or, if such court does not have subject matter jurisdiction
thereof, any other court located in the State of Delaware with
subject matter jurisdiction) and, if brought outside of Delaware,
the stockholder bringing such suit will be deemed to have consented
to service of process on such stockholder’s counsel. This provision
may limit a stockholder’s ability to bring a claim in a judicial
forum that it finds favorable for disputes with us and our
directors, officers or other employees and may have the effect of
discouraging lawsuits against our directors and
officers.
Cyber
incidents or attacks directed at us could result in information
theft, data corruption, operational disruption and/or financial
loss.
We
depend on digital technologies, including information systems,
infrastructure and cloud applications and services, including those
of third parties with which we may deal. Sophisticated and
deliberate attacks on, or security breaches in, our systems or
infrastructure, or the systems or infrastructure of third parties
or the cloud, could lead to corruption or misappropriation of our
assets, proprietary information and sensitive or confidential data.
As an early stage company without significant investments in data
security protection, we may not be sufficiently protected against
such occurrences. We may not have sufficient resources to
adequately protect against, or to investigate and remediate any
vulnerability to, cyber incidents. It is possible that any of these
occurrences, or a combination of them, could have adverse
consequences on our business and lead to financial loss.
If
we pursue a target business with operations or opportunities
outside of the United States for our initial business combination,
we may face additional burdens in connection with investigating,
agreeing to and completing such initial business combination, and
if we effect such initial business combination, we would be subject
to a variety of additional risks that may negatively impact our
operations.
If we
pursue a target a company with operations or opportunities outside
of the United States for our initial business combination, we would
be subject to risks associated with cross-border business
combinations, including in connection with investigating, agreeing
to and completing our initial business combination, conducting due
diligence in a foreign jurisdiction, having such transaction
approved by any local governments, regulators or agencies and
changes in the purchase price based on fluctuations in foreign
exchange rates.
If we
effect our initial business combination with such a company, we
would be subject to any special considerations or risks associated
with companies operating in an international setting, including any
of the following:
|
|
● |
higher
costs, complexity and difficulties inherent in executing
cross-border transactions, managing cross-border business
operations, and complying with different commercial and legal
requirements of overseas markets; |
|
|
● |
rules
and regulations regarding currency redemption; |
|
|
● |
laws
governing the manner in which future business combinations may be
effected; |
|
|
● |
exchange
listing and/or delisting requirements; |
|
|
● |
tariffs
and trade barriers; |
|
|
● |
regulations
related to customs and import/export matters; |
|
|
● |
local
or regional economic policies and market conditions; |
|
|
● |
unexpected
changes in regulatory requirements; |
|
|
● |
tax
issues, including limits on our ability to change our tax residence
from the United States, complex withholding or other tax regimes
which may apply in connection with our business combination or to
our structure following our business combination, variations in tax
laws as compared to the United States, and potential changes in the
applicable tax laws in the United States and/or relevant non-U.S.
jurisdictions; |
|
|
● |
currency
fluctuations and exchange controls; |
|
|
● |
challenges
in collecting accounts receivable; |
|
|
● |
cultural
and language differences; |
|
|
● |
employment
regulations; |
|
|
● |
underdeveloped
or unpredictable legal or regulatory systems; |
|
|
● |
protection
of intellectual property; |
|
|
● |
social
unrest, crime, strikes, riots and civil disturbances; |
|
|
● |
regime
changes and political upheaval; |
|
|
● |
terrorist
attacks and wars; and |
|
|
● |
deterioration
of political relations with the United States. |
We
may not be able to adequately address these additional risks. If we
were unable to do so, we may be unable to complete such initial
business combination, or, if we complete such combination, our
operations might suffer, either of which may adversely impact our
business, financial condition and results of operations.
Our
initial business combination and our structure thereafter may not
be tax-efficient to our stockholders and warrantholders. As a
result of our business combination, our tax obligations may be more
complex, burdensome and uncertain.
Although
we will attempt to structure our initial business combination in a
tax-efficient manner, tax structuring considerations are complex,
the relevant facts and law are uncertain and may change, and we may
prioritize commercial and other considerations over tax
considerations. For example, in connection with our initial
business combination and subject to requisite stockholder approval,
we may structure our business combination in a manner that requires
stockholders and/or warrantholders to recognize gain or income for
tax purposes. We do not intend to make any cash distributions to
stockholders or warrantholders to pay taxes in connection with our
business combination or thereafter. Accordingly, a stockholder or a
warrant holder may need to satisfy any liability resulting from our
initial business combination with cash from its own funds or by
selling all or a portion of such holder’s shares or warrants. In
addition, we may effect a business combination with a target
company in another jurisdiction or reincorporate in a different
jurisdiction (including, but not limited to, the jurisdiction in
which the target company or business is located). As a result,
stockholders and warrantholders may be subject to additional
income, withholding or other taxes with respect to their ownership
of us after our initial business combination.
In
addition, we may effect a business combination with a target
company that has business operations outside of the United States,
and possibly, business operations in multiple jurisdictions. If we
effect such a business combination, we could be subject to
significant income, withholding and other tax obligations in a
number of jurisdictions with respect to income, operations and
subsidiaries related to those jurisdictions. Due to the complexity
of tax obligations and filings in other jurisdictions, we may have
a heightened risk related to audits or examinations by taxing
authorities. This additional complexity and risk could have an
adverse effect on our after-tax profitability and financial
condition.
Our
organizational structure confers certain benefits upon our initial
stockholders that will not benefit the holders of our Class A
common stock to the same extent as it will benefit our initial
stockholders.
We
are a holding company and will not have material assets other than
our ownership of Opco Units. Subject to the obligation of Opco to
make tax distributions and to reimburse us for our corporate and
other overhead expenses, we will have the right to determine
whether to cause Opco to make non-liquidating distributions, and
the amount of any such distributions. We do not anticipate causing
Opco to make any such distributions (other than tax distributions)
to holders of Opco Units (including Rice Acquisition Corp.) prior
to our initial business combination, other than required
redemptions of Class A Units of Opco held by us in connection with
a redemption of public shares. If Opco makes distributions after
our initial business combination, the initial stockholders will be
entitled to receive equivalent distributions from Opco on a pro
rata basis. However, because we must pay taxes, amounts we may
distribute as dividends to holders of our Class A common stock are
expected to be less on a per share basis than the amounts
distributed by Opco to the initial stockholders on a per unit
basis.
If
our management following our initial business combination is
unfamiliar with United States securities laws, they may have to
expend time and resources becoming familiar with such laws, which
could lead to various regulatory issues.
Following
our initial business combination, our management may resign from
their positions as officers or directors of the company and the
management of the target business at the time of the business
combination will remain in place. Management of the target business
may not be familiar with United States securities laws. If new
management is unfamiliar with United States securities laws, they
may have to expend time and resources becoming familiar with such
laws. This could be expensive and time-consuming and could lead to
various regulatory issues which may adversely affect our
operations.
After
our initial business combination, substantially all of our assets
may be located in a foreign country and substantially all of our
revenue will be derived from our operations in such country.
Accordingly, our results of operations and prospects will be
subject, to a significant extent, to the economic, political and
legal policies, developments and conditions in the country in which
we operate.
The
economic, political and social conditions, as well as government
policies, of the country in which our operations are located could
affect our business. Economic growth could be uneven, both
geographically and among various sectors of the economy and such
growth may not be sustained in the future. If in the future such
country’s economy experiences a downturn or grows at a slower rate
than expected, there may be less demand for spending in certain
industries. A decrease in demand for spending in certain industries
could materially and adversely affect our ability to find an
attractive target business with which to consummate our initial
business combination and if we effect our initial business
combination, the ability of that target business to become
profitable.
Exchange
rate fluctuations and currency policies may cause a target
business’ ability to succeed in the international markets to be
diminished
In
the event we acquire a non-U.S. target, all revenues and income
would likely be received in a foreign currency, and the dollar
equivalent of our net assets and distributions, if any, could be
adversely affected by reductions in the value of the local
currency. The value of the currencies in non-U.S. regions
fluctuates and is affected by, among other things, changes in
political and economic conditions. Any change in the relative value
of such currency against our reporting currency may affect the
attractiveness of any target business or, following consummation of
our initial business combination, our financial condition and
results of operations. Additionally, if a currency appreciates in
value against the dollar prior to the consummation of our initial
business combination, the cost of a target business as measured in
dollars will increase, which may make it less likely that we are
able to consummate such transaction.
|
Item 1B. |
Unresolved
Staff Comments |
None.
Our
executive offices are located at 102 East Main Street, Second
Story, Carnegie, Pennsylvania 15106, and our telephone number is
(713) 446-6259. The cost for our use of this space is included in
the $10,000 per month fee we will pay to our sponsor for office
space, utilities, secretarial support and administrative services.
We consider our current office space adequate for our current
operations.
|
Item
3. |
Legal
Proceedings |
To
the knowledge of our management, there is no material litigation
currently pending or contemplated against us, any of our officers
or directors in their capacity as such or against any of our
property.
|
Item 4. |
Mine
Safety Disclosures |
Not
applicable.
PART II
|
Item 5. |
Market
for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities |
Our
units, shares of Class A common stock and warrants are each traded
on the NYSE under the symbol “RICE.U”, “RICE” and “RICE WS”
respectively. Our units commenced public trading on October 22,
2020. Our shares of Class A common stock and warrants began
separate trading on December 14, 2020.
On
March 19, 2021, there was 1 holder of record of our units, 2
holders of record of our shares of Class A common stock, 5 holders
of record of our shares of Class B common stock and 3 holders of
record of our warrants.
We
have not paid any cash dividends on our common stock to date and do
not intend to pay cash dividends prior to the completion of an
initial business combination. The payment of cash dividends in the
future will be dependent upon our revenues and earnings, if any,
capital requirements and general financial conditions subsequent to
completion of an initial business combination. The payment of any
cash dividends subsequent to an initial business combination will
be within the discretion of our board of directors at such time. In
addition, our board of directors is not currently contemplating and
does not anticipate declaring any stock dividends in the
foreseeable future. Further, if we incur any indebtedness, our
ability to declare dividends may be limited by restrictive
covenants we may agree to in connection therewith.
|
(d) |
Securities
Authorized for Issuance Under Equity Compensation Plans |
None.
Not
applicable.
|
(f) |
Recent
Sales of Unregistered Securities; Use of Proceeds from Registered
Offerings |
On
September 2, 2020, Rice Acquisition Sponsor LLC, our sponsor,
received 5,750,000 Class B Units of Opco for no consideration and
purchased 5,750,000 corresponding shares of our Class B common
stock, 2,500 shares of our Class A common stock and 100 Class A
Units of Opco and 100 corresponding shares of our Class B common
stock for an aggregate of $26,000. The number of founder shares was
determined based on the expectation that the founder shares would
represent 20% of the total outstanding equity after our initial
public offering (excluding the sponsor shares). Such securities
were issued in connection with our organization pursuant to the
exemption from registration contained in Section 4(a)(2) of the
Securities Act.
Our
sponsor is an accredited investor for purposes of Rule 501 of
Regulation D under the Securities Act. The sole business of our
sponsor was to act as our sponsor in connection with our initial
public offering.
In
addition, our sponsor purchased from us an aggregate of 6,093,900
private placement warrants at a purchase price of $1.00 per warrant
(for an aggregate purchase price of $6,093,900). Atlas Point Fund
also purchased 677,100 private placement warrants at a purchase
price of $1.00 per warrant (for an aggregate purchase price of
$677,100). These purchases took place on a private placement basis
simultaneously with the completion of our initial public offering.
These issuances were made pursuant to the exemption from
registration contained in Section 4(a)(2) of the Securities Act. No
underwriting discounts or commissions were paid with respect to
such sales. Each private placement warrant entitles the holder to
purchase for $11.50 either one share of our Class A common stock
or, so long as they are held by our initial stockholders or their
permitted transferees, one Class A Unit of Opco (and corresponding
share of our Class B common stock). The private placement warrants
(including the Class A common stock or Class A Units of Opco (and
corresponding shares of our Class B common stock) issuable upon
exercise thereof) may not, subject to certain limited exceptions,
be transferred, assigned or sold by the holder until 30 days after
the completion of our initial business combination.
On
October 26, 2020, the Company consummated its initial public
offering of 23,725,000 units, including 2,225,000 units that were
issued pursuant to the underwriters’ partial exercise of their
over-allotment option, at $10.00 per unit, generating gross
proceeds of approximately $237.3 million, and incurring offering
costs of approximately $12.5 million, inclusive of $7.6 million in
deferred underwriting commissions. Of the 23,725,000 units sold,
affiliates of our Sponsor and Atlas Point Energy Infrastructure
Fund, LLC (“Atlas Point Fund”) had purchased 1,980,000 units (the
“Affiliated Units”) and 2,128,500 units (the “Atlas Units”),
respectively, at the initial public offering price. The
underwriters did not receive any underwriting discounts or
commissions on the 1,980,000 Affiliated Units. Each unit consists
of one share of Class A common stock and one-half of one redeemable
warrant (each, a “Public Warrant”). Each whole Public Warrant
entitles the holder to purchase one share of our Class A common
stock at a price of $11.50 per share, subject to
adjustment.
Simultaneously
with the closing of our initial public offering, we consummated the
private placement (“Private Placement”) of 6,771,000 warrants
(each, a “Private Placement Warrant” and collectively, the “Private
Placement Warrants”) to the Sponsor and Atlas Point Fund, at a
price of $1.00 per Private Placement Warrant, generating gross
proceeds of approximately $6.8 million. Each Private Placement
Warrant is exercisable to purchase one share of our Class A common
stock or, in certain circumstances, one Class A Unit of Opco
together with a corresponding number of shares of our non-economic
Class B common stock, subject to certain adjustments.
|
(g) |
Purchases
of Equity Securities by the Issuer and Affiliated
Purchasers |
None.
|
Item 6. |
Selected
Financial Data |
Not
applicable.
|
Item 7. |
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations |
References
to the “Company,” “our,” “us” or “we” refer to Rice Acquisition
Corp. The following discussion and analysis of the Company’s
financial condition and results of operations should be read in
conjunction with the financial statements and the notes thereto
contained elsewhere in this Report. Certain information contained
in the discussion and analysis set forth below includes
forward-looking statements that involve risks and
uncertainties.
We have re-evaluated our application of ASC 480-10-S99-3A to our
accounting and classification of the public shares issued as part
of the units sold in the Initial Public Offering on October 26,
2020. Historically, a portion of the public shares was classified
as permanent equity to maintain stockholders’ equity greater than
$5 million on the basis that we will not redeem our public shares
in an amount that would cause our net tangible assets to be less
than $5,000,001, as described in our charter. Previously, the
Company did not consider redeemable stock classified as temporary
equity as part of net tangible assets. Effective with these
financial statements, the Company revised this interpretation to
include temporary equity in net tangible assets. Pursuant to such
re-evaluation, our management has determined that the public shares
include certain provisions that require classification of all of
the public shares as temporary equity. In addition, in connection
with the change in presentation for the public shares, management
determined it should restate earnings per share calculation to
allocate income and losses shared pro rata between the two classes
of shares. This presentation contemplates a Business Combination as
the most likely outcome, in which case, both classes of shares
share pro rata in our income and losses.
Therefore, on December 28, 2021, our management and the Audit
Committee concluded that our previously issued (i) audited balance
sheet as of October 26, 2020, as previously restated in Amendment
No. 1, (ii) audited financial statements as previously restated in
Amendment No. 1, (iii) unaudited interim financial statements
included in our Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2021, filed with the SEC on May 26, 2021 and
(iv) unaudited interim financial statements included in our
Quarterly Report on Form 10-Q for the quarterly period ended June
30, 2021, filed with the SEC on August 13, 2021, should be restated
to report all public shares as temporary equity and should no
longer be relied upon. As such, the Company is restating the 2020
periods herein and intends to restate its 2021 interim financial
statements for the Affected Periods in its quarterly reports on
Form 10-Qs for the periods ended March 31, 2021 and June 30,
2021.
The restatement does not have an impact on our cash position or the
cash held in the Trust Account.
Our management has concluded that a material weakness remains in
our internal control over financial reporting and that our
disclosure controls and procedures were not effective. As a result
of that reassessment, we determined that our disclosure controls
and procedures for such periods were not effective with respect to
the proper accounting and classification of complex financial
instruments. For more information, see Part II, Item 9A. “Controls
and Procedures” included in this Annual Report on Form 10-K.
The financial information that has been previously filed or
otherwise reported for these periods is superseded by the
information in this Amendment No. 2, and the financial statements
and related financial information contained in such previously
filed reports should no longer be relied upon.
The restatement is more fully described in Note 2 of the notes to
the financial statements included herein.
Overview
We
are a blank check company incorporated in Delaware on September 1,
2020 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar
business combination with one or more businesses (the “Business
Combination”). Our sponsor is Rice Acquisition Sponsor LLC, a
Delaware limited liability company (“Sponsor”).
The
registration statement for our initial public offering (“Initial
Public Offering”) was declared effective on October 21, 2020. On
October 26, 2020, we consummated the Initial Public Offering of
23,725,000 units (each, a “Unit” and collectively, the “Units”),
including 2,225,000 additional Units that were issued pursuant to
the underwriters’ partial exercise of their over-allotment option
(the “Over-Allotment Units”), at $10.00 per Unit, generating gross
proceeds of approximately $237.3 million, and incurring offering
costs of approximately $12.5 million, inclusive of $7.6 million in
deferred underwriting commissions.
Simultaneously
with the closing of the Initial Public Offering, we consummated the
private placement (“Private Placement”) of 6,771,000 warrants
(each, a “Private Placement Warrant” and collectively, the “Private
Placement Warrants”) to our Sponsor and Atlas Point Energy
Infrastructure Fund, LLC (“Atlas Point Fund”), at a price of $1.00
per Private Placement Warrant, generating gross proceeds of
approximately $6.8 million. Each Private Placement Warrant is
exercisable to purchase one share of Rice’s Class A common stock
or, in certain circumstances, one Class A Unit of Opco together
with a corresponding number of shares of Rice’s non-economic Class
B common stock.
Following the Initial Public Offering, our public stockholders hold
a direct economic equity ownership interest in Rice in the form of
shares of Class A common stock, and an indirect ownership interest
in Opco through Rice’s ownership of Class A Units of Opco. By
contrast, the Initial Stockholders (our Sponsor, Atlas Point Fund
and our officers and directors) hold direct economic interests in
Opco in the form of Class B Units and a corresponding non-economic
voting equity interest in Rice in the form of shares of Class B
common stock, as well as a small direct interest through the
Sponsor Shares (as defined below). Sponsor Shares were purchased
for $10.00 each and, in the absence of an initial Business
Combination, will generally participate in liquidation or other
payments on a pari passu basis with the public shares. However,
given the relatively de minimis number of Sponsor Shares relative
to public shares, in many cases the economic, governance or other
effects of the sponsor shares are not material to the holders of
Class A common stock or warrants, and for simplicity, portions of
this disclosure may not fully describe or reflect these immaterial
effects.
Upon
the closing of the Initial Public Offering and the Private
Placement, approximately $237.3 million of the net proceeds of the
sale of the Units in the Initial Public Offering and the sale of
the Private Placement Warrants in the Private Placement were placed
in a trust account (“Trust Account”) located in the United States
with Continental Stock Transfer & Trust Company acting as
trustee, and invested only in U.S. “government securities” within
the meaning of Section 2(a)(16) of the Investment Company Act
having a maturity of 185 days or less or in money market funds
meeting certain conditions under Rule 2a-7 promulgated under the
Investment Company Act which invest only in direct U.S. government
treasury obligations, as determined by us, until the earlier of:
(i) the completion of a Business Combination and (ii) the
distribution of the Trust Account.
If we are unable to complete a Business Combination within 24
months from the closing of the Initial Public Offering, or October
26, 2022, we will (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more
than ten 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
pay our franchise and income taxes (less up to $100,000 of interest
to pay dissolution expenses), divided by the number of then
outstanding public shares and Class A Units of Opco (other than
those held by Rice), which redemption will completely extinguish
Public Stockholders’ rights as stockholders (including the right to
receive further liquidating distributions, if any), subject to
applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the remaining
stockholders and the board of directors, dissolve and liquidate,
subject in each case to our obligations under Delaware law to
provide for claims of creditors and the requirements of other
applicable law.
Liquidity
and Capital Resources
As of
December 31, 2020, we had approximately $1.3 million in our
operating bank account and working capital of approximately
$1.6 million.
Our liquidity needs to date had been satisfied through the payment
of $26,000 from our Sponsor to purchase the Founder Shares and
Sponsor Shares, a loan under a note agreement with our Sponsor of
approximately $44,000 as of December 31, 2020 (the “Note”), and the
net proceeds from the consummation of the Private Placement not
held in the Trust Account. The Note was paid in full as of November
10, 2020. In addition, in order to finance transaction costs in
connection with a Business Combination, our officers, directors and
Sponsor may, but are not obligated to, provide us working capital
loans. As of December 31, 2020, there were no amounts outstanding
under any working capital loans.
Based
on the foregoing, management believes that we will have sufficient
working capital and borrowing capacity to meet its needs through
the earlier of the consummation of a Business Combination or one
year from this filing. Over this time period, the Company will be
using these funds held outside of the Trust Account for paying
existing accounts payable, identifying and evaluating prospective
initial Business Combination candidates, performing due diligence
on prospective target businesses, paying for travel expenditures,
selecting the target business to merge with or acquire, and
structuring, negotiating and consummating the Business
Combination.
Results
of Operations
Our
entire activity since inception through December 31, 2020 related
to our formation, the preparation for the Initial Public Offering,
and since the closing of the Initial Public Offering, the search
for a prospective initial Business Combination. We have neither
engaged in any operations nor generated any revenues to date. We
will not generate any operating revenues until after completion of
our initial Business Combination. We will generate non-operating
income in the form of interest income on cash and cash equivalents.
We expect to incur increased expenses as a result of being a public
company (for legal, financial reporting, accounting and auditing
compliance), as well as for due diligence expenses.
The Company’s statement of operations includes a presentation of
income per share for common stock subject to redemption in a manner
similar to the two-class method of income per share. Net income per
share, basic and diluted for Class A common stock is calculated by
dividing the net gain from investments held in the Trust Account of
approximately $32,000, net of applicable franchise taxes of
approximately $32,000 for the period from September 1, 2020
(inception) through December 31, 2020, by the weighted average
number of shares of Class A common stock outstanding for the
period. Net loss per share, basic and diluted for Class B common
stock for the period from September 1, 2020 (inception) through
December 31, 2020 is calculated by dividing the change in fair
value of warrant liability of approximately $19.7 million,
compensation expense of approximately $1.7 million, approximately
$787,000 related to warrant financing costs, general and
administration expenses of approximately $291,000 and franchise
taxes of approximately $33,000, net of noncontrolling interest of
approximately $865,000, resulting in a net loss of approximately
$21.6 million, by the weighted average number of Class B common
stock outstanding for the period.
Contractual
Obligations
We do
not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term
liabilities.
On
October 21, 2020, we entered into an Administrative Services
Agreement pursuant to which we have agreed to cause Opco to pay the
Sponsor a total of $10,000 per month for office space, utilities
and administrative support. Upon completion of the Initial Business
Combination or our liquidation, the agreement will
terminate.
The
underwriters of the Initial Public Offering were entitled to
underwriting discounts and commissions of 5.5%, of which 2.0%
(approximately $4.3 million) was paid at the closing of the Initial
Public Offering and 3.5% (approximately $7.6 million) was deferred.
The deferred underwriting discounts and commissions will become
payable to the underwriters upon the consummation of the Initial
Business Combination and will be paid from the amounts held in the
Trust Account. The underwriters are not entitled to any interest
accrued on the deferred underwriting discounts and
commissions.
Critical
Accounting Policies
This
management’s discussion and analysis of our financial condition and
results of operations is based on our financial statements, which
have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation
of our financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities,
revenues and expenses and the disclosure of contingent assets and
liabilities in our financial statements. On an ongoing basis, we
evaluate our estimates and judgments, including those related to
fair value of financial instruments and accrued expenses. We base
our estimates on historical experience, known trends and events and
various other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or
conditions. The Company has identified the following as its
critical accounting policies:
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible
redemption in accordance with the guidance in ASC Topic 480
“Distinguishing Liabilities from Equity.” Class A common stock
subject to mandatory redemption (if any) is classified as liability
instruments and are measured at fair value. Conditionally
redeemable Class A common stock (including Class A common stock
that features redemption rights that are either within the control
of the holder or subject to redemption upon the occurrence of
uncertain events not solely within our control) is classified as
temporary equity. At all other times, Class A common stock is
classified as stockholders’ equity. We
issued 2,500 shares of Class A common stock to the
Sponsor. These Sponsor Shares will not be transferable and
will only be exchangeable into Class A common stock after the
initial business combination, and as such are considered
non-redeemable and presented as permanent equity in our balance
sheet. Excluding the Sponsor Shares, our Class A common stock
feature certain redemption rights that are considered to be outside
of our control and subject to the occurrence of uncertain future
events. Accordingly, as of the Initial Public
Offering, 23,725,000 shares of Class A common stock
subject to possible redemption is presented at redemption value as
temporary equity, outside of the stockholders’ equity section of
our balance sheets.
We recognize changes in redemption value immediately as they occur
and adjust the carrying value of the Class A common stock subject
to possible redemption to equal the redemption value at the end of
each reporting period. Effective with the closing of the Initial
Public Offering, we recognized the accretion from initial book
value to redemption amount, which resulted in charges against
additional paid-in capital (to the extent available) and
accumulated deficit.
Net
Income (Loss) Per Common Share
We comply with accounting and disclosure requirements of FASB ASC
Topic 260, “Earnings Per Share.” We have two classes of shares,
which are referred to as Class A common stock and Class B common
stock. Income and losses are shared pro rata between the two
classes of shares. Net income (loss) per common share is calculated
by dividing the net income (loss) by the weighted average shares of
common stock outstanding for the respective period.
The calculation of diluted net income (loss) per share does not
consider the effect of the warrants underlying the Units sold in
the Initial Public Offering (including the consummation of the
over-allotment) and the private placement warrants to purchase an
aggregate of 18,633,500 shares of Class A common stock,
because their exercise is contingent upon future events and their
inclusion would be anti-dilutive under the treasury stock method.
As a result, diluted net income (loss) per share is the same as
basic net income (loss) per share for the period from September 1,
2020 (inception) through December 31, 2020. Accretion associated
with the redeemable Class A common stock is excluded from earnings
per share as the redemption value approximates fair value.
Recent
Accounting Pronouncements
Our
management does not believe that any recently issued, but not yet
effective, accounting standards if currently adopted would have a
material effect on the accompanying financial
statements.
Off-Balance
Sheet Arrangements
As of
December 31, 2020, we did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K.
Inflation
We do
not believe that inflation had a material impact on our business,
revenues or operating results during the period
presented.
JOBS
Act
The
Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”)
contains provisions that, among other things, relax certain
reporting requirements for qualifying public companies. We qualify
as an “emerging growth company” and under the JOBS Act are allowed
to comply with new or revised accounting pronouncements based on
the effective date for private (not publicly traded) companies. We
are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised
accounting standards on the relevant dates on which adoption of
such standards is required for non-emerging growth companies. As a
result, the financial statements may not be comparable to companies
that comply with new or revised accounting pronouncements as of
public company effective dates.
Additionally,
we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act.
Subject to certain conditions set forth in the JOBS Act, if, as an
“emerging growth company,” we choose to rely on such exemptions we
may not be required to, among other things, (i) provide an
auditor’s attestation report on our system of internal controls
over financial reporting pursuant to Section 404, (ii) provide all
of the compensation disclosure that may be required of non-emerging
growth public companies under the Dodd-Frank Wall Street Reform and
Consumer Protection Act, (iii) comply with any requirement that may
be adopted by the PCAOB regarding mandatory audit firm rotation or
a supplement to the auditor’s report providing additional
information about the audit and the financial statements (auditor
discussion and analysis) and (iv) disclose certain executive
compensation related items such as the correlation between
executive compensation and performance and comparisons of the CEO’s
compensation to median employee compensation. These exemptions will
apply for a period of five years following the completion of our
Initial Public Offering or until we are no longer an “emerging
growth company,” whichever is earlier.
|
Item 7A. |
Quantitative
and Qualitative Disclosures About Market Risk |
We
are a smaller reporting company as defined by Rule 12b-2 of the
Exchange Act and are not required to provide the information
otherwise required under this item.
|
Item 8. |
Consolidated
Financial Statements And Supplementary Data |
This
information appears following Item 15 of this Annual Report on
Form 10-K and is incorporated herein by reference.
|
Item 9. |
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure |
None.
|
Item 9A. |
Controls
and Procedures |
Evaluation
of Disclosure Controls and Procedures
Disclosure
controls are procedures that are designed with the objective of
ensuring that information required to be disclosed in our reports
filed under the Exchange Act, such as this Report, is recorded,
processed, summarized, and reported within the time period
specified in the SEC’s rules and forms. Disclosure controls are
also designed with the objective of ensuring that such information
is accumulated and communicated to our management, including the
chief executive officer and chief financial officer, as appropriate
to allow timely decisions regarding required disclosure.
On March 30, 2021, we filed our original Annual Report on Form 10-K
for the period ended December 31, 2020 (the “Original Filing”). Our
management evaluated, with the participation of our principal
executive officer and principal financial officer (our “Certifying
Officers”), the effectiveness of our disclosure controls and
procedures as of December 31, 2020, pursuant to Rule 13a-15(b)
under the Exchange Act. Based upon that evaluation at that earlier
time, our Certifying Officers had concluded that our disclosure
controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act) were effective as of December 31,
2020. Subsequently, and solely due to the restatement of our
financial statements to reclassify our warrants as described
Amendment No. 1 and the restatement of our financial statements to
reclassify the public shares as described herein in Amendment No. 2
and the restatement of our financial statements to reclassify the
public shares as described herein, our Certifying Officers have
concluded that our disclosure controls and procedures were not
effective as of December 31, 2020.
Management’s
Report on Internal Controls Over Financial Reporting
This
Report does not include a report of management’s assessment
regarding internal control over financial reporting or an
attestation report of our independent registered public accounting
firm due to a transition period established by rules of the SEC for
newly public companies.
Changes
in Internal Control over Financial Reporting
There
were no changes in our internal control over financial reporting
(as such term is defined in Rules 13a-15(f) and 15d-15(f) of the
Exchange Act) during the most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting, as the circumstances
that led to the restatement of our financial statements described
in this Report had not yet been identified.
PART III
| Item 10. |
Directors,
Executive Officers and Corporate Governance |
Our
officers and directors are as follows:
|
Name
|
|
Age
|
|
Position
|
|
Daniel
Joseph Rice, IV* |
|
40 |
|
Chief
Executive Officer and Director |
|
J.
Kyle Derham* |
|
33 |
|
Chief
Financial Officer and Director |
|
James
Wilmot Rogers* |
|
40 |
|
Chief
Accounting Officer |
|
Kathryn
Jackson |
|
63 |
|
Independent
Director |
|
Joseph
Malchow |
|
35 |
|
Independent
Director |
|
James
Torgerson |
|
68 |
|
Independent
Director |
|
* |
Denotes
an executive officer. |
Daniel Joseph Rice, IV — Chief Executive Officer and
director. Mr. Rice has over 15 years of experience in the energy
industry. Mr. Rice is also the Chief Executive Officer and a
director of Rice II. Mr. Rice is a Partner of Rice Investment Group
and served as Chief Executive Officer of Rice Energy Inc. (“Rice
Energy”) from October 2013 through the completion of its
acquisition by EQT Corporation (“EQT”) in November 2017. Prior to
his role as Chief Executive Officer, Mr. Rice served as Chief
Operating Officer of Rice Energy from October 2012 through
September 2013 and as Vice President and Chief Financial Officer of
Rice Energy from October 2008 through September 2012. Mr. Rice
oversaw Rice Energy’s growth from start-up through its $1 billion
initial public offering in 2014 and eventual $8.2 billion sale to
EQT in 2017. Mr. Rice also oversaw the creation and growth of Rice
Midstream Partners LP (“Rice Midstream”), which was acquired by EQT
Midstream Partners, LP for $2.4 billion in 2018. Mr. Rice
established Rice Energy’s strategic framework for value creation,
which yielded success for its shareholders and employees. He has
utilized his operating and growth strategy formulation experience
as the founder of Rice Energy to help portfolio companies of Rice
Investment Group to refine and optimize their business strategies
in order to profitably grow. Mr. Rice currently serves on the board
of directors of EQT, and he recently joined the board of Whiting
Petroleum in August 2020. Prior to joining Rice Energy, he was an
investment banker for Tudor Pickering Holt & Co. in Houston and
held finance and strategic roles with Transocean Ltd. and Tyco
International plc.
J. Kyle Derham — Chief Financial Officer and director. Mr.
Derham is a Partner of Rice Investment Group. Mr. Derham is
also the President, Chief Financial Officer and a director nominee
of Rice II. Mr. Derham, as part of the Rice Team, led the
shareholder campaign in 2019 to revamp the strategic direction of
EQT and elect a majority slate of director candidates to the board
of EQT, the largest operator of natural gas production in the
United States. Following the campaign, Mr. Derham served as interim
Chief Financial Officer of EQT and currently serves as a strategic
advisor to the company. Mr. Derham previously served as Vice
President, Corporate Development and Finance of Rice Energy and
Rice Midstream from January 2014 through November 2017. Through his
various roles working alongside the Rice family, Mr. Derham has
focused on evaluating, structuring and negotiating key acquisitions
and execution of critical strategic initiatives to generate
attractive risk adjusted returns for investors. Mr. Derham also has
experience as a private equity investor, working as an associate at
First Reserve and as an investment banker at Barclays Investment
Bank.
James Wilmot Rogers — Chief Accounting Officer.
Mr. Rogers is also the Chief Accounting Officer of Rice II.
Mr. Rogers served as Senior Vice President and Chief Accounting
Officer & Administrative Officer, Treasurer of Rice Energy from
April 2011 through November 2017. Mr. Rogers led accounting, tax
and human resources functions for Rice Energy, Rice Midstream and
its numerous joint ventures and joint venture companies. Mr. Rogers
oversaw such functions through two initial public offerings in a
single calendar year (Rice Energy in January 2014 and Rice
Midstream in December 2014) and through numerous asset and
corporate level acquisitions totaling more than $10 billion in
asset value. He also has numerous years in public accounting
experience, having worked at both Ernst & Young and
PricewaterhouseCoopers.
Dr. Kathryn Jackson — Independent director. Dr. Kathryn
Jackson, one of our independent directors, is an accomplished
executive leader with a highly successful career in electricity
generation, energy system operations and technology management. Dr.
Jackson serves as Director of Energy and Technology Consulting for
KeySource, Inc. Prior to this role, Dr. Jackson has served as
President and Chief Technology Officer for RTI International
Metals, Chief Technology Officer and Senior Vice President for
Research and Technology for Westinghouse Electric Company, LLC, and
Executive Vice President of River System Operations and Environment
for the Tennessee Valley Authority. Dr. Jackson serves on the board
of directors of Portland General Electric, Cameco Corporation,
Duquesne Light Holdings and EQT. Dr. Jackson previously served on
the board of directors of Rice Energy from April 2017 until its
acquisition by EQT. Dr. Jackson holds advanced degrees in
engineering, industrial engineering, and public policy from
Carnegie Mellon University and the University of
Pittsburgh.
Joseph Malchow — Independent director. Mr. Malchow, one of
our independent directors, is the Founding General Partner at HNVR
Technology Investment Management in Menlo Park, California, a Seed
and Series A venture capital firm. The firm supports software
entrepreneurs in fields including artificial intelligence,
developer tooling, low code business logic, data and computing
infrastructure, cybersecurity for enterprise, government, and
people, and SaaS in a number of specific verticals including
finance and credit, freight and logistics, national security and
defense technology, and construction. Mr. Malchow also sits on the
Board of Enphase Energy, Inc. (Nasdaq: ENPH), a global energy
technology company. Mr. Malchow earned an A.B. from Dartmouth
College in 2008. He later studied at the law and business schools
of Stanford University, receiving a J.D. in 2013.
James Torgerson — Independent director Mr. Torgerson, one
of our independent directors, was the Chief Executive Officer of
Avangrid, Inc., a public utility company with $35 billion of
assets, from December 2015 until June 2020. Prior to that role, Mr.
Torgerson served as President and Chief Executive Officer of UIL
Holdings Corporation beginning in 2006. Prior to 2006, Mr.
Torgerson was President and Chief Executive Officer of Midcontinent
Independent System Operator, Inc. Mr. Torgerson served as the chair
of the board of directors of the American Gas Association and
serves as a trustee of the Yale-New Haven Hospital and as a trustee
of Yale New Haven Health System. Until his retirement in June 2020,
he served on the board and as an executive committee member of the
Edison Electric Institute (“EEI”). Mr. Torgerson also co-chaired
EEI’s Board Committee for Reliability, Security and Business
Continuity, which included responsibility related to cyber security
for the EEI member utilities. Mr. Torgerson, prior to his
retirement, was also a member of the Electricity Sub-sector
Coordinating Council (“ESCC”), that coordinates with the federal
government on physical and cyber security and natural disasters
impacting the electric grid.
Our
board of directors is divided into three classes with only one
class of directors being elected in each year and each class
(except for those directors elected prior to our first annual
meeting of stockholders) serving a three-year term. The term of
office of the first class of directors, consisting of Kathryn
Jackson and J. Kyle Derham, will expire at our first annual meeting
of stockholders. The term of office of the second class of
directors, consisting of Joseph Malchow and Daniel Joseph Rice, IV,
will expire at the second annual meeting of stockholders. The term
of office of the third class of directors, consisting of James
Torgerson, will expire at the third annual meeting of stockholders.
We may not hold an annual meeting of stockholders until after we
consummate our initial business combination.
Holders
of our founder shares have the right to elect all of our directors
prior to consummation of our initial business combination and
holders of our public shares do not have the right to vote on the
election of directors during such time. These provisions of our
amended and restated certificate of incorporation may only be
amended if approved by a majority of at least 90% of our common
stock voting at a stockholder meeting.
Our
officers are appointed by the board of directors and serve at the
discretion of the board of directors, rather than for specific
terms of office. Our board of directors is authorized to appoint
persons to the offices set forth in our bylaws as it deems
appropriate. Our bylaws provide that our officers may consist of a
Chairman of the Board, Chief Executive Officer, President, Chief
Financial Officer, Vice Presidents, Secretary, Treasurer and such
other offices as may be determined by the board of
directors.
Director
Independence
The
NYSE listing standards require that a majority of our board of
directors be independent. An “independent director” is defined
generally as a person who has no material relationship with the
listed company (either directly or as a partner, stockholder or
officer of an organization that has a relationship with the
company). Our board of directors has determined that Kathryn
Jackson, Joseph Malchow, and James Torgerson are “independent
directors” as defined in the NYSE listing standards and applicable
SEC rules. Our independent directors will have regularly scheduled
meetings at which only independent directors are
present.
Officer
and Director Compensation
None
of our officers or directors have received any cash compensation
for services rendered to us. Commencing on the date that of our
initial public offering through the earlier of consummation of our
initial business combination and our liquidation, we have pay our
sponsor a total of $10,000 per month for office space, utilities,
secretarial support and administrative services. In addition, our
sponsor, executive officers and directors, or any of their
respective affiliates, are reimbursed for any out-of-pocket
expenses incurred in connection with activities on our behalf such
as identifying potential target businesses and performing due
diligence on suitable business combinations. Our audit committee
reviews on a quarterly basis all payments that were made to our
sponsor, officers or directors, or our or their affiliates. Any
such payments prior to an initial business combination will be made
using funds held outside the trust account. Other than quarterly
audit committee review of such reimbursements, we do not expect to
have any additional controls in place governing our reimbursement
payments to our directors and officers for their out-of-pocket
expenses incurred in connection with our activities on our behalf
in connection with identifying and consummating an initial business
combination. Other than these payments and reimbursements, no
compensation of any kind, including finder’s and consulting fees,
will be paid by the company to our sponsor, officers and directors,
or any of their respective affiliates, prior to completion of our
initial business combination.
After
the completion of our initial business combination, directors or
members of our management team who remain with us may be paid
consulting or management fees from the combined company. All of
these fees will be fully disclosed to stockholders, to the extent
then known, in the proxy solicitation or tender offer materials (as
applicable) furnished to our stockholders in connection with a
proposed business combination. We have not established any limit on
the amount of such fees that may be paid by the combined company to
our directors or members of our management. It is unlikely the
amount of such compensation will be known at the time of the
proposed business combination, because the directors of the
post-combination business will be responsible for determining
officer and director compensation. Any compensation to be paid to
our officers will be determined, or recommended to the board of
directors for determination, either by a compensation committee
constituted solely by independent directors or by a majority of the
independent directors on our board of directors.
We do
not intend to take any action to ensure that members of our
management team maintain their positions with us after the
consummation of our initial business combination, although it is
possible that some or all of our officers and directors may
negotiate employment or consulting arrangements to remain with us
after our initial business combination. The existence or terms of
any such employment or consulting arrangements to retain their
positions with us may influence our management’s motivation in
identifying or selecting a target business but we do not believe
that the ability of our management to remain with us after the
consummation of our initial business combination will be a
determining factor in our decision to proceed with any potential
business combination. We are not party to any agreements with our
officers and directors that provide for benefits upon termination
of employment.
Committees
of the Board of Directors
Our
board of directors has three standing committees: an audit
committee, a compensation committee and a nominating and corporate
governance committee. Subject to phase-in rules and a limited
exception, the rules of the NYSE and Rule 10A of the Exchange Act
require that the audit committee of a listed company be comprised
solely of independent directors. Subject to phase-in rules and a
limited exception, the rules of the NYSE require that the
compensation and nominating and corporate governance committees of
a listed company be comprised solely of independent directors. The
charter of each committee is available on our website.
Audit
Committee
We
have established an audit committee of the board of directors.
Kathryn Jackson, Joseph Malchow and James Torgerson serve as
members of our audit committee. Under the NYSE listing standards
and applicable SEC rules, we are required to have at least three
members of the audit committee, all of whom must be independent,
subject to the exception described below. Kathryn Jackson, Joseph
Malchow, and James Torgerson are independent.
James
Torgerson serves as chair of the audit committee. Each member of
the audit committee is financially literate and our board of
directors has determined that James Torgerson qualifies as an
“audit committee financial expert” as defined in applicable SEC
rules.
We
have adopted an audit committee charter, which details the
principal functions of the audit committee, including:
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the
appointment, compensation, retention, replacement, and oversight of
the work of the independent registered public accounting firm and
any other independent registered public accounting firm engaged by
us; |
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pre-approving
all audit and permitted non-audit services to be provided by the
independent registered public accounting firm or any other
registered public accounting firm engaged by us, and establishing
pre-approval policies and procedures; |
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reviewing
and discussing with the independent registered public accounting
firm all relationships the auditors have with us in order to
evaluate their continued independence; |
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setting
clear hiring policies for employees or former employees of the
independent registered public accounting firm; |
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setting
clear policies for audit partner rotation in compliance with
applicable laws and regulations; |
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obtaining
and reviewing a report, at least annually, from the independent
registered public accounting firm describing (i) the independent
registered public accounting firm’s internal quality-control
procedures and (ii) any material issues raised by the most recent
internal quality-control review, or peer review, of the audit firm,
or by any inquiry or investigation by governmental or professional
authorities within the preceding five years respecting one or more
independent audits carried out by the firm and any steps taken to
deal with such issues; |
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reviewing
and approving any related party transaction required to be
disclosed pursuant to Item 404 of Regulation S-K promulgated by the
SEC prior to us entering into such transaction; and |
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● |
reviewing
with management, the independent registered public accounting firm,
and our legal advisors, as appropriate, any legal, regulatory or
compliance matters, including any correspondence with regulators or
government agencies and any employee complaints or published
reports that raise material issues regarding our financial
statements or accounting policies and any significant changes in
accounting standards or rules promulgated by the Financial
Accounting Standards Board, the SEC or other regulatory
authorities. |
Compensation
Committee
Kathryn
Jackson, Joseph Malchow, and James Torgerson serve as members of
our compensation committee. Under the NYSE listing standards and
applicable SEC rules, we are required to have at least two members
of the compensation committee, all of whom must be independent.
Kathryn Jackson, Joseph Malchow, and James Torgerson are
independent. Joseph Malchow serves as chair of the compensation
committee.
We
have adopted a compensation committee charter, which details the
principal functions of the compensation committee,
including:
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reviewing
and approving on an annual basis the corporate goals and objectives
relevant to our chief executive officer’s compensation, evaluating
our chief executive officer’s performance in light of such goals
and objectives and determining and approving the remuneration (if
any) of our chief executive officer based on such
evaluation; |
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reviewing
and approving on an annual basis the compensation of all of our
other officers; |
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reviewing
on an annual basis our executive compensation policies and
plans; |
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implementing
and administering our incentive compensation equity-based
remuneration plans; |
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assisting
management in complying with our proxy statement and annual report
disclosure requirements; |
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approving
all special perquisites, special cash payments and other special
compensation and benefit arrangements for our officers and
employees; |
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● |
if
required, producing a report on executive compensation to be
included in our annual proxy statement; and |
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reviewing,
evaluating and recommending changes, if appropriate, to the
remuneration for directors. |
The
charter also provides that the compensation committee may, in its
sole discretion, retain or obtain the advice of a compensation
consultant, legal counsel or other adviser and will be directly
responsible for the appointment, compensation and oversight of the
work of any such adviser. However, before engaging or receiving
advice from a compensation consultant, external legal counsel or
any other adviser, the compensation committee will consider the
independence of each such adviser, including the factors required
by the NYSE and the SEC.
Nominating
and Corporate Governance Committee
The
members of our nominating and corporate governance are Kathryn
Jackson, Joseph Malchow, and James Torgerson. Kathryn Jackson
serves as chair of the nominating and corporate governance
committee.
The
primary purposes of our nominating and corporate governance
committee is to assist the board in:
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identifying,
screening and reviewing individuals qualified to serve as directors
and recommending to the board of directors candidates for
nomination for election at the annual meeting of stockholders or to
fill vacancies on the board of directors; |
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developing,
recommending to the board of directors and overseeing
implementation of our corporate governance guidelines; |
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coordinating
and overseeing the annual self-evaluation of the board of
directors, its committees, individual directors and management in
the governance of the company; and |
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reviewing
on a regular basis our overall corporate governance and
recommending improvements as and when necessary. |
The
nominating and corporate governance committee is governed by a
charter that complies with the rules of the NYSE.
Director
Nominations
Our
nominating and corporate governance committee recommend to the
board of directors candidates for nomination for election at the
annual meeting of the stockholders. The board of directors also
consider director candidates recommended for nomination by our
stockholders during such times as they are seeking proposed
nominees to stand for election at the next annual meeting of
stockholders (or, if applicable, a special meeting of
stockholders). Our stockholders that wish to nominate a director
for election to our board of directors should follow the procedures
set forth in our bylaws.
We
have not formally established any specific, minimum qualifications
that must be met or skills that are necessary for directors to
possess. In general, in identifying and evaluating nominees for
director, our board of directors considers educational background,
diversity of professional experience, knowledge of our business,
integrity, professional reputation, independence, wisdom, and the
ability to represent the best interests of our stockholders. Prior
to our initial business combination, holders of our public shares
do not have the right to recommend director candidates for
nomination to our board of directors.
Compensation
Committee Interlocks and Insider Participation
None
of our officers currently serves, or in the past year has served,
as a member of the board of directors or compensation committee of
any entity that has one or more officers serving on our board of
directors.
Code
of Ethics
We
have adopted a Code of Ethics applicable to our directors, officers
and employees. A copy of the Code of Ethics will be provided
without charge upon written request to our principal executive
offices. We intend to disclose any amendments to or waivers of
certain provisions of our Code of Ethics in a Current Report on
Form 8-K.
Corporate
Governance Guidelines
Our
board of directors has adopted corporate governance guidelines in
accordance with the corporate governance rules of the NYSE that
serve as a flexible framework within which our board of directors
and its committees operate. These guidelines cover a number of
areas including board membership criteria and director
qualifications, director responsibilities, board agenda, roles of
the chairman of the board, chief executive officer and presiding
director, meetings of independent directors, committee
responsibilities and assignments, board member access to management
and independent advisors, director communications with third
parties, director compensation, director orientation and continuing
education, evaluation of senior management and management
succession planning. A copy of our corporate governance guidelines
is posted on our website.
Conflicts
of Interest
Members
of our sponsor, as well as Rice Investment Group and its portfolio
companies may compete with us for acquisition opportunities. If
they decide to pursue any such opportunity, we may be precluded
from procuring such opportunities. Neither members of our sponsor
nor members of our management team who are members of our sponsor
have any obligation to present us with any opportunity for a
potential business combination of which they become aware, unless
presented to such member solely in his or her capacity as an
officer of the company. Members of our sponsor and our management,
in their other endeavors, may be required to present potential
business combinations to other entities, before they present such
opportunities to us.
In
addition, members of our sponsor, as well as Rice Investment Group
and its portfolio companies, may sponsor other blank check
companies similar to ours during the period in which we are seeking
an initial business combination, and members of our management team
may participate in such blank check companies. In particular, an
affiliate of Rice Investment Group has formed Rice II, a blank
check company like our company that was formed to consummate an
initial business combination. Like us, Rice II intends to focus its
search for a target business in the energy transition or
sustainability arena. As of the date of this filing, Rice II has
not completed its initial public offering and does not have a class
of securities registered under the Exchange Act. Any such
companies, including Rice II, may present additional conflicts of
interest in pursuing an acquisition target, particularly in the
event there is overlap among the management teams. Mr. Rice also
serves as a director and officer of Rice II, and Mr. Derham also
serves as an officer and is a director nominee of Rice II. However,
we do not believe that any such potential conflicts would
materially affect our ability to complete our initial business
combination. Each of Mr. Rice and Mr. Derham has agreed not to
become an officer or director of any other special purpose
acquisition company with a class of securities registered under the
Exchange Act, until we have entered into a definitive agreement
regarding our initial business combination or we have failed to
complete our initial business combination within 24 months after
the closing of our initial public offering. Neither Mr. Rice nor
Mr. Derham has been involved with any blank check companies prior
to our company.
Each
of our officers and directors presently has, and any of them in the
future may have additional, fiduciary or contractual obligations to
other entities, including Rice II, pursuant to which such officer
or director is or will be required to present a business
combination opportunity. Accordingly, if any of our officers or
directors becomes aware of a business combination opportunity which
is suitable for an entity to which he or she has then-current
fiduciary or contractual obligations, he or she will honor his or
her fiduciary or contractual obligations to present such
opportunity to such other entity. We do not believe, however, that
the fiduciary duties or contractual obligations of our officers or
directors will materially affect our ability to complete our
business combination. In addition, we may pursue an Affiliated
Joint Acquisition opportunity with an entity to which an officer or
director has a fiduciary or contractual obligation. Any such entity
may co-invest with us in the target business at the time of our
initial business combination, or we could raise additional proceeds
to complete the acquisition by issuing to such entity a class of
equity or equity-linked securities. Our amended and restated
certificate of incorporation provides that we renounce our interest
in any corporate opportunity offered to any director or officer
unless such opportunity is expressly offered to such person solely
in his or her capacity as a director or officer of our company and
such opportunity is one we are legally and contractually permitted
to undertake and would otherwise be reasonable for us to
pursue.
Potential
investors should also be aware of the following other potential
conflicts of interest:
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None
of our officers or directors is required to commit his or her full
time to our affairs and, accordingly, may have conflicts of
interest in allocating his or her time among various business
activities. |
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In
the course of their other business activities, our officers and
directors may become aware of investment and business opportunities
which may be appropriate for presentation to us as well as the
other entities with which they are affiliated. Our management may
have conflicts of interest in determining to which entity a
particular business opportunity should be presented. |
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Our
initial stockholders have agreed that any founder shares and
sponsor shares will not be entitled to redemption rights, and they
will waive any such redemption rights for any public shares held by
them, in connection with the consummation of our initial business
combination. Additionally, our initial stockholders have agreed
that any founder shares held by them will not be entitled to
redemption rights, and they will waive any such redemption rights
for any public shares held by them, if we fail to consummate our
initial business combination within 24 months after the closing of
our initial public offering. If we do not complete our initial
business combination within such applicable time period, the
portion of the proceeds of the sale of the private placement
warrants held in the trust account will be used to fund the
redemption of our public shares and any Class A Units of Opco
(other than those held by Rice Acquisition Corp.), and the private
placement warrants will expire worthless. Furthermore, our initial
stockholders have agreed not to transfer, assign or sell any
founder shares held by them, and any shares of our Class A common
stock acquired upon exchange of founder shares, until one year
after the date of the consummation of our initial business
combination or earlier if, subsequent to our initial business
combination, (i) the last sale price of our Class A common stock
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 our initial business combination or (ii) we
consummate a subsequent liquidation, merger, stock exchange or
other similar transaction which results in all of our stockholders
having the right to exchange their shares of common stock for cash,
securities or other property. With certain limited exceptions, the
private placement warrants and the Class A common stock underlying
such warrants will not be transferable, assignable or saleable
until 30 days after the completion of our initial business
combination. Since our sponsor and officers and directors may
directly or indirectly own common stock and warrants following our
initial public offering, our officers and directors may have a
conflict of interest in determining whether a particular target
business is an appropriate business with which to effectuate our
initial business combination. |
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Our
officers and directors may have a conflict of interest with respect
to evaluating a particular business combination if the retention or
resignation of any such officers and directors was included by a
target business as a condition to any agreement with respect to our
initial business combination. |
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Our
sponsor, officers or directors may have a conflict of interest with
respect to evaluating a business combination and financing
arrangements as we may obtain loans from our sponsor or an
affiliate of our sponsor or any of our officers or directors to
finance transaction costs in connection with an intended initial
business combination. Up to $1,500,000 of such loans may be
convertible into warrants at a price of $1.00 per warrant at the
option of the lender. Such warrants would be identical to the
private placement warrants, including as to exercise price,
exercisability and exercise period. |
The
conflicts described above may not be resolved in our
favor.
In
general, officers and directors of a corporation incorporated under
the laws of the State of Delaware are required to present business
opportunities to a corporation if:
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the
corporation could financially undertake the
opportunity; |
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the
opportunity is within the corporation’s line of business;
and |
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it
would not be fair to our company and its stockholders for the
opportunity not to be brought to the attention of the
corporation. |
Accordingly,
as a result of multiple business affiliations, our officers and
directors may have similar legal obligations relating to presenting
business opportunities meeting the above-listed criteria to
multiple entities. Furthermore, our amended and restated
certificate of incorporation provide that the doctrine of corporate
opportunity will not apply with respect to any of our officers or
directors in circumstances where the application of the doctrine
would conflict with any fiduciary duties or contractual obligations
they may have.
We
are not prohibited from pursuing an initial business combination
with or from a company that is affiliated with our sponsor,
officers or directors, including a portfolio company of Rice
Investment Group, or making the acquisition through a joint venture
or other form of shared ownership with our sponsor, officers or
directors or their affiliates, including Rice Investment Group
and/or one or more of its portfolio companies and Rice II. We are
also not prohibited from entering into an agreement with our
sponsor, officers or directors or their affiliates with respect to
the operation of any business we acquire in connection with the
initial business combination. In the event we seek to complete our
initial business combination with a business combination target
that is affiliated with our sponsor, officers or directors, we, or
a committee of independent directors, would obtain an opinion from
an independent investment banking firm which is a member of FINRA
or from an independent accounting firm that such initial business
combination is fair to our company from a financial point of view.
We are not required to obtain such an opinion in any other context.
Further, commencing on the date our securities are first listed on
the NYSE, we began paying an amount equal to $10,000 per month to
our sponsor for office space, utilities, secretarial support and
administrative services provided to us.
We
cannot assure you that any of the above mentioned conflicts will be
resolved in our favor.
In
the event that we submit our initial business combination to our
public stockholders for a vote, we will complete our initial
business combination only if a majority of the outstanding shares
of common stock voted are voted in favor of the initial business
combination. Our initial stockholders have agreed to vote any
founder shares held by them and any public shares purchased during
or after the offering in favor of our initial business combination
and our officers and directors have also agreed to vote any public
shares purchased during or after the offering in favor of our
initial business combination.
Limitation
on Liability and Indemnification of Officers and
Directors
Our
amended and restated certificate of incorporation provides that our
officers and directors will be indemnified by us to the fullest
extent authorized by Delaware law, as it now exists or may in the
future be amended. In addition, our amended and restated
certificate of incorporation provide that our directors will not be
personally liable for monetary damages to us or our stockholders
for breaches of their fiduciary duty as directors, unless they
violated their duty of loyalty to us or our stockholders, acted in
bad faith, knowingly or intentionally violated the law, authorized
unlawful payments of dividends, unlawful stock purchases or
unlawful redemptions, or derived an improper personal benefit from
their actions as directors.
We
have entered into agreements with our officers and directors to
provide contractual indemnification in addition to the
indemnification provided for in our amended and restated
certificate of incorporation. Our bylaws also permit us to secure
insurance on behalf of any officer, director or employee for any
liability arising out of his or her actions, regardless of whether
Delaware law would permit such indemnification. We have purchased a
policy of directors’ and officers’ liability insurance that insures
our officers and directors against the cost of defense, settlement
or payment of a judgment in some circumstances and insures us
against our obligations to indemnify our officers and
directors.
Our
officers and directors have agreed, and any persons who may become
officers or directors prior to the initial business combination
will agree, to waive any right, title, interest or claim of any
kind in or to any monies in the trust account, and to waive any
right, title, interest or claim of any kind they may have in the
future as a result of, or arising out of, any services provided to
us and will not seek recourse against the trust account for any
reason whatsoever. Accordingly, any indemnification provided will
only be able to be satisfied by us if (i) we have sufficient funds
outside of the trust account or (ii) we consummate an initial
business combination.
Our
indemnification obligations may discourage stockholders from
bringing a lawsuit against our officers or directors for breach of
their fiduciary duty. These provisions also may have the effect of
reducing the likelihood of derivative litigation against our
officers and directors, even though such an action, if successful,
might otherwise benefit us and our stockholders. Furthermore, a
stockholder’s investment may be adversely affected to the extent we
pay the costs of settlement and damage awards against our officers
and directors pursuant to these indemnification
provisions.
We
believe that these provisions, the insurance and the indemnity
agreements are necessary to attract and retain talented and
experienced officers and directors.
Insofar
as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, we have been informed that in
the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is therefore
unenforceable.
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Item 11. |
Executive
Compensation |
Officer
and Director Compensation
None
of our officers or directors have received any cash compensation
for services rendered to us. Commencing on the date that our
securities were first listed on the NYSE through the earlier of
consummation of our initial business combination and our
liquidation, we have agreed to pay our sponsor a total of $10,000
per month for office space, utilities, secretarial support and
administrative services. In addition, our sponsor, executive
officers and directors, or any of their respective affiliates, will
be reimbursed for any out-of-pocket expenses incurred in connection
with activities on our behalf such as identifying potential target
businesses and performing due diligence on suitable business
combinations. Our audit committee will review on a quarterly basis
all payments that were made to our sponsor, officers or directors,
or our or their affiliates. Any such payments prior to an initial
business combination will be made using funds held outside the
trust account. Other than quarterly audit committee review of such
reimbursements, we do not expect to have any additional controls in
place governing our reimbursement payments to our directors and
officers for their out-of-pocket expenses incurred in connection
with our activities on our behalf in connection with identifying
and consummating an initial business combination. Other than these
payments and reimbursements, no compensation of any kind, including
finder’s and consulting fees, will be paid by the company to our
sponsor, officers and directors, or any of their respective
affiliates, prior to completion of our initial business
combination.
After
the completion of our initial business combination, directors or
members of our management team who remain with us may be paid
consulting or management fees from the combined company. All of
these fees will be fully disclosed to stockholders, to the extent
then known, in the proxy solicitation or tender offer materials (as
applicable) furnished to our stockholders in connection with a
proposed business combination. We have not established any limit on
the amount of such fees that may be paid by the combined company to
our directors or members of our management. It is unlikely the
amount of such compensation will be known at the time of the
proposed business combination, because the directors of the
post-combination business will be responsible for determining
officer and director compensation. Any compensation to be paid to
our officers will be determined, or recommended to the board of
directors for determination, either by a compensation committee
constituted solely by independent directors or by a majority of the
independent directors on our board of directors.
We do
not intend to take any action to ensure that members of our
management team maintain their positions with us after the
consummation of our initial business combination, although it is
possible that some or all of our officers and directors may
negotiate employment or consulting arrangements to remain with us
after our initial business combination. The existence or terms of
any such employment or consulting arrangements to retain their
positions with us may influence our management’s motivation in
identifying or selecting a target business but we do not believe
that the ability of our management to remain with us after the
consummation of our initial business combination will be a
determining factor in our decision to proceed with any potential
business combination. We are not party to any agreements with our
officers and directors that provide for benefits upon termination
of employment.
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Item 12. |
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters |
The
following table sets forth information regarding the beneficial
ownership of our shares of common stock as of March 19, 2021 based
on information obtained from the persons named below, with respect
to the beneficial ownership of our shares of common stock,
by:
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each
person known by us to be the beneficial owner of more than 5% of
our outstanding shares of common stock; |
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each
of our executive officers and directors that beneficially owns our
shares of common stock; and |
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all
our executive officers and directors as a group. |
In
the table below, percentage ownership is based on 23,727,500 shares
of Class A common stock (which includes shares of Class A common
stock that are underlying the units) and 5,931,350 shares of Class
B common stock outstanding as of March 19, 2021. The table below
does not include the shares of Class A common stock underlying the
private placement warrants held by our sponsor because these
securities are not exercisable within 60 days of this
Report.
|
Name of Beneficial Owners(1)
|
|
Class
B
common stock |
|
|
Class
A
common stock |
|
|
|
Number
of Shares Beneficially Owned(2) |
|
|
Approximate
Percentage of Class |
|
|
Number
of Shares Beneficially Owned |
|
|
Approximate
Percentage of Class |
|
|
Rice
Acquisition Sponsor LLC (our sponsor)(3) |
|
|
5,532,287 |
|
|
|
93.3 |
% |
|
|
2,500 |
|
|
|
* |
|
|
Atlas
Point Energy Infrastructure, LLC(4) |
|
|
309,063 |
|
|
|
5.2 |
% |
|
|
— |
|
|
|
— |
|
|
Daniel
Joseph Rice, IV(3) |
|
|
5,532,287 |
|
|
|
93.3 |
% |
|
|
— |
|
|
|
— |
|
|
J.
Kyle Derham(3) |
|
|
5,532,287 |
|
|
|
93.3 |
% |
|
|
— |
|
|
|
— |
|
|
James
Wilmot Rogers |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Kathryn
Jackson |
|
|
30,000 |
|
|
|
* |
|
|
|
— |
|
|
|
— |
|
|
Joseph
Malchow |
|
|
30,000 |
|
|
|
* |
|
|
|
— |
|
|
|
— |
|
|
James
Torgerson |
|
|
30,000 |
|
|
|
* |
|
|
|
— |
|
|
|
— |
|
|
All
officers and directors as a group (six individuals) |
|
|
5,622,287 |
|
|
|
94.8 |
% |
|
|
— |
|
|
|
— |
|
|
Adage
Capital Partners, LP(5) |
|
|
— |
|
|
|
— |
|
|
|
1,935,000 |
|
|
|
8.16 |
% |
|
CIBC
Private Wealth Group, LLC(6) |
|
|
— |
|
|
|
— |
|
|
|
2,128,500 |
|
|
|
8.97 |
% |
|
Goldman
Sachs Asset Management(7) |
|
|
— |
|
|
|
— |
|
|
|
2,550,000 |
|
|
|
10.4 |
% |
|
Hartree
Partners, LP(8) |
|
|
|
|
|
|
|
|
|
|
1,359,341 |
|
|
|
5.7 |
% |
|
HITE
Hedge Asset Management LLC(9) |
|
|
— |
|
|
|
— |
|
|
|
1,300,000 |
|
|
|
5.5 |
% |
|
Kensico
Capital Management Corp(10) |
|
|
— |
|
|
|
— |
|
|
|
2,000,000 |
|
|
|
8.4 |
% |
|
(1) |
Unless
otherwise noted, the business address of each of the following
entities or individuals is 102 East Main Street, Second Story,
Carnegie, Pennsylvania 15106. |
|
(2) |
The
interests shown consist of founder shares and sponsor shares. The
Class A Units of Opco (and corresponding shares of our Class B
common stock) comprising such shares will be exchangeable for
shares of our Class A common stock after the time of our initial
business combination on a one-for-one basis, subject to adjustment,
as described in the section entitled “Description of Securities.”
Excludes forward purchase securities that will only be issued, if
at all, at the time of our initial business
combination. |
|
(3) |
Rice
Acquisition Sponsor LLC is the record holder of the shares reported
herein. Daniel Joseph Rice, IV and J. Kyle Derham are the managing
members of Rice Acquisition Sponsor LLC. |
|
(4) |
Upon
the closing of our initial public offering, our sponsor transferred
309,063 founder shares to Atlas Point Fund pursuant to the forward
purchase agreement. Atlas Point Fund is the record holder of the
shares reported herein. CIBC National Trust Company, a
limited-purpose national trust bank, is the manager of Atlas Point
Fund. The parent company of CIBC National Trust is CIBC Private
Wealth Group, LLC, which in turn is an indirect, wholly owned
subsidiary of Canadian Imperial Bank of Commerce (“CIBC”).
Accordingly, CIBC may be deemed to have or share beneficial
ownership of the common stock held directly by Atlas Point Fund.
The business address for Atlas Point Energy Infrastructure Fund,
LLC is: 3920 Northside Parkway, 7th Floor, Atlanta, Georgia
30327. |
|
(5) |
The
address of Adage Capital Partners, L.P. is 200 Clarendon Street,
52nd Floor, Boston, Massachusetts 02116. Based on a Schedule 13G/A
filed on November 5, 2020 (the “Adage 13G”). According to the Adage
13G, Adage Capital Partners, L.P., a Delaware limited partnership
(“ACP” is the direct owner of such Class A Common Stock. Adage
Capital Partners GP, L.L.C., a limited liability company organized
under the laws of the State of Delaware (“ACPGP”), is the general
partner of ACP and therefore has beneficial ownership of the shares
of Class A Common Stock directly owned by ACP. Adage Capital
Advisors, L.L.C., a limited liability company organized under the
laws of the State of Delaware (“ACA”), is the managing member of
ACPGP, the general partner of ACP, and therefore has beneficial
ownership of the shares of Class A Common Stock directly owned by
ACP. Robert Atchinson (“Mr. Atchinson”) is the managing member of
ACA, which is the managing member of ACPGP, which is the general
partner of ACP and therefore Mr. Atchinson has beneficial ownership
of the shares of Class A Common Stock directly owned by ACP.
Phillip Gross (“Mr. Gross”) is the managing member of ACA, which is
the managing member of ACPGP, which is the general partner of ACP
and therefore Mr. Gross has beneficial ownership of the shares of
Class A Common Stock directly owned by ACP. |
|
(6) |
The
address of CIBC Private Wealth Group, LLC is 3290 Northside Parkway
NW, 7th Flr, Atlanta, GA 30327. Based on a Schedule 13G/A filed on
February 14, 2021. |
|
(7) |
The
address of Goldman Sachs Asset Management is 200 West Street New
York, NY 10282. Based on a Schedule 13G/A filed on December 16,
2020. |
|
(8) |
The
address of Hartree Partners, LP is 1185 Avenue of the Americas New
York, NY 10036. Based on a Schedule 13G/A filed on February 8,
2021. |
|
(9) |
The
address of HITE Hedge Asset Management LLC is 300 Crown Colony
Drive Suite 108 Quincy, MA 02169. Based on a Schedule 13G/A filed
on February 17, 2021. |
|
(10) |
The
address of Kensico Capital Management Corp. is 55 Railroad Avenue,
2nd Floor Greenwich, CT 06830. Based on a Schedule 13G/A filed on
February 12, 2021. |
Our
sponsor, officers and directors are deemed to be our “promoter” as
such term is defined under the federal securities laws.
Changes
in Control
None.
|
Item 13. |
Certain
Relationships and Related Transactions, and Director
Independence |
Founder
Shares
In September 2020, our sponsor received 5,750,000 Class B Units of
Opco for no consideration and purchased 5,750,000 corresponding
shares of our Class B common stock, 2,500 shares of our Class A
common stock and 100 Class A Units of Opco and 100 corresponding
shares of our Class B common stock for an aggregate of $26,000. The
number of founder shares issued was determined based on the
expectation that such founder shares would represent 20% of the
total outstanding equity upon completion of our initial public
offering (excluding the sponsor shares). In October, 2020 our
sponsor forfeited 90,000 Class B Units of Opco, and 30,000 Class
Units of Opco were issued to each of our independent directors. In
October 2020, we effected a dividend, and Opco effected a
distribution, resulting in our Sponsor owning 6,091,250 Class B
Units and 6,091,250 shares of our Class B common stock that
comprise the founder shares. Our sponsor transferred a
corresponding number of shares of our Class B common stock to our
independent directors. Following the closing of our initial public
offering, our sponsor forfeited 309,063 Class B Units of Opco, and
309,063 Class B Units of Opco was issued to Atlas Point Fund. Our
sponsor transferred a corresponding number of shares of our Class B
common stock to Atlas Point Fund. Up to 806,250 founder shares were
subject to forfeiture by our sponsor depending on the extent to
which the underwriters’ over-allotment option was exercised. The
founder shares (including the Class A common stock issuable upon
exchange thereof) may not, subject to certain limited exceptions,
be transferred, assigned or sold by the holder. On October 26,
2020, the underwriters partially exercised the over-allotment
option to purchase an additional 2,225,000 Units; thus, only
250,000 founder shares remained subject to forfeiture to the extent
the over-allotment option was exercised. On December 5, 2020, the
remaining underwriters’ over-allotment option expired unexercised;
thus, 250,000 founder shares held by our sponsor were forfeited for
no consideration. As of December 31, 2020, there were 5,931,350
shares of Class B common stock issued and outstanding.
Private
Placement Warrants
Our
sponsor purchased from us an aggregate of 6,093,900 private
placement warrants at a purchase price of $1.00 per warrant
($6,093,900 in the aggregate) in a private placement that occurred
simultaneously with the closing of our initial public offering.
Atlas Point Fund also purchased 677,100 private placement warrants
at a purchase price of $1.00 per warrant ($677,100 in the
aggregate). Each private placement warrant entitles the holder to
purchase for $11.50 either one share of our Class A common stock
or, so long as they are held by our initial stockholders or their
permitted transferees, one Class A Unit of Opco (and corresponding
share of our Class B common stock). The private placement warrants
(including the Class A common stock or Class A Units of Opco (and
corresponding shares of our Class B common stock) issuable upon
exercise thereof) may not, subject to certain limited exceptions,
be transferred, assigned or sold by the holder until 30 days after
the completion of our initial business combination.
We
have entered into a forward purchase agreement pursuant to which we
may elect, in our sole and absolute discretion, to offer Atlas
Point Fund, which is a fund managed by CIBC National Trust Company
the opportunity to purchase up to $75,000,000 of either (i) a
number of forward purchase units for $10.00 per unit or (ii) a
number of forward purchase shares for $9.67 per share in a private
placement that will close simultaneously with the closing of our
initial business combination. Whether we will issue Atlas Point
Fund forward purchase units valued at $10.00 per unit or forward
purchase shares valued at $9.67 per share will be determined at our
election, and in our sole discretion, at least 10 business days
prior to the closing of our initial business combination. Each
whole forward purchase warrant is exercisable to purchase one share
of our Class A common stock at $11.50 per share. The forward
purchase warrants will have the same terms as the public warrants
and the forward purchase shares will be identical to the shares of
Class A common stock included in the units being sold in our
initial public offering, except the forward purchase shares and the
forward purchase warrants will be subject to transfer restrictions
and certain registration rights and the forward purchase units will
consist of only one-third of one forward purchase warrant. The
funds from the sale of the forward purchase securities may be used
as part of the consideration to the sellers in the initial business
combination, and any excess funds may be used for the working
capital needs of the post-transaction company. This agreement is
independent of the percentage of stockholders electing to redeem
their public shares and may provide us with an increased minimum
funding level for the initial business combination. The forward
purchase agreement is subject to conditions, including Atlas Point
Fund giving us its written consent to purchase the forward purchase
securities no later than five days after we notify it of our
intention to meet to consider entering into a definitive agreement
for a proposed business combination. Atlas Point Fund may grant or
withhold its consent to the purchase entirely within its sole
discretion. Accordingly, if Atlas Point Fund does not consent to
the purchase, it will not be obligated to purchase the forward
purchase securities. Additionally, pursuant to the terms of the
forward purchase agreement, we have granted Atlas Point Fund the
right to appoint a single observer to our board of directors until
the consummation of our initial business combination. Such observer
will not have voting rights or otherwise have any of the powers of
a member of our board of directors and Atlas Point Fund will not
have the right to appoint such observer at any time that Atlas
Point Fund or any of Atlas Point Fund’s affiliates has the right to
designate a director or observer to the board of directors of a
special purchase acquisition company that is focused on an industry
similar to that which we are focused.
Opco
LLC Agreement
In
connection with our initial public offering, we entered into the
Amended and Restated Limited Liability Company Agreement of Opco
(the “Opco LLC Agreement”). A form of the Opco LLC Agreement was
filed as an exhibit to our Registration Statement on Form S-1 filed
in connection with our initial public offering, and the following
description of the Opco LLC Agreement is qualified in its entirety
by reference thereto.
Conversion
of Class B Units of Opco and Exchange Right
Our
initial stockholders own all of the outstanding Class B Units of
Opco. The Class B Units of Opco will convert into Class A Units of
Opco in connection with the initial business combination on a
one-for-one basis, subject to adjustment for stock splits, stock
dividends, reorganizations, recapitalizations and the like and
subject to further adjustment as described below under “— Founder
Shares Anti-Dilution.”
In
addition, following our initial business combination, holders of
Class A Units of Opco (other than Rice Acquisition Corp.) will have
the right (an “exchange right”), subject to certain limitations, to
exchange Class A Units of Opco (and a corresponding number of
shares of our Class B common stock) for, at our option, (i) shares
of our Class A common stock on a one-for-one basis, subject to
adjustment for stock splits, stock dividends, reorganizations,
recapitalizations and the like, or (ii) a corresponding amount of
cash. Our decision to make a cash payment upon an exercise of an
exchange right will be made by our independent directors. We will
determine whether to issue shares of our Class A common stock or
pay cash based on facts in existence at the time of the decision,
which we expect would include the relative value of the Class A
common stock (including trading prices for the Class A common stock
at the time), the cash purchase price, the availability of other
sources of liquidity (such as an issuance of preferred stock) to
acquire the Class A Units of Opco and alternative uses for such
cash.
Holders
of Class A Units of Opco (other than Rice Acquisition Corp.) will
generally be permitted to exercise the exchange right on a
quarterly basis, subject to certain de minimis allowances. In
addition, additional exchanges may occur in connection with certain
specified events, and any exchanges involving 500,000 or more Class
A Units of Opco (subject to our discretion to permit exchanges of a
lower number of units) may occur at any time upon ten business
days’ advanced notice. The exchange rights will be subject to
certain limitations and restrictions intended to reduce the
administrative burden of exchanges upon us and ensure that Opco
will continue to be treated as a partnership for U.S. federal
income tax purposes.
Following
any exchange of Class A Units of Opco (and a corresponding number
of shares of our Class B common stock), Rice Acquisition Corp. will
retain the Class A Units of Opco and cancel the shares of our Class
B common stock. As the holders of Class A Units of Opco (other than
Rice Acquisition Corp.) exchange their Class A Units of Opco, our
membership interest in Opco will be correspondingly increased, the
number of shares of our Class A common stock outstanding will be
increased, and the number of shares of our Class B common stock
outstanding will be reduced.
In
connection with our initial business combination, we might choose
to issue additional Class A Units of Opco (and corresponding shares
of our Class B common stock) to participants in the business
combination, such as sellers of assets or entities or financing
sources. We expect that any participants receiving Class A Units of
Opco in the business combination will have an exchange right on
substantially the same terms as described above.
Founder
Shares Anti-Dilution
In
the case that additional shares of our Class A common stock, or
equity-linked securities, are issued or deemed issued in excess of
the amounts sold in the offering in connection with the initial
business combination (other than the forward purchase securities),
the number of Class A Units of Opco into which the Class B Units of
Opco will convert may be adjusted (unless the holders of a majority
of the outstanding founder shares agree to waive such adjustment
with respect to any such issuance or deemed issuance) so that,
after all founders shares have been exchanged for shares of our
Class A common stock, the aggregate number of shares of our Class A
common stock received by holders in exchange for founders shares
would equal 20% of the sum of the total outstanding shares of
common stock upon the completion of our initial public offering
plus all shares of our Class A common stock and equity-linked
securities issued or deemed issued in connection with the business
combination (excluding the forward purchase securities and any
shares or equity-linked securities issued, or to be issued, to any
seller in the business combination and excluding the sponsor
shares). In addition, the number of outstanding shares of our Class
B common stock will be adjusted through a stock split or stock
dividend so that the total number of outstanding shares of our
Class B common stock corresponds to the total number of Class A
Units of Opco outstanding (other than those held by Rice
Acquisition Corp.) plus the total number of Class A Units of Opco
into which the Class B Units of Opco are entitled to
convert.
Non-Liquidating
Distributions and Allocations of Income and Loss
Subject
to the obligation of Opco to make tax distributions and to
reimburse Rice Acquisition Corp. for its corporate and other
overhead expenses, Rice Acquisition Corp. will have the right to
determine when non-liquidating distributions will be made to the
holders of Opco Units and the amount of any such distributions. We
do not anticipate making any such distributions (other than tax
distributions and reimbursements of expenses) to holders of Opco
Units (including Rice Acquisition Corp.) prior to our initial
business combination, other than redemptions of Class A Units of
Opco held by Rice Acquisition Corp. in connection with a redemption
of public shares. If we authorize a non-liquidating distribution,
whether before or following our initial business combination, the
distribution will be made to holders of Opco Units on a pro rata
basis in accordance with their respective percentage ownership of
Opco Units.
Opco
will allocate its net income or net loss for each year to the
holders of its Class A and Class B Units pursuant to the terms of
the Opco LLC Agreement, and holders of its Class A and Class B
Units, including Rice Acquisition Corp., will generally incur U.S.
federal, state and local income taxes on their share of any taxable
income of Opco. Prior to the initial business combination, net
profits and net losses of Opco generally will be allocated to
holders of Class A Units of Opco on a pro rata basis in accordance
with their respective percentage ownership of Class A Units (except
for certain allocations of items of book income and loss and
book-tax differences that may be specially allocated). Prior to our
initial business combination, to the extent cash is available, pro
rata tax distributions will be made to the holders of Class A Units
of Opco in an amount sufficient to allow Rice Acquisition Corp. to
satisfy its actual income tax liabilities. We will own
substantially all of the Class A Units of Opco prior to our initial
business combination, and accordingly, we will be allocated
substantially all of the taxable income of Opco and will receive
substantially all of the tax distributions made by Opco.
After
our initial business combination, net profits and net losses of
Opco generally will be allocated to holders of Opco Units on a pro
rata basis in accordance with their respective percentage ownership
of Opco Units (except for certain allocations of book income and
loss items and book-tax differences that may be specially
allocated). After our initial business combination, to the extent
cash is available, tax distributions will be made to the holders of
Opco Units, on a pro rata basis in accordance with their respective
percentage ownership of Opco Units, in an amount sufficient to
allow Rice Acquisition Corp. to satisfy its actual tax
liabilities.
Issuance
of Equity
Except
as otherwise determined by us, at any time Rice Acquisition Corp.
issues a share of its Class A common stock or any other equity
security, the net proceeds received by Rice Acquisition Corp. with
respect to such issuance, if any, shall be concurrently invested in
Opco, and Opco shall issue to Rice Acquisition Corp. one Class A
Unit or other economically equivalent equity interest. Conversely,
if at any time any shares of Rice Acquisition Corp.’s Class A
common stock are redeemed, repurchased, or otherwise acquired by
Rice Acquisition Corp., including in connection with the exercise
of redemption rights by holders of our public shares, Opco shall
redeem, repurchase or otherwise acquire an equal number of Opco
Units held by Rice Acquisition Corp., upon the same terms and for
the same price, as the shares of our Class A common stock are
redeemed, repurchased or otherwise acquired.
Other
Transactions With Our Sponsor and Atlas Point Fund
As
more fully discussed in the section of this Report titled “Certain
Relationships and Related Transactions, and Director Independence”
if any of our officers or directors becomes aware of a business
combination opportunity that falls within the line of business of
any entity to which he or she has then-current fiduciary or
contractual obligations, he or she will honor his or her fiduciary
or contractual obligations to present such business combination
opportunity to such entity. Our officers and directors currently
have certain relevant fiduciary duties or contractual obligations
that may take priority over their duties to us. We may pursue an
Affiliated Joint Acquisition opportunity with an entity to which an
officer or director has a fiduciary or contractual obligation. Any
such entity may co-invest with us in the target business at the
time of our initial business combination, or we could raise
additional proceeds to complete the acquisition by issuing to such
entity a class of equity or equity-linked securities.
Commencing
on the date that our securities were first listed on the NYSE, we
began to pay our sponsor a total of $10,000 per month for office
space, utilities, secretarial support and administrative services.
Upon completion of our initial business combination or our
liquidation, we will cease paying these monthly fees.
Other
than these monthly fees, no compensation of any kind, including
finder’s and consulting fees, will be paid by the company to our
sponsor, officers and directors, or any of their respective
affiliates, for services rendered prior to or in connection with
the completion of an initial business combination. However, these
individuals will be reimbursed for any out-of-pocket expenses
incurred in connection with activities on our behalf such as
identifying potential target businesses and performing due
diligence on suitable business combinations. Our audit committee
will review on a quarterly basis all payments that were made to our
sponsor, officers, directors or our or their affiliates and will
determine which expenses and the amount of expenses that will be
reimbursed. There is no cap or ceiling on the reimbursement of
out-of-pocket expenses incurred by such persons in connection with
activities on our behalf.
In
addition, in order to finance transaction costs in connection with
an intended initial business combination, our sponsor or an
affiliate of our sponsor or certain of our officers and directors
may, but are not obligated to, loan us funds as may be required. If
we complete an initial business combination, we would repay such
loaned amounts. In the event that our initial business combination
does not close, we may use a portion of the working capital held
outside the trust account to repay such loaned amounts but no
proceeds from our trust account would be used for such repayment.
Up to $1,500,000 of such loans may be convertible into warrants at
a price of $1.00 per warrant at the option of the lender. The
warrants would be identical to the private placement warrants,
including as to exercise price, exercisability and exercise period.
Except as set forth above, the terms of such loans by our officers
and directors, if any, have not been determined and no written
agreements exist with respect to such loans. Prior to the
completion of our initial business combination, we do not expect to
seek loans from parties other than our sponsor or an affiliate of
our sponsor as we do not believe third parties will be willing to
loan such funds and provide a waiver against any and all rights to
seek access to funds in our trust account.
After
our initial business combination, members of our management team
who remain with us may be paid consulting, management or other fees
from the combined company with any and all amounts being fully
disclosed to our stockholders, to the extent then known, in the
tender offer or proxy solicitation materials (as applicable)
furnished to our stockholders. It is unlikely the amount of such
compensation will be known at the time of distribution of such
tender offer materials or at the time of a stockholder meeting held
to consider our initial business combination, as applicable, as it
will be up to the directors of the post-combination business to
determine executive and director compensation.
We
will enter into a registration rights agreement with respect to the
private placement warrants, the warrants issuable upon conversion
of working capital loans (if any) and the shares of our Class A
common stock issuable upon exercise of the foregoing and upon
exchange of the founder shares, which is described under the
heading “Description of Securities — Registration
Rights.”
Related
Party Policy
Following
the consummation of our initial public offering, we adopted a code
of ethics requiring us to avoid, wherever possible, all conflicts
of interests, except under guidelines or resolutions approved by
our board of directors (or the appropriate committee of our board)
or as disclosed in our public filings with the SEC. Under our code
of ethics, conflict of interest situations will include any
financial transaction, arrangement or relationship (including any
indebtedness or guarantee of indebtedness) involving the
company.
In
addition, our audit committee, pursuant to a written charter that
was adopted prior to the consummation of our initial public
offering, is responsible for reviewing and approving related party
transactions to the extent that we enter into such transactions. An
affirmative vote of a majority of the members of the audit
committee present at a meeting at which a quorum is present is
required in order to approve a related party transaction. A
majority of the members of the entire audit committee will
constitute a quorum. Without a meeting, the unanimous written
consent of all of the members of the audit committee is required to
approve a related party transaction. We also require each of our
directors and executive officers to complete a directors’ and
officers’ questionnaire that elicits information about related
party transactions.
These
procedures are intended to determine whether any such related party
transaction impairs the independence of a director or presents a
conflict of interest on the part of a director, employee or
officer.
To
further minimize conflicts of interest, we will not consummate an
initial business combination with an entity that is affiliated with
any of our sponsor, officers or directors unless we, or a committee
of independent directors, have obtained an opinion from an
independent investment banking firm which is a member of FINRA or
an independent accounting firm that our initial business
combination is fair to our company from a financial point of view.
Our audit committee will review on a quarterly basis all payments
that were made to our sponsor, officers or directors, or our or
their affiliates.
|
Item 14. |
Principal
Accountant Fees and Services |
The
following is a summary of fees paid to WithumSmith+Brown, PC
(“Withum”) for services rendered.
Audit
Fees. Audit fees consist of fees billed for professional services
rendered for the audit of our year-end financial statements,
reviews of our quarterly financial statements and services that are
normally provided by our independent registered public accounting
firm in connection with statutory and regulatory filings. The
aggregate fees billed by Withum for audit fees, inclusive of
required filings with the SEC for the period from September 1, 2020
(inception) through December 31, 2020, and of services rendered in
connection with our initial public offering, totaled
$66,435.
Audit-Related
Fees. Audit-related fees consist of fees billed for assurance and
related services that are reasonably related to performance of the
audit or review of our year-end financial statements and are not
reported under “Audit Fees.” These services include attest services
that are not required by statute or regulation and consultation
concerning financial accounting and reporting standards. We did not
pay Withum any audit-related fees during the period from September
1, 2020 (inception) through December 31, 2020.
Tax
Fees. Tax fees consist of fees billed for professional services
relating to tax compliance, tax planning and tax advice. We did not
pay Withum any tax fees during the period from September 1, 2020
(inception) through December 31, 2020.
All
Other Fees. All other fees consist of fees billed for all other
services. We did not pay Withum any other fees during the period
from September 1, 2020 (inception) through December 31,
2020.
Pre-Approval
Policy
Our
audit committee was formed upon the consummation of our initial
public offering. As a result, the audit committee did not
pre-approve all of the foregoing services, although any services
rendered prior to the formation of our audit committee were
approved by our board of directors. Since the formation of our
audit committee, and on a going-forward basis, the audit committee
has and will pre-approve all auditing services and permitted
non-audit services to be performed for us by our auditors,
including the fees and terms thereof (subject to the de minimis
exceptions for non-audit services described in the Exchange Act
which are approved by the audit committee prior to the completion
of the audit).
PART IV
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Item 15. |
Exhibits,
Financial Statements Schedules |
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(a) |
The
following documents are filed as part of this Form
10-K: |
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(1) |
Financial
Statements: Our consolidated financial statements are listed in the
“Index to Consolidated Financial Statements” on page
F-1. |
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(2) |
Financial
Statement Schedules: None. |
We
hereby file as part of this Report the exhibits listed in the
attached Exhibit Index. Copies of such material can also be
obtained on the SEC website at www.sec.gov.
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Exhibit
No.
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Description
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3.1 |
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Amended
and Restated Certificate of Incorporation. (1) |
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3.2 |
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Bylaws.
(2) |
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4.1 |
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Warrant
Agreement, dated October 21, 2020, between the Company, Opco and
Continental Stock Transfer & Trust Company, as warrant
agent. (1) |
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4.2 |
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Specimen
Unit Certificate. (2) |
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4.3 |
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Specimen
Class A Common Stock Certificate. (2) |
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4.4 |
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Specimen
Warrant Certificate. (2) |
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4.5 |
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Description
of Registrant’s Securities. (3) |
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10.1 |
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Investment
Management Trust Agreement, dated October 21, 2020, between the
Company, Opco and Continental Stock Transfer & Trust
Company, as trustee. (1) |
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10.2 |
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Registration
Rights Agreement, dated October 21, 2020, among the Company, the
Sponsor, Atlas Point and certain other security holders named
therein. (1) |
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10.3 |
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Private
Placement Warrants and Warrants Rights Purchase Agreement, dated
October 21, 2020, between the Company, Opco and the Sponsor.
(1) |
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10.4 |
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Private
Placement Warrants and Warrants Rights Purchase Agreement, dated
October 21, 2020, between the Company, Opco and Atlas Point.
(1) |
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10.5 |
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Letter
Agreement, dated October 21, 2020, among the Company, its officers
and directors, Atlas Point and the Sponsor. (1) |
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10.6 |
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Administrative
Services Agreement, dated October 21, 2020, between the Company,
Opco and the Sponsor. (1) |
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10.7 |
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Promissory
Note, dated September 1, 2020, issued to sponsor by Opco.
(2) |
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10.8 |
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Forward
Purchase Agreement, dated September 30, 2020, between the
Registrant and Atlas Point Energy Infrastructure Fund, LLC.
(2) |
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(1) |
Incorporated
by reference to the registrant’s Current Report on Form 8-K, filed
with the SEC on October 21, 2020. |
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(2) |
Incorporated
by reference to the registrant’s Registration Statement on Form
S-1, filed with the SEC on October 15, 2020. |
| (3) |
Incorporated
by reference to the Original Filing (the registrant’s Annual Report
on Form 10-K, filed with the SEC on March 30, 2021). |
| (4) |
Incorporated by reference to
Amendment No. 1 (the registrant’s Annual Report on Form 10-K/A,
filed with the SEC on May 13, 2021). |
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Item 16. |
Form
10-K Summary |
Not
applicable.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the registrant has duly caused this Annual Report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly
authorized.
December 28, 2021
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Archaea Energy Inc. |
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/s/ Nicholas Stork |
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Name: |
Nicholas Stork |
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Title: |
Chief
Executive Officer and Director |
Pursuant
to the requirements of the Securities Exchange Act of 1934, this
Annual Report on Form 10-K has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
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Name |
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Position |
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Date |
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/s/
Nicholas Stork |
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Chief
Executive Officer and Director |
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December
28, 2021 |
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Nicholas
Stork |
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(Principal
Executive Officer) |
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/s/
Eric Javidi |
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Chief
Financial Officer |
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December
28, 2021 |
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Eric
Javidi |
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(Principal
Financial Officer) |
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/s/
Chad Bellah |
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Chief
Accounting Officer |
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December
28, 2021 |
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Chad
Bellah |
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(Principal
Accounting Officer) |
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/s/
Daniel J. Rice, IV |
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Chairman
of the Board of Directors |
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December
28, 2021 |
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Daniel
J. Rice, IV |
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/s/
J. Kyle Derham |
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Director |
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December
28, 2021 |
| J.
Kyle Derham |
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/s/
Kathryn Jackson |
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Director |
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December
28, 2021 |
| Kathryn
Jackson |
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/s/
Joseph Malchow |
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Director |
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December
28, 2021 |
| Joseph
Malchow |
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| |
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/s/
Scott Parkes |
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Director |
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December
28, 2021 |
| Scott
Parkes |
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/s/
James Torgerson |
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Director |
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December
28, 2021 |
| James
Torgerson |
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INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of
Rice Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Rice
Acquisition Corp. (the “Company”), as of December 31, 2020, the
related consolidated statements of operations, changes in
stockholders’ equity and cash flows for the period from September
1, 2020 (inception) through December 31, 2020, and the related
notes (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of
the Company as of December 31, 2020, and the results of its
operations and its cash flows for the period from September 1, 2020
(inception) through December 31, 2020, in conformity with
accounting principles generally accepted in the United States of
America.
Restatement of Financial Statements
As discussed in Note 2 to the financial statements, the 2020
financial statements have been restated to correct certain
misstatements.
Basis for Opinion
These consolidated financial statements are the responsibility of
the Company’s management. Our responsibility is to express an
opinion on the Company’s consolidated financial statements based on
our audit. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audit in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due
to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting. As part of our audit we are required to obtain an
understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of
material misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audit also included
evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audit provides a
reasonable basis for our opinion.
/s/ WithumSmith+Brown, PC
We have served as the Company’s auditor since 2020.
New York, New York
May 13, 2021, except for the effects of the restatement disclosed
in Note 2, as to which the date is December 28, 2021
RICE ACQUISITION
CORP.
CONSOLIDATED BALANCE
SHEET
DECEMBER
31, 2020
(as
restated)
| Assets: |
|
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| Current assets: |
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| Cash |
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$ |
1,335,167 |
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|
Prepaid expenses |
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662,865 |
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| Total current
assets |
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1,998,032 |
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| Investments
held in Trust Account |
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237,308,171 |
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| Total
Assets |
|
$ |
239,306,203 |
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| Liabilities, Class
A Common Stock Subject to Possible Redemption and Stockholders’
Deficit: |
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