- X-energy is developing a more advanced small modular reactor
(“SMR”) and proprietary fuel that can safely and efficiently
deliver affordable zero-carbon energy to people around the
world.
- X-energy’s intrinsically safe SMR and fuel design greatly
expands applications and markets for deployment of nuclear
technology relative to other SMRs and conventional nuclear.
- X-energy’s technology significantly enhances the applicability
for zero-carbon nuclear energy generation with a serviceable
addressable market expected to reach approximately $500 billion by
2040 and increase to approximately $1 trillion by 2050.
- Supported by $1.2 billion of funding from the U.S. Department
of Energy and a growing pipeline of potential blue-chip global
customers, X-energy is a frontrunner in the deployment of advanced
SMRs across North America and Europe.
- Estimated pre-money equity value of approximately $2 billion
for X-energy with existing X-energy equity holders rolling 100% of
their interests into the combined company.
- Institutional and strategic investors have invested or
committed $120 million in financing, which includes $75 million
from Ares Management and $45 million from Ontario Power Generation
and Segra Capital Management. They join existing strategic
investors Dow and Curtiss-Wright Corporation.
X Energy Reactor Company, LLC (“X-energy” or the “Company”), a
leading developer of small modular nuclear reactors and fuel
technology for clean energy generation, and Ares Acquisition
Corporation (NYSE: AAC) (“AAC”), a publicly-traded special purpose
acquisition company, announced today that they have entered into a
definitive business combination agreement.
The combination will establish X-energy as a publicly-traded,
developer of a more advanced small modular reactor (“SMR”) and
proprietary fuel that supports the transition to clean, affordable
energy through enhanced safety, lower cost, scalability and broader
industrial applications. X-energy’s entry into the public markets
is expected to accelerate its growth strategy through additional
investment opportunities and financial flexibility as well as
differentiated sponsorship by Ares Management Corporation (NYSE:
ARES) (“Ares”), a leading global alternative investment
manager.
A Leading Developer of Advanced SMR and Fuel
Technology
X-energy is advancing nuclear energy generation through its
latest-generation high-temperature gas-cooled reactor (“HTGR”), the
Xe-100, and its proprietary tri-structural isotropic (“TRISO”)
encapsulated particle fuel, TRISO-X. Representing the next stage in
the evolution of nuclear energy technology, the pioneering design
of the Xe-100 couples its scalability, innovative modularity,
enhanced safety and higher temperature capabilities with decades of
HTGR research and operating experience. The Xe-100 can also
uniquely address a broader range of uses and applications compared
with conventional nuclear reactors. This specifically includes
applications that currently rely on fossil fuels to produce steam
and heat for processes like manufacturing, petroleum refining and
hydrogen production.
The Xe-100 is engineered to operate as a single 80-megawatt
(“MWe”) unit and is optimized as a four-unit plant delivering 320
MWe. With load-following capabilities, the Xe-100 can support
intermittent renewable (solar and wind) and other clean energy
options with reliable baseload generation.
The reactors are fueled by X-energy’s TRISO-X fuel, both of
which are designed to be intrinsically safe. TRISO fuel has a more
than 40-year demonstrated track record through prototype and
full-scale reactors and has been called “the most robust nuclear
fuel on earth” by the U.S. Department of Energy. By developing the
proprietary TRISO-X fuel, X-energy has further enhanced the safety
of the product and can ensure steadier supply and greater quality
control.
In addition to its reactors and fuel, X-energy intends to
provide a full suite of value-added services, including project
planning, regulatory support, assembly and construction
coordination, procurement support, and long-term maintenance and
operations services during the lifetime of its reactors.
Key Investment Highlights
- Advanced Modular Technology: The Xe-100’s radically
simplified modular design is road-shippable and intended to drive
scalability, accelerate construction timelines and create more
predictable and manageable construction costs.
- Intrinsically Safe Design: TRISO-X fuel is designed to
be intrinsically safe under the most adverse conditions by acting
as its own waste containment vessel. In addition, X-energy expects
that an Xe-100 four-reactor plant will require significantly less
land area for its entire site-bounded emergency planning zone
compared to typical large-scale nuclear facilities.
- Broader Applications for Decarbonization: Unlike
existing nuclear reactors and many under-development competitor
alternatives, X-energy’s HTGR technology can support broad
industrial use applications through its high-temperature heat and
steam output. In addition, it can integrate into and address the
needs of both large and regional electricity systems through more
efficient load ramping – down to or up from 40% power in 12
minutes.
- Significant Serviceable Addressable Market (“SAM”) for
Advanced Nuclear: In the U.S., Canada and the U.K. alone, 67
gigawatts of capacity from SMRs will need to be installed by 2040
to offset the retirement of existing coal and fossil fuel
facilities and meet expected growth in energy demand. This
represents a potential revenue opportunity of approximately $500
billion for X-energy by 2040, which is expected to increase to
approximately $1.0 trillion by 2050. The Xe-100’s versatility
expands the addressable market beyond power generation to also
include industrial heat and other important decarbonization
applications.
- Attractive Business Model: X-energy’s CapEx-light,
services-driven business model includes technology licensing, fuel
sales and long-term recurring service offerings and is expected to
generate consistent and recurring revenue, strong operating margins
and robust free cash flow.
- Experienced and Innovative Team: X-energy is led by a
forward-thinking team with an average of more than 25 years of
experience in the nuclear and/or energy sectors. X-energy’s
management team has deep capabilities in design, operations,
government relations and public markets and is supported by more
than 120 team members with advanced degrees in engineering and
science.
A Strong, Prospective Customer Pipeline and Significant
Bi-Partisan Support
X-energy’s prospective customer pipeline includes approximately
30 potential unique customers across a variety of use cases and
geographies covering the North America and Europe. Key examples
include:
- Ontario Power Generation Inc. (“OPG”), one of North
America’s largest clean power producers. Framework agreement
signed in July 2022 to pursue opportunities to deploy Xe-100
advanced reactors in Ontario at industrial sites and identify
further potential end users and sites throughout Canada.
- Dow. Letter of intent signed in August 2022 to build the
Xe-100 and provide cost-competitive, carbon-free process heat and
power to a Dow facility on the Gulf Coast. This is the first time
an industrial manufacturer has announced its intention to deploy
SMRs in its operations.
- Grant County Public Utility District (WA) and Energy
Northwest. Memorandum of understanding signed in April 2021 to
support the development and commercial demonstration of the first
advanced nuclear reactor in the U.S.
Underpinning this demand is a supportive regulatory backdrop in
the U.S., where there is strong bi-partisan support for nuclear
power. In 2020, X-energy was selected by the U.S. Department of
Energy to receive $1.2 billion in federal funding as part of the
Advanced Reactor Demonstration Program. The funding is intended to
provide significant financial support for the delivery of a
first-of-a-kind commercial advanced nuclear plant and TRISO-X fuel
fabrication facility. In 2022, the Inflation Reduction Act and
Infrastructure Investment and Jobs Act allocated hundreds of
billions of dollars to the clean energy sector, with the former
providing tax credits of up to 50% of initial capital costs for
advanced nuclear reactors.
Leadership Commentary
“We founded X-energy in 2009 because the world needs energy
solutions that are clean, safe, secure and affordable,” said Kam
Ghaffarian, Ph. D., Founder and Executive Chairman of X-energy.
“Since then, it has become even more evident that nuclear energy is
the only viable technology that can provide the reliable,
zero-carbon power generation critical to advancing the energy
transition. We are thrilled to have the support of Ares, which we
believe will accelerate X-energy’s ability to deliver among the
most advanced nuclear technology to benefit communities around the
world.”
“We see a significant addressable market opportunity given the
rapidly growing demand to accelerate the decarbonization of power
and provide greater energy security,” said J. Clay Sell, Chief
Executive Officer of X-energy. “We have assembled a world-class
team that shares a deep passion for our work, and we believe
X-energy’s technology is distinctly positioned to support the
delivery of nuclear energy at scale to meet the needs of customers,
consumers and businesses globally. The commitments from Ares and
our commercial partners reflect their confidence in our business
and our team. I appreciate their continued collaboration to help us
achieve our objectives.”
“Ares and X-energy share a strong commitment to driving the
transition to a lower-carbon economy through innovation in climate
infrastructure,” said David Kaplan, Co-Chairman and Chief Executive
Officer of AAC, Co-Founder of Ares and Co-Chairman of the Ares
Private Equity Group. “As an early mover in developing proprietary
nuclear technology and backed by an attractive business model and
veteran leadership team, we believe that X-energy is
well-positioned to become a leader in the global clean energy
generation market. We look forward to contributing Ares’
significant investment and value creation experience, global ESG
focus and deep understanding of the public markets to support
X-energy’s vision to deliver a positive impact and long-term value
creation.”
Transaction Overview
The business combination ascribes a pre-money equity value of
approximately $2.0 billion to X-energy. Existing X-energy equity
holders will roll 100% of their existing equity interests into the
combined company. In addition, the combined company will receive
approximately $1 billion of cash held in AAC’s trust account,
assuming no redemptions by AAC shareholders. Institutional and
strategic investors have also invested or committed $120 million in
financing. This includes an invested private round of financing,
which comprises $30 million from Ares and $45 million from OPG and
Segra Capital Management, a leading nuclear energy-focused hedge
fund, as well as an additional commitment of $45 million from Ares
to be invested concurrent with the closing of the transaction.
X-energy also received approximately $58 million of interim
financing throughout 2022 from existing strategic investors,
including Dow and Curtiss-Wright Corporation. Immediately following
the consummation of the transaction and assuming none of AAC’s
existing shareholders exercise their redemption rights, X-energy’s
existing equity holders are expected to hold over 60% of the issued
and outstanding shares of common stock of the combined company.
The Board of Directors of AAC and the Board of Directors of
X-energy have both unanimously approved the proposed transaction.
The proposed transaction has also been approved by the requisite
members of X-Energy. Completion of the transaction is subject to
customary closing conditions, including the approval of the AAC
shareholders and the receipt of certain governmental and regulatory
approvals. The transaction is expected to be completed in the
second quarter of 2023.
Upon the closing of the transaction, the combined company will
be named X-Energy, Inc., and its common equity securities and
warrants will be listed on the New York Stock Exchange.
For a summary of the material terms of the transaction, as well
as a copy of the business combination agreement and supplemental
investor presentation, please see the Current Report on Form 8-K to
be filed by AAC with the U.S. Securities and Exchange Commission
(the “SEC”) available at www.sec.gov, on AAC’s website at
www.aresacquisitioncorporation.com and on X-energy’s website at
www.x-energy.com/investors. Additional information about the
proposed transaction will be described in the registration
statement relating to the transaction, which AAC will file with the
SEC.
Advisors
Guggenheim Securities, LLC is acting as financial advisor and
Latham & Watkins LLP is acting as legal advisor to
X-energy.
Moelis & Company LLC is acting as financial advisor and
Kirkland & Ellis LLP is acting as legal advisor to AAC.
Ocean Tomo, a part of J.S. Held, acted as financial advisor to
the Special Committee of the Board of Directors of AAC.
UBS Securities LLC and Citigroup Global Markets Inc. are serving
as capital markets advisors to AAC and Ropes & Gray LLP is
acting as legal advisor to the capital markets advisors.
Investor Conference Call
X-energy and AAC will host a joint investor conference call to
discuss the business combination and the proposed transaction
today, December 6, 2022 at 8:30 AM ET.
To listen to the conference call via telephone dial
1-877-407-9208 (U.S.) or 1-201-493-6784 (international) and enter
the conference ID number 13734640. To listen to the webcast, please
click here. A telephone replay will be available until Thursday
December 20, 2022 at 1-844-512-2921 using the conference ID number
13734640.
For Investor Relations, including a copy of the presentation as
filed with the SEC, please visit the X-energy website at
www.X-energy.com/investors, or the AAC website at
www.aresacquisitioncorporation.com or the SEC’s website at
www.sec.gov.
About X Energy Reactor Company, LLC.
X Energy Reactor Company, LLC (“X-energy”) is a leading
developer of small modular nuclear reactor and fuel technology for
clean energy generation that is redefining the nuclear energy
industry through its development of safer and more efficient
advanced small modular nuclear reactors and proprietary fuel to
deliver reliable, zero-carbon and affordable energy to people
around the world. X-energy’s simplified, modular and intrinsically
safe SMR design greatly expands applications and markets for
deployment of nuclear technology and drives enhanced safety, lower
cost and faster construction timelines when compared with other
SMRs and conventional nuclear. For more information, visit
x-energy.com or connect with us on Twitter or LinkedIn.
About Ares Acquisition Corporation
Ares Acquisition Corporation (NYSE: AAC) (“AAC”) is a special
purpose acquisition company (SPAC) affiliated with Ares Management
Corporation, formed for the purpose of effecting a merger, share
exchange, asset acquisition, share purchase, reorganization or
similar business combination. AAC is seeking to pursue an initial
business combination target in any industry or sector in North
America, Europe or Asia. For more information about AAC, please
visit www.aresacquisitioncorporation.com.
Additional Information and Where to Find It
This press release relates to a proposed transaction between
X-energy and AAC (the “Business Combination”). This press release
does not constitute an offer to sell or exchange, or the
solicitation of an offer to buy or exchange, any securities, nor
shall there be any sale of securities in any jurisdiction in which
such offer, sale or exchange would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. In connection with the Business Combination, AAC will
file a registration statement on Form S-4 (the “Registration
Statement”) with the SEC, which will include a preliminary proxy
statement/prospectus to be distributed to holders of AAC’s ordinary
shares in connection with AAC’s solicitation of proxies for the
vote by AAC’s shareholders with respect to the Business Combination
and other matters as described in the Registration Statement, as
well as a prospectus relating to the offer of securities to be
issued to X-energy equity holders in connection with the Business
Combination. After the Registration Statement has been filed and
declared effective, AAC will mail a copy of the definitive proxy
statement/prospectus, when available, to its shareholders. The
Registration Statement will include information regarding the
persons who may, under SEC rules, be deemed participants in the
solicitation of proxies to AAC’s shareholders in connection with
the Business Combination. AAC will also file other documents
regarding the Business Combination with the SEC. Before making any
voting decision, investors and security holders of AAC and X-energy
are urged to read the Registration Statement, the proxy
statement/prospectus contained therein, and all other relevant
documents filed or that will be filed with the SEC in connection
with the Business Combination as they become available because they
will contain important information about the Business
Combination.
Investors and security holders will be able to obtain free
copies of the Registration Statement, the proxy
statement/prospectus and all other relevant documents filed or that
will be filed with the SEC by AAC through the website maintained by
the SEC at www.sec.gov. In addition, the documents filed by AAC may
be obtained free of charge from AAC’s website at
www.aresacquisitioncorporation.com or by written request to AAC at
Ares Acquisition Corporation, 245 Park Avenue, 44th Floor, New
York, NY 10167.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the federal securities laws with respect to the
business combination, including statements regarding the benefits
of the business combination, the anticipated timing of the business
combination, the markets in which X-energy operates and X-energy’s
projected future results. X-energy’s actual results may differ from
its expectations, estimates and projections (which, in part, are
based on certain assumptions) and consequently, you should not rely
on these forward-looking statements as predictions of future
events. Words such as “expect,” “estimate,” “project,” “budget,”
“forecast,” “anticipate,” intend,” “plan,” “may,” “will,” “could,”
“should,” “believes,” “predicts,” “potential,” “continue,” and
similar expressions are intended to identify such forward-looking
statements. Although these forward-looking statements are based on
assumptions that X-Energy and AAC believe are reasonable, these
assumptions may be incorrect. These forward-looking statements also
involve significant risks and uncertainties that could cause the
actual results to differ materially from the expected results.
Factors that may cause such differences include, but are not
limited to: (1) the outcome of any legal proceedings that may be
instituted in connection with any proposed business combination;
(2) the inability to complete any proposed business combination or
related transactions; (3) inability to raise sufficient capital to
fund our business plan, including limitations on the amount of
capital raised in any proposed business combination as a result of
redemptions or otherwise; (4) delays in obtaining, adverse
conditions contained in, or the inability to obtain necessary
regulatory approvals or complete regulatory reviews required to
complete any business combination; (5) the risk that any proposed
business combination disrupts current plans and operations; (6) the
inability to recognize the anticipated benefits of any proposed
business combination, which may be affected by, among other things,
competition, the ability of the combined company to grow and manage
growth profitably, maintain relationships with customers and
suppliers and retain key employees; (7) costs related to the
proposed business combination; (8) changes in the applicable laws
or regulations; (9) the possibility that X-Energy or X-Energy, Inc.
may be adversely affected by other economic, business, and/or
competitive factors; (10) the ongoing impact of the global COVID 19
pandemic; (11) economic uncertainty caused by the impacts of the
conflict in Russia and Ukraine and rising levels of inflation and
interest rates; (12) the ability of X-Energy to obtain regulatory
approvals necessary for it to deploy its small modular reactors in
the United States and abroad; (13) whether government funding
and/or demand for high assay low enriched uranium for government or
commercial uses will materialize or continue; (14) the impact and
potential extended duration of the current supply/demand imbalance
in the market for low enriched uranium; (15) X-Energy’s business
with various governmental entities is subject to the policies,
priorities, regulations, mandates and funding levels of such
governmental entities and may be negatively or positively impacted
by any change thereto; (16) X-Energy’s limited operating history
makes it difficult to evaluate its future prospects and the risks
and challenges it may encounter; and (17) other risks and
uncertainties separately provided to you and indicated from time to
time described in filings and potential filings by X-Energy, AAC or
X-Energy, Inc. with the U.S. Securities and Exchange Commission
(the “SEC”).
The foregoing list of factors is not exhaustive. These
forward-looking statements are provided for illustrative purposes
only and are not intended to serve as, and must not be relied on by
investors as, a guarantee, an assurance, a prediction or a
definitive statement of fact or probability. You should carefully
consider the foregoing factors and the other risks and
uncertainties described in the “Risk Factors” section of AAC’s
Annual Report on Form 10-K, its subsequent Quarterly Reports on
Form 10-Q, the proxy statement/prospectus related to the
transaction, when it becomes available, and other documents filed
(or to be filed) by AAC from time to time with the SEC. These
filings identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
These risks and uncertainties may be amplified by the conflict
between Russia and Ukraine, rising levels of inflation and interest
rates and the ongoing COVID 19 pandemic, which have caused
significant economic uncertainty. Forward-looking statements speak
only as of the date they are made. Investors are cautioned not to
put undue reliance on forward-looking statements, and X-Energy and
AAC assume no obligation and do not intend to update or revise
these forward-looking statements, whether as a result of new
information, future events, or otherwise, except as required by
securities and other applicable laws.
Participants in the Solicitation
AAC and certain of its directors and executive officers may be
deemed to be participants in the solicitation of proxies from AAC
’s shareholders, in favor of the approval of the proposed
transaction. For information regarding AAC’s directors and
executive officers, please see AAC’s Annual Report on Form 10-K,
its subsequent Quarterly Reports on Form 10-Q, and the other
documents filed (or to be filed) by AAC from time to time with the
SEC. Additional information regarding the interests of those
participants and other persons who may be deemed participants in
the business combination may be obtained by reading the
registration statement and the proxy statement/prospectus and other
relevant documents filed with the SEC when they become available.
Free copies of these documents may be obtained as described in the
preceding paragraph.
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version on businesswire.com: https://www.businesswire.com/news/home/20221206005422/en/
X-energy Investors: XenergyIR@icrinc.com
Media: XenergyPR@icrinc.com
Ares Acquisition Corporation Investors: Carl Drake and
Greg Mason +1-888-818-5298 IR@AresAcquisitionCorporation.com
Media: Jacob Silber +1-212-301-0376 or Brittany Cash
+1-212-301-0347 media@aresmgmt.com
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