This Supplement may contain certain forward-looking
statements within the meaning of the federal securities laws with respect to (i) the PIPE, including commitments to the PIPE, and (ii)
the proposed transaction between NET Power and RONI and the combined company. These forward-looking statements generally are identified
by the words “believe,” “project,” “expect,” “seek,” “anticipate,” “estimate,”
“intend,” “strategy,” “future,” “opportunity,” “plan,” “may,”
“should,” “could,” “will,” “would,” “will be,” “will continue,”
“will likely result” and similar expressions. Forward-looking statements are predictions, projections and other statements
about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many
factors could cause actual future events to differ materially from the forward-looking statements in this Supplement, including but not
limited to: (i) conditions to the completion of the proposed business combination and PIPE investment, including shareholder approval
of the business combination, may not be satisfied or the regulatory approvals required for the proposed business combination may not be
obtained on the terms expected or on the anticipated schedule; (ii) the occurrence of any event, change or other circumstance that could
give rise to the termination of the business combination agreement between the parties or the termination of any PIPE investor’s
subscription agreement; (iii) the effect of the announcement or pendency of the proposed business combination on NET Power’s business
relationships, operating results, and business generally; (iv) risks that the proposed business combination disrupts NET Power’s
current plans and operations; (v) risks related to diverting management’s attention from NET Power’s ongoing business operations;
(vi) potential litigation that may be instituted against RONI or NET Power or their respective directors or officers related to the proposed
transaction or the business combination agreement or in relation to NET Power’s business; (vii) the amount of the costs, fees, expenses
and other charges related to the proposed business combination and PIPE investment; (viii) risks relating to the uncertainty of the projected
financial information with respect to NET Power or the combined company; (ix) NET Power’s history of significant losses; (x) the
combined company’s ability to manage future growth effectively; (xi) the combined company’s ability to utilize its net operating
loss and tax credit carryforwards effectively; (xii) NET Power’s ability to continue as a going concern if the transactions contemplated
herein are not completed; (xiii) the capital-intensive nature of NET Power’s business model, which may require the combined company
to raise additional capital in the future; (xiv) barriers the combined company may face in its attempts to deploy and commercialize its
technology; (xv) the complexity of the machinery NET Power relies on for its operations and development; (xvi) the combined company’s
ability to establish and maintain supply relationships; (xvii) risks related to NET Power’s arrangements with third parties for
the development, commercialization and deployment of technology associated with NET Power’s technology; (xviii) risks related to
NET Power’s other strategic investors and partners; (xix) the combined company’s ability to successfully commercialize its
operations; (xx) the availability and cost of raw materials; (xxi) the ability of NET Power’s supply base to scale to meet the combined
company’s anticipated growth; (xxii) risks related to NET Power’s or the combined company’s ability to meet its projections;
(xxiii) the combined company’s ability to expand internationally; (xxiv) the combined company’s ability to update the design,
construction and operations of the NET Power technology; (xxv) the impact of potential delays in discovering manufacturing and construction
issues; (xxvi) the possibility of damage to NET Power’s Texas facilities as a result of natural disasters; (xxvii) the ability of
commercial plants using NET Power’s technology to efficiently provide net power output; (xxviii) the combined company’s ability
to obtain and retain licenses; (xxix) the combined company’s ability to establish an initial commercial scale plant; (xxx) the combined
company’s ability to license to large customers; (xxxi) the combined company’s or NET Power’s ability to accurately
estimate future commercial demand; (xxxii) the combined company’s ability to adapt to the rapidly evolving and competitive natural
and renewable power industry; (xxxiii) the combined company’s ability to comply with all applicable laws and regulations; (xxxiv)
the impact of public perception of fossil fuel derived energy on the combined company’s business; (xxxv) any political or other
disruptions in gas producing nations; (xxxvi) the combined company’s ability to protect its intellectual property and the intellectual
property it licenses; (xxxvii) the ability to meet stock exchange listing standards following the consummation of the proposed business
combination; (xxxviii) changes to the proposed structure of the proposed business combination that may be required or appropriate as a
result of applicable laws or regulations, including recent proposals by the SEC or as a condition to obtaining regulatory approval of
the proposed business combination; (xxxix) the impact of the global COVID-19 pandemic on any of the foregoing risks; and (xl) such other
factors as are set forth in RONI’s filings with the SEC, including but not limited to those described under the headings “Risk
Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the Proxy Statement/Prospectus, and in its other
filings made with the SEC from time to time, which are available via the SEC’s website at www.sec.gov. 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. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue
reliance on forward-looking statements, and NET Power and RONI 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. Neither NET Power nor RONI gives any assurance that either
NET Power or RONI, or the combined company, will achieve its expectations.
This Supplement relates to, among other matters, the
proposed Business Combination involving RONI and NET Power. In connection with the Business Combination, RONI has filed with the SEC a
registration statement on Form S-4 (File No. 333-268975), including the Proxy Statement/Prospectus. This document is not a substitute
for the Proxy Statement/Prospectus. The definitive Proxy Statement/Prospectus was filed with the SEC on May 10, 2023 and has been or will
be sent to all RONI shareholders as of April 18, 2023 (the record date for voting on the proposed Business Combination). RONI may also
file other relevant documents regarding the proposed Business Combination with the SEC. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION,
SECURITY HOLDERS OF RONI AND OTHER INTERESTED PARTIES ARE URGED TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND ALL
OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC IN CONNECTION WITH THE BUSINESS COMBINATION, INCLUDING ANY AMENDMENTS
OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT RONI, NET POWER, THE BUSINESS COMBINATION AND RELATED MATTERS.
Investors and security holders of RONI may obtain free
copies of the Proxy Statement/Prospectus and other documents that are filed or will be filed with the SEC by RONI through the website
maintained by the SEC at www.sec.gov or at RONI’s website at www.ricespac.com/rac-ii.
RONI and NET Power and their respective directors and
executive officers may be deemed to be participants in the solicitation of proxies from RONI’s shareholders in connection with the
Business Combination. A list of the names of such directors and executive officers and information regarding their interests in the Business
Combination are contained in the Proxy Statement/Prospectus. You may obtain free copies of these documents as described in the preceding
paragraph.
This Supplement shall not constitute a solicitation
of a proxy, consent or authorization with respect to any securities or in respect of the Business Combination. This Supplement shall also
not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any
states or jurisdictions in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities
laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section
10 of the Securities Act of 1933, as amended, or an exemption therefrom.
Rice
Acquisition Corp. II
Unaudited Pro Forma Condensed Combined Balance Sheet
As of DECEMBER 31, 2022
(in thousands, except share and per share amounts)
|
|
|
Historical
(A) | |
|
|
Historical
(B) |
|
|
|
Scenario
1
Assuming No
Redemptions into Cash | |
|
Scenario
2
Assuming Maximum
Redemptions into Cash |
|
|
|
|
RONI |
|
|
|
NET
Power |
|
|
|
Transaction
Accounting
Adjustments |
|
|
|
|
|
Pro Forma
Balance
Sheet |
|
|
|
Transaction
Accounting
Adjustments |
|
|
|
|
|
Pro
Forma
Balance
Sheet |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
1,628 |
|
|
$ |
5,164 |
|
|
$ |
853,271
803,671
|
|
|
4(a) |
|
$ |
860,063
810,463
|
|
|
$ |
(317,765
(329,575
|
)
)
|
|
4(m) |
|
$ |
542,298
480,888
|
|
Due
from Related Party |
|
|
8 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
8 |
|
|
|
— |
|
|
|
|
|
8 |
|
Receivables |
|
|
— |
|
|
|
352 |
|
|
|
— |
|
|
|
|
|
352 |
|
|
|
— |
|
|
|
|
|
352 |
|
Prepaid
Expenses |
|
|
273 |
|
|
|
184 |
|
|
|
— |
|
|
|
|
|
457 |
|
|
|
— |
|
|
|
|
|
457 |
|
Other
Current Assets |
|
|
— |
|
|
|
1,795 |
|
|
|
— |
|
|
|
|
|
1,795 |
|
|
|
— |
|
|
|
|
|
1,795 |
|
Total
Current Assets |
|
|
1,909 |
|
|
|
7,495 |
|
|
|
853,271
803,671
|
|
|
|
|
|
862,675
813,075
|
|
|
|
(317,765
(329,575
|
)
)
|
|
|
|
|
544,910
483,500
|
|
Property,
Plant and Equipment, net |
|
|
— |
|
|
|
69,595 |
|
|
|
28,718 |
|
|
4(b) |
|
|
98,313 |
|
|
|
— |
|
|
|
|
|
98,313 |
|
Right-of-use
asset |
|
|
— |
|
|
|
784 |
|
|
|
— |
|
|
|
|
|
784 |
|
|
|
— |
|
|
|
|
|
784 |
|
Intangible
Assets, net |
|
|
— |
|
|
|
263 |
|
|
|
500,722 |
|
|
4(b) |
|
|
500,985 |
|
|
|
— |
|
|
|
|
|
500,985 |
|
Goodwill |
|
|
— |
|
|
|
— |
|
|
|
779,902 |
|
|
4(b) |
|
|
779,902 |
|
|
|
— |
|
|
|
|
|
779,902 |
|
Deferred
Tax Asset |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
4(c) |
|
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
Investments
held in Trust Account |
|
|
349,943 |
|
|
|
— |
|
|
|
(349,943 |
) |
|
4(d) |
|
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
Total
Assets |
|
$ |
351,852 |
|
|
$ |
78,137 |
|
|
$ |
1,812,670
1,763,070
|
|
|
|
|
$ |
2,242,659
2,193,059
|
|
|
$ |
(317,765
(329,575
|
)
)
|
|
|
|
$ |
1,924,894
1,863,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
Payable |
|
$ |
32 |
|
|
$ |
577 |
|
|
$ |
— |
|
|
|
|
$ |
609 |
|
|
$ |
— |
|
|
|
|
$ |
609 |
|
Accrued
Liabilities |
|
|
4,987 |
|
|
|
2,570 |
|
|
|
— |
|
|
|
|
|
7,557 |
|
|
|
— |
|
|
|
|
|
7,557 |
|
Lease
Liability |
|
|
— |
|
|
|
130 |
|
|
|
— |
|
|
|
|
|
130 |
|
|
|
— |
|
|
|
|
|
130 |
|
Option
Liability |
|
|
— |
|
|
|
5,174 |
|
|
|
— |
|
|
|
|
|
5,174 |
|
|
|
— |
|
|
|
|
|
5,174 |
|
Total
Current Liabilities |
|
|
5,019 |
|
|
|
8,451 |
|
|
|
— |
|
|
|
|
|
13,470 |
|
|
|
— |
|
|
|
|
|
13,470 |
|
Derivative
Warrant Liabilities |
|
|
24,832 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
24,832 |
|
|
|
— |
|
|
|
|
|
24,832 |
|
Deferred
Underwriting Commissions in Connection with the Initial Public Offering |
|
|
11,722 |
|
|
|
— |
|
|
|
(11,722 |
) |
|
4(e) |
|
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
Asset
Retirement Obligation |
|
|
— |
|
|
|
2,416 |
|
|
|
— |
|
|
|
|
|
2,416 |
|
|
|
— |
|
|
|
|
|
2,416 |
|
Due
to Related Parties |
|
|
— |
|
|
|
2,212 |
|
|
|
— |
|
|
|
|
|
2,212 |
|
|
|
— |
|
|
|
|
|
2,212 |
|
Lease
liability |
|
|
— |
|
|
|
656 |
|
|
|
— |
|
|
|
|
|
656 |
|
|
|
— |
|
|
|
|
|
656 |
|
Total
Liabilities |
|
$ |
41,573 |
|
|
$ |
13,735 |
|
|
$ |
(11,722 |
) |
|
|
|
$ |
43,586 |
|
|
$ |
— |
|
|
|
|
$ |
43,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rice
Acquisition Corp. II Class A common stock, subject to possible redemption; $0.0001 par value; 34,500,000 shares issued
and outstanding at redemption value of approximately $10.06 per share |
|
$ |
349,817 |
|
|
$ |
— |
|
|
$ |
(349,817 |
) |
|
4(f) |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
$ |
— |
|
Stockholders’
Equity (Deficit): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rice
Acquisition Corp. II Class A common stock; $0.0001 par value; 300,000,000 shares authorized; 2,500 shares issued and outstanding
(Historical); 300,000,000 shares authorized (Scenario 1); 88,597,495 83,597,495 shares issued and outstanding
(Scenario 1); 300,000,000 shares authorized (Scenario 2); 56,607,495 51,107,495 shares issued and outstanding
(Scenario 2) |
|
|
— |
|
|
|
— |
|
|
|
9
8
|
|
|
4(g) |
|
|
9
8
|
|
|
|
(3 |
) |
|
4(m) |
|
|
6
5
|
|
Rice
Acquisition Corp. II Class B common stock; $0.0001 par value; 30,000 shares authorized (Historical); 8,625,000 shares issued
and outstanding (Historical); 143,830,788 shares authorized, issued, and outstanding (Scenario 1); 143,830,788 shares authorized,
issued, and outstanding (Scenario 2); |
|
|
1 |
|
|
|
— |
|
|
|
14 |
|
|
4(g) |
|
|
15 |
|
|
|
— |
|
|
|
|
|
15 |
|
NET
Power Members’ Equity; 4,987,845 units authorized; 3,722,355 units issued and outstanding |
|
|
— |
|
|
|
262,622 |
|
|
|
(262,622 |
) |
|
4(h) |
|
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
Additional
Paid-In Capital |
|
|
— |
|
|
|
26,288 |
|
|
|
887,351
838,802
|
|
|
4(i) |
|
|
913,639
865,090
|
|
|
|
(324,362
(339,572
|
)
)
|
|
4(m) |
|
|
589,277
525,518
|
|
Accumulated
Deficit |
|
|
(39,311 |
) |
|
|
(224,525 |
) |
|
|
210,840
211,476
|
|
|
4(j) |
|
|
(52,996
(52,360
|
)) |
|
|
1,864
2,584
|
|
|
4(m) |
|
|
(51,132)
(49,776)
|
|
Accumulated
Other Income (Loss) |
|
|
— |
|
|
|
17 |
|
|
|
(17 |
) |
|
4(k) |
|
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
Non-Controlling
Interests |
|
|
(228 |
) |
|
|
— |
|
|
|
1,338,634
1,336,948
|
|
|
4(l) |
|
|
1,338,406
1,336,720
|
|
|
|
4,736
7,416
|
|
|
4(m) |
|
|
1,343,142
1,344,136
|
|
Total
Stockholders’ Equity (Deficit) |
|
|
(39,538 |
) |
|
|
64,402 |
|
|
|
2,174,209
2,124,609
|
|
|
|
|
|
2,199,073
2,149,473
|
|
|
|
(317,765
(329,575
|
)
)
|
|
|
|
|
1,881,309
1,819,898
|
|
Total
Liabilities, Ordinary Shares Subject to Possible Redemption and Shareholders’ Equity (Deficit) |
|
$ |
351,852 |
|
|
$ |
78,137 |
|
|
$ |
1,812,670
1,763,070
|
|
|
|
|
$ |
2,242,659
2,193,059
|
|
|
$ |
(317,765
(329,575
|
)
)
|
|
|
|
$ |
1,924,894
1,863,484
|
|
See
accompanying notes to the unaudited pro forma condensed combined financial information.
Rice
Acquisition Corp. II
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2022
(in thousands, except share and per share amounts)
|
|
Historical
(A) |
|
Historical
(B) |
|
Scenario
1
Assuming No
Redemptions into Cash |
|
Scenario
2
Assuming Maximum
Redemptions into Cash |
|
|
|
|
RONI |
|
|
|
NET
Power |
|
|
|
Transaction
Accounting
Adjustments |
|
|
|
|
|
Pro
Forma
Statement of
Operations |
|
|
|
|
Transaction
Accounting
Adjustments |
|
|
|
|
|
Pro
Forma
Statement of
Operations |
|
Revenue |
|
$ |
— |
|
|
$ |
580 |
|
|
$ |
— |
|
|
|
|
$ |
580 |
|
|
|
$ |
— |
|
|
|
|
$ |
580 |
|
Cost
of Revenue |
|
|
— |
|
|
|
275 |
|
|
|
— |
|
|
|
|
|
275 |
|
|
|
|
— |
|
|
|
|
|
275 |
|
Gross
Profit |
|
|
— |
|
|
|
305 |
|
|
|
— |
|
|
|
|
|
305 |
|
|
|
|
— |
|
|
|
|
|
305 |
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and Administration |
|
|
5,796 |
|
|
|
17,189 |
|
|
|
35,900
35,500
|
|
|
5(a) |
|
|
58,885
58,485
|
|
|
|
|
(6,600
(10,000
|
)
)
|
|
5(f) |
|
|
52,285
48,485
|
|
General
and Administration – Related Party |
|
|
120 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
120 |
|
|
|
|
— |
|
|
|
|
|
120 |
|
Sales
and Marketing |
|
|
— |
|
|
|
801 |
|
|
|
|
|
|
|
|
|
801 |
|
|
|
|
— |
|
|
|
|
|
801 |
|
Research
and Development |
|
|
— |
|
|
|
18,953 |
|
|
|
— |
|
|
|
|
|
18,953 |
|
|
|
|
— |
|
|
|
|
|
18,953 |
|
Depreciation,
Amortization and Accretion |
|
|
— |
|
|
|
13,387 |
|
|
|
52,944 |
|
|
5(b) |
|
|
66,331 |
|
|
|
|
— |
|
|
|
|
|
66,331 |
|
Total
Operating Expenses |
|
|
5,916 |
|
|
|
50,330 |
|
|
|
88,844
88,444
|
|
|
|
|
|
145,090
144,690
|
|
|
|
|
(6,600
(10,000
|
)
)
|
|
|
|
|
138,490
134,690
|
|
Operating
Loss |
|
|
(5,916 |
) |
|
|
(50,025 |
) |
|
|
(88,844
(88,444
|
)
)
|
|
|
|
|
(144,785
(144,385
|
)
)
|
|
|
|
6,600
10,000
|
|
|
|
|
|
(138,185
(134,385
|
)
)
|
Other
Income (Expense), Net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Income (Expense) – Net |
|
|
4,898 |
|
|
|
(4,791 |
) |
|
|
(4,898 |
) |
|
5(c) |
|
|
(4,791 |
) |
|
|
|
— |
|
|
|
|
|
(4,791 |
) |
Change
in Fair Value of Warrant Liabilities |
|
|
5,245 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
5,245 |
|
|
|
|
— |
|
|
|
|
|
5,245 |
|
Other
Income (Expense) |
|
|
— |
|
|
|
38 |
|
|
|
— |
|
|
|
|
|
38 |
|
|
|
|
— |
|
|
|
|
|
38 |
|
Net
Other Income (Expense) |
|
|
10,143 |
|
|
|
(4,753 |
) |
|
|
(4,898 |
) |
|
|
|
|
492 |
|
|
|
|
— |
|
|
|
|
|
492 |
|
Net
Income (Loss) before Income Taxes |
|
|
4,228 |
|
|
|
(54,778 |
) |
|
|
(93,742
(93,342
|
)
)
|
|
|
|
|
(144,293
(143,893
|
)
)
|
|
|
|
6,600
10,000
|
|
|
|
|
|
(137,693
(133,893
|
)
)
|
Provision
for Income Taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
5(d) |
|
|
— |
|
|
|
|
— |
|
|
|
|
|
— |
|
Net
Income (Loss) |
|
$ |
4,228 |
|
|
$ |
(54,778 |
) |
|
$ |
(93,742)
(93,342
|
) |
|
|
|
$ |
(144,293)
_(143,893
|
) |
|
|
$ |
6,600
10,000
|
|
|
|
|
$ |
(137,693
(133,893
|
)
)
|
Net
Gain (Loss) Attributable to Non-Controlling Interest in Subsidiary |
|
|
163 |
|
|
|
— |
|
|
|
(89,455
(91,165
|
)
)
|
|
5(e) |
|
|
(89,292
(91,002
|
)
)
|
|
|
|
4,736
7,416
|
|
|
5(f) |
|
|
(84,556
(83,586
|
)
)
|
Net
Gain (Loss) Attributable to Controlling Interests |
|
$ |
4,065 |
|
|
$ |
(54,778 |
) |
|
$ |
(4,287
(2,177
|
)
)
|
|
|
|
$ |
(55,001
(52,891
|
)
)
|
|
|
$ |
1,864
2,584
|
|
|
|
|
$ |
(53,137
(50,307
|
)
)
|
Weighted
Average Shares Outstanding of Class A ordinary shares, Basic and Diluted (RONI); Weighted Average Units Outstanding, Basic
and Diluted (NET Power) |
|
|
34,502,500 |
|
|
|
3,703,000 |
|
|
|
223,800,783
218,800,783
|
|
|
5(g) |
|
|
232,428,283
227,428,283
|
|
|
|
|
(31,990,000
(33,490,000
|
)
)
|
|
5(g) |
|
|
200,438,283
193,938,283
|
|
Basic
and Diluted Net Loss Per Share of Class A Common Stock (RONI); Basic and Diluted Net Loss Per Unit (NET Power); |
|
$ |
0.09 |
|
|
$ |
(14.79 |
) |
|
|
|
|
|
|
|
$ |
(0.24
(0.23
|
)
)
|
|
|
|
|
|
|
|
|
$ |
(0.27
(0.26
|
)
)
|
Weighted
Average Shares Outstanding of Class B ordinary shares Basic and Diluted (RONI); |
|
|
8,625,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and Diluted Net Loss Per Share of Class B Common Stock (RONI) |
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to the unaudited pro forma condensed combined financial information.
NOTES
TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. Description
of the Business Combination
On
December 13, 2022, Rice Acquisition Corp. II (“RONI”) entered into the Business Combination Agreement (as amended,
supplemented or otherwise modified from time to time, the “Business Combination Agreement”) by and among RONI, Rice Acquisition
Holdings II LLC (“RONI Opco”), Topo Buyer Co, LLC, a Delaware limited liability company and a direct, wholly owned subsidiary
of RONI Opco (the “Buyer”), Topo Merger Sub, LLC, a Delaware limited liability company and a direct, wholly owned subsidiary
of the Buyer (“Merger Sub” and, together with RONI, RONI Opco and the Buyer, collectively, the “Buyer Parties”),
and NET Power, LLC, a Delaware limited liability company (“NET Power”), pursuant to which, among other things, Merger Sub
will merge with and into NET Power (the “the Business Combination”), with NET Power surviving the merger and becoming a direct,
wholly owned subsidiary of the Buyer, on the terms and subject to the conditions set forth therein. Upon the consummation of the Business
Combination, RONI will be renamed NET Power Inc.
Pursuant
to the Business Combination Agreement, the aggregate merger consideration payable upon closing of the Business Combination to the selling
shareholders of NET Power (“NET Power Holders”) is expected to be approximately $1.4 billion, subject to certain adjustments
set forth in the Business Combination Agreement for, among other things, NET Power’s cash, indebtedness, unpaid transaction expenses,
and certain capital expenditures. The merger consideration will consist of consideration in the form of newly issued Class A units
of RONI Opco and newly issued shares of Class B Common Stock of RONI. The consideration will consist of 137.2 million
Class A units of RONI Opco and 137.2 million shares of Class B Common Stock of RONI. Following the Closing, RONI
will retain its “Up-C” structure, whereby all of the equity interests in NET Power will be held by RONI Opco, and RONI’s
only assets will be its equity interests in RONI Opco. Following the Closing, RONI will be renamed NET Power Inc (the “Combined
Company”).
As
a result of the Business Combination, the Combined Company will become a publicly traded company with its common stock trading on the
New York Stock Exchange, which will require it to hire additional personnel and implement procedures and processes to address public
company regulatory requirements and customary practices. The Combined Company expects to incur material additional annual expenses as
a public company for, among other things, directors’ and officers’ liability insurance, director fees, and additional internal
and external accounting, legal, and administrative resources, including increased personnel costs, audit and other professional service
fees.
Following
the closing of the Business Combination (the “Closing”), the ownership structure for the Combined Company will be as follows
in the table below under Scenario 1 with no redemptions as described in Note 2. The table below excludes the effect of 986,775 of
Sponsor’s RONI Interests, which will be subject to forfeiture, and vest in equal one-third increments if, over any 20 trading
days within any 30 consecutive trading-day period during the three years following the Closing, the trading share price of Class A
Common Stock equals or exceeds $12.00 per share, $14.00 per share and $16.00 per share, respectively (or if RONI consummates a sale that
would value such shares at the aforementioned thresholds). Due to the pro forma gross proceeds exceeding $397,500,000, the table below
includes the following: the effect of 1,000,000 of Sponsor’s shares which will be subject to forfeiture, and vest, incrementally,
if the gross proceeds raised by RONI in connection with the Business Combination exceed $300,000,000 as of the Closing (incrementally
vesting until the gross proceeds exceed $397,500,000); and the effect of 552,536 of Sponsor’s shares which will be subject to forfeiture,
and vest if the gross proceeds exceed $397,500,000 as of the Closing. Additionally, the Company notes that the 50,000 shares belonging
to “Other” equity holders below are to be issued to DeSolve, a consulting firm, in connection with the Business Combination.
Equity
Holder |
|
Shares |
|
% |
|
Public
Shareholders |
|
34,500,000 |
|
15 |
% |
PIPE
Investors |
|
54,044,995
49,044,995
|
|
22
21
|
|
Other |
|
50,000 |
|
1 |
|
Controlling
interests |
|
88,594,995
83,594,995
|
|
38
37
|
% |
Existing
NET Power Holders |
|
137,192,563 |
|
59
60
|
% |
Sponsor
and Affiliates |
|
6,640,725 |
|
3 |
|
Noncontrolling
interests |
|
143,833,288 |
|
62
63
|
% |
Total |
|
232,428,283
227,428,283
|
|
100 |
% |
Following
the Closing, the ownership structure for the Combined Company will be as follows in the table below under Scenario 2 with maximum redemptions
as described in Note 2. The table below excludes the following: the effect of 986,775 of Sponsor’s RONI Interests, which will
be subject to forfeiture, and vest in equal one-third increments if, over any 20 trading days within any 30 consecutive trading-day
period during the three years following the Closing, the trading share price of Class A Common Stock equals or exceeds $12.00
per share, $14.00 per share and $16.00 per share, respectively (or if RONI consummates a sale that would value such shares at the aforementioned
thresholds). Due to the pro forma gross proceeds exceeding $397,500,000, the table below includes the following: the effect of 1,000,000
of Sponsor’s shares which will be subject to forfeiture, and vest, incrementally, if the gross proceeds raised by RONI in connection
with the Business Combination exceed $300,000,000 as of the Closing (incrementally vesting until the gross proceeds exceed $397,500,000);
and the effect of 552,536 of Sponsor’s shares which will be subject to forfeiture, and vest if the gross proceeds exceed $397,500,000
as of the Closing. Additionally, the Company notes that the 50,000 shares belonging to “Other” equity holders below are to
be issued to DeSolve, a consulting firm, in connection with the Business Combination.
Equity
Holder |
|
Shares |
|
% |
|
Public
Shareholders |
|
2,510,000
1,010,000
|
|
1 |
% |
PIPE
Investors |
|
54,044,995
49,044,995
|
|
26
24
|
|
Other |
|
50,000 |
|
1 |
|
Controlling
interests |
|
56,604,995
50,104,995
|
|
28
26
|
% |
Existing
NET Power Holders |
|
137,192,563 |
|
69
71
|
|
Sponsor
and Affiliates |
|
6,640,725 |
|
3 |
|
Noncontrolling
interests |
|
143,833,288 |
|
72
74
|
% |
Total |
|
200,438,283
193,938,283
|
|
100 |
% |
The
Class A Ordinary Shares, par value $0.0001 per share, of RONI (“Class A Common Stock” and, together with the Class B
Ordinary Shares, the “Common Stock”) and warrants exercisable for Class A Common Stock are currently listed on the New York
Stock Exchange (the “NYSE”) under the symbols “RONI” and “RONI WS,” respectively. Certain shares
of Class A Common Stock and certain warrants currently trade as units (the “Units”), each of which consists of one share
of Class A Common Stock and one-fourth of one redeemable warrant. The Units are listed on the NYSE under the symbol “RONI
U.” The Units will automatically separate into their component securities upon consummation of the Business Combination and,
as a result, will no longer trade as an independent security. We intend to apply to continue the listing of the Class A Common Stock
and the warrants on the NYSE under the symbols “NPWR” and “NPWR WS,” respectively, upon the Closing. References
herein to “Class B Common Stock,” “Class A Common Stock” and “Common Stock” are to those
of RONI (prior to the Closing) or the Combined Company (upon and after the Closing).
In
connection with the Closing, Rice Acquisition Corp. II (the “Sponsor”), RONI, RONI Opco, the Buyer, and certain other
individuals affiliated with the Companies will enter into a stockholders agreement (the “Stockholders’ Agreement”),
a copy of the form of which is attached as Annex E, which provides that, among other things, (i) the board of directors of
the Combined Company (the “Combined Company Board”) is expected to initially consist of 10 directors (which may be increased
to comply with independence requirements), including a minimum of six independent directors. The Stockholders’ Agreement further
grants certain board designation rights, subject to equity ownership thresholds in the combined company (NET Power Inc.), as follows:
(i) OLCV NET Power, LLC will have the right to designate three directors; (ii) our Sponsor will have the right to designate
one director; (iii) 8 Rivers Capital, LLC (through an entity controlled by it) will have the right to designate one director; and
(iv) Constellation will have the right to designate one independent director.
Concurrently
with the execution of the Business Combination Agreement, on December 13, 2022, RONI entered into the Sponsor Letter Agreement with
the Sponsor. Pursuant to the Sponsor Letter Agreement, 1,000,000 RONI Interests held by the Sponsor will be forfeited and canceled for
no further consideration. Additionally, (a) 1,000,000 of the Sponsor’s RONI Interests will be subject to forfeiture, and vest,
incrementally, if the gross proceeds raised by RONI in connection with the Business Combination exceed $300,000,000 as of the Closing
(incrementally vesting until the gross proceeds exceed $397,500,000); (b) 552,536 of the Sponsor’s RONI Interests will be
subject to forfeiture, and vest if the gross proceeds exceed $397,500,000 as of the Closing; and (c) 986,775 of the Sponsor’s
RONI Interests will be subject to forfeiture, and vest in equal one-third increments if, over any 20 trading days within any 30
consecutive trading-day period during the three years following the Closing, the trading share price of Class A Common Stock
equals or exceeds $12.00 per share, $14.00 per share and $16.00 per share, respectively (or if RONI consummates a sale that would value
such shares at the aforementioned thresholds).
The
Sponsor and RONI’s independent directors also agreed to be bound by certain “lock-up” provisions, pursuant to the terms
and conditions of the Sponsor Letter Agreement, as follows: (i) 3,510,643 of Sponsor’s and the Insiders’ RONI Interests
will be restricted from transfer for a period of one year following the Closing and (ii) 1,575,045 of Sponsor’s RONI Interests
will be restricted from transfer for a period of three years following the Closing, in each case, subject to customary exceptions
and potential early-release based on the stock price sustaining specified price thresholds for 20 trading days within any 30 consecutive
trading-day period.
In
connection with the Business Combination Agreement, RONI entered into subscription agreements (each, a “Subscription Agreement”
and together, the “Subscription Agreements”) with certain investors (the “PIPE Investors”) pursuant to which,
among other things, the PIPE Investors have agreed to subscribe for and purchase from RONI, and RONI has agreed to issue and sell to
the PIPE Investors, an aggregate of 55.5 49.0 million newly issued shares of Class A Common Stock
for an aggregate purchase price of $555.4 $490.5 million, on the terms and subject to the conditions
set forth therein (the “PIPE Financing”). Each Subscription Agreement contains customary conditions to closing, including
the substantially concurrent consummation of the Business Combination. In May 2023, certain of the investors exercised their Offset
Right (as defined below). Pursuant to certain subscription agreements, the subscriber was granted the right to reduce its obligation
to purchase shares of Class A Common Stock, at the subscriber’s election, by up to the number of Class A Ordinary Shares of RONI
that it currently owned (the “Offset Right”), subject to the subscriber agreeing to (i) not sell or otherwise transfer the
currently owned shares used to satisfy the Offset Right prior to the consummation of the Business Combination and (ii) not exercise its
right to have any of its currently owned shares used to satisfy the Offset Right redeemed for cash in connection with the consummation
of the Business Combination. As a result of the Offset Right exercises in May, the number of shares of Class A Common Stock to be issued
pursuant to the Subscription Agreements is 54.0 million for an aggregate purchase price of $540.4 million.
2. Basis
of Pro Forma Presentation
The
unaudited pro forma condensed combined financial statements were prepared in accordance with Article 11 of SEC Regulation S-X, as amended
by the final rule, SEC Release No. 33-10786 “Amendments to Financial Disclosures About Acquired and Disposed Businesses”.
The adjustments presented in the unaudited pro forma condensed combined financial statements have been identified and presented to provide
relevant information necessary for an understanding of the Combined Company upon consummation of the Pro Forma Adjustments.
The
unaudited pro forma condensed combined balance sheet as of December 31, 2022 was derived from the historical audited condensed balance
sheet of RONI as of December 31, 2022 and the historical audited consolidated balance sheet of NET Power as of December 31, 2022 and
giving further effect to the Pro Forma Adjustments as if they occurred on December 31, 2022. The unaudited pro forma condensed combined
statements of operations for the year ended December 31, 2022 combine the historical audited statement of operations of RONI for the
year ended December 31, 2022, and the historical audited consolidated statements of operations of NET Power for the year ended December
31, 2022, giving effect to the Pro Forma Adjustments as if they had been consummated on January 1, 2021, the beginning of the earliest
period presented.
The
historical financial information has been adjusted to reflect the pro forma adjustments giving effect to the Business Combination and
related transactions as described in more detail below.
Management
has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed
combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially
from the information presented.
The
pro forma adjustments reflecting the consummation of the Business Combination and certain other transactions as described in more detail
below are based on certain currently available information and certain assumptions and methodologies that RONI believes are reasonable
under the circumstances. The pro forma adjustments, which are described in the accompanying notes, may be revised as additional information
becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments, and
it is possible the difference may be material. RONI believes that its assumptions and methodologies provide a reasonable basis for presenting
all of the significant effects of the Pro Forma Adjustments based on information available to management at this time and that the pro
forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined
financial information.
The
unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies,
tax savings, or cost savings that may be associated with the Business Combination and related transactions as described in more detail
below. As such, the Company has elected not to present Management’s Adjustments. RONI and NET Power have not had any historical
relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the
companies.
The
unaudited pro forma condensed combined financial information presents two redemption scenarios as follows:
| ● | Assuming
No Redemptions: This presentation assumes that no public shareholders exercise
redemption rights with respect to their shares. |
| ● | Assuming
Maximum Redemptions: This presentation assumes that public shareholders holding
32.0 33.5 million shares of our currently outstanding
Class A Shares exercise their redemption rights and that such shares are redeemed for
their pro rata share of the funds in the Trust Account for an aggregate redemption payment
of approximately $324.4 $336.9 million, approximately
$10.14 per share, based on $349.9 million in the Trust Account and approximately 34.5 million
shares of RONI Class A Shares outstanding as of December 31, 2022 of which the Rice
family owns 1,010,000 which are assumed to not be redeemed. Additionally, as a result
of the Offset Right exercises in May 2023, certain other current Class A Shareholders have
agreed to not redeem 1,500,000 Class A Shares. As such, in the Maximum Redemption scenario,
2,510,000 Class A Shares are assumed to not be redeemed. The Business Combination
Agreement provides that RONI’s and NET Power’s respective obligations to consummate
the NET Power Merger is conditioned on RONI having a minimum cash amount equaling or exceeding
$200.0 million, after giving effect to the NET Power Merger. Furthermore, RONI will
not redeem shares of Class A Common Stock in an amount that would result in RONI’s
failure to have net tangible assets exceeding $5.0 million. |
Shares
outstanding as presented in the unaudited pro forma condensed combined financial statements include the 137.2 million shares of
Class B Common Stock expected to be issued to the NET Power Holders, the 34.5 million shares of Class A Common Stock
that is outstanding as of December 31, 2022 (assuming there are no RONI stockholders who exercise their redemption rights), the 6.6 million
shares of Class B Common Stock issued to the Sponsor, and the 54.0 49.0 million shares of Class A
Common Stock expected to be issued in connection with the PIPE Financing.
3. Accounting
for the Business Combination
RONI
was formed on February 2, 2021. It is the managing member of RONI Opco, which was formed February 3, 2021, as a result of its 34,502,000
Class A units of RONI Opco, and Sponsor and the RONI independent directors are the members of RONI Opco. Upon formation of RONI Opco,
Sponsor held 100 Class A units of RONI Opco and 8,534,900 Class B units of RONI Opco, and RONI’s independent directors held 90,000
Class B units of RONI Opco. Due to RONI Opco’s limited liability company structure functioning like a limited partnership with
RONI as the managing member having decision making authority and the limited partners not having any kick-out rights nor substantive
participating rights, it was considered a VIE. On June 15, 2021, the IPO of RONI generated $345.0 million in cash that was subsequently
contributed to RONI Opco for purposes of effecting the Business Combination at a later date. On July 26, 2022, RONI and NET Power executed
a letter of intent to execute the Business Combination. On December 5, 2022, Buyer was formed as a wholly-owned subsidiary of RONI Opco,
and Merger Sub was formed as a wholly-owned subsidiary of Buyer. Upon formation and through the Business Combination, neither Buyer nor
Merger Sub had significant pre-combination activities or material assets, liabilities, revenues or operations, and they were each were
determined to be non-substantive entities as it relates to the Business Combination. Under the proposed structure of the Business Combination,
NET Power will be acquired by and will merge with and into Merger Sub in exchange for 137.2 million Class A units of RONI Opco (economic,
non-voting) and 137.2 million shares of Class B Common Stock of RONI (voting, non-economic).
In
accordance with FASB’s ASC Topic 810, the Business Combination triggers a VIE reconsideration event due to RONI Opco’s status
as a VIE and due to its acquisition of NET Power through its 100% owned subsidiaries, Buyer and Merger Sub. Based on the organization
of the Up-C structure, in applying a bottom-up approach to determining the consolidation of the entities involved in the Business Combination,
NET Power, a previously unconsolidated entity having no common control relationship with of the entities involved in the Up-C structure,
is considered to be acquired by RONI Opco as a result of it being wholly-owned by Buyer, a wholly-owned subsidiary of RONI Opco, with
Buyer being considered a non-substantive entity. RONI Opco, which will subsequently be renamed to NET Power Operations LLC, will continue
to be considered a VIE after the Business Combination, with RONI as its primary beneficiary. RONI was determined to be the primary beneficiary
of RONI Opco before and after the acquisition of NET Power because RONI will ultimately be the sole managing member of RONI Opco, having
the power to control the most significant activities of RONI Opco (through which it will also control NET Power), while RONI will also
have an economic interest that provides it with the ability to participate significantly in RONI Opco’s benefits and losses under
all redemption scenarios. RONI Opco, which will subsequently be renamed to NET Power Operations LLC, will continue to be considered a
VIE after the Business Combination because it will continue to function like a limited partnership with a managing member, over whom
the limited partners will lack both substantive kick-out and participating rights. As a result, NET Power will be treated as the “acquired”
company for financial reporting purposes. Accordingly, since NET Power meets the definition of a business in ASC 805, for accounting
purposes the Business Combination represents an acquisition of a business by RONI, and NET Power’s identifiable assets acquired,
liabilities assumed and any non-controlling interests will be measured at their acquisition date fair value. The purchase consideration
for the acquisition of NET Power consisted of the issuance of 137.2 million shares of newly issued Class B Common Stock of RONI, valued
at $10.00 per share to arrive at a total consideration of $1.4 billion.
The
preliminary purchase price allocation of the acquisition for NET Power for common stock consideration as of December 31, 2022 is as follows:
Common
stock consideration |
|
$ |
1,371,925,630 |
Fair
value of total consideration transferred |
|
$ |
1,371,925,630 |
|
|
|
|
Assets: |
|
|
|
Current
Assets: |
|
|
|
Cash
and cash equivalents |
|
$ |
5,164,000 |
Account
receivable – net |
|
|
352,000 |
Other |
|
|
1,795,000 |
Prepaid
expenses and other current assets |
|
|
184,000 |
Total
current assets |
|
$ |
7,495,000 |
Other
assets |
|
|
263,000 |
Property
and equipment, net |
|
|
96,495,000 |
Intangible
assets – developed technology |
|
|
500,722,000 |
Right-of-use
asset |
|
|
784,000 |
Deferred
tax asset |
|
|
— |
Total
assets |
|
$ |
605,759,000 |
Liabilities: |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
|
$ |
577,000 |
Accrued
and other current liabilities |
|
|
2,570,000 |
Option
liability |
|
|
5,174,000 |
Member
loans |
|
|
130,000 |
Total
current liabilities |
|
$ |
8,451,000 |
Due
to related parties |
|
|
2,212,000 |
Asset
retirement obligation |
|
|
2,416,000 |
Lease
liability |
|
|
656,000 |
Total
liabilities |
|
$ |
13,735,000 |
|
|
|
|
Total
identifiable net assets |
|
$ |
592,024,000 |
Goodwill |
|
$ |
779,901,630 |
Net
assets acquired |
|
$ |
1,371,925,630 |
Property
and equipment assets are depreciated over a remaining weighted average useful life of 10 years. Fair value adjustments include a
$28,718,053 step-up in fair value.
Intangible
assets primarily consist of developed technology and are depreciated over a remaining weighted average useful life of 10 years.
Fair value adjustments include $500,722,130 step-up in fair value.
Estimated
Goodwill of $779,901,630 is recognized as part of the merger.
The
increase to depreciation and amortization expense totaled $52.9 million related to property and equipment and intangible assets
for the year ended December 31, 2022.
Due
to the company’s Up-C structure and pass-through tax status of RONI Opco, no deferred taxes are recorded on the LLC. RONI will
have a deferred tax asset for its tax basis in RONI Opco in excess of its investment in the partnership. Due to cumulative losses, the
company has full valuation allowance provide against such deferred taxes as it is more likely than not that we will not realize the tax
benefit of any deferred tax assets resulting from the transaction.
4. Adjustments
to Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2022
The
unaudited pro forma condensed combined balance sheet as of December 31, 2022 has been prepared to illustrate the effect of the Pro Forma
Adjustments and has been prepared for informational purposes only.
The
unaudited pro forma condensed combined balance sheet as of December 31, 2022 includes the Pro Forma Adjustments giving effect to the
Business Combination and related transactions noted in this filing. RONI and NET Power did not have any historical relationship prior
to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
The
pro forma notes and adjustments, based on preliminary estimates that could change materially as additional information is obtained, are
as follows:
Pro
forma notes
| (A) | Derived
from the historical audited condensed consolidated balance sheet of RONI as of December 31,
2022. |
| (B) | Derived
from the historical audited consolidated balance sheet of NET Power as of December 31, 2022. |
Pro
forma adjustments giving effect to the Business Combination and related transactions:
| a) | To
reflect the combination of the following items: the payment of approximately $11.7 million
of deferred underwriters’ fees incurred during the RONI IPO that are payable upon completion
of the Business Combination, the release of $349.9 million of cash from the Trust Account
to the cash and cash equivalents account, the issuance of an aggregate of 54.0
49.0 million shares of Class A Common Stock in the PIPE Financing
at an average price of $10.00 per share, for an aggregate purchase price of $540.4
$490.5 million, a $10 million pre-transaction equity contribution
from an existing NET Power Holder, and the payment of the estimated transaction expenses
of $35.4 $35 million. See table below: |
Release
of Trust Account |
|
$ |
349,942 |
|
Payment
of deferred underwriters’ fees |
|
|
(11,721 |
) |
Issuance
of 54.0 49.0 million shares of Class A Common Stock in the PIPE Financing |
|
|
540,450
490,450
|
|
Pre-transaction
equity contribution of existing NET Power Holder |
|
|
10,000 |
|
Payment
of transaction expenses |
|
|
(35,400
(35,000
|
)
)
|
Cash
and cash equivalents |
|
$ |
853,271
803,671
|
|
| b) | To
reflect fair value step-up related to Property, Plant, & Equipment of $28.7 million,
which is attributable to the fair value of NET Power’s Demonstration Plant in La Porte,
Texas, and a fair value step-up related to Intangible Assets of $500.7 million, which
is attributable to the fair value of NET Power’s patented technology, and the estimated
Goodwill balance of $779.9 million to be recognized as part of the merger. The Demonstration
Plant is expected to have an estimated remaining useful life of 10 years based on NET Power’s
planned utility of the plant. The patented technology is expected to have a remaining useful
life of 10 years based on the average remaining life of NET Power’s patent protections. |
| c) | Pursuant
to the Business Combination Agreement, in consideration of the transactions set forth above,
RONI will increase its ownership in RONI Opco. The total tax benefit from such RONI’s
share of the historical tax basis, including any increases thereto as a result of the transactions
and the existing tax attributes, will be amortized generally over 15 years. It is more
likely than not that we will not realize the tax benefit of any deferred tax assets resulting
from the transaction, and therefore have recorded a full valuation allowance. As a result,
the pro forma consolidated balance sheet does not reflect an adjustment for deferred taxes. |
In
addition, prior to the completion of this offering, we will enter into a Tax Receivable Agreement with certain of Existing Net Power
Holders that provides for the payment by RONI to such Existing NET Power Holders of 75% of the benefits, if any, that RONI actually realizes,
or is deemed to realize. Amounts contingently payable under the Tax Receivable Agreement are contingent upon, among other things, generation
of sufficient future taxable income during the term of the Tax Receivable Agreement. As such, we determined there is no resulting liability
related to the Tax Receivable Agreement arising from the Transactions as the associated deferred tax assets are fully offset by a valuation
allowance. However, if all of the Existing NET Power Holders were to exchange or sell to RONI all of their Class A Units of RONI Opco,
we would recognize a deferred tax asset of approximately $339.8 million and a liability under the Tax Receivable Agreement of approximately
$254.8 million, assuming: (i) all exchanges or purchases occurred on the same day; (ii) a price of $10.00 per share;
(iii) a constant corporate tax rate of 22.28%; (iv) that we will have sufficient taxable income to fully utilize the tax benefits;
and (v) no material changes in tax law. These amounts are estimates and have been prepared for illustrative purposes only. The actual
amount of deferred tax assets and related liabilities that we will recognize will differ based on, among other things, the timing of
the exchanges, the price per share of our Domestication Class A Common Stock at the time of the exchange, and the tax rates then
in effect.
| d) | To
reflect the release of $349.9 million of cash from the Trust Account to the cash and
cash equivalents account. |
| e) | To
reflect the payment of approximately $11.7 million of deferred underwriters’ fees
incurred during the RONI IPO that are payable upon completion of the Business Combination. |
| f) | To
reflect the reclassification, in Scenario 1, which assumes no public shareholders exercise
their redemption rights, of common stock subject to redemption of 34.5 million shares
of Class A Common Stock to permanent equity. |
| g) | To
reflect the reclassification, in Scenario 1, which assumes no public shareholders exercise
their redemption rights, of common stock subject to redemption of 34.5 million shares
of Class A Common Stock to permanent equity, the issuance of 137.2 million shares
of Class B common stock in connection with the acquisition of NET Power, the issuance
of an aggregate of 54.0 49.0 million shares of Class A
Common Stock in the PIPE Financing at a price of $10.00 per share, for an aggregate purchase
price of $540.4 $490.5 million and the issuance
of an aggregate 50 thousand shares of Class A Common Stock at $10.00 per share for $500,000
of transaction expenses. |
| h) | To
reflect the elimination of the accumulated deficit of NET Power, the accounting acquiree. |
| i) | To
reflect the combination of the following items: (1) the reclassification of Class A
Common Stock adjusting from temporary equity to permanent equity ($349.8 million), (2)
the reclassification of the non-controlling interest associated with the Class A and
Class B units in RONI Opco held by unitholders other than NET Power Inc., which represents
61.9% 63.2% of the total ownership interests of RONI Opco ($1.4 billion),
(3) the issuance of 137.2 million shares of Class B Common Stock to effect the
acquisition of NET Power ($1.4 billion), (4) the issuance of an aggregate of 54.0
49.0 million shares of Class A Common Stock in the PIPE
Financing at a price of $10.00 per share, for an aggregate purchase price of $540.4
$490.5 million. |
| j) | To
reflect the combination of the following items: the elimination of the accumulated deficit
of NET Power and the controlling interest’s share of $35.9 $35.5
million in transaction expenses associated with the Business Combination. |
| k) | To
reflect the elimination of the accumulated other comprehensive loss of NET Power. |
| l) | To
reflect the reclassification of the non-controlling interests associated with the Class A
and Class B units in RONI Opco ($1.4 billion) held by unitholders other than NET Power Inc.
and the noncontrolling interest’s share of $35.9 $35.5
million in transaction expenses associated with the Business Combination. As of December
31, 2022, the pro forma ownership of RONI Opco is as follows, assuming no redemptions: |
Holders |
|
Class A
Units |
|
Class B
Units |
|
Total
Units |
|
% of
Total |
|
NET
Power Inc. |
|
88,594,995
83,594,995
|
|
— |
|
88,594,995
83,594,995
|
|
38.0
36.8
|
% |
Sponsors |
|
100 |
|
6,550,625 |
|
6,550,725 |
|
2.9 |
% |
Existing
NET Power Holders |
|
137,192,563 |
|
— |
|
137,192,563 |
|
59.0
60.2
|
% |
Independent
Directors |
|
— |
|
90,000 |
|
90,000 |
|
0.1 |
% |
Total |
|
225,787,658
220,787,658
|
|
6,640,625 |
|
232,428,283
227,428,283
|
|
100.0 |
% |
As
of December 31, 2022, the pro forma ownership of RONI Opco is as follows, assuming maximum redemptions:
Holders |
|
Class A
Units |
|
Class B
Units |
|
Total
Units |
|
% of
Total |
|
NET
Power Inc. |
|
56,604,995
50,104,995
|
|
— |
|
56,604,995
50,104,995
|
|
28.1
25.8
|
% |
Sponsors |
|
100 |
|
6,550,625 |
|
6,550,725 |
|
3.3
3.4
|
% |
Existing
NET Power Holders |
|
137,192,563 |
|
— |
|
137,192,563 |
|
68.5
70.7
|
% |
Independent
Directors |
|
— |
|
90,000 |
|
90,000 |
|
0.1 |
% |
Total |
|
193,797,658
187,297,658
|
|
6,640,625 |
|
200,438,283
193,938,288
|
|
100.0 |
% |
| m) | To
reflect, in Scenario 2, (1) the assumption that public shareholders exercise their redemption
rights with respect to a maximum of 32.0 33.5 million
shares of Class A Common Stock prior to the consummation of the business combinations
at a redemption price of approximately $10.14 per share, or $324.4 $339.6 million
in cash, (2) the reduction of expected transaction expenses of $6.6 $10 million
due to reduced underwriting fees associated with the maximum redemptions and (3) the allocation
of the income to the noncontrolling interest and controlling interest shareholders based
on the maximum redemption ownership percentages. |
Pursuant
to the Merger Agreement, in consideration of the transactions set forth above, RONI will increase its ownership in RONI Opco. The total
tax benefit from such RONI’s share of the historical tax basis, including any increases thereto as a result of the transactions
and the existing tax attributes, will be amortized generally over 15 years. It is more likely than not that we will not realize
the tax benefit of any deferred tax assets resulting from the transaction, and therefore have recorded a full valuation allowance. As
a result, the pro forma consolidated balance sheet does not reflect an adjustment for deferred taxes.
5. Adjustments
to Unaudited Pro Forma Condensed Combined Statements of Operations for the Year Ended December 31, 2022
RONI
and NET Power did not have any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were
required to eliminate activities between the companies.
The
pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statements of operations
are based upon the number of shares of Common Stock outstanding at the closing of the Business Combination and the PIPE Financing, assuming
the Pro Forma Adjustments occurred on January 1, 2022.
The
pro forma notes and adjustments, based on preliminary estimates that could change materially as additional information is obtained, are
as follows:
Pro
forma notes:
| (A) | Derived
from the historical audited condensed consolidated statements of operations of RONI for the
year ended December 31, 2022. |
| (B) | Derived
from the historical audited consolidated statements of operations of NET Power for the year
ended December 31, 2022. |
Pro
forma adjustments giving effect to the Business Combination and related transactions:
| a) | To
reflect the transaction expenses of $35.9 $35.5 million associated
with the acquisition of NET Power. |
| b) | To
reflect one year of incremental depreciation of Property, Plant, and Equipment assets of
$2.8 million based on a 10-year estimated useful life and one year of incremental amortization
of Intangible assets of $50.1 million based on a 10-year estimated useful life as a
result of the fair value step-ups as part of the merger. |
| c) | To
reflect the removal of approximately $4.9 million of interest earned on the Trust Account
investments in 2022. |
| d) | As
a result of the Combined Company’s Up-C structure, RONI’s share of RONI Opco
earnings will be subject to tax. However, as RONI Opco has historically been loss-making,
any deferred tax assets created as a result of net operating losses would be offset by a
full valuation allowance resulting in no income tax expense adjustments to be presented in
the unaudited pro forma condensed combined statement of operations. |
| e) | To
reflect the noncontrolling interest portion (61.9% 63.2%) of
the pro forma adjustments. |
| f) | To
reflect the reduction of expected transaction expenses of $6.6 $10 million
due to reduced underwriting fees associated with the maximum redemptions and the allocation
of this adjustment to the noncontrolling interest portion (71.8% 74.2%). |
Pro
forma weighted average shares outstanding:
| g) | As
the Business Combination is being reflected as if it had occurred at the beginning of the
earliest period presented, the calculation of weighted average shares outstanding for basic
and diluted net loss per share assumes that the shares issuable in connection with the Pro
Forma Adjustments have been outstanding for the entirety of the periods presented. Weighted
average common shares outstanding — basic and diluted for the twelve months
ended December 31, 2022 are calculated as follows: |
|
|
Year
Ended December 31, 2022 |
|
|
|
Scenario
1 (Assuming No
Redemptions
into Cash) |
|
Scenario
2
(Assuming
Maximum
Redemptions
into Cash) |
|
Weighted
average shares calculation – basic and diluted |
|
|
|
|
|
|
RONI
weighted average public shares outstanding |
|
8,627,500 |
|
|
8,627,500 |
|
Cancellation
of Founder Shares in connection with the Business Combination |
|
(1,986,775 |
) |
|
(1,986,775 |
) |
Class A
Common Stock subject to redemption reclassified to equity |
|
34,500,000 |
|
|
2,510,000
1,010,000
|
|
Issuance
of Class A Common Stock in connection with closing of the PIPE Financing |
|
54,044,995
49,044,995
|
|
|
54,044,995
49,044,995
|
|
Issuance
of Class A Common Stock in connection with other closing transactions |
|
50,000 |
|
|
50,000 |
|
Issuance
of Class B Common Stock to NET Power Holders in connection with the acquisition of NET Power |
|
137,192,563 |
|
|
137,192,563 |
|
Weighted
average shares outstanding |
|
232,428,283
227,428,283
|
|
|
200,438,283
193,938,283
|
|
The
table below presents the weighted averages shares outstanding under both scenarios by each shareholder group. The table below excludes
8,625,000 public warrants and 10,900,000 private placement warrants held by the Sponsor because including them would have had an anti-dilutive
effect on net loss per share, causing net loss per share for the year ended December 31, 2022 under the no redemption and maximum redemption
scenarios to have been $0.21 and $0.24, respectively.
Holders |
|
No
Redemption |
|
%
of
Total |
|
Maximum
Redemption |
|
%
of
Total |
|
Public
shareholders |
|
34,500,000 |
|
14.8
15.1
|
% |
|
2,510,000
1,010,000
|
|
1.2
0.5
|
% |
Sponsor
and Affiliates |
|
6,640,725 |
|
2.9 |
% |
|
6,640,725 |
|
3.3
3.4
|
% |
Existing
NET Power Holders |
|
137,192,563 |
|
59.0
60.2
|
% |
|
137,192,563 |
|
68.4
70.7
|
% |
Other |
|
50,000 |
|
0.1 |
% |
|
50,000 |
|
0.1 |
% |
PIPE
Investors |
|
54,044,995
49,044,995
|
|
23.2
21.9
|
% |
|
54,044,995
49,044,995
|
|
27.0
25.73
|
% |
Total
Common Shares |
|
232,428,283
227,428,283
|
|
100.0 |
% |
|
200,438,283
193,938,283
|
|
100.0 |
% |
Comparative
Share Information
The
following table sets forth selected historical comparative share information for RONI and unaudited pro forma condensed combined per
share information for the Combined Company after giving effect to the Business Combination.
The
pro forma book value information reflects the Business Combination as if it had occurred on December 31, 2022. The weighted average shares
outstanding and net earnings per share information reflect the Business Combination as if it had occurred on January 1, 2022.
This
information is only a summary and should be read together with the historical financial statements of RONI and the Companies and related
notes. The unaudited pro forma condensed combined per share information of RONI and the Companies is derived from, and should be read
in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this proxy
statement.
The
unaudited pro forma condensed combined earnings per share information below does not purport to represent the earnings per share which
would have occurred had RONI and NET Power been combined during the periods presented, nor the earnings per share for any future date
or period. Historically, RONI’s statement of operations included a presentation of income (loss) per common share subject to redemption
in a manner similar to the two-class method of income (loss) per common share. The two-class method is not required in the pro forma
income (loss) per common share as the Class A shares are no longer subject to redemption. RONI has not considered the effect of
the warrants sold in the RONI IPO and private placement to purchase an aggregate of 19,525,000 shares of Class A Common Stock in
the calculation of diluted earnings per share, since their inclusion would be anti-dilutive under the treasury stock method. As a result,
diluted earnings per common share is the same as basic earnings per common share for the period presented.
|
|
|
RONI
(Historical) |
|
|
|
NET
Power |
|
|
|
Pro
Forma
Combined
(Assuming |
|
|
|
Pro
Forma
Combined
(Assuming
Maximum |
|
|
|
|
Class A |
|
|
|
Class B |
|
|
|
(Historical) |
|
|
|
No Redemption) |
|
|
|
Redemption) |
|
As
of and for the year ended December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book
value per share(1) |
|
$ |
(0.92 |
) |
|
$ |
(0.92 |
) |
|
$ |
17.30 |
|
|
$ |
9.46
9.45
|
|
|
$ |
9.39
9.38
|
|
Weighted
average shares outstanding – basic and diluted (RONI); Weighted average units outstanding (NET Power) |
|
|
34,502,500 |
|
|
|
8,625,000 |
|
|
|
3,702,803 |
|
|
|
232,428,283
227,428,283
|
|
|
|
200,438,283
193,938,283
|
|
Net
income (loss) per share of Class A and B Common Stock – basic and diluted |
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
$ |
(14.79 |
) |
|
$ |
(0.21 |
) |
|
$ |
(0.24 |
) |
(1) | Book
value per share = Total equity/shares outstanding. For the pro forma combined book value
per share, total equity is derived using 232,428,283 227,428,283
shares in the no redemption scenario and 200,438,283 193,938,283
in the maximum redemption scenario. |
A-15