Updated Terms Establish More Attractive
Investment Entry Point for Shareholders
Companies Reaffirm Commitment to Complete
Transaction
X-energy Completes Key Milestones for Advanced
Nuclear Reactor and Provides Updates to Project Cost Estimates
X-Energy Reactor Company, LLC (“X-energy” or the “Company”), a
leading developer of advanced 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 a strategic update to their
previously announced business combination agreement that revises
the valuation of the transaction. Under the amended terms,
X-energy’s pre-money equity value has been revised to $1.8 billion
from approximately $2.1 billion. By establishing a more attractive
entry point for investors, X-energy and AAC believe the revised
valuation reinforces the long-term value creation opportunity for,
and the companies’ alignment with, shareholders.
X-energy also announced the completion of key engineering and
design milestones as its Xe-100 advanced small modular nuclear
reactor (“SMR”) has progressed from basic design to the Final
Design Readiness Review phase. Reaching this phase demonstrates the
substantial progress the Company has made to develop and eventually
deploy an innovative advanced nuclear facility through the U.S.
Department of Energy’s (“DOE”) Advanced Reactor Demonstration
Program (“ARDP”) to provide clean, safe, zero-carbon energy for a
broad range of uses and applications that meet customers’ unique
needs.
X-energy has invested significant engineering hours in
developing its technology, including approximately 800,000 hours in
its Xe-100 design, 250,000 hours in its TRISO-X nuclear fuel
design, and 117,000 hours in pre-application engagements, reviews,
and interactions with the U.S. Nuclear Regulatory Commission
(“NRC”) in preparation for the submission of the ARDP project
Construction Permit application to the NRC. As a result, key Xe-100
subsystems are now significantly more defined and developed, and
X-energy's manufacturing, construction, and supply chain partners
are deeply integrated with the Company to provide input on detailed
design, constructability, and associated costs.
The Company completed its most recent review of design processes
and related costs on March 31, 2023. As a result, X-energy updated
its cost estimates to complete the full ARDP scope to a total of
between $4.75 and $5.75 billion. This scope includes the design and
licensing of the Xe-100 standard plant, the design, licensing, and
construction of the TRISO-X commercial fuel fabrication facility,
and the construction of a four-unit Xe-100 facility at the Dow Inc.
(“Dow”) UCC Seadrift Operations site (the “Seadrift site”) in
Texas. Approximately 15% to 17.5% of the total ARDP project costs
are assumed to be paid by X-energy. The Company’s updated program
cost estimate reflects, among other factors, inflationary pressures
for construction materials, higher-than-expected labor costs,
increasing interest rates, supply chain constraints for equipment,
and maturation in the design of the Xe-100, as well as a shift in
program scope from an electric-generation-only plant to a combined
steam and power project at the Seadrift site that results in an
extension of some program elements to 2030.
This range of estimated costs does not account for any
site-specific cost adjustments related to the Seadrift site, which
was announced as the location of the Xe-100 facility after this
estimate was prepared, or Dow’s engagement in the ARDP project,
which in large part began after this estimate was prepared. Dow and
X-energy believe that both of those factors could ultimately lead
to a reduction in costs and intend to work collaboratively to
reduce costs where possible.
“Together with our customers and partners, we are steadfast in
our commitment to deliver and scale our technology at costs
competitive to more conventional or carbon-intensive energy
production methods,” said J. Clay Sell, Chief Executive Officer of
X-energy. “Meeting critical engineering and design milestones has
given us detailed insight into the impact of external market
conditions on our cost profile. We believe our revised valuation
provides a compelling opportunity for investors seeking to build
long-term value around providing clean, safe, zero-carbon energy to
a wide range of customers and applications. We are confident that
our progress in developing the advanced nuclear supply chain will
put X-energy in a strong position to build capacity and scale for
future projects.”
"We reaffirm our support of this business combination and our
conviction that X-energy is poised to be a differentiated leader in
the global clean energy market,” said David Kaplan, Co-Chairman and
Chief Executive Officer of AAC and Co-Founder, Director and Partner
of Ares Management Corporation. “Following the recent work of our
teams, we believe this amended business combination agreement
appropriately recalibrates the valuation and reflects our alignment
with our shareholders and the opportunity to create attractive,
long-term value. With X-energy’s proprietary technology and
competitive advantages in combination with its strategic
relationships with Dow and OPG, we believe X-energy is
well-positioned to meet the rapidly growing global demand for
reliable, affordable energy.”
Transaction Details
In December 2022, X-energy entered into a definitive business
combination agreement with AAC. Upon the closing of the
transaction, which is expected to be completed in summer 2023, the
combined company will be named X-Energy, Inc. and its common equity
securities and warrants are expected to be listed on the New York
Stock Exchange.
Completion of the transaction is subject to approval by AAC’s
shareholders, the Registration Statement (as defined below) being
declared effective by the Securities and Exchange Commission (the
“SEC”), and other customary closing conditions.
As previously announced, existing X-energy equity holders will
roll 100% of their equity interests into the combined company.
Institutional and strategic investors have invested or committed up
to $148 million in financing, which combined with approximately
$485 million of cash held in AAC’s trust account as of March 31,
2023, assuming no redemptions by AAC shareholders, will result in
$515 million of cash to the combined company balance sheet, after
fees. 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 approximately 72% of the issued and outstanding shares of
common stock of the combined company.
About X-Energy Reactor Company, LLC
X-Energy Reactor Company, LLC, is a leading developer of
advanced small modular nuclear reactors and fuel technology for
clean energy generation that is redefining the nuclear energy
industry through its development of safer and more efficient
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 expands
applications and markets for deployment of nuclear technology and
drives enhanced safety, lower cost and faster construction
timelines when compared with conventional nuclear. For more
information, visit X-energy.com or connect with us on Twitter or
LinkedIn.
About Ares Acquisition Corporation
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
In connection with the business combination (the “Business Combination”) with X-energy, AAC filed a
registration statement on Form S-4 on January 25, 2023, as amended
by Amendment No. 1 thereto, filed on March 24, 2023 (the
“Registration Statement”) with the
SEC, which includes 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 declared effective, AAC will mail a
copy of the definitive proxy statement/prospectus, when available,
to its shareholders. The Registration Statement includes
information regarding the persons who may, under the 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 contains certain 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,
expectations with regards to X-energy’s partnership with Dow 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) the
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) the failure to obtain additional funding from the
U.S. government or our ARDP partner for the ARDP; (5) unexpected
increased project costs, increasing as a result of macroeconomic
factors, such as inflation and rising interest rates; (6) 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; (7) the risk
that any proposed business combination disrupts current plans and
operations; (8) 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; (9) costs related to the proposed business combination;
(10) changes in the applicable laws or regulations; (11) the
possibility that X-energy may be adversely affected by other
economic, business, and/or competitive factors; (12) the persistent
impact of the global COVID-19 pandemic; (13) economic uncertainty
caused by the impacts of the conflict in Russia and Ukraine and
rising levels of inflation and interest rates; (14) the ability of
X-energy to obtain regulatory approvals necessary for it to deploy
its small modular reactors in the United States and abroad; (15)
whether government funding for high assay low enriched uranium for
government or commercial uses will result in adequate supply on
anticipated timelines to support X-energy’s business; (16) the
impact and potential extended duration of the current supply/demand
imbalance in the market for low enriched uranium; (17) 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; (18) X-energy’s limited operating
history makes it difficult to evaluate its future prospects and the
risks and challenges it may encounter; and (19) 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 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.
No Offer or Solicitation
This press release is for informational purposes only and is
neither an offer to purchase, nor a solicitation of an offer to
sell, subscribe for or buy, any securities or the solicitation of
any vote in any jurisdiction pursuant to the Business Combination
or otherwise, nor shall there be any sale, issuance or transfer of
securities in any jurisdiction in contravention of applicable law.
No offer of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act.
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/20230612379197/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 media@aresmgmt.com
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