8-K: American Resources' American Metals to Merge with AITR in $170 Million Deal

American Metals LLC, a subsidiary of American Resources Corporation, has agreed to a business combination with AI Transportation Acquisition Corp, valuing the combined entity at $170 million.

Summary

• American Metals LLC, a wholly-owned subsidiary of American Resources Corporation, is set to merge with AI Transportation Acquisition Corp (AITR), a Nasdaq-listed SPAC.
• The transaction values the combined company at $170 million on a pro forma basis.
• Following the merger, both AITR and American Metals will become wholly-owned subsidiaries of a new entity, Electrified Materials Corporation (Pubco).
• Pubco is expected to be listed on the Nasdaq Stock Market under the ticker symbol EMCO.
• American Metals focuses on recycling metals for the electrified economy, including steel, rare earth elements, and battery materials.
• The company leverages its existing infrastructure and a partnership with ReElement Technologies for refining processes.
• The deal includes a potential earnout of $70 million based on revenue targets.
• The transaction is subject to regulatory approvals, shareholder approval, and other customary closing conditions.

Sentiment

Score: 8

Explanation: The document conveys a positive outlook on the merger, highlighting the growth potential and strategic advantages of the combined company. The language is optimistic and forward-looking, suggesting a strong positive sentiment.

Positives

• The merger provides American Metals with a platform for growth and expansion in the recycling market.
• The combined company will have access to capital markets through its Nasdaq listing.
• American Metals is positioned to capitalize on the growing demand for critical metals.
• The partnership with ReElement Technologies provides a closed-loop supply chain for recycled materials.
• The transaction is expected to generate attractive value for shareholders.

Risks

• The transaction is subject to regulatory approvals and shareholder approval, which may not be obtained.
• The combined company may face challenges in integrating operations and achieving projected financial performance.
• The market for recycled metals is subject to fluctuations in demand and pricing.
• The company may face competition from other players in the recycling industry.
• The company's ability to meet revenue targets for the earnout consideration is not guaranteed.

Future Outlook

American Metals seeks to expand its preprocessing of both end of life magnets, lithium-ion batteries and ferrous metals to ensure a domestic supply chain for copper, aluminum, steel, plastic as well as rare earth and battery elements. The company believes that its planned listing, in addition to creating a capital platform for its development and gaining the attention of investors in the international capital markets, will further promote American Metals growth strategy.

Management Comments

• Mark Jensen, Chairman and CEO of American Resources Corporation said, 'This is an exciting moment for American Metals. Our American Metals division is uniquely positioned to expand its business in the recycling marketplace through direct engagements as well as joint venture partnerships such as with ReElement Technologies Corporation.'
• Mr. Yongjin Chen, Chairman and CEO of AITR added, 'Were thrilled to partner with the American Metals team to capitalize on their proven track record and support the expansion of their operations to meet the demand for critical metals.'

Industry Context

This announcement reflects the growing trend of companies focusing on sustainable practices and the increasing demand for critical metals in the electrification market. The merger positions American Metals to capitalize on the need for recycled materials in the energy transition.

Comparison to Industry Standards

• The recycling rate for many critical metals is below 5%, with total recycled metals in batteries currently around 1%, and recycling rate of certain rare earths even below 1%, according to the World Economic Forums April 24, 2024 report.
• American Metals is uniquely positioned to be a leading producer of critical metals while contributing to a reduction in global greenhouse gases.
• The company has established a complete closed-loop supply chain for such materials through its non-exclusive partnership with ReElement to refine such material to battery and magnet grade (lithium, cobalt, nickel, rare earth elements and copper).

Stakeholder Impact

• Shareholders of AITR and American Metals will be impacted by the merger and the resulting ownership structure.
• Employees of American Metals may experience changes in their roles and responsibilities.
• Customers and suppliers of American Metals may see changes in their relationships with the company.
• The merger is expected to create value for shareholders of the combined company.

Next Steps

• AITR will file a Current Report on Form 8-K with the SEC.
• Pubco will file a Registration Statement on Form S-4 with the SEC.
• AITR will mail a definitive proxy statement/prospectus to its shareholders.
• AITR shareholders will vote on the proposed business combination.
• The parties will seek regulatory approvals for the transaction.

Key Dates

Keywords

business combination, recycling, critical metals, rare earth elements, battery materials, merger, SPAC, Nasdaq, electrified economy, American Metals, AI Transportation Acquisition Corp, ReElement Technologies