8-K: DevvStream, XCF, Southern Energy Announce Merger Term Sheet

DevvStream Corp., XCF Global, Inc., and Southern Energy Renewables, Inc. have entered into a binding term sheet for a three-party merger aimed at creating a low-carbon fuels platform.

Summary

• A binding term sheet was signed on January 26, 2026, for a proposed business combination between DevvStream Corp., XCF Global, Inc., Southern Energy Renewables, Inc., and EEME Energy SPV I LLC.
• The transaction aims to establish a combined enterprise focused on developing a next-generation low-carbon fuels platform, accelerating sustainable aviation fuel (SAF) adoption, expanding domestic capacity, and integrating environmental-attribute monetization.
• The parties are targeting a combined enterprise value of approximately $3.0 billion.
• Southern and DevvStream will merge with wholly-owned subsidiaries of XCF, becoming wholly-owned subsidiaries of XCF, with their respective stockholders receiving shares of XCF Class A common stock.
• XCF will invest $10 million to convert and build out its New Rise Reno facility for SAF blending and related corporate purposes, funded by EEME through the sale of XCF Common Stock.
• Post-closing, the XCF Board of Directors will comprise four members designated by XCF (including CEO Chris Cooper as chair), two by Southern, and one by DevvStream.
• XCF shares held by XCF stockholders immediately prior to closing will represent approximately 66.67% of the combined entity, Southern stockholders 23.33%, and DevvStream stockholders 10%.
• The transaction is subject to numerous closing conditions, including completion of the Plant Conversion, EEME funding $10 million, XCF entering a long-term SAF offtake agreement, XCF achieving annualized blended fuel product revenues exceeding $1.0 billion and minimum annualized EBITDA of $100 million by June 30, 2026, Southern receiving authorization for $400 million in bonds, and regulatory/stockholder approvals.

Sentiment

Score: 7

Explanation: The announcement outlines a significant strategic merger with ambitious financial targets and a clear vision for a low-carbon fuels platform. The substantial investment and potential for state-supported bonds are positive. However, the numerous closing conditions, forward-looking nature, and explicit risks of non-consummation or failure to achieve targets temper the immediate positive sentiment, making it a cautiously optimistic outlook.

Positives

• Formation of an integrated platform for low-carbon fuels, sustainable aviation fuel (SAF) adoption, and environmental-attribute monetization.
• Targeted enterprise value of approximately $3.0 billion for the combined entity.
• XCF's New Rise Reno facility is set to receive a $10 million investment for SAF blending conversion and buildout.
• Potential to achieve annualized blended fuel product revenues exceeding $1.0 billion and minimum annualized EBITDA of $100 million by June 30, 2026.
• Exploration of integrating small modular reactor (SMR) nuclear power with electro-sustainable aviation fuel (eSAF) and AI data centers.
• Southern's potential to issue up to $400 million in state-supported bonds for projects.
• Creation of a U.S.-based platform with complementary strengths: XCF's scale and speed-to-market, Southern's biomass feedstock focus, and DevvStream's environmental-asset capabilities.

Negatives

• The Term Sheet does not obligate parties to consummate the Proposed Transaction, and there is no assurance definitive agreements will be entered into or the transaction will close.
• The transaction is subject to numerous factors outside the control of XCF, including market conditions, regulatory approvals, and third-party actions.
• The target enterprise value of $3.0 billion is an objective that may never materialize.
• The Plant Conversion, revenue/EBITDA thresholds, and bond issuance are all subject to significant risks and may not be achieved as anticipated.
• The risk of disputes or litigation if the Term Sheet is terminated or definitive documentation is not agreed upon.
• Costs, expenses, and management distraction are associated with negotiations and potential litigation.

Risks

• Changes in domestic and foreign business, market, financial, political, regulatory, and legal conditions.
• The risk that the plant conversion specified in the Term Sheet is delayed, not completed on the anticipated timeline, or requires additional capital beyond current expectations.
• The risk that XCF is unable to achieve the specified annualized revenue (in excess of $1.0 billion) and EBITDA ($100 million) thresholds.
• The risk that Southern does not receive authorization to issue up to $400 million of bonds, or that such bonds are delayed, issued on less favorable terms, or not issued at all.
• The risk that XCF is unable to obtain or maintain compliance with applicable Nasdaq continued listing standards, including regaining compliance with the $1.00 minimum bid price requirement, which could result in delisting.
• The risk that negotiations among the parties relating to the Term Sheet or any contemplated definitive agreements are delayed, modified, suspended, or terminated, including as a result of alleged breaches or differing interpretations of the binding provisions.
• The inability of the parties to agree on mutually acceptable definitive agreements or to satisfy or waive the closing conditions contemplated by the Term Sheet.
• The occurrence of events, changes, or other circumstances that could give rise to the termination of the Term Sheet or any related negotiations, or that could result in disputes or litigation.
• The outcome of any legal proceedings that may be instituted against XCF, DevvStream, Southern, EEME, or their respective affiliates, which could be costly, time-consuming, divert management attention, and adversely affect liquidity or financial condition.
• Uncertainty with respect to the scope, timing, or completion of due diligence by any party and each party's satisfaction therewith.
• Uncertainty regarding valuations, capital structure, financing arrangements, equity ownership, or the allocation of economic interests, including the risk that the aim of creating a $3.0 billion combined enterprise may never be achieved.
• Changes to the structure, timing, or terms of any Proposed Transaction that may be required or deemed appropriate as a result of applicable laws, regulations, accounting considerations, stock exchange requirements, or regulatory guidance.
• The risk that required regulatory, governmental, stock exchange, or stockholder approvals are not obtained, are delayed, or are subject to conditions that could adversely affect the parties or the expected benefits.
• The risk that the announcement of the Term Sheet or the pursuit of the contemplated transactions disrupts current plans, operations, or relationships of XCF, DevvStream, or Southern.
• The risk that anticipated benefits of any contemplated transaction are not realized due to competition, execution challenges, market conditions, or the inability to grow and manage operations profitably.
• Costs, expenses, and management distraction associated with the Term Sheet, negotiations, potential litigation, and any contemplated transactions.
• Changes in applicable laws, regulations, or enforcement priorities, including extensive regulation and compliance obligations applicable to the parties' businesses.
• Other economic, business, competitive, operational, or financial factors beyond management's control.

Future Outlook

The proposed transaction aims to create a leading low-carbon fuels platform, accelerating sustainable aviation fuel (SAF) adoption, expanding domestic production, and integrating environmental attribute monetization. The combined entity targets an enterprise value of $3.0 billion, with XCF aiming for over $1.0 billion in annualized blended fuel product revenues and $100 million in annualized EBITDA by June 30, 2026. The parties will also explore integrating small modular reactor (SMR) nuclear power with electro-sustainable aviation fuel (eSAF) and AI data centers.

Management Comments

• Chris Cooper (CEO of XCF): "We are excited to formalize a proposed final structure with DevvStream and Southern on what we believe will be a very accretive and excellent opportunity. We believe this combination has the potential to further validate the value XCF brings to the SAF industry while increasing shareholder value and providing alternative clean fuel opportunities. If consummated, this merger has the potential to solidify our footprint in North America as the supreme SAF producer."
• Sunny Trinh (CEO of DevvStream): "We believe the next phase of SAF adoption will favor U.S.-based platforms that can move quickly, operate at scale, and better integrate environmental attributes into the fuel value chain to support project economics and customer confidence. If progressed, this merger would bring together complementary strengths—XCFs scale and speed-to-market, Southerns biomass feedstock focus, and DevvStreams environmental-asset capabilities—with the shared objective of building a globally competitive low-carbon fuels platform grounded in real operating execution."
• Jay Patel (CEO of Southern Energy Renewables): "Southerns approach is centered on sustainable biomass feedstocks and scalable fuel pathways, and we see meaningful potential in combining that focus with XCFs production footprint and ability to accelerate commercialization. Subject to completing the necessary documentation, and approvals, we believe this collaboration could create a U.S.-based platform that can compete globally."

Industry Context

The announcement aligns with the growing global demand for sustainable aviation fuel (SAF) and low-carbon energy solutions. The focus on integrating environmental attribute monetization, SMR nuclear power, and AI data center power reflects a broader industry trend towards comprehensive, decarbonized energy platforms and the increasing importance of verifiable environmental attributes in meeting compliance and market standards. The merger aims to create a "globally competitive" U.S.-based platform, indicating a strategic move to capitalize on domestic capacity expansion in the clean fuels sector.

Comparison to Industry Standards

• The filing states the objective of building a "globally competitive low-carbon fuels platform" and mentions XCF's New Rise Reno facility having a "permitted nameplate production capacity of 38 million gallons per year, positioning XCF as an early mover among large-scale SAF producers in North America." However, it does not provide specific comparable companies, projects, or results to global benchmarks.

Management Changes

Corporate Governance

Legal Proceedings

• Risk of disputes or litigation relating to the interpretation, enforceability, or performance of the binding provisions of the Term Sheet if definitive agreements are not reached or the Term Sheet is terminated.
• Outcome of any legal proceedings that may be instituted against XCF, DevvStream, Southern, EEME, or their respective affiliates, which could be costly, time-consuming, divert management attention, and adversely affect financial condition or liquidity.
• XCF will use commercially reasonable efforts to cooperate and facilitate any settlement of ongoing disputes between XCF and affiliates of EEME.

Related Party Transactions

• EEME Energy SPV I LLC, an investor, is funding $10 million into XCF for the Plant Conversion through the purchase of XCF shares. EEME's obligation to acquire shares is independent of the remainder of the Transaction.
• XCF will use commercially reasonable efforts to cooperate and facilitate (including through the issuance of securities) any settlement of ongoing disputes between XCF and affiliates of EEME.

Stakeholder Impact

• Shareholders (XCF, Southern, DevvStream): Will become stockholders of the combined XCF entity, with specific ownership percentages. Potential for increased shareholder value if the $3.0 billion enterprise value and financial milestones are achieved. Risk of dilution, non-consummation, or failure to achieve targets.
• Employees: Potential for integration and synergy, but also uncertainty during a merger process.
• Customers: Potential for expanded low-carbon fuel offerings, particularly SAF, and integrated environmental attribute solutions.
• Creditors (XCF, Southern, DevvStream): XCF's New Rise Reno facility will seek a forbearance agreement with Twain and GNCU regarding its indebtedness. Southern's ability to issue bonds could impact its financial structure.
• EEME Energy SPV I LLC: Significant investor in XCF, with specific funding commitments and protective covenants.

Next Steps

• Finalization of mutually agreeable merger structure and definitive transaction documents.
• Satisfaction of certain closing conditions, including completion of the Plant Conversion and EEME funding.
• XCF to enter into a long-term SAF offtake agreement and make a public announcement.
• XCF and Southern to enter into an agreement for XCF's offtake partner to purchase Southern's SAF.
• XCF to achieve annualized blended fuel product revenues exceeding $1.0 billion and minimum annualized EBITDA of $100 million by June 30, 2026.
• Southern to obtain approval from the State of Louisiana to issue at least $400 million in bonds and hold a related press conference/release.
• Southern to complete engagement with an investment bank for the bond offering.
• XCF to file a registration statement on Form S-4 with the SEC, containing preliminary proxy statements/prospectus.
• Stockholder approvals from XCF, Southern, and DevvStream for the transaction.
• Satisfactory due diligence, execution of definitive documents, approvals by Special Committees, and satisfactory fairness opinions.
• XCF Shares to be approved for listing on Nasdaq and Nasdaq Sweden (and/or other mutually agreeable European and Asian securities exchanges).
• XCF and Southern to use commercially reasonable efforts to engage Interlink for expansion sites and make an announcement with ExIm bank.
• XCF to use commercially reasonable efforts to cause New Rise Reno to enter into a forbearance agreement with Twain and GNCU for its indebtedness.
• XCF to engage a mutually agreed upon investment bank for future capital raising and Research and Coverage.
• XCF to cooperate and facilitate settlement of ongoing disputes with affiliates of EEME.
• The combined company will enter into an updated Consulting Agreement with Focus Impact Partners.

Key Dates

Recommendation

The proposed three-way merger presents a compelling strategic vision for a leading low-carbon fuels platform with significant growth potential in the SAF and environmental attribute markets. The targeted $3.0 billion enterprise value and substantial revenue/EBITDA goals are ambitious and attractive. However, the transaction is currently based on a binding term sheet, not definitive agreements, and is subject to numerous, explicitly stated closing conditions and significant risks, including regulatory approvals, financing, and operational milestones. Investors should hold existing positions to monitor the progress of definitive agreement negotiations, the satisfaction of closing conditions, and the realization of the stated financial and operational targets. The inherent uncertainties and forward-looking nature of the projections warrant caution before making new investment decisions.

Keywords

Sustainable Aviation Fuel, SAF, Merger, Business Combination, Low-Carbon Fuels, Carbon Management, Environmental Assets, SMR, Small Modular Reactor, AI Data Centers, Carbon Credits, Renewable Energy, XCF Global, DevvStream Corp, Southern Energy Renewables, EEME Energy SPV I LLC, Nasdaq, Plant Conversion, Biomass Feedstock