DEFM14A: Focus Impact BH3 Acquisition Company to Merge with XCF Global Capital, Creating Publicly-Traded Sustainable Aviation Fuel Leader

Focus Impact BH3 Acquisition Company is set to combine with XCF Global Capital, paving the way for XCF to become a publicly-traded entity focused on sustainable aviation fuel production.

Summary

• Focus Impact BH3 Acquisition Company (Focus Impact) is merging with XCF Global Capital (XCF) to create a publicly-traded company, XCF Global, Inc., focused on sustainable aviation fuel (SAF).
• The merger involves Focus Impact merging into Merger Sub 1, with each Focus Impact Class A and Class B share converting into one share of NewCo Class A common stock.
• Merger Sub 2 will then merge into XCF, with each XCF share converting into NewCo Class A common stock based on a pre-money equity value of XCF at $1.75 billion.
• Public stockholders are not voting on the NewCo Charter or Bylaws.
• Randy Soule, majority stakeholder of New Rise, will own approximately 53.9% of the combined voting power of NewCo's Class A Common Stock, assuming no redemptions by the Public Stockholders.
• Nasdaq has determined to delist Focus Impact's securities due to not completing a business combination within 36 months of its IPO.
• Focus Impact's securities now trade on the OTC Pink Marketplace under the symbols BHACU, BHAC, and BHACW.
• As of February 3, 2025, there are 5,312,124 shares of Focus Impact Class A Common Stock and 1,608,333 shares of Focus Impact Class B Common Stock outstanding.
• The special meeting to vote on the merger is scheduled for February 27, 2025.
• EntrepreneurShares rendered an opinion that the Business Combination was fair from a financial point of view for the holders of shares of Focus Impact Common Stock (other than the Sponsor, any of its affiliates and any other holder of shares of Focus Impact Class B Common Stock).

Sentiment

Score: 6

Explanation: The document presents a mix of positive and negative aspects. The merger itself is a positive step, but the delisting from Nasdaq and potential dilution are concerning. The overall sentiment is neutral to slightly positive.

Positives

• The merger creates a pure-play SAF company in the public market.
• EntrepreneurShares rendered an opinion that the Business Combination was fair from a financial point of view for the holders of shares of Focus Impact Common Stock (other than the Sponsor, any of its affiliates and any other holder of shares of Focus Impact Class B Common Stock).

Negatives

• Focus Impact's shares are being delisted from Nasdaq.
• Public Stockholders will go from owning 22.8% of the Focus Impact Class A Common Stock prior to the Business Combination to owning 1.1% of the total shares outstanding of NewCo, assuming no redemptions by the Public Stockholders.

Risks

• The delisting from Nasdaq could reduce liquidity and analyst coverage.
• Public Stockholders that do not elect to redeem their shares of Focus Impact Class A Common Stock will experience dilution as a result of the Business Combination.
• The Former Sponsor, Sponsor and the officers and directors of the Focus Impact have no redemption rights in the event a business combination is not consummated in the required time period, and, accordingly, their shares will be worthless.
• The existence of financial and personal interests of Focus Impacts directors and officers and our Sponsor may result in a conflict of interest on the part of one or more of the directors between what he, she or they may believe is in the best interests of Focus Impact and its stockholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that stockholders vote for the proposals.

Future Outlook

NewCo intends to apply to list the NewCo Class A Common Stock and NewCo Warrants on the NYSE or Nasdaq under the symbols SAFX and SAFXW respectively.

Industry Context

The renewable fuel market is experiencing increased demand worldwide, particularly for sustainable aviation fuel. Major airlines have set 2030 targets for incorporating SAF into their fuel procurement programs.

Comparison to Industry Standards

• Focus Impact management compared XCF to a universe of public peers that included renewable diesel and sustainable aviation fuel producers such as Calumet, Neste, Gevo, LanzaJet and Vertex, as well as renewable natural gas and other biofuel producers such as Aemetis, Ameresco, Darling Ingredients, Green Plains, Montauk Renewables and Opal Fuels.
• The average multiple of revenue and EBITDA projected for comparable companies in 2025 is 1.63x and 8.02x, respectively, whereas the multiple of revenue and EBITDA projected for XCF in 2025 at the implied transaction value is 3.48x and 6.77x, respectively.

Stakeholder Impact

• Public Stockholders may redeem their shares for cash.
• The Former Sponsor, Sponsor and the officers and directors of the Focus Impact have no redemption rights in the event a business combination is not consummated in the required time period, and, accordingly, their shares will be worthless.

Next Steps

• Focus Impact stockholders will vote on the Business Combination Proposal and the Adjournment Proposal at a special meeting on February 27, 2025.
• If approved, the Business Combination will be consummated promptly following the special meeting.
• NewCo intends to apply to list the NewCo Class A Common Stock and NewCo Warrants on the NYSE or Nasdaq under the symbols SAFX and SAFXW respectively, upon the Closing.

Key Dates

Keywords

Business Combination, XCF Global Capital, Focus Impact BH3, Sustainable Aviation Fuel, Merger, Delisting, NewCo, SAF, SPAC