8-K: XCF Global Capital Extends Merger Deadline, Secures New Financing Amidst Major Debt Defaults and SAF Production Shift

XCF Global Capital, Inc. has extended its business combination agreement with Focus Impact BH3 Acquisition Company, secured significant new debt and an equity line, but faces immediate challenges with substantial defaults on its primary loan and ground lease, leading to a temporary halt in sustainable aviation fuel production.

Summary

• Focus Impact BH3 Acquisition Company (BHAC) and XCF Global Capital, Inc. (XCF) have amended their Business Combination Agreement, extending the termination date from May 31, 2025, to June 30, 2025.
• XCF entered into a First Amendment to Promissory Note with GL Part SPV I, LLC (GL) on April 17, 2025, modifying repayment terms for a $1,200,000 note (originally dated February 13, 2025) to be due 10 business days from a 'Qualified Financing Event' or Event of Default.
• A new Promissory Note for $2,500,000 was issued to GL on April 17, 2025, bearing $300,000 interest and requiring XCF to issue 5,000,000 common shares to GL upon certain conditions.
• XCF amended a $500,000 Promissory Note with Innovativ Media Group, Inc. (Innovativ) on April 17, 2025, also linking repayment to a 'Qualified Financing Event' and adding $60,000 in interest due to past-due status.
• XCF issued a $700,000 Promissory Note to Narrow Road Capital, Ltd. on May 1, 2025, with $140,000 interest, due September 30, 2025, and a stock-based penalty of 20% of outstanding principal per quarter for nonpayment after this date.
• A $250,000 Promissory Note was issued to Gregory Segars Cribb on May 14, 2025, with $50,000 interest, due September 30, 2025, also including a 20% quarterly stock-based penalty for nonpayment.
• NewCo (a BHAC subsidiary) and XCF entered into an Equity Line of Credit (ELOC) Purchase Agreement with Helena Global Investment Opportunities I Ltd (Helena) on May 30, 2025, allowing NewCo to sell up to $50,000,000 of Class A Common Stock to Helena post-business combination.
• As a commitment fee for the ELOC, XCF issued 740,000 common shares to Helena (expected to convert to 500,000 NewCo Class A Common Stock post-merger).
• A $2,000,000 Promissory Note (Helena Note) was issued to Helena on May 30, 2025, with $400,000 interest, due three months from disbursement or upon certain events; Randall Soule (XCF shareholder) transferred 2,840,000 XCF common shares to Helena in connection with this note.
• XCF's subsidiary, New Rise Renewables Reno, LLC, is in default on a $112,580,000 loan from Greater Nevada Credit Union (GNCU), with approximately $19.3 million in principal and interest, plus $2.1 million in penalties/late charges, past due as of May 15, 2025.
• New Rise Reno is also in default on its ground lease with Twain GL XXVIII, LLC, with $18.5 million due as of May 15, 2025, comprising $13.3 million in lease payments and $5.6 million in late fees/penalties.
• XCF's Reno production facility, which began initial production of Sustainable Aviation Fuel (SAF) in February 2025 and produced 1 million gallons, has temporarily shifted to renewable diesel production at full capacity (3,000 barrels per day) due to catalyst processing review for SAF.
• XCF expects to resume SAF production in or before the third quarter of 2025, but cannot assure timing or full capacity operation.
• Pamela M. Abowd was appointed Chief Accounting Officer on April 16, 2025, with an annual base salary of $300,000 and eligibility for 45,000 restricted stock units post-business combination.
• Jonathan Seeley was appointed Vice President, Treasurer in April 2025 (joined Feb 14, 2025), with his annual base salary increased to $260,000 and eligibility for 39,000 restricted stock units post-business combination.
• Gregory R. Surette (Chief Strategy Officer) and Gregory P. Savarese (Chief Marketing Officer) will receive additional common stock grants of 300,000 and 335,000 shares, respectively, upon the closing of the business combination, vesting over three years.
• Joseph Cunningham (former Chief Accounting Officer and Director) and Stephen Goodwin (former Chief Business Development Officer and Director) retired/resigned effective April 13, 2025, and February 27, 2025 (executive) / April 13, 2025 (director), respectively, receiving $330,000 in cash and 300,000 common shares each post-merger as part of separation agreements.

Sentiment

Score: 3

Explanation: The sentiment is negative due to significant and ongoing defaults on major loans and leases, which pose an existential threat to the company's operations. While new financing has been secured and an equity line established, the high cost of this new debt and the operational setback in SAF production (temporary shift to renewable diesel) indicate severe financial distress and execution challenges. The extension of the merger deadline also adds to uncertainty.

Positives

• The extension of the Business Combination Agreement provides additional time to finalize the merger with Focus Impact BH3 Acquisition Company.
• XCF has secured significant new financing through multiple promissory notes totaling $3.45 million in gross principal from GL, Narrow Road Capital, and Gregory Segars Cribb, and a $2.0 million note from Helena.
• The establishment of a $50,000,000 Equity Line of Credit (ELOC) with Helena Global Investment Opportunities I Ltd provides a substantial potential source of future capital post-business combination.
• The Reno production facility has successfully produced 1 million gallons of neat SAF and renewable naphtha since February 2025, demonstrating initial operational capability.
• Strategic hires of Pamela M. Abowd as Chief Accounting Officer and Jonathan Seeley as Vice President, Treasurer, bring experienced financial leadership to the company.
• The temporary shift to renewable diesel production allows the Reno facility to operate at nameplate capacity (3,000 barrels per day) and generate revenue while SAF catalyst processing is optimized.

Negatives

• XCF's subsidiary, New Rise Renewables Reno, LLC, is in significant default on a $112,580,000 loan from Greater Nevada Credit Union (GNCU), with approximately $19.3 million in principal and interest, plus $2.1 million in penalties/late charges, past due as of May 15, 2025.
• The company is also in default on its ground lease with Twain GL XXVIII, LLC, owing $18.5 million as of May 15, 2025, including $5.6 million in late fees and penalties.
• These defaults expose the company to severe remedies, including acceleration of debt, foreclosure on assets, and termination of the ground lease, which could lead to a temporary or permanent cessation of operations at the Reno facility.
• The temporary shift from SAF to renewable diesel production indicates an operational challenge in meeting SAF nameplate capacity, introducing uncertainty regarding the resumption and full-capacity operation of SAF production.
• The company acknowledges that the existence of these defaults could make it more difficult to obtain future financing on acceptable terms.
• The terms of the new promissory notes include high interest rates (e.g., 12% fixed for GL and Innovativ, 20% quarterly stock-based penalty for Narrow Road and Cribb notes if unpaid after September 30, 2025), indicating high-cost debt.
• The issuance of significant common stock (200,000, 5,000,000, 250,000, 740,000, plus potential 280,000 and 100,000 from options, and 2,840,000 from Soule's transfer, and additional shares for Surette and Savarese) suggests substantial dilution for existing shareholders.

Risks

• The inability of the parties to successfully or timely close the business combination, including the risk that any required regulatory approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect NewCo or the expected benefits of the business combination.
• Changes to the proposed structure of the proposed transactions that may be required or appropriate as a result of applicable laws or regulations.
• The ability to meet stock exchange listing standards following the consummation of the business combination.
• The ability of XCF to integrate the operations of New Rise and implement its business plan on its anticipated timeline.
• The ability of New Rise to produce the anticipated quantities of SAF without interruption or material changes to the SAF production process.
• XCF's ability to resolve current disputes between New Rise and its landlord (Twain) with respect to the ground lease for the New Rise Reno facility.
• XCF's ability to resolve current disputes between New Rise and its primary lender (GNCU) with respect to loans outstanding that were used in the development of the New Rise Reno facility.
• The risk that the proposed transactions disrupt current plans and operations of Focus Impact or XCF as a result of the announcement and consummation of the proposed transactions.
• The ability to recognize the anticipated benefits of the proposed transactions, which may be affected by, among other things, competition, the ability of NewCo to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees.
• Costs related to the proposed transactions.
• Changes in applicable laws or regulations.
• Risks related to extensive regulation, compliance obligations and rigorous enforcement by federal, state, and non-U.S. governmental authorities.
• The possibility that Focus Impact, XCF or NewCo may be adversely affected by other economic, business, and/or competitive factors.
• The availability of tax credits and other federal, state or local government support.
• Risks relating to XCF's and New Rise's key intellectual property rights.
• Various factors beyond management's control, including general economic conditions.

Future Outlook

XCF Global Capital expects to resume Sustainable Aviation Fuel (SAF) production in or before the third quarter of 2025, though the timing and ability to operate at full capacity are not assured. The company is actively evaluating financing alternatives to refinance the Greater Nevada Credit Union loan and Twain Ground Lease payments, aiming to generate sufficient cash flows from operations to meet its obligations and execute its business plan. The business combination with Focus Impact BH3 Acquisition Company is anticipated to close by June 30, 2025.

Management Comments

• XCF is in active discussions with GNCU to resolve the matters addressed in GNCU's notice to New Rise Reno, including the possibility of a potential forbearance or modified loan payment schedule while XCF seeks and secures financing and ramps-up SAF production.
• XCF is actively evaluating financing alternatives with other financial institutions and investors that would allow the re-financing of the GNCU Loan and the Ground Lease payments.
• Management has made the determination to temporarily produce renewable diesel which can be achieved at nameplate capacity (approximately 3,000 barrels per day) and without any additional modifications to the facility, while ramp-up processes for SAF are being undertaken.

Industry Context

This filing highlights the significant capital requirements and operational challenges within the nascent Sustainable Aviation Fuel (SAF) and renewable fuels industry. While there is strong market demand and regulatory push for SAF, the transition from pilot to full-scale commercial production, as evidenced by XCF's temporary shift to renewable diesel, can be complex and capital-intensive. The reliance on substantial debt financing and the need for a 'Qualified Financing Event' to trigger repayment terms underscore the funding hurdles faced by companies in this sector. The defaults on major loans and leases also reflect the financial fragility that can accompany ambitious renewable energy projects, especially when production ramp-up does not meet initial expectations. The ongoing SPAC merger process is a common strategy for emerging companies to access public markets and capital, but extensions and financial distress can complicate these transactions.

Management Changes

Corporate Governance

Legal Proceedings

• Greater Nevada Credit Union (GNCU) has provided notice of an event of default on a $112,580,000 loan to New Rise Renewables Reno, LLC due to failure to make required minimum monthly payments. GNCU has demanded the loan be brought current, including approximately $19.3 million in principal and interest and $2.1 million in penalties/late charges as of May 15, 2025. GNCU's remedies include acceleration of the loan and foreclosure on collateral.
• Twain GL XXVIII, LLC has provided notice of default on the Ground Lease to New Rise Renewables Reno, LLC for failure to make certain payments. As of May 15, 2025, $18.5 million is owing, comprised of $13.3 million in lease payments and $5.6 million in late fees and penalties. Twain's remedies include the right to terminate the lease and take possession of the facility.

Related Party Transactions

• Randall Soule, an XCF shareholder, agreed to transfer 2,840,000 shares of XCF common stock to Helena Global Investment Opportunities I Ltd in connection with the $2,000,000 Helena Note. XCF agreed to issue Mr. Soule 2,840,000 replacement shares in consideration for this transfer. Helena is obligated to return any remaining Advanced Shares to Soule after receiving $2,400,000 in payments and net proceeds from share sales.

Stakeholder Impact

• **Shareholders**: Significant potential for dilution due to multiple new share issuances (GL notes, Narrow Road/Cribb options, ELOC commitment fee, management equity grants) and potential stock-based penalties for unpaid debt. The ongoing financial distress and operational challenges create high uncertainty regarding future share value.
• **Creditors (GNCU, Twain)**: Current defaults on substantial loans and leases put these creditors at risk of non-payment and may lead to legal action, including foreclosure or lease termination, to recover their investments.
• **New Lenders (GL, Innovativ, Narrow Road, Cribb, Helena)**: While providing new capital, these lenders are exposed to the company's financial distress, with repayment terms often contingent on future financing events or carrying high interest rates/stock-based penalties.
• **Employees**: Management changes, including new appointments and departures, may create uncertainty. The operational challenges at the Reno facility could impact job security if not resolved.
• **Customers (Phillips 66)**: The temporary shift from SAF to renewable diesel production may impact Phillips 66's supply of SAF, potentially affecting their renewable fuel commitments, though renewable diesel is still being supplied.

Next Steps

• Resolve the event of default with Greater Nevada Credit Union (GNCU) by bringing the loan current or negotiating a forbearance/modified payment schedule.
• Resolve the default on the Ground Lease with Twain GL XXVIII, LLC by making past due payments or negotiating a modified lease payment schedule.
• Secure additional financing to refinance the GNCU Loan and Ground Lease payments.
• Optimize catalyst processing for Sustainable Aviation Fuel (SAF) production at the Reno facility.
• Resume full-scale SAF production at the Reno facility in or before the third quarter of 2025.
• Complete the business combination with Focus Impact BH3 Acquisition Company by the extended deadline of June 30, 2025.
• Integrate new management personnel (Pamela M. Abowd as CAO, Jonathan Seeley as VP, Treasurer) into the company's operations.

Key Dates

Recommendation

Keywords

XCF Global Capital, Focus Impact BH3 Acquisition Company, Business Combination Agreement, Merger Extension, Promissory Notes, Debt Financing, Equity Line of Credit, Sustainable Aviation Fuel, SAF Production, Renewable Diesel, Loan Default, Ground Lease Default, SEC Filing, 8-K, Corporate Governance, Management Changes, Financial Distress, Biorefinery, Renewable Energy, Unsecured Debt, Dilution