425: XCF Global Capital to Go Public Through Merger with Focus Impact BH3 Acquisition Co., Aiming to Lead Sustainable Aviation Fuel Production

XCF Global Capital, a sustainable aviation fuel (SAF) producer, is set to go public through a business combination with Focus Impact BH3 Acquisition Co., with an implied pro forma enterprise value of $1.84 billion.

Summary

• XCF Global Capital, Inc. and Focus Impact BH3 Acquisition Co. have entered into a definitive Business Combination Agreement.
• The transaction will result in a newly formed holding company of XCF becoming a publicly-listed company on NYSE or Nasdaq.
• XCF Global intends to be a leading producer of SAF with an initial annualized production capacity of 38 million gallons following the close of its acquisition of New Rise Renewables.
• XCF recently acquired two strategic locations in Wilson, North Carolina and Ft. Myers, Florida, which, upon conversion to SAF production, should further increase the combined companys capacity to over 150 million gallons per year of pure SAF within the next 5 years.
• The proposed transaction implies a pro forma enterprise value for the combined company of $1.84 billion.
• Existing XCF shareholders are anticipated to roll 100% of their equity ownership and will own a pro forma equity ownership of approximately 91.4% in the newly combined entity.
• The transaction is anticipated to close in the second half of 2024, subject to customary closing conditions.

Sentiment

Score: 8

Explanation: The document expresses a positive outlook on the business combination and the future of XCF Global in the SAF market, supported by regulatory tailwinds and strategic partnerships.

Positives

• XCF intends to be a leading producer of SAF with an initial annualized production capacity of 38 million gallons following the close of its acquisition of New Rise Renewables.
• XCF recently acquired two strategic locations in Wilson, North Carolina and Ft. Myers, Florida, which, upon conversion to SAF production, should further increase the combined companys capacity to over 150 million gallons per year of pure SAF within the next 5 years.
• The leadership team brings experience in engineering and operations from various sectors including energy and commodities.

Risks

• The acquisition of New Rise Renewables is expected to be completed in 2024 and the business combination with Focus Impact BH3 is conditioned on its completion.
• The transaction is anticipated to close in the second half of 2024, subject to customary closing conditions.
• The amount of redemptions by Focus Impact BH3s public stockholders in connection with the Business Combination.
• The inability of XCF to successfully or timely consummate the New Rise acquisition, 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.

Future Outlook

XCF Global intends to be a leading producer of SAF with an initial annualized production capacity of 38 million gallons following the close of its acquisition of New Rise Renewables. The Company expects to rapidly scale by acquiring more strategically located, smaller-footprint sites and quickly converting them into SAF production facilities.

Management Comments

• At XCF, we see tremendous growth potential from SAF and renewables and we are very bullish on the sector, said Mihir Dange, CEO of XCF Global.
• We live in an exciting time with so many compelling green energy platforms racing to reduce the globes carbon footprint.
• We are in the very beginning stages of SAF in the United States and XCF is committed to being a leader in this space.
• Our goal is to change the world for the better while delivering world class returns.
• Focus Impact BH3 is proud to be part of this exciting business combination with XCF Global, said Carl Stanton, CEO of Focus Impact BH3 Acquisition Co.
• Our partnership with XCF and their dedication to catalyzing the sustainable fuel industry is an example of our commitment to investing in socially forward companies.
• Together, we aim to accelerate XCFs growth to become one of Americas leading SAF producers, where we can contribute to reducing the aviation sectors global carbon footprint and help to build a company that creates significant growth and value for its investors over time.

Industry Context

The announcement highlights the growing importance of SAF in the aviation industry's efforts to reduce carbon emissions, aligning with government initiatives and airline commitments to sustainable practices.

Comparison to Industry Standards

• The document positions XCF Global as a pure-play SAF producer, differentiating it from competitors that are predominantly legacy crude oil refiners.
• The document references the Sustainable Aviation Fuel Grand Challenge, an ambitious partnership between the U.S. Departments of Energy, Transportation, Agriculture, and other federal government agencies to put the aviation sector on a pathway to full decarbonization by 2050.
• The document references the International Air Transport Association (IATA) emissions reduction targets, many airlines have now set SAF targets to help the industry work towards deploying necessary capital investments.

Stakeholder Impact

• Shareholders of Focus Impact BH3 will have the opportunity to vote on the business combination.
• The combined company aims to create significant growth and value for its investors over time.
• The business combination is expected to contribute to reducing the aviation sector's global carbon footprint.

Next Steps

• Focus Impact BH3 and XCF intend to prepare and file with the SEC a Registration Statement on Form S-4.
• Focus Impact BH3 will mail the definitive proxy statement/prospectus and other relevant documents to its stockholders as of a record date to be established for voting on the business combination.
• The transaction is anticipated to close in the second half of 2024, subject to customary closing conditions.

Key Dates