425: Focus Impact BH3 and XCF Global Capital Waive Key Conditions to Advance Business Combination

Focus Impact BH3 Newco, Inc. and XCF Global Capital, Inc. have mutually agreed to waive several conditions precedent to their business combination, including board composition, specific loan and lease disputes, and unfulfilled agreements, to facilitate the closing of the merger.

Summary

• Focus Impact BH3 Newco, Inc. (NewCo), a subsidiary of Focus Impact BH3 Acquisition Company (BHAC), and XCF Global Capital, Inc. (XCF) entered into a waiver on June 5, 2025, regarding their Business Combination Agreement.
• The waiver allows the business combination to proceed despite certain conditions not being met, which otherwise would have prevented the closing.
• Key waived conditions include the final composition of NewCo's board of directors, which will consist of six members: four designated by XCF (Mihir Dange, Anne Anderson, Sanford Cockrell, Si-Yeon Kim), one by BHAC (Wray Thorn), and one mutually designated independent director (Carter McCain).
• The waiver also covers issues previously disclosed in NewCo's June 3, 2025 Form 8-K, specifically concerning the Greater Nevada Credit Union Loan, the Twain Ground Lease, and matters related to SAF Production.
• Additionally, the waiver addresses the fact that Phillips 66 Company's right of first refusal on the Reno, Nevada production facility has not been permanently waived prior to closing.
• The Amended Key Agreement has not been executed, and the Company Service Level Insurance Coverage has not been purchased at or prior to the Closing, both of which are now waived conditions.
• The waiver explicitly states that any changes or effects directly or indirectly attributable to these waived conditions will not cause a failure of any condition set forth in the Business Combination Agreement.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative. While the waiver allows the business combination to proceed, which is positive for deal certainty, the underlying reasons for the waivers (unmet conditions, unresolved disputes, unexecuted agreements, and lack of insurance) introduce significant concerns and potential future liabilities or operational challenges for the combined entity.

Positives

• The mutual agreement to waive conditions indicates a strong commitment from both Focus Impact BH3 and XCF Global Capital to complete the business combination.
• The waiver removes potential roadblocks that could have delayed or terminated the merger, providing greater certainty for the transaction's closing.
• The establishment of the NewCo board composition, even if different from initial plans, provides clarity on future governance.

Negatives

• The necessity of waiving conditions suggests that XCF Global Capital has not fully met certain pre-closing requirements, indicating potential operational or financial challenges.
• Specific issues like the Greater Nevada Credit Union Loan, Twain Ground Lease disputes, and unfulfilled SAF Production matters highlight unresolved problems that could impact the combined entity post-merger.
• The failure to permanently waive Phillips 66 Company's right of first refusal on the Reno facility could limit future strategic flexibility or asset sales.
• The non-execution of the Amended Key Agreement and the lack of Company Service Level Insurance Coverage prior to closing represent unaddressed contractual and risk management items.

Risks

• Changes in domestic and foreign business, market, financial, political, and legal conditions could adversely affect the combined entity.
• The potential for termination of negotiations and agreements related to the business combination or XCF's offtake arrangements remains a risk.
• The outcome of any legal proceedings against Focus Impact, XCF, NewCo, or others could materially impact the business.
• Inability to successfully or timely close the business combination due to unobtained or delayed regulatory approvals, or unanticipated conditions.
• Changes to the proposed transaction structure may be required by applicable laws or regulations.
• Challenges in meeting stock exchange listing standards following the consummation of the business combination.
• XCF's ability to integrate the operations of New Rise and implement its business plan on its anticipated timeline may face difficulties.
• New Rise's ability to produce anticipated quantities of Sustainable Aviation Fuel (SAF) without interruption or material changes to the production process is uncertain.
• XCF's ability to resolve current disputes between New Rise and its landlord regarding the ground lease for the Reno facility poses a risk.
• XCF's ability to resolve current disputes between New Rise and its primary lender concerning loans outstanding for the Reno facility development is critical.
• The proposed transactions may disrupt current plans and operations of Focus Impact or XCF.
• Challenges in recognizing the anticipated benefits of the proposed transactions due to competition, growth management, customer/supplier relationships, and retention of key employees.
• Costs related to the proposed transactions could be higher than anticipated.
• Changes in applicable laws or regulations, and risks related to extensive regulation, compliance obligations, and rigorous enforcement by governmental authorities.
• Adverse effects from other economic, business, and/or competitive factors.
• The availability of tax credits and other federal, state, or local government support is crucial for XCF's operations.
• 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

The document includes forward-looking statements regarding Focus Impact's and XCF's expectations for future performance, anticipated financial impacts of the business combination, estimates of financial and performance metrics, projections of market opportunity and share, and the satisfaction and timing of closing conditions. These statements are subject to significant risks and uncertainties that could cause actual results to differ materially.

Management Comments

• Carl Stanton, Chief Executive Officer of Focus Impact BH3 Newco, Inc., signed the waiver, indicating the company's agreement to proceed with the business combination despite the waived conditions.
• Mihir Dange, Chief Executive Officer of XCF Global Capital, Inc., signed the waiver, signifying XCF's commitment to the merger and acceptance of the waived conditions.

Industry Context

The mention of 'SAF Production' (Sustainable Aviation Fuel) indicates that the business combination involves a company operating in the renewable energy and sustainable fuels sector, an industry experiencing significant growth and regulatory focus due to climate change initiatives and demand for decarbonization in aviation.

Management Changes

Corporate Governance

Legal Proceedings

• The document mentions 'the outcome of any legal proceedings that may be instituted against Focus Impact, XCF, NewCo or others' as a risk.
• It also highlights 'current disputes between New Rise and its landlord with respect to the ground lease for the New Rise Reno facility' as an ongoing issue.
• Furthermore, 'current disputes between New Rise and its primary lender with respect to loans outstanding that were used in the development of the New Rise Reno facility' are noted as unresolved matters.

Stakeholder Impact

• Shareholders of BHAC and XCF: The waiver provides greater certainty for the completion of the business combination, which could be positive for shareholders seeking the merger's benefits, but the underlying issues could introduce future risks or reduce anticipated value.
• Employees: The completion of the merger provides clarity on the future structure of the combined entity, potentially reducing uncertainty for employees.
• Customers and Suppliers: The ability of the combined entity to grow and manage growth profitably, and maintain relationships with customers and suppliers, is a stated risk, indicating potential impact.
• Creditors (Greater Nevada Credit Union): The ongoing loan disputes with Greater Nevada Credit Union could impact the financial health and creditworthiness of the combined entity.
• Phillips 66 Company: Their right of first refusal not being permanently waived could affect future asset disposition strategies for the Reno facility.

Next Steps

• Consummation of the business combination between Focus Impact BH3 and XCF Global Capital.
• Integration of New Rise operations by XCF and implementation of its business plan.
• Resolution of current disputes between New Rise and its landlord regarding the ground lease.
• Resolution of current disputes between New Rise and its primary lender regarding outstanding loans.
• Meeting stock exchange listing standards following the consummation of the business combination.

Key Dates

Recommendation

Keywords

Business Combination, Merger, Waiver, SEC Filing, Form 425, Focus Impact BH3 Acquisition Company, XCF Global Capital, NewCo, Sustainable Aviation Fuel, SAF Production, Corporate Governance, Risk Management, SEC, Phillips 66, Greater Nevada Credit Union, Twain Ground Lease