425: XCF Global, Southern Energy, DevvStream Plan Merger

XCF Global, Southern Energy Renewables, and DevvStream Corp. have entered a binding term sheet for a three-party merger to create a low-carbon fuels and environmental-asset platform.

Summary

• XCF Global, Southern Energy Renewables, and DevvStream Corp. signed a binding term sheet on January 26, 2026, for a proposed business combination.
• Southern and DEVS will merge into wholly-owned subsidiaries of XCF, with their stockholders receiving XCF Class A common stock.
• XCF will invest $10 million to convert and build out its New Rise Reno facility for sustainable aviation fuel (SAF) blending and general corporate purposes.
• This $10 million investment will be funded by EEME Energy SPV I LLC (EEME) purchasing XCF common stock.
• EEME is expected to purchase 7,000,000 shares for $700,000 contemporaneously with the term sheet execution.
• The remaining 93,000,000 shares for $9,300,000 are expected to be issued periodically until March 31, 2026, subject to a 19.99% Share Cap until stockholder approval.
• The parties aim to build a combined enterprise with an approximate enterprise value of $3.0 billion.
• Post-closing, XCF stockholders will hold approximately 66.67%, Southern stockholders approximately 23.33%, and DEVS stockholders approximately 10% of the combined entity.
• The combined entity aims to achieve annualized blended fuel product revenues exceeding $1.0 billion and minimum annualized EBITDA of $100 million.
• Southern is seeking approval from the State of Louisiana to issue up to $400 million in bonds.
• The combined company plans to explore licensing nuclear fusion technology, engaging nuclear EPC, and deploying Small Modular Reactor (SMR) nuclear power for clean fuel production and AI data centers.

Sentiment

Score: 7

Explanation: The filing outlines a significant strategic merger and substantial capital infusion for growth in a high-demand sector. While there are numerous forward-looking statements and explicit risks, the overall intent and potential scale of the combined entity, coupled with the immediate funding for plant conversion, suggest a positive strategic direction, albeit with execution uncertainties.

Positives

• Formation of an integrated platform for low-carbon fuels and environmental-asset monetization.
• $10 million investment from EEME to fund the conversion of XCF's New Rise Reno facility for SAF blending and general corporate purposes.
• Potential to achieve an enterprise value of approximately $3.0 billion for the combined entity.
• Targeted annualized blended fuel product revenues exceeding $1.0 billion and minimum annualized EBITDA of $100 million.
• Exploration of SMR nuclear power integration with eSAF and AI data centers.
• XCF's CEO, Chris Cooper, believes the combination will be "very accretive and an excellent opportunity" and has the potential to "solidify our footprint in North America as the supreme SAF producer."
• DevvStream's CEO, Sunny Trinh, highlights the complementary strengths: XCF's scale and speed-to-market, Southern's biomass feedstock focus, and DevvStream's environmental-asset capabilities.
• Southern's CEO, Jay Patel, sees meaningful potential in combining their biomass feedstock focus with XCF's production footprint and ability to accelerate commercialization.

Negatives

• The Term Sheet does not obligate the parties to consummate the Proposed Transaction, which remains subject to negotiation, execution of definitive agreements, and satisfaction or waiver of closing conditions.
• No assurance that definitive agreements will be entered into or that the Proposed Transaction will be consummated on the terms described or at all.
• The $3.0 billion combined enterprise valuation is an objective and "has not in the past and may never in the future be achieved."
• EEME's obligation to acquire shares is independent of the remainder of the proposed Transaction, meaning the funding could proceed even if the merger fails.
• The Share Cap limits EEME's immediate acquisition to 19.99% of outstanding shares until stockholder approval is obtained.

Risks

• Changes in domestic and foreign business, market, financial, political, regulatory, and legal conditions.
• 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.
• Risk that XCF is unable to achieve the specified annualized revenue and EBITDA thresholds ($1.0 billion revenue, $100 million EBITDA).
• 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.
• 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.
• Risk that negotiations among the parties relating to the Term Sheet or definitive agreements are delayed, modified, suspended, or terminated, including due to alleged breaches or differing interpretations.
• Inability of the parties to agree on mutually acceptable definitive agreements or to satisfy or waive closing conditions.
• Occurrence of events that could lead to termination of the Term Sheet or related negotiations, potentially resulting in disputes or litigation.
• Outcome of any legal proceedings against XCF, DEVS, Southern, EEME, or their 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.
• Uncertainty regarding valuations, capital structure, financing arrangements, equity ownership, or the allocation of economic interests, including the risk that the $3.0 billion combined enterprise value may never materialize.
• Changes to the structure, timing, or terms of any proposed transaction due to laws, regulations, accounting, or stock exchange requirements.
• Risk that required regulatory, governmental, stock exchange, or stockholder approvals are not obtained, are delayed, or are subject to adverse conditions.
• Risk that the announcement or pursuit of the transactions disrupts current plans, operations, or relationships of XCF, DEVS, or Southern.
• Risk that anticipated benefits are not realized due to competition, execution challenges, market conditions, or inability to grow profitably.
• Costs, expenses, and management distraction associated with the Term Sheet, negotiations, potential litigation, and transactions.
• Changes in applicable laws, regulations, or enforcement priorities, including extensive regulation and compliance obligations.
• Other economic, business, competitive, operational, or financial factors beyond management's control.

Future Outlook

The parties aim to build a combined enterprise focused on developing a next-generation low-carbon fuels platform, accelerating SAF adoption, expanding domestic capacity, and integrating environmental-attribute monetization. They also plan to explore integrating small modular reactor (SMR) nuclear power with electro-sustainable aviation fuel (eSAF) and AI data center power. The goal is to achieve an enterprise value of approximately $3.0 billion, annualized blended fuel product revenues exceeding $1.0 billion, and minimum annualized EBITDA of $100 million by June 30, 2026. Southern is also pursuing authorization for up to $400 million in state-supported bonds.

Management Comments

• "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." Chris Cooper, CEO of XCF.
• "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." Chris Cooper, CEO of XCF.
• "If consummated, this merger has the potential to solidify our footprint in North America as the supreme SAF producer." Chris Cooper, CEO of XCF.
• "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." Sunny Trinh, CEO of DevvStream.
• "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." Sunny Trinh, CEO of DevvStream.
• "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." Jay Patel, CEO of Southern Energy Renewables.
• "Subject to completing the necessary documentation, and approvals, we believe this collaboration could create a U.S.-based platform that can compete globally." Jay Patel, CEO of Southern Energy Renewables.

Industry Context

This proposed merger aligns with the growing global demand for sustainable aviation fuel (SAF) and green methanol, driven by decarbonization efforts in the aviation and shipping industries. The integration of carbon management and environmental-asset monetization (DevvStream) with SAF production (XCF) and biomass feedstock development (Southern) creates a vertically integrated platform. The exploration of Small Modular Reactor (SMR) nuclear power for eSAF and AI data centers positions the combined entity at the forefront of emerging clean energy technologies, addressing both fuel production and energy-intensive computing needs. This move reflects a broader industry trend towards comprehensive, integrated solutions for climate change mitigation and energy transition.

Comparison to Industry Standards

• The target of annualized blended fuel product revenues exceeding $1.0 billion and minimum annualized EBITDA of $100 million by June 30, 2026, positions the combined entity as a significant player in the SAF market, aiming for scale comparable to established or rapidly growing renewable fuel producers.
• XCF's New Rise Reno facility, with a permitted nameplate production capacity of 38 million gallons per year, is noted as an "early mover among large-scale SAF producers in North America," suggesting a competitive position relative to other emerging SAF projects.
• The focus on integrating environmental attributes and carbon credit generation (DevvStream's expertise) is a critical differentiator, as the monetization of these attributes is increasingly vital for the economic viability of low-carbon fuel projects, aligning with best practices in the ESG and renewable energy sectors.
• The exploration of SMR nuclear power for eSAF and AI data centers indicates an ambition to leverage advanced, zero-carbon energy sources, potentially setting a new standard for energy-intensive clean fuel production and data center operations, which is a nascent but rapidly developing area in the energy transition.

Management Changes

Corporate Governance

Legal Proceedings

• The filing mentions the risk of "any legal proceedings that may be instituted against XCF, DEVS, Southern, EEME or their respective affiliates" if the Term Sheet is terminated or definitive agreements are not reached, which "could be costly, time-consuming, divert management attention, and adversely affect the 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 is providing $10 million in funding through the purchase of XCF common stock, and EEME will have customary demand and piggy-back registration rights.
• XCF will use commercially reasonable efforts to cooperate and facilitate any settlement of ongoing disputes between XCF and affiliates of EEME.

Stakeholder Impact

• Shareholders (XCF, Southern, DEVS): Will become stockholders of the combined entity, with XCF shareholders holding 66.67%, Southern 23.33%, and DEVS 10%. Potential for increased shareholder value if the $3.0 billion enterprise value and financial milestones are achieved. Risk of dilution from EEME's investment and uncertainty if the merger fails.
• Employees: Potential for integration challenges or synergies, but also opportunities within a larger, more diversified company focused on growth in sustainable fuels and carbon management.
• Customers: Expected to benefit from increased long-term SAF supply, expanded domestic capacity, and integrated environmental-attribute monetization, potentially leading to more transparent and commercially viable low-carbon fuel options.
• Suppliers: Potential for increased demand for biomass feedstocks and other inputs as the combined entity expands its production capacity.
• Creditors: XCF will seek a forbearance agreement with Twain and GNCU regarding New Rise Reno indebtedness, which could impact existing creditors. Southern's plan to issue $400 million in bonds will introduce new debt.

Next Steps

• Finalization of mutually agreeable merger structure and definitive transaction documents.
• Satisfaction of certain closing conditions for the Proposed Transaction.
• EEME to complete funding of $10 million for XCF's Plant Conversion by March 31, 2026, according to the Funding Schedule.
• XCF to complete the buildout and conversion of its New Rise Reno facility for SAF blending.
• XCF to obtain stockholder approval for EEME's share issuance exceeding the 19.99% Share Cap.
• XCF to make application for XCF Shares to be listed on Nasdaq and Nasdaq Sweden (and/or other mutually agreeable European and Asian securities exchanges).
• Southern and DEVS to terminate their previous Agreement and Plan of Merger dated December 3, 2025.
• Southern stockholders to approve the Transaction by written consent.
• Insider stockholders of XCF and DEVS to enter into customary support agreements and lock-up agreements.
• XCF and Southern to use commercially reasonable efforts to engage Interlink for expansion sites and make an announcement with ExIm bank.
• XCF to cause New Rise Reno to enter into a forbearance agreement with Twain and GNCU for at least 6 months.
• XCF to engage a mutually agreed upon investment bank for future capital raising and Research and Coverage.
• XCF to cooperate and facilitate any settlement of ongoing disputes with affiliates of EEME.
• The combined company to enter into an updated Consulting Agreement with Focus Impact Partners.
• XCF to enter into a long-term offtake agreement for SAF and make a public announcement.
• XCF and Southern to enter into an agreement for XCF's long-term offtake partner to purchase SAF produced by Southern.
• 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 make a public announcement.
• Southern to complete engagement with an investment bank for the bond offering.
• Registration statement on Form S-4 to be declared effective by the SEC.
• Stockholders of XCF, Southern, and DEVS to approve the Transaction.
• Completion of satisfactory due diligence, execution of definitive documents, approvals by Special Committees, and satisfactory fairness opinions.

Key Dates

Recommendation

The proposed three-way merger and associated financing represent a significant strategic move with substantial upside potential in the rapidly growing sustainable aviation fuel and carbon credit markets. The $10 million immediate funding for the New Rise Reno facility and the ambitious financial targets (>$1B revenue, $100M EBITDA, $3B enterprise value) are compelling. However, the transaction is still subject to numerous closing conditions, definitive agreements, regulatory approvals, and stockholder consents, introducing considerable execution risk. The explicit cautionary statements regarding forward-looking projections and the possibility that the transaction may not close or achieve its stated objectives warrant a cautious approach. While the long-term vision is strong, the immediate uncertainty surrounding the consummation of the merger and the achievement of aggressive financial milestones suggests a "hold" recommendation until more definitive agreements are in place and progress on closing conditions can be assessed. Investors should monitor developments closely.

Keywords

Sustainable Aviation Fuel, SAF, Carbon Credits, Renewable Energy, Merger, Acquisition, XCF Global, Southern Energy Renewables, DevvStream Corp, EEME Energy, New Rise Reno, SMR, Small Modular Reactor, ESG, Decarbonization, Nasdaq, SAFX, DEVS