DEFM14A: Renewable Energy Firms Announce All-Stock Merger

Zeo Energy Corp. and Heliogen, Inc. have entered into an all-stock merger agreement, with Heliogen stockholders set to receive shares of Zeo Energy Class A Common Stock, aiming to combine their solar energy solutions and address Heliogen's liquidity challenges.

Summary

• Zeo Energy Corp. and Heliogen, Inc. entered into an Agreement and Plan of Merger and Reorganization on May 28, 2025, for an all-stock acquisition of Heliogen by Zeo Energy.
• The transaction involves a two-step merger: Merger Sub I will merge into Heliogen, with Heliogen surviving as a wholly-owned subsidiary of Zeo Energy, followed immediately by Heliogen merging into Merger Sub II, with Merger Sub II surviving as a wholly-owned subsidiary of Zeo Energy.
• Each outstanding share of Heliogen Common Stock (excluding shares held by Zeo Energy, Heliogen, or their subsidiaries) will be converted into a number of shares of Zeo Energy Class A Common Stock equal to the Exchange Ratio, plus cash for fractional shares.
• The Total Merger Consideration is $10.0 million, subject to adjustment based on Heliogen's Net Cash at Closing: reduced by 50% if Net Cash is below $13.0 million, or increased by 50% if Net Cash is above $16.0 million.
• Heliogen's Net Cash at Closing must be equal to or greater than $10.0 million for Zeo Energy's obligation to consummate the merger, unless waived.
• Based on an illustrative Exchange Ratio of approximately 0.9546 (assuming 6,605,298 Heliogen Fully-Diluted Shares as of June 24, 2025, and Net Cash between $13.0M and $16.0M), former Heliogen stockholders are expected to own approximately 11% of Zeo Energy's outstanding common stock immediately after closing.
• The Heliogen board of directors unanimously approved the merger, deeming it fair and in the best interests of Heliogen and its stockholders.
• A special meeting of Heliogen stockholders is scheduled for August 8, 2025, to vote on the merger proposal and an adjournment proposal.
• Certain Heliogen stockholders, owning approximately 23.5% of outstanding shares as of June 24, 2025, have entered into voting and support agreements to vote in favor of the merger.

Sentiment

Score: 3

Explanation: The merger is a strategic necessity for Heliogen, which faces significant liquidity issues and going concern doubts. While it offers a path forward and Nasdaq listing for Heliogen shareholders, the terms reflect Heliogen's distressed position. Zeo Energy is acquiring a company with substantial financial challenges, and its own recent financial performance shows increased losses and decreased revenue, indicating a challenging integration ahead. The overall sentiment is cautious, reflecting the distressed nature of the acquisition for Heliogen and the financial headwinds for Zeo Energy.

Positives

• The merger provides a strategic intervention for Heliogen, which faced substantial doubt about its ability to continue as a going concern due to significant cash outflows and no active revenue-generating projects.
• Heliogen stockholders will receive shares of Zeo Energy Class A Common Stock, which are traded on Nasdaq, offering improved liquidity compared to Heliogen's current OTCQX listing.
• The all-stock nature of the transaction allows former Heliogen stockholders to participate in the future growth and potential value accretion of the combined entity.
• The transaction is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes, generally meaning U.S. Holders will not recognize gain or loss on the exchange of shares (except for fractional shares).
• The Heliogen Board of Directors unanimously recommended the merger, following an extensive strategic review process that did not yield other actionable alternative proposals offering greater value.
• Existing voting agreements from stockholders representing approximately 23.5% of Heliogen's outstanding shares increase the likelihood of securing the necessary stockholder approval.
• Zeo Energy's board views the acquisition as empowering its ability to serve solar energy system customers through additional capital and increased opportunities for diversification in the energy systems market.

Negatives

• Heliogen had liquidity of $30.1 million as of March 31, 2025, down from $36.9 million as of December 31, 2024, and incurred a net loss of $6.4 million and used $8.4 million cash in operations during Q1 2025, with no revenues.
• Heliogen's common stock and public warrants were delisted from the NYSE on June 20, 2024, and now trade on the OTCQX market, negatively impacting liquidity and limiting its ability to raise future financing.
• The estimated return to Heliogen stockholders in a potential liquidation scenario (approximately $1.21 per share as of July 1, 2025) was less than the estimated value of the Exchange Ratio in the merger (approximately $1.51 per share), indicating a distressed sale.
• The value of the merger consideration will fluctuate with Zeo Energy Class A Common Stock performance, and the Exchange Ratio will not be adjusted for declines in Zeo Energy's stock price prior to closing.
• Heliogen may be required to pay a termination fee of $450,000 to Zeo Energy under certain circumstances, which could cause significant cash flow difficulties for Heliogen if the merger is not completed.
• The merger agreement limits Heliogen's ability to solicit other acquisition proposals and imposes restrictions on its business operations during the interim period.
• Zeo Energy has identified material weaknesses in its internal controls over financial reporting, which could adversely affect its business and stock price if not remediated.

Risks

• The Mergers may not be completed on the terms or timeline currently contemplated, or at all, due to various conditions, including Heliogen Stockholder Approval and SEC effectiveness of the Form S-4.
• The Exchange Ratio will not be adjusted based on the market price of Zeo Energy Class A Common Stock, meaning the consideration at closing may have a greater or lesser value than at the time the Merger Agreement was signed.
• Heliogen stockholders will have a reduced ownership interest (approximately 11%) and voting power in the Combined Company after the Mergers, and Zeo Energy's stock may be affected by different factors than Heliogen's.
• Litigation relating to the Mergers could result in an injunction preventing completion and/or substantial costs to both companies.
• Zeo Energy or Heliogen may waive one or more closing conditions without re-soliciting stockholder approval, potentially impacting shareholder interests.
• Heliogen stockholders will forfeit all rights to their Heliogen Common Stock other than the right to receive merger consideration, losing direct participation in Heliogen's future earnings or growth.
• Neither Heliogen nor Zeo Energy stockholders will be entitled to appraisal rights in the Mergers under Delaware law.
• The unaudited pro forma financial information is illustrative and may not reflect actual operating results or financial condition of the combined company, and final acquisition accounting may differ materially.
• The Merger Agreement limits Heliogen's ability to pursue alternative acquisition proposals and includes a termination fee, which may discourage other offers.
• Sales of substantial amounts of Zeo Energy Class A Common Stock by former Heliogen stockholders could depress its stock price.
• The pendency of the Mergers could adversely affect the business and operations of both companies due to uncertainty among employees, partners, customers, and suppliers.
• Zeo Energy expects to incur substantial costs and expenses related to the integration of the Combined Company, which are difficult to estimate accurately and may exceed expectations.
• Zeo Energy may fail to realize all anticipated benefits or synergies from the Mergers, or they may take longer to realize than expected, impacting financial results.
• Failure to attract, motivate, and retain executives and other key employees could diminish the anticipated benefits of the Mergers.
• The Combined Company's ability to use net operating loss (NOL) carryforwards and other tax attributes may be limited due to ownership changes, including as a result of the Mergers.
• The solar energy industry is an emerging and constantly evolving market, and additional demand for solar energy systems may not develop as expected, impacting Zeo Energy's growth.
• Zeo Energy faces intense competition from electric utilities, retail electric providers, independent power producers, and other renewable energy companies, which could harm its business.
• A material reduction in the retail price of electricity charged by electric utilities or other providers would make Zeo Energy's offerings less economically attractive.
• Zeo Energy may be unable to sustain its net losses as it expands operations and incurs increased spending.
• Zeo Energy's growth depends on successful relationships with third parties (equipment suppliers, subcontractors, dealers), and disruptions could impair its ability to grow.
• Due to a limited number of suppliers in the industry, acquisition of suppliers by competitors, shortages, delays, or price changes (e.g., due to tariffs) could result in sales and installation delays and loss of customers.
• Increases in the cost or reduction in supply of solar energy system components due to tariffs or trade restrictions imposed by the U.S. government could adversely affect Zeo Energy's business.
• There is no assurance that Zeo Energy will be able to comply with Nasdaq's continued listing standards, which could lead to delisting and adverse consequences for its stock.
• Sales of a substantial number of Zeo Energy securities by existing securityholders could cause the stock price to fall and impair future capital raising efforts.
• Zeo Energy's management team has limited experience managing a public company, and regulatory compliance obligations may divert attention from day-to-day business.

Future Outlook

Zeo Energy plans to increase its market impact, revenue, and profits by expanding into new geographic markets organically and through M&A, increasing capacity by investing in personnel and systems, growing its external dealer sales channel, and expanding customer options for affordable solar energy, including roofing services and lease financing. The combined company is projected to achieve net revenue of $123.9 million and positive Adjusted EBITDA of $9.8 million in fiscal year 2025, with unlevered free cash flow of ($2.4 million).

Management Comments

• Christiana Obiaya (Heliogen CEO): Laid out strategic priorities to extend cash runway and afford more attractive financing alternatives, including focusing on conserving cash and refining Heliogen's business plan.
• Timothy Bridgewater (Zeo Energy CEO): Believes the acquisition of Heliogen will further empower Zeo Energy to serve its solar energy system customers through additional capital for sale, design, procurement, installation, and maintenance of residential solar energy systems.
• Timothy Bridgewater (Zeo Energy CEO): Believes the combined company will have increased ability to scale and enhance opportunities for meaningful diversification in the energy systems market, and improved financial performance and operations compared to Zeo Energy on a stand-alone basis.

Industry Context

The solar energy industry is an emerging and constantly evolving market, with growth dependent on factors like consumer acceptance, pricing of alternative energy sources, a favorable regulatory environment, and continuation of tax benefits and incentives. The industry faces intense competition from electric utilities, retail electric providers, independent power producers, and other renewable energy companies. Declining costs of solar components have historically driven adoption, but recent increases due to supply chain disruptions, tariffs, and inflation pose challenges. Regulatory changes, such as those to net metering policies, can significantly impact demand and competitiveness. The U.S. government's stance on climate change and related incentives (e.g., IRA) significantly influences market conditions.

Comparison to Industry Standards

• The document notes that Zeo Energy's management uses non-GAAP financial measures like Adjusted EBITDA and Contribution Margin to compare its financial results with other companies in its industry, many of which present similar non-GAAP financial measures to investors, but does not list specific comparable companies or their results.
• Heliogen's financial advisor, PEP Advisory, reviewed the financial terms of certain other transactions deemed relevant and compared the financial and operating performance of Heliogen and Zeo with publicly traded companies deemed comparable, but specific comparable companies or their results are not detailed in the document.
• Zeo Energy's CEO compensation is based on comparison to 'peer organizations with similar activities and risk profiles', but no specific comparable companies are named.

Management Changes

Corporate Governance

Legal Proceedings

• Zeo Energy is not currently a party to any material litigation or governmental or other proceeding, but may be involved in various lawsuits and legal proceedings in the ordinary course of business.
• Zeo Energy's financing partners, Sunnova and Mosaic, voluntarily filed for Chapter 11 bankruptcy in June 2025, with outstanding amounts owed to Zeo Energy of $3,113,019 and $734,140 respectively. Zeo Energy has recorded a full reserve against the Sunnova receivable.
• Heliogen is involved in various claims and lawsuits arising in the normal course of business, but management believes the ultimate outcome will not have a material adverse effect on its financial statements.
• Heliogen is currently under audit by the Internal Revenue Service for the year ended December 31, 2022.

Related Party Transactions

• Zeo Energy's CEO, Timothy Bridgewater, is the owner and manager of White Horse Energy, LC, which manages third-party leasing companies (e.g., Solar Leasing) that finance Zeo Energy's customer leases.
• Approximately 30% of Zeo Energy's customers who entered into leasing agreements in 2024 did so with third-party leasing companies managed by White Horse Energy.
• For the year ended December 31, 2024, and through March 31, 2025, these related-party leasing companies purchased approximately $22.2 million in solar energy systems from Zeo Energy.
• Zeo Energy recognized $2.57 million in related party revenue for the three months ended March 31, 2025, and $22.16 million for the year ended December 31, 2024.
• Zeo Energy had $286,103 in accounts receivable and $2,320,129 in accrued expenses due to related parties as of March 31, 2025.
• Zeo Energy issued a $4.0 million convertible promissory note to LHX Intermediate LLC (a 14.1% Class A Common Stock owner) in December 2024, with $2.5 million advanced as of March 31, 2025.
• Heliogen had an agreement with NantG Power, LLC (an affiliated sister-company to Nant Capital LLC, a >5% stockholder) for front-end concept design and R&D engineering services, recognizing $0.2 million and $0.1 million in services revenue from NantG in 2024 and 2023, respectively.

Stakeholder Impact

• Shareholders of Heliogen will exchange their shares for Zeo Energy Class A Common Stock, becoming shareholders of a larger, publicly traded company on Nasdaq, but will experience significant dilution (expected 11% ownership in combined entity).
• Employees of Heliogen may face uncertainty regarding their future roles, with some potentially being terminated as part of the merger, while continuing employees will receive comparable compensation and benefits for 12 months post-merger.
• Customers of Heliogen are expected to see continued service under Zeo Energy, which aims to enhance offerings and expand capabilities.
• Suppliers and partners of both companies may experience disruptions or changes in business relationships due to the merger's pendency and integration efforts.
• Creditors of Heliogen will see their liabilities assumed by Zeo Energy, subject to the terms of the merger agreement and the minimum net cash condition.

Next Steps

• Heliogen stockholders to virtually attend a special meeting on August 8, 2025, to vote on the Merger Proposal and Adjournment Proposal.
• Zeo Energy and Heliogen are working to complete the Mergers in the third quarter of 2025.
• Following the Effective Time, Heliogen Common Stock will no longer be publicly traded and will be delisted from OTCQX, and deregistered under the Exchange Act.
• Zeo Energy Class A Common Stock issued in the Mergers will be listed for trading on Nasdaq.
• At least one day after the Second Effective Time, Parent will transfer all outstanding equity of the Surviving Company to OpCo in exchange for Class A Units of OpCo.

Key Dates

Recommendation

Keywords

Merger, Acquisition, Solar Energy, Renewable Energy, Concentrated Solar Power, Residential Solar, SEC Filing, Proxy Statement, Stock Transaction, Corporate Governance, Risk Management, Financial Reporting, Nasdaq Listing, OTC Markets, Net Metering, Tax-Free Reorganization, Liquidity, Going Concern