SCHEDULE 13D/A: Carbon Direct Proposes Take-Private Acquisition of LanzaTech Global at $0.02 Per Share, Citing Dire Financial Condition

Carbon Direct Capital Management and its affiliates have proposed to acquire all outstanding shares of LanzaTech Global, Inc. for $0.02 per share, asserting the company faces potential bankruptcy and requires private capital for its mission.

Summary

• Carbon Direct Capital Management LLC and its affiliates (the "Buyer Group") have submitted a non-binding proposal to acquire all outstanding common shares of LanzaTech Global, Inc. for $0.02 per share.
• The Buyer Group currently beneficially owns 44,968,002 shares, representing 18.5% of LanzaTech's common stock, including shares convertible from notes.
• The proposal, dated April 3, 2025, suggests that LanzaTech would best achieve long-term value and enhance its competitive position as a private company.
• The Buyer Group believes this offer, despite being below the current market price, is necessary to prevent "total degradation of stockholder value, including through a bankruptcy," and that the market has not fully reflected LanzaTech's "dire financial position."
• The offer implies an enterprise value of approximately $100 million for LanzaTech.
• The Buyer Group states it will fully finance the transaction with no financing condition and is prepared to extend additional financing to LanzaTech.
• They are open to exploring alternative structures, including a sale under Section 363 of Chapter 11 of the U.S. Bankruptcy Code.
• The Buyer Group previously financed LanzaTech with a $40,150,000 convertible promissory note on August 5, 2024, with a conversion price of $1.25 and an 8% annual interest rate, expiring August 6, 2029.

Sentiment

Score: 2

Explanation: The sentiment is overwhelmingly negative for current shareholders due to a proposed acquisition price of $0.02 per share, explicitly stated to be below market, and strong warnings of impending bankruptcy and total loss of shareholder value if the offer is not accepted. While the offer itself provides a potential lifeline, it comes at a severe cost to existing equity holders.

Positives

• The proposal aims to provide some value to stockholders and protect creditor investments, potentially staving off a complete loss of value in bankruptcy.
• The Buyer Group is prepared to fully finance the transaction with no financing condition, indicating a clear path to funding.
• The Buyer Group is open to extending additional financing to LanzaTech to complete the transaction.
• The Buyer Group is willing to explore various transaction structures, including a Section 363 bankruptcy sale, offering flexibility.

Negatives

• The proposed acquisition price of $0.02 per share is significantly below the current market price, indicating a substantial loss for existing shareholders.
• The Buyer Group explicitly states concerns about LanzaTech's "dire financial position" and the potential for "total degradation of stockholder value, including through a bankruptcy."
• The Buyer Group believes that "100% of stockholder value and a major portion of the creditors investments will be lost" if the company proceeds to bankruptcy without this offer.
• The company is urged to file its Annual Report on Form 10-K or provide "fulsome public disclosures about the Company's financial condition and liquidity," suggesting a lack of transparency or concerning financial health.
• The Buyer Group asserts that "substantial supplemental growth capital" can "only be accomplished in private markets," implying public market access challenges for LanzaTech.

Risks

• Bankruptcy Risk: The Buyer Group explicitly states that "the only alternative to this offer will be a bankruptcy process where 100% of stockholder value and a major portion of the creditors investments will be lost."
• Liquidity and Financial Condition: Concerns are raised about the "dire nature of the Company's financial position" and the need for "fulsome public disclosures about the Company's financial condition and liquidity."
• Inability to Raise Capital: The Buyer Group suggests that "substantial supplemental growth capital in the near term... can only be accomplished in private markets," indicating potential difficulties in raising funds publicly.
• Shareholder Value Degradation: Without the proposed transaction, there is a risk of "total degradation of stockholder value."
• Market Mispricing: The Buyer Group believes the market has not yet fully reflected the company's severe financial issues.

Future Outlook

The Buyer Group intends to acquire LanzaTech Global, Inc. at $0.02 per share, believing that the company's long-term value and competitive position can only be enhanced as a private entity, especially given its need for substantial supplemental growth capital. They anticipate negotiating definitive documentation quickly, with a draft agreement by April 6, 2025, and are prepared to fully finance the transaction and potentially extend additional financing to the company. They also plan to engage with existing stockholders regarding rollovers and negotiate with current creditors regarding debt treatment, while remaining open to a Section 363 bankruptcy sale if preferred by the Board.

Management Comments

• "We strongly believe that, as a private company, the Company would best be able to achieve long-term value and enhance its competitive position in the global marketplace."
• "We further believe that the Buyer Groups intended offer to acquire all of the Common Shares... at a price equal to $0.02 per share will stave off total degradation of stockholder value, including through a bankruptcy."
• "We strongly encourage the Company to file its Annual Report on Form 10-K no later than tomorrow, April 4th, or otherwise provide fulsome public disclosures about the Companys financial condition and liquidity."
• "We are extremely concerned that the only alternative to this offer will be a bankruptcy process where 100% of stockholder value and a major portion of the creditors investments will be lost."
• "Achieving the Companys mission of bio carbon recycling will require substantial supplemental growth capital in the near term, which based on the situation, we believe can only be accomplished in private markets."
• "We are committed to collaborating with the Company to maximize value for all stakeholders and are open to exploring all potential structures, including a sale under section 363 of Chapter 11 of the U.S. Bankruptcy Code, if an alternative approach to the one currently proposed is preferred by the Board to achieve this goal."

Industry Context

This proposed take-private transaction highlights the challenges faced by some companies in the clean technology and carbon recycling sectors, particularly those requiring significant capital for growth and scaling. The Buyer Group's assertion that LanzaTech's mission requires capital that 'can only be accomplished in private markets' suggests a broader trend of public market skepticism or difficulty in financing capital-intensive, early-stage or distressed cleantech ventures. The offer, framed as a bankruptcy avoidance measure, indicates a distressed asset scenario, which is not uncommon in nascent, high-risk industries where companies may struggle to achieve profitability or secure sufficient funding through traditional public channels.

Comparison to Industry Standards

• The proposed acquisition price of $0.02 per share, explicitly stated to be "below the current market price," suggests a valuation significantly lower than typical healthy public company valuations, indicating severe financial distress.
• The Buyer Group's concern that "100% of stockholder value and a major portion of the creditors investments will be lost" in a bankruptcy process implies that LanzaTech's financial situation is worse than many comparable companies that might undergo restructuring without complete equity wipeout.
• The statement that "substantial supplemental growth capital... can only be accomplished in private markets" suggests LanzaTech's access to public capital is severely constrained, contrasting with more mature or financially stable companies in the cleantech sector that can raise funds through equity offerings or debt markets.
• The mention of a potential Section 363 sale under Chapter 11 of the U.S. Bankruptcy Code indicates a distressed M&A scenario, a common mechanism for acquiring assets of financially troubled companies, often at a significant discount compared to solvent transactions.

Related Party Transactions

• On August 5, 2024, Carbon Direct Fund II Blocker I LLC (part of the Buyer Group) entered into a Convertible Note Purchase Agreement with LanzaTech Global, Inc., for at least $40,150,000 in convertible promissory notes.

Stakeholder Impact

• Shareholders: Face potential total loss of value through bankruptcy if the offer is not accepted, or a significant dilution/loss of value if the $0.02 per share offer is accepted.
• Creditors: The Buyer Group's offer aims to "protect the investments made by your creditors," and they intend to negotiate with current creditors regarding debt treatment, suggesting a potential for recovery or restructuring of debt.
• Employees: While not explicitly mentioned, a take-private transaction, especially one driven by financial distress, could lead to operational changes that impact employees. The stated goal of achieving the company's mission could imply continued operations.

Next Steps

• LanzaTech Global, Inc. is encouraged to file its Annual Report on Form 10-K by April 4, 2025, or provide fulsome public disclosures about its financial condition and liquidity.
• The Buyer Group is prepared to immediately begin negotiating definitive documentation for the Transaction.
• The Buyer Group aims to provide a draft definitive agreement by Sunday, April 6, 2025.
• The Buyer Group plans to explore opportunities for certain existing stockholders to roll over their Common Shares.
• The Buyer Group will seek to negotiate with LanzaTech's current creditors regarding the treatment of the company's debt.
• The Buyer Group requests authorization to contact LanzaTech's other significant investors to discuss the Transaction.
• The Buyer Group is open to exploring alternative transaction structures, including a sale under Section 363 of Chapter 11 of the U.S. Bankruptcy Code.

Key Dates

Recommendation

Keywords

LanzaTech Global Inc., Carbon Direct Capital Management, Schedule 13D, Take-Private Proposal, Acquisition, Convertible Notes, Bankruptcy Risk, Shareholder Value, Financial Distress, Carbon Recycling, Clean Technology, SEC Filing, Corporate Governance, Investment Proposal