DEF: Nabors Energy Transition II: Liquidation Path, Indefinite Extension

Nabors Energy Transition Corp. II proposes to indefinitely extend its existence to collect settlement payments from e2Companies LLC, terminating its SPAC mission and facing Nasdaq delisting.

Summary

• Shareholders will vote on amending the Articles of Association for indefinite existence and amending the Trust Agreement to use Trust Account interest for expenses.
• The company has terminated its business combination agreement with e2Companies LLC and settled a lawsuit.
• e2Companies LLC issued secured promissory notes totaling $29.23 million to the company, with maturities on March 31, 2026 ($14.615 million) and October 14, 2028 ($14.615 million).
• A Trigger Event Payment of 6.5% of e2's equity value exceeding $500 million is due if e2 undergoes a change of control, IPO, or public listing within 24 months from the Settlement Date.
• The Sponsor will no longer fund monthly extension payments, leading the company to seek an indefinite extension to collect settlement proceeds.
• The company expects to be delisted from Nasdaq following shareholder redemptions.
• Public shareholders can redeem their shares for approximately $11.31 per share as of October 23, 2025.
• The company has incurred approximately $10.0 million in fees and expenses and has $4.1 million in loans from Sponsor owners and Monthly Extension Payments.

Sentiment

Score: 3

Explanation: The sentiment is negative because the company has failed its primary mission as a SPAC (to complete a business combination) and is now pursuing a liquidation strategy. While a settlement has been reached, its full realization is uncertain, and the expected Nasdaq delisting will significantly impair shareholder value and liquidity for non-redeeming shareholders. The worthlessness of warrants is also a strong negative.

Positives

• Secured promissory notes totaling $29.23 million from e2Companies LLC provide a defined path for asset recovery.
• The Settlement Agreement includes a potential Trigger Event Payment of 6.5% of e2's equity value over $500 million, offering upside if e2 performs well.
• The dismissal of the lawsuit against e2Companies LLC resolves prior litigation.
• The Board believes the proposed amendments are in the best interests of the company and its shareholders, aiming to maximize recovery from the settlement.

Negatives

• The company has terminated its initial business combination agreement and does not intend to pursue another, effectively ending its SPAC mission.
• The Sponsor will no longer fund monthly extension payments, necessitating the proposed indefinite extension.
• Public Warrants will expire worthless if the company winds up without a business combination.
• The company expects to be delisted from Nasdaq following redemptions, leading to a less liquid trading market for remaining shares.
• Security interests for the promissory notes will not vest until a priority creditor is repaid in full, potentially impairing the company's secured status.
• There is no assurance that settlement payments will be received in full or at all, or regarding the amount of fees and expenses.
• Shareholders who do not redeem will hold shares in a company with a potentially less liquid trading market, fewer shareholders, and potentially less cash.
• The company has incurred approximately $10.0 million in fees and expenses and has $4.1 million in loans from Sponsor owners, which will be paid from settlement proceeds or Trust Account interest.

Risks

• Uncertainty regarding the timely and full receipt of payments under the Settlement Agreement and the Notes from e2Companies LLC.
• Volatility of the market price and liquidity of the Public Shares and other securities of the company.
• The company's securities may cease to be listed on a national securities exchange (Nasdaq delisting is expected).
• Uncertainty regarding the amount and timing of the use of any funds available from Trust Account interest, Note repayment, or Trigger Event Payment.
• Security interests granted by e2 and its subsidiaries will not vest until a priority creditor is repaid in full, potentially impairing the company's secured creditor status.
• The collateral for the Notes (equity interests of Mission Critical e2 LLC and Mission Critical e2 Limited) is subject to risks related to the Energy Services Agreement with Herbata, including Herbata's financial condition, project completion timeline, permits, and financing.
• Risk of being deemed an investment company under the Investment Company Act of 1940, which could impose burdensome compliance requirements and restrict activities.
• If the Articles Amendment Proposal is not approved, the company may be wound up, and public shareholders will not participate in settlement proceeds.
• The per-share distribution from the Trust Account, if the company winds up, may be less than $10.10 plus interest due to unforeseen creditor claims.

Future Outlook

The company no longer intends to pursue an initial business combination and plans to exist indefinitely solely to receive payments under the Settlement Agreement and Notes, satisfy liabilities, and then liquidate and dissolve. It expects to be delisted from Nasdaq following shareholder redemptions.

Management Comments

• The Board believes it is in the best interests of the Company and its shareholders to provide for the continued existence of the Company even without the Monthly Extension Payments, and the Board currently anticipates maintaining the Company’s existence until all payments are made under the Settlement Agreement and the Notes.
• The Board has determined that it is in the best interests of the Company to have the Company’s shareholders approve the Articles Amendment Proposal and the IMTA Amendment Proposal to allow the Company to remain in existence indefinitely to receive payments under the Settlement Agreement and Notes and to permit the Company to withdraw from the interest earned on Trust Account... in order to pay for fees and expenses incurred by or on behalf of the Company since its formation.
• We do not intend to pursue another business combination at this time. The Board believes it is in the best interests of shareholders that Company maximize its recovery under the Settlement Agreement and the Notes rather than pursue an alternative business combination.
• We expect that following the redemptions, the Company will not meet the Nasdaq listing standards and expects that its Class A Ordinary Shares, Units and warrants will be delisted from Nasdaq.

Industry Context

This filing reflects a growing trend among Special Purpose Acquisition Companies (SPACs) that fail to identify and complete a suitable business combination within their mandated timeframe. Instead of liquidating immediately, the company is attempting to maximize shareholder value through a settlement agreement from a failed merger, a less common but emerging strategy. The expected Nasdaq delisting highlights the challenges faced by SPACs that do not successfully de-SPAC, often leading to reduced liquidity and investor interest.

Comparison to Industry Standards

• The company's pivot from a traditional SPAC business combination to a liquidation-focused entity relying on settlement payments is a deviation from the standard SPAC model, which typically involves either completing a merger or liquidating and returning funds to shareholders.
• The redemption price of approximately $11.31 per Public Share (as of October 23, 2025) is above the typical $10.00 IPO price for SPACs, which is a positive for redeeming shareholders, but below the market price of $11.35, indicating a slight market premium for holding.
• The expected delisting from Nasdaq is a common outcome for SPACs that fail to complete a business combination or fall below listing requirements after significant redemptions, similar to other SPACs that have liquidated or struggled to find targets.
• The Sponsor's decision to cease monthly extension payments is a common indicator of a SPAC's inability to find a viable target or a shift in strategy, aligning with patterns seen in other SPACs nearing their termination dates.

Corporate Governance

Legal Proceedings

• Dismissal with prejudice of the previously disclosed action styled Nabors Energy Transition Corp. II, et al. v. e2Companies LLC, 2025-0810-BWD, effective upon the Settlement Date (October 14, 2025).

Related Party Transactions

• Nabors Energy Transition Sponsor II LLC (the Sponsor) and its affiliates have made approximately $4.1 million in loans to the company, which were funded into the Trust Account. These loans are expected to be repaid from settlement proceeds or Trust Account interest.
• The Sponsor (or its affiliates or designees) deposited an aggregate of $1.0 million into the Trust Account for four one-month extensions, which will be repaid from funds outside the Trust Account if the company winds up, or from Trust Account interest/settlement proceeds if proposals are approved.
• Nabors Lux (an affiliate of Nabors Industries Ltd., which manages the Sponsor) and certain officers/directors paid $8,727,510 for 8,727,510 Private Placement Warrants. These warrants will be worthless if the company winds up.
• Nabors Lux and certain officers/directors loaned $2,787,490 of the $3,050,000 Overfunding Loans to the company at IPO, which will not be repaid if the company winds up.
• The Sponsor and independent directors hold 7,625,000 Class F Ordinary Shares (35.7% of outstanding Ordinary Shares), which are not redeemable.
• The Sponsor has agreed to indemnify the company against certain third-party claims that reduce Trust Account funds below $10.10 per Public Share (with exceptions).
• Nabors and certain affiliates of Nabors entered into a settlement agreement with e2, where e2 shall refund Nabors Corporate Services, Inc. $1,631,500 for purchase orders.
• The Sponsor and the company's officers and directors, and their respective affiliates, will be reimbursed for out-of-pocket expenses incurred on the company's behalf (approximately $0 as of October 20, 2025).

Stakeholder Impact

• Shareholders (Public): Those who redeem will receive approximately $11.31 per share, slightly less than the current market price but above the IPO price. Those who do not redeem will hold shares in a company with no active business, reduced liquidity (due to expected Nasdaq delisting), and will receive a pro rata portion of remaining Trust Account funds (less expenses) and settlement proceeds, with no assurance of full or timely payment.
• Shareholders (Sponsor/Insiders): Their Class F Ordinary Shares are not redeemable and their Private Placement Warrants are expected to become worthless. They have made loans and extension payments that are at risk of not being fully repaid if the company winds up without the proposals passing. They benefit from the indefinite extension to maximize recovery from the settlement.
• Warrantholders: Public Warrants will expire worthless, representing a complete loss of investment.
• e2Companies LLC: Benefits from the termination of the business combination agreement and the settlement of the lawsuit, but is now obligated to make significant payments to the company via promissory notes and a potential Trigger Event Payment.
• Creditors: The company's ability to satisfy liabilities and obligations depends on the receipt of settlement payments and the ability to draw from Trust Account interest. The Sponsor has provided an indemnity against certain third-party claims reducing Trust Account funds.

Next Steps

• Shareholders to vote on Articles Amendment Proposal, IMTA Amendment Proposal, and Adjournment Proposal at the Extraordinary General Meeting on November 14, 2025.
• If approved, the company will file the Articles Amendment with the Registrar of Companies in the Cayman Islands.
• Public shareholders have until November 12, 2025, to exercise redemption rights.
• The company expects to be delisted from Nasdaq following redemptions.
• The Board expects to declare pro rata distributions of net proceeds from the Settlement Agreement and Notes from time to time.
• The company will remain in existence indefinitely or until the Board determines to liquidate and dissolve.
• e2 is required to prepay $3.5 million of the First Note by December 31, 2025.
• e2 is required to refund Nabors Corporate Services, Inc. $1,631,500 by December 1, 2025.
• First Note matures on March 31, 2026.
• Second Note matures on October 14, 2028.

Key Dates

Recommendation

The company has failed its primary objective as a SPAC, terminating its business combination and explicitly stating it will not pursue another. The future involves a prolonged liquidation process focused on collecting settlement payments, which carry inherent risks of non-payment or delays. The expected delisting from Nasdaq will severely impair liquidity, making it difficult for shareholders to exit their positions. While the redemption price is slightly above the IPO price, the overall outlook for a non-operating, delisted entity with uncertain future cash flows from a settlement is highly unfavorable for long-term investment. Redeeming shares or selling in the open market (if the price remains above redemption value) is the most prudent course of action to avoid further risk and illiquidity.

Keywords

SPAC, liquidation, settlement agreement, promissory notes, e2Companies, Nasdaq delisting, proxy statement, shareholder meeting, trust account, redemption rights, corporate governance, energy transition, blank check company, SEC filing