425: Stardust Power to Go Public via Merger with Global Partner Acquisition Corp II, Aiming to Revolutionize US Lithium Production

Stardust Power, a development-stage lithium manufacturer, plans to become a publicly listed company on Nasdaq through a business combination with Global Partner Acquisition Corp II, targeting a pro forma enterprise value of $493 million.

Summary

• Stardust Power, an American manufacturer of battery-grade lithium products, is set to go public through a merger with Global Partner Acquisition Corp II (GPAC II).
• The combined company will be listed on Nasdaq under the ticker symbols SDST and SDSTW.
• The pro forma implied enterprise value of the combined entity is estimated at $493 million.
• Stardust Power is developing a central lithium refinery in Muskogee, Oklahoma, with a planned production capacity of up to 50,000 tonnes per annum of battery-grade lithium.
• The transaction is expected to provide up to approximately $50 million of gross proceeds to Stardust Power through a PIPE or similar financing transaction.
• Existing Stardust Power shareholders will roll over 100% of their equity, owning 84.5% of the pro forma equity at closing.
• GPAC's sponsor will retain 3.0 million promote shares at closing.
• The company aims to address the challenge of reliable access to critical minerals for the energy transition by becoming a leading US producer of battery-grade lithium.
• Stardust Power intends to seek up to $257 million in incentives from the State of Oklahoma and will also pursue federal grant and loan program incentives.

Sentiment

Score: 7

Explanation: The document presents a positive outlook for Stardust Power's future, highlighting its strategic position in the lithium market and potential for growth. However, it also acknowledges several risks and uncertainties associated with the business combination and the company's development stage, leading to a moderately positive sentiment score.

Positives

• Stardust Power's merger with GPAC II provides access to public markets and potential capital for expansion.
• The company's planned lithium refinery aims to address the growing demand for battery-grade lithium in the US.
• The location of the refinery in Muskogee, Oklahoma, offers centralized logistics and access to multiple brine resources.
• The company intends to use sustainable processes, including renewable energy and water recycling.
• The deal structure allows existing Stardust Power shareholders to retain a significant ownership stake.
• The company has a well-developed feedstock plan and experienced engineering partners.

Negatives

• The transaction is contingent on raising up to $50 million through a PIPE or similar financing transaction, which is not guaranteed.
• The company is in the development stage and has a limited operating history.
• The company faces risks related to exploration, construction, and extraction of brine by its suppliers.
• The company's success depends on securing government benefits and incentives.
• The company's future growth depends on consumer demand for electric vehicles.

Risks

• The proposed business combination may not be completed in a timely manner or at all.
• The company may be unable to raise additional funds through a private placement or equity or debt raise.
• Stardust Power may not be able to secure government benefits described in the document.
• The anticipated growth of the Lithium industry may not be achieved.
• The company faces risks related to exploration, construction, and extraction of brine by its suppliers.
• The company's future growth and success are dependent upon consumers' demand for electric vehicles.
• The company may be unable to successfully negotiate final, binding terms related to its current non binding memoranda of understanding and letters of intent for the supply and offtake agreements.

Future Outlook

Stardust Power aims to become a leading producer of battery-grade lithium products in the US, focusing on scaling production and enabling energy independence.

Management Comments

• Roshan Pujari, CEO of Stardust Power, states that the company's strategy is to become a leading producer of battery-grade lithium products in the US.
• Roshan Pujari, CEO of Stardust Power, states that the company believes that designing a large central refinery optimized for multiple inputs of brine lithium feedstock provides an opportunity to scale production rather than the dependence on single assets.

Industry Context

The announcement comes amid growing demand for lithium-ion batteries driven by the increasing adoption of electric vehicles and the need for domestic lithium production to secure American national security and leadership in the energy transition.

Comparison to Industry Standards

• The planned 50,000 tonnes per annum capacity of Stardust Power's refinery aims to position it among the largest lithium refineries in the US.
• Companies like Albemarle and Livent are established players in the lithium market, and Stardust Power aims to compete with them by focusing on domestic production and sustainable processes.
• The company's strategy of using multiple brine feedstock inputs is similar to approaches used by other lithium producers to diversify supply and mitigate risks.

Stakeholder Impact

• Shareholders of GPAC II will have the opportunity to invest in a company focused on lithium production for the EV industry.
• Employees of Stardust Power may experience changes in their roles and responsibilities as the company transitions to a public entity.
• Customers in the EV industry will benefit from a potential increase in the supply of domestically produced battery-grade lithium.
• The local community in Muskogee, Oklahoma, may experience economic benefits from the development of the lithium refinery.

Next Steps

• GPAC II shareholders need to approve the proposed business combination.
• Stardust Power and GPAC II need to satisfy the conditions for consummation of the business combination, including regulatory approvals.
• The company intends to work collaboratively to establish a PIPE or similar supplemental financing instrument.
• Stardust Power will continue developing its lithium refinery in Muskogee, Oklahoma.

Key Dates