Fusion Acquisition Corp. II (NYSE:FSNB) announced this morning that it has signed a non-binding letter-of-intent (LOI) to combine with transportation technology company Hyperloop Transportation Technologies for, so far, undisclosed terms.
The news comes within teasing distance of Fusion II’s extension vote scheduled for 11 am ET this morning. Shareholders at the special meeting will vote on whether to extend Fusion II’s deadline from September 2 to March 2, 2024 without an additional contribution to its trust.
Its current estimated redemption price is $10.43, and Fusion II goes into the vote with about $45.5 million in trust after having already seen 91% of shares redeemed in an earlier extension.
This is Hyperloop’s second dance with a SPAC in the past year as it entered into a definitive agreement to combine with Forest Road II last November. That deal was struck at an enterprise value of $397 million, but the parties called off the engagement just three months later citing unfavorable time constraints and market conditions.
Indeed, the market has grown skeptical of new technology companies – particularly those coming via the SPAC route – and Hyperloop is unabashedly a bit of a moonshot.
Its design for a vacuum tube-like travel system between cities could theoretically achieve aircraft-like speeds over 700 mph on the ground, but it is largely unproven and comes with drawbacks.
Hyperloop has built a full-scale test facility in Toulouse, France and completed a commissioned study into a system connecting Chicago, Cleveland and Pittsburgh.
But, that study found that construction would face challenges because Hyperloop tubes must be placed in virtual straight lines between their destinations while rail lines can have relatively winding tracks that rise and fall in elevation. A Hyperloop train would also need about 20 miles to slow down from full speed and even emergency stops would require four to five miles, according to the study.
The biggest thing that has changed between the termination of Hyperloop’s deal with Forest Road II and this LOI announcement is that it won a bid in May to build a 10 km prototype in northern Italy. This project, funded by the Venetian Motorway Concession, could in theory be expanded into an active commercial hyperloop project, which would be the company’s first.
Hyperloop has plenty of other ideas, however. In its presentation accompanying the Forest Road II deal, it cited a pipeline of about 150 potential projects on five continents.
The parties also expect progress on this deal, which they anticipate transitioning to a definitive agreement in the fourth quarter. But, because there are no guarantees this happens, Fusion II will remain in SPACInsider‘s “Searching” column for now.