Morning Roundup: December 13, 2023


Morning Roundup: December 13, 2023

At the SPAC of Dawn

When Flame Acquisition Corp. (NYSE:FLME) initially announced its combination with energy company Sable Offshore in November 2022, there was quite a bit of uncertainty in the business it was putting forward. But, there has been some news on that front that could shake some things loose.

Essentially, Sable Offshore was set up to purchase the Santa Ynez Unit offshore oil field in California and its associated onshore facilities from Exxon (NYSE:XOM) with a mix of trust proceeds, a now-$75 million PIPE and a $623 million term loan from Exxon itself. Now, why would Exxon want to lend a de-SPACing entity the money to buy an asset from itself?

Well, the pipeline linking those facilities to the coast was shut down after a spill in 2015 and its operations have been in regulatory limbo ever since. Courts blocked Exxon from transporting oil resources from the platform by truck through nearby Santa Barbara in September, but the pipeline itself may have found new life after actions taken by the California State Lands Commission last week.

At a meeting December 5, the Commission approved a five-year extension to the permit on the stalled pipeline to January 31, 2029 and exempted it from other state actions blocking any new or existing offshore leases.

So far, the move has been met with little fanfare, but it would appear to clear the way for those existing facilities to restart under the Sable Offshore de-SPAC. The move does not end uncertainty over its future, however, as the very next item on the Commission’s agenda was to launch a survey of all offshore oil facilities due to be completed by the end of 2026 that could wind up proposing a further moratorium.

Whatever happens in the regulatory battles to come, Sable could potentially generate a great deal of cash in the interim. The Santa Ynez unit generated $317 million in net free cash flow in 2014, its last full year of operations.

Deals and Funding

News and Rumors

  • RIABiz: Apex Fintech, a clearing engine for crypto and other financial assets, filed for a confidential IPO two years after terminating a $4.7 billion combination with Northern Star II (NYSE:NSTB).
  • PR: Metaverse firm Infinite Reality announced a strategic partnership and equity swap with cryptocurrency datacenter provider Greenidge (NASDAQ:GREE) that will see it receive preferential terms on power and data processing needs. Infinite Reality is also to receive Greenidge shares at $8.33 per share and warrants to purchase more at $7 per share while Greenidge will receive a one-year warrant to purchase the same amount of Infinite Reality shares in return at a $2.5 billion valuation. Infinite Reality has a pending business combination with Newbury Street (NASDAQ:NBST) struck at a $1.85 billion equity value.
  • PR: Predictive analytics firm Alpha Modus has appointed experienced auditor Rodney Sperry as its CFO as it moves towards close with Insight (NASDAQ:INAQ).
  • PR: eVTOL developer Horizon Aircraft has appointed Brian Merker as CFO as it works to close a combination with Pono Capital Three (NASDAQ:PTHR). Merker has previously served in the same role at other publicly listed aviation firms.

Non-Redemption Agreements and Forward Purchase Agreements

  • Nubia Brand International (NASDAQ:NUBI) has entered into a forward purchase agreement (FPA) with Meteora Capital and non-redemption agreements with other shareholders. Under the FPA, Meteora is to purchase up to 9.9% of Nubia outstanding public shares and will be prepaid for such purchases and will then remit to the combined company proceeds from any shares it sells on the open market until the agreement matures in three years. Nubia will also pay certain shareholders to not redeem shares in exchange for a cash payment of the redemption amount on those shares minus $4 per share and Mach FM Acquisitions will also make a cash payment to Nubia’s sponsor of $7.25 million in exchange for the sponsor taking on certain fees. So far, 3,896,031 Nubia shares have been tendered for redemption in connection with its December 15 extension vote.

Scheduling Notes

  • On December 12, 7GC & Co. Holdings (NASDAQ:VII) reconvened and then further adjourned its special meeting relating to its proposed business combination with Banzai International. The meeting has been further adjourned until December 13 at 1 pm ET.
  • Chavant Capital (NASDAQ:CLAY) believes that it will not be able to satisfy the $30 million minimum cash condition on or around the date of its meeting. It therefore expects to adjourn its December 14 completion vote and reconvene it at 1 pm ET, December 18.