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Pyrophyte Acquisition Corp. *

Pyrophyte Acquisition Corp. *

Oct 5, 2021 by Anthony Sozzi

PROPOSED BUSINESS COMBINATION: Sio Silica Corporation

ENTERPRISE VALUE: $708 million
ANTICIPATED SYMBOL: SIOS

Pyrophyte Acquisition Corp. entered into a definitive agreement with Sio Silica Corporation

  • Sio Silica is a Canadian-based high-purity quartz silica producer committed to offering superior products and practicing sustainable development. Combined with its facility using renewable electricity, natural gas, and efficient processing, Sio Silica expects to contribute to a low-carbon future.

EXTENSION – 4/29/24 – LINK

  • The SPAC approved the extension from April 29, 2024 to April 29, 2025.
    • 2,683,126 shares were redeemed.
    • $90K per month will be deposited into the trust account.

TRANSACTION

  • The terms of the Business Combination reflect an implied enterprise value of $708 million and equity value of $758 million for the combined company, an approximate 80% discount to the net present value.
  • Approximately $150 million of gross capital, comprised of equity, debt, royalties and Sio’s cash on hand, has been secured from a variety of institutional and individual accredited investors, including a credit facility provided by Riverstone Credit Partners, and other financing from HITE Hedge Asset Management and a large Canadian pension fund, and an additional $10 million is expected to be secured from flow-through equity from a variety of individual accredited investors
  • The Business Combination has been unanimously approved by the Boards of Directors of Sio and Pyrophyte.
  • CEO Feisal Somji will continue to lead Sio, supported by a team of experienced operators.
  • The name of the combined company will be Sio Silica Incorporated, and its common shares and warrants are expected to be listed on the New York Stock Exchange under the tickers “SIOS” and “SIOS WS,” respectively.

SPAC FUNDING

  • PIPE:
    • Pyrophyte, Sio and Sio Newco entered into subscription agreements with (i) a certain accredited investor and (ii) certain other accredited investors who are existing shareholders of Sio or Pyrophyte, pursuant to which Sio Newco agreed to issue and sell, in a private placement to close concurrently with and conditioned upon the effectiveness of the consummation of the Proposed Transactions, an aggregate of 3,114,258 Pubco Class A Common Shares (the “PIPE Investment”) to the PIPE Investors for an aggregate purchase price equal to $20,122,474.
    • BMO Capital Markets Corp., UBS Securities LLC and Integral Wealth Securities Limited are acting as joint placement agents on the PIPE.
  • Non-Redemption:
    • Pyrophyte and Sio Newco entered into a non-redemption agreement with a Pyrophyte shareholder with respect to 100,000 SPAC Class A Ordinary Shares held by such shareholder, pursuant to which Pyrophyte agreed to issue 58,570 SPAC Class A Ordinary Shares to such shareholder in consideration of such shareholder’s commitment not to redeem the Non-Redemption SPAC Shares held by it in connection with the approval of the Proposed Transactions by Pyrophyte’s shareholders.

EARNOUT

  • Company:
    • The Company Earnout shall issue to each Company Shareholder who holds Company Common Shares (excluding Interim Company Shares) a pro rata portion of an aggregate of 6,585,366 shares of New SPAC Class A Common Shares valued at the Earnout Issue Price of $10.25.
    • Commencing on the Closing Date and ending on the date that is five years after the Closing Date, the Company Earnout Shares shall be subject to the following vesting conditions:
      • (i) if the Trading Price is greater than or equal to $12.50, then 50% of the Company Earnout Shares held by each holder of Company Earnout Shares shall immediately vest and no longer be subject to the forfeiture conditions, and
      • (ii) if the Trading Price is greater than or equal to $15.00, then the remaining 50% of the Company Earnout Shares held by each holder of Company Earnout Shares shall immediately vest and no longer be subject to the forfeiture conditions.
  • Sponsor:
    • The number of Restricted Owned Shares shall either be equal to the actual number of Owned Shares that were used to secure such SPAC Proceeds, up to (but not exceeding) an amount equal to the Maximum Restricted Owned Shares (4,025,000 shares), or equal to the number of Owned Shares being 4,025,000 minus the number of Incentive Owned Shares.
    • Each Restricted Owned Share will be subject to forfeiture or release as follows:
      • (i) half of the Restricted Owned Shares will be released to the Sponsor on the first day that the Trading Price is at least $12.50, and
      • (ii) the other half of the Restricted Owned Shares will be released from forfeiture on the first day that the Trading Price is at least $15.00, in each case during the period commencing on the Closing Date and ending on the date that is three years after the Closing Date (the “End Date”).
    • After the End Date, any Restricted Owned Shares that have not been released to the Sponsor pursuant to clauses (i) or (ii) above will be automatically forfeited for no consideration.

LOCK-UP

  • Sponsor:
    • The Sponsor agreed not transfer any Covered Shares (other than Pubco Class A Common Shares issued upon exercise of any private placement warrants held by the Sponsor) until the earlier of:
      • (i) one year after the Closing, and
      • (ii) the first day the last sale price of Pubco Class A Common Shares equals or exceeds $12.00 per share for any 20 trading days within a 30-day trading period commencing at least 150 days after the Closing.
  • Company:
    • Company holders (owning 1% or more of the Sio Common Shares) will agree to not transfer any Covered Shares until the earlier of:
      • (i) six months after the Closing, and
      • (ii) the first day the last sale price of Pubco Class A Common Shares equals or exceeds $12.00 per share for any 20 trading days within a 30-day trading period provided, however, that the restrictions set forth above ((i) and (ii)) shall not apply to 10% of the aggregate amount of securities held by such shareholders on the Closing Date.

NOTABLE CONDITIONS TO CLOSING

  • Pyrophyte and Sio shareholder approvals
  • Available Closing Cash available at closing must be no less than $130 million and the Debt-to-Other Cash Ratio must be no greater than 0.5882.

NOTABLE CONDITIONS TO TERMINATION

  • The Business Combination Agreement may be terminated if the Closing has not occurred prior to November 13, 2024 (the “Outside Date”).
  • On 12/31/24, the Outside Date was extended to April 30, 2025. – LINK

ADVISORS

  • Sio Silica Advisors:
    • BMO Nesbitt Burns Inc. is acting as exclusive Financial Advisor
    • Integral Wealth Securities Limited acted as Sio’s exclusive financial advisor in procuring and negotiating royalty financing, and, as an advisor to Sio in respect of the business combination agreement.
    • DLA Piper (Canada) LLP and DLA Piper (US) are acting as legal advisors
  • SPAC Advisors:
    • UBS Securities LLC is acting as capital markets advisor
    • White & Case LLP is acting as legal advisor
    • Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to BMO Capital Markets Corp. and UBS Securities LLC

EXTENSION – 4/28/23 – LINK

  • The SPAC approved the extension from April 29, 2023 to April 29, 2024.
    • 11,151,163 shares were redeemed for $10.52 per share.
    • $160K per month will be deposited into the trust account.

MANAGEMENT & BOARD

Executive Officers

Sten L. Gustafson, 54
Chief Executive Officer and Director

Mr. Gustafson is a highly experienced energy service industry executive, investment banker, and corporate securities attorney. Since 2018, Mr. Gustafson has served as Chairman of the Board of Directors of the publicly traded Norwegian company, Golden Energy Offshore and has also served as an independent director for Western Rare Earths, the U.S. subsidiary of Australian rare earth mining company, American Rare Earths, since 2020. From 2012 to 2014, Mr. Gustafson was Chief Executive Officer and Director of Era Group Inc. (previously NYSE: ERA), where he led the successful spin out of Era from Seacor Holdings in January 2013, generating record quarterly revenues every quarter during his tenure while meaningfully de-leveraging the balance sheet. From 2017 to 2018, Mr. Gustafson served as a member of the Founding Steering Committee created by the Public Investment Fund of Saudi Arabia to establish a private commercial helicopter operator (The Helicopter Company) in the Kingdom of Saudi Arabia. From 2017 to 2019, Mr. Gustafson served as a director at CHC Helicopter. Mr. Gustafson earned a B.A. in English from Rice University and earned a Juris Doctor from the University of Houston Law Center.

Thomas W. Major, 35
Chief Financial Officer and Executive Vice President of Business Development

Mr. Major is an energy leader with over a decade of corporate experience in various technical, business, and management roles. From 2010 to 2020, Mr. Major worked with National Oilwell Varco, most recently as Director Corporate Development, assessing over 500 transactions and leading multiple energy services and technology transactions to closure. After leaving NOV in 2020, Mr. Major has provided consulting and advisory services to companies and investors operating in wind, solar, and energy storage. Mr. Major earned his MBA from Harvard Business School and B.Sc. in Mechanical Engineering from the University of Alberta.

Board of Directors

Bernard J. Duroc-Danner, 67
Chairman Nominee

Since 2018, Dr. Duroc-Danner co-founded, raised the seed and second round capital and co-managed the incubation of an energy sensing and artificial intelligence software company with applications in wind renewable energy. In addition, Dr. Duroc-Danner has been involved in the planning of the development of a solar power generation and CO2 sequestration project as part of a broader energy project in the Eastern Hemisphere. Dr. Duroc-Danner currently serves as advisory director to the Energy Intelligence Group (EIG). As an internationally recognized energy executive, Dr. Duroc-Danner is well qualified to serve as chairman of our Board of Directors, having built two global market and industry leaders through hundreds of focused acquisitions around the world. Dr. Duroc-Danner started EVI, Inc. (NYSE: EVI), an oilfield service and equipment company in May 1987, for which he served as Chairman, President and CEO until he retired in 2016, and upon retirement was given the distinction of Chairman Emeritus of Weatherford, EVI’s successor company Dr. Duroc-Danner was a director for a number of many public companies with global operations. Prior to the startup of EVI, Dr. Duroc-Danner was a management consultant with Arthur D. Little in Boston working in the metals, minerals and power generating industry. Dr. Duroc-Danner received his MBA and a PhD degree from The Wharton School of the University of Pennsylvania.

Brian Guido Hassin, 42
Director Nominee

Mr. Hassin is a global energy technology entrepreneur and since March 2021 has served as the Co-Founder & Chief Executive Officer of The Third Derivative, a joint venture between Rocky Mountain Institute and New Energy Nexus that is transforming the way that innovative startups, investment funds, and large corporations accelerate the energy transition by creating a global, vertically integrated engine for climate innovation. Prior to Third Derivative, Mr. Hassin spent 20 years as a global energy technology entrepreneur and executive, founding, leading and scaling high-growth energy transition startups. Mr. Hassin is well qualified to act as a Director, having spent much of his career in the private sector raising venture capital, building and leading startup teams, scaling operations, and negotiating partnerships and acquisitions. Mr. Hassin received his MBA with Honors and Leadership Distinction from IMD in Lausanne, Switzerland. He has a Master’s in Computer Science and undergraduate degrees in Computer Science and Electrical and Computer Engineering from Rice University.

Per Hornung Pedersen, 67
Director Nominee

Since 2011, Mr. Pedersen has worked as an Independent Director and Industry Advisor in the renewable energy industry. Mr. Pedersen is currently the Chairman of PNE AG Germany, one of Europe’s largest project developers in onshore and offshore wind as well as solar. Mr. Pedersen also serves as Independent Director in Suzlon Energy Ltd India (since 2015), Independent Director in Swire Energy Services and Independent Director in SeaTower AS Norway. Since 2017, Mr. Pedersen has served as a Senior Advisor to McKinsey and an independent member of the Investment Committee of Caribbean Clean Energy Fund. Mr. Pedersen is well-qualified to serve on our Board of Directors as a highly experienced veteran in the renewable energy industry, with 20 years of experience as a senior executive as well as an independent director in leading global companies in the renewable energy industry across the value chain. Mr. Pedersen received his MBA with honors from Copenhagen Business School (University of Copenhagen) and holds a BSc in Finance and Accounting from Copenhagen Business School.

Adam Pierce, 42
Director Nominee

Since 2020, Mr. Pierce has been the Founder and Managing Partner of Tenkara Capital, an investment firm focused on opportunistic credit and structured equity investments across multiple industries. Prior to founding Tenkara Capital in 2020, Mr. Pierce spent nearly 17 years as an investment professional at Oaktree Capital Management, most recently as Managing Director and a member of the Investment Committee for the Special Situations and Global Principal Opportunities Group. During this time, Mr. Pierce identified, executed and subsequently oversaw nearly $2 billion in direct capital investments into 35 new investment vehicles, five of which were international companies. In addition, Mr. Pierce led over 30 debt financing transactions, four IPOs, nearly 20 add-on acquisitions and 17 merger transactions, and served on 12 different boards of directors. A number of these investments Mr. Pierce was involved in and board positions he held were in companies participating in the Energy Transition. Prior to joining Oaktree in 2003, Mr. Pierce was an investment banker with J.P. Morgan and Goldman Sachs. Mr. Pierce received a B.A. in Economics with a focus on business administration from Vanderbilt University.

 

ByAnthony Sozzi