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Rice Acquisition Corp. II

Rice Acquisition Corp. II

Mar 10, 2021 by Kristi Marvin

PROPOSED BUSINESS COMBINATION: NET Power Inc.

ENTERPRISE VALUE: $1.463 billion
ANTICIPATED SYMBOL: NPWR

Rice Acquisition Corporation proposes to combine with NET Power Inc.

NET Power is a clean energy technology company with a mission to globally deliver the “Energy Trifecta”: Reliable, Clean, and Low-Cost power. The company invents, develops and intends to license technology that provides reliable, on-demand natural gas power with life cycle emissions that are approximately 90% below today’s combined cycle natural gas systems and in line with renewables coupled with batteries. The technology also delivers a levelized cost of energy that is below both combined cycle gas turbines with carbon capture and renewables coupled with batteries. Founded in 2010 and headquartered in Durham, North Carolina, NET Power has received strategic investments from key industry partners including Occidental, Baker Hughes, Constellation, and 8 Rivers.

SUBSEQUENT EVENT – 5/30/23 – LINK

  • On May 25, 2023, RONI entered into subscription agreements with certain investors known as the May 25, 2023 PIPE Investors.
    • These agreements outlined that the May 25, 2023 PIPE Investors would purchase a total of 1,500,000 shares of Class A Common Stock from RONI for $15.0 million.
    • The terms and conditions of these agreements were similar to the subscription agreements made in 2022.
    • The total committed capital for the transaction is now $575 million.

SUBSEQUENT EVENT – 5/19/23 – LINK

  • NET Power, LLC has disclosed a $50 million PIPE commitment from SK Group in relation to their proposed business combination.
  • The total committed capital for the transaction is now $560 million.

SUBSEQUENT EVENT – 4/24/23 – LINK

  • The SPAC announce upsized PIPE commitments from Occidental and Rice Family.
    • A total of approximately $500.45 million from the PIPE raised.

TRANSACTION

  • Business combination of RAC II and NET Power at pro forma enterprise value of $1.459 billion
  • Assuming no redemptions, the transaction is expected to provide NET Power with approximately $535 million of cash net of transaction fees, consisting of $347 million of cash in trust of which $10 million is subject to a non-redemption agreement, and $225 million of PIPE commitments.
    • Total committed investment of $235 million is comprised of $100 million from the Rice Family and affiliates through a $90 million PIPE commitment and $10 million non-redemption agreement, and PIPE commitments of $100 million from Occidental, $5 million from 8 Rivers, $5 million from Constellation, and $25 million from other investors.
  • Existing NET Power shareholders are rolling 100% of their equity into the combined Company and will own approximately 70% of the pro forma equity assuming no redemptions

RONI

SPAC FUNDING

Aggregate Proceeds = $560M

  • PIPE
    • $85mm PIPE commitment from SK Group. – LINK
    • $350mm Oxy investment includes $10mm pre-funded to support NET Power’s operations through transaction close. – LINK
    • These agreements outlined that the May 25, 2023 PIPE Investors would purchase a total of 1,500,000 shares of Class A Common Stock from RONI for $15.0 million. – LINK
    • Rice Friends & Family $115mm investment via PIPE.
  • Non-Redemption Agreement
    • The Rice Family and affiliates have agreed to not redeem $10M worth of shares

SPONSOR AGREEMENT

  • Pursuant to the Sponsor Letter Agreement, 1,000,000 RONI Interests held by RONI Sponsor will be forfeited and cancelled for no further consideration.
  • Additionally,
    • (a) 1,000,000 of RONI Sponsor’s RONI Interests will be subject to forfeiture, and vest, incrementally, if the gross proceeds raised by RONI in connection with the Business Combination exceed $300,000,000 as of the Closing (incrementally vesting until the gross proceeds exceed $397,500,000);
    • (b) 552,536 of RONI Sponsor’s RONI Interests will be subject to forfeiture, and vest if the gross proceeds exceed $397,500,000 as of the Closing; and
    • (c) 986,775 of RONI Sponsor’s RONI Interests will be subject to forfeiture, and vest in equal one-third increments if, over any 20/30 consecutive trading-day period during the three years following the Closing, the trading share price of Class A Common Stock equals or exceeds $12.00 per share, $14.00 per share and $16.00 per share, respectively (or if RONI consummates a sale that would value such shares at the aforementioned thresholds).

LOCK-UP

  • Sponsor
    • RONI Sponsor and RONI’s independent directors also agreed to be bound by certain “lock-up” provisions, pursuant to the terms and conditions of the Sponsor Letter Agreement, as follows:
      • (i) 3,510,643 of Sponsor’s and the Insiders’ RONI Interests will be restricted from transfer for a period of one year following the Closing and
      • (ii) 1,575,045 of Sponsor’s RONI Interests will be restricted from transfer for a period of three years following the Closing, in each case, subject to customary exceptions and potential early-release based on the stock price sustaining specified price thresholds for 20 trading days within any 30 consecutive trading-day period.
  • Company
    • To be agreed upon at Closing

NOTABLE CONDITIONS TO CLOSING

  • All cash on the consolidated balance sheet of RONI and its subsidiaries, in the aggregate, exceeding $200,000,000 as of immediately prior to the Closing.

NOTABLE CONDITIONS TO TERMINATION

  • By mutual written consent or if the Business Combination has not been consummated on or before August 31, 2023, which date will be extended automatically for up to 30 days to the extent the Parties are continuing to work in good faith toward Closing.

ADVISORS

  • Guggenheim Securities, LLC acted as lead financial advisor to RAC II.
  • Barclays Capital Inc. also served as financial advisor to RAC II.
  • Kirkland & Ellis LLP served as legal counsel to RAC II.
  • Credit Suisse Securities (USA) LLC acted as financial advisor and capital markets advisor to NET Power.
  • Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. served as legal counsel to NET Power.
  • Barclays Capital Inc. and Citigroup Global Markets Inc. acted as capital markets advisors to RAC II.
  • Barclays Capital Inc. and Citigroup Global Markets Inc. acted as lead placement agents and Credit Suisse Securities (USA) LLC acted as co-placement agent on the PIPE.
  • Vinson & Elkins L.L.P. served as legal counsel to the capital markets advisors and placement agents.

MANAGEMENT & BOARD

Executive Officers

Daniel Joseph Rice, IV, 40 [Resigned 2/22/22]
Chief Executive Officer and Director

Mr. Rice has over 15 years of experience in the energy industry. Mr. Rice is also the Chief Executive Officer and a director of Rice I. Mr. Rice is a Partner of Rice Investment Group and served as Chief Executive Officer of Rice Energy from October 2013 through the completion of its acquisition by EQT in November 2017. Prior to his role as Chief Executive Officer, Mr. Rice served as Chief Operating Officer of Rice Energy from October 2012 through September 2013 and as Vice President and Chief Financial Officer of Rice Energy from October 2008 through September 2012. Mr. Rice oversaw Rice Energy’s growth from start-up through its $1 billion initial public offering in 2014 and eventual $8.2 billion sale to EQT in 2017. Mr. Rice also oversaw the creation and growth of Rice Midstream, which was acquired by EQM for $2.4 billion in 2018. Mr. Rice established Rice Energy’s strategic framework for value creation, which yielded success for its shareholders and employees. He has utilized his operating and growth strategy formulation experience as the founder of Rice Energy to help portfolio companies of Rice Investment Group to refine and optimize their business strategies in order to profitably grow. Mr. Rice currently serves on the board of directors of EQT, and he joined the board of Whiting Petroleum in August 2020. Prior to joining Rice Energy, he was an investment banker for Tudor Pickering Holt & Co. in Houston and held finance and strategic roles with Transocean Ltd. and Tyco International plc.

J. Kyle Derham, 34 [Appointed 2/22/22]
Chief Financial Officer and Director Nominee, Chief Executive Officer

Mr. Derham is a Partner of Rice Investment Group. Mr. Derham is also the President, Chief Financial Officer and a director of Rice I. Mr. Derham, as part of the Rice Team, led the shareholder campaign in 2019 to revamp the strategic direction of EQT and elect a majority slate of director candidates to the board of EQT, the largest operator of natural gas production in the United States. Following the campaign, Mr. Derham served as interim Chief Financial Officer of EQT and currently serves as a strategic advisor to the company. Mr. Derham previously served as Vice President, Corporate Development and Finance of Rice Energy and Rice Midstream from January 2014 through November 2017. Through his various roles working alongside the Rice family, Mr. Derham has focused on evaluating, structuring and negotiating key acquisitions and execution of critical strategic initiatives to generate attractive risk adjusted returns for investors. Mr. Derham also has experience as a private equity investor, working as an associate at First Reserve and as an investment banker at Barclays Investment Bank.

James Wilmot Rogers, 41
Chief Accounting Officer

Mr. Rogers served as Senior Vice Present and Chief Accounting Officer & Administrative Officer, Treasurer of Rice Energy from April 2011 through November 2017. Mr. Rogers is also the Chief Accounting Officer of Rice I. Mr. Rogers led accounting, tax and human resources functions for Rice Energy, Rice Midstream and its numerous joint ventures and joint venture companies. Mr. Rogers oversaw such functions through two initial public offerings in a single calendar year (Rice Energy in January 2014 and Rice Midstream in December 2014) and through numerous asset and corporate level acquisitions totaling more than $10 billion in asset value. He also has numerous years in public accounting experience, having worked at both Ernst & Young and PricewaterhouseCoopers.

Board of Directors

Jide Famuagun, 41
Independent Director Nominee

Mr. Famuagun is the Founder & CEO of Alpha Capital Partners, a vertically integrated private equity real estate firm. The firm is an investor, developer, operator, and fund manager of thriving Multifamily and Student Housing investments across the Midwest, South, and Southeast markets. Prior to founding Alpha, Mr. Famuagun served as Vice President of Production at Rice Energy from June 2012 through November 2017 and was responsible for production engineering, operations, flowback and well workovers, facilities engineering and construction, automation and SCADA, produced water recycling, and gas control and measurement

Carrie Fox, 37
Independent Director Nominee

Ms. Fox has served as Founder and Chief Executive Officer for Cygnet Resources, a real property investment company, since September 2020, Chief Financial Officer for Driltek, Inc., a global onshore and offshore upstream operations and decommissioning company, since September 2020, and Director for Extraction Oil and Gas (NASDAQ: XOG), an independent oil and gas company, since January 2021. Ms. Fox previously served as a Vice President of Business Development for California Resources Corporation (NYSE: CRC) from 2014 to August 2020, where her accomplishments included originating and closing multiple midstream/development joint ventures and asset acquisitions/divestitures. Prior to joining business development at CRC, Ms. Fox held numerous leadership positions within the asset development and exploitation organizations for Occidental Petroleum (NYSE: OXY) from 2006 to 2014. There, Ms. Fox also served as California Government Affairs Manager where she analyzed and developed legislative and regulatory strategies. Ms. Fox was selected for Hart Energy’s “40 under 40” in 2020. Ms. Fox began her career as a reservoir and operations engineer responsible for assets under primary, secondary, and tertiary recovery mechanisms in the San Joaquin and Los Angeles Basins. Ms. Fox holds a B.Sc. in engineering from California Polytechnical State University, San Luis Obispo.

James Lytal, 63
Independent Director Nominee

Mr. Lytal has served as a Senior Advisor for Global Infrastructure Partners (a leading global, independent infrastructure investor) since April 2009. From 1994 to 2004, he served as President of Leviathan Gas Pipeline Partners, which later became El Paso Energy Partners, and then Gulfterra Energy Partners. In 2004, Gulfterra merged with Enterprise Products Partners (a North American midstream energy services provider), where he served as Executive Vice President until 2009. From 1980 to 1994, Mr. Lytal held a series of commercial, engineering and business development positions with various companies engaged in oil and gas exploration and production and gas pipeline services. Mr. Lytal currently serves on the board of directors for Archrock, Inc, a publicly listed natural gas compression services company. Previously, Mr. Lytal served as a director and member of the audit committee and chairman of the conflicts committee of Rice Midstream Management LLC, the managing general partner of Rice Midstream Partners, L.P. from 2015 until it was acquired in July 2018; director of Gulfterra Energy Partners from 1994 to 2004; director of Azure Midstream Partners GP, LLC, the general partner of Azure Midstream Partners, LP from 2013 to 2017, including service as member of the audit committee and chairman of the conflicts committee; and director and chairman of the compensation committee and member of the audit committee of SemGroup Corporation from 2011 until it was acquired in December of 2019. Mr. Lytal holds a B.S. in Petroleum Engineering from The University of Texas at Austin.

 

ByKristi Marvin