Business context and reporting period
This is Spring Valley Acquisition Corp.’s Form 10-K for the fiscal year ended December 31, 2021, not an operating-company 10-K filed by NuScale Power Corp. Spring Valley was a blank-check company with no operating business or revenue. It reported a proposed merger with NuScale Power, LLC, announced December 13, 2021; the transaction had not closed as of the filing, dated March 10, 2022. If completed, Spring Valley was expected to be renamed NuScale Power Corporation and trade as “SMR.”
Key financial metrics
| Metric | FY 2021 / Dec. 31, 2021 | Comparison |
|---|---|---|
| Operating revenue | None | No operating revenue expected before a business combination |
| Net income (loss) | $3.203 million net income in the audited statements | $12.971 million net loss for Aug. 20–Dec. 31, 2020 |
| General and administrative expense | $1.327 million | $114,144 in the 2020 inception period |
| Trust-account investment income | $18,965 | $1,973 in the 2020 inception period |
| Cash flow from operations | $896,234 used | $346,232 used in the 2020 inception period |
| Cash outside trust | $985,114 | $1.906 million at Dec. 31, 2020 |
| Trust-account investments | $232.321 million | $232.302 million at Dec. 31, 2020 |
| Total assets | $233.407 million | $234.445 million at Dec. 31, 2020 |
| Liabilities | $37.544 million, including $29.149 million warrant liabilities and $8.050 million deferred underwriting fees | $41.760 million at Dec. 31, 2020 |
| Shareholders’ deficit | $36.437 million | $39.615 million at Dec. 31, 2020 |
No meaningful operating margins are reported because the company had no operating revenue. It reported no long-term debt or off-balance-sheet financing arrangements. The filing’s MD&A describes FY 2021 net loss of approximately $3.203 million, but the audited statement of operations reports net income of $3.203 million; the audited financial statements show $0.11 basic and diluted income per share. The filing text does not reconcile this inconsistency.
Material changes and proposed transaction
- The company’s audited statement shows a swing from a $12.971 million loss in the 2020 inception period to $3.203 million income in 2021, largely reflecting non-cash changes in the fair value of warrant liabilities rather than operating performance. FY 2021 warrant fair-value income was reported as $4.511 million.
- Spring Valley terminated its previously announced AeroFarms transaction in October 2021 and later signed the NuScale merger agreement. The proposed combination included a $211 million PIPE for 21,300,002 shares, subject to closing conditions; $30 million of the PIPE depended on definitive Fluor-related commercial documents.
- Closing conditions included at least $200 million of “Closing Acquiror Cash,” shareholder and NuScale unitholder approvals, regulatory clearances, and other customary conditions. The filing anticipated a second-quarter 2022 closing, but this was a forecast, not a completed transaction.
- Estimated transaction expenses were $43 million, including $8 million of deferred underwriting commissions, subject to specified offsets. A separate service-provider fee of approximately $4 million was contingent on a business-combination closing.
- The proposed structure included an Up-C arrangement and a tax receivable agreement under which Spring Valley would pay NuScale’s current owners 85% of certain realized tax savings from future unit exchanges.
Liquidity, outlook, risks and unusual items
The $232.321 million trust balance was intended primarily for a business combination and shareholder redemptions; it should not be viewed as ordinary operating cash. The company reported approximately $985,000 of cash outside the trust and approximately $0.7 million of working capital. Its auditor included a going-concern explanatory paragraph: if the company could not raise funds as needed and complete a business combination by May 27, 2022, it would have to cease operations and liquidate. The sponsor could extend the deadline to November 27, 2022 by funding an additional $2.3 million into trust, but was not obligated to do so. Management stated its intention to complete the NuScale transaction before the deadline; there was no assurance it would close.
- Spring Valley had no operating business, recurring revenue, or established operating track record; its results and continued existence depended on completing a transaction or liquidating.
- Redemptions, financing availability, shareholder approvals, regulatory review, transaction costs, and the May 2022 deadline could prevent or delay the proposed merger. If it failed to complete a combination, public shareholders might receive about $10.10 per share or less, while public warrants would expire worthless.
- The filing identified material weaknesses in internal control over financial reporting, including accounting for warrants and redeemable shares and earnings-per-share presentation. Prior-period financial statements were restated, and management concluded controls remained ineffective at December 31, 2021. Remediation efforts were ongoing, with no assurance they would succeed.
- Warrants were recorded as liabilities and remeasured at fair value, creating potentially significant non-cash earnings volatility. The sponsor’s trust indemnity may not be fully collectible; creditor claims could reduce funds available for redemptions.
- Other relevant risks include sponsor and management conflicts, dilution from founder shares, warrants and transaction securities, and the tax-receivable-agreement payments described above.
Most important facts for investors to verify
- Confirm the reported FY 2021 result: the audited statements show $3.203 million of net income, while MD&A calls it a net loss.
- Check subsequent filings for whether the NuScale merger closed, actual redemption levels, PIPE funding, closing cash, and final transaction expenses.
- Review the going-concern status, remaining cash outside trust, any sponsor extension or financing, and the applicable liquidation deadline.
- Assess whether the accounting-control material weaknesses were remediated and whether any further restatements or regulatory matters arose.
- Evaluate dilution, warrant terms and liabilities, the Fluor-related conditions, and the tax receivable agreement’s potential cash obligations.