Solid Power, Inc. current report, 15 June 2021

Full document

Business Context and Reporting Period

Solid Power, Inc. and Decarbonization Plus Acquisition Corporation III (DCRC) entered into a business combination agreement on June 15, 2021. DCRC Merger Sub Inc. will merge with Solid Power, with Solid Power surviving as a wholly owned subsidiary of DCRC. The filing reports transaction terms and related financing; it does not provide operating results for Solid Power or DCRC for a fiscal reporting period.

Transaction and Key Financial Terms

  • Equity consideration: Holders of Solid Power common and preferred stock will receive DCRC Class A common stock based on an exchange ratio calculated using 123,900,000 “Company Merger Shares” divided by Solid Power’s fully diluted, as-converted outstanding shares, subject to specified exclusions and adjustments.
  • PIPE financing: Subscribers agreed to purchase 16,500,000 DCRC Class A shares at $10.00 per share, for gross proceeds of $165,000,000. The financing is contingent on closing of the proposed transactions and is intended to provide capital to the combined company.
  • Closing cash condition: After the PIPE, release of trust-account funds and transaction-related distributions, DCRC must have at least $300,000,000 of unrestricted cash, excluding transaction fees, costs and expenses.
  • Minimum capitalization condition: DCRC must have at least $5,000,001 of net tangible assets after redemptions and the PIPE, unless its Class A common stock does not constitute “penny stock” under the Exchange Act.
  • Security conversions: Solid Power preferred stock will convert into Solid Power common stock before the merger. Solid Power warrants, options and restricted stock awards will generally be converted into corresponding DCRC securities using the exchange ratio.
  • Financial metrics: The filing text does not provide clear values for revenue, net income, operating cash flow, margins, debt, cash balances, liquidity beyond the stated closing conditions, or other historical operating metrics.

Material Changes Versus the Prior Comparable Period

The filing does not present comparative financial statements or period-over-period operating results. The material development is the signing of the proposed SPAC merger and the associated $165 million PIPE financing.

Guidance, Outlook, Risks and Unusual Items

  • DCRC will file a Form S-4 registration statement and proxy statement/prospectus, and will seek stockholder approval, regulatory clearance, NASDAQ listing and other closing conditions.
  • The closing is expected to occur promptly after all conditions are satisfied or waived, but the agreement may generally be terminated if the transaction has not closed within 180 days, subject to a possible three-month extension in specified circumstances.
  • Solid Power stockholders supporting the transaction agreed to vote in favor of it and accepted transfer restrictions. DCRC’s sponsor and certain directors agreed to vote their shares in favor and waive specified anti-dilution rights.
  • Registration rights will be provided for certain existing and merger-related holders, and for PIPE investors. DCRC is expected to file applicable resale registration statements within 30 days after closing.
  • Key risks include failure to obtain stockholder or regulatory approvals, redemption levels, inability to satisfy cash or listing conditions, termination of the agreements, transaction costs, litigation, execution and growth risks, competition, supply shortages, dependence on original equipment manufacturers and other partners, changes in clean-energy and electric-vehicle incentives, and delays in production facilities.
  • The filing contains forward-looking statements regarding completion of the transaction, business milestones, growth and anticipated benefits. These statements are subject to substantial uncertainty and are not guarantees of future performance.

Important Facts for Investors to Verify

  • Review the definitive Form S-4 and proxy statement for Solid Power’s capitalization, ownership, valuation, dilution, financial statements and risk factors.
  • Verify the fully diluted share count used to calculate the exchange ratio and the resulting number of DCRC shares issued at closing.
  • Confirm the amount of DCRC trust-account proceeds available after shareholder redemptions and transaction expenses.
  • Confirm whether the $165 million PIPE closes and whether DCRC satisfies the $300 million unrestricted-cash and $5,000,001 net-tangible-asset conditions.
  • Track stockholder approval, regulatory review, NASDAQ listing, registration-statement effectiveness and the actual closing date.
  • Review Solid Power’s subsequent filings for revenue prospects, cash burn, financing needs, production milestones, customer or OEM arrangements and facility-construction progress.