Business Context and Reporting Period
This Form 8-K, dated July 12, 2021, reports that Ivanhoe Capital Acquisition Corp. (Ivanhoe) has entered into a definitive Business Combination Agreement with SES Holdings Pte. Ltd. (SES). Upon consummation, Ivanhoe will domesticate as a Delaware corporation and be renamed SES AI Corporation. The transaction involves an amalgamation of SES with a wholly-owned subsidiary of Ivanhoe, with SES surviving as the amalgamated company. The closing is expected in the third or fourth quarter of 2021.
Key Financial Metrics and Transaction Terms
- Total Consideration: $2,810,000,000 in shares of Class A common stock valued at $10.00 per share.
- PIPE Financing: $200,000,000 in aggregate gross proceeds from the sale of 20,000,000 shares of Class A common stock at $10.00 per share.
- Earn-Out Shares: Up to 30,000,000 shares of Class A common stock (valued at $10.00 per share) payable if the closing price equals or exceeds $18.00 within a five-year period following the closing.
- Liquidity Condition: The transaction requires aggregate cash proceeds from Ivanhoe's trust account and the PIPE Financing to equal no less than $200,000,000 after redemptions and transaction costs.
- Financial Statements: This filing does not provide historical revenue, profit, cash flow, or margin data for SES or Ivanhoe.
Material Changes and Transaction Structure
The primary material change is the proposed merger of a SPAC (Ivanhoe) with a private operating company (SES). Key structural elements include:
- Share Conversion: Ivanhoe Class A and B ordinary shares will convert to New SES Class A and B common stock. Immediately following domestication, Class B shares will convert to Class A shares.
- Voting Rights: Post-closing, Class B common stock (held by the SES Founder Group) will carry 10 votes per share, while Class A common stock will carry 1 vote per share. Both classes have identical economic rights.
- Exchange Ratio: Defined as 281,000,000 divided by the aggregate number of SES shares outstanding (including vested options and restricted shares) minus excluded shares.
Guidance, Risks, and Contingencies
Conditions to Closing: The transaction is subject to customary conditions, including shareholder approval from Ivanhoe and SES, expiration of the HSR Act waiting period, effectiveness of the Form S-4 registration statement, and the absence of laws prohibiting the combination.
Lock-Up Arrangements: Certain SES shareholders are restricted from transferring shares for six months post-closing. Ivanhoe insiders and the Sponsor are subject to tiered lock-up restrictions based on share price performance milestones ($12.00, $14.00, $16.00, and $18.00) or a 180-day period.
Risks and Contingencies:
- Regulatory Approval: Risk that required regulatory approvals are not obtained or are delayed.
- Redemptions: Ivanhoe public shareholders have the right to redeem shares, which could impact the cash available for the transaction.
- Technology Commercialization: Risks related to the development and commercialization of SES's hybrid lithium-metal battery technology.
- Forward-Looking Statements: Projections regarding market opportunity and financial metrics are not guarantees and are subject to significant uncertainties.
Investor Verification Checklist
- Verify the final number of shares redeemed by Ivanhoe public shareholders to ensure the $200,000,000 minimum cash condition is met.
- Confirm the approval of the Business Combination by Ivanhoe shareholders and the requisite written consents from SES shareholders.
- Review the upcoming Form S-4 proxy statement/prospectus for detailed risk factors and financial projections.
- Monitor the status of regulatory approvals under the Hart-Scott-Rodino Antitrust Improvements Act.
- Assess the viability of SES's battery technology commercialization timeline as outlined in the third-party technical reports referenced in the filing.