Lanzatech Global, Inc. current report, 03 February 2023

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Business Context and Reporting Period

This February 3, 2023 Form 8-K was filed by AMCI Acquisition Corp. II, not LanzaTech Global, Inc. It reports entry into a Forward Purchase Agreement with ACM ARRT H LLC in connection with AMCI’s proposed business combination with LanzaTech NZ, Inc. The report was signed on February 6, 2023.

Key Financial and Transaction Metrics

  • Trust account: $152.4 million of investments and cash as of February 3, 2023.
  • Potential share purchases: The seller may purchase up to 10.0 million AMCI Class A shares in the open market before the business combination closes.
  • Prepayment: At or shortly after closing, the seller will receive an amount generally equal to the redemption price multiplied by the number of shares specified in the pricing notice, less a potential prepayment shortfall of up to $2.5 million retained in the trust account.
  • Share ownership limit: The seller may not beneficially own more than 9.9% of AMCI shares on a post-combination basis.
  • Maturity: The transaction matures on the third anniversary of the business combination closing.
  • Maturity consideration: At maturity, AMCI or the combined company generally must pay cash or deliver shares based on the applicable VWAP. The stated amount is based on up to 7.5 million shares, less terminated shares, multiplied by $2.00, or $3.25 if the prepayment shortfall is not repaid within 30 days after closing.
  • Additional consideration: At maturity, the counterparty must pay consideration equal to 500,000 multiplied by the redemption price.
  • Registration: The counterparty must seek to register resale of the recycled shares and related share consideration within specified contractual time periods.

Material Changes Versus Prior Comparable Period

The filing does not provide prior-period operating results or comparable financial statements. The material development is the execution of the Forward Purchase Agreement on February 3, 2023, supplementing the previously announced merger agreement dated March 8, 2022, as amended December 7, 2022.

Guidance, Outlook, Risks, Contingencies, and Unusual Items

  • The seller may issue shortfall sale notices after the business combination and effectiveness of the resale registration statement. The prepayment shortfall increases by $7.5 million if not repaid in full within 30 days after closing.
  • For 30 days following closing, the seller may not sell recycled shares below $10.00 per share.
  • The counterparty is restricted from issuing additional shares or convertible, exercisable, or exchangeable securities until specified shortfall amounts are satisfied, subject to exceptions.
  • The seller may request shortfall warrants, and the reset price may be reduced if the counterparty later issues equity or equity-linked securities at a lower price, subject to exceptions.
  • The seller may accelerate maturity if the combined company’s VWAP falls below specified thresholds for specified periods.
  • The agreement may terminate if the business combination is not completed by the applicable termination date, the merger agreement is terminated, fewer than 4.0 million shares are specified initially, or the resale registration statement is not declared effective within 105 days of the registration request.
  • The counterparty provides indemnification to the seller and related parties for specified losses and liabilities.
  • The seller’s waiver of redemption rights for recycled shares could reduce total redemptions and affect market perceptions of the business combination.
  • The filing contains customary forward-looking statement warnings and identifies risks, uncertainties, assumptions, and possible outcomes that could cause actual results to differ materially.

Important Facts for Investors to Verify

  1. Confirm the final number of recycled shares and the applicable redemption price.
  2. Review the amount ultimately paid from the trust account and any retained or unpaid prepayment shortfall.
  3. Determine whether the business combination closes and whether the resale registration statement becomes effective within the required period.
  4. Assess potential dilution from maturity consideration, share consideration, shortfall warrants, and any reset-price provisions.
  5. Review the Forward Purchase Agreement filed as Exhibit 10.1 and the definitive proxy statement/prospectus for complete terms and risk factors.