Net Power Inc. current report, 18 June 2021

Full document

Business Context and Reporting Period

This Form 8-K was filed by Rice Acquisition Corp. II, a Cayman Islands special purpose acquisition company, with a report date of June 18, 2021 and filing signature date of June 21, 2021. The request identifies Net Power Inc., but Net Power Inc. is not the registrant named in the filing. The filing primarily reports the completion of the company’s initial public offering and related transactions.

Key Financial Metrics and Capitalization

  • The company completed an IPO of 34,500,000 units, including 4,500,000 units issued upon the underwriters’ full exercise of their over-allotment option.
  • Each unit was sold to the public for $10.00 and consisted of one Class A ordinary share and one-fourth of a redeemable warrant.
  • Each whole public warrant is exercisable for one Class A ordinary share at $11.50 per share.
  • Gross IPO proceeds were $345.0 million, before underwriting discounts, commissions, and other offering expenses.
  • The company deposited $345.026 million into a U.S.-based trust account, including $11.7215 million of deferred underwriting discount.
  • The company separately sold 10,900,000 private placement warrants to its sponsor at $1.00 per warrant, generating $10.9 million of gross proceeds.
  • Each private placement warrant is exercisable at $11.50 for one Class A ordinary share or, in certain circumstances, an equivalent Opco interest and Class B ordinary share.
  • The filing does not provide operating revenue, net income, cash flow, margins, or conventional corporate debt metrics. As a newly formed SPAC, its principal reported liquidity consists of IPO and private-placement proceeds held in trust.

Material Changes and Transaction Terms

  • The IPO and related private placement were completed on June 18, 2021 under agreements entered into on June 15, 2021.
  • Trust-account funds generally may be released only upon completion of an initial business combination, certain approved amendments involving redemption rights, or liquidation if no business combination is completed within 24 months after the IPO closing.
  • The underwriters received a deferred discount of $0.35 per applicable unit, subject to forfeiture if no business combination is completed and the trust is distributed to public shareholders.
  • The company’s amended and restated memorandum and articles of association were approved on June 15, 2021.
  • J. Kyle Derham, Jide Famuagun, Carrie Fox, and James Lytal were appointed to the board. Famuagun, Fox, and Lytal were designated independent directors and appointed as chairs of the compensation, nominating, and audit committees, respectively.
  • The sponsor forfeited 90,000 Class B Opco units, and 30,000 Class B Opco units were issued to each of the three independent directors, together with corresponding Class B ordinary shares.

Guidance, Outlook, Risks, and Unusual Items

  • The filing does not identify a completed business combination, operating forecast, or specific acquisition target. The company’s stated purpose remains pursuing an initial business combination.
  • Public shareholders may have redemption rights in connection with a proposed business combination, and the company must redeem the relevant securities if it does not complete a business combination within 24 months, subject to applicable law.
  • Trust-account proceeds are restricted pending the applicable release events; only certain interest may be released for franchise and income tax obligations.
  • Investors should consider dilution and potential future share issuance from the public and private warrants, all of which have an $11.50 exercise price.
  • The company entered into customary underwriting, trust, warrant, registration-rights, administrative-services, sponsor, and indemnification agreements. The filing also notes that underwriters and affiliates may have other commercial and securities-trading relationships with the company or its affiliates.

Important Facts to Verify

  1. Confirm that the intended issuer is Rice Acquisition Corp. II rather than Net Power Inc.
  2. Review the trust agreement and governing documents for redemption rights, liquidation provisions, and the 24-month business-combination deadline.
  3. Verify the final amount held in trust and the treatment of the $11.7215 million deferred underwriting discount.
  4. Assess dilution from 34.5 million public units, 10.9 million private placement warrants, sponsor securities, and director equity awards.
  5. Review the IPO prospectus and subsequent filings for any announced business combination, target-company disclosures, or changes to the SPAC’s terms.