Net Power Inc. current report, 13 December 2022

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Business Context and Reporting Period

Rice Acquisition Corp. II (“RONI”), the registrant and SPAC, filed this Form 8-K on December 13, 2022, reporting entry into a definitive Business Combination Agreement with NET Power, LLC. Upon closing, RONI is expected to domesticate as a Delaware corporation and change its name to NET Power Inc.

The transaction would combine NET Power with RONI through an Up-C structure. NET Power would become a wholly owned subsidiary of RONI Opco, and existing NET Power equity holders would receive an aggregate of 135,698,078 RONI Opco Class A Units and an equivalent number of Class B Common Stock shares, subject to specified adjustments.

Key Financial and Transaction Metrics

  • PIPE financing: Investors agreed to purchase 22,545,000 shares of Class A Common Stock for aggregate gross proceeds of $225.45 million, or $10.00 per share.
  • Minimum transaction funding condition: NET Power’s obligation to close is generally conditioned on aggregate available trust-account proceeds, PIPE proceeds and certain other cash, less transaction expenses, exceeding $200 million immediately before closing.
  • RONI must have at least $5,000,001 of net tangible assets after giving effect to the transaction.
  • Warrant terms: Existing warrants are expected to convert on a one-for-one basis into warrants exercisable at $11.50 per share.
  • Tax receivable agreement: RONI is expected to pay certain RONI Opco unitholders 75% of specified tax savings realized from exchanges of RONI Opco units and related tax benefits.
  • Operating financial information: The filing text does not provide clear revenue, profit, cash-flow, margin, debt, liquidity-balance, or historical financial-statement values for NET Power.

Material Changes Versus the Prior Comparable Period

The filing is principally a transaction announcement rather than an earnings report. It does not provide comparable-period financial results or quantify changes in revenue, profitability, cash flow, debt, or liquidity.

  • RONI entered into the Business Combination Agreement, Sponsor Letter Agreement, Support Agreement, PIPE subscription agreements, and an amended and restated joint development agreement.
  • RONI Sponsor agreed to forfeit and cancel 1,000,000 RONI Interests for no consideration. Additional sponsor interests are subject to forfeiture and performance-based vesting tied to financing proceeds and post-closing stock-price thresholds.
  • The transaction would replace RONI’s SPAC structure with a public operating-company structure under the NET Power Inc. name.

Guidance, Outlook, Risks, and Unusual Items

  • Closing is subject to shareholder approvals, antitrust clearance, absence of legal impediments, NYSE listing approval, satisfaction of the net tangible asset requirement, and the specified minimum funding condition.
  • The agreement may be terminated if the transaction has not closed by August 31, 2023, with an automatic extension of up to 30 days if the parties continue working in good faith toward closing.
  • Under the amended joint development agreement, Baker Hughes-related entities may receive cash reimbursements and additional RONI Opco units and Class B Common Stock for development costs, cost overruns, milestones, and other specified events. The agreement generally expires no later than February 3, 2027, subject to earlier termination rights.
  • NET Power’s stated risks include significant historical losses, potential going-concern risk if the transaction is not completed, capital-intensive operations and possible future capital needs, technology commercialization and deployment barriers, complex machinery, supply-chain constraints, construction and manufacturing delays, dependence on strategic partners, regulatory and licensing risks, intellectual-property protection, and uncertainty of projected financial information.
  • Forward-looking statements are subject to transaction termination, redemption levels, financing availability, litigation, regulatory developments, management distraction, demand uncertainty, commodity and raw-material costs, and the ability to build and commercialize an initial commercial-scale plant.

Important Facts for Investors to Verify

  • Whether RONI and NET Power obtain all required shareholder, regulatory, and NYSE approvals.
  • Actual redemption levels and the amount ultimately available from RONI’s trust account.
  • Whether the $225.45 million PIPE financing closes and whether total available funding exceeds the $200 million transaction condition after expenses.
  • The final number of shares and RONI Opco units issued, including adjustments for additional NET Power equity issuance, financing, and joint-development obligations.
  • NET Power’s historical and projected revenue, losses, cash burn, liquidity, debt, capital requirements, and going-concern assessment, which are not clearly provided in this Form 8-K text.
  • The economic impact of the 75% tax receivable agreement, exchange rights, sponsor forfeiture and vesting provisions, lock-ups, and potential dilution from warrants and future equity issuance.
  • The terms and status of the Form S-4 registration statement, proxy statement/prospectus, and subsequent SEC filings containing detailed financial statements and risk factors.