Carbon Revolution looks to merge, list in the US

Carbon Fibre road wheel manufacturer Carbon Revolution has outlined an ambitious plan to merge with a US fund, list on a US stock exchange and emerge with a warchest to speed its path to commercialisation.

The Geelong company told shareholders that it had signed a non-binding letter of intent to merge with a US special purpose acquisition company (SPAC) which it did not name.

Dubbing the new entity MergeCo, the merger would immediately make available US$50 million in capital from a Committed Equity Fund, as well as cash which would likely be ‘substantially less than US$200 million’.

Carbon Revolution will meanwhile require short term bridging finance to meet its cash flow requirements.

Carbon Revolution has been investing heavily in its Geelong plant, constructing its first ‘mega-line’ wheel manufacturing line while improving product quality and manufacturing yield.

However in recent years it has experienced slower than hoped market growth as car manufacturers globally struggle with supply chain disruptions.

Nonetheless Carbon Revolution wheels adorn many of the world’s top performance cars, including several Ferrari models and the recently released Ford GT (pictured).

The company said the proposed merger potentially unlocks critical investment capital to support commercialisation and accelerate the company’s path to profitability.

Like most young technology not yet in profit, Carbon Revolution’s share price has been languishing – however the company’s shares rose on the ASX by 16 cents to 38 cents before trading in its shares was paused.

This reflects the likely boon for shareholders should the merger go ahead – the deal reflects a notional value of Carbon Revolution shares of $1.49.

Australian shareholders will hold about 67 per cent of the company shares should it list in the United States.

Carbon Revolution warned that there was a risk that no transaction would emerge from its negotiations, though it said both parties were aiming to reach a binding agreement in the ‘near term’.

Further reading:
CARBON REVOLUTION TO INAUGURATE MEGA-LINE IN 2022

Picture: Carbon Revolution/Ford GT with Carbon Revolution road wheels