In a significant financial move, LanzaTech Global, Inc. has entered into a new loan agreement with Brookfield Asset Management Inc (NYSE:BAM)., effectively replacing a previous equity arrangement with a direct loan. The change was reported on Thursday, February 20, 2025, based on an 8-K filing with the Securities and Exchange Commission. According to InvestingPro data, LanzaTech operates with a moderate level of debt and maintains a healthy current ratio of 2.91, indicating strong short-term liquidity position despite recent financial challenges.
The new loan agreement, dated February 14, 2025, supersedes the Simple Agreement for Future Equity (SAFE) that was established on October 2, 2022. As a result of this transition, Brookfield has provided LanzaTech with a loan totaling $60,030,750. This sum includes the initial $50 million from the SAFE and accumulated interest at an 8% annual rate compounded since the original agreement date. With a market capitalization of approximately $148 million and negative EBITDA of $94.8 million in the last twelve months, this financing comes at a crucial time for the company. InvestingPro analysis reveals that LanzaTech has been quickly burning through cash, with 12 additional key financial insights available to subscribers.
LanzaTech is obligated to make an initial repayment of $12.5 million by February 21, 2025. The remaining balance, along with accrued interest, is due by October 3, 2027, or earlier if certain conditions such as change of control events or breaches of the loan agreement occur. Additionally, for every $50 million of equity funding Brookfield commits to qualifying projects under the Framework Agreement, $5 million of the loan's remaining amount will be considered repaid.
The loan imposes several restrictions on LanzaTech, including limitations on dividend payments, asset sales, and the incurrence of senior debt or certain liens without Brookfield's consent. Brookfield also gains the right to appoint an observer to LanzaTech's Board of Directors.
Concurrent with the loan agreement, both parties have signed a Termination Agreement to formally conclude the SAFE, with provisions for its reinstatement under specific circumstances. Notably, the Framework Agreement between LanzaTech and Brookfield remains intact and unaffected by these changes.
This strategic financial restructuring reflects the ongoing partnership between LanzaTech, a leader in industrial organic chemicals, and Brookfield, aiming to develop and construct commercial facilities utilizing LanzaTech's carbon capture and transformation technology.
Investors and stakeholders in LanzaTech Global, Inc., which trades on the Nasdaq Stock Market under the ticker symbols (NASDAQ:LNZA) for its common stock and NASDAQ:LNZAW for its redeemable warrants, may view these developments as a continued commitment to the company's growth and technological advancements in sustainable chemical production. The stock has shown significant volatility, with a notable 29% return over the last week despite a 73% decline over the past year. With the company's next earnings report due on February 28, 2025, InvestingPro subscribers can access detailed financial forecasts and analyst recommendations to better navigate this volatile period.
The details outlined in this article are based on a press release statement and provide a concise overview of the new financial arrangements between LanzaTech Global, Inc. and Brookfield Asset Management Inc.
In other recent news, LanzaTech Global, Inc. and Technip (EPA:FTI) Energies have secured nearly $20 million in federal funding from the U.S. Department of Energy for Project SECURE, which aims to decarbonize ethylene production. This funding will support the initial phase of the project, focusing on engineering design work to develop sustainable ethanol and ethylene from carbon dioxide. LanzaTech also announced changes in its finance leadership, appointing Sushmita Koyanagi as the new Chief Accounting Officer and promoting George Dimitrov to Senior Vice President of Finance and Business Operations for its new venture, LanzaTech Nutritional Protein.
Additionally, LanzaTech has strengthened its Board of Directors with the appointment of Thierry Pilenko, an energy sector veteran with extensive experience in managing large-scale infrastructure projects. Pilenko is expected to contribute valuable insights as LanzaTech expands its global operations. The company is actively enhancing its biorefining capabilities and diversifying its product offerings, particularly in the alternative protein market. These developments reflect LanzaTech's strategic growth initiatives and commitment to advancing carbon management solutions.
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