PHILADELPHIA, Aug. 01, 2024 (GLOBE NEWSWIRE) -- Vellar Opportunity Fund SPV LLC – Series 10 (“Vellar”,) today issues the following statement in response to claims by LanzaTech Global, Inc., a Delaware corporation (“LanzaTech”).
On February 3, 2023, LanzaTech entered into an OTC Prepaid Forward Transaction (“Forward Purchase Agreement” or “FPA”) with ACM ARRT H LLC (“ACM”). Pursuant to an Assignment and Novation Agreement, dated February 3, 2023, ACM novated a portion (equivalent to 50%) of its rights and obligations under the FPA to Vellar.
On July 22, 2024, pursuant to the daily VWAP in LanzaTech’s common stock previously being below $3.00 for a period of at least 50 out of 60 consecutive trading days, Vellar exercised its right under the FPA to accelerate the Valuation and Maturity Dates to July 22, 2024, by providing LanzaTech with a VWAP Trigger Event notice. Pursuant to this acceleration, LanzaTech must pay to Vellar amounts equal to the Maturity and Share Considerations (as defined in the FPA), of (i) USD $10,039,350 in cash, or (ii) USD $2,539,350 in cash and 3,936,725 shares of LanzaTech’s common stock, at LanzaTech’s option.
On July 25, 2024, pursuant to Section 5(a)(i) of the 2002 ISDA Master Agreement (“ISDA Form”), Vellar delivered a notice of Failure to Pay or Deliver to LanzaTech. On July 26, 2024, pursuant to Section 5(a)(i) of the ISDA Form, LanzaTech’s ongoing failure to pay matured into an Event of Default as defined by the ISDA Form. Pursuant to Section 6(a) of the ISDA Form, Vellar has provided further notice to LanzaTech designating an Early Termination Date of July 30th, 2024 and demanding immediate payment from LanzaTech.
Vellar intends to vigorously pursue LanzaTech for payment of the Maturity and Share Considerations.
LanzaTech has disputed the validity of Vellar’s VWAP Trigger Event notice and refused to cure the Event of Default. LanzaTech has also filed suit against Vellar in the Supreme Court of the State of New York, Commercial Division, alleging Vellar’s breach of the FPA, breach of the implied covenant of good faith and fair dealing, and unjust enrichment.
Vellar believes LanzaTech’s suit to be meritless, filed by LanzaTech as part of a strategy to avoid paying amounts it owes pursuant to the FPA. Vellar believes LanzaTech’s actions to be reflective of its weak financial position (having reported only $56.7 million of cash and cash equivalents on its balance sheet as of March 31, 20241, measured against an average quarterly reduction in cash and cash equivalents of $22.1 million, as measured over the 4 quarters ending March 31, 20242) and significant need to raise equity capital in a historically challenging capital markets environment for loss generating small-cap companies. Vellar further believes that LanzaTech’s ability to raise capital may be adversely affected by the FPA and associated Warrant Agreement; specifically, pursuant to the Warrant Agreement dated March 27, 2023, the strike of the warrants associated with the FPA (for 2,010,000 shares of LanzaTech’s common stock) would be reset to the effective price of any such equity capital raise. The warrants remain outstanding for a period of another 3 years and 8 months in connection with the termination of the FPA.
Contact:
vofspv@cohenandcompany.com
1 Per LanzaTech’s unaudited “Condensed Consolidated Balance Sheets” as included in its report 10-Q filed with the SEC on May 9th, 2024
2 Measured as the simple average of reduction in cash and cash equivalents shown in LanzaTech’s unaudited “Condensed Consolidated Balance Sheets” as included in its report 10-Q filed with the SEC on May 9th, 2024, in its amended reports 10-Q/A filed with the SEC on December 4th, 2023, and in LanzaTech’s “Consolidated Balance Sheets” as included in its form 10-K filed with the SEC on February 29th, 2024
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