LanzaTech Global, Inc. (NASDAQ:LNZA), an industrial chemicals company, is embroiled in a legal dispute following the termination of a significant agreement with Vellar Opportunity Fund SPV LLC – Series 10 ("Vellar"). The conflict centers on a Forward Purchase Agreement, which was established with ACM ARRT H LLC ("ACM") and later partially assigned to Vellar.
On Monday, LanzaTech filed a lawsuit in the Supreme Court of New York, alleging that Vellar breached the Forward Purchase Agreement by selling shares that were supposed to be held in a special purpose vehicle for the company's benefit. LanzaTech claims these sales were made without the required notice for an early termination, which would entitle the company to repurchase the shares at $10.1574 each.
The controversy escalated when Vellar notified LanzaTech of a volume-weighted average price (VWAP) Trigger Event on July 1, 2024, and subsequently claimed the right to accelerate the maturity of its shares, demanding payment of $7,500,000 plus additional consideration. LanzaTech contests the validity of this notice and maintains that no payments are due to Vellar.
The disputed VWAP Notice purportedly set the accelerated maturity date of Vellar's portion of the shares (2,990,000 common shares) to Monday, July 22, 2024. Vellar asserts it is entitled to the maturity consideration and a share consideration totaling approximately $10 million, payable on Wednesday, July 24, 2024. The following day, LanzaTech received a default notice from Vellar for failing to make the payment.
LanzaTech has stated its intention to "vigorously pursue" its claims against Vellar. This legal conflict adds a layer of complexity to the company's financial landscape and raises questions about the future of the Forward Purchase Agreement.
In other recent news, LanzaTech Global shareholders have approved key proposals in the company's 2024 Annual Meeting, including director elections and executive compensation. LanzaTech has also launched a new technology, CirculAir™, with LanzaJet, aimed at producing sustainable aviation fuel (SAF) by repurposing waste and carbon emissions into jet fuel. In line with its strategy, LanzaTech has increased its ownership stake in LanzaJet from approximately 23% to 36%.
Analysts from TD Cowen and Roth/MKM have shared their perspectives on LanzaTech, with TD Cowen initiating coverage with a Hold rating due to anticipated deployment challenges and Roth/MKM maintaining a Buy rating contingent on the company's ability to manage potential challenges.
Further, LanzaTech and Technip (EPA:FTI) Energies are in negotiations with the U.S. Department of Energy for a potential award of up to $200 million to support the SECURE project, a joint initiative aimed at sustainable ethylene production from captured carbon dioxide. These developments highlight LanzaTech's recent activities and strategic advancements.
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