As filed with the Securities and Exchange Commission on May 12, 2022
No. 333-262583
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
TO
FORM
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________
(Exact name of registrant as specified in its charter)
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| | 6770 | 98-1578357 | ||
| (State or other jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer |
200 Clarendon Street, 55th Floor
Boston, Massachusetts 02116
617-531-6300
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
_____________________
John F. Erhard
Chief Executive Officer
200 Clarendon Street, 55th Floor
Boston, Massachusetts 02116
617-531-6300
(Name, address, including zip code, and telephone number, including area code, of agent for service)
_____________________
Copies of all communications, including communications sent to agent for service, should be sent to:
|
Julian J. Seiguer, P.C. |
Jennifer Wu Kirkland & Ellis LLP 401 Congress Avenue Austin, TX 78701 Tel: (512) 678-9100 |
T. Allen McConnell, P.C. |
John H. Booher, Esq. |
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Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934 (“Exchange Act”).
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||
| | ☒ | Smaller reporting company | | |||||
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
The registrant hereby amends this Registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
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* Immediately prior to the consummation of the Business Combination, ArcLight intends to effect a deregistration under the Cayman Islands Companies Act (As Revised) and a domestication under Section 388 of the Delaware General Corporation Law, pursuant to which ArcLight’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware (the “Domestication”). All securities being registered will be issued by the continuing entity following the Domestication, which continuing entity will be renamed “OPAL Fuels Inc.” following the Effective Time (as defined in the accompanying proxy statement/prospectus). As used herein, “New OPAL” refers to ArcLight after giving effect to the Business Combination.
The information in this preliminary proxy statement/prospectus is not complete and may be changed. These securities may not be issued until the registration statement filed with the U.S. Securities and Exchange Commission is effective. The preliminary proxy statement/prospectus is not an offer to sell these securities and does not constitute the solicitation of offers to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY — SUBJECT TO COMPLETION, DATED MAY 12, 2022
PROXY STATEMENT FOR SPECIAL MEETING OF
ARCLIGHT CLEAN TRANSITION CORP. II
PROSPECTUS FOR
38,895,381 SHARES OF NEW OPAL CLASS A COMMON STOCK,
15,446,522 WARRANTS TO PURCHASE SHARES OF NEW OPAL CLASS A COMMON STOCK AND
15,446,522 SHARES OF NEW OPAL CLASS A COMMON STOCK UNDERLYING WARRANTS OF
ARCLIGHT CLEAN TRANSITION CORP. II (AFTER ITS DOMESTICATION AS A CORPORATION INCORPORATED IN THE STATE OF DELAWARE AND RENAMING
AS OPAL FUELS INC. IN CONNECTION WITH THE DOMESTICATION)
The board of directors (the “ArcLight Board”) of ArcLight Clean Transition Corp. II, a blank check company incorporated as a Cayman Islands exempted company with limited liability (the “Company,” “ArcLight,” “we,” “us” or “our”), has unanimously approved (i) the deregistration of ArcLight under Part XII of the Cayman Islands Companies Act (As Revised) and a domestication under Section 388 of the Delaware General Corporation Law (the “DGCL”), pursuant to which ArcLight’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware (the “Domestication”) and (ii) that certain business combination agreement, dated as of December 2, 2021 (as the same has been or may be amended, modified, supplemented or waived from time to time, the “BCA” or the “Business Combination Agreement”), by and among ArcLight, OPAL Fuels LLC, a Delaware limited liability company (“OPAL Fuels”), and OPAL HoldCo LLC, a Delaware limited liability company and, as of the date of signing, the sole member of OPAL Fuels (“OPAL HoldCo”), a copy of which is attached to this proxy statement/prospectus as Annex A. In connection with the transactions contemplated by the Business Combination Agreement (collectively, the “Business Combination”), the Company will be renamed “OPAL Fuels Inc.” and is referred to herein as “New OPAL”.
Upon consummation of the Business Combination, the Combined Company (defined below) will be organized in an “Up-C” structure. New OPAL will be the managing member of OPAL Fuels. OPAL Fuels will directly or indirectly hold substantially all of the consolidated assets and business of New OPAL.
As described in this proxy statement/prospectus, ArcLight’s shareholders are being asked to consider and vote upon (among other things) the Business Combination, the Domestication and the other proposals set forth herein.
The accompanying prospectus covers 38,895,381 shares of New OPAL Class A Common Stock, 15,446,522 shares of New OPAL Class A Common Stock issuable upon exercise of New OPAL Public Warrants and 15,446,522 New OPAL Public Warrants to acquire shares of New OPAL Class A Common Stock.
ArcLight’s units, Public Shares and ArcLight Public Warrants are currently listed on the Nasdaq Capital Market (“Nasdaq”) under the symbols “ACTDU,” “ACTD” and “ACTDW,” respectively. ArcLight intends to apply for listing, to be effective upon consummation of the Business Combination, of New OPAL’s Class A Common Stock and New OPAL’s Public Warrants to purchase New OPAL Class A Common Stock on Nasdaq under the proposed symbols “OPL” and “OPL.WS,” respectively.
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This proxy statement/prospectus provides you with detailed information about the Business Combination and other matters to be considered at the Special Meeting. We urge you to carefully read this entire document and the documents incorporated herein by reference. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 52 of this proxy statement/prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the transactions described in this proxy statement/prospectus, passed upon the fairness of the BCA or the transactions contemplated thereby, or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.
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This proxy statement/prospectus is dated , 2022, and is first being mailed to ArcLight’s shareholders on or about , 2022.
ARCLIGHT CLEAN TRANSITION CORP. II
A Cayman Islands Exempted Company
200 Clarendon Street, 55th Floor
Boston, Massachusetts 02116
NOTICE OF SPECIAL MEETING
TO BE HELD ON ______________, 2022
TO THE SHAREHOLDERS OF ARCLIGHT CLEAN TRANSITION CORP. II:
NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “Special Meeting”) of ArcLight Clean Transition Corp. II, a Cayman Islands exempted company with limited liability (“ArcLight,” “we,” “us” or “our”), will be held at a.m., Eastern Time, on , 2022. For the purposes of ArcLight’s Amended and Restated Memorandum and Articles of Association (the “Existing Organizational Documents”), dated as of March 22, 2021 (the “Existing Organizational Documents”), the physical place of the meeting will be at the offices of Kirkland & Ellis LLP located at 609 Main Street, Houston, Texas 77002. In light of the novel coronavirus pandemic and to support the well-being of ArcLight’s shareholders, directors and officers, ArcLight encourages you to use remote methods of attending the Special Meeting or to attend via proxy. You may attend the Special Meeting and vote your shares electronically during the Special Meeting via live webcast by visiting https://www.cstproxy.com/actcii/2022. You will need the meeting control number that is printed on your proxy card to enter the Special Meeting. If you do not have internet capabilities, you can listen only to the meeting by dialing 1 800-450-7155 (toll-free), outside the U.S. and Canada +1 857-999-9155 (standard rates apply) when prompted enter the pin number 0732540#. This is listen-only, you will not be able to vote or enter questions during the Special Meeting. You are cordially invited to attend the Special Meeting, which will be held for the following purposes:
Proposal No. 1 — The Business Combination Proposal — to consider and vote upon a proposal to approve by ordinary resolution under Cayman Islands law and adopt that certain business combination agreement, dated as of December 2, 2021 (as the same has been or may be amended, modified, supplemented or waived from time to time, the “BCA” or the “Business Combination Agreement”), by and among ArcLight, OPAL Fuels LLC, a Delaware limited liability company (“OPAL Fuels”), and OPAL HoldCo LLC, a Delaware limited liability company and, as of the date of the signing, the sole member of OPAL Fuels (“OPAL HoldCo”), a copy of which is attached to this proxy statement/prospectus as Annex A. The Business Combination Agreement provides for, among other things, the following transactions (collectively, the “Business Combination”): (i) the conversion of each issued and outstanding Class B ordinary share, par value $0.0001 per share, of ArcLight (collectively, the “ArcLight Class B ordinary shares”) into one Class A ordinary share, par value $0.0001 per share, of ArcLight (each, an “ArcLight Class A ordinary share”); (ii) the Domestication (as defined below) will occur and, in connection with the Domestication, (A) ArcLight’s name will be changed to “OPAL Fuels Inc.”, (B) OPAL Fuels Inc. (“New OPAL”) will file its certificate of incorporation and adopt bylaws to serve as its governing documents in connection with the Domestication, (C) each outstanding ArcLight Class A ordinary share will convert into one share of Class A common stock of New OPAL, par value $0.0001 per share (the “New OPAL Class A Common Stock”), and (D) each outstanding warrant to purchase one ArcLight Class A ordinary share will represent the right to purchase one share of New OPAL Class A Common Stock at an exercise price of $11.50 per share; (iii) (A) OPAL Fuels and its existing members will cause OPAL Fuels’ existing limited liability company agreement to be amended and restated, (B) in connection therewith, all of the common units of OPAL Fuels issued and outstanding immediately prior to the closing of the Business Combination (the “Closing”) will be re-classified into a number of Class B common units of OPAL Fuels (collectively, the “OPAL Common Units”) calculated as a function of the pre-transaction equity value for OPAL Fuels equal to $1,501,870,000, less all principal and accrued interest outstanding immediately after the Closing pursuant to that certain Convertible Promissory Note, dated as of May 1, 2021 (as amended, including by that certain First Amendment to Convertible Note, dated November 29, 2021, the “Ares Note”), held by ARCC Beacon LLC, a Delaware limited liability company (“Ares”), (C) ArcLight will contribute to OPAL Fuels (x) the amount of cash in the trust account (the “Trust Account”) established by ArcLight with the proceeds from its IPO as of immediately prior to the Closing (and after, for the avoidance of doubt, giving effect to the exercise of redemption rights by any ArcLight shareholders (the “ACT Share Redemptions”)), plus (y) the aggregate cash proceeds actually received in respect of the PIPE Investment (as defined below) and (D) New OPAL will contribute to OPAL Fuels, and OPAL Fuels will in turn distribute to pre-closing members of OPAL Fuels, a number of shares of Class B common stock, par
value $0.0001 per share, of New OPAL (the “New OPAL Class B Common Stock”) and shares of Class D common stock, par value $0.0001 per share, of New OPAL (the “New OPAL Class D Common Stock”) (neither of such shares of New OPAL Class B Common Stock and shares of New OPAL Class D Common Stock will have any economic value but will entitle the holder thereof to one vote per share or five votes per share, respectively), with the number of such shares of New OPAL Class B Common Stock and shares of New OPAL Class D Common Stock equal to the number of OPAL Common Units held by each pre-closing member of OPAL Fuels, provided that in lieu of receiving a combination of OPAL Common Units and New OPAL Class B Common Stock, if elected, Ares may receive a number of shares of New OPAL Class A Common Stock equal to the number of shares of New OPAL Class B Common Stock it otherwise would have received; and (iv) OPAL Fuels will issue to ArcLight a number of Class A Units of OPAL Fuels equal to the number of shares of New OPAL Class A Common Stock then issued and outstanding (after giving effect to OPAL Fuels’ election to receive New OPAL Class A Common Stock in lieu of New OPAL Class B Common Stock, if any) (we refer to this proposal, collectively, as the “Business Combination Proposal”);
Proposal No. 2 — The Domestication Proposal — to consider and vote upon a proposal to approve by special resolution under Cayman Islands law, assuming the Business Combination Proposal is approved and adopted, the change of ArcLight’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication” and such proposal, the “Domestication Proposal”);
Proposal No. 3 — The Organizational Documents Proposal — to consider and vote upon a proposal to approve by special resolution under Cayman Islands law, assuming the Business Combination Proposal and the Domestication Proposal are approved and adopted, the proposed new certificate of incorporation (the “Proposed Charter”) and bylaws (the “Proposed Bylaws,” and, together with the Proposed Charter, the “Proposed Organizational Documents”) of New OPAL, the post-Domestication company, which, if approved, would take effect at the time of the Domestication (we refer to this proposal as the “Organizational Documents Proposal”);
Proposal No. 4 — The Advisory Charter Proposals — to consider and vote upon a proposal to approve, by ordinary resolution under Cayman Islands law, on a non-binding advisory basis, certain governance provisions in the Proposed Charter, which are being presented separately in accordance with guidance from the U.S. Securities and Exchange Commission (the “SEC”) to give shareholders the opportunity to present their separate views on important corporate governance provisions, as six sub-proposals (which proposals we refer to, collectively, as the “Advisory Charter Proposals”):
Advisory Charter Proposal 4A — to increase the authorized share capital from 555,000,000 shares, divided into 500,000,000 ArcLight Class A ordinary shares, 50,000,000 ArcLight Class B ordinary shares, and 5,000,000 preference shares, par value $0.0001 per share (the “ArcLight preferred shares”), to authorized capital stock of 1,120,000,000 shares, consisting of (i) 340,000,000 shares of New OPAL Class A Common Stock, (ii) 160,000,000 shares of New OPAL Class B Common Stock, (iii) 160,000,000 shares of Class C common stock, par value $0.0001 per share (“New OPAL Class C Common Stock”) of New OPAL, (iv) 160,000,000 shares of New OPAL Class D Common Stock (together with the New OPAL Class A Common Stock, New OPAL Class B Common Stock and New OPAL Class C Common Stock, the “New OPAL Common Stock”) and (v) 300,000,000 shares of preferred stock, par value $0.0001 per share (“New OPAL Preferred Stock”) of New OPAL;
Advisory Charter Proposal 4B — to provide that the Proposed Charter may be amended by holders of outstanding shares of each class of New OPAL Common Stock who shall be entitled to vote separately upon any proposed amendment to the Proposed Charter that would alter or change the powers, preferences or special rights of such class of New OPAL Common Stock in a manner that is disproportionately adverse as compared to the other classes of New OPAL Common Stock;
Advisory Charter Proposal 4C — to provide for (i) the election of directors by the board of directors of New OPAL (the “New OPAL Board”) unless it is a period when the holders of any series of New OPAL Preferred Stock have the right to elect additional directors per a certificate of designation filed by the New OPAL Board establishing shares of New OPAL Preferred Stock which may have powers, preferences and rights senior to, junior to, or pari passu with rights of New OPAL Common Stock, (ii) the filling of newly-created directorships or any vacancy on the New OPAL Board by a majority vote of the remaining directors then in office, even if less than a quorum, and not by the stockholders and (iii) the removal of directors with or without cause and only upon the affirmative vote of the holders of a majority in voting power of all the then outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class;
Advisory Charter Proposal 4D — to provide that, unless New OPAL consents in writing to the selection of an alternative forum, the Delaware Court of Chancery (or, if and only if such court does not have subject matter jurisdiction thereof, another state court located within the State of Delaware, or if and only if all such state courts do not have subject matter jurisdiction thereof, then the federal district court for the State of Delaware) and any appellate court thereof shall be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (i) any derivative action, suit or proceeding brought on behalf of New OPAL; (ii) any action, suit or proceeding (including any class action) asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee, agent or stockholder of New OPAL to New OPAL or New OPAL’s stockholders; (iii) any action, suit or proceeding (including any class action) asserting a claim against New OPAL or any current or former director, officer, other employee, agent or stockholder of New OPAL arising out of or pursuant to any provision of the DGCL, the Proposed Organizational Documents (as each may be amended from time to time); (iv) any action, suit or proceeding (including any class action) to interpret, apply, enforce or determine the validity of the Proposed Organizational Documents (including any right, obligation or remedy thereunder); (v) any action, suit or proceeding as to which the DGCL confers jurisdiction to the Delaware Court of Chancery; or (vi) any action asserting a claim against New OPAL or any director, officer or other employee of New OPAL governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. This provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction. Further, unless New OPAL consents in writing to the selection of an alternative forum, the federal district courts shall be the exclusive forum for any complaint asserting a cause of action arising under the Securities Act; however, there is uncertainty as to whether a court would enforce such provision;
Advisory Charter Proposal 4E — to provide that (i) each holder of record of New OPAL Class A Common Stock and New OPAL Class B Common Stock shall be entitled to one vote per share on all matters which stockholders generally are entitled to vote, and (ii) each holder of record of New OPAL Class C Common Stock and New OPAL Class D Common Stock are entitled to five votes per share on all matters which stockholders generally are entitled to vote;
Advisory Charter Proposal 4F — to eliminate various provisions in the Existing Organizational Documents applicable only to blank check companies, including the provisions requiring that ArcLight have net tangible assets of at least $5,000,001 immediately prior to, or upon such consummation of, a business combination.
Proposal No. 5 — The Nasdaq Proposal — to consider and vote upon a proposal to approve by ordinary resolution under Cayman Islands law, assuming the Business Combination Proposal, the Domestication Proposal and the Organizational Documents Proposal are approved and adopted, for the purposes of complying with the applicable provisions of Nasdaq Listing Rule 5635, the issuance of (a) shares of New OPAL Class A Common Stock to the PIPE Investors (as defined below) pursuant to Subscription Agreements (as defined below), (b) the issuance of shares of New OPAL Class A Common Stock, New OPAL Class B Common Stock, New OPAL Class C Common Stock and New OPAL Class D Common Stock (i) pursuant to the terms of the Business Combination Agreement, (ii) upon the exchange of the OPAL Common Units pursuant to the amended and restated limited liability company agreement of OPAL Fuels and (iii) upon the conversion, in accordance with our Proposed Charter, of any such New OPAL Common Stock issued pursuant to (i) or (ii) (we refer to this proposal as the “Nasdaq Proposal” and, collectively with the Business Combination Proposal, the Domestication Proposal and the Organizational Documents Proposal, the “Condition Precedent Proposals”);
Proposal No. 6 — The Equity Incentive Plan Proposal — to consider and vote upon a proposal to approve by ordinary resolution under Cayman Islands law, assuming the Nasdaq Proposal is approved and adopted, the 2022 Omnibus Equity Incentive Plan, a copy of which is attached to this proxy statement/prospectus as Annex I (we refer to this proposal as the “Equity Incentive Plan Proposal”);
Proposal No. 7 — The Adjournment Proposal — to consider and vote upon a proposal to approve by ordinary resolution under Cayman Islands law the adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, any of the Condition Precedent Proposals would not be duly approved and adopted by our shareholders or we determine that one or more of the closing conditions under the Business Combination Agreement is not satisfied or waived (we refer to this proposal as the “Adjournment Proposal”).
Only holders of record of ArcLight’s Class A ordinary shares and Class B ordinary shares (collectively, “ArcLight ordinary shares”) at the close of business on , 2022 are entitled to notice of and to vote and have their votes counted at the Special Meeting and any adjournment of the Special Meeting.
The resolutions to be voted upon in person or by proxy at the Special Meeting relating to the above proposals are set forth in the proxy/statement prospectus sections entitled “Proposal No. 1 — The Business Combination Proposal”, “Proposal No. 2 — The Domestication Proposal”, “Proposal No. 3 — The Organizational Documents Proposal”, “Proposal No. 4 — The Advisory Charter Proposals”, “Proposal No. 5 — The Nasdaq Proposal”, “Proposal No. 6 — The Equity Incentive Plan Proposal” and “Proposal No. 7 — The Adjournment Proposal”, respectively.
We will provide you with the proxy statement/prospectus and a proxy card in connection with the solicitation of proxies to be voted at the Special Meeting and at any adjournment of the Special Meeting. Whether or not you plan to attend the Special Meeting, we urge you to read when available the proxy statement/prospectus (and any documents incorporated into the proxy statement/prospectus by reference) carefully. Please pay particular attention to the section entitled “Risk Factors.”
After careful consideration, the ArcLight Board has determined that each of the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Advisory Charter Proposals, the Nasdaq Proposal, the Equity Incentive Plan Proposal and the Adjournment Proposal are in the best interests of ArcLight and its shareholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.
The existence of financial and personal interests of ArcLight’s directors may result in a conflict of interest on the part of one or more of the directors between what he, she or they may believe is in the best interests of ArcLight and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of ArcLight Directors and Officers in the Business Combination” in the proxy statement/prospectus for a further discussion.
Under the Business Combination Agreement, the approval of each of the Condition Precedent Proposals is a condition to the consummation of the Business Combination. The adoption of each Condition Precedent Proposal is conditioned on the approval of all of the Condition Precedent Proposals. The Advisory Charter Proposals, the Equity Incentive Proposal and the Adjournment Proposal are not conditioned on the approval of any other proposal. If our shareholders do not approve each of the Condition Precedent Proposals, the Business Combination may not be consummated.
In connection with our IPO, on March 25, 2021, our sponsor, ArcLight CTC Holdings II, L.P., a Delaware limited partnership (the “Sponsor”), and our officers and directors at the time of our IPO entered into a letter agreement (the “IPO Letter Agreement”) pursuant to which they agreed, among other things, to vote their ArcLight Class B ordinary shares purchased prior to our IPO (the “founder shares”), as well as any ArcLight Class A ordinary shares sold by us in our IPO (“Public Shares”) purchased by them during or after our IPO, in favor of ArcLight’s initial business combination (including the proposals recommended by the ArcLight Board in connection with such business combination). Accordingly, we expect them to vote their shares in favor of all proposals being presented at the Special Meeting. As of the date hereof, our Initial Shareholders own approximately 20% of our total outstanding ArcLight ordinary shares. In addition, the Sponsor and each of our officers and directors entered into that certain sponsor letter agreement, dated December 2, 2021 (as amended from time to time, the “Sponsor Letter Agreement”), with OPAL Fuels, which, among other things, (i) amended the IPO Letter Agreement to definitively apply the voting and support provisions to the subject Business Combination with OPAL Fuels, (ii) subjected 10% of the founder shares owned by the Sponsor in the aggregate to earn-out provisions (the “Sponsor Earn-Out”) described in more detail below and (iii) provided that the Sponsor will pay any transaction expenses at Closing that exceed $26,000,000.
The terms of the Sponsor Earn-Out provide that effective immediately after the Closing, (i) 5% of the New OPAL Class A Common Stock beneficially owned by the Sponsor immediately following the Closing resulting from the conversion of its founder shares in connection with the Business Combination will be subject to forfeiture if not vested by the Sponsor Earn-Out End Date (such shares, the “First 50% Earn-Out Shares”) and (ii) an additional 5%
of the New OPAL Class A Common Stock beneficially owned by the Sponsor immediately following the Closing resulting from the conversion of its founder shares in connection with the Business Combination will be subject to forfeiture if not vested by the Sponsor Earn-Out End Date (such shares, the “Second 50% Earn Out Shares” and, together with the First 50% Earn-Out Shares, the “Sponsor Earn-Out Shares”). The Sponsor Earn-Out Shares will vest and no longer be subject to forfeiture as follows if, during the 60 months following the Closing (the final day of such period, the “Sponsor Earn-Out End Date”):
(1) (A) the VWAP of the New OPAL Class A Common Stock over any 20 trading days within any 30 consecutive trading day period is greater than or equal to $12.50 per share; or (B) a Sale (as defined below) is consummated in which the New OPAL Class A Common Stock are valued at greater than or equal to $12.50 per share, in which the case of either (A) or (B), the First 50% Earn-Out Shares will vest upon the close of market on the 20th such trading day or as of immediately prior to the closing of such Sale, respectively; and
(2) (A) the VWAP of the New OPAL Class A Common Stock over any 20 trading days within any 30 consecutive trading day period is greater than or equal to $15.00 per share; or (B) a Sale is consummated in which the New OPAL Class A Common Stock are valued at greater than or equal to $15.00 per share, in which the case of either (A) or (B), such Second 50% Earn-Out Shares will vest upon the close of market on the 20th such trading day or as of immediately prior to the closing of such Sale, respectively.
As used with respect to the Sponsor Earn-Out, “Sale” means (A) (1) a direct or indirect sale, lease, exchange or other transfer (regardless of the form of the transaction) in one transaction or a series of related transactions of a majority of New OPAL’s assets, as determined on a consolidated basis, to a third party or third parties acting as a “group” (as defined in Section 13(d)(3) of the Exchange Act) or (2) any transaction or series of transactions that results, directly or indirectly, in the shareholders of New OPAL as of immediately prior to such transactions holding, in the aggregate, less than 50% of the voting equity securities of New OPAL (or any successor of New OPAL) immediately after the consummation thereof (excluding any Sponsor Earnout Shares), in the case of each of clause (1) or (2), whether by amalgamation, merger, consolidation, arrangement, tender offer, recapitalization, purchase, issuance, sale or transfer of equity securities or assets or otherwise.
Pursuant to ArcLight’s Existing Organizational Documents, a holder of Public Shares (“Public Shareholder”) may request that ArcLight redeem all or a portion of its Public Shares (which would become shares of New OPAL Class A Common Stock in the Domestication) for cash if the Business Combination is consummated. For the purposes of Article 49.5 of the Existing Organizational Documents and the Cayman Islands Companies Act (As Revised), the exercise of redemption rights shall be treated as an election to have such Public Shares repurchased for cash and references in the proxy statement/prospectus relating to the Business Combination shall be interpreted accordingly. You will be entitled to receive cash for any Public Shares to be redeemed only if you:
(i) (a) hold Public Shares or (b) hold units and you elect to separate your units into the underlying Public Shares and ArcLight Public Warrants prior to exercising your redemption rights with respect to the Public Shares; and
(ii) prior to p.m., Eastern Time, on , 2022, (a) submit a written request to Continental Transfer & Trust Company, ArcLight’s transfer agent (“CST”), that ArcLight redeem your Public Shares for cash and (b) deliver your Public Shares to CST, physically or electronically through Depository Trust Company (“DTC”).
Holders of units must elect to separate the underlying Public Shares and ArcLight Public Warrants prior to exercising redemption rights with respect to the Public Shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying Public Shares and ArcLight Public Warrants, or if a holder holds units registered in its own name, the holder must contact CST, directly and instruct it to do so. Public Shareholders may elect to redeem all or a portion of their Public Shares even if they vote for the Business Combination Proposal. If the Business Combination is not consummated, the Public Shares will not be redeemed for cash. If a Public Shareholder properly exercises its right to redeem its Public Shares and timely delivers its shares to CST, we will redeem each Public Share for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior to the vote at the Special Meeting, including interest, less income taxes payable, divided by the number of then issued and outstanding Public Shares. For illustrative purposes, as of , 2022, there was approximately $ on
deposit in the Trust Account, which would have amounted to approximately $ per ArcLight Class A ordinary share. If a Public Shareholder exercises its redemption rights, then it will be exchanging its redeemed Public Shares for cash and will no longer own such shares. See “The Special Meeting of ArcLight — Redemption Rights” in the proxy statement/prospectus when it becomes available for a detailed description of the procedures to be followed if you wish to redeem your Public Shares for cash.
Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of such Public Shareholder or any other person with whom such Public Shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), will be restricted from redeeming its Public Shares with respect to more than an aggregate of 15% of the Public Shares. Accordingly, if a Public Shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the Public Shares, then any such shares in excess of that 15% limit would not be redeemed for cash.
Pursuant to the Business Combination Agreement, the current common equityholders of OPAL Fuels (the “OPAL Fuels Common Equityholders”), in connection with the Business Combination, will receive units in OPAL Fuels, which are exchangeable for certain shares in New OPAL. OPAL Fuels Common Equityholders will take their continuing equity interests in New OPAL in the form of economic, voting shares of New OPAL Class A Common Stock, non-economic, voting shares of New OPAL Class B Common Stock or New OPAL Class D Common Stock along with corresponding economic, non-voting OPAL Common Units in OPAL Fuels. In addition to the consideration described above, each OPAL Fuels Common Equityholder will have the right to receive certain payments from New OPAL under the Tax Receivable Agreement (as defined below).
In addition, upon the date on which New OPAL’s annual EBITDA for the calendar year 2023 exceeds $238,000,000 (the “First Earnout Triggering Event”), New OPAL will issue to OPAL Fuels Common Equityholders (the “Earnout Participants”) an aggregate of 5,000,000 shares of New OPAL Class B Common Stock and New OPAL Class D Common Stock and corresponding OPAL Common Units (or, in the case of Ares, if elected pursuant to the BCA, a corresponding number of additional shares of New OPAL Class A Common Stock, which would not have corresponding OPAL Common Units) (collectively, the “First Earnout Tranche”) in accordance with the allocations set forth in the Business Combination Agreement. Additionally, upon the date on which New OPAL’s annual EBITDA for the calendar year 2024 exceeds $446,000,000 (the “Second Earnout Triggering Event”), New OPAL will issue to the Earnout Participants an aggregate of 5,000,000 additional shares of New OPAL Class B Common Stock and New OPAL Class D Common Stock and corresponding OPAL Common Units (or, in the case of Ares, if elected pursuant to the BCA, a corresponding number of additional shares of New OPAL Class A Common Stock, which would not have corresponding OPAL Common Units) (collectively, the “Second Earnout Tranche”) in accordance with the allocations set forth in the Business Combination Agreement.
In connection with the Business Combination, outstanding preferred units of OPAL Fuels will remain outstanding in accordance with their terms.
The Closing is subject to certain conditions, including, among other things: (i) the approval of the Condition Precedent Proposals by ArcLight’s shareholders; (ii) the completion of the Domestication by ArcLight in accordance with Section 388 of the DGCL and the Companies Act (As Revised) of the Cayman Islands; (iii) Aggregate Transaction Proceeds (as defined below) equaling no less than $225,000,000 at the Closing (the “Minimum Cash Proceeds”); (iv) covenant and representation and warranty bring down conditions; (v) the absence of a material adverse effect on the respective parties; (vi) the execution of the Tax Receivable Agreement by ArcLight; and (vii) the listing of New OPAL Class A Common Stock to be issued in the Business Combination on Nasdaq. To the extent permitted by law, the conditions in the Business Combination Agreement may be waived by the parties thereto.
As used herein, “Aggregate Transaction Proceeds” means an amount equal to (a) the sum of (i) the cash proceeds from the Trust Account, net of any amounts paid to the Public Shareholders that exercise their redemption rights in connection with the Business Combination, (ii) the aggregate proceeds of the PIPE Investment, (iii) the aggregate amount of NextEra’s (as defined below) commitment to purchase OPAL Fuels Series A Preferred Units pursuant to the NextEra Subscription Agreement, (iv) any debt financings which are convertible into equity entered into by OPAL Fuels and its subsidiaries following the date of the Business Combination Agreement and (v) all unrestricted cash proceeds held in the name of and available for use by ArcLight as of the Closing but held in accounts other than the Trust Account, minus (b) the outstanding expenses to be paid by ArcLight prior to the Closing pursuant to the Business Combination Agreement.
In connection with entering into the Business Combination Agreement, ArcLight entered into subscription agreements (as amended from time to time, the “Subscription Agreements”), each dated as of December 2, 2021, with certain institutional and other accredited investors (the “PIPE Investors”), pursuant to which, among other things, the PIPE Investors party thereto agreed to purchase an aggregate of 12,500,000 shares of New OPAL Class A Common Stock immediately prior to the Closing at a cash purchase price of $10.00 per share (the “PIPE Investment”). The Subscription Agreements contain customary representations, warranties, covenants and agreements of ArcLight and the PIPE Investors and are subject to customary closing conditions (including, without limitation, that there is no amendment or modification to the Business Combination Agreement that is material and adverse to the PIPE Investor) and termination rights (including a termination right if the transaction contemplated by the Subscription Agreement has not been consummated by May 31, 2022 (one hundred eighty (180) days after the date of the Subscription Agreement), other than as a result of breach by the terminating party). As of the date hereof, PIPE Investors representing $110,806,000 of the original PIPE Investment entered into amendments with respect to such PIPE Investors’ Subscription Agreements (the “Amended Subscription Agreements”), whereby the termination rights described above were amended to extend the term of each Amended Subscription Agreement by 60 days to July 29, 2022 (the “PIPE Extension”).
All ArcLight shareholders are cordially invited to attend the Special Meeting. To ensure your representation at the Special Meeting, however, you are urged to complete, sign, date and return the proxy card accompanying the proxy statement/prospectus as soon as possible. If you are a shareholder of record holding ArcLight ordinary shares, you may also cast your vote in person at the Special Meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the Special Meeting and vote in person, obtain a proxy from your broker or bank. If you do not vote or do not instruct your broker or bank how to vote, your failure to vote will have no effect on the vote count for the proposals to be voted on at the Special Meeting.
Your vote is important regardless of the number of shares you own. Whether you plan to attend the Special Meeting or not, please sign, date and return the proxy card accompanying the proxy statement/prospectus as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.
If you have any questions or need assistance voting your ArcLight ordinary shares, please contact Morrow, our proxy solicitor, by calling (800) 662-5200 (toll-free) or (203) 658-9400.
If you would like to receive additional information or if you want additional copies of this document, agreements contained in the appendices or any other documents filed by ArcLight with the Securities and Exchange Commission, such information is available without charge upon written or oral request. If you have any questions or need assistance with voting, please contact ArcLight’s proxy solicitor.
Morrow Sodali LLC
333 Ludlow Street, 5th Floor, South Tower
Stamford, CT 06902
Tel: Toll-Free (800) 662-5200 or (203) 658-9400
Email: ACTD.info@investor.morrowsodali.com
If you would like to request documents, please do so no later than five business days prior to the Special Meeting date, by , 2022. Please be sure to include your complete name and address in your request. Please see “Where You Can Find More Information” to find out where you can find more information about ArcLight, and OPAL Fuels.
This proxy statement/prospectus incorporates by reference important business and financial information about ArcLight and OPAL Fuels and their respective subsidiaries from documents filed with the SEC that have not been included in or delivered in with this proxy statement/prospectus. This information is available without charge on the SEC’s website at www.sec.gov, as well as on the respective Internet websites of ArcLight (https://arclightclean.com/ii) and OPAL Fuels (https://opalfuels.com). Please see the section titled “Where You Can Find More Information.”
This proxy statement/prospectus provides shareholders of ArcLight with detailed information about the proposed Business Combination and other matters to be considered at the Special Meeting. We encourage you to read this entire document, including the Annexes and other documents referred to herein, carefully and in their entirety. You should also carefully consider the risk factors described in the section titled “Risk Factors” of this proxy statement/prospectus.
Thank you for your participation. We look forward to your continued support.
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, 2022 |
By Order of the Board of Directors, |
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Daniel R. Revers |
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Chairman of the Board of Directors |
IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST (I) IF YOU HOLD ARCLIGHT CLASS A ORDINARY SHARES THROUGH UNITS, ELECT TO SEPARATE YOUR UNITS INTO THE UNDERLYING ARCLIGHT CLASS A ORDINARY SHARES AND PUBLIC WARRANTS PRIOR TO EXERCISING YOUR REDEMPTION RIGHTS WITH RESPECT TO THE PUBLIC SHARES, (II) SUBMIT A WRITTEN REQUEST TO CST, THAT YOUR PUBLIC SHARES BE REDEEMED FOR CASH, AND (III) DELIVER YOUR ARCLIGHT CLASS A ORDINARY SHARES TO CST, PHYSICALLY OR ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM, IN EACH CASE IN ACCORDANCE WITH THE PROCEDURES AND DEADLINES DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS. IF THE BUSINESS COMBINATION IS NOT CONSUMMATED, THEN THE PUBLIC SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “THE SPECIAL MEETING OF ARCLIGHT — REDEMPTION RIGHTS” IN THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE FOR MORE SPECIFIC INSTRUCTIONS.
This notice was mailed by ArcLight on , 2022.
TABLE OF CONTENTS
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2 |
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3 |
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10 |
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QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE SPECIAL MEETING |
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28 |
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SELECTED HISTORICAL CONDENSED FINANCIAL INFORMATION OF ARCLIGHT |
46 |
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF OPAL FUELS |
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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE FINANCIAL INFORMATION |
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109 |
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ARCLIGHT’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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OPAL FUELS’ MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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267 |
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280 |
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287 |
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SECURITIES ACT RESTRICTIONS ON RESALE OF NEW OPAL COMMON STOCK |
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ANNEX B AMENDED AND RESTATED MEMORANDUM AND ARTICLES OF ASSOCIATION OF ARCLIGHT |
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D-1 |
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E-1 |
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ANNEX E-I FORM OF AMENDMENT NO. 1 TO THE SUBSCRIPTION AGREEMENT |
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II-1 |
ii
ADDITIONAL INFORMATION
If you have questions about the Business Combination or the Special Meeting, or if you need to obtain copies of the enclosed proxy statement/prospectus, proxy card or other documents incorporated by reference in the proxy statement/prospectus, you may contact ArcLight’s proxy solicitor listed below. You will not be charged for any of the documents you request.
Morrow Sodali LLC
333 Ludlow Street, 5th Floor, South Tower
Stamford, CT 06902
Tel: Toll-Free (800) 662-5200 or (203) 658-9400
Email: ACTD.info@investor.morrowsodali.com
In order for you to receive timely delivery of the documents in advance of the Special Meeting to be held on , 2022, you must request the information no later than five business days prior to the date of the Special Meeting, by , 2022.
For a more detailed description of the information incorporated by reference in the enclosed proxy statement/prospectus and how you may obtain it, see the section captioned “Where You Can Find More Information” beginning on page 306 of the enclosed proxy statement/prospectus.
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TRADEMARKS
This document contains references to trademarks and service marks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this proxy statement/prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
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SELECTED DEFINITIONS
When used in this proxy statement/prospectus, unless the context otherwise requires:
• “ACTC I Business Combination” refers to the business combination between ArcLight Clean Transition Corp. and Proterra Inc.
• “Adjournment Proposal” refers to the Shareholder Proposal to be considered at the Special Meeting to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the Special Meeting.
• “Advisory Charter Proposals” refers to the six sub-proposals to take effect upon the Closing Date if the Organizational Documents Proposal is approved consisting of Advisory Charter Proposal A, Advisory Charter Proposal B, Advisory Charter Proposal C, Advisory Charter Proposal D, Advisory Charter Proposal E, and Advisory Charter Proposal F.
• “Affiliate” refers to, with respect to any Person, any other Person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlled” and “controlling” have meanings correlative thereto. Unless otherwise specified herein, ArcLight Capital Partners, LLC and its Affiliates (other than ArcLight and the Sponsor) shall not be deemed Affiliates of ArcLight and the Sponsor.
• “Aggregate Transaction Proceeds” refers to an amount equal to the sum of (i) the cash proceeds from the Trust Account, net any amounts paid to the Public Shareholders that exercise their redemption rights in connection with the Business Combination, (ii) the aggregate proceeds of the PIPE Investment, (iii) the aggregate amount of NextEra’s commitment to purchase OPAL Fuels Series A Preferred Units pursuant to the NextEra Subscription Agreement, (iv) any debt financings which are convertible into equity effected into by OPAL Fuels and its subsidiaries following the date of the Business Combination Agreement and (v) all unrestricted cash proceeds held in the name of and available for us by ArcLight as of the Closing but held in accounts other than the Trust Account, minus (b) the outstanding expenses to be paid by ArcLight prior to the Closing pursuant to the Business Combination Agreement.
• “ArcLight” refers to ArcLight Clean Transaction Corp. II, a blank check company incorporated as a Cayman Islands exempt company.
• “ArcLight Board” refers to the ArcLight board of directors.
• “ArcLight Capital” refers to ArcLight Capital Partners, LLC, an affiliate of the Sponsor.
• “ArcLight Class A ordinary shares” refers to the 31,116,305 shares, par value $0.0001 per share, of ArcLight that were previously sold pursuant to ArcLight’s Registration Statement on Form S-1 (File No. 333-252730) that will automatically convert by operation of law into 31,116,305 shares of New OPAL Class A Common Stock.
• “ArcLight Class B ordinary shares” refers to the 7,779,076 Class B ordinary shares, par value $0.0001 per share of ArcLight that will automatically convert by operation of law into 7,779,076 shares of New OPAL Class A Common Stock prior to the Domestication (including 763,907 of such shares subject to forfeiture as described herein).
• “ArcLight ordinary shares” refers to ArcLight Class A ordinary shares and ArcLight class B ordinary shares.
• “ArcLight preferred shares” refers to the 5,000,000 preferred shares, par value $0.0001 per share of ArcLight.
• “ArcLight Private Placement Warrants” refers to the 9,223,261 warrants to purchase ArcLight Class A ordinary shares that were issued in a private placement concurrently with the IPO.
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• “ArcLight Public Warrants” refers to the 6,223,261 redeemable warrants issued in the IPO, entitling the holder thereof to purchase ArcLight Class A ordinary shares.
• “ArcLight Warrants” refers collectively to the ArcLight Private Placement Warrants together with the ArcLight Public Warrants.
• “Ares” refers to ARRC Beacon LLC, a Delaware limited liability company.
• “Ares Note” refers to that certain Convertible Promissory Note, dated as of May 1, 2021 (as amended, including that certain First Amendment to Convertible Note, dated November 29,2021) held by Ares.
• “BofA” refers to BofA Securities Inc.
• “BCA” or “Business Combination Agreement” refers to the Business Combination Agreement dated as of December 2, 2021 (as the same has been or may be amended, modified, supplemented or waived from time to time), by and among ArcLight, OPAL Fuels and OPAL HoldCo, substantially in the form attached hereto at Annex A.
• “Business Combination” refers to the transaction contemplated by the BCA.
• “Class B Units” refers to the Class B Units as defined in the Second A&R LLC Agreement.
• “Closing” refers to the closing of the Business Combination.
• “Combined Company” refers to New OPAL and its subsidiaries, including OPAL Fuels, following consummation of the Business Combinations.
• “Condition Precedent Proposals” refers, collectively, to the (i) the Business Combination Proposal, (ii) the Domestication Proposal, (iii) the Organizational Documents Proposal and (iv) the Nasdaq Proposal.
• “Combination Period” refers to the 24 month period (or 30 month period if ArcLight has executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within such 24 month period) from the closing of the IPO that ArcLight must complete an initial business combination pursuant to ArcLight’s Amended and Restated Memorandum and Articles of Association.
• “CST” refers to Continental Transfer & Trust Company.
• “Domestication” refers to the continuation of ArcLight by a way of domestication of ArcLight into a Delaware corporation, with the ordinary shares of ArcLight becoming shares of common stock of the Delaware corporation under the applicable provisions of the Cayman Islands Companies Act (As Revised) and the DGCL; the term includes all matters and necessary or ancillary changes in order to effect such Domestication, including the adoption of the Proposed Charter (substantially in the form attached hereto at Annex C) consistent with the DGCL and changing the name and registered office of ArcLight.
• “DTC” refers to Depository Trust Company.
• “Earnout Participants” refers, collectively, to OPAL HoldCo, Ares and Hillman.
• “Exchange Act” refers to the Securities Exchange Act of 1934, as amended.
• “Existing Organizational Documents” refers to ArcLight’s Amended and Restated Memorandum and Articles of Association, dated as of March 22, 2021.
• “FASB” refers to the Financial Accounting Standards Board.
• “First 50% Earnout Shares” refers to the 5% of New OPAL Class A Common Stock beneficially owned by the Sponsor immediately following the Closing resulting from the conversion of its founder shares in connection with the Business Combination that will be subject to forfeiture if not vested by the Sponsor Earnout End Date.
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• “First Earnout Tranche” refers to New OPAL’s issuance of an aggregate of 5,000,000 shares of New OPAL Class B Common Stock and New OPAL Class D Common Stock and corresponding OPAL Common Units (or, in the case of Ares, if elected pursuant to the BCA, a corresponding number of additional shares of New OPAL Class A Common Stock, which would not have corresponding OPAL Common Units) to the Earnout Participants on the date of the First Earnout Triggering Event.
• “First Earnout Triggering Event” refers to the date on which New OPAL’s annual EBITDA for the calendar year 2023 exceeds $238,000,000.
• “Fortistar LLC” refers to Fortistar LLC, a Delaware limited liability company.
• “Fueling Stations” refers to facilities where (i) natural gas is dispensed into fuel tanks of vehicles for use as transportation fuel, and (ii) transactional data from the dispensing of the fuel is recorded so that Environmental Attributes can be subsequently reported, matched with the dispensed fuel to the extent sourced from RNG, and generated under the federal or state RFS or LCFS programs and other current and potential future programs aimed at providing support for RNG into the transportation market. At the Fueling Stations, the natural gas is pressurized using compressor systems and, in this state, is referred to as compressed natural gas (“CNG”). Because Environmental Attributes associated with RNG are nominated/assigned to the physical quantity of CNG dispensed at the Fueling Station, when the CNG is dispensed into to fuel tanks for use as transportation fuel and subsequently reported to the EPA and/or state environmental agency and matched with the production of RNG, the respective RINs and LCFS credits are generated. Some of these stations are designed, developed, constructed, operated and maintained by OPAL Fuels while others are third party stations where OPAL Fuels may only provide maintenance services.
• “Hillman” refers to Hillman RNG Investments, LLC, a Delaware limited liability company.
• “Initial Shareholders” means the Sponsor and ArcLight’s four independent directors who hold Class B ordinary shares;
• “Investment Company Act” refers to the Investment Company Act of 1940, as amended.
• “Investor Rights Agreement” refers to the Investor Rights Agreement, to be entered into, and signed at Closing, by ArcLight, OPAL HoldCo, Ares, Hillman, the Sponsor and the holders of ArcLight Class B ordinary shares, pursuant to which, among other things, (a) OPAL HoldCo, Ares, Hillman, and the Sponsor will agree not to effect any sale or distribution of any Equity Securities of ArcLight held by any of them during the lock-up period described therein and (b) OPAL HoldCo, Ares, Hillman, the Sponsor and the holders of ArcLight Class B ordinary shares will be granted certain registration rights with respect to their respective New OPAL Common Stock, in each case, on the terms and subject to the conditions set forth therein, substantially in the form attached hereto at Annex G, as the same may be amended, modified, supplemented or waived from time to time in accordance with its terms.
• “IPO” refers to ArcLight’s initial public offering of its Public Shares and ArcLight Public Warrants pursuant to the IPO Registration Statement and completed on March 25, 2021.
• “IPO Registration Statement” refers to ArcLight’s Registration Statement on Form S-1, filed with the SEC (File No. 333-252730), on March 22, 2021.
• “Minimum Cash Proceeds” refers to the Aggregate Transaction Proceeds equaling no less than $225,000,000 at the Closing.
• “Morrow” refers to Morrow Sodali LLC, the proxy solicitation agent for ArcLight.
• “Nasdaq” refers to the Nasdaq Stock Market.
• “New OPAL” refers to OPAL Fuels Inc., a Delaware corporation and, as used herein where context requires, the Combined Company following the consummation of the Business Combination.
• “New OPAL Board” refers to the board of directors of New OPAL.
• “New OPAL Class A Common Stock” refers to shares of Common A stock, par value $0.0001 per share, of New OPAL.
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• “New OPAL Class B Common Stock” refers to shares of Common B stock, par value $0.0001 per share, of New OPAL.
• “New OPAL Class C Common Stock” refers to shares of Class C stock, par value $0.0001 per share, of New OPAL.
• “New OPAL Class D Common Stock” refers to shares of Common D stock, par value $0.0001 per share, of New OPAL.
• “New OPAL Common Stock” refers to the collective shares of New OPAL Class A Common Stock, New OPAL Class B Common Stock, New OPAL Class C Common Stock and New OPAL Class D Common Stock.
• “New OPAL Equityholders” refers to the equityholders of New OPAL.
• “New OPAL Preferred Stock” refers to shares of preferred stock, par value $0.0001 per share, of New OPAL.
• “New OPAL Private Placement Warrants” refers to the 9,223,261 redeemable warrants that were issued in a private placement concurrently with the IPO, entitling the holder thereof to purchase New OPAL Class A Common Stock.
• “New OPAL Public Warrants” refers to the 6,223,261 redeemable warrants issued in the IPO, entitling the holder thereof to purchase New OPAL Class A Common Stock.
• “New OPAL Warrants” refers collectively to the New OPAL Private Placement Warrants together with the New OPAL Public Warrants.
• “NextEra” refers to Mendocino Capital, LLC, a Delaware limited liability company.
• “NextEra Subscription Agreement” refers to that certain subscription agreement, dated as of November 29, 2021, by and between OPAL Fuels and NextEra.
• “OPAL Common Units” refers to the number of new Class B common units resulting from the re-classification of the collective OPAL Fuels common units existing immediately prior to the Closing of the Business Combination.
• “OPAL Fuels” refers to OPAL Fuels LLC, a Delaware limited liability company.
• “OPAL Fuels Common Equityholders” refers to the common unit holders of OPAL Fuels immediately prior to the Closing of the Business Combination.
• “OPAL Fuels Series A Preferred Units” refers to the 1,000,000 Series A preferred units of OPAL Fuels which NextEra has agreed to subscribe for pursuant to the NextEra Subscription Agreement.
• “OPAL Fuels Series A-1 Preferred Units” refers to the 300,000 Series A-1 preferred units held by Hillman.
• “OPAL HoldCo” refers to OPAL HoldCo LLC, a Delaware limited liability, which, at the time of signing the BCA, was the sole member of OPAL Fuels.
• “Person” means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture or other similar entity, whether or not a legal entity.
• “PIPE Investment” refers to the PIPE Investors commitment to purchase an aggregate of 12,500,000 shares of New OPAL Class A Common Stock immediately prior to the Closing at a cash purchase price of $10.00 per share pursuant to the Subscription Agreements.
• “PIPE Investors” refers, collectively, to the institutional and accredited investors that entered into Subscription Agreements with ArcLight.
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• “PIPE Securities” refers to the 12,500,000 shares of New OPAL Class A Common Stock sold to the PIPE Investors pursuant to the Subscription Agreements.
• “Proposed Bylaws” refers to the proposed new bylaws of New OPAL in connection with the Business Combination.
• “Proposed Charter” refers to the proposed new certificate of incorporation of New OPAL in connection with the Business Combination.
• “Proposed Organizational Documents” refers to the Proposed Charter and the Proposed Bylaws of New OPAL.
• “Public Shareholders” refers to the holders of the Public Shares that were sold in the IPO.
• “Public Shares” refers to the Arclight Class A ordinary shares, par value $0.0001 per share, issued in the IPO.
• “Sale” refers to (1) a direct or indirect sale, lease, exchange or other transfer (regardless of the form of the transaction) in one transaction or a series of related transactions of a majority of New OPAL’s assets, as determined on a consolidated basis, to a third party or third parties acting as a “group” (as defined in Section 13(d)(3) of the Exchange Act) or (2) any transaction or series of transactions that results, directly or indirectly, in the shareholders of New OPAL as of immediately prior to such transactions holding, in the aggregate, less than 50% of the voting equity securities of New OPAL (or any successor of New OPAL) immediately after the consummation thereof (excluding any Sponsor Earnout Shares), in the case of each of clause (1) or (2), whether by amalgamation, merger, consolidation, arrangement, tender offer, recapitalization, purchase, issuance, sale or transfer of equity securities or assets or otherwise.
• “Sarbanes-Oxley Act” refers to the Sarbanes-Oxley Act of 2002.
• “SEC” refers to the U.S. Securities and Exchange Commission.
• “Second 50% Earn Out Shares” refers to the 5% of New OPAL Class A Common Stock beneficially owned by the Sponsor immediately following the Closing resulting from the conversion of its founder shares in connection with the Business Combination that will be subject to forfeiture if not vested by the Sponsor-Earn Out End Date.
• “Second A&R LLC Agreement” refers to the Second Amended and Restated Limited Liability Company Agreement of OPAL Fuels.
• “Second Earnout Tranche” refers to New OPAL’s issuance of an aggregate of 5,000,000 additional shares of New OPAL B Common Stock and New OPAL Class D Common Stock and corresponding OPAL Common Units (or, in the case of Ares, if elected pursuant to the BCA, a corresponding number of additional shares of New OPAL Class A Common Stock, which would not have corresponding OPAL Common Units) to the Earnout Participants on the date of the Second Earnout Triggering Event.
• “Second Earnout Triggering Event” refers to the date upon which New OPAL’s annual EBITDA for the calendar year 2024 exceeds $446,000,000.
• “Securities Act” refers to the Securities Act of 1933, as amended.
• “Shareholder Proposals” refer, collectively, to (i) the Business Combination Proposal, (ii) the Domestication Proposal, (iii) the Organizational Documents Proposal, (iv) the Advisory Charter Proposal, (v) the Nasdaq Proposal, (vi) the Equity Incentive Proposal and (vii) the Adjournment Proposal.
• “Special Meeting” refers to the extraordinary general meeting of ArcLight to be held on , 2022 at a.m., Eastern Time, to vote on matters relating to the Business Combination.
• “Sponsor” refers to ArcLight CTC Holdings II, L.P., a Delaware limited partnership.
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• “Sponsor Earnout” refers to the 10% of founder shares owned by the Sponsor in aggregate that are subject to the Sponsor Earn-Out.
• “Sponsor Earnout End Date” refers to date 60 months following the Closing when the Sponsor-Earn Out Shares vest.
• “Sponsor Earnout Shares” refers to, collectively, the First 50% Earnout Shares together with the Second 50% Earnout Shares.
• “Sponsor Letter Agreement” refers to the agreement entered into by the Sponsor and ArcLight Board, dated December 2, 2021 (as amended from time to time) with OPAL Fuels.
• “Subscription Agreements” refer to the subscription agreements (as amended from time to time) that ArcLight entered into in connection with the Business Combination Agreement, each dated as of December 2, 2021.
• “Trust Account” refers to the trust account of ArcLight which holds the net proceeds from the IPO and certain of the proceeds received in respect of the PIPE investment, together with interest earned thereon, less amounts released to pay taxes.
• “U.S. Holder” refers to a beneficial owner of the Public Shares or ArcLight Public Warrants or New OPAL Common Stock or New OPAL Warrants, as applicable, and is, for U.S. federal income tax purposes.
In addition, the following is a glossary of key industry terms used herein:
• “Advanced Clean Trucks Regulation” refers to the rules adopted by the California Air Resources Board on June 25, 2020 requiring the sale of zero-emission heavy-duty trucks.
• “ADG” refers to anaerobic digester gas.
• “Biogas Conversion Projects” refers to projects derived from the recovery and processing of biogas from landfills and other non-fossil fuel sources, such as livestock and dairy farms, for beneficial use as a replacement to fossil fuels.
• “BOD” refers to biochemical oxygen demand.
• “Btu” refers to British thermal units.
• “CARB” refers to the California Air Resources Board.
• “CO₂” refers to Carbon dioxide.
• “CNG” refers to compressed natural gas.
• “CI” refers to carbon intensity.
• “D3” refers to cellulosic biofuel with a 60% GHG reduction requirement.
• “EHS” refers to environment, health and safety.
• “EISA” refers to Energy Independence and Security Act of 2007.
• “EPA” refers to the U.S. Environmental Protection Agency.
• “EPACT 2005” refers to the Energy Policy Act of 2005.
• “Environmental Attributes” refer to federal, state and local government incentives in the U.S., provided in the form of RINs, RECs, LCFS credits, rebates, tax credits and other incentives to end users, distributors, system integrators and manufacturers of renewable energy projects, that promote the use of renewable energy.
• “FERC” refers to the U.S. Federal Energy Regulatory Commission.
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• “GHG” refers to greenhouse gases.
• “ISOs” refers to Independent System Operators.
• “LCFS” refers to Low Carbon Fuel Standard or similar types of federal and state programs.
• “LFG” refers to landfill gas.
• “MBR Authority” refers to (a) authorization by FERC pursuant to the Federal Power Act to sell electric energy, capacity and/or ancillary services at market-based rates, (b) acceptance by FERC of a tariff providing for such sales, and (c) granting by FERC of such regulatory waivers and blanket authorizations as are customarily granted by FERC to holders of market-based rate authority, including blanket authorization under section 204 of the Federal Power Act to issue securities and assume liabilities.
• “Obligated Parties” means refiners or importers of gasoline or diesel fuel under the RFS program.
• “QFs” refers to qualifying small power production facilities under the Federal Power Act and the Public Utility Regulatory Policies Act of 1978, as amended
• “RECs” refers to Renewable Energy Credits.
• “Renewable Power” refers to electricity generated from renewable sources.
• “RFS” refers to the EPA’s Renewable Fuel Standard.
• “RINs” refers to Renewable Identification Numbers.
• “RNG” refers to renewable natural gas.
• “RPS” refers to Renewable Portfolio Standards.
• “RTOs” refers to Regional Transmission Organizations.
• “RVOs” refers to renewable volume obligations.
• “September 2020 Executive Order” refers to Executive Order N-79-20 issued by the Governor of the State of California in September 2020.
9
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made in this proxy statement/prospectus and in any document incorporated by reference herein are “forward-looking statements.” Statements regarding the potential combination and expectations regarding the combined business are “forward-looking statements.” In addition, words such as “estimates,” “projected,” “expects,” “estimated,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “would,” “future,” “propose,” “target,” “goal,” “objective,” “outlook” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the control of the parties, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include:
• our ability to complete the Business Combination, or, if we fail to consummate the Business Combination, any other initial business combination;
• the failure to realize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, the ability of the Combined Company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain key employees;
• delays in obtaining, adverse conditions contained in, or the inability to obtain necessary regulatory approvals or complete regulatory reviews required to complete the Business Combination;
• the outcome of any legal proceedings that may be instituted in connection with the proposed business combination; the inability to complete the Business Combination;
• the inability to complete the transactions contemplated by the proposed Business Combination due to the failure to satisfy any conditions to closing, including the failure to obtain certain approval of ArcLight’s shareholders;
• the occurrence of any event, change or other circumstances that could give rise to the termination of the Business Combination Agreement, including the failure to satisfy any of the conditions to closing in the Business Combination Agreement;
• the ability to obtain and/or maintain the listing of the New OPAL Class A Common Stock and the New OPAL Warrants on Nasdaq, and the potential liquidity and trading of such securities;
• the amount of redemptions made by Public Shareholders;
• the projected financial information, anticipated growth rate and market opportunity of the Combined Company;
• our success in retaining or recruiting, our principal officers, key employees or directors following the Business Combination;
• our directors and officers potentially having conflicts of interest with our business or in approving the Business Combination, as a result of which they would receive compensation;
• intense competition and competitive pressures from other companies in the industry in which the Combined Company will operate;
• increased costs of, or delays in obtaining, key components or labor for the construction and completion of landfill gas and livestock waste projects that generate electricity and RNG and compressed natural gas (“CNG”) and hydrogen dispensing stations.
• factors relating to the business, operations and financial performance of OPAL Fuels, including market conditions and global and economic factors beyond OPAL Fuels’ control;
• macroeconomic conditions related to the global COVID-19 pandemic;
• costs related to the Business Combination;
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• the reduction or elimination of government economic incentives to the renewable energy market;
• factors associated with companies, such as OPAL Fuels, that are engaged in the production and integration of RNG, including (i) anticipated trends, growth rates and challenges in those businesses and in the markets in which they operate (ii) contractual arrangements with, and the cooperation of, landfill and livestock biogas conversion project site owners and operators and operators, on which OPAL Fuels operates its landfill gas and livestock waste projects that generate electricity and (iii) RNG prices for Environmental Attributes, low carbon fuel standard credits and other incentives;
• the ability to identify, acquire, develop and operate renewable projects and Fueling Stations;
• the ability of the Combined Company to issue equity or equity-linked securities or obtain debt financing in connection with the Business Combination or in the future;
• the demand for renewable energy not being sustained;
• impacts of climate change, changing weather patterns and conditions and natural disasters;
• the effect of legal, tax and regulatory changes; and
• other factors detailed under the section entitled “Risk Factors.”
The forward-looking statements contained in this proxy statement/prospectus and in any document incorporated by reference herein are based on current expectations and beliefs concerning future developments and their potential effects on us and/or OPAL Fuels. There can be no assurance that future developments affecting us and/or OPAL Fuels will be those that we and/or OPAL Fuels have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control or the control of OPAL Fuels) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in this proxy statement/prospectus and in our IPO Registration Statement filed in connection with our IPO. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Before you grant your proxy or instruct how your vote should be cast or vote on the Shareholder Proposals to be put to the Special Meeting, you should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/prospectus may adversely affect ArcLight, OPAL Fuels, or, following the consummation of the Business Combination, New OPAL.
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QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION
AND THE SPECIAL MEETING
The following are answers to certain questions that you may have regarding the Business Combination and the Special Meeting. We urge you to read carefully the remainder of this proxy statement/prospectus because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the annexes to this proxy statement/prospectus.
QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION
Q: WHAT IS THE BUSINESS COMBINATION?
A: ArcLight, OPAL Fuels LLC, a Delaware limited liability company (“OPAL Fuels”), and OPAL HoldCo LLC, a Delaware limited liability company and, as of the date of signing, the sole member of OPAL Fuels (“OPAL HoldCo”), entered into that certain Business Combination Agreement, dated as of December 2, 2021 (the “Business Combination Agreement”), pursuant to which, among other things:
(a) prior to the consummation of the Business Combination (the “Closing”), each issued and outstanding Class B ordinary share, par value $0.0001 per share (collectively, the “ArcLight Class B ordinary shares”), of ArcLight will convert into one ArcLight Class A ordinary share, par value $0.0001 per share (collectively, the “ArcLight Class A ordinary shares”), of ArcLight (the “ArcLight Share Conversion”);
(b) on the Closing Date, following the ArcLight Share Conversion but prior to the Closing, ArcLight will, subject to the receipt of the requisite shareholder approval, transfer by way of continuation from the Cayman Islands to the State of Delaware and domesticate as a Delaware corporation, upon which ArcLight will change its name to “OPAL Fuels Inc.”;
(c) at the Closing, the members of OPAL Fuels and OPAL Fuels will cause OPAL Fuels’ existing limited liability company agreement to be amended and restated (the “Second A&R LLC Agreement”) to, among other things, admit OPAL Fuels Inc. (“New OPAL”) as the managing member of OPAL Fuels and to re-classify all of OPAL Fuels’ existing common units into a number of Class B Units of OPAL Fuels (“Class B Units”), calculated as a function of the pre-transaction equity value of OPAL Fuels in an amount equal to $1,501,870,000, minus all principal and accrued interest outstanding pursuant to that certain Convertible Promissory Note, dated as of May 1, 2021 (as amended, including by that certain First Amendment to Convertible Note, dated November 29, 2021, the “Ares Note”) held by ARCC Beacon LLC, a Delaware limited liability company (“Ares”), as of immediately after the Closing; and
(d) at the Closing, ArcLight will (i) contribute to OPAL Fuels an amount equal to the amount of cash in the trust account (the “Trust Account”) established by ArcLight with the proceeds from its initial public offering (the “IPO”) as of immediately prior to the Closing (and after giving effect to the exercise of redemption rights by any ArcLight shareholders (the “ACT Share Redemptions”) of all or a portion of their ArcLight Class A ordinary shares), plus the aggregate cash proceeds actually received in respect of the PIPE Investment (whether on or prior to the Closing Date) and held in a bank account owned and controlled by ArcLight on the Closing Date and (ii) contribute to OPAL Fuels a number of shares of Class A common stock, par value $0.0001 per share, of New OPAL (the “New OPAL Class A Common Stock”) (to the extent elected by OPAL Fuels), Class B common stock, par value $0.0001 per share, of New OPAL (the “New OPAL Class B Common Stock”) and Class D common stock, par value $0.0001 per share, of New OPAL (the “New OPAL Class D Common Stock”), and immediately following such equity contribution, OPAL Fuels will distribute such shares of New OPAL Class A Common Stock, New OPAL Class B Common Stock and New OPAL Class D Common Stock to the holders of OPAL Fuels’ existing common units in accordance with the Second A&R LLC Agreement.
ArcLight will hold the Special Meeting to, among other things, obtain the adoption and approval of the Business Combination Agreement and the transactions contemplated by the Business Combination Agreement by the shareholders of ArcLight, and you are receiving this proxy statement/prospectus in connection with the Special Meeting. See “The Business Combination Agreement” beginning on page 110. In addition, a copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A. We urge you to read carefully this proxy statement/prospectus and the Business Combination Agreement in their entirety.
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Q: WHY AM I RECEIVING THIS DOCUMENT?
A: ArcLight is sending this proxy statement/prospectus to its shareholders to help them decide how to vote their shares of ArcLight ordinary shares with respect to the matters to be considered at the Special Meeting.
The Business Combination cannot be completed unless ArcLight’s shareholders approve the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposal, and the Nasdaq Proposal set forth in this proxy statement/prospectus for their approval. Information about the Special Meeting, the Business Combination and the other business to be considered by shareholders at the Special Meeting is contained in this proxy statement/prospectus.
This document constitutes a proxy statement of ArcLight and a prospectus of ArcLight. It is a proxy statement because the ArcLight Board is soliciting proxies using this proxy statement/prospectus from its shareholders. It is a prospectus because ArcLight, in connection with the Business Combination, is offering shares of New OPAL Class A Common Stock in exchange for its outstanding Class A ordinary shares. See “The Business Combination Agreement — Closing Matters”.
Q: WHAT WILL ARCLIGHT EQUITYHOLDERS OWN AS A RESULT OF THE BUSINESS COMBINATION?
A: As of the date of this proxy statement/prospectus, there are 38,895,381 ArcLight ordinary shares issued and outstanding, which includes an aggregate of 7,779,076 ArcLight Class B ordinary shares held by the Initial Shareholders, including 7,639,076 shares (including 763,907 of such share subject to forfeiture as described herein) held by the Sponsor. In addition, as of the date of this proxy statement/prospectus, there is outstanding an aggregate of 15,446,522 ArcLight Warrants to acquire ArcLight Class A ordinary shares, comprised of 6,223,261 ArcLight Public Warrants and 9,223,261 ArcLight Private Placement Warrants to acquire ArcLight Class A ordinary shares.
Following the Business Combination, assuming no redemptions and assuming no election is made for Ares to receive New OPAL Class A Common Stock pursuant to the BCA, the ArcLight equity holders will hold approximately 75.7% of the issued and outstanding shares of New OPAL Class A Common Stock and none of the issued and outstanding shares of New OPAL Class B Common Stock, New OPAL Class C Common Stock or New OPAL Class D Common Stock and will accordingly hold approximately 5.0% of the voting power of New OPAL’s capital stock on a fully-diluted basis.
Q: WHAT WILL OPAL FUELS COMMON EQUITYHOLDERS RECEIVE IN THE BUSINESS COMBINATION?
A: Pursuant to the Business Combination, OPAL Fuels Common Equityholders will receive:
• As a result of the re-classification of their existing common units in OPAL Fuels, a number of OPAL Common Units calculated by dividing an agreed pre-transaction equity value for OPAL Fuels of $1,501,870,000 (less all principal and accrued interest outstanding immediately prior to the Closing pursuant to the Ares Note) by $10.00;
• An equal number (in total) of New OPAL Class B Common Stock and New OPAL Class D Common Stock (neither of which will have any economic value but will entitle the holder thereof to one vote per share or five votes per share, respectively);
• The right to receive certain payments from OPAL HoldCo under a Tax Receivable Agreement (see Certain Relationships and Related Party Transactions — Tax Receivable Agreement for a description thereof); and
• The right to receive an aggregate of 5,000,000 shares of New OPAL Class B Common Stock and New OPAL Class D Common Stock and corresponding OPAL Common Units upon the date on which New OPAL’s annual EBITDA for the calendar year 2023 exceeds $238,000,000, in accordance with the allocations set forth in the Business Combination Agreement; and
• The right to receive upon the date on which New OPAL’s annual EBITDA for the calendar year 2024 exceeds $446,000,000, an aggregate of 5,000,000 additional shares of New OPAL Class B Common Stock and New OPAL Class D Common Stock and corresponding OPAL Common Units in accordance with the allocations set forth in the Business Combination Agreement.
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In connection with the Business Combination, outstanding preferred units of OPAL Fuels will remain outstanding in accordance with their terms.
Q: WHAT EQUITY STAKE WILL CURRENT ARCLIGHT EQUITYHOLDERS AND OPAL FUELS COMMON EQUITYHOLDERS HOLD IN NEW OPAL IMMEDIATELY AFTER THE CONSUMMATION OF THE BUSINESS COMBINATION?
A: The following table summarizes the pro forma equity ownership and voting power in New OPAL Common Stock immediately following the Business Combination under three redemption scenarios. For additional information and assumptions, see “The Business Combination Agreement — Ownership of New OPAL Immediately Following the Business Combination” and “Unaudited Pro Forma Combined Financial Information.” If the actual facts differ from these assumptions, the ownership percentages and voting power in New OPAL Common Stock will be different and totals may not add up to 100% due to rounding.
|
Equity Ownership in New OPAL Common Stock(1) |
Voting Power in New OPAL(1) |
|||||||||||||||||
|
Assuming |
Assuming |
Assuming |
Assuming |
Assuming |
Assuming Maximum Redemptions(3)(6) |
|||||||||||||
|
ArcLight Public Shareholders |
15.6 |
% |
9.1 |
% |
1.5 |
% |
4.0 |
% |
2.2 |
% |
0.3 |
% |
||||||
|
Sponsor and Independent Directors(4) |
3.9 |
% |
4.2 |
% |
4.6 |
% |
1.0 |
% |
1.0 |
% |
1.0 |
% |
||||||
|
PIPE Investors(7) |
6.3 |
% |
6.8 |
% |
7.3 |
% |
1.6 |
% |
1.6 |
% |
1.7 |
% |
||||||
|
OPAL Fuels Common Equityholders(5) |
74.2 |
% |
79.9 |
% |
86.6 |
% |
93.4 |
% |
95.2 |
% |
97.0 |
% |
||||||
|
Total |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
||||||
____________
(1) Assumes the exchange of 100% of the OPAL Common Units that will be outstanding at Closing for shares of New OPAL Class A Common Stock or New OPAL Class C Common Stock, as applicable. Please refer to “The Business Combination Agreement — Related Agreements — Exchange Agreement” for more information.
(2) Assumes that (i) a total of 14,299,400 Public Shares are redeemed in connection with the Business Combination and (ii) 184,558,989 shares of New OPAL Class A Common Stock are issued and outstanding as Closing.
(3) Assumes that (i) a total of 28,598,800 Public Shares are redeemed in connection with the Business Combination (“Maximum Redemptions”) and (ii) 170,259,589 shares of New OPAL Class A Common Stock are issued and outstanding at Closing.
(4) Consists of 7,779,076 shares (including 7,639,076 shares held by Sponsor) of New OPAL Class A Common Stock. 763,907 of such shares held by Sponsor will be subject to forfeiture if not vested by the Sponsor Earnout End Date pursuant to the Sponsor Letter Agreement. See “The Business Combination Agreement — Sponsor Letter Agreement” for more information.
(5) Assumes that an aggregate of 142,414,241 shares are issued to OPAL HoldCo, 2,022,109 shares are issued to Hillman, and 3,026,658 are issued to Ares. Based on an assumed Closing on May 31, 2022 and an assumed outstanding principal and accrued interest on the Ares Note on such date of $27,239,922.
(6) Mr. Mark Comora, who beneficially owns the shares attributable to OPAL Holdco and Hillman, will accordingly hold (a) 93% of the voting power in New OPAL assuming no redemptions, (b) 95.1% assuming 50% redemptions, or (c) 96.6% of the voting power in New OPAL assuming Maximum Redemptions.
In addition, immediately after consummation of the Business Combination, the OPAL Fuels Common Equity holders will own 74.2%, 79.9% and 86.6%, respectively, of the common equity interests in OPAL Fuels, assuming no redemptions, 50% redemptions and Maximum Redemptions.
New OPAL Common Stock will consist of four classes: (i) economic, “low-vote” shares of New OPAL Class A Common Stock, (ii) non-economic (other than the right to receive par value in the event of a liquidation, dissolution or winding up of New OPAL), “low-vote” shares of New OPAL Class B Common Stock, (iii) economic, “high-vote” shares of New OPAL Class C Common Stock, and (iv) non-economic (other than the right to receive par value in the event of a liquidation, dissolution or winding up of New OPAL), “high-vote” shares of New OPAL Class D Common Stock.
(7) Assumes an aggregate 12,500,000 shares of Class A Common Stock are issued to the PIPE Investors. In the event that the Business Combination closes subsequent to May 30, 2022 but prior to July 29, 2022, assuming that additional PIPE Investors do not enter into amendments to their Subscription Agreements extending the expiration date of such agreements, 11,080,600 shares of Class A Common Stock will be issued to PIPE Investors.
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Q: WHEN WILL THE BUSINESS COMBINATION BE COMPLETED?
A. The parties currently expect that the Business Combination will be completed late in the first half of 2022. However, none of ArcLight, OPAL Fuels and OPAL HoldCo can assure you of when or if the Business Combination will be completed, and it is possible that factors outside of the control of the companies could result in the Business Combination being completed at a different time or not at all. See “Risk Factors — Risks Related to the Business Combination and ArcLight — If the conditions to the Business Combination Agreement are not met the Business Combination may not occur.” The outside date for consummation of the Business Combination is August 29, 2022 (subject to certain extensions up to a total of three months). ArcLight must first obtain the approval of ArcLight shareholders for each of the Condition Precedent Proposals, and ArcLight, OPAL Fuels and OPAL HoldCo must also first obtain certain necessary regulatory approvals and satisfy other closing conditions. See “The Business Combination Agreement — Conditions to Closing of the Business Combination” beginning on page 123.
Q: WHAT HAPPENS IF THE BUSINESS COMBINATION IS NOT COMPLETED?
A: If ArcLight does not complete the Business Combination with OPAL Fuels and OPAL HoldCo for any reason, ArcLight would search for another target business with which to complete a business combination. If ArcLight does not complete the Business Combination with OPAL Fuels and OPAL HoldCo or a business combination with another target business by March 25, 2023 (unless such date is extended in accordance with the Existing Organizational Documents), ArcLight must redeem 100% of the outstanding ArcLight Class A ordinary shares, at a per-share price, payable in cash, equal to the amount then held in the Trust Account (less income taxes paid or payable, if any, and up to $100,000.00 of interest to pay dissolution expenses) divided by the number of then outstanding ArcLight Class A ordinary shares. The Sponsor has no redemption rights in the event a business combination is not effected in the required time period and, accordingly, their founder shares will be worthless. Additionally, in the event of such liquidation, there will be no distribution with respect to outstanding ArcLight Warrants. Accordingly, such warrants will expire worthless.
QUESTIONS AND ANSWERS ABOUT ARCLIGHT’S SPECIAL MEETING
Q: WHAT AM I BEING ASKED TO VOTE ON AND WHY IS THIS APPROVAL NECESSARY?
A: ArcLight shareholders are being asked to vote on the following Shareholder Proposals:
1. the Business Combination Proposal;
2. the Domestication Proposal;
3. the Organizational Documents Proposal;
4. the Advisory Charter Proposals;
5. the Nasdaq Proposal;
6. the Equity Incentive Plan Proposal; and
7. the Adjournment Proposal.
The Business Combination is conditioned upon the approval of the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposal, and the Nasdaq Proposal, subject to the terms of the Business Combination Agreement. The Business Combination is not conditioned on the Advisory Charter Proposals, the Equity Incentive Plan Proposal or the Adjournment Proposal. If the Business Combination Proposal is not approved, the other proposals (except the Adjournment Proposal) will not be presented to the shareholders for a vote.
Q: WHY IS ARCLIGHT PROPOSING THE BUSINESS COMBINATION?
A: ArcLight is a blank check company incorporated on January 13, 2021 as a Cayman Islands exempted entity for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities, which we refer to throughout this prospectus as our initial business combination. Based on ArcLight’s business activities, it is a “shell company” as defined under the Exchange Act because it has no operations and nominal assets consisting almost entirely of cash.
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ArcLight has identified several general criteria and guidelines to evaluate prospective acquisition opportunities. ArcLight has sought to acquire a business or company that: (i) exhibits, or has the potential to develop, fundamentally sound financial performance, with visibility into revenue and cash flow growth and relatively predictable future financial performance; (ii) is an active market participant in the global development of the clean energy industry, continued decarbonization of the industrial, government and consumer spaces, and/or broader transition toward a sustainable economic model; (iii) targets large addressable markets with long-term tailwinds and low risk of obsolescence; (iv) has a defensible market position with differentiated product offerings, technology, assets, distribution channels, supply chain capabilities or other sustainable competitive advantages; (v) can serve as a platform for both organic and acquisitive growth; (vi) is led by an experienced management team with a proven track record and complementary capabilities, or is open to enhancing the existing management team’s strengths with additional talent through ArcLight’s network; and (vii) leverages the potential to utilize ArcLight’s industry experience, as well as operating, strategic, financing and M&A capabilities to maximize the value to the shareholders.
Based on its due diligence investigations of OPAL Fuels and the industry in which they operate, including the financial and other information provided by OPAL Fuels in the course of the negotiations in connection with the Business Combination Agreement, ArcLight believes that New OPAL will meet the general criteria and guidelines listed above. However, there is no assurance of this. See “Proposal No. 1 — Business Combination Proposal — Interests of ArcLight Directors and Officers in the Business Combination.”
Although the ArcLight Board believes that the Business Combination with OPAL Fuels presents a unique business combination opportunity and is in the best interests of ArcLight and its shareholders, the board of directors did consider certain potentially material negative factors in arriving at that conclusion. These factors are discussed in greater detail in the sections entitled “Proposal No. 1 — Business Combination Proposal — Interests of ArcLight Directors and Officer’s in the Business Combination” and “Risk Factors — Risks Related to Our Business Following the Business Combination.”
Q: DID THE ARCLIGHT BOARD OBTAIN A THIRD-PARTY VALUATION OR FAIRNESS OPINION IN DETERMINING WHETHER OR NOT TO PROCEED WITH THE BUSINESS COMBINATION?
A: The Board did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Business Combination.
ArcLight’s officers, directors and advisors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of ArcLight’s financial advisors, enabled them to make the necessary analyses and determinations regarding the Business Combination. In addition, ArcLight’s officers, directors and advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of ArcLight’s officers, board of directors and advisors in valuing OPAL Fuels’ business.
Q: DO I HAVE REDEMPTION RIGHTS?
A: If you are a holder of ArcLight Class A ordinary shares, you have the right to demand that ArcLight redeem such shares for a pro rata portion of the cash held in the Trust Account, which holds the proceeds of ArcLight’s IPO, as of two business days prior to vote at the Special Meeting (including interest earned on the funds held in the Trust Account and not previously released to ArcLight to pay its taxes) upon the closing of the transactions contemplated by the Business Combination Agreement (such rights, “redemption rights”).
Notwithstanding the foregoing, a holder of ArcLight Class A ordinary shares, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption with respect to more than 15% of the ArcLight Class A ordinary shares. Accordingly, all ArcLight Class A ordinary shares in excess of 15% held by a Public Shareholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed.
If passed, the Organizational Documents Proposal would remove the requirement that ArcLight have at least $5,000,001 of net tangible assets after giving effect to the redemption of all such shares.
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Q: HOW WILL MY VOTE AFFECT MY ABILITY TO EXERCISE REDEMPTION RIGHTS?
A: You may exercise your redemption rights whether you vote your ArcLight Class A ordinary shares for or against, or whether you abstain from voting on, the Business Combination Proposal or any other Shareholder Proposal. As a result, the Business Combination Proposal can be approved by shareholders who will redeem their ArcLight Class A ordinary shares and no longer remain shareholders and the Business Combination may be consummated even though the funds available from the Trust Account and the number of Public Shareholders are substantially reduced as a result of redemptions by Public Shareholders. Also, with fewer ArcLight Class A ordinary shares and Public Shareholders, the trading market for ArcLight Class A ordinary shares may be less liquid than the market for ArcLight Class A ordinary shares prior to the Business Combination and ArcLight may not be able to meet the listing standards of a national securities exchange. In addition, with fewer funds available from the Trust Account, the capital infusion from the Trust Account into OPAL Fuels’ business will be reduced.
Q: HOW DO REDEMPTIONS AFFECT THE VALUE OF MY NEW OPAL COMMON STOCK?
A: The value of shares of New OPAL Common Stock held by a non-redeeming ArcLight Public Shareholder may be impacted by the number of ArcLight Class A ordinary shares that are redeemed, as well as other events that may significantly dilute the value of such shares of New OPAL Common Stock. For example, the following table shows the potential impact of varying levels of redemptions and certain dilutive events on the per share value of the New OPAL Common Stock held by non-redeeming ArcLight Public Shareholders, in each case assuming an enterprise value of $1.75 billion for New OPAL upon consummation of the Business Combination and that an aggregate 12,500,000 shares of Class A Common Stock are issued to the PIPE Investors. In the event that the Business Combination closes subsequent to May 30, 2022 but prior to July 29, 2022, assuming that additional PIPE Investors do not enter into amendments to their Subscription Agreements extending the expiration date of such agreements, 11,080,600 shares of Class A Common Stock will be issued to PIPE Investors.
|
No |
50% Redemption |
Maximum |
||||||||||
|
Shares held by ArcLight Public Stockholders |
|
31,116,305 |
|
|
16,816,905 |
|
|
2,517,505 |
|
|||
|
ArcLight Founder Shares(1) |
|
7,779,076 |
|
|
7,779,076 |
|
|
7,779,076 |
|
|||
|
PIPE Shares |
|
12,500,000 |
|
|
12,500,000 |
|
|
12,500,000 |
|
|||
|
OPAL Fuels Common Equityholders(2) |
|
147,463,008 |
|
|
147,463,008 |
|
|
147,463,008 |
|
|||
|
|
|
|
|
|
|
|||||||
|
Total shares (projected to be issued and outstanding) |
|
198,858,389 |
|
|
184,558,989 |
|
|
170,259,589 |
|
|||
|
Implied Value Per Share |
|
|
|
|
|
|
||||||
|
Shares issued and outstanding(4) |
$ |
10.37 |
|
$ |
10.33 |
|
$ |
10.43 |
|
|||
|
Shares issued, outstanding and fully diluted(5) |
$ |
9.62 |
|
$ |
9.53 |
|
$ |
9.56 |
|
|||
|
Effective Underwriting Fee(6)(7) |
|
3.92 |
% |
|
6.10 |
% |
|
11.40 |
% |
|||
____________
(1) Includes 763,907 founder shares that will be subject to forfeiture if not vested by the Sponsor Earnout End Date pursuant to the Sponsor Letter Agreement. See “The Business Combination Agreement — Sponsor Letter Agreement” for more information.
(2) Assumes that an aggregate of 147,463,008 shares of New OPAL Common Stock are issued to the OPAL Fuels Common Equityholders upon consummation of the Business Combination, with 142,414,241 shares issued to OPAL HoldCo, 2,022,109 shares issued to Hillman, and 3,026,658 issued to Ares. Based on an assumed Closing on May 31, 2022 and an assumed outstanding principal and accrued interest on the Ares Note on such date of $27,239,922.
(3) The maximum redemptions scenario assumes that ArcLight shareholders redeem the maximum number of their Class A ordinary shares for a pro rata portion of cash in the Trust Account, while maintaining the Minimum Cash Proceeds and the minimum net tangible assets pursuant to the BCA.
(4) Calculation of implied value per share assumes (i) enterprise value of $1.75 billion of New OPAL upon consummation of the Business Combination, (ii) $125.0 million of cash proceeds received from the PIPE Investment upon consummation of the Business Combination, (iii) approximately $311.2 million of funds in the Trust Account immediately prior to any redemptions and (iv) no exercise of New OPAL Warrants that remain outstanding after consummation of the Business Combination regardless of the level of redemptions.
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(5) Calculation of implied value per share assumes (i) enterprise value of $1.75 billion upon consummation of the Business Combination, (ii) $125.0 million of cash proceeds received from the PIPE Investment upon consummation of the Business Combination, (iii) approximately $311.2 million of funds in the trust account immediately prior to any redemptions and (iv) the exercise of all 6,223,261 New OPAL Public Warrants and 9,223,261 New OPAL Private Placement Warrants that will remain outstanding after consummation of the Business Combination regardless of the level of redemptions.
(6) Includes $6,223,261 in underwriting fees paid in connection with ArcLight’s IPO and $10,890,707 in deferred underwriting fees in connection with ArcLight’s IPO.
(7) The level of redemption impacts the effective underwriting fee incurred in connection with ArcLight’s IPO. In a no redemption scenario, the effective underwriting fee is based on $125.0 million in proceeds from the PIPE Investment and $311.2 million in the Trust Account. In a 50% redemption scenario, the effective underwriting fee is based on $125.0 million in proceeds from the PIPE Investment and $155.6 million in the Trust Account. In a 100% redemption scenario, the effective underwriting fee is based on $125.0 million in proceeds from the PIPE Investment and $24.9 million in the Trust Account.
(8) Assumes the exchange of 100% of the OPAL Common Units that will be outstanding at Closing for shares of New OPAL Class A Common Stock or New OPAL Class C Common Stock, as applicable. Please refer to “The Business Combination Agreement — Related Agreements — Exchange Agreement” for more information.
The foregoing table is provided for illustrative purposes only and there can be no assurance that the New OPAL Common Stock will trade at the illustrative per share values set forth therein, regardless of the levels of redemption. Further, we have not received any indications from stockholders regarding their intentions to redeem or retain their shares upon consummation of the Business Combination and have not formulated any expectation as to which, if any, of the illustrative scenarios included in the foregoing table is most likely.
Q: HOW DO I EXERCISE MY REDEMPTION RIGHTS?
A: If you are a holder of ArcLight Class A ordinary shares and wish to exercise your redemption rights, you must demand that ArcLight redeem your shares for cash no later than 5:00 p.m., New York City Time, on , 2022 (the second business day preceding the vote on the Business Combination Proposal) by delivering your share certificates (if any) and other redemption forms at the address below to Continental Transfer & Trust Company (“CST”), ArcLight’s transfer agent physically or electronically using DTC’s DWAC (Deposit and Withdrawal at Custodian) system. Holders of units must elect to separate the underlying ArcLight Class A ordinary shares and public warrants prior to exercising redemption rights with respect to the ArcLight Class A ordinary shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into underlying ArcLight Class A ordinary shares and public warrants, or if a holder holds units registered in its own name, the holder must contact CST, ArcLight’s transfer agent, directly and instruct them to do so. Any holder of ArcLight Class A ordinary shares will be entitled to demand that such holder’s shares be redeemed for a full pro rata portion of the amount then in the Trust Account (which, for illustrative purposes, was approximately $311,264,661, or approximately $10.00 per ArcLight Class A ordinary share, as of May 6, 2022, the record date). Such amount, including interest earned on the funds held in the Trust Account and not previously released to ArcLight to pay its taxes, if any (less up to $100,000 of interest to pay dissolution expenses), will be paid promptly upon consummation of the Business Combination. However, the proceeds deposited in the Trust Account could become subject to the claims of ArcLight’s creditors, if any, which could have priority over the claims of ArcLight’s Public Shareholders, regardless of whether such Public Shareholders vote for or against the Business Combination Proposal. Therefore, the per-share distribution from the Trust Account in such a situation may be less than originally anticipated due to such claims. Your vote on any Shareholder Proposal will have no impact on the amount you will receive upon exercise of your redemption rights.
Any request for redemption made by a holder of ArcLight Class A ordinary shares may not be withdrawn once submitted to ArcLight unless the board of directors of ArcLight determines (in its sole discretion) to permit the withdrawal of such redemption request (which it may do in whole or in part).
Any corrected or changed proxy card or written demand of redemption rights must be received by CST, ArcLight’s transfer agent, prior to the vote taken on the Business Combination Proposal at the Special Meeting. No demand for redemption will be honored unless the holder’s share certificates (if any) and other redemption forms have been delivered (either physically or electronically) to CST, ArcLight’s transfer agent, prior to the vote at the Special Meeting.
If a holder of ArcLight Class A ordinary shares properly makes a request for redemption and the certificates for the ArcLight Class A ordinary shares (if any) along with the redemption forms are delivered as described to CST, ArcLight’s transfer agent, as described herein, then, if the Business Combination is consummated, ArcLight will redeem these shares for a pro rata portion of funds deposited in the Trust Account. If you exercise your redemption rights, then you will be exchanging your ArcLight Class A ordinary shares for cash.
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Q: WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF EXERCISING MY REDEMPTION RIGHTS?
A: We expect that a U.S. Holder (as defined in “Material U.S. Federal Income Tax Considerations — U.S. Holders”) that exercises its redemption rights to receive cash from the Trust Account in exchange for its Public Shares will generally be treated as selling such Public Shares, resulting in the recognition of capital gain or loss. There may be certain circumstances in which the redemption may be treated as a distribution for U.S. federal income tax purposes depending on the amount of Public Shares that such U.S. Holder owns or is deemed to own (including through the ownership of public warrants) prior to and following the redemption. For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights, see “Material U.S. Federal Income Tax Considerations.”
The tax consequences of the exercise of redemption rights are discussed more fully below under “Material U.S. Federal Income Tax Considerations — U.S. Holders.” All holders of Public Shares considering exercising their redemption rights are urged to consult their tax advisor on the tax consequences to them of an exercise of redemption rights, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws.
Q: DO I HAVE APPRAISAL RIGHTS IN CONNECTION WITH THE PROPOSED BUSINESS COMBINATION AND THE PROPOSED DOMESTICATION?
A: No. Neither ArcLight shareholders nor ArcLight warrantholders have appraisal rights in connection with the Business Combination or the Domestication under Cayman Islands law or under the DGCL.
Q: WHY IS ARCLIGHT PROPOSING THE DOMESTICATION?
A: The ArcLight Board believes that there are significant advantages to New OPAL that will arise as a result of a change of domicile to Delaware, including, (i) the prominence, predictability and flexibility of Delaware law, (ii) Delaware’s well-established principles of corporate governance and (iii) the increased ability for Delaware corporations to attract and retain qualified directors, each of the foregoing as discussed in greater detail in the section entitled “Proposal No. 2 — The Domestication Proposal — Reasons for the Domestication.” The ArcLight Board believes that any direct benefit that Delaware law provides to a corporation also indirectly benefits shareholders, who are the owners of the corporation. Additionally, OPAL Fuels and OPAL HoldCo have required the Domestication as a condition to consummating the Business Combination.
To effect the Domestication, ArcLight will file a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and file a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which ArcLight will be domesticated and continue as a Delaware corporation, at which time ArcLight will change its name to “OPAL Fuels Inc.”
The approval of the Domestication Proposal is a condition to the closing of the transactions contemplated by the Business Combination Agreement. The approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the ArcLight ordinary shares who, being present (in person or by proxy) and entitled to vote at the Special Meeting, vote at the Special Meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as a vote cast at the Special Meeting.
Q: HOW WILL THE DOMESTICATION AFFECT MY PUBLIC SHARES, ARCLIGHT PUBLIC WARRANTS AND UNITS?
A: On the effective date of the Domestication, (a) each outstanding ArcLight Class A ordinary share (including any such share received upon conversion of a Class B ordinary share) will become one share of New OPAL Class A Common Stock, (b) each outstanding warrant to purchase one ArcLight Class A ordinary share will become a warrant to purchase one share of New OPAL Class A Common Stock at an exercise price of $11.50 per share and (c) New OPAL will file its certificate of incorporation and adopt bylaws to serve as its governing documents in connection with the Domestication.
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At a moment in time after the effectiveness of the Domestication and before the closing of the Business Combination, each outstanding unit of ArcLight (each of which consists of one share of ArcLight Class A ordinary shares and one-half of one warrant to purchase one share of ArcLight Class A ordinary shares) will be separated into its component common stock and warrant. Such warrants will become exercisable into shares of ArcLight Class A common stock any time after the later of one year following the completion of ArcLight’s IPO and 30 days following the completion of the Business Combination.
Q: What is involved with the Domestication?
A: The Domestication will require ArcLight to file certain documents in both the Cayman Islands and the State of Delaware. At the effective time of the Domestication, which will be the Closing Date, ArcLight will cease to be a company incorporated under the laws of the Cayman Islands and in connection with the Business Combination, ArcLight will continue as a Delaware corporation. ArcLight’s Amended and Restated Memorandum and Articles of Association (the “Existing Organizational Documents”) will be replaced by the Proposed Charter and Proposed Bylaws and your rights as a shareholder will cease to be governed by the laws of the Cayman Islands and will be governed by the laws of Delaware.
Q: WHAT HAPPENS TO THE FUNDS DEPOSITED IN THE TRUST ACCOUNT AFTER CONSUMMATION OF THE BUSINESS COMBINATION?
A: The net proceeds of ArcLight’s IPO, together with funds raised from the private sale of warrants simultaneously with the consummation of ArcLight’s IPO, was placed in the Trust Account immediately following ArcLight’s IPO. After consummation of the Business Combination, the funds in the Trust Account will be used to pay holders of the ArcLight Class A ordinary shares who exercise redemption rights, to pay fees and expenses incurred in connection with the Business Combination (including aggregate fees of approximately $10,890,707 as deferred underwriting commissions related to ArcLight’s IPO) and then, together with the proceeds of the PIPE Investment, contributed to New OPAL for use as working capital and for general corporate purposes.
Q: WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DOMESTICATION?
A: As discussed more fully under “Material U.S. Federal Income Tax Considerations,” the Domestication generally should constitute a tax-deferred reorganization within the meaning of Section 368(a)(l)(F) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). However, due to the absence of direct guidance on the application of Section 368(a)(1)(F) of the Code to the facts and circumstances relating to ArcLight, this result is not entirely clear. A transaction, such as the Domestication, that should qualify as a tax-deferred reorganization within the meaning of Section 368(a)(1)(F) of the Code, U.S. Holders (as defined in “Material U.S. Federal Income Tax Considerations — U.S. Holders” below) will be subject to Section 367(b) of the Code and, as a result of the Domestication:
• a U.S. Holder that holds Public Shares that have a fair market value of less than $50,000 on the date of the Domestication generally will not recognize any gain or loss and will not be required to include any part of ArcLight’s earnings in income;
• a U.S. Holder that holds Public Shares that have a fair market value of $50,000 or more and that, on the date of the Domestication, owns (actually and constructively) less than 10% of the total combined voting power of all classes of our stock entitled to vote and less than 10% of the total value of all classes of our stock generally will recognize gain (but not loss) on the exchange of Public Shares for shares of New OPAL Common Stock pursuant to the Domestication. As an alternative to recognizing gain, such U.S. Holder may file an election to include in income as a deemed dividend the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367(b) of the Code) attributable to its Public Shares provided certain other requirements are satisfied; and
• a U.S. Holder that holds Public Shares have a fair market value of $50,000 or more and that, on the date of the Domestication, owns (actually or constructively) 10% or more of the total combined voting power of all classes of our stock entitled to vote or 10% or more of the total value of all classes of our stock generally will be required to include in income as a deemed dividend the “all earnings and profits
20
amount” attributable to its Public Shares provided certain other requirements are satisfied. Any such U.S. Holder that is a corporation may, under certain circumstances, effectively be exempt from taxation on a portion or all of the deemed dividend pursuant to Section 245A of the Code (commonly referred to as the participation exemption).
ArcLight does not expect to have significant cumulative earnings and profits through the date of the Domestication.
ArcLight believes that it is likely classified as a PFIC (as defined below). If ArcLight is a PFIC, a U.S. Holder of Public Shares may, in certain circumstances, still recognize gain (but not loss) upon the exchange of its Public Shares or ArcLight Public Warrants for New OPAL Common Stock or New OPAL Public Warrants pursuant to the Domestication under the “passive foreign investment company” (“PFIC”) rules of the Code equal to the excess, if any, of the fair market value of the shares of New OPAL Common Stock or New OPAL Public Warrants received in the Domestication over the U.S. Holder’s adjusted tax basis in the corresponding Public Shares or ArcLight Public Warrants surrendered in exchange therefor. The tax on any such gain so recognized would be imposed at the rate applicable to ordinary income and an interest charge would apply. For a more complete discussion of the potential application of the PFIC rules to U.S. Holders as a result of the Domestication, see the discussion in the section entitled “Material U.S. Federal Income Tax Considerations — U.S. Holders — PFIC Considerations.”
Additionally, the Domestication may cause non-U.S. Holders (as defined in “Material U.S. Federal Income Tax Considerations — Non-U.S. Holders”) to become subject to U.S. federal income withholding taxes on any dividends paid in respect of such non-U.S. Holder’s shares of New OPAL Common Stock after the Domestication.
The tax consequences of the Domestication are complex and will depend on a holder’s particular circumstances. All holders are urged to consult their tax advisor on the tax consequences to them of the Domestication, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws. For a more complete discussion of the U.S. federal income tax considerations of the Domestication, see “Material U.S. Federal Income Tax Considerations.”
Q: WHAT IS A TAX RECEIVABLE AGREEMENT?
A: In connection with the Business Combination, New OPAL will enter into the tax receivable agreement (the “Tax Receivable Agreement”) with the persons from time to time that become a party thereto (such persons, collectively, the “TRA Participants”). Pursuant to the Tax Receivable Agreement, New OPAL will be required to pay the TRA Participants 85% of the amount of savings, if any, in U.S. federal, state and local income tax that New OPAL actually realizes (computed using certain simplifying assumptions) as a result of the increases in tax basis and certain other tax benefits related to any exchanges of OPAL Common Units (together with voting shares of New OPAL) for shares of New OPAL Class A Common Stock or New OPAL Class C Common Stock. For more information on the tax receivable agreement, please see the section entitled “The Business Combination — Related Agreements — Tax Receivable Agreement.”
Q: HOW DOES THE SPONSOR INTEND TO VOTE ON THE SHAREHOLDER PROPOSALS?
A: The Sponsor and ArcLight’s officers and directors own of record and are entitled to vote an aggregate of approximately 20% of the outstanding shares of ArcLight ordinary shares. The Sponsor and ArcLight’s officers and directors have agreed to vote any founder shares and any ArcLight Class A ordinary shares held by them as of the record date in favor of the Shareholder Proposals. In addition, pursuant to the Sponsor Letter Agreement executed by the Sponsor and ArcLight’s officers and directors on December 2, 2021 in connection with the execution of the Business Combination Agreement, the Sponsor and other parties thereto have agreed to vote all of their ArcLight Class A ordinary shares and ArcLight Class B ordinary shares (i) in favor of Shareholder Proposals 1-7 (including the Advisory Charter Proposals) (ii) against any action or agreement that would reasonably be expected to result in a breach in any material respect of any covenant, representation or warranty or any other obligation or agreement of the ArcLight or its Affiliates under the Business Combination Agreement or that would reasonable be expected to result in any of the conditions to ArcLight’s or any of its Affiliate’s obligations under the Business Combination Agreement not being fulfilled; and (iii) against (A) any proposal or offer from any Person concerning (1) a merger, consolidation, liquidation, recapitalization, share
21
exchange or other business combination transaction involving the Company, or (2) the issuance or acquisition of shares of capital stock or other equity securities of the Company (other than as contemplated or permitted by the Business Combination Agreement); and (B) any agreement, transaction or other matter that is intended to, or would reasonably be expected to, impede, interfere with, delay, postpone, discourage or materially and adversely affect the consummation of the Business Combination. See “Certain Relationships and Related Party Transactions — Sponsor Letter Agreement.”
Q: WHAT CONSTITUTES A QUORUM AT THE SPECIAL MEETING?
A: The holders of a majority of the voting power of the issued and outstanding ArcLight ordinary shares entitled to vote at the Special Meeting must be present, in person or virtually or represented by proxy, at the Special Meeting to constitute a quorum and in order to conduct business at the Special Meeting. Abstentions and broker non-votes will be counted as present for the purpose of determining a quorum. The Sponsor and ArcLight’s officers and directors, who currently own approximately 20% of the issued and outstanding shares of ArcLight ordinary shares, will count towards this quorum. In the absence of a quorum, the chairman of the Special Meeting has power to adjourn the Special Meeting. As of the record date for the Special Meeting, 19,447,691 shares of ArcLight ordinary shares would be required to achieve a quorum.
Q: WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AT THE SPECIAL MEETING?
A: The Business Combination Proposal: The approval of the Business Combination Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ArcLight ordinary shares who, being present (in person or by proxy) and entitled to vote at the Special Meeting, vote at the Special Meeting. ArcLight shareholders must approve the Business Combination Proposal in order for the Business Combination to occur. If ArcLight shareholders fail to approve the Business Combination Proposal, the Business Combination will not occur. Pursuant to the IPO Letter Agreement and as further discussed in the section entitled “The Business Combination Agreement — Related Agreements — Sponsor Letter Agreement,” the Sponsor and ArcLight’s officers and directors have agreed to vote shares representing approximately 20% of the aggregate voting power of the ArcLight ordinary shares in favor of the Business Combination Proposal.
The Domestication Proposal: The approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the ArcLight ordinary shares who, being present (in person or by proxy) and entitled to vote at the Special Meeting, vote at the Special Meeting. The Domestication Proposal is conditioned on the approval of the Business Combination Proposal. Therefore, if the Business Combination Proposal is not approved, the Domestication Proposal will have no effect, even if approved by ArcLight’s Public Shareholders. Pursuant to the IPO Letter Agreement, the Sponsor and ArcLight’s officers and directors have agreed to vote shares representing approximately 20% of the aggregate voting power of the ArcLight ordinary shares in favor of the Domestication Proposal.
The Organizational Documents Proposal: The approval of the Organizational Documents Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the ArcLight ordinary shares who, being present (in person or by proxy) and entitled to vote at the Special Meeting, vote at the Special Meeting. The Organizational Documents Proposal is conditioned on the approval of the Domestication Proposal, and, therefore, also conditioned on approval of the Business Combination Proposal. Therefore, if either the Business Combination Proposal or the Domestication Proposal is not approved, the Organizational Documents Proposal will have no effect, even if approved by ArcLight’s Public Shareholders. Pursuant to the Sponsor Letter Agreement, the Sponsor and ArcLight’s officers and directors have agreed to vote shares representing approximately 20% of the aggregate voting power of the ArcLight ordinary shares in favor of the Organizational Documents Proposal.
The Advisory Charter Proposals: The approval of any of the Advisory Charter Proposals is not otherwise required by Cayman Islands law or Delaware law separate and apart from the Organizational Documents Proposal but, pursuant to SEC guidance, ArcLight is required to submit these provisions to its stockholders separately for approval. However, the stockholder votes regarding these proposals are advisory votes, and are not binding on ArcLight or the ArcLight Board (separate and apart from the approval of the Organizational Documents Proposal). Furthermore, the Business Combination is not conditioned on the separate approval of any of the Advisory Charter Proposals (separate and apart from approval of the Organizational Documents Proposal).
22
The Nasdaq Proposal: The approval of the Nasdaq Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ArcLight ordinary shares who, being present (in person or by proxy) and entitled to vote at the Special Meeting, vote at the Special Meeting. The Nasdaq Proposal is conditioned on the approval of the Business Combination Proposal, the Domestication Proposal and the Organizational Documents Proposals. Therefore, if any of those proposals is not approved, the Nasdaq Proposal will have no effect, even if approved by ArcLight’s Public Shareholders. Pursuant to the Sponsor Support Agreement, the Sponsor and ArcLight’s officers and directors have agreed to vote shares representing approximately 20% of the aggregate voting power of the ArcLight ordinary shares in favor of the Nasdaq Proposal.
The Equity Incentive Plan Proposal: The approval of the Equity Incentive Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ArcLight ordinary shares who, being present (in person or by proxy) and entitled to vote at the Special Meeting, vote at the Special Meeting. Pursuant to the Sponsor Letter Agreement, the Sponsor and ArcLight’s officers and directors have agreed to vote shares representing approximately 20% of the aggregate voting power of the ArcLight ordinary shares in favor of the Equity Incentive Plan Proposal. Furthermore, the Business Combination is not conditioned on the separate approval of the Equity Incentive Plan Proposal.
The Adjournment Proposal: The approval of the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ArcLight ordinary shares who, being present (in person or by proxy) and entitled to vote at the Special Meeting, vote at the Special Meeting. The Adjournment Proposal is not conditioned upon any other Shareholder Proposal.
Q: DO ANY OF ARCLIGHT’S DIRECTORS OR OFFICERS HAVE INTERESTS IN THE BUSINESS COMBINATION THAT MAY DIFFER FROM OR BE IN ADDITION TO THE INTERESTS OF ARCLIGHT SHAREHOLDERS?
A: ArcLight’s executive officers and certain non-employee directors may have interests in the Business Combination that may be different from, or in addition to, the interests of ArcLight’s shareholders generally. For example, following the Business Combination, the Sponsor can earn a positive rate of return on their investment, even if other shareholders of ArcLight experience a negative rate of return on their investment. The ArcLight Board was aware of and considered these interests to the extent such interests existed at the time, among other matters, in approving the Business Combination Agreement and in recommending that the Business Combination Agreement and the transactions contemplated thereby be approved by the shareholders of ArcLight. See “Proposal No. 1 — The Business Combination Proposal — Interests of ArcLight Directors and Officers in the Business Combination” beginning on page 157 of this proxy statement/prospectus.
For additional information regarding pre-existing relationships between certain of the parties to the Business Combination Agreement and certain of their Affiliates, see “Risk Factors — Risks Related to the Business Combination and ArcLight — Pre-existing relationships between participants in the Business Combination and the related transactions or their Affiliates could give rise to actual or perceived conflicts of interest in connection with the Business Combination.”
Q: WHAT INTERESTS DO ARCLIGHT’S CURRENT OFFICERS AND DIRECTORS HAVE IN THE BUSINESS COMBINATION?
A: The Sponsor and each executive officer and director of ArcLight may have interests in the Business Combination that are different from or in addition to your interests. You should take these interests into account in deciding whether to approve the Business Combination. These interests include, among other things, the interests listed below:
• the fact that the Initial Shareholders have agreed not to redeem any ArcLight ordinary shares held by them in connection with a shareholder vote to approve a proposed initial business combination;
• the fact that the Sponsor paid an aggregate of $25,000 for 7,187,500 ArcLight Class B ordinary shares and effected a share capitalization resulting in an aggregate of 7,906,250 ArcLight Class B ordinary shares issued and outstanding. 127,174 ArcLight Class B ordinary shares were forfeited by the Sponsor upon the expiration of the over-allotment option. As of December 31, 2021, there were 7,779,076 ArcLight Class B
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ordinary shares currently owned by the Initial Shareholders. The 7,779,076 shares of New OPAL Class A Common Stock that the Initial Shareholders will hold following the Business Combination (including 763,907 of such shares subject to forfeiture), if unrestricted and freely tradable, and in the case of the shares held by the Sponsor, assuming all vesting conditions of the Sponsor Earnout Shares are satisfied, would have had an aggregate market value of $77,168,434 based upon the closing price of $9.92 per ArcLight Class A ordinary share on the Nasdaq on May 5, 2022, the most recent closing price;
• the fact that Sponsor paid $9,223,261 for its ArcLight Private Placement Warrants, which, if unrestricted and freely tradable, would have had an aggregate market value of $16,325,172 based upon the closing price of $1.77 per ArcLight Public Warrant (although holders of the private placement warrants have certain rights that differ from the rights of holders of the ArcLight Public Warrants) on Nasdaq on May 5, 2022, the most recent closing price, and the fact that the ArcLight Private Placement Warrants would be worthless if a business combination is not consummated by March 25, 2023 (unless such date is extended in accordance with the Existing Organizational Documents);
• the fact that an affiliate of ArcLight have agreed to purchase 2,000,000 shares of New OPAL Class A Common Stock at $10.00 per share in the PIPE Investment on the same terms and conditions as the other PIPE Investors;
• the fact that the Initial Shareholders and certain of ArcLight’s current officers have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any ArcLight ordinary shares (other than Public Shares) held by them if ArcLight fails to complete an initial business combination by March 25, 2023 (unless such date is extended in accordance with the Existing Organizational Documents);
• the fact that, at the option of the Sponsor, any amounts outstanding under any loan made by the Sponsor or any of its Affiliates to ArcLight in an aggregate amount of up to $1,500,000 may be converted into warrants to purchase ArcLight Class A ordinary shares in connection with the consummation of the Business Combination. As of the date of this proxy statement/prospectus, there are no amounts outstanding under any such loans;
• the continued indemnification of ArcLight’s directors and officers and the continuation of ArcLight’s directors’ and officers’ liability insurance after the Business Combination (i.e., a “tail policy”);
• the fact that the Sponsor (including its representatives and affiliates) and ArcLight’s directors and officers, are, or may in the future become, affiliated with entities that are engaged in a similar business to ArcLight. Moreover, certain of ArcLight’s directors and officers have time and attention requirements for investment funds of which affiliates of the Sponsor are the investment managers. ArcLight’s directors and officers also may become aware of business opportunities which may be appropriate for presentation to ArcLight, and the other entities to which they owe certain fiduciary or contractual duties. Accordingly, they may have had conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in ArcLight’s favor and such potential business opportunities may be presented to other entities prior to their presentation to ArcLight, subject to applicable fiduciary duties under the Cayman Islands Companies Act. ArcLight’s amended and restated memorandum and articles of association provide that Arclight renounces its interest in any corporate opportunity offered to any director or officer of ArcLight;
• the fact that, following the Business Combination, the Sponsor can earn a positive rate of return on their investment, even if other shareholders of ArcLight experience a negative rate of return on their investment;
• the fact that the Sponsor and ArcLight’s officers and directors will lose their entire investment in ArcLight and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by March 25, 2023 (unless such date is extended in accordance with the Existing Organizational Documents);
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• the fact that if the Trust Account is liquidated, including in the event ArcLight is unable to complete an initial business combination by March 25, 2023 (unless such date is extended in accordance with the Existing Organizational Documents), the Sponsor has agreed to indemnify ArcLight to ensure that the proceeds in the Trust Account are not reduced below $10.00 per Public Share, or such lesser per Public Share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which ArcLight has entered into an acquisition agreement or claims of any third party for services rendered or products sold to ArcLight, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account;
• the fact that ArcLight may be entitled to distribute or pay over funds held by ArcLight outside the Trust Account to the Sponsor or any of its Affiliates prior to the Closing; and
• the fact that the Initial Shareholders entered into the Sponsor Letter Agreement pursuant to which the original lock-up period to which our Sponsor and our directors and executive officers are subject was amended to remove such lock-up period, but only with respect to securities that are not held by the Sponsor.
These interests may influence the ArcLight Board in making their recommendation that you vote in favor of the approval of the Business Combination. See “Proposal No. 1 — The Business Combination Proposal — Interests of ArcLight Directors and Officers in the Business Combination” beginning on page 157 of this proxy statement/prospectus for a further discussion of these considerations.
Q: WHAT DO I NEED TO DO NOW?
A: After carefully reading and considering the information contained in this proxy statement/prospectus, please submit your proxies as soon as possible so that your shares will be represented at the Special Meeting. Please follow the instructions set forth on the proxy card or on the voting instruction form provided by your broker, bank or other nominee if your shares are held in the name of your broker, bank or other nominee.
Q: HOW DO I VOTE?
A: If you are a shareholder of record of ArcLight as of May 6, 2022 (the “record date”) you may submit your proxy before the Special Meeting in any of the following ways, if available:
• visit the website shown on your proxy card to vote via the Internet; or
• complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope.
If you are a shareholder of record of ArcLight as of the record date, you may also cast your vote at the Special Meeting.
If your shares are held in “street name” through a broker, bank or other nominee, your broker, bank or other nominee will send you separate instructions describing the procedure for voting your shares. “Street name” shareholders who wish to vote at the Special Meeting will need to obtain a legal proxy form from their broker, bank or other nominee.
Q: WHEN AND WHERE IS THE SPECIAL MEETING?
A: The Special Meeting will be held on , 2022, at local time. For the purposes of the Existing Organizational Documents, the physical place of the meeting will be at the offices of Kirkland & Ellis LLP located at 609 Main Street, Houston, Texas 77002. In light of the novel coronavirus pandemic and to support the well-being of ArcLight’s shareholders, directors and officers, ArcLight encourages you to use remote methods of attending the Special Meeting or to attend via proxy. You may attend the Special Meeting and vote your shares electronically during the Special Meeting via live webcast by visiting https://www.cstproxy.com/actcii/2022. You will need the meeting control number that is printed on your proxy card to enter the Special Meeting. If you do not have internet capabilities, you can listen only to the meeting by dialing 1 800-450-7155 (toll-free), outside the U.S. and Canada +1 857-999-9155 (standard rates apply) when prompted enter the pin number 0732540#. This is listen-only, you will not be able to vote or enter questions during the Special Meeting. All ArcLight shareholders as of the record date, or their duly appointed proxies, may attend the Special Meeting.
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Q: IF MY SHARES ARE HELD IN “STREET NAME” BY A BROKER, BANK OR OTHER NOMINEE, WILL MY BROKER, BANK OR OTHER NOMINEE VOTE MY SHARES FOR ME?
A: If your shares are held in “street name” in a stock brokerage account or by a broker, bank or other nominee, you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your broker, bank or other nominee. Please note that you may not vote shares held in “street name” by returning a proxy card directly to ArcLight or by voting at the Special Meeting unless you provide a “legal proxy”, which you must obtain from your broker, bank or other nominee. In addition to such legal proxy, if you plan to attend the Special Meeting, but are not a shareholder of record because you hold your shares in “street name”, please have evidence of your beneficial ownership of your shares (e.g., a copy of a recent brokerage statement showing the shares) and valid photo identification with you at the Special Meeting.
Under the rules of the Nasdaq, brokers who hold shares in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not permitted to exercise their voting discretion with respect to the approval of matters that the Nasdaq determines to be “non-routine” without specific instructions from the beneficial owner. It is expected that all of the Shareholder Proposals are “non-routine” matters. Broker non-votes occur when a broker or nominee is not instructed by the beneficial owner of shares to vote on a particular Shareholder Proposal for which the broker does not have discretionary voting power.
If you are an ArcLight shareholder holding your shares in “street name” and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker, bank or other nominee will not vote your shares on the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Advisory Charter Proposals, the Nasdaq Proposal, the Equity Incentive Plan Proposal or the Adjournment Proposal. Such abstentions and broker non-votes will have no effect on the vote count for any of the proposals.
Q: WHAT IF I ATTEND THE SPECIAL MEETING AND ABSTAIN OR DO NOT VOTE?
A: For purposes of the Special Meeting, an abstention occurs when a shareholder attends the meeting and does not vote or returns a proxy with an “abstain” vote.
If you are an ArcLight shareholder that attends the Special Meeting and fails to vote on the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Advisory Charter Proposals, the Nasdaq Proposal, the Equity Incentive Plan Proposal or the Adjournment Proposal, or if you respond to such proposals with an “abstain” vote, your failure to vote or “abstain” vote in each case will have no effect on the vote count for such proposals.
Q: WHAT WILL HAPPEN IF I RETURN MY PROXY CARD WITHOUT INDICATING HOW TO VOTE?
A: If you sign and return your proxy card without indicating how to vote on any particular Shareholder Proposal, the ArcLight shares represented by your proxy will be voted as recommended by the ArcLight board of directors with respect to that Shareholder Proposal.
Q: MAY I CHANGE MY VOTE AFTER I HAVE DELIVERED MY PROXY OR VOTING INSTRUCTION CARD?
A: Yes. You may change your vote at any time before your proxy is voted at the Special Meeting. You may do this in one of three ways:
• filing a notice with the Secretary of ArcLight;
• mailing a new, subsequently dated proxy card; or
• by attending the Special Meeting and electing to vote your shares.
If you are a shareholder of record of ArcLight and you choose to send a written notice or to mail a new proxy, you must submit your notice of revocation or your new proxy to ArcLight and it must be received at any time before the vote is taken at the Special Meeting. Any proxy that you submitted may also be revoked by submitting a new proxy by mail, or online or by telephone, not later than 5:00 p.m. New York City time on , 2022, or
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by voting at the Special Meeting. Simply attending the Special Meeting will not revoke your proxy. If you have instructed a broker, bank or other nominee to vote your shares of ArcLight ordinary shares, you must follow the directions you receive from your broker, bank or other nominee in order to change or revoke your vote.
Q: WHAT HAPPENS IF I FAIL TO TAKE ANY ACTION WITH RESPECT TO THE SPECIAL MEETING?
A: If you fail to take any action with respect to the Special Meeting and the Business Combination is approved by shareholders and consummated, you will become a stockholder and/or warrant holder of New OPAL. Failure to take any action with respect to the Special Meeting will not affect your ability to exercise your redemption rights. If you fail to take any action with respect to the Special Meeting and the Business Combination is not approved, you will continue to be a shareholder of ArcLight while ArcLight searches for another target business with which to complete a business combination.
Q: WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?
A: Shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered under more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your shares.
Q: WHOM SHOULD I CONTACT IF I HAVE ANY QUESTIONS ABOUT THE PROXY MATERIALS, VOTING OR THE BUSINESS COMBINATION?
A: If you have any questions about the proxy materials, need assistance submitting your proxy or voting your shares or need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact Morrow, the proxy solicitation agent for ArcLight, at the following address and telephone number:
Morrow Sodali LLC
333 Ludlow Street, 5th Floor, South Tower
Stamford CT 06902
Tel: Toll-Free (800) 662-5200 or (203) 658-9400
Email: ACTD.info@investor.morrowsodali.com
If you are a holder of Public Shares and you intend to seek redemption of your shares, you will need to deliver your Public Shares (either physically or electronically) to CST, ArcLight’s transfer agent, at the address below prior to p.m., New York City Time, on , 2022. If you have questions regarding the certification of your position or delivery of your stock, please contact:
Continental Stock Transfer & Trust Company
One State Street Plaza, 30th Floor
New York, NY 10004
Attn: Mark Zimkind
E-mail: mzimkind@continentalstock.com
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SUMMARY
This summary highlights selected information included in this document and does not contain all of the information that may be important to you. You should read this entire document and its appendices and the other documents to which ArcLight and OPAL Fuels refer before you decide how to vote with respect to the Shareholder Proposals. Each item in this summary includes a page reference directing you to a more complete description of that item.
Information About the Parties to the Business Combination (page 109)
ArcLight Clean Transition Corp. II
200 Clarendon Street, 55th Floor
Boston, Massachusetts 02116
617-531-6300
ArcLight is a blank check company incorporated as a Cayman Islands exempted company with limited liability organized for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. ArcLight completed its IPO on March 25, 2021.
OPAL Fuels
OPAL is a renewable energy company specializing in the capture and conversion of biogas for the (i) production of RNG for use as a vehicle fuel for heavy and medium-duty trucking fleets, (ii) generation of Renewable Power for sale to utilities, (iii) generation and sale of Environmental Attributes associated with RNG and Renewable Power, and (iv) sales of RNG as pipeline quality natural gas. OPAL also designs, develops, constructs, operates and services Fueling Stations for trucking fleets across the country that use natural gas to displace diesel as their transportation fuel. The Biogas Conversion Projects currently use landfill gas and dairy manure as the source of the biogas. In addition, OPAL has recently begun implementing design, development, and construction services for hydrogen fueling stations, and OPAL is pursuing opportunities to diversify its sources of biogas to other waste streams.
The Business Combination Agreement (page 110)
The terms and conditions of the Business Combination are contained in the BCA, substantially in the form attached to this document as Annex A, which is incorporated by reference herein in its entirety. ArcLight encourages you to read the BCA carefully, as it is the legal document that governs the Business Combination. For more information on the BCA, see the section entitled “The Business Combination Agreement.”
Structure of the Business Combination (page 121)
The Business Combination contemplates, among other things, the following transactions:
• Prior to the Closing, each outstanding ArcLight Class B ordinary share will convert into one ArcLight Class A ordinary share;
• On the Closing Date, prior to the Closing, ArcLight will change its jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware, upon which ArcLight will change its name to “OPAL Fuels Inc.”;
• At the Closing, OPAL HoldCo and OPAL Fuels will cause OPAL Fuels’ existing limited liability company agreement to be amended and restated to be in the form of the Second A&R LLC Agreement to, among other things, admit New OPAL as a member of OPAL Fuels and to re-classify OPAL Fuels’ existing common units into Class B Units of OPAL Fuels, calculated as a function of the pre-transaction equity value for OPAL Fuels equal to $1,501,870,000, less all principal and accrued interest outstanding immediately after the Closing pursuant to the Ares Note; and
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• At the Closing, substantially concurrently with the foregoing actions, ArcLight will (i) contribute to OPAL Fuels an amount equal to the sum of cash in the Trust Account as of immediately prior to the Closing (after giving effect to the ACT Share Redemptions from the Trust Account) plus the aggregate cash proceeds actually received in respect of the PIPE Investment and (ii) contribute to OPAL Fuels a number of shares of New OPAL Class D Common Stock (which it will in turn distribute to OPAL Holdco and Hillman) and a number of shares of New OPAL Class B Common Stock (which it will in turn distribute to Ares, provided that in lieu of receiving a combination of Class B Units of OPAL Fuels and New OPAL Class B Common Stock, if elected, Ares may receive a number of shares of New OPAL Class A Common Stock equal to the number of shares of New OPAL Class B Common Stock it otherwise would have received), collectively, in exchange for a number of Class A Units of OPAL Fuels equal to the number of shares of New OPAL Class A Common Stock then issued and outstanding (after giving effect to OPAL Fuels’ election to receive New OPAL Class A Common Stock in lieu of New OPAL Class B Common Stock, if any), which OPAL Fuels will issue to ArcLight.
Simplified Pre-Combination Structure of OPAL Fuels
The following diagram illustrates in simplified terms the current structure of OPAL Fuels and its operating subsidiaries prior to the Closing.
____________
(1) This assumes that OPAL Fuels has drawn down amounts under the commitment made by NextEra under the NextEra Subscription Agreement. As of March 31, 2022, $25.0 million has been drawn down, and OPAL Fuels expects the full amount of NextEra’s $100.0 million subscription commitment to be drawn down prior to Closing.
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Simplified Post-Combination New OPAL Structure
The following diagrams illustrate in simplified terms the expected structure of New OPAL and its operating subsidiaries upon the Closing.
____________
(1) The equity ownership and voting power shown in this structure chart are based on the Maximum Redemptions and assumes the Business Combination closes prior to May 30, 2022 with respect to the number of shares of Class A Common Stock to be issued to the PIPE Investors. Assuming no holders of Public Shares exercise their redemption rights, the equity ownership levels and voting power of the entities in the structure chart in New OPAL Common Stock would be as follows: (a) Public Stockholders: 25.8% equity ownership interest and 6.6% voting power; (b) Ares: 1.5% equity ownership interest and 0.4% voting power; (c) OPAL HoldCo: 71.6% equity ownership interest and 91.7% voting interest; (d) Hillman: 1.1% equity ownership interest and 1.3% voting interest. For additional information and assumptions on these calculations, see “The Business Combination Agreement — Ownership of New OPAL Immediately Following the Business Combination.” Assuming Maximum Redemptions, the ownership of OPAL Common Units would be as follows: (a) New OPAL: 13.4% common equity ownership; (b) Ares: 1.8% common equity ownership; (c) OPAL HoldCo: 83.6% common equity ownership; and (d) Hillman: 1.2% common equity ownership. No information as to the relative voting power with respect to the OPAL Common Units has been presented because OPAL Fuels will have a managing member, New OPAL, and the Class A Common Units and Class B Common Units will not have voting rights, except as required by law.
(2) OPAL Fuels expects to (and the chart above assumes) draw down the full amount on NextEra’s $100.0 million subscription commitment prior to Closing and will issue to NextEra 1,000,000 Series A Preferred Units in connection therewith, which are redeemable after four years at the option of NextEra for an aggregate redemption price of $100.0 million plus accrued and unpaid dividends thereon.
(3) Alternatively, if elected pursuant to the Business Combination Agreement, Ares may hold New OPAL Class A Common Stock only (and not New OPAL Class B Common Stock or Class B Common Units of OPAL Fuels).
(4) Pursuant to the Second A&R LLC Agreement, the OPAL Common Units will be entitled to share in the profits and losses of OPAL Fuels and to receive distributions if and as declared by the managing member of OPAL Fuels, which will be New OPAL, and will have no voting rights, except as otherwise required by law. For a description of the rights of the OPAL Common Units, see “The Business Combination Agreement — Second Amended and Restated Limited Liability Company Agreement — Rights of the OPAL Common Units.”
(5) The OPAL Preferred Units are not entitled to vote, except as required by law, or in limited instances as specified in the certificate of designations governing these preferred units. For a description of the rights of the OPAL Preferred Units, see “The Business Combination Agreement — Second Amended and Restated Limited Liability Company Agreement — Rights of the OPAL Preferred Units.”
The Private Placement (page 134)
In connection with entering into the Business Combination Agreement, ArcLight entered into the Subscription Agreements with the PIPE Investors, pursuant to which, among other things, the PIPE Investors party thereto agreed to purchase an aggregate of 12,500,000 shares of New OPAL Class A Common Stock immediately prior to the Closing at a cash purchase price of $10.00 per share, resulting in aggregate proceeds of $125.0 million in the PIPE Investment. The Subscription Agreements contain customary representations, warranties, covenants and agreements of ArcLight and the PIPE Investors and are subject to customary closing conditions (including, without limitation, that there is no amendment or modification to the Business Combination Agreement that is material and adverse
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to the PIPE Investors) and termination rights (including a termination right if the transactions contemplated by the Subscription Agreements have not been consummated by May 31, 2022 (one hundred eighty (180) days after the date of the Subscription Agreement), other than as a result of breach by the terminating party). As of the date hereof, PIPE Investors representing $110,806,000 of the original PIPE Investment entered into amendments with respect to such PIPE Investors’ Subscription Agreements (the “Amended Subscription Agreements”), whereby the termination rights described above were amended to extend the term of each Amended Subscription Agreement by 60 days to July 29, 2022 (the “PIPE Extension”). In the event that the Business Combination closes subsequent to May 30, 2022 but prior to July 29, 2022, assuming that additional PIPE Investors do not enter into amendments to their Subscription Agreements extending the expiration date of such agreements, only 11,080,600 shares of Class A Common Stock will be issued to PIPE Investors. The PIPE Investments are expected to close immediately prior to the Closing.
For more information regarding the Private Placement and the Subscription Agreements, see the section entitled “The Business Combination Agreement — PIPE Financing (Private Placement).”
The NextEra Subscription (pages 134 to 136)
In connection with entering into the Business Combination Agreement, OPAL Fuels entered into a Subscription Agreement with NextEra (the “NextEra Subscription Agreement”) pursuant to which NextEra has agreed to subscribe for up to an aggregate amount of 1,000,000 OPAL Fuels’ Series A Preferred Units at a price of $100.00 per unit (the “Series A Original Issue Price”). OPAL expects to draw down the full amount on NextEra’s $100.0 million subscription commitment prior to Closing and will issue to NextEra 1,000,000 Series A Preferred Units, which are redeemable after four years at the option of NextEra for an aggregate redemption price of $100.0 million plus accrued and unpaid dividends thereon.
The Series A Preferred Units provide holders with an 8% annual dividend on the Series A Original Issue Price, compounding on a monthly basis, and paid quarterly in arrears, with the option (at OPAL Fuels’ election) to pay such dividends in kind during the first 8 quarters following the first issuance of any Series A Preferred Units. Upon certain material breaches of the terms of the Series A Preferred Units, the dividend rate is subject to an increase to 12% (and additional 2% increases thereafter based on how long such breach remains uncured, up to a maximum rate of 20%).
The Series A Preferred Units further provide that for so long as any Series A Preferred Units remain outstanding or are issuable pursuant to the terms of the NextEra Subscription Agreement, (i) no dividend or distribution shall be paid or set aside for payment on any junior units, (ii) no dividend or distribution shall be paid or set aside for payment on any pari passu units; and (iii) no units (other than Series A Preferred Units) shall be repurchased, redeemed or otherwise acquired for consideration by the Company, directly or indirectly. Such restrictions do not apply to (A) the payment of any costs, fees, operating expenses or other expenses (1) incurred by New OPAL in connection with serving as a manager or managing member of OPAL Fuels or (2) allocable to OPAL Fuels or otherwise incurred by New OPAL in connection with operating OPAL Fuels’ business (including expenses allocated to New OPAL by its affiliates), (B) tax distributions, (C) any dividend or distribution payable solely in OPAL Common Units, (D) any distribution in connection with an exchange of OPAL Common Units (together with voting shares of New OPAL) for shares of New OPAL Class A Common Stock or New OPAL Class C Common Stock or (E) in the event that OPAL Fuels has received $335 million in cash proceeds in connection with the Business Combination or other equity financings, declaring or paying any dividend or distribution on or repurchasing, redeeming or otherwise acquiring any junior units or pari passu units in a cumulative amount not to exceed $100 million.
Upon dissolution, liquidation or winding up of OPAL Fuels (a “Liquidation”), the holders are entitled to receive from any proceeds resulting from the Liquidation, before any proceeds shall be distributed in respect of any junior units, an amount per Series A Preferred Unit equal to the Series A Original Issue Price plus all accrued and unpaid dividends thereon (the “Series A Base Amount”).
The Series A Preferred Units may be redeemed, in whole or in part, at OPAL Fuels’ election, at any time, at a price, payable solely in cash, equal to the Series A Base Amount per Series A Preferred Unit as of the date of redemption (the “Series A Redemption Price”). Holders of Series A Preferred Units are entitled to request redemption (in whole or in part) of their Series A Preferred Units either (i) in connection with a change of control or (ii) at any time on or after November 29, 2025, at the Series A Redemption Price per Series A Preferred Unit (payable solely in cash).
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In the event OPAL Fuels’ fails to timely redeem a holder’s Series A Preferred Units upon a mandatory redemption request, such holder’s are entitled to (i) an increase in the dividend rate to 12% (with additional 2% increases added thereto, based on the length of delay in redemption, up to a 20% maximum dividend rate) and (ii) to convert their Series A Preferred Units that are subject to delayed redemption to common units of OPAL Fuels at a discount price. Additionally, if the Series A Base Amount of Series A Preferred Units that are subject to delayed redemption is at least $25.0 million and such delayed redemption lasts for more than 6 months, then NextEra (or if there is more than one holder, holders of a majority of the Series A Preferred Units) have the right for so long as such delay remains uncured to appoint a single member to the Board of Managers of OPAL Fuels (or following an initial public offering or business combination after which OPAL Fuels is a subsidiary of a public company, the board of directors (or similar governing body) of the public company parent). Alternatively, in lieu of receiving any of the aforementioned rights and remedies, if NextEra or any of its affiliates becomes a holder of Series A Preferred Units for which their mandatory redemption has been delayed, NextEra may instead elect to extend the then-remaining term of the Environmental Attributes Purchase and Sale Agreement, dated November 29, 2021, by and between, on the one hand, NextEra Energy Marketing, LLC and, on the other hand, TruStar Energy LLC and OPAL Fuels LLC (“EA Sales Agreement”) by an additional 12 months provided that the EA Sales Agreement has not been terminated prior thereto for any reason and NextEra is not then in material breach of the EA Sales Agreement (and may further elect additional 12 month extensions if such Series A Preferred Units continue to remain unredeemed following such 12 month extension).
Pursuant to the terms of the Series A Preferred Units, following the completion of the Business Combination, OPAL Fuels is required to obtain the consent of the holders of the Series A Units in the case of (i) issuances of indebtedness and pari passu preferred units resulting in repayment obligations (including amounts payable upon a liquidation) exceeding the greater of (x) $500 million and (y) three times (3x) OPAL Fuels’ last twelve months consolidated EBITDA, (ii) issuances of preferred units resulting in payment obligations upon a liquidation in excess of $100 million, (iii) certain material transactions with OPAL Fuels’ affiliates and (iv) certain other issuances of preferred units. Additionally, for so long as any Series A Preferred Units are outstanding, holders of the Series A Preferred Units have the right to consent to (i) any amendments to the certificate of designations for the Series A Preferred Units or OPAL Fuels’ operating agreement that adversely modify the terms of the Series A Preferred Units and (ii) any sale or issuance of additional Series A Preferred Units other than pursuant to the Subscription Agreement (and other than Series A Preferred Units issued to Holders as payment for accrued dividends).
Hillman Exchange (page 136)
In connection with entering into the Business Combination Agreement, OPAL Fuels entered into an exchange agreement with Hillman, pursuant to which Hillman exchanged all of its equity interests in OPAL Fuels and its subsidiaries for 300,000 OPAL Fuels’ Series A-1 Preferred Units and 14 pre-Closing OPAL Fuels common units.
The Series A-1 Preferred provide holders with an 8% annual dividend on the original issue price of $100.00 per unit (the “Series A-1 Original Issue Price”), compounding on a monthly basis, and paid quarterly in arrears, with the option (at OPAL Fuels’ election) to pay such dividends in kind during the first 8 quarters following the first issuance of any Series A-1 Preferred Units. Upon certain material breaches of the terms of the Series A-1 Preferred Units, the dividend rate is subject to an increase to 12% (and additional 2% increases thereafter based on how long such breach remains uncured, up to a maximum rate of 20%).
Upon a Liquidation, the holders are entitled to receive from any proceeds resulting from the Liquidation, before any proceeds shall be distributed in respect of any junior units, an amount per Series A-1 Preferred Unit equal to the Series A-1 Original Issue Price plus all accrued and unpaid dividends thereon (the “Series A-1 Base Amount”).
Subject to certain restrictions on redemption pursuant to the terms of the Series A Preferred Units, the Series A-1 Preferred Units may be redeemed, in whole or in part, at OPAL Fuels’ election, at any time, at a price, payable solely in cash, equal to the Series A-1 Base Amount per Series A Preferred Unit as of the date of redemption (the “Series A-1 Redemption Price”). Holders of Series A-1 Preferred Units are entitled to request redemption (in whole or in part) of their Series A-1 Preferred Units either (i) in connection with a change of control or (ii) at any time on or after November 29, 2025, at the Series A-1 Redemption Price per Series A Preferred Unit (payable solely in cash).
In the event OPAL Fuels’ fails to timely redeem a holder’s Series A-1 Preferred Units upon a mandatory redemption request, such holder’s are entitled to (i) an increase in the dividend rate to 12% (with additional 2% increases added thereto, based on the length of delay in redemption, up to a 20% maximum dividend rate) and (ii) to convert their Series A-1 Preferred Units that are subject to delayed redemption to common units of OPAL Fuels at a discount price.
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Earnout (page 207)
Pursuant to the terms of the Sponsor Letter Agreement, Sponsor agreed to subject 10% of its New OPAL Class A Common Stock (received as a result of the conversion of its ArcLight Class B ordinary shares immediately prior to the Closing) to vesting and forfeiture conditions relating to VWAP targets for New OPAL Class A Common Stock sustained over a period of 60 months following the Closing. For more information, see the section entitled “The Business Combination Agreement — Sponsor Letter Agreement.”
In addition, upon the occurrence of the First Earnout Triggering Event, New OPAL will issue the First Earnout Tranche to the Earnout Participants in accordance with the allocations set forth in the Business Combination Agreement. Additionally, upon the occurrence of the Second Earnout Triggering Event, New OPAL will issue the Second Earnout Tranche to the Earnout Participants in accordance with the allocations set forth in the Business Combination Agreement. For more information, see the section entitled “The Business Combination Agreement — Consideration to OPAL Fuels Holders in the Business Combination.”
ArcLight Special Meeting and the Proposals (page 149)
The Special Meeting will be held at a.m., Eastern Time, on , 2022. For the purposes of the Existing Organizational Documents, the physical place of the meeting will be at the offices of Kirkland & Ellis LLP located at 609 Main Street, Houston, Texas 77002. In light of the novel coronavirus pandemic and to support the well-being of ArcLight’s shareholders, directors and officers, ArcLight encourages you to use remote methods of attending the Special Meeting or to attend via proxy. You may attend the Special Meeting and vote your shares electronically during the Special Meeting via live webcast by visiting https://www.cstproxy.com/actcii/2022. You will need the meeting control number that is printed on your proxy card to enter the Special Meeting. If you do not have internet capabilities, you can listen only to the meeting by dialing 1 800-450-7155 (toll-free), outside the U.S. and Canada +1 857-999-9155 (standard rates apply) when prompted enter the pin number 0732540#. This is listen-only, you will not be able to vote or enter questions during the Special Meeting. At the Special Meeting, ArcLight’s shareholders will be asked to approve the Business Combination Proposal, the Domestication Proposal, Organizational Documents Proposal, the Advisory Charter Proposals, the Nasdaq Proposal, the Equity Incentive Plan Proposal, and the Adjournment Proposal (if necessary).
The ArcLight Board has fixed the close of business on May 6, 2022 (the “record date”) as the record date for determining the holders of ArcLight ordinary shares entitled to receive notice of and to vote at the Special Meeting. As of the record date, there were 31,116,305 shares of ArcLight Class A ordinary shares and 7,779,076 shares of ArcLight Class B ordinary shares outstanding and entitled to vote at the Special Meeting. Each share of ArcLight ordinary shares entitles the holder to one vote at the Special Meeting on each proposal to be considered at the Special Meeting. As of the record date, the Sponsor and ArcLight’s directors and officers and their Affiliates owned and were entitled to vote 7,779,076 shares of ArcLight ordinary shares, representing approximately 20% of the shares of ArcLight ordinary shares outstanding on that date. ArcLight currently expects that the Sponsor and its directors and officers will vote their shares in favor of the Shareholder Proposals and, pursuant to the Sponsor Letter Agreement, the Sponsor and directors and officers have agreed to do so. As of the record date, OPAL Fuels did not beneficially hold any shares of ArcLight ordinary shares.
A majority of the voting power of the issued and outstanding ArcLight ordinary shares entitled to vote at the Special Meeting must be present, in person or virtually or represented by proxy, at the Special Meeting to constitute a quorum and in order to conduct business at the Special Meeting.
Approval of the Business Combination Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ArcLight ordinary shares who, being present (in person or by proxy) and entitled to vote at the Special Meeting, vote at the Special Meeting. Approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the ArcLight ordinary shares who, being present (in person or by proxy) and entitled to vote at the Special Meeting, vote at the Special Meeting. Approval of the Organizational Documents Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the ArcLight ordinary shares who, being present (in person or by proxy) and entitled to vote at the Special Meeting, vote at the Special Meeting. The approval of each of the Advisory Charter Proposals requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ArcLight ordinary shares who, being present (in person or by proxy) and entitled to vote at the Special Meeting, vote at the Special Meeting.
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Approval of the Nasdaq Proposal, the Equity Incentive Plan Proposal and the Adjournment Proposal (if necessary) each requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ArcLight ordinary shares who, being present (in person or by proxy) and entitled to vote at the Special Meeting, vote at the Special Meeting.
The Business Combination is conditioned upon the approval of the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Nasdaq Proposal, subject to the terms of the Business Combination Agreement. The Business Combination is not conditioned on the Advisory Charter Proposals, the Equity Incentive Plan Proposal or the Adjournment Proposal. If the Business Combination Proposal is not approved, the other Shareholder Proposals (except the Adjournment Proposal) will not be presented to the shareholders for a vote.
Recommendation of ArcLight’s Board (page 151)
The ArcLight Board has unanimously determined that the Business Combination Proposal is in the best interests of ArcLight and its shareholders, has unanimously approved the Business Combination Proposal, and unanimously recommends that shareholders vote “FOR” the Business Combination Proposal, “FOR” the Domestication Proposal, “FOR” the Organizational Documents Proposal, “FOR” each of the Advisory Charter Proposals, “FOR” the Nasdaq Proposal, “FOR” the Equity Incentive Plan Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the Special Meeting.
ArcLight’s Boards’ Reasons for Approval of the Business Combination (page 117)
ArcLight was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. The ArcLight Board sought to do this by utilizing the networks and industry experience of both the Sponsor and the ArcLight Board and management to identify, acquire and operate one or more businesses. The members of the ArcLight Board and management have extensive transactional experience, particularly in the energy infrastructure industry.
As described under “The Background of the Business Combination,” the ArcLight Board, in evaluating the Business Combination, consulted with ArcLight’s management and legal advisors. In reaching its unanimous decision to approve the Business Combination Agreement and the transactions contemplated by the Business Combination Agreement, the ArcLight Board considered a range of factors, including, but not limited to, the factors discussed below. In light of the number and wide variety of factors considered in connection with its evaluation of the proposed combination, the ArcLight Board did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors that it considered in reaching its determination and supporting its decision. The ArcLight Board contemplated its decision in the context of all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors. This explanation of ArcLight’s reasons for approving the combination and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the section titled “Cautionary Statement Regarding Forward-Looking Statements.”
In approving the combination, the ArcLight Board decided not to obtain a fairness opinion. The officers and directors of ArcLight have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and background, together with the experience of their representatives, enabled them to make the necessary analyses and determinations regarding the Business Combination.
The ArcLight Board considered a number of factors pertaining to the Business Combination as generally supporting its decision to enter into the Business Combination Agreement and the transactions contemplated thereby, including, but not limited to, the following: OPAL Fuels’ demonstrable contributions toward global sustainability and decarbonization through greenhouse gas reduction, the experience of the management team and their proven ability to execute strategic initiatives in the RNG market, the scale and growth potential of its RNG platform, the prudent financial management of the business, Fortistar’s commitment to the business as demonstrated by rolling 100% of their current equity position following the Business Combination, the established current margins of the business and future ability of OPAL Fuels’ management team to improve the economics of the business over time, and more generally the large and growing market for RNG in the transportation segment and, more broadly, across the energy complex. Additionally, the ArcLight Board took into consideration the following factors or made the following determinations, as applicable, among others:
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• Meets the acquisition criteria that ArcLight had established to evaluate prospective business combination targets;
• Experienced management team;
• Potential for significant growth underpinned by pipeline of Biogas Conversion Projects either under construction or substantially under OPAL Fuels’ control;
• Evidence of continued adoption of RNG and CNG as a transportation fuel in medium and heavy-duty trucking;
• Attractive RNG market with substantial regulatory support;
• Valuation supported by financial analysis and due diligence;
• Multiple avenues to accelerate organic growth opportunities;
• Significant value creation and organic growth opportunities;
• OPAL Fuels’ post-closing financial condition;
• Historic successes of mature renewable natural gas business and resulting strong competitive positioning;
• Strong commitment of existing OPAL Fuels equity holders.
The ArcLight Board also considered a variety of uncertainties, risks and other potentially negative factors relating to the Business Combination including, but not limited to, the following: redemptions, complexities related to the shareholder vote, litigation and threats of litigation and broader macro risks, including OPAL Fuels’ reliance on manufacturers of membrane, compressors and other equipment necessary to build RNG conversion and dispensing facilities, reliance on truck fleet operators to purchase vehicles that use RNG, continued support for environmental, health and safety (“EHS”) laws and regulatory regimes applicable to various constituents in the RNG industry, developments in tax and other governmental incentives applicable to the RNG industry, and price fluctuations in environmental commodities. Additionally, the ArcLight Board considered the following issues and risks, among others:
• Risk that the benefits described above may not be achieved;
• Risk of the liquidation of ArcLight;
• ArcLight’s exclusivity obligations to OPAL Fuels, including its obligation not to pursue alternative business combination transactions;
• Risks regarding the shareholder vote;
• Limitations of review;
• Closing conditions;
• Fees and expenses;
• Public company readiness of OPAL Fuels’ management team;
• Potential litigation;
• Potential impacts of COVID-19; and
• Other risk factors.
In addition to considering the factors described above, the ArcLight Board also considered that some officers and directors of ArcLight might have interests in the Business Combination as individuals that are in addition to, and that may be different from, the interests of ArcLight’s stockholders. ArcLight’s independent directors reviewed and
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considered these interests during the negotiation of the Business Combination and in evaluating and unanimously approving, as members of the ArcLight Board, the Business Combination Agreement and the transactions contemplated thereby, including the Business Combination.
The ArcLight Board concluded that the potential benefits that it expected ArcLight and its stockholders to achieve as a result of the Business Combination outweighed the negative factors associated with the Business Combination. Accordingly, the ArcLight Board unanimously determined that the Business Combination Agreement, and the transactions contemplated thereby, including the Business Combination, were advisable, fair to, and in the best interests of, ArcLight and its shareholders.
For more information about the ArcLight Board’s decision-making process concerning the Business Combination, please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of ArcLight Directors and Officers in the Business Combination.”
Satisfaction of 80% Test (page 157)
It is a requirement under the Existing Organizational Documents that the business or assets acquired in its initial business combination have a fair market value equal to at least 80% of the assets held in the Trust Account (excluding deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into such business combination. In addition, the rules of Nasdaq require that ArcLight’s initial business combination be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes and excluding the amount of any deferred underwriting discount held in trust). As of December 2, 2021, the date of the execution of the definitive agreement for the proposed Business Combination, the balance of the Trust Account was approximately $300,280,781 (excluding the $10,890,707 deferred underwriting commissions and taxes payable on the income earned on the Trust Account) and 80% thereof represents approximately $240,225,000. In reaching its conclusion that the proposed Business Combination meets the 80% asset test, our Board used as a fair market value the enterprise value of approximately $1.75 billion, which was implied based on the terms of the transactions agreed to by the parties in negotiating the definitive agreement for the proposed Business Combination. The enterprise value consists of an implied equity value for OPAL Fuels (prior to the proposed Business Combination) of approximately $1,501,870,000, less all principal and accrued interest outstanding immediately after the Closing pursuant to the Ares Note. In determining whether the enterprise value described above represents the fair market value of the OPAL Fuels Business, the ArcLight Board considered all of the factors described in the section of the proxy statement/prospectus captioned “ArcLight’s Boards’ Reasons for Approval of the Business Combination” and the fact that the purchase price for this business was the result of an arm’s length negotiation. As a result, the ArcLight Board concluded that the fair market value of New OPAL was significantly in excess of 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account).
Conditions to Closing (page 123)
The Closing is subject to certain conditions, including, but not limited to: (i) the absence of any order, law or other legal restraint or prohibition issued by any court of competent jurisdiction or other governmental entity of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by the Business Combination Agreement being in effect, (ii) the effectiveness of this proxy statement/prospectus in accordance with the provisions of the Securities Act, (iii) the approval and adoption of the Business Combination Agreement and the transactions contemplated thereby by OPAL HoldCo will have been obtained, (iv) the Aggregate Transaction Proceeds (as defined in the Business Combination Agreement) being equal to or greater than $225,000,000, and ArcLight having made appropriate arrangements for the funds in the Trust Account to be released from the Trust Account upon the Closing, (v) the sum of all Unpaid ACT Expenses (as defined in the Business Combination Agreement) and all Unpaid ACT Liabilities (as defined in the Business Combination Agreement) not exceeding $30,000,000, (vi) the conditional approval by Nasdaq of ArcLight’s initial listing application with Nasdaq in connection with the transactions contemplated by the Business Combination Agreement, (vii) after giving effect to the transactions contemplated by the Business Combination Agreement (including after giving effect to the PIPE Financing (as defined in the Business Combination Agreement) and after giving effect to the ACT Shareholder Redemption (as defined in the Business Combination Agreement)), ArcLight having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) immediately after the Closing, (viii) since the date of the Business Combination Agreement, no Company Material Adverse Effect (as defined in the Business Combination Agreement) or ACT Material Adverse Effect (as defined in the Business Combination Agreement) having occurred that is continuing, (ix) as of the Closing, each of the Ancillary
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Documents (as defined in the Business Combination Agreement) being in full force and effect and not having been rescinded by any of the parties thereto, (x) the Domestication (as defined in the Business Combination Agreement) having been consummated on the Closing Date prior to the Closing in accordance with the Business Combination Agreement and a time-stamped copy of the Certificate of Domestication issued by the Secretary of State of the State of Delaware in relation thereto having been delivered to OPAL Fuels and (xi) the Required ACT Shareholder Approval (as defined in the Business Combination Agreement) (other than the Equity Incentive Plan Proposal) having been obtained. To the extent permitted by applicable law, the conditions set forth in the Business Combination Agreement may be waived in writing by ArcLight, OPAL Fuels or all of the parties to the Business Combination Agreement (as applicable).
Termination (page 132)
The Business Combination Agreement may be terminated, and the transactions contemplated thereby may be abandoned at any time prior to the Closing:
• by the mutual written consent of ArcLight and OPAL Fuels;
• by ArcLight, if any of the representations or warranties made by OPAL Fuels in the Business Combination Agreement are not true and correct or if OPAL Fuels fails to perform any covenant or agreement on the part of OPAL Fuels set forth in the Business Combination Agreement (including an obligation to consummate the Closing) such that certain conditions to the obligations of ArcLight could not be satisfied and the breach (or breaches) causing such representations or warranties not to be true and correct, or the failures to perform any covenant or agreement, as applicable, is (or are) not cured or cannot be cured within the earlier of (i) thirty days after written notice thereof is delivered to OPAL Fuels by ArcLight and (ii) 11:59 P.M. (pacific time) August 29, 2022 (the “Termination Date”); provided, however, that ArcLight is not then in breach of the Business Combination Agreement so as to prevent certain conditions to the obligations of OPAL Fuels from being satisfied;
• by OPAL Fuels, if any of the representations or warranties made by ArcLight in the Business Combination Agreement are not true and correct or if ArcLight fails to perform any covenant or agreement on the part of ArcLight set forth in the Business Combination Agreement (including an obligation to consummate the Closing) such that certain conditions to the obligations of OPAL Fuels could not be satisfied and the breach (or breaches) causing such representations or warranties not to be true and correct, or the failures to perform any covenant or agreement, as applicable, is (or are) not cured or cannot be cured within the earlier of (i) thirty days after written notice thereof is delivered to ArcLight by OPAL Fuels, and (ii) the Termination Date; provided, however, that OPAL Fuels is not then in breach of the Business Combination Agreement so as to prevent certain conditions to the obligations of ArcLight from being satisfied;
• by either ArcLight or OPAL Fuels, subject to certain customary exceptions, if the transactions contemplated by the Business Combination Agreement have not been consummated on or prior to the Termination Date; or
• by either ArcLight or OPAL Fuels, if (i) any governmental entity of competent jurisdiction has issued an order permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by the Business Combination Agreement and such order has become final and nonappealable, or if any law or regulation has been adopted that permanently makes the consummation of the transactions contemplated by the Business Combination Agreement illegal or otherwise prohibited, or (ii) the ACT Shareholders Meeting (as defined in the Business Combination Agreement) has been held (including following any adjournment thereof), has concluded, ArcLight’s shareholders have duly voted and the Required ACT Shareholder Approval (as defined in the Business Combination Agreement) was not obtained.
Redemption Rights (page 153)
Pursuant to the Existing Organizational Documents, a Public Shareholder may request that ArcLight redeem all or a portion of its Public Shares for cash if the Business Combination is consummated. As a holder of Public Shares, you will be entitled to receive cash for any Public Shares to be redeemed only if you:
i. (a) hold Public Shares or (b) if you hold Public Shares through units, you elect to separate your units into the underlying Public Shares and ArcLight Public Warrants prior to exercising your redemption rights with respect to the Public Shares;
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ii. submit a written request to CST, ArcLight’s transfer agent, in which you (i) request that ArcLight redeem all or a portion of your Public Shares for cash, and (ii) identify yourself as the beneficial holder of the Public Shares and provide your legal name, phone number and address; and
iii. deliver your Public Shares to CST, ArcLight’s transfer agent, physically or electronically through DTC.
Holders must complete the procedures for electing to redeem their Public Shares in the manner described above prior to, Time, on , 2022 (two business days before the Special Meeting) in order for their shares to be redeemed.
Holders of units must elect to separate the units into the underlying Public Shares and ArcLight Public Warrants prior to exercising redemption rights with respect to the Public Shares. Public holders that hold their units in an account at a brokerage firm or bank, must notify their broker or bank that they elect to separate the units into the underlying Public Shares and ArcLight Public Warrants, or if a holder holds units registered in its own name, the holder must contact CST, ArcLight’s transfer agent, directly and instruct them to do so. The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number and address to CST, ArcLight’s transfer agent, in order to validly redeem its shares. Public Shareholders may elect to redeem all or a portion of the Public Shares held by them regardless of if or how they vote in respect of the Business Combination Proposal. If the Business Combination is not consummated, the Public Shares will be returned to the respective holder, broker or bank. If the Business Combination is consummated, and if a Public Shareholder properly exercises its right to redeem all or a portion of the Public Shares that it holds and timely delivers its shares to CST, ArcLight’s transfer agent, New OPAL will redeem such Public Shares for a per-share price, payable in cash, equal to the pro rata portion of the Trust Account, calculated as of two business days prior to the vote at the Special Meeting. For illustrative purposes, this would have amounted to approximately $10.00 per issued and outstanding public share, based on 31,116,305 shares subject to possible redemption as of November 5, 2021. If a Public Shareholder exercises its redemption rights in full, then it will be electing to exchange its Public Shares for cash and will no longer own Public Shares. The redemption takes place following the Domestication and accordingly it is shares of New OPAL Class A Common Stock that will be redeemed immediately after consummation of the Business Combination. See “The Special Meeting of ArcLight — Redemption Rights” in this proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your Public Shares for cash.
Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of such Public Shareholder or any other person with whom such Public Shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its Public Shares with respect to more than an aggregate of 15% of the Public Shares. Accordingly, if a Public Shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the Public Shares, then any such shares in excess of that 15% limit would not be redeemed for cash.
The Sponsor and each executive officer and director of ArcLight have, pursuant to the Sponsor Letter Agreement, agreed to, among other things, vote all of their ArcLight ordinary shares in favor of the proposals being presented at the Special Meeting and waive their anti-dilution rights with respect to their ArcLight Class B ordinary shares in connection with the consummation of the Business Combination. Such shares will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of the proxy statement/prospectus, the Sponsor and each executive officer and director of ArcLight own 20% of the issued and outstanding ArcLight ordinary shares. See “Certain Relationships and Related Party Transactions — Sponsor Letter Agreement” in the accompanying proxy statement/prospectus for more information related to the Sponsor Letter Agreement.
Holders of the ArcLight Warrants will not have redemption rights with respect to the ArcLight Warrants.
Appraisal Rights (page 304)
ArcLight’s shareholders will not have appraisal rights under Cayman Islands law or otherwise in connection with the Business Combination Proposal or the other Shareholder Proposals.
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Proxy Solicitation (page 154)
Proxies may be solicited by mail, telephone or in person. ArcLight has engaged Morrow Sodali LLC (“Morrow”) to assist in the solicitation of proxies. If a shareholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the Special Meeting. A shareholder also may change its vote by submitting a later-dated proxy as described in the section entitled “The Special Meeting of ArcLight — Revoking Your Proxy.”
Interests of ArcLight Directors and Officers in the Business Combination (page 157)
When you consider the recommendation of the ArcLight Board in favor of approval of the Business Combination Proposal, you should keep in mind that the Sponsor and each executive officer and director of ArcLight, have interests in such proposal that are different from, or in addition to, those of Public Shareholders and ArcLight Public Warrant holders generally. These interests include, among other things, the interests listed below:
• the fact that the Initial Shareholders have agreed not to redeem any ArcLight ordinary shares held by them in connection with a shareholder vote to approve a proposed initial business combination;
• the fact that the Sponsor paid an aggregate of $25,000 for 7,187,500 ArcLight Class B ordinary shares and effected a share capitalization resulting in an aggregate of 7,906,250 ArcLight Class B ordinary shares issued and outstanding. 127,174 ArcLight Class B ordinary shares were forfeited by the Sponsor upon the expiration of the over-allotment option. As of December 31, 2021, there were 7,779,076 ArcLight Class B ordinary shares currently owned by the Initial Shareholders. The 7,779,076 shares of New OPAL Class A Common Stock that the Initial Shareholders will hold following the Business Combination (including 763,907 of such shares subject to forfeiture), if unrestricted and freely tradable, and in the case of the shares held by the Sponsor, assuming all vesting conditions of the Sponsor Earnout Shares are satisfied, would have had an aggregate market value of $77,168,434 based upon the closing price of $9.92 per ArcLight Class A ordinary share on the Nasdaq on May 5, 2022, the most recent closing price;
• the fact that Sponsor paid $9,223,261 for its ArcLight Private Placement Warrants, which, if unrestricted and freely tradable, would have had an aggregate market value of $16,325,172 based upon the closing price of $1.77 per ArcLight Public Warrant (although holders of the private placement warrants have certain rights that differ from the rights of holders of the ArcLight Public Warrants) on Nasdaq on May 5, 2022, the most recent closing price, and the fact that the ArcLight Private Placement Warrants would be worthless if a business combination is not consummated by March 25, 2023 (unless such date is extended in accordance with the Existing Organizational Documents);
• the fact that an affiliate of ArcLight have agreed to purchase 2,000,000 shares of New OPAL Class A Common Stock at $10.00 per share in the PIPE Investment on the same terms and conditions as the other PIPE Investors;
• the fact that the Initial Shareholders and certain of ArcLight’s current officers have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any ArcLight ordinary shares (other than Public Shares) held by them if ArcLight fails to complete an initial business combination by March 25, 2023 (unless such date is extended in accordance with the Existing Organizational Documents);
• the fact that, at the option of the Sponsor, any amounts outstanding under any loan made by the Sponsor or any of its Affiliates to ArcLight in an aggregate amount of up to $1,500,000 may be converted into warrants to purchase ArcLight Class A ordinary shares in connection with the consummation of the Business Combination. As of the date of this proxy statement/prospectus, there are no amounts outstanding under any such loans;
• the continued indemnification of ArcLight’s directors and officers and the continuation of ArcLight’s directors’ and officers’ liability insurance after the Business Combination (i.e., a “tail policy”);
• the fact that the Sponsor (including its representatives and affiliates) and ArcLight’s directors and officers, are, or may in the future become, affiliated with entities that are engaged in a similar business to ArcLight. Moreover, certain of ArcLight’s directors and officers have time and attention requirements for investment funds of which affiliates of the Sponsor are the investment managers. ArcLight’s directors and officers also may become aware of business opportunities which may be appropriate for presentation to ArcLight, and the other entities to which they owe certain fiduciary or contractual duties. Accordingly,
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they may have had conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in ArcLight’s favor and such potential business opportunities may be presented to other entities prior to their presentation to ArcLight, subject to applicable fiduciary duties under the Cayman Islands Companies Act. ArcLight’s amended and restated memorandum and articles of association provide that Arclight renounces its interest in any corporate opportunity offered to any director or officer of ArcLight;
• the fact that, following the Business Combination, the Sponsor can earn a positive rate of return on their investment, even if other shareholders of ArcLight experience a negative rate of return on their investment;
• the fact that the Sponsor and ArcLight’s officers and directors will lose their entire investment in ArcLight and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by March 25, 2023 (unless such date is extended in accordance with the Existing Organizational Documents);
• the fact that if the Trust Account is liquidated, including in the event ArcLight is unable to complete an initial business combination by March 25, 2023 (unless such date is extended in accordance with the Existing Organizational Documents), the Sponsor has agreed to indemnify ArcLight to ensure that the proceeds in the Trust Account are not reduced below $10.00 per Public Share, or such lesser per Public Share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which ArcLight has entered into an acquisition agreement or claims of any third party for services rendered or products sold to ArcLight, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account;
• the fact that ArcLight may be entitled to distribute or pay over funds held by ArcLight outside the Trust Account to the Sponsor or any of its Affiliates prior to the Closing; and
• the fact that the Initial Shareholders entered into the Sponsor Letter Agreement pursuant to which the original lock-up period to which our Sponsor and our directors and executive officers are subject was amended to remove such lock-up period, but only with respect to securities that are not held by the Sponsor.
The Initial Shareholders have, pursuant to the Sponsor Letter Agreement, agreed to, among other things, (i) vote all of their ArcLight ordinary shares in favor of the proposals being presented at the Special Meeting, (ii) waive their anti-dilution rights with respect to their ArcLight Class B ordinary shares in connection with the consummation of the Business Combination and (iii) be bound by certain transfer restrictions with respect to his, her or its shares in ArcLight prior to the Closing. Such shares will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of this proxy statement/prospectus, the Initial Shareholders own 20% of the issued and outstanding ArcLight ordinary shares. See “Certain Relationships and Related Party Transactions — Sponsor Letter Agreement” in the accompanying proxy statement/prospectus for more information related to the Sponsor Letter Agreement.
At any time at or prior to the Business Combination, during a period when they are not then aware of any material nonpublic information regarding us or our securities, our Initial Shareholders, OPAL Fuels and/or their directors, officers, advisors or respective affiliates may purchase Public Shares from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire Public Shares or vote their Public Shares in favor of the Condition Precedent Proposals. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record or beneficial holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our Initial Shareholders, OPAL Fuels and/or their directors, officers, advisors or respective affiliates who have agreed to vote in favor of this transaction purchase shares in privately negotiated transactions from Public Shareholders who have already elected to exercise their redemption rights, such selling shareholder would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that (i) the Business Combination Proposal, the Organizational Documents Proposals, the Nasdaq Proposal, the Equity Incentive Plan Proposal and the Adjournment Proposal are approved by the affirmative vote of at least a majority of the votes cast by the holders of the issued ArcLight ordinary shares present in person or represented by proxy at the Special Meeting and entitled to vote on such matter (ii) the Domestication Proposal is approved by the affirmative vote of at least a two-thirds majority of the votes cast by the holders of the issued ArcLight ordinary shares present in person or represented by proxy at the Special Meeting and entitled to vote on such matter,
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(iii) otherwise limit the number of Public Shares electing to redeem and (iv) New OPAL’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) being at least $5,000,001 after giving effect to the transactions contemplated by the Business Combination Agreement and the PIPE Investment.
If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation would not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the Special Meeting and would likely increase the chances that such proposals would be approved. We will file or submit a Current Report on Form 8-K to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the Shareholder Proposals to be put to the Special Meeting or the redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.
The Sponsor and its affiliates are active investors across a number of different investment platforms, which ArcLight and the Sponsor believe improved the volume and quality of opportunities that were available to ArcLight. However, it also creates potential conflicts and the need to allocate investment opportunities across multiple investment vehicles. In order to provide the Sponsor with the flexibility to evaluate opportunities across these platforms, ArcLight’s Existing Organizational Documents provide that ArcLight renounces its interest in any business combination opportunity offered to any founder, director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of ArcLight and is an opportunity that ArcLight is able to complete on a reasonable basis. This waiver allows the Sponsor and its affiliates to allocate opportunities based on a combination of the objectives, including the fundraising needs of the target and the investment objectives of the investment vehicle. ArcLight is not aware of any such conflict or opportunity being presented to any founder, director or officer of ArcLight nor does it believe that the waiver of the corporate opportunities doctrine otherwise had a material impact on its search for an acquisition target.
The existence of financial and personal interests of one or more of ArcLight’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of ArcLight and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, ArcLight’s officers have interests in the Business Combination that may conflict with your interests as a shareholder.
Stock Exchange Listing
We expect to list the shares of New OPAL Class A Common Stock and New OPAL Public Warrants to purchase shares of New OPAL Class A Common Stock on the Nasdaq under the proposed symbols “OPL” and “OPL.WS,” respectively.
Sources and Uses of Funds
The following tables summarize the sources and uses for funding the Business Combination, assuming (i) none of ArcLight’s outstanding Public Shares are redeemed in connection with the Business Combination (“Assuming No Redemptions”) and (ii) a total of 28,598,800 shares of ArcLight’s outstanding Public Shares are redeemed in connection with the Business Combination (“Assuming Maximum Redemptions”).
Assuming No Redemptions
|
Source of Funds(1) |
Uses(1) |
|||||||
|
Existing Cash held in Trust Account(2) |
$ |
311,988 |
Transaction Fees and Expenses(3) |
$ |
15,109 |
|||
|
PIPE Financing(5) |
|
125,000 |
Deferred Underwriter Commissions |
|
10,891 |
|||
|
NextEra Subscription |
|
100,000 |
Remaining Cash on Balance Sheet |
|
510,988 |
|||
|
Total Sources |
$ |
536,988 |
Total Uses(4) |
$ |
536,988 |
|||
____________
(1) Totals might be affected by rounding.
(2) As of December 31, 2021.
(3) Excluding OPAL Fuels’ transaction fees and expenses since such fees and expenses are expected to be paid by OPAL Fuels using its pre-closing available funds.
(4) Includes $15.5 million in aggregate fees due to ArcLight’s financial advisors for the transaction, including deferred underwriting commissions from ArcLight’s initial public offering. In the event that such advisors resign or withdraw from the transaction and waive their fees in whole or in part, the amount of cash remaining on the balance sheet at the consummation of the Business Combination would be increased by a commensurate amount.
41
(5) Assumes an aggregate 12,500,000 shares of Class A Common Stock are issued to the PIPE Investors. In the event that the Business Combination closes subsequent to May 30, 2022 but prior to July 29, 2022, assuming that additional PIPE Investors do not enter into amendments to their Subscription Agreements extending the expiration date of such agreements, only 11,080,600 shares of Class A Common Stock will be issued to PIPE Investors yielding $110,806,000.
Assuming Maximum Redemptions
|
Source of Funds(1) |
Uses(1) |
|||||||
|
Existing Cash held in Trust Account(2) |
$ |
311,988 |
Remaining Cash on Balance Sheet |
|
225,000 |
|||
|
PIPE Financing(6) |
|
125,000 |
Transaction Fees and Expenses(4) |
|
15,109 |
|||
|
NextEra Subscription |
|
100,000 |
Deferred Underwriter Commissions |
|
10,891 |
|||
|
|
|
ArcLight public redemption(3) |
|
285,988 |
||||
|
Total Sources |
$ |
536,988 |
Total Uses(5) |
$ |
536,988 |
|||
____________
(1) Totals might be affected by rounding.
(2) As of December 31, 2021.
(3) Based on 28,598,800 shares subject to possible redemption, which assumes the maximum number of ArcLight Class A ordinary shares that can be redeemed are redeemed, while still satisfying the Aggregate Transaction Proceeds condition.
(4) Excluding OPAL Fuels’ transaction fees and expenses since such fees and expenses are expected to be paid by OPAL Fuels using its pre-closing available funds.
(5) Includes $15.5 million in aggregate fees due to ArcLight’s financial advisors for the transaction, including deferred underwriting commissions from ArcLight’s initial public offering. In the event that such advisors resign or withdraw from the transaction and waive their fees in whole or in part, the amount of cash remaining on the balance sheet at the consummation of the Business Combination would be increased by a commensurate amount.
(6) Assumes an aggregate 12,500,000 shares of Class A Common Stock are issued to the PIPE Investors. In the event that the Business Combination closes subsequent to May 30, 2022 but prior to July 29, 2022, assuming that additional PIPE Investors do not enter into amendments to their Subscription Agreements extending the expiration date of such agreements, only 11,080,600 shares of Class A Common Stock will be issued to PIPE Investors yielding $110,806,000.
Accounting Treatment of the Business Combination (page 207)
The Business Combination is a common control transaction that will be accounted for similar to a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. OPAL HoldCo held a controlling financial interest in OPAL Fuels prior to the closing date. At transaction close, OPAL HoldCo will obtain a controlling financial interest in New OPAL and indirectly retain control over OPAL Fuels through New OPAL. OPAL HoldCo does not relinquish a control over OPAL Fuels during the transaction, instead it affected a transfer of a controlled subsidiary (i.e., OPAL Fuels) to a newly-controlled subsidiary (i.e., New OPAL) in exchange for issuing Class A common units of OPAL Fuels for the net assets of New OPAL. As there is no change in control, OPAL Fuels has been determined to be the accounting acquirer. Under this method of accounting, ArcLight will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the transaction will be treated as the equivalent of OPAL Fuels issuing stock for the net assets of ArcLight, accompanied by a recapitalization. The net assets of ArcLight will be stated at historical cost, with no goodwill or other intangible assets recorded.
Comparison of Corporate Governance and Shareholder Rights (page 163)
Following the consummation of the Business Combination, the rights of ArcLight shareholders who become New OPAL stockholders in the Business Combination will no longer be governed by the Existing Organizational Documents and instead will be governed by the Proposed Charter and the Proposed Bylaws of New OPAL. See “Proposal No. 2 — The Domestication Proposal — Comparison of Corporate Governance and Shareholders” beginning on page 163.
Summary of Risk Factors (page 52)
The transactions described in this proxy statement/prospectus involve various risks, and you should carefully read and consider the factors discussed under “Risk Factors.” The following is a summary of some of these risks.
Risks Related to OPAL Fuels’ Business
• We are dependent on contractual arrangements with, and the cooperation of, owners and operators of biogas project sites where our Biogas Conversion Projects are located for the underlying biogas rights granted to us in connection with our Biogas Conversion Projects and for access to and operations on the biogas project sites where we utilize those underlying biogas rights.
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• For the US transportation fuel market, we are dependent on the production of vehicles and engines capable of running on natural gas and we have no control over these vehicle and engine manufacturers. We are also dependent on the willingness of owners of truck fleets to adopt natural gas powered vehicles and to contract with OPAL Fuels for the provision of CNG to said fleets.
• Failure of third parties to manufacture quality products or provide reliable services in a timely manner could cause delays in developing, constructing and operating our Biogas Conversion Projects and Fueling Stations, which could damage our reputation, adversely affect our partner relationships or adversely affect our growth.
• Our operations are subject to numerous stringent EHS laws and regulations that may expose us to significant costs and liabilities. From time to time, we have been issued notices of violations from government entities that our operations have failed to comply with such laws and regulations, particularly in regards to the operation of our landfill gas electric generating facilities. Failure to comply with such laws and regulations may result in the assessment of sanctions, including administrative, civil or criminal penalties, the imposition of investigatory or remedial obligations, and the issuance of orders limiting or prohibiting some or all of our operations.
• Existing, and future changes to, federal, state and local regulations and policies, including permitting requirements applicable to us, and enactment of new regulations and policies, may present technical, regulatory and economic barriers to the generation, purchase and use of Renewable Power and RNG, and may adversely affect the market for the associated Environmental Attributes. A failure on our part to comply with any laws, regulations or rules, applicable to us may adversely affect the Combined Company’s business, investments and results of operations.
• The financial performance of our business depends upon tax and other government incentives for the generation of RNG and Renewable Power, any of which could change at any time and such changes may negatively impact our growth strategy.
• We are subject to risks associated with litigation or administrative proceedings that could materially impact our operations, including proceedings in the future related to our projects we subsequently acquire.
• The volatility in oil, gasoline, diesel, natural gas, RNG, and Environmental Attribute prices could adversely affect our business.
• We currently use, and may continue in the future to use, forward-sale and hedging arrangements, to mitigate certain risks, but the use of such arrangements could have a material adverse effect on our results of operations.
• Our contracts with government entities may be subject to unique risks, including possible termination of or reduction in the governmental programs under which we operate, instances in which our contract provisions allow the government entity to terminate, amend or change terms at their convenience, and competitive bidding processes for the award of contracts.
• In accordance with applicable FASB standards, management has concluded there are conditions or events, considered in the aggregate, that raise substantial doubt about the ability of OPAL Fuels to continue as a going concern without the implementation of various mitigation steps identified by management of OPAL Fuels, including consummation of the Business Combination.
• Liabilities and costs associated with hazardous materials and contamination and other environmental conditions may require us to conduct investigations or remediation at the properties underlying our projects, may adversely impact the value of our projects or the underlying properties, and may expose us to liabilities to third parties.
• We have a history of accounting losses and may incur additional losses in the future.
• We operate a capital-intensive business and are pursuing a business plan requiring significant access to capital. We may fail to get access to said capital in a timely manner or obtain capital at unfavorable terms.
• Some relationships with our counterparties and suppliers may experience disruptions in connection with the Business Combination, which may limit the Combined Company’s business.
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• OPAL’s operations may be restricted during the pendency of the Business Combination pursuant to the terms of the Business Combination Agreement.
• The Combined Company’s failure to timely and effectively implement controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act that will be applicable to it following consummation of the Business Combination could have a material adverse effect on its business.
Risks Related to the Business Combination and ArcLight
• Pre-existing relationships between participants in the Business Combination and the related transactions or their Affiliates could give rise to actual or perceived conflicts of interest in connection with the Business Combination.
• If the Business Combination is consummated, ArcLight’s shareholders will experience dilution.
• ArcLight has not obtained an opinion from an independent investment banking firm or another independent firm, and consequently, you may have no assurance from an independent source that the terms of the Business Combination are fair to ArcLight from a financial point of view.
• The unaudited pro forma financial information included in the section entitled “Unaudited Pro Forma Combined Financial Information” may not be representative of New OPAL’s results if the Business Combination is completed.
• Past performance by our management team (including with respect to ACTC I), ArcLight or their respective Affiliates may not be indicative of future performance of an investment in us.
• We have identified a material weakness in our internal control over financial reporting as of November 24, 2021. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
• There are material risks to unaffiliated investors presented by taking OPAL Fuels public through a merger rather than through an underwritten offering.
• New OPAL’s business and operations could be negatively affected if it becomes subject to any securities litigation or shareholder activism, which could cause New OPAL to incur significant expense, hinder execution of business and growth strategy and impact its stock price.
• Our Initial Shareholders, our directors, executive officers, advisors and their Affiliates may elect to purchase Public Shares prior to the consummation of the Business Combination, which may influence the vote on the Business Combination and reduce the public “float” of our ArcLight Class A ordinary shares.
• We are subject to and New OPAL will be subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that have increased both ArcLight’s costs and the risk of noncompliance and will increase both New OPAL’s costs and the risk of non-compliance.
• We may redeem unexpired ArcLight Public Warrants prior to their exercise at a time that is disadvantageous to holders of Arclight Public Warrants, thereby making such warrants worthless.
• OPAL Fuels’ current majority stockholder is expected to have control over all stockholder decisions of New OPAL because it will control a substantial majority of New OPAL’s voting power through “high vote” voting stock. Such majority stockholder, and the persons controlling such majority stockholder may have potential conflicts of interest in connection with existing or proposed business relationships and decisions impacting the Combined Company and, even in situations where it does not have a conflict of interest, its interests in such matters may be different than the other stockholders.
• The existence of a family relationship between Mr. Mark Comora and Mr. Adam Comora may result in a conflict of interest on the part of such persons between what he, in his capacity as Chairman or Co-Chief Executive Officer, respectively, may believe is in the best interests of New OPAL and its shareholders in connection with a decision to be made by New OPAL through its board, standing committees thereof, and management and what he may believe is best for himself or his family members in connection with the same decision.
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• New OPAL’s only material assets following consummation of the Business Combination will be its direct interests in OPAL Fuels, and New OPAL is accordingly dependent upon distributions from OPAL Fuels to pay dividends and taxes and other expenses.
• In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits that New OPAL realizes in respect of the tax attributes subject to the Tax Receivable Agreement.
Emerging Growth Company
Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of ArcLight’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of ArcLight’s IPO, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700.0 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.
45
SELECTED HISTORICAL FINANCIAL INFORMATION OF ARCLIGHT
The selected historical statements of operations data of ArcLight for the period from January 13, 2021 (date of inception) to December 31, 2021 and the balance sheet data as of December 31, 2021 are derived from ArcLight’s audited financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC and included elsewhere in this proxy statement/prospectus. In ArcLight’s management’s opinion, the audited financial statements include all adjustments necessary to state fairly ArcLight’s financial position as of December 31, 2021 and the results of operations for the period from January 13, 2021 (date of inception) to December 31, 2021.
ArcLight’s historical results are not necessarily indicative of the results that may be expected for any other period in the future. You should read the selected historical financial data set forth below together with ArcLight’s financial statements and the accompanying notes included elsewhere in this proxy statement/prospectus, the information in the section entitled “ArcLight’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other financial information contained elsewhere in this proxy statement/prospectus.
ArcLight is providing the following selected historical consolidated financial information to assist you in your analysis of the financial aspects of the Business Combination.
|
Statement of Operations Data |
From |
|||
|
General and administrative expenses |
$ |
4,944,523 |
|
|
|
Loss from operations |
|
(4,944,523 |
) |
|
|
Other income (expense) |
|
|
||
|
Change in fair value of derivative warrant liabilities |
|
(10,799,940 |
) |
|
|
Financing costs – warrant liabilities |
|
(462,620 |
) |
|
|
Net gain on investments held in Trust Account |
|
12,421 |
|
|
|
Total other income (expense) |
|
(11,250,139 |
) |
|
|
Net income (loss) |
$ |
(16,194,662 |
) |
|
|
Weighted average shares outstanding of New OPAL Class A Common Stock (subject to possible redemption), basic and diluted |
|
25,360,688 |
|
|
|
Basic and diluted Net income (loss) per ordinary share |
$ |
(0.49 |
) |
|
|
Weighted average shares outstanding of New OPAL Class B Common Stock (non-redeemable), basic and diluted |
|
7,611,848 |
||