RNG producer OPAL Fuels to combine with SPAC ArcLight
OPAL Fuels LLC, a leading vertically integrated producer and distributor of renewable natural gas (RNG), and ArcLight Clean Transition Corp. II, a publicly-traded special purpose acquisition company (SPAC), announced a definitive agreement for a business combination that will result in OPAL Fuels becoming a publicly listed company.
The business combination values OPAL Fuels at an implied USD1.75 billion pro forma enterprise value at a price of USD10.00 per ArcLight share. The transaction and related financings are expected to provide gross proceeds of approximately USD536 million to OPAL Fuels.
Upon closing of the transaction, the combined company will be named OPAL Fuels Inc. and remain listed on the Nasdaq Stock Exchange under the new ticker symbol “OPL.” The combined company will continue to be led by OPAL Fuels co-CEOs Adam Comora and Jonathan Maurer.
Renewable natural gas is a proven low-cost, low-carbon fuel that when used in transportation in place of diesel fuel can cost 40 to 70% less per gallon, providing significant annual operating cost savings while dramatically reducing the carbon footprint of heavy-duty fleets.
OPAL Fuels is a portfolio company of Fortistar, a privately-owned investment firm based in White Plains, New York, U.S.A. It is a vertically integrated, waste-to-fuel RNG production and distribution company with a “capture and conversion” upstream business and “dispensing and monetization” downstream business serving the domestic heavy-duty transportation sector.
Underpinned by gas rights agreements that are typically at least 20 years in length, Capture and Conversion projects produce RNG by capturing methane emissions from landfill sites and dairy farms. The captured methane emissions are purified and treated, turning once harmful emissions into a source of clean, renewable energy, reducing the harmful long-term effects of methane and carbon emissions. This flips a substantial cost – managing dairy waste and landfill gas – into significant revenue streams for dairy farms and landfills. OPAL Fuels’ Dispensing and Monetization operations help deliver this clean, reliable and renewable fuel to heavy-duty trucking fleets through OPAL Fuels’ national network of fueling stations, which spans 42 states and is typically backed by fueling agreements averaging 10 years in duration.
OPAL Fuels is also positioned for a future that includes the commercialization of emerging technologies, including renewable hydrogen, through existing partnerships with key industry participants. The company is well placed to be an enabler of renewable hydrogen that uses RNG in its production and to develop, construct, and operate heavy-duty hydrogen fueling station networks.
OPAL Fuels traces its roots back to 1998. It is expected to generate nearly USD170 million in revenues in 2021. The company’s vertically integrated model benefits its margin profile and positions the company to capture market share in a fragmented industry that is characterized by smaller, non-vertically integrated upstream and downstream participants.
Today, OPAL Fuels operates 21 biomethane projects, of which three are in RNG service and the balance are in renewable power service. Increasing secular tailwinds, which include public policy initiatives and corporate sustainability objectives, are supporting the growth of renewable natural gas as a way to cost effectively halt climate change and decarbonize transportation, providing strong visibility into significant volume. The company’s project pipeline totals 23, seven of which are in construction and the balance of which are in advanced development execution.