Blue World Acquisition Corporation (NASDAQ: BWAQ) has entered into a definitive agreement to combine with solar solution company Vietnam Sunergy Cell (“TOYO Solar”).

Tokyo, Japan-based TOYO is a solar module solutions provider focusing on solar photovoltaic products in Southeast Asia.

The combined company is expected to trade on the Nasdaq once the deal is completed in the first half of 2024.

Transaction Overview

Blue World has about $41 million in its current trust after seeing 58.3% of shares redeemed in extension votes. It has not yet supplemented this with additional financing. The SPAC must maintain at least $29.5 million in cash immediately prior to or upon closing.

TOYO will acquire 100% of the issued and paid-up share capital of TOPTOYO INVESTMENT PTE from Fuji Solar in exchange for one ordinary share of TOYO per share.

Immediately prior to closing, Fuji Solar will hold an aggregate of 41,000,000 TOYO Ordinary Shares, representing all issued and outstanding share capital of PubCo.

In terms of the earnout, at or prior to the closing, an aggregate of 13,000,000 PubCo Ordinary Shares held by Fuji Solar will be deposited in a segregated escrow account and will be released from the earnout escrow account and delivered to Fuji.

Following the merger, if the net profit of PubCo for the fiscal year ending December 31, 2024 as shown on the audited financial statements is no less than $41 million, then the shares will immediately become vested in full and be released from the account to Fuji.

If the 2024 audited net profit is less than $41 million, then the portion of the shares in number equal to the quotient of the net profit divided by $41 million multiplied by 13,000,000 PubCo Ordinary Shares, will become immediately vested and be released. The remaining portion of the earnout shares will be surrendered or otherwise delivered by Fuji to PubCo for no consideration or nominal consideration and canceled.

Regarding the lock-up, the sponsor and company agreed not to transfer any of their shares until the earlier of for 20% of the PubCo Ordinary Shares held, 6 months after closing, for 30% of the ordinary shares held, 12 months after the closing, and for 50% of the shares held, 18 months after closing. Or, the date on which the closing price of each ordinary share equals or exceeds $12.00 per share for any 20 trading days within any 30-trading day period commencing at least 150 days after closing.

The parties have not yet released an investor presentation, but Blue World’s profile page will be updated once more terms and details are made available.

Quick Takes: TOYO becomes the fourth solar company this year to unveil a SPAC deal, contributing to a modest rise in the representation of solar enterprises among the 18 deals announced in 2023 focused on the traditional green categories – sustainability, EVs and renewable energy.

It also joins a cohort of five solar power de-SPACs that have closed deals since 2016. Most recently, residential solar developer Complete Solaria (NASDAQ:CSLR) closed its $553 million deal with Freedom I in mid-July.

But, CSLR has gotten a lackluster start on the market as it last closed at $2.76, lagging behind other de-SPACs such as Indian renewable energy producer ReNew Power (NASDAQ:RNW), and renewable energy firm Altus Power (NYSE:AMPS), which last closed at $6.15 and $6.21, respectively.

On the lower end, Peck Electric Co, which later acquired iSun Energy LLC (NASDAQ:ISUN), last closed at $0.39 while VivoPower (NASDAQ:VVPR) closed at $0.59.

However, TOYO Solar introduces a distinctive angle to the renewable energy market as it stands alone in the sector with its emphasis on Southeast Asia.

TOYO Solar, an indirect subsidiary of Fuji Solar Co., Ltd. (TYO:6504), whose major shareholder is Abalance Corporation (TYO:3856), specializes in solar photovoltaic solutions throughout the Southeast Asian region.

Abalance Group was established in 2006 in Japan and later expanded its operations to North America, Southeast Asia, and EMEA. The manufacturing hub of TOYO is situated in Vietnam, but its affiliated company, Vietnam Sunergy Joint Stock Company (“VSUN”), offers branches and offices in Newark, Frankfurt, Shanghai, and Vietnam. Through its affiliate, which provides utility, commercial, and residential solar solutions, TOYO’s widespread global presence can effectively cater to the needs of customers worldwide.

It is also worth noting that TOYO Solar’s associated entity VSUN is a prominent solar module manufacturer listed as a Bloomberg NEF Tier 1 contender, and its impressive 2022 sales figures reached nearly $1.2 billion.

But, without an investor presentation, financials for TOYO Solar itself remain undisclosed.

From what we do know, the company has strategic plans to allocate $350 million toward establishing a solar cell factory in Phu Tho Province, Vietnam. This advanced facility is projected to achieve a capacity of 3GW during Phase I, followed by an additional 3GW in Phase II, with commencement of production anticipated in the third quarter of 2023. If all goes as planned, the production of this facility will launch before the deal closes.

For Blue World, the SPAC initially intended to focus on opportunities in marine leisure, cruise, marine infrastructure and engineering, general hospitality, travel and tourism, and related industry segments globally. But, its S-1 did note that it may focus on targets that have viable synergies with the Asia Pacific and the U.S. markets, which TOYO does have.

ADVISORS

• TOYO Solar Advisors:
  • Cooley LLP acted as U.S. legal advisor
  • Beyond Capital acted as financial advisor
• Blue World Advisors:
  • Robinson & Cole LLP acted as U.S. legal advisor