Insight Acquisition Corp. (NYSE: INAQ) announced this afternoon that it has signed a non-binding letter of intent (LOI) to combine with oil and gas developer Avila Energy Corporation (CSE:VIK).
The parties have agreed to negotiate the terms of the transaction on an exclusive basis through February 24, at which point Insight may extend the term for an additional 15 calendar days. The term may be further extended on a mutually agreeable basis.
As of now, Insight brings $241.2 million into the deal through its trust and values the transaction at an enterprise value of $185.28 million. There is no minimum cash condition for the transaction, but the parties may consider one or more financing alternatives, including a convertible note financing, to provide capital for the company following the closing, which is expected to occur later this year.
Avila Energy currently has 111,437,322 issued and outstanding Class A common shares and 185,725,972 common shares outstanding on a fully-diluted basis, assuming the planned conversion of all currently-outstanding warrants, convertible securities and options.
Additionally, Avila expects its current shareholders to hold approximately 68% of the issued shares of the surviving company upon the closing of the transaction. As part of the potential merger, employment agreements are expected to be entered into between current members of Avila management and the company, which will also provide for a grant of shares to be made to certain persons based on stock price performance on an earnout structure to be agreed upon between the parties.
Insight Acquisition Corp. announced the pricing of its $240 million IPO in September 2021. The SPAC initially set out to focus its search on businesses in the FinTech or financial services industry with an enterprise value of approximately $750 million to $1.5 billion.
Upon signing a definitive agreement, Burkhan LLC is expected to provide Insight with working capital funding. But, INAQ’s deal is still just a non-binding LOI, so SPACInsider will not consider this deal as fully “announced”. As such, it will remain in the “Searching” category until a definitive agreement is signed.
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