CENAQ Energy Corp. (CENQ) Warns PIPE Investors Fall Short
by Marlena Haddad on 2022-12-30 at 10:22am

CENAQ Energy Corp. (NASDAQ:CENQ) in an 8-K filing gave an update this morning that its investors have not yet been able to raise the full $80 million PIPE that was initially intended at its deal announcement.

In connection to CENAQ’s business combination with gasoline supplier Bluescape Clean Fuels on August 12, the SPAC entered into subscription agreements with each of its new PIPE investors, which agreed to purchase an aggregate of 8,000,000 PIPE shares at $10.00 per share for an aggregate purchase price of $80 million. The PIPE is led by Arb Clean Fuels Management LLC and Bluescape Holdings.

Of the $80 million in commitments, Bluescape Holdings previously agreed to purchase 800,000 shares for an aggregate commitment of $8 million and Arb agreed to purchase 7,000,000 shares for a commitment of $70 million. However, this is provided, that, to the extent the funds in the trust, after redemptions, exceed its threshold of $17,420,000, each $10.00 increment of such excess funds will reduce Arb’s commitment by $10.00 up to a maximum reduction of $20 million.

Arb previously notified CENAQ in November that it had raised financing to purchase only 5,000,000 PIPE Shares for an aggregate of $50 million, out of its full commitment of 7,000,000 PIPE Shares for an aggregate of $70 million.

As of today, Arb has notified CENAQ that it has received non-binding commitments to purchase only 3,000,000 PIPE shares for an aggregate of $30 million. But, Arb intends to continue focusing on raising further funds necessary to purchase its full commitment.

Cenaq warned that if Arb does not fund its full commitment in accordance with the terms of its subscription agreement, the SPAC may not be able to satisfy its closing condition of having at least $80 million in gross proceeds from its PIPE in order to complete its business combination.

Dallas, Texas-based Bluescape Clean Fuels turns waste feedstocks into renewable gasoline, allowing consumers to reduce their carbon footprint. Upon closing of the business combination, which is expected to occur in the first quarter of 2023, the combined company will be named Verde Clean Fuels, Inc. (“VCF”).


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