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ArcLight Clean Transition Corporation

ArcLight Clean Transition Corporation

Oct 19, 2020 by viktoria.v

PROPOSED BUSINESS COMBINATION: Proterra Inc.

ENTERPRISE VALUE: $1.6 billion
ANTICIPATED SYMBOL: PTRA

Arclight Clean Transition Corp. proposes to combine with Proterra Inc (the “Company”), a leading innovator in commercial vehicle electrification technology. Upon closing, Proterra’s common stock is expected to trade on the Nasdaq under the ticker symbol PTRA. The transaction represents an enterprise value of $1.6 billion for Proterra.

Proterra is a high-growth commercial electric vehicle technology leader with over a decade of production experience. The Company has designed an end-to-end, flexible technology platform that delivers world-class performance and a low total cost of ownership to original equipment manufacturers (OEMs) and end customers. Proterra has three complementary businesses:

  • Proterra Powered: Delivering industry-leading battery systems and electrification solutions to commercial vehicle manufacturers;
  • Proterra Transit: Leading North America as the market’s #1 electric transit bus OEM; and
  • Proterra Energy: Offering end-to-end turnkey charging and energy management solutions.

The Company’s industry-leading battery systems have been proven in more than 16 million service miles driven by its fleet of transit vehicles and validated through partnerships with world-class commercial vehicle OEMs, such as Freightliner Custom Chassis Corporation (FCCC), Thomas Built Buses, Van Hool, Bustech, and Optimal-EV. To date, Proterra has produced and delivered more than 300 megawatt-hours of battery systems, more than 550 heavy-duty electric transit buses and installed 54 megawatts of charging systems.

Proterra operates manufacturing facilities in California and South Carolina, as well as a state-of-the-art R&D lab in Silicon Valley. The Company recently announced the opening of a new battery production line co-located in its electric transit bus manufacturing facility in Los Angeles County. This battery production line was established within a year and demonstrates Proterra’s ability to bring its scalable and capital-efficient battery manufacturing process directly to commercial vehicle OEMs alongside their existing manufacturing.


TRANSACTION

The transaction is expected to deliver approximately $648 million in cash at closing, including approximately $278 million of cash held in ArcLight Clean Transition Corp.’s trust account from its initial public offering in September 2020 (assuming no redemptions).

The transaction is further supported by a $415 million PIPE at $10.00 per share from key investors, including strategic partners Daimler Trucks and Constellation, existing investors Franklin Templeton, Broadscale, 40 North and G2VP, as well as new investors such as Chamath Palihapitiya, Fidelity Management & Research Company LLC, funds and accounts managed by BlackRock, Neuberger Berman Funds and affiliates of ArcLight.

Proterra’s existing shareholders have agreed to convert 100 percent of their ownership stakes into the new company, and are expected to own more than 60 percent of the pro forma company at close.

proterra transaction overview

 


PIPE

$415 million PIPE at $10.00 per share from key investors, including:

  • Strategic partners Daimler Trucks and Constellation
  • Existing investors – Franklin Templeton
  • Existing investors – Broadscale,
  • Existing investors – 40 North
  • Existing investors – G2VP
  • New investors – Chamath Palihapitiya
  • New investors – Fidelity Management & Research Company LLC, funds
  • New investors – accounts managed by BlackRock,
  • New investors – accounts managed by Neuberger Berman Funds
  • New investors – affiliates of ArcLight.

EARN-OUT

  • Earn-out of 2% of total shares outstanding at close issued to existing Proterra shareholders at
    illustrative pro forma share prices of $15.00
  • Additional 2.5% at $20.00, $25.00 and $30.00
    (or upon a change of control transaction at that valuation)
  • 10% of ArcLight founder shares withheld at close subject to earn-out at $15.00 per share

AMENDED SPONSOR LOCK UP 2/3/21

  • The term “Lock-up Period” means the period beginning on the Closing Date and ending on the date that is 180 days after the Closing Date; provided, that such 180-day restricted period will terminate early with respect to:
    • (A) 33% of the Lock-up Shares on the Business Day after the Release Condition is satisfied during the period starting on the day after the Closing Date and ending on the 119th day after the Closing Date; provided, that such early termination will occur no earlier than the later of sixty (60) days after the Closing and thirty (30) days after the registration statement registering shares of Acquiror Common Stock issued in connection with the PIPE investment
    • (B) 33% of the Lock-up Shares on the Business Day after the Release Condition is satisfied during the period starting 120 days after the Closing Date (which, for the avoidance of doubt, shall represent an additional 33% of the Lock-up Shares if the Release Condition shall have been satisfied in clause (A).
  • The term “Release Condition” means if over any twenty (20) Trading Days within any thirty (30) Trading Day period, the VWAP of the Acquiror Common Stock is greater than or equal to $20.00 per share of Acquiror Common Stock or there occurs any transaction resulting in a Change in Control with a valuation of the Acquiror Common Stock that is greater than or equal to $20.00 per share of Acquiror Common Stock;

NOTABLE CONDITIONS TO CLOSING

  • The Business Combination is also subject to the fulfillment of other closing conditions, including, but not limited to the aggregate cash proceeds from ArcLight’s trust account, together with the proceeds from the PIPE Financing, equaling no less than $350,000,000 (after deducting any amounts paid to ArcLight shareholders that exercise their redemption rights in connection with the Business Combination and net of unpaid transaction expenses incurred or subject to reimbursement by ArcLight)

NOTABLE CONDITIONS TO TERMINATION

  • The Merger Agreement may be terminated subject to certain limited exceptions, by either ArcLight or Proterra if the Business Combination is not consummated by July 11, 2021.

ADVISORS

  • BofA Securities is acting as lead financial advisor to Proterra.
  • Latham & Watkins LLP and Fenwick & West LLP are acting as legal counsel to Proterra.
  • Barclays is acting as M&A advisor to ArcLight Clean Transition Corp.
  • Citigroup is acting as M&A and Capital Markets advisor to ArcLight Clean Transition Corp.
  • Kirkland & Ellis LLP is serving as legal counsel to ArcLight Clean Transition Corp.
  • Morgan Stanley & Co. LLC and Barclays are acting as lead placement agents for ArcLight Clean Transition Corp.
  • BofA Securities is acting as joint placement agent for ArcLight Clean Transition Corp.

MANAGEMENT & BOARD


Executive Officers

Jake F. Erhard, 46
President, Chief Executive Officer and Director

Mr. Erhard joined ArcLight around the time of its founding in 2001 and is currently a Partner. Mr. Erhard has 20 years of energy finance and private equity experience. Prior to joining ArcLight, Mr. Erhard was an Analyst at the investment banking firm Schroder Wertheim, where he focused on mergers and acquisitions. Mr. Erhard earned a Bachelor of Arts in Economics from Princeton University and a Juris Doctor from Harvard Law School.


Marco F. Gatti, 37
Chief Financial Officer

Mr. Gatti joined ArcLight in 2018 and has 11 years of energy and private equity experience. Prior to joining ArcLight, Mr. Gatti spent five years as a Vice President in the Energy group at Warburg Pincus, where he focused on the sourcing, execution and portfolio management of equity investments in the energy and heavy industry sectors. Prior to joining Warburg Pincus in 2013, Mr. Gatti worked at Bain Capital, McKinsey & Company and Praxair between 2007 and 2012. Mr. Gatti earned a Master of Business Administration from the Wharton School of the University of Pennsylvania, a Master of Science in Mechanical Engineering from the University of Minnesota and a Bachelor of Science in Mechanical Engineering from Politecnico di Milano.


Rick S. Knauth, 57
Chief Operating Officer

Mr. Knauth joined CAMS in 2013 and has 25 years of energy project development and asset management experience. Prior to CAMS, Mr. Knauth was a Director at Vestas, a Danish wind turbine manufacturer, where he held both contract negotiation and asset management roles. Mr. Knauth has a bachelor’s degree in engineering from Tulane University and an MA in Economics and International Relations from the Johns Hopkins School of Advanced International Studies, with a concentration in energy and the environment.


Christine M. Miller, 49
General Counsel

Ms. Miller joined ArcLight in 2004 and has 23 years of legal experience in the areas of investment transactions and fund operations, with 21 years specific to energy finance and private equity. Prior to joining ArcLight, she was Counsel in John Hancock’s Investment Law Division, where she represented investment managers and advised institutional investors in purchasing private debt and equity securities. Ms. Miller earned a Bachelor of Arts in Political Science from the University of Massachusetts at Amherst and a Juris Doctor from Boston University School of Law.


 

Board of Directors

Daniel R. Revers, 58
Chairman of the Board

Mr. Revers is the founder of ArcLight and has 30 years of energy finance and private equity experience. Mr. Revers is responsible for overall investment, asset management, strategic planning, and operations of ArcLight and its funds. Prior to forming ArcLight in 2001, Mr. Revers was a Managing Director in the Corporate Finance Group at John Hancock Financial Services, a private insurance and financial services firm, where he was responsible for the origination, execution, and management of a $6 billion portfolio consisting of debt, equity, and mezzanine investments in the energy industry. Prior to joining John Hancock in 1995, Mr. Revers held various financial positions at Wheelabrator Technologies, where he specialized in the development, acquisition, and financing of domestic and international power and energy projects. Mr. Revers earned a Bachelor of Arts in Economics from Lafayette College and a Master of Business Administration from the Amos Tuck School of Business Administration at Dartmouth College.


Arno Harris, 51
Director

Mr. Harris has spent the last 25 years starting and growing successful businesses in high technology, clean energy and electric mobility. He now advises startups and growth companies, helping them to raise capital and achieve scale. In addition to his advisory work, Mr. Harris serves as an independent director for Pacific Gas & Electric Company (NYSE:PCG), California’s largest investor-owned utility, and Azure Power Global Limited (NYSE:AZRE), India’s leading solar developer with almost 2GW of operating assets and over 5GW in development. Between 2006 and 2015, Mr. Harris was the founder, CEO and chair of Recurrent Energy, one of North America’s largest solar project developers. Prior to Recurrent Energy, Mr. Harris was the founder and CEO of Prevalent Power, one of California’s fastest growing commercial solar project developers. Mr. Harris earned a Bachelor of Arts from the University of California Berkeley.


Ja-Chin Audrey Lee, 42
Director 

Dr. Lee has 15 years of experience in clean energy. Previously, Dr. Lee served as Vice President of Energy Services at Sunrun Inc (NASDAQ: RUN) from 2017 to 2020. Prior to Sunrun, she served as Vice President of Analytics and Design at Advanced Microgrid Solutions from 2014 to 2017. Before her role at Advanced Microgrid Solutions, Dr. Lee was appointed by the Governor as Advisor to the President of the California Public Utilities Commission from 2011 to 2014, where she led the approval of first-in-the-nation rules on customer energy data. Dr. Lee serves on the board of Gridworks, a non-profit that convenes, educates and empowers stakeholders to decarbonize electricity grids. She also serves on the board of Pinnacle Engines, commercializing advanced engines for reduced petroleum usage and greenhouse gas emissions. She volunteers as Co-Chair and Co-Founder of Clean Energy for Biden. Dr. Lee earned her Ph.D. and M.S. in Electrical Engineering from Princeton University and her B.S. in Applied Physics from the California Institute of Technology.


Brian Goncher, 64
Director

Mr. Goncher is Strategy Advisor to Powerhouse and active member of Clean Energy for Biden with more than 42 years of experience in finance, management and consulting. Mr. Goncher was a Managing Director at Deloitte until 2019, where he created and led their Energy Tech Practice. Before Deloitte, Mr. Goncher was a venture capitalist at Frontier Ventures between 1997 and 2000, and Crystal Ventures between 2000 and 2003 where he invested in technology companies. In addition, between 1990 and 1996, Mr. Goncher created and led the Emerging Company Services Group at Coopers & Lybrand (now part of PwC). He provided financial and strategic consulting services to tech startups. Earlier in his career, Mr. Goncher was the founder/CFO of several technology-enabled startups and a Corporate Banking Officer at Bank of America. Mr. Goncher earned a BS in Economics and MBA in Finance from the University of Chicago.


Steven Berkenfeld, 60
Director

Mr. Berkenfeld recently retired from a career in Investment Banking to focus entirely on impact and sustainability. Steven is founder and principal of Ecotopia Consulting LLC. and is primarily engaged in advising earlier stage, mission driven companies. Previously he was a Managing Director in Investment Banking at Barclays where he served as senior sponsor of the Environmental and Social Impact Banking Initiative and was co head of the firm’s Cleantech Initiative. Before joining Barclays in 2008, Steven spent over 21 years at Lehman Brothers in numerous roles including Chief Investment Officer of the firm’s Private Equity Division. Steven is former chair of the board of the Sierra Club Foundation, and is a sponsor of several projects, and board member of several other organizations, focused on social impact and sustainability. He holds a J.D. from Columbia Law School and a Bachelor’s Degree from Cornell University.