Harmony Merger and privately held NextDecade have signed a non-binding letter of intent (LOI) for a business combination transaction.
This deal will see NextDecade becoming a publicly listed company.
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Harmony is a publicly traded special purpose acquisition company (SPAC) whose objective is to take a company public via reverse merger.
Harmony currently has $117.5m of cash in trust (trust fund).
This all-stock transaction is expected to yield a combined entity with a pro forma enterprise value exceeding $1bn at closing, with additional stock consideration to be paid to NextDecade shareholders upon the achievement of some milestones.
Assuming no redemptions by Harmony stockholders, current Harmony stockholders will own approximately 13.4% of the combined company immediately following the deal.
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By GlobalDataPursuant to the LOI, Harmony and NextDecade have also reserved capacity for strategic partners to invest in the company prior to the closing of the merger.
Harmony chief executive officer Eric Rosenfeld said: “We are pleased to work towards bringing our stockholders this unique opportunity to participate in the US LNG export market at what we at Harmony believe to be a discount to intrinsic value.
“NextDecade’s commercial and regulatory progress, coupled with its location on the Texas Gulf Coast in close proximity to the Permian Basin and Eagle Ford Shale, positions the company to provide low-cost LNG to customers around the world.”
NextDecade is a liquefied natural gas (LNG) development company that specialises in LNG export projects and associated pipelines in Texas.
The company’s first proposed LNG export facility, Rio Grande LNG project, is situated in Brownsville, Texas.
NextDecade CEO Kathleen Eisbrenner said: “After conducting an extensive review with our Board of Directors regarding development financing considerations, we are delighted to be advancing the process of merging with Harmony.
“Eric and his team have successfully completed four SPAC transactions, and have extensive experience in public markets.
“This transaction is a natural next step in NextDecade’s strategy of continuing to de-risk its projects to attract world-class customers and access capital on competitive terms.
“We believe that the proposed merger will enhance NextDecade’s ability to provide flexible solutions to customers and producers, and create value for our current and future stakeholders and partners.”
The completion of this transaction is subject to the satisfaction of certain conditions, including the execution of definitive agreements and approval from Harmony’s stockholders and regulatory boards.
Assuming the satisfaction of all preceding conditions, the proposed merger is expected to be completed in the second quarter of this year.
In this deal, Harmony is represented by Graubard Miller and NextDecade is represented by King & Spalding.
Height Securities is acting as financial advisor to NextDecade.
