April 8 (Renewables Now) – Rice Acquisition Corp (NYSE: RICE) has agreed to acquire Aria Energy LLC and Archaea Energy LLC to form a renewable natural gas (RNG) platform in the U.S. with a total business value of $ 1.15 billion (EUR 968m).
Rice Acquisition is a special purpose acquisition company (SPAC) led by former executives of Rice Energy Inc, which was acquired by natural gas producer EQT Corp (NYSE: EQT) for $ 6.7 billion in 2017. The SPAC had defined its focus on landfill gas (LFG) opportunities at the start of the acquisition search, seeing them as “the most predictable, economically and environmentally beneficial raw material to help organizations achieve their carbon neutral goals” , said Daniel Rice, CEO of Rice Acquisition.
Under the terms of the agreement, SPAC will acquire Aria from the infrastructure and energy strategy of Ares Management Corp (NYSE: ARES) for $ 680 million, and Archaea from an affiliate for $ 347 million.
The move involves an agreement to increase private investment in public shares (PIPE), which has been heavily subscribed, according to Rice Acquisition. The latter claimed to have secured $ 300 million in commitments led by institutional investors such as the Baupost Group, BNP Paribas Energy Transition Fund, CIBC, Goldman Sachs Asset Management LP and Wellington Management. In addition to the capital of PIPE, Rice Acquisition obtained $ 340 million in debt commitments from the Comerica Bank’s Environmental Services Department.
The combined company will be called Archaea Energy and will be listed on the New York Stock Exchange (NYSE) under the symbol “LFG”. Your earnings before interest, taxes, depreciation and amortization (EBITDA) in 2021 are estimated at US $ 65 million and that amount is expected to grow to US $ 327 million in 2024.
The platform will focus on capturing and converting waste emissions from landfills and anaerobic digesters into low carbon RNG, electricity and green hydrogen. It will include Aria’s LFG operational asset portfolio, greenfield LFG to RNG projects and opportunities for converting electricity to RNG, as well as Archaea’s own assets in the field, including the world’s largest RNG plant currently under construction, known as Assai Project. This specific scheme is being developed at the Keystone landfill in Dunmore, Pennsylvania, and once completed later this year, it will produce more than 12,000 MMBtu / day of RNG.
Pro forma for the transaction, Archaea Energy will have more than $ 350 million in cash on the balance sheet, to be used to finance its pipeline of development projects. It will seek to generate free cash flow in 2023.
The business combination is pending shareholder approval and is expected to be completed in the third quarter of 2021.
($ 1.0 = EUR 0.842)