BusinessWire staff reported that NuScale Power, LLC, the industry-leading provider of proprietary and innovative advanced nuclear small modular reactor (SMR) technology, and Spring Valley Acquisition Corp., a publicly traded special purpose acquisition company, today announced they have entered into a definitive business combination agreement to create a first-of-its-kind energy company poised to power the global energy transition by delivering safe, scalable and reliable carbon-free nuclear power.
Company Overview
NuScale is the provider of a proprietary and innovative advanced nuclear power solution, the NuScale Power Module™ (NPM), which is the only viable, near-term deployable SMR technology. Capable of generating 77 megawatts electric (MWe) of electricity, the NPM is safe, reliable and scalable – NuScale’s VOYGR™ power plant design can accommodate configurations of four, six and 12 modules that can provide up to 924 megawatts per day of electricity.
NuScale’s NPM can serve as a reliable, carbon-free source of power that complements renewable sources such as wind, solar and hydropower generation. The NPM can provide consistent baseload power with available load-following, no matter the time of day, weather or season. Its unique design and safety features allow it to be easily integrated into electric grids or used in a variety of industrial applications such as water desalination, commercial-scale hydrogen production and carbon-capture technology.
In 2020, NuScale’s NPM became the first and only SMR to receive Standard Design Approval from the U.S. Nuclear Regulatory Commission (NRC) – a watershed moment not only for the Company, but also for the nuclear industry. The advanced design of the NPM eliminates the need for two-thirds of the safety systems and components found in today’s large commercial reactors, which significantly improves the economics of NuScale plants compared to traditional nuclear power plants. NuScale’s reactors are designed to safely shut down in an emergency and self-cool, indefinitely, with no need for operator or computer action, power or the addition of water – a first for any commercial nuclear power plant. The intellectual property supporting NuScale’s technology is protected by more than 600 granted or pending patents.
With broad global consensus that nuclear energy is critical to achieving the goal of net zero greenhouse gas emissions by 2050 – and for the U.S. to create a carbon pollution-free power sector by 2035 – NuScale is well positioned to play a significant and multifaceted role in the global energy transition. As a first mover in the development and provision of SMR technology, the Company has a massive market opportunity, with growing bipartisan support in the U.S. and support around the world. Industry analysts estimate that more than 16,000 gigawatts electric (GWe) of zero-carbon generation capacity additions will be required globally through 2040.
Propelled by the growing urgency to decarbonize the world’s energy system and a longstanding partnership with the U.S. Department of Energy, NuScale is currently working with a major regional utility customer, Utah Associated Municipal Power Systems (UAMPS), to deploy a NuScale VOYGR power plant in 2029. NuScale has a robust and growing customer development pipeline, with 19 Memoranda of Understanding (MOUs) or agreements in 11 countries.
NuScale’s scalable technology and diversified business model are designed to drive exceptional financial results and create long-term value. The Company has an attractive, high-margin business model that monetizes its intellectual property through NPM sales and recovery fees, while driving recurring revenues through critical maintenance services over the lifecycle of a plant. NuScale is positioned to deliver the first VOYGR power plant to a customer as soon as 2027 (based upon customer needs), supported by its established supply chain partners. NuScale anticipates being cash flow positive by 2024.
NuScale VOYGR power plants also create significant economic opportunities, including skilled jobs, for the communities where they are located. This is a critical consideration when replacing retiring fossil fuel-generating facilities. For example, in the U.S., the domestic supply chain for manufacturing 27 NPMs per year could generate over 14,000 direct jobs, in addition to indirect benefits in local taxes and economic activity.
Following the transaction, NuScale will continue to be led by its highly experienced leadership team, including John Hopkins, President and Chief Executive Officer, Chris Colbert, Chief Financial Officer, José Reyes, Ph.D., Chief Technology Officer and Co-Founder, Dale Atkinson, Chief Operating Officer and Chief Nuclear Officer, Tom Mundy, Chief Commercial Officer, and Robert Temple, General Counsel.
Management Comments
John Hopkins, President and Chief Executive Officer of NuScale, said:
“NuScale is building the next generation of nuclear power technology that is safer, more versatile and more cost-efficient than ever before. The scale of our ambition is only matched by the world’s enormous decarbonization needs, and now is the right time to accelerate and expand our efforts to bring our trailblazing SMR technology to more customers around the world. Spring Valley will be a highly complementary strategic partner for NuScale as we enter this next phase of growth, with leadership that brings deep expertise in sustainable energy and a strong operating and investment record in the energy sector, including in nuclear power.”
Christopher D. Sorrells, Chief Executive Officer of Spring Valley, said:
“NuScale is a bellwether company that has developed pioneering technology that can have a transformational impact on humanity by improving the energy sector. By receiving Standard Design Approval from the NRC, NuScale has helped establish a new standard in nuclear safety, and in doing so, developed a new carbon-free power solution that provides unique capabilities and performance that can realistically factor into the clean energy transition in the near term. This is the rare chance to invest in an industry-defining technology. We are very pleased to partner with NuScale and its deeply knowledgeable management team to bring this critical technology to market.”
Alan L. Boeckmann, Executive Chairman, Fluor Corporation, said:
“Fluor expects that the proposed transaction will bolster and accelerate the path to commercialization and deployment of NuScale Power’s unique small modular nuclear reactor technology. This is the next step in Fluor’s plan, first outlined 10 years ago, to work closely with NuScale Power, Congress and the Department of Energy to commercialize this unique carbon-free energy technology. Today’s announcement is further evidence that cost-shared government funding to build first-of-a-kind commercial scale technology can attract private investment and yield results. Fluor will continue to serve as an important partner by providing NuScale Power and its clients with world-class expertise in engineering services, project management and supply chain support.”
Transaction Overview
Under the terms of the Merger Agreement, the transaction is valued at an estimated pro-forma enterprise value of approximately $1.9 billion. At close, NuScale expects up to $413 million of gross cash proceeds, including a $181 million oversubscribed, fully committed PIPE anchored by Samsung C&T Corporation, DS Private Equity, Segra Capital Management and Pearl Energy. NuScale intends to use the proceeds to fund its path to commercialization and expects no additional capital requirements between closing and achieving positive free cash flow.
Upon completion of the transaction, Fluor projects to control approximately 60% of the combined company, based on the PIPE investment commitments received in the transaction and the current equity and in-the-money equity equivalents of NuScale Power and Spring Valley.
Existing NuScale shareholders, including majority owner Fluor, will retain their equity in NuScale and roll it into the combined company. Fluor will also continue to provide NuScale with engineering services, project management, administrative and supply chain support. Additional existing strategic investors in NuScale include Doosan Heavy Industries and Construction, Samsung C&T Corporation, JGC Holdings Corporation, IHI Corporation, Enercon Services, Inc., GS Energy, Sarens and Sargent & Lundy.
The transaction is expected to close in the first half of 2022 and is subject to approval by Spring Valley’s shareholders as well as other customary closing conditions.
Advisors
Guggenheim Securities, LLC is acting as financial advisor to NuScale and Fluor. Cowen is acting as financial advisor and lead capital markets advisor to Spring Valley. Guggenheim Securities, LLC and Cowen acted as placement agents to Spring Valley in connection with the PIPE offering.
Stoel Rives LLP is acting as legal counsel to NuScale, Gibson, Dunn & Crutcher LLP is acting as legal counsel to Fluor, White & Case LLP is acting as legal counsel to the placement agents and Kirkland & Ellis LLP is acting as legal counsel to Spring Valley.
Investor Presentation
NuScale and Spring Valley management will host an investor presentation on December 14, 2021 at 10:00 a.m. ET.
To listen to the webcast, please visit www.netroadshow.com/nrs/home/#!/?show=04285b34. Following the webcast, a telephone replay will be available at 1 (844) 385-9713 (U.S.) or 1 (678) 389-4980 (International), replay code number: 48521#.
Additional information about the proposed transaction, including a copy of the Agreement and Plan of Merger and investor presentation, will be provided in a Current Report on Form 8-K to be filed by Spring Valley with the Securities and Exchange Commission ("SEC") and is available on the NuScale investor relations page at https://www.nuscalepower.com/about-us/investors
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