Dragonfly Energy and Chardan NexTech Acquisition 2 today announced a merger agreement. If approved, upon closing Dragonfly Energy is expected to be listed on the Nasdaq under the new ticker symbol DFLI.
Dragonfly is engaged in energy storage and production of deep cycle lithium-ion storage batteries.
The business combination values Dragonfly at an implied $500.1 million pro forma enterprise value. Estimated cash proceeds are expected to consist of CNTQ’s approximately $128 million of cash in trust (assuming no redemptions) and an additional $230 million consisting of $75 million senior secured term loan (used in part to refinance approximately $45 million of outstanding Dragonfly indebtedness), a $5 million equity investment from CNTQ’s sponsor, Chardan NexTech Investments 2, and a $150 million Chardan Equity Facility from Chardan, an affiliate of CNTQ’s sponsor.
The transaction includes an earn-out provision for up to an additional 40 million shares:
15 million issued if both 2023 audited Revenue and Operating Income reach $250 million and $35 million, respectively; 12.5 million issued at a price target of $22.50 by Dec. 31, 2026; 12.5 million issued at a price target of $32.50 by Dec. 31, 2028.
All Dragonfly stockholders will roll 100% of their equity holdings into the new combined company.
A commitment letter and term sheet have been agreed in connection with the $75 million term loan and $150 million equity facility, respectively. The availability of these facilities is subject to the negotiation and execution of related definitive documentation, customary funding conditions and closing of the business combination. Read more.
