(Reuters) - Bolder Industries has signed a letter of intent (LOI) to merge with blank-check acquisition company GigCapital2 Inc GIX.N in a deal that would take the U.S. sustainable rubber ingredient manufacturer public and value it at $880 million, including debt, the two companies said on Tuesday.
It would be the latest deal by a blank-check vehicle, or special purpose acquisition company (SPAC), for an environmentally focused business, following mergers for bioplastics company Danimer Scientific and Agricultural technology firm AppHarvest.
The LOI is nonbinding and a deal may not ultimately be sealed but Bolder and GigCapital2 aim to reach a formal agreement before the end of the year, they said in a statement.
Reuters on Monday reported Bolder and GigCapital2 were in talks.
If the deal goes through, the transaction could give Bolder a cash injection of around $300 million.
“In order to scale, for us it’s very capital-intensive. And the public markets were really interested in providing the large amounts of cash necessary to go to scale,” Bolder’s founder and chief executive, Tony Wibbeler, said in an interview.
Boulder is currently “about break-even as a whole” and expects to turn a profit in the first quarter of 2021, Wibbeler said.
Bolder, which is backed by Aravaipa Ventures, Crestwood Energy and Cupola Infrastructure, uses end-of-life tires to develop a sustainable alternative to carbon black material which can be used in rubbers and plastic products.
Black carbon is the third-largest contributer of man-made greenhouse gases after carbon dioxide and methane, according to the U.S. Environmental Protection Agency.
GigCapital2, which is led by investors Avi Katz and Raluca Dinu, raised $150 million in a June 2019 IPO.
“We feel that we’re in the foothills of an industry that is going to really take off and skyrocket because of the huge technology here,” GigCapital2’s executive chairman, Katz, said in an interview.
A SPAC is a shell company that uses proceeds from an IPO to acquire a private company, typically within two years. For the private company, merging with a SPAC is an alternative to going public through a traditional IPO.
Reporting by Joshua Franklin in Boston; Editing by Matthew Lewis
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