Advanced Emissions Solutions Completes Acquisition of Arq Limited’s Business

Revised transaction structure results in ADES acquiring 100% of the equity interests of Arq Limited subsidiaries in exchange for issuance of preferred shares

Final ownership terms results in legacy ADES shareholders retaining 59% of the outstanding equity

GREENWOOD VILLAGE, Colo., Feb. 01, 2023 (GLOBE NEWSWIRE) -- Advanced Emissions Solutions, Inc. (NASDAQ: ADES) (the “Company” or “ADES”), a leader in emissions control solutions for coal-fired power generation, industrial and municipal water purification markets, today closed its previously announced agreement with Arq Limited to combine their respective businesses on updated terms and structure.

“We are pleased to announce the completion of the acquisition of all of the subsidiaries of Arq Limited. As a result of changing macroeconomic conditions, the Board and management team of ADES reopened discussions with the leaders of Arq Limited and have revised the terms of the proposed transaction,” said Greg Marken, Chief Executive Officer, President and Treasurer of ADES. “As a result, the parties have mutually agreed upon a new deal structure that both parties believe are conducive to long-term value creation and sustainability for the combined company. All parties look forward to collaboratively forging the future for ADES and our shareholders.”

Updated Transaction Terms

• Pursuant to the revised securities purchase agreement, ADES issued a combination of shares of common stock and shares of a newly created series of preferred stock in exchange for all of the equity interests in all of the subsidiaries of Arq Limited (“Arq”).
• That new preferred shares will automatically convert to common stock upon the approval by ADES’ shareholders.   Until conversion, the preferred security will accrue dividends at an 8% coupon rate (or if greater, the dividend paid on ADES common shares) that will be payable in cash or in kind, which coupon will increase at set intervals if the conversion is not approved within 635 days of closing.
• Prior to the impact of new capital, legacy ADES and Arq shareholders owned 67.9% and 32.1% of the combined company, respectively.
• The Company also closed on
  • a private placement of approximately $15.4 million of its common stock from certain significant Arq shareholders and members of Arq management at a price of $4.00 per share.
  • a $10.0 million term debt facility.
• The lender under the debt facility also obtained penny warrants to purchase 1% of the pro forma equity of the combined company.
• After giving effect to the PIPE investment and the warrants provided to the lenders, legacy ADES and Arq shareholders owned 59.2% and 28.0% of the Company, respectively while new PIPE investors and the lenders (assuming conversion of the warrants) owned 11.8% and 1.0% of the new Company respectively.

Marken added, “The acquisition of Arq marks an important step toward solidifying our future and delivering on our commitment to creating shareholder value. The combined Company, through the use of two base feedstocks, will be able to pursue end markets served by both Powder and Granular Activated Carbon products and will be the only completely vertically integrated North American activated carbon provider from feedstock to distribution.”