Carbon Revolution Secures $25 Million Financing Agreement with OIC to Fund Growth

Rhea-AI Summary

Carbon Revolution (Nasdaq: CREV), a leading manufacturer of automotive carbon fiber wheels, has secured a $25 million financing agreement with Orion Infrastructure Capital (OIC). The funding will be released in five $5 million tranches, contingent on meeting certain reserve conditions. Each tranche will involve issuing OIC a warrant to purchase 2.5% of the company's outstanding shares. The funds are aimed at supporting the company's growth to meet increasing demand from OEM customers and enhance production capacity. CEO Jake Dingle highlighted the importance of the capital for addressing the business backlog and expansion.

OIC's Chris Leary expressed confidence in Carbon Revolution's innovative technology and its value to automotive OEMs. The agreement follows Carbon Revolution's recent recognition at the Automotive Pace Awards for innovation and performance.

Positive

• Carbon Revolution secures $25 million in financing from OIC.
• Funding is structured in five tranches of $5 million each.
• Each funding tranche includes issuing warrants for 2.5% of outstanding shares.
• Capital aimed at addressing demand and enhancing production capacity.
• Recent recognition at Automotive Pace Awards for innovation.

Negative

• Issuing warrants to OIC could lead to shareholder dilution.

Insights

Financial Analyst

Carbon Revolution's agreement for $25 million in financing is a significant event for the company. The infusion of capital will support the company's expansion plans and help it meet the growing demand from its OEM customers. The structured release of the funds in five tranches provides a steady stream of capital, ensuring financial stability while the company ramps up production. This approach also aligns with performance milestones, which can help mitigate risks for both parties involved.

The issuance of warrants to OIC, equal to 2.5% of the company's shares outstanding per tranche, is a strategic move. It ties the financier's interests directly to the company's performance, which can be seen as a vote of confidence in Carbon Revolution's future prospects. However, this will also lead to some dilution of existing shareholders, which could be a concern for current investors.

Looking at the broader picture, this financing deal supports Carbon Revolution’s growth trajectory. The funds will likely drive increased production capacity, which can translate to higher revenue and potentially improved profitability in the long run. Nevertheless, investors should keep an eye on how effectively the company can manage its expansion and whether it can meet the performance criteria required for the tranche releases.

Market Research Analyst

This financing agreement positions Carbon Revolution favorably within the competitive landscape of automotive suppliers. The company’s ability to secure additional capital underscores its strong market position and the growing demand for its innovative carbon fiber wheels. Carbon fiber technology is highly valued in the automotive industry for its weight reduction benefits, directly contributing to improved vehicle performance and fuel efficiency. This trend is likely to continue as OEMs focus on sustainability and performance improvements.

The fact that OIC has shown such confidence in Carbon Revolution's prospects is noteworthy. It suggests that the market for carbon fiber wheels is expanding and that Carbon Revolution is well-placed to capitalize on this trend. Additionally, the recent recognition at the Automotive Pace Awards further enhances the company's reputation, potentially leading to new business opportunities and partnerships.

In the short term, the incremental financing will support operational needs and capacity expansion. In the long term, it could facilitate broader market penetration and customer acquisition. However, investors need to monitor market conditions, competitive actions and the company's ability to innovate and maintain its leadership position.

GEELONG, Australia, June 24, 2024 (GLOBE NEWSWIRE) -- Carbon Revolution plc (Nasdaq: CREV) (the “Company”), a Tier 1 OEM supplier and the leading global manufacturer of lightweight advanced technology automotive carbon fiber wheels, today announced that it has reached an agreement with Orion Infrastructure Capital ("OIC") for the early release of a further US$25 million in five tranches, each equal to US$5 million, subject to satisfying certain reserve release conditions. In connection with the release of each of the five tranches of US$5 million from escrow, the Company will issue to OIC a warrant to purchase a number of shares equal to 2.5% of the Company’s shares outstanding.

The incremental $25 million of capital to be funded from OIC is intended to fund the Company as it works to satisfy the growing demand from Carbon Revolution’s OEM customers. The Company is making substantial investments in capacity and throughput and has been producing wheels at record rates.

“We are fortunate to have such strong and supportive financial partners like OIC, that understand our business and support our growth,” said Jake Dingle, CEO of Carbon Revolution. “This capital will be instrumental in helping us meet the substantial backlog of awarded business and continue our expansion efforts.”

“We are firm believers in Carbon Revolution's prospects and the transformative impact of their lightweighting technology,” said Chris Leary, Investment Partner & Head of Infra Equity at OIC. “As the only company capable of producing carbon fiber wheels at scale, their innovative solutions offer unparalleled value to automotive OEMs as they modernize their product portfolios.”

The financing follows Carbon Revolution’s recent wins at the prestigious Automotive Pace Awards, which recognize automotive suppliers for superior innovation, technological advancement, and business performance.

The terms and conditions of the financing are summarized in the Company's filing with the SEC, which can be accessed here.

About Carbon Revolution plc

Carbon Revolution plc (Nasdaq: CREV) is the parent of Carbon Revolution Pty Ltd, an early-stage growth company which has successfully innovated, commercialized and industrialized the advanced manufacture of carbon fiber wheels for the global automotive industry. The Company has progressed from single prototypes to designing and manufacturing lightweight wheels for cars and SUVs in the high performance, premium and luxury segments, for the world’s most prestigious automotive brands. Carbon Revolution is creating a significant and sustainable advanced technology business that supplies its lightweight wheel technology to automotive manufacturers around the world.

For more information, visit carbonrev.com

Forward Looking Statements

All statements other than statements of historical facts contained in this communication are forward-looking statements. Forward-looking statements may generally be identified by the use of words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “project,” “forecast,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” “target” or other similar expressions (or the negative versions of such words or expressions) that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the future financial performance, business strategies, financings and expectations for the Company’s business. These statements are based on various assumptions, whether or not identified in this communication, and on the current expectations of Carbon Revolution’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and may differ from such assumptions, and such differences may be material. Many actual events and circumstances are beyond the control of Carbon Revolution.

These forward-looking statements are subject to a number of risks and uncertainties, including (i) Carbon Revolution's liquidity, including its ability to pay its obligations and to issue equity, refinance its indebtedness or otherwise obtain financing at all or on acceptable terms, (ii) risks related to our ability to meet financial covenants and other key covenants under existing financing arrangements, (iii) changes in domestic and foreign business, market, financial, political and legal conditions; (iv) the ability to maintain the listing of Carbon Revolution’s securities on the stock exchange; (v) the failure to realize the anticipated benefits of the business combination and related transactions; (vi) risks related to the rollout of Carbon Revolution’s business strategy and the timing of expected business milestones; (vii) the effects of competition on Carbon Revolution’s future business and the ability of the combined company to grow and manage growth, establish and maintain relationships with customers and retain its management and key employees; (viii) risks related to domestic and international political and macroeconomic uncertainty, including the Russia-Ukraine and Israel-Hamas conflicts; (ix) the outcome of any legal proceedings that may be instituted against Carbon Revolution; (x) the impact of pandemic and governmental responses on any of the foregoing risks; (xi) risks related to Carbon Revolution’s industry; (xii) changes in laws and regulations; and (xiii) those factors discussed in the documents Carbon Revolution filed with the SEC, including the Shell Company Report on Form 20-F.

If any of these risks materialize or Carbon Revolution’s assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that Carbon Revolution does not presently know or that Carbon Revolution currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Carbon Revolution’s expectations, plans or forecasts of future events and views as of the date of this communication. Carbon Revolution anticipates that subsequent events and developments will cause Carbon Revolution’s assessments to change. However, while Carbon Revolution may elect to update these forward-looking statements at some point in the future, Carbon Revolution specifically disclaims any obligation to do so, unless required by applicable law. These forward-looking statements should not be relied upon as representing Carbon Revolution’s assessments as of any date subsequent to the date of this communication. Accordingly, undue reliance should not be placed upon the forward-looking statements.

FAQ

What is the recent financing agreement announced by Carbon Revolution (CREV)?

Carbon Revolution announced a $25 million financing agreement with Orion Infrastructure Capital (OIC), to be released in five $5 million tranches.

How will Carbon Revolution (CREV) use the $25 million funding?

The $25 million funding will support Carbon Revolution's growth, helping the company meet increasing demand from OEM customers and enhance production capacity.

What are the terms of the $25 million financing agreement for Carbon Revolution (CREV)?

The financing agreement involves the release of five $5 million tranches, each contingent on meeting certain reserve conditions. Each tranche includes issuing OIC a warrant for 2.5% of the company's outstanding shares.

Why did Orion Infrastructure Capital (OIC) invest in Carbon Revolution (CREV)?

OIC invested in Carbon Revolution due to their strong belief in the company's innovative technology and its value to automotive OEMs.

What recent achievements has Carbon Revolution (CREV) accomplished?

Carbon Revolution recently won recognition at the Automotive Pace Awards for superior innovation, technological advancement, and business performance.