OPAL Fuels Announces Exchange of High-Voting Stock for Low-Voting Stock by Controlling Stockholder
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Insights
From a market research perspective, the exchange of shares from Class D to Class B by OPAL Fuels Inc.'s controlling shareholder, Fortistar LLC, is a strategic move that could potentially increase the stock's liquidity and attractiveness to a broader range of investors. Index inclusion often leads to a higher demand for a stock, as it becomes a must-own for index funds and passively managed investment vehicles that track these indices. However, it's important to note that inclusion in stock market indices is not guaranteed and depends on various criteria such as market capitalization, liquidity and sector representation.
While the economic interest of Fortistar remains unchanged, the reduction in voting power could be seen as a positive step towards democratizing the company's governance structure, making it more appealing to investors who favor companies with less concentrated control. This could potentially lead to a re-rating of the stock as governance and shareholder rights are important factors in investment decision-making.
As a financial analyst, it is essential to consider the implications of this transaction on the company's valuation and investor perception. The exchange of shares does not affect Fortistar's economic interest, which indicates stability in the company's financial backing. However, the dilution of voting rights could be interpreted as a move to align with corporate governance best practices, potentially leading to improved investor confidence.
Investors should monitor the company's progress towards index inclusion, as it could increase the stock's visibility and potentially lead to an uptick in trading volume. However, it is also crucial to exercise caution, as the chairman's statement makes it clear that there is no certainty regarding the inclusion or its impact on the stock price. This uncertainty should be factored into any valuation models and investment strategies.
Legally, the exchange of Class D to Class B shares is a non-dilutive transaction that maintains Fortistar's economic stake in OPAL Fuels Inc. while altering the governance dynamics. Such a change in voting rights can be interpreted as a move towards a more equitable voting structure. This can be seen as aligning with shareholder activism trends where investors are increasingly advocating for one-share-one-vote principles.
It is also pertinent to consider any potential regulatory implications of this move, particularly if the company's securities are to be included in stock market indices. Regulatory compliance with the rules of the index and the broader market can influence investor sentiment and the company's compliance costs. Companies undergoing such restructuring must ensure adherence to the Securities Exchange Act of 1934, particularly concerning disclosure and reporting requirements.
“With Fortistar reducing a significant portion of its voting control, the Company anticipates that its publicly traded Class A common stock will become eligible for inclusion in certain stock market indices, on which many broad-based mutual funds and exchange-trade index funds are based,” said Mark Comora, the Company’s Chairman.
Note that the Company cannot ensure that the Company’s Class A common stock will be included in any stock market indices as a result of this exchange, which is out of the Company’s control, or that, if its stock is included, that it will have any effect on the price per share of the Company’s Class A common stock.
About OPAL Fuels Inc.
OPAL Fuels Inc. is a vertically integrated leader in the capture and conversion of biomethane into low carbon intensity renewable natural gas (RNG) and Renewable Power. OPAL Fuels is also a leader in the marketing and distribution of RNG to heavy duty trucking and other hard to de-carbonize industrial sectors. RNG is chemically identical to the natural gas used for cooking, heating homes, and fueling natural gas engines, with one significant difference: RNG is produced by recycling harmful biomethane emissions created by decaying organic waste as opposed to natural gas which is a fossil fuel pumped from the ground. To learn more about OPAL Fuels and how it is leading the effort to capture North America’s harmful methane emissions and decarbonize the economy, please visit www.opalfuels.com.
Forward-Looking Statements
Certain statements in this communication may be considered forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts and generally relate to future events or OPAL Fuels’ (the “Company”) future financial or other performance metrics. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by the Company and its management, as the case may be, are inherently uncertain and subject to material change. Factors that may cause actual results to differ materially from current expectations include various factors beyond management’s control, including but not limited to general economic conditions and other risks, uncertainties and factors set forth in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in the Company’s Quarterly Report on Form 10-Q filed on November 14, 2023 with the Securities and Exchange Commission, and other filings with the Securities and Exchange Commission. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this communication, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions, or circumstances on which any statement is based.
Disclaimer
This communication is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, subscribe for or buy, any securities, nor shall there be any sale, issuance or transfer or securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
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Investors
Todd Firestone
Vice President Investor Relations and Corporate Development
914-705-4001
investors@opalfuels.com
Media
Zach Gorin
ICR, Inc.
OPALFuelsPR@icrinc.com
Source: OPAL Fuels, Inc.
FAQ
What did OPAL Fuels Inc. announce regarding its controlling shareholder?
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Is the Company guaranteed inclusion in stock market indices due to the share exchange?
