X-energy joins forces with Ares to go public

9 December 2022

X-energy Reactor Company, a developer of small modular reactors (SMRs) and fuel technology for clean energy generation, and Ares Acquisition Corporation (AAC), a publicly-traded special purpose acquisition company, have entered into a definitive business combination agreement.

The combination will establish X-energy as a publicly-traded, developer of a more advanced SMR and proprietary fuel that supports the transition to clean, affordable energy through enhanced safety, lower cost, scalability and broader industrial applications. X-energy’s entry into the public markets is expected to accelerate its growth strategy through additional investment opportunities and financial flexibility as well as differentiated sponsorship by Ares Management Corporation.

X-energy is advancing nuclear energy generation through its latest-generation high-temperature gas-cooled reactor design, the Xe-100, and its proprietary tri-structural isotropic encapsulated particle fuel, TRISO-X. In addition to its reactors and fuel, X-energy intends to provide a full suite of value-added services, including project planning, regulatory support, assembly and construction coordination, procurement support, and long-term maintenance and operations services during the lifetime of its reactors.

X-energy said its prospective customer pipeline includes approximately 30 potential unique customers across a variety of use cases and geographies covering the North America and Europe. Key examples include: Ontario Power Generation (OPG, which signed a framework agreement in July 2022 to pursue opportunities to deploy Xe-100 advanced reactors in Ontario; Dow, which signed a letter of intent in August 2022 to build the Xe-100 to provide heat and power to a Dow facility on the Gulf Coast; and Grant County Public Utility District (WA) and Energy Northwest, which signed a Memorandum of understanding in April 2021 to support the development and commercial demonstration of the first advanced nuclear reactor in the US.

In 2020, X-energy was selected by the US Department of Energy to receive $1.2 billion in federal funding as part of the Advanced Reactor Demonstration Programme. The funding is intended to provide support for the delivery of a first-of-a-kind commercial advanced nuclear plant and TRISO-X fuel fabrication facility.

The business combination ascribes a pre-money equity value of approximately $2.0 billion to X-energy. Existing X-energy equity holders will roll 100% of their existing equity interests into the combined company. In addition, the combined company will receive approximately $1 billion of cash held in AAC’s trust account, assuming no redemptions by AAC shareholders. Institutional and strategic investors have also invested or committed $120 million in financing.

This includes an invested private round of financing, which comprises $30 million from Ares and $45 million from OPG and Segra Capital Management, a leading nuclear energy-focused hedge fund, as well as an additional commitment of $45 million from Ares to be invested concurrent with the closing of the transaction. X-energy also received approximately $58 million of interim financing throughout 2022 from existing strategic investors, including Dow and Curtiss-Wright Corporation. Upon the closing of the transaction, the combined company will be named X-Energy Inc and its common equity securities and warrants will be listed on the New York Stock Exchange.

Image: Advanced fuels are seen as the most critical element in the design of advanced nuclear reactors (courtesy of Idaho National Laboratory)

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