Sparks Energy, Inc. (“Sparks” or “the Company”), a leading provider
of power infrastructure restoration and services to utilities
across the United States, and 10X Capital Venture Acquisition Corp.
III (“10X III”) (NYSE: VCXB), a special purpose acquisition company
(“SPAC”), today announced that they have entered into a merger
agreement for a business combination that would result in the
combined entity being a publicly listed holding company with Sparks
as its wholly-owned subsidiary. Following the close of the
transaction, the resulting holding company expects to be listed on
NYSE under the ticker “SPKS”.
Through the transaction, Sparks will receive
additional capital to fund its organic and inorganic growth plans,
including expanding its suite of service offerings and geographic
footprint. A $50 million standby equity financing facility has been
secured from YA II PN, LTD., an affiliate of Yorkville
Advisors.
The combined public company will be led by
Sparks founder and CEO, Jaradda Sparks. Mr. Sparks has over 25
years of experience in the industry and in 2007 founded the Company
with a vision of providing expert third-party power recovery and
restoration services to utilities in the Southeast United States.
Over the past 15 years, the Company has grown to be a leading
provider of critical power infrastructure recovery services to
utilities across the southern, eastern and midwestern United
States. The Company’s proven history and reputation for delivering
dependable, high quality service in its customers’ greatest times
of need has driven growth that makes Sparks a vendor of choice in
many of the regions typically impacted by recurring weather
events.
Mr. Sparks stated, “Listing as a publicly traded
company will enable increased growth opportunities for Sparks
Energy. The enhanced access to capital will allow us to accelerate
our plans to scale and grow our service offerings and geographic
reach across the United States at a time when customers need them
the most. The “Electrification of Everything”, the push to
renewable energy sources, and the impacts of more frequent and
severe storms resulting from climate change are creating a
tremendous amount of pressure on the country’s already strained
electric distribution system. Through our partnership with 10X III,
we look forward to expanding our ability to grow our customer base
and ensure the highest levels of electrical reliability from our
nation’s utilities.”
Partnership with 10X III“10X
Capital has a strong commitment to investing in sustainability, and
we are very enthusiastic to partner with Sparks as it executes on
its strategic vision of providing the highest levels of power
distribution recovery and restoration services to customers across
the United States,” said Hans Thomas, Chairman and Chief Executive
Officer of 10X Capital. “Thematically, Sparks resonates with
multiple areas of interest for 10X, including climate change,
renewable energy, and infrastructure. The country’s grid, already
compromised by decades of underinvestment, faces increasing risks
from climate-change fueled storm activity just as consumer demand
for reliable energy sources continue to hit new highs. Sparks
addresses an enormous need, and its ability to provide critical
equipment in a time of growing scarcity, as well as qualified,
insured, experienced crews where and when they are needed most is
highly compelling. We are thrilled by Sparks’ impressive portfolio
of utility, federal, state, and municipal customers, the resilience
and profitability of their business model, as well as the
tremendous opportunity to grow organically and acquisitively in the
coming years.”
Mr. Thomas continued, “The Sparks team has built
an outstanding business that is relatively uncorrelated with
economic cycles, with underlying organic growth driven by the
observed impacts of climate change and the country’s accelerating
investment in renewable energy. Sparks is well-positioned with
combined technical expertise and financial strength to be a
consolidator in this highly fragmented, but critical industry. We
also see tremendous demand for renewable energy, along with
significant support for energy infrastructure in recent legislation
including the Bipartisan Infrastructure Law and the Inflation
Reduction Act, and we feel that Sparks is well positioned to help
connect emerging solar, hydro, wind and other renewable sources, as
well as charging stations and other new infrastructure, to the
grid. The “Electrification of Everything” fundamentally requires at
least one thing, reliable electricity, and Sparks is at the
forefront of enhancing that reliability for power companies and
governments across America.”
Storm Recovery and
RestorationElectric power distribution recovery and
restoration is Sparks’ core business. From snow, ice and wind
events in the Northeast to hurricane activity in the Southeast, to
fire, tornado or other events across many parts of the United
States, the loss of power to customers is one of the highest
profile events that utility providers face and one that they are
structurally unfit to address. Despite many utility providers
having internal crews, the scale of most weather-driven outages
requires the assistance of third-party experts, such as Sparks, who
provide crews, vital equipment, and response coordination. Sparks,
with its dependable “boots on the ground”, or BOG, strategy, has
assets staged at critical, high demand areas across its services
territories, making the Company’s time and ability to respond to
events more attractive than that of many competitors. Sparks has a
fleet of 400 vehicles deployed at BOG sites and nearly 2,800
deployable trained personnel ready to answer the call from its
multitude of utility customers. The nature of this business
typically features annual contracts with utilities with set terms,
rates, response times, and other factors. Sparks has long-standing
relationships with many customers and a high level of repeat
business, driven by a proven record it has established over its
many years of delivering rapid, safe, cost-effective power
restoration services to its customers.
Renewables-Driven
Transmission and Distribution
OpportunitiesThe Company’s expertise in
transmission work and deep bench of experienced technical people
makes the growing opportunities presented by increasing renewable
investment particularly exciting. Renewable sources of power like
wind and solar typically involve building facilities that are not
covered by existing transmission capacity and are far from
population centers. Sparks is advancing its plans to partner with
engineering, procurement and construction companies to provide
transmission services to those projects. This creates additional
growth opportunities for the Company that help improve overall
employee utilization with flexible crews that can be efficiently
redeployed from steady state, “blue-sky” projects like these during
times of peak demand for emergency power restoration, and returned
to the longer-term projects when that shorter, higher margin work
is completed.
Maintenance and Other
OfferingsIn addition to the event-driven electric power
restoration services that Sparks provides, having equipment and
deployable personnel in the same region as a customer presents an
opportunity for the Company to augment a customer’s normal
transmission and distribution maintenance programs. This can
include services such as routine electric power line maintenance or
capacity upgrades, providing the Company with another way to expand
existing customer relationships and win new business, driving
additional growth and diversification of recurring revenue.
Key Transaction TermsThe Boards
of Directors of each of the Company and 10X III have unanimously
approved the proposed merger, which is expected to be completed in
2023, subject to regulatory approval, the approval of the proposed
merger by the Company’s stockholders and 10X III’s shareholders and
the satisfaction or waiver of other customary closing
conditions.
Additional information about the proposed
transaction, including a copy of the merger agreement and this
press release, will be provided in a Current Report on Form 8-K to
be filed by 10X III with the SEC and available at www.sec.gov. More
information about the proposed transaction will also be described
in 10X III’s proxy statement/prospectus relating to the
transactions, which it will file with the SEC.
Financial and Legal Advisors Roth Capital
Partners is serving as financial advisor to 10X III in connection
with rendering a fairness opinion to 10X III’s board of directors
regarding the transaction. Latham & Watkins LLP is legal
counsel to 10X III. Nelson Mullins Riley & Scarborough LLP is
serving as legal counsel to the Company.
About Sparks Energy Sparks Energy, Inc. is a
leading provider of power infrastructure restoration and services
for utilities across the United States. The Company was founded in
2007 to address the growing need by both Investor-Owned Utilities
and Electric Co-ops for quality workforces to perform storm
response and energy restoration services. Sparks is a committed
leader in power infrastructure restoration and services with an
extensive fleet and qualified workforce to provide
overhead/underground distribution, transmission, substation, and
right of way operations in the southern, eastern and midwestern
United States. For more information visit
https://www.SparksInc.com.
About 10X CAPITAL 10X Capital is an investment
firm at the nexus of Wall Street and Silicon Valley, aligning
institutional capital with high growth ventures. 10X Capital
invests across the capital structure, with a focus on companies
using technology to disrupt major industries, including finance,
healthcare, natural resources, transportation, infrastructure and
real estate. For more information, visit
https://www.10XCapital.com/.
10X Capital Venture Acquisition Corp III (NYSE:
VCXB) is a special purpose acquisition company sponsored by 10X
Capital, focused on identifying high growth businesses domestically
and abroad and bringing them to the public markets. For more
information visit www.10xspac.com.
Additional Information
For additional information on the proposed
transaction, see 10X III’s Current Report on Form 8-K, which will
be filed concurrently with this press release. In connection with
the proposed transaction, the parties intend to file relevant
materials with the Securities and Exchange Commission, including a
registration statement on Form S-4, which will include a proxy
statement/prospectus of 10X III, and will file other documents
regarding the proposed transaction with the SEC. 10X III’s
shareholders and other interested persons are advised to read, when
available, the preliminary proxy statement/prospectus and the
amendments thereto and the definitive proxy statement and documents
incorporated by reference therein filed in connection with the
proposed business combination, as these materials will contain
important information about Sparks, 10X III and the proposed
business combination. Promptly after the Form S-4 is declared
effective by the SEC, 10X III will mail the definitive proxy
statement/prospectus and a proxy card to each shareholder entitled
to vote at the meeting relating to the approval of the transactions
and other proposals set forth in the proxy statement/prospectus.
BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE
URGED TO READ THE FORM S-4 AND THE PROXY
STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION AND ANY
OTHER RELEVANT DOCUMENTS CAREFULLY IN THEIR ENTIRETY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED TRANSACTION. The proxy statement/prospectus, as
well as other filings containing information about Sparks and 10X
III will be available without charge at the SEC’s Internet site
(http://www.sec.gov). Copies of the proxy statement/prospectus can
be obtained, when available, without charge, from 10X III’s website
https://www.10xspac.com/.
Participants in the
SolicitationsSparks, 10X III and certain of their
respective directors, executive officers and other members of
management and employees may, under SEC rules, be deemed to be
participants in the solicitation of proxies from 10X III’s
shareholders in connection with the proposed transaction. You can
find more information about 10X III’s directors and executive
officers in 10X III’s final prospectus dated January 11, 2022 and
filed with the SEC on January 14, 2022, as modified or supplemented
by any Form 3 or Form 4 filed with the SEC since the date of such
filing. Additional information regarding the participants in the
proxy solicitation and a description of their direct and indirect
interests will be included in the proxy statement/prospectus when
it becomes available. Shareholders, potential investors and other
interested persons should read the proxy statement/prospectus
carefully when it becomes available before making any voting or
investment decisions. You may obtain free copies of these documents
from the sources indicated above.
No Offer or SolicitationThis
press release shall not constitute a solicitation of a proxy,
consent, or authorization with respect to any securities or in
respect of the proposed business combination. This press release
shall also not constitute an offer to sell or the solicitation of
an offer to buy any securities, nor shall there be any sale of
securities in any states or jurisdictions in which such offer,
solicitation, or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering 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, or an exemption therefrom.
Caution About Forward-Looking
StatementsThis communication includes forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements include, but are not limited
to, statements about future financial and operating results, our
plans, objectives, expectations and intentions with respect to
future operations, products and services; and other statements
identified by words such as “will likely result,” “are expected
to,” “will continue,” “is anticipated,” “estimated,” “believe,”
“intend,” “plan,” “projection,” “outlook” or words of similar
meaning. These forward-looking statements include, but are not
limited to, statements regarding Sparks’s industry and market
sizes, future opportunities for Sparks and 10X III, Sparks’s
estimated future results and the proposed business combination
between 10X III and Sparks, including the implied enterprise value,
the expected transaction and the likelihood, timing and ability of
the parties to successfully consummate the proposed transaction.
These forward-looking statements are based on Sparks’ and 10X III’s
expectations and beliefs concerning future events and involve risks
and uncertainties that may cause actual results to differ
materially from current expectations. These factors are difficult
to predict accurately and may be beyond Sparks’ and 10X III’s
control. Actual results, performance or achievements may differ
materially, and potentially adversely, from any projections and
forward-looking statements and the assumptions on which those
forward-looking statements are based. There can be no assurance
that the data contained herein is reflective of future performance
to any degree. You are cautioned not to place undue reliance on
forward-looking statements as a predictor of future performance as
projected financial information and other information are based on
estimates and assumptions that are inherently subject to various
significant risks, uncertainties and other factors, many of which
are beyond our control. Forward-looking statements in this
communication or elsewhere speak only as of the date made. New
uncertainties and risks arise from time to time, and it is
impossible for Sparks or 10X III to predict these events or how
they may affect Sparks or 10X III. Except as required by law,
neither Sparks nor 10X III has any duty to, and does not intend to,
update or revise the forward-looking statements in this
communication or elsewhere after the date this communication is
issued. In light of these risks and uncertainties, investors should
keep in mind that results, events or developments discussed in any
forward-looking statement made in this communication may not occur.
Uncertainties and risk factors that could affect Sparks’ and 10X
III’s future performance and cause results to differ from the
forward-looking statements in this release include, but are not
limited to: the occurrence of any event, change or other
circumstances that could give rise to the termination of the
business combination; the outcome of any legal proceedings that may
be instituted against Sparks or 10X III, the combined company or
others following the announcement of the business combination; the
inability to complete the business combination due to the failure
to obtain approval of the shareholders of 10X III or to satisfy
other conditions to closing; changes to the proposed structure of
the business combination that may be required or appropriate as a
result of applicable laws or regulations; the ability to meet stock
exchange listing standards following the consummation of the
business combination; the risk that the business combination
disrupts current plans and operations of 10X III or Sparks as a
result of the announcement and consummation of the business
combination; the ability to recognize the anticipated benefits of
the business combination, which may be affected by, among other
things, competition, the ability of the combined company to grow
and manage growth profitably, maintain relationships with customers
and retain its management and key employees; costs related to the
business combination; changes in applicable laws or regulations;
Sparks’ estimates of expenses and profitability and underlying
assumptions with respect to shareholder redemptions and purchase
price and other adjustments; intense competition in the
infrastructure services space, including with competitors who have
significantly more resources; ability to grow and scale Sparks’
fleet of equipment; ability to maintain relationships with current
customers and strategic partners; ability to make continued
investments in Sparks’ platform; the need to attract, train and
retain highly-skilled technical workforce; the impact of the
ongoing COVID-19 pandemic; changes in laws and regulations that
impact Sparks; and other risks and uncertainties set forth in the
section entitled “Risk Factors” and “Cautionary Note Regarding
Forward-Looking Statements” in 10X III’s final prospectus dated
January 11, 2022 relating to its initial public offering and in
subsequent filings with the SEC, including the proxy statement
relating to the business combination expected to be filed by 10X
III.
# # #
Contacts:
Sparks:Investor
Relationsinvestors@Sparksinc.com
10X
Capital:For
investors please contact:ir@10xcapital.com
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