Crown LNG Holdings and Catcha Investment Gorp announce merger
Crown LNG Holdings AS, a leading provider of LNG liquefaction and regasification terminal technologies for harsh weather locations, and Catcha Investment Corp (NYSE American: CHAA), a publicly traded special purpose acquisition company, announced a definitive agreement for a business combination that would result in Crown becoming a U.S. publicly listed company, Crown LNG said in a media release.
The combined company, named Crown LNG Holdings Limited (“PubCo”), intends to apply to list its shares on the New York Stock Exchange under the new ticker symbol “CGBS”. Founded with a vision to secure stable energy supplies to growth markets exposed to harsh weather conditions, Crown designs and plans to own and operate offshore LNG terminals in locations where onshore facilities are not feasible or desirable for reasons of harsh weather, safety, cost, or environmental impact.
Crown is active in the two critical parts of the LNG value chain: (1) liquefaction, where natural gas from producers is supercooled to a liquid for transport by ship as LNG, and (2) regasification, where the LNG is turned back into gas and delivered to consumers and businesses as natural gas. With expertise in both areas, Crown has the potential to enable stable, secure, year-round LNG supplies to growing markets and locations exposed to harsh weather conditions. In doing so, the Company aims to expand the global market for LNG (particularly LNG supplied from the U.S.) and contribute to lower carbon emissions in markets it serves by replacing coal with LNG. Crown’s bottom-fixed, gravity based structure (“GBS”) design also is expected to ensure lower cost and a reduced environmental footprint versus a comparable land-based LNG terminal alternative.
Driven by the use of natural gas as a transition fuel to replace decommissioned coal infrastructure, as well as overall energy security concerns, global demand for LNG is anticipated to increase from 351 million tons per annum (mtpa) in 2020 to approximately 570 mtpa by 2030, an increase of more than 60%. At the same time, and as a result of this rapid and dramatic increase in demand, there is expected to be an LNG supply deficit of more than 40 mtpa by 2030.
To reduce the anticipated LNG supply shortfall, additional new facilities for both export and import of LNG are needed over the next decade, many of which will need to be located in geographies prone to extreme weather events. Crown’s GBS designs for both liquefaction and regasification offshore terminals are able to significantly reduce impacts and downtime resulting from extreme weather. This is accomplished through advanced facility design that improves on and replaces floating and land-based alternatives for liquefaction and regasification. Crown’s GBS facilities are designed to rest directly on the seabed, after preparation and leveling. The rectangular concrete structure, built onshore in drydock, is then towed to location. A typical GBS contains two membrane tank compartments, which store the LNG temporarily after unloading, or prior to delivery onshore. This ‘LNG island’ offers greater reliability allowing operations year-round, including in harsh weather conditions, when compared with floating alternatives. Bottom-fixed solutions for energy development have a nearly 50-year track record in the offshore energy sector, with the first regasification GBS coming online in 2009. Crown will construct its GBS facilities in partnership with Aker Solutions, the leader in offshore bottom-fixed facility development and construction, as well as technology provider Wärtsilä Gas Solutions and Siemens Energy.
Currently, Crown is advancing development of two projects toward FID – Kakinada, on the east coast of India, and Grangemouth, in Scotland. The Kakinada project, utilizing GBS facilities, directly supports the Indian government’s target of increasing natural gas in the country’s energy mix from approximately 7% today, to 15% by 2030. India’s gas demand is expected to double during the same period to 115 BCM, with growth coming from several sectors, including city gas distribution, petrochemicals, heavy industry, fertilizer and power generation. Crown’s Kakinada project is able to uniquely address this demand growth, having received a full-year, 365day license to operate from the Indian government’s Ministry of Environment, Forest & Climate Change based on the Company’s stable GBS terminal design. Comparable floating solutions for LNG delivery on the east coast of India have been approved for operation for just 270 days per year. Preliminary Front End Engineering and Design (“Pre-FEED”) studies for the Kakinada project have been completed by Crown’s international partners. The project will take advantage of existing onshore natural gas infrastructure in the country, including the East-West Pipeline, which has a capacity of 3 Bcf per day and connects Kakinada to Gujarat via Hyderabad. The Company’s Grangemouth project, located on the east coast of Scotland, seeks to address the UK’s increasing drive for energy security post-Brexit and in the context of the Ukraine War’s impact on energy markets. Currently, the UK relies on just three facilities for LNG imports, which increased 74% from 2021 to 2022. For the Grangemouth project, Crown has entered into an exclusivity agreement with GBTron Lands Limited for use of the proposed offshore site on the Forth River. A site study for the deepwater port with LNG vessel access has been completed, and Crown has begun the consenting process with the Scottish Government, which can be completed in as few as seven months. Existing power grid and gas grid access is available within ten miles of the proposed site location. The Company will employ FSRU technology for the Grangemouth project.
Catcha has agreed to combine with Crown through PubCo based on a pre-money valuation of Crown at approximately $600 million. The transaction is expected to provide $50 million of capital, with net proceeds going to fund both the Kakinada and Grangemouth projects to final investment decision (FID). The implied pro forma enterprise valuation of PubCo is expected to be approximately $685 million. The Company has agreed to cause all of its shareholders to roll their interest into PubCo. Shareholders who are expected to represent approximately 90% of Crown’s equity before closing have already agreed to not sell any shares and contribute their shares in exchange for PubCo’s shares, which reflects the Company’s support for the combination and confidence in the go-forward prospects for the PubCo. After the close of the transaction, the existing Crown leadership team will remain in place, and will continue to execute on the Company’s strategy.
The transaction has been unanimously approved by the Boards of Directors of CHAA and Crown. Completion of the proposed transaction is subject to customary closing conditions, and is anticipated to occur in the fourth quarter of 2023. Additional information about the proposed transaction, including a copy of the business combination agreement and the investor presentation, will be provided in a Current Report on Form 8-K to be filed by CHAA with the U.S. Securities and Exchange Commission (the “SEC”) and made available at www.sec.gov.
Advisors Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC (“CCM”), serves as exclusive financial advisor and lead capital markets advisor to Catcha. In partnership with CCM, WestOak Advisors serves as energy capital markets advisor to Catcha. Emerging Asia Capital Partners Co Ltd (“EACP”) serves as financial advisors to Crown. Goodwin Procter LLP serves as legal counsel to Catcha. Nelson Mullins Riley & Scarborough LLP serves as legal counsel to Crown. About Crown LNG Holdings AS Crown LNG Holdings AS is a leading provider of offshore LNG liquefaction and regasification terminal infrastructure solutions for harsh weather locations, which represent a significant addressable market for bottom-fixed, gravity based (“GBS”) liquefaction and regasification plants, as well as associated green hydrogen, ammonia and power projects. Through this approach, Crown aims to provide lower carbon sources of energy securely to under-served markets across the globe.
Catcha Investment Corp (NYSE American: CHAA) is a blank check company, also commonly referred to as a Special Purpose Acquisition Company, or SPAC, formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. Catcha is led by Chief Executive Officer Patrick Grove and Chief Financial Officer Wai Kit Wong, and is sponsored by Catcha Group, one of the earliest and most established new economy-focused investment groups in Southeast Asia and Australia.