LOS ANGELES and NEW YORK : Hyperloop Transportation Technologies announced that they have entered into a definitive merger agreement (“Merger Agreement”) that is expected to result in HyperloopTT becoming a publicly listed company.
Upon the closing of the transaction, the newly combined company will be named “Hyperloop Transportation Technologies” and will continue to be led by Chief Executive Officer Andrés de León and the HyperloopTT management team.
A Leading Developer of Hyperloop IP
Led by an experienced team of hyperloop business and technology professionals, HyperloopTT relies on a global network of technologists, scientists, engineers, and expert contributors, resulting in an asset-light technology development business model. Through this partner network, the Company is driving a suite of next generation technologies to power transportation in the future.
Since its inception in 2013, HyperloopTT has made significant progress towards the adoption of hyperloop systems. The Company developed a full scale hyperloop test track in Toulouse, France, a hyperloop insurance framework model, and model safety and certification guidelines.
With the deployment of the Company’s test track, HyperloopTT has built a robust technology portfolio relating to patents across levitation and propulsion, low pressure tube transportation, and passenger experience. These patents are the basis of a technology that combines sustainability with the ability to reach destinations faster, which can redefine the urban landscape, create new economic opportunities, and disrupt the $2+ trillion transportation industry.
What is Hyperloop?
Hyperloop is a vacuum tube-based system that moves people and goods in levitating capsules at airplane speeds on the ground. These speeds are achieved by using passive magnetic levitation technology and a linear electric motor in a tube with minimal pressure, reducing resistance. As a mobility solution with transformative power, hyperloop is potentially cleaner, safer, healthier, and more efficient than existing forms of transportation.
HyperloopTT Investment Highlights
Through its combination of experience, capabilities, and partners, HyperloopTT has an opportunity to transform the multi-trillion-dollar transportation market.
Technology with world-changing impact in a $2+ trillion transportation market, of which HyperloopTT is well positioned to capture early market share for hyperloop technology
Nearly a decade of proprietary critical IP development, including 66 global patents for hyperloop technologies, with 40 granted and 26 in process, across the spectrum of technologies including levitation and propulsion, low pressure tube system, and passenger experience
Asset-light technology licensing business model with three potential major revenue streams: one-time license fee during system construction, annual license fees throughout the life of a system, and annual take-rate of sales
Working relationships with regulators in the U.S. and Europe has resulted in legislative advancements with opportunities for transportation industry grant access
Innovative expert contributors model, with more than 800 technology contributors worldwide since inception in 2013
Several hyperloop projects in various stages globally, including potential projects in Italy and the U.S.
Experienced leadership team, with decades of executive experience across leading global corporations
Contemplated transaction structure provides attractive value opportunity for shareholders
Management Commentary
Andrés de León, Chief Executive Officer of HyperloopTT said, “This transaction is a major milestone for HyperloopTT and the hyperloop industry as a whole. The transaction is a moment that could not have been possible without our countless supporters around the world, who have built HyperloopTT into a company that is perfect for this moment. Our innovative business model has allowed HyperloopTT to succeed, while facing enormous challenges. The team has worked tirelessly these past nine years to gain the support of the private and public sector in countries around the world. We thank Forest Road for working with us through this process and embrace this next step with humility, gratitude, and determination.”
Tom Staggs and Kevin Mayer, Co-CEOs and Co-Chairpersons of the Board of Directors of Forest Road, commented, “When we were introduced to HyperloopTT we quickly saw its potential to address some of the most profound transportation challenges of our time. The Company has a deep base of intellectual property that gives it a robust competitive advantage in this space. The Company’s asset-light ‘Hyperloop-as-a-Service’ business model is built to develop and support projects efficiently, presenting a possible solution that is environmentally and economically-minded. We believe their technology has the opportunity to create meaningful shareholder value and positively impact our world.”
Robust Near-Term Project Pipeline
HyperloopTT is actively engaged in providing the European Commission and the U.S. Department of Transportation (USDOT) with a critical technical understanding of hyperloop systems. The following are project opportunities HyperloopTT is currently pursuing:
Commercial prototype in Italy: Hyper Transfer Demonstrator project. Final proposal for tender submitted in Q4 2022 as part of a Consortium. Expect tender to choose the contract winner by Q1 2023.
Multi-state commercial line project: Great Lakes Hyperloop Feasibility study complete and HyperloopTT expected to facilitate Environmental Impact Statement in 2023.
Cargo hyperloop technology: HyperPort Cargo Solution, Germany. Joint venture with Hamburger Hafen und Logistik AG (HHLA).
Testing & certification MOU with ENSCO: Federal Rail Administration’s Transportation Technology Center, Colorado, United States.
Commercial prototype site exploration: 3-mile passenger system, R&D, and experience center, Canada.
Transaction Overview
The transaction ascribes to HyperloopTT a pre-money equity value of approximately $600 million, including outstanding options and warrants. Existing HyperloopTT shareholders and convertible note holders will roll 100% of their interests in the transaction and the combined company will assume the outstanding HyperloopTT options and warrants, which will remain outstanding to the extent not otherwise exercised prior to closing. Approximately $289 million of common stock will be issued at closing to the HyperloopTT shareholders and convertible note holders. Assuming no redemptions, the transaction is expected to deliver up to $330 million in net proceeds to the combined company at close.
The Boards of Directors of HyperloopTT and Forest Road have each unanimously approved this transaction. The transaction is subject to customary closing conditions, including the approval of the stockholders of Forest Road. The transaction is expected to close in the first half of 2023.
Additional information about the proposed transaction, including a copy of the merger agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed by Forest Road with the Securities and Exchange Commission (“SEC”) and will be available on the Forest Road website, the HyperloopTT investor page and at the SEC’s website at http://www.sec.gov/.
