Announcement • May 18
Dragonfly Energy Corp. entered into a definitive agreement to acquire Chardan NexTech Acquisition 2 Corp. (NasdaqCM:CNTQ) in a reverse merger transaction.
Dragonfly Energy Corp. entered into a definitive agreement to acquire Chardan NexTech Acquisition 2 Corp. (NasdaqCM:CNTQ) for approximately $400 million in a reverse merger transaction on May 15, 2022. The business combination values Dragonfly at an implied $500 million pro forma enterprise value. The transaction includes an earn-out provision for up to an additional 40 million shares as follows: 15 million issued if both 2023 audited Revenue and Operating Income reach $250 million and $35 million, respectively; 12.5 million issued at a price target of $22.50 by December 31, 2026; 12.5 million issued at a price target of $32.50 by December 31, 2028. All Dragonfly stockholders will roll 100% of their equity holdings into the new combined company. A commitment letter and term sheet have been agreed in connection with the $75 million term loan and $150 million equity facility, respectively. As a result of the transaction, the combined company will be renamed Dragonfly Energy and is expected to be listed on the Nasdaq under the new ticker symbol “DFLI.” Dragonfly Co-Founder, Chairman & Chief Executive Officer, Denis Phares, and the current management team are expected to continue to lead the combined company. The Boards of Directors of each of Dragonfly and CNTQ have unanimously approved the transaction, the Board of Directors of CNTQ has unanimously recommended to CNTQ stockholders the approval of the transaction, and the requisite stockholders of Dragonfly have approved the transaction. The transaction will require the approval of the stockholders of CNTQ, and is subject to satisfaction or waiver of the conditions stated in the merger agreement, effectiveness of the proxy statement or registration statement on Form S-4, expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, that Chardan have at least $5 million of net tangible assets upon closing, receipt of approval for listing on the Nasdaq Capital Market of the shares of New Dragonfly Common Stock and other customary closing conditions, including the receipt of certain regulatory approvals. The transaction is currently expected to close in the second half of 2022. Estimated cash proceeds to the combined company are expected to consist of CNTQ’s approximately $128 million of cash in trust and an additional $230 million consisting of $75 million senior secured term loan, a $5 million equity investment at $10.00 per share from CNTQ’s Sponsor, Chardan NexTech Investments 2 LLC, and a $150 million Chardan Equity Facility from Chardan, an affiliate of CNTQ’s sponsor. Stifel, Nicolaus & Company, Incorporated is serving as financial advisor. Portia Ku, Wenting Yu, Tai Vivatvaraphol, Viq Shariff, Laurie Davis, Kurt J. Berney and Noah K. Kornblith of O’Melveny & Myers, LLP and Parsons Behle & Latimer are serving as legal counsel to Dragonfly. Chardan is serving as financial advisor, Stifel and Chardan are acting as joint placement agents, Jeffrey A. Brill and Peter D. Serating of Skadden, Arps, Slate, Meagher & Flom LLP and Brownstein Hyatt Farber Schreck, LLP are serving as legal counsel to CNTQ. Energy Impact Partners is serving as lead arranger of the senior secured term loan. Chapman and Cutler LLP is serving as legal counsel to Energy Impact Partners.
