Filed Pursuant to Rule 424(b)(3)
Registration No.: 333-262053
PROXY STATEMENT FOR EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS OF
SPRING VALLEY ACQUISITION CORP.
SPRING VALLEY ACQUISITION CORP.
PROSPECTUS FOR
23,000,000 SHARES OF CLASS A COMMON STOCK,
11,500,000 WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK AND
11,500,000 SHARES OF CLASS A COMMON STOCK UNDERLYING WARRANTS OF
SPRING VALLEY ACQUISITION CORP. (AFTER ITS DOMESTICATION AS A CORPORATION INCORPORATED IN THE STATE OF DELAWARE AND RENAMING
AS NUSCALE POWER CORPORATION IN CONNECTION WITH THE DOMESTICATION)
23,000,000 SHARES OF CLASS A COMMON STOCK,
11,500,000 WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK AND
11,500,000 SHARES OF CLASS A COMMON STOCK UNDERLYING WARRANTS OF
SPRING VALLEY ACQUISITION CORP. (AFTER ITS DOMESTICATION AS A CORPORATION INCORPORATED IN THE STATE OF DELAWARE AND RENAMING
AS NUSCALE POWER CORPORATION IN CONNECTION WITH THE DOMESTICATION)
The board of directors (the “Spring Valley Board”) of Spring Valley Acquisition Corp., a blank check company incorporated as a Cayman Islands exempted company with limited liability (the “Company,” “Spring Valley,” “we,” “us” or “our”), has unanimously approved (i) the deregistration of Spring Valley under the Cayman Islands Companies Act (As Revised) and a domestication under Part XII of the Delaware General Corporation Law, pursuant to which Spring Valley’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware (the “Domestication”) and (ii) that certain Agreement and Plan of Merger, dated as of December 13, 2021 (as the same has been or may be amended, modified, supplemented or waived from time to time, the “Merger Agreement”), by and among Spring Valley, NuScale Power, LLC, an Oregon limited liability company (“NuScale LLC”), and Spring Valley Merger Sub, LLC, an Oregon limited liability company (“Merger Sub”), a copy of which is attached to this Proxy Statement/Prospectus as Annex A. In connection with the transactions contemplated by the Merger Agreement (collectively, the “Transactions”), the Company will be renamed “NuScale Power Corporation” and is referred to herein as “NuScale Corp.”
Upon completion of the Transactions, the combined company will be organized in an “UP-C” structure, which is commonly used by limited liability companies classified as partnerships for United States federal income tax purposes (such as NuScale LLC) that are undertaking a reverse acquisition (such as the Merger (as defined in the accompanying Proxy Statement/Prospectus)). The UP-C structure allows the current equityholders of NuScale LLC (the “NuScale Equityholders”) to retain their equity ownership in NuScale LLC in passthrough form and provides potential future tax benefits and associated cash flow advantages for NuScale Corp and the NuScale Equityholders when they ultimately exchange their NuScale LLC equity for shares of Class A common stock of NuScale Corp (the “NuScale Corp Class A Common Stock”). Upon completion of the Transactions, (i) NuScale Corp will be the sole manager of NuScale LLC, (ii) NuScale LLC will directly or indirectly hold substantially all of the consolidated assets and business of NuScale Corp and (iii) NuScale Corp will consolidate the financial results of NuScale LLC in its combined financial statements. See the section entitled “The Transactions” for more information.
As described in this Proxy Statement/Prospectus, Spring Valley’s shareholders are being asked to consider and vote upon (among other things) the Merger, the Domestication and the other proposals set forth herein.
The accompanying prospectus covers 23,000,000 shares of NuScale Corp Class A Common Stock, 11,500,000 warrants to purchase NuScale Corp Class A Common Stock and 11,500,000 shares of NuScale Corp Class A Common Stock issuable upon exercise of those warrants.
Spring Valley’s Units, Public Shares and Spring Valley Public Warrants (each as defined in the accompanying Proxy Statement/Prospectus) are currently listed on the Nasdaq Capital Market LLC (“Nasdaq”) under the symbols “SVSVU,” “SV” and “SVSVW,” respectively. Spring Valley intends to apply for listing, to be effective upon consummation of the Transactions, of NuScale Corp Class A Common Stock and warrants to purchase NuScale Corp Class A Common Stock on the New York Stock Exchange (the “NYSE”) under the proposed symbols “SMR” and “SMR WS” respectively.
This Proxy Statement/Prospectus provides you with detailed information about the Transactions and other matters to be considered at the Special Meeting. We urge you to carefully read this entire document and the documents incorporated herein by reference. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 48 of this Proxy Statement/Prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the transactions described in this Proxy Statement/Prospectus, passed upon the merits or fairness of the Merger Agreement or the Transactions contemplated thereby, or passed upon the adequacy or accuracy of this Proxy Statement/Prospectus. Any representation to the contrary is a criminal offense.
This Proxy Statement/Prospectus is dated April 7, 2022, and is first being mailed to Spring Valley’s shareholders on or about April 7, 2022.
SPRING VALLEY ACQUISITION CORP.
A Cayman Islands Exempted Company
2100 McKinney Avenue, Suite 1675
Dallas, TX 75201
2100 McKinney Avenue, Suite 1675
Dallas, TX 75201
NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 2022
TO BE HELD ON APRIL 28, 2022
TO THE SHAREHOLDERS OF SPRING VALLEY ACQUISITION CORP.:
NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “Special Meeting”) of Spring Valley Acquisition Corp., a Cayman Islands exempted company (“Spring Valley,” “we,” “us” or “our”), will be held at 10:00 a.m., Central Time, on April 28, 2022. For the purposes of Spring Valley’s Amended and Restated Memorandum and Articles of Association (the “Existing Organizational Documents”), the physical place of the meeting will be at the offices of Kirkland & Ellis LLP located at 609 Main Street, Suite 4700, Houston, TX 77002, and via a virtual meeting at https://www.cstproxy.com/svac/2022, unless the Special Meeting is adjourned. In light of the novel coronavirus pandemic (“COVID-19”) and to support the well-being of Spring Valley’s shareholders, directors and officers, Spring Valley encourages you to use remote methods of attending the Special Meeting or to attend via proxy. You may attend the Special Meeting and vote your shares electronically during the Special Meeting via live webcast by visiting https://www.cstproxy.com/svac/2022. You will need the meeting control number that is printed on your proxy card to enter the Special Meeting. You may also attend the meeting telephonically by dialing 1 800-450-7155. You are cordially invited to attend the Special Meeting, which will be held for the following purposes:
Proposal No. 1 — The Merger Agreement Proposal — to consider and vote upon a proposal to approve by ordinary resolution under the Cayman Islands Companies Act and adopt that certain Agreement and Plan of Merger, dated as of December 13, 2021 (as the same has been or may be amended, modified, supplemented or waived from time to time, the “Merger Agreement”), by and among Spring Valley, Spring Valley Merger Sub, LLC, an Oregon limited liability company (“Merger Sub”), and NuScale Power, LLC, an Oregon limited liability company (“NuScale LLC”), a copy of which is attached to this Proxy Statement/Prospectus as Annex A. The Merger Agreement provides for, among other things, the following transactions (collectively, the “Transactions”):
(i) the Domestication (as defined below) and, in connection with the Domestication,
(A) Spring Valley’s name will be changed to “NuScale Power Corporation” (“NuScale Corp”),
(B) each outstanding Class A ordinary share, par value $0.0001, of Spring Valley (each, a “Spring Valley Class A ordinary share”) will convert into one share of Class A common stock of NuScale Corp (the “NuScale Corp Class A Common Stock”) as a result of the Domestication,
(C) each outstanding Class B ordinary share, par value $0.0001, of Spring Valley (each, a “Spring Valley Class B ordinary share”) will convert into one Spring Valley Class A ordinary share immediately prior to the Domestication, which will then automatically convert by operation of law into one share of NuScale Corp Class A Common Stock as a result of the Domestication,
(D) each outstanding warrant to purchase one Spring Valley Class A ordinary share will convert into a warrant to purchase one share of NuScale Corp Class A Common Stock, and
(E) NuScale Corp will file its initial certificate of incorporation and adopt bylaws to serve as its governing documents in connection with the Domestication;
(ii) Merger Sub will merge with and into NuScale LLC, with NuScale LLC as the surviving entity in the merger (the “Merger”);
(iii) at the effective time of the Merger (the “Effective Time”), NuScale LLC’s existing limited liability company agreement (the “Existing NuScale LLCA”) will be amended and restated (such new
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agreement, the “A&R NuScale LLC Agreement”) and, in connection therewith, (A) each preferred unit of NuScale LLC will be re-classified into a certain number of common units of NuScale LLC, and immediately after such re-classification (B) all NuScale LLC common units will be re-classified into 178,268,640 non-voting Class B common units (each, a “NuScale LLC Class B Unit”);
(iv) NuScale Corp will issue to each of the NuScale Equityholders (as defined below) one share of voting, non-economic Class B common stock, par value $0.0001 per share, of NuScale Corp (the “NuScale Corp Class B Common Stock”) for each NuScale LLC Class B Unit held by such NuScale Equityholder;
(v) each option to purchase a NuScale LLC common unit (a “NuScale Option”) will be converted into an economically equivalent number of options to purchase shares of NuScale Corp Class A Common Stock based on the Exchange Ratio (as defined in the accompanying Proxy Statement/Prospectus) with the same aggregate exercise price, terms and conditions (including vesting and exercisability terms) as were applicable to the NuScale Option immediately prior to the Effective Time; and
(vi) Spring Valley will contribute, without duplication, an amount equal to (A) the amount of cash in the Trust Account (the “Trust Account”) established by Spring Valley with the proceeds from its initial public offering as of immediately prior to the closing of the Merger (the “Closing”) (and before, for the avoidance of doubt, giving effect to the exercise of redemption rights by any Spring Valley shareholders (the “Spring Valley Share Redemptions”)), plus (B) all other cash and cash equivalents of Spring Valley, minus (C) the aggregate amount of cash proceeds that will be required to satisfy the Spring Valley Share Redemptions, plus (D) the aggregate cash proceeds actually received in respect of the PIPE Investment (as defined below), and minus (E) any Transaction Expenses (as defined in the Merger Agreement) in excess of $43,000,000 in the aggregate. We refer to this Proposal No. 1 as the “Merger Agreement Proposal.”
Proposal No. 2 — The Domestication Proposal — to consider and vote upon a proposal to approve, by special resolution under the Cayman Islands Companies Act, assuming the Merger Agreement Proposal is approved and adopted, the change of Spring Valley’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication”). We refer to this Proposal No. 2 as the “Domestication Proposal.”
Proposal No. 3 — The Organizational Documents Proposal — to approve and adopt by special resolution under the Cayman Islands Companies Act, assuming the Merger Agreement Proposal and the Domestication Proposal are approved and adopted, the proposed new certificate of incorporation (the “Proposed Charter”) and bylaws (the “Proposed Bylaws,” and, together with the Proposed Charter, the “Proposed Organizational Documents”) of NuScale Corp, the post-Domestication company, which, if approved, would take effect at the time of the Domestication. We refer to this proposal No. 3 as the “Organizational Documents Proposal.”
Proposal No. 4 — The Advisory Charter Proposal — to approve, on a non-binding advisory basis, certain governance provisions in the Proposed Charter, which are being presented separately in accordance with guidance from the United States Securities and Exchange Commission (the “SEC”) to give shareholders the opportunity to present their separate views on important corporate governance provisions, including the sub-proposals below. We refer to this Proposal No. 4, collectively, as the “Advisory Charter Proposal.”
Advisory Charter Proposal 4A — to increase the authorized share capital from 331,000,000 shares, divided into 300,000,000 Spring Valley Class A ordinary shares, 30,000,000 Spring Valley Class B ordinary shares, and 1,000,000 preferred shares, par value $0.0001 per share (the “Spring Valley preferred shares”), to authorized capital stock of 512,000,000 shares, consisting of (i) 332,000,000 shares of NuScale Corp Class A Common Stock, (ii) 179,000,000 shares of NuScale Corp Class B Common Stock (together with the NuScale Corp Class A Common Stock, the “NuScale Corp Common Stock”) and (iii) 1,000,000 shares of preferred stock of NuScale Corp (“NuScale Corp Preferred Stock”);
Advisory Charter Proposal 4B — to provide that the approval of holders of a majority, or sixty-six and two-thirds percent (66 2/3%) for certain amendments, of the outstanding shares of each class of NuScale Corp Common Stock shall be required to amend the Proposed Charter;
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Advisory Charter Proposal 4C — to provide for (i) the election of directors by a plurality of the votes cast by the stockholders present in person or represented by proxy at the meeting and entitled to vote thereon, voting together as a single class, (ii) the filling of newly-created directorships or any vacancy on the board of directors of NuScale Corp (the “NuScale Corp Board”) by a majority vote of the remaining directors then in office, even if less than a quorum, and not by the stockholders and (iii) the removal of directors from the NuScale Corp Board with or without cause and only upon the affirmative vote of the holders of a majority in voting power of all the then outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class;
Advisory Charter Proposal 4D — to provide that the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, another state or federal court located within the State of Delaware, shall be the exclusive forum for certain actions and claims;
Advisory Charter Proposal 4E — to provide that each holder of record of NuScale Corp Class A Common Stock and NuScale Corp Class B Common Stock shall be entitled to one vote per share on all matters which stockholders generally are entitled to vote;
Advisory Charter Proposal 4F — to provide that (i) each holder of record of NuScale Corp Class A Common Stock shall be entitled to receive such dividends and other distributions on the NuScale Corp Class A Common Stock as may from time to time be declared by the NuScale Corp Board, subject to the rights, if any, of the holders of any outstanding series of preferred stock or any class or series of stock having a preference senior to or the right to participate with the NuScale Corp Class A Common Stock with respect to the payment of dividends; and (ii) each holder of record of NuScale Corp Class B Common Stock shall not be entitled to receive dividends and other distributions, other than their respective par values in connection with the dissolution, liquidation, winding up or sales of all or substantially all of NuScale Corp;
Advisory Charter Proposal 4G — to eliminate various provisions in Spring Valley’s Amended and Restated Memorandum and Articles of Association (the “Existing Organizational Documents”) applicable only to blank check companies, including the provisions requiring that Spring Valley have net tangible assets of at least $5,000,001 immediately prior to, or upon such consummation of, a business combination; and
Advisory Charter Proposal 4H — to provide that no transfer of NuScale Corp Class B Common Stock may be made unless the transferor also transfers an equal number of NuScale LLC Class B Units in accordance with the terms and subject to the conditions of the A&R NuScale LLC Agreement.
Proposal No. 5 — The Nasdaq Proposal — to consider and vote upon a proposal to approve by ordinary resolution under the Cayman Islands Companies Act, assuming the Merger Agreement Proposal, the Domestication Proposal and the Organizational Documents Proposal are approved and adopted, for the purposes of complying with the applicable provisions of Nasdaq Listing Rule 5635, the issuance of (a) shares of NuScale Corp Class A Common Stock to the PIPE Investors (as defined below) pursuant to Subscription Agreements (as defined below) and (b) shares of NuScale Corp Class A Common Stock and NuScale Corp Class B Common Stock (i) pursuant to the terms of the Merger Agreement and (ii) upon the exchange of the NuScale LLC Class B Units pursuant to the A&R NuScale LLC Agreement. We refer to this Proposal No. 5 as the “Nasdaq Proposal.”
Proposal No. 6 — The Director Election Proposal — for the holders of Spring Valley Class B ordinary shares to consider and vote upon a proposal under the Cayman Islands Companies Act to elect John L. Hopkins, Alan L. Boeckmann, Alvin C. Collins, III, James T. Hackett, Kent Kresa, Christopher J. Panichi, Kimberly O. Warnica, and Christopher Sorrells, in each case, to serve as directors until their respective successors are duly elected and qualified, or until their earlier death, resignation or removal. We refer to this Proposal No. 6 as the “Director Election Proposal.”
Proposal No. 7 — The Long-Term Incentive Plan Proposal — to consider and vote upon a proposal to approve by ordinary resolution under the Cayman Islands Companies Act, assuming the Merger Agreement Proposal, the Domestication Proposal, the Organizational Documents Proposal and the Nasdaq Proposal are approved and adopted, the 2022 Long-Term Incentive Plan, a copy of which is attached to this Proxy Statement/Prospectus as Annex E. We refer to this Proposal No. 7 as the “Long-Term Incentive Plan Proposal”
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and, collectively with the Merger Agreement Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Nasdaq Proposal and the Director Election Proposal, the “Condition Precedent Proposals.”
Proposal No. 8 — The Adjournment Proposal — to consider and vote upon a proposal to approve by ordinary resolution under the Cayman Islands Companies Act the adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, any of the Condition Precedent Proposals would not be duly approved and adopted by our shareholders or we determine that one or more of the closing conditions under the Merger Agreement is not satisfied or waived. We refer to this Proposal No. 8 as the “Adjournment Proposal.”
Only holders of record of Spring Valley Class A ordinary shares and Spring Valley Class B ordinary shares (collectively, “Spring Valley ordinary shares”) at the close of business on March 25, 2022 are entitled to notice of and to vote and have their votes counted at the Special Meeting and any adjournment of the Special Meeting.
The resolutions to be voted upon in person or by proxy at the Special Meeting relating to the above proposals are set forth in the Proxy Statement/Prospectus sections entitled “Proposal No. 1 — The Merger Agreement Proposal,” “Proposal No. 2 — The Domestication Proposal,” “Proposal No. 3 — The Organizational Documents Proposal,” “Proposal No. 4 — The Advisory Charter Proposal,” “Proposal No. 5 — The Nasdaq Proposal,” “Proposal No. 6 — The Director Election Proposal,” “Proposal No. 7 — The Long-Term Incentive Plan Proposal” and “Proposal No. 8 — The Adjournment Proposal,” respectively.
We will provide you with the Proxy Statement/Prospectus and a proxy card in connection with the solicitation of proxies to be voted at the Special Meeting and at any adjournment of the Special Meeting. Whether or not you plan to attend the Special Meeting, we urge you to read, when available, the Proxy Statement/Prospectus (and any documents incorporated into the Proxy Statement/Prospectus by reference) carefully. Please pay particular attention to the section entitled “Risk Factors.”
After careful consideration, the board of directors of Spring Valley (the “Spring Valley Board”) has determined that each of the Merger Agreement Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Advisory Charter Proposal, the Nasdaq Proposal, the Director Election Proposal, the Long-Term Incentive Plan Proposal and the Adjournment Proposal are in the best interests of Spring Valley and its shareholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.
The existence of financial and personal interests of Spring Valley’s directors may result in a conflict of interest on the part of one or more of the directors between what he, she or they may believe is in the best interests of Spring Valley and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “The Merger Agreement Proposal — Interests of Spring Valley Directors and Officers in the Transactions” in the Proxy Statement/Prospectus for a further discussion.
Under the Merger Agreement, the approval of each of the Condition Precedent Proposals is a condition to the consummation of the Merger. The adoption of each Condition Precedent Proposal is conditioned on the approval of all of the Condition Precedent Proposals. The Advisory Charter Proposal and the Adjournment Proposal are not conditioned on the approval of any other proposal. If our shareholders do not approve each of the Condition Precedent Proposals, the Transactions will not be consummated.
In connection with our initial public offering, on November 23, 2020, our sponsor, Spring Valley Acquisition Sponsor, LLC, a Delaware limited liability company (the “Sponsor”), and our officers and directors at the time of our initial public offering entered into a letter agreement (the “Spring Valley Letter Agreement”) pursuant to which they agreed, among other things, to vote their Spring Valley Class B ordinary shares purchased prior to our initial public offering (the “Spring Valley Founder Shares”), as well as any Spring Valley Class A ordinary shares sold by us in our initial public offering (“Public Shares”) and purchased by them during or after our initial public offering, in favor of Spring Valley’s initial business combination (including the proposals recommended by the Spring Valley Board in connection with such business combination). Accordingly, we expect them to vote their shares in favor of all proposals being presented at
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the Special Meeting. As of the date hereof, our Initial Shareholders own 20.0% of our total outstanding ordinary shares. In addition, SV Acquisition Sponsor Sub, LLC, a Delaware limited liability company (the “Sponsor Sub”), and Spring Valley and each of our directors entered into certain support agreements, dated December 13, 2021 (as may be amended from time to time, the “Support Agreements”), with NuScale LLC, pursuant to which, among other things, the Sponsor Sub and such directors agreed to vote all of their respective Spring Valley ordinary shares (subject to certain exceptions) in favor of the approval and adoption of the Transactions. Further, on December 13, 2021, Spring Valley, Sponsor Sub and NuScale LLC entered into the Sponsor Letter Agreement (the “Sponsor Letter Agreement”) pursuant to which the parties thereto agreed to, among other things, (i) certain forfeiture terms with respect to up to 35% of the NuScale Corp Class A Common Stock owned by such parties if Closing Acquiror Cash is less than $432 million, (ii) certain vesting and forfeiture terms with respect to up to 35% of NuScale Corp Class A Common Stock beneficially owned by the Sponsor Sub immediately following the Closing, (iii) not transfer, assign or sell any securities held by them subject to the lock-up provisions described therein or exercise any of their Spring Valley Warrants until the expiration of a certain applicable lock-up period (such lock-up provisions apply also to certain permitted transferees of the Sponsor Sub) and (iv) extend the May 27, 2022 deadline by which Spring Valley must complete an initial business combination by six months to November 27, 2022 upon Sponsor Sub’s purchase of 2,300,000 additional Spring Valley Warrants for $2,300,000.
Pursuant to Spring Valley’s Existing Organizational Documents, a holder of Public Shares (“Public Shareholder”) may request that Spring Valley redeem all or a portion of its Public Shares (which would otherwise become shares of NuScale Corp Class A Common Stock in the Domestication) for cash if the Merger is consummated. For the purposes of Article 49.5 of the Existing Organizational Documents and the Companies Law (2021 Revision) of the Cayman Islands, the exercise of redemption rights shall be treated as an election to have such Public Shares repurchased for cash. You will be entitled to receive cash for any Public Shares to be redeemed only if you:
(i) (a) hold Public Shares or (b) hold Units (as defined herein) and you elect to separate your Units into the underlying Public Shares and Spring Valley Public Warrants prior to exercising your redemption rights with respect to the Public Shares; and
(ii) prior to 5:00 p.m., Eastern Time, on April 26, 2022, (a) submit a written request to Continental Stock Transfer & Trust Company, Spring Valley’s transfer agent (the “transfer agent” or “Continental”), that Spring Valley redeem your Public Shares for cash and (b) deliver your Public Shares to the transfer agent, physically or electronically through The Depository Trust Company (“DTC”).
Holders of Units must elect to separate the underlying Public Shares and Spring Valley Public Warrants prior to exercising redemption rights with respect to the Public Shares underlying such Units. If holders hold their Units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the Units into the underlying Public Shares and Spring Valley Public Warrants, or if a holder holds Units registered in its own name, the holder must contact the transfer agent, directly and instruct it to do so. Public Shareholders may elect to redeem all or a portion of their Public Shares even if they vote for the Merger Agreement Proposal. If the Merger is not consummated, the Public Shares will not be redeemed for cash. If a Public Shareholder properly exercises its right to redeem its Public Shares and timely delivers its shares to the transfer agent, we will redeem each Public Share for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior to the consummation of the Merger, including interest earned on the Trust Account, less income taxes payable, divided by the number of then issued and outstanding Public Shares. For illustrative purposes, as of December 31, 2021, there was approximately $232,320,939 on deposit in the Trust Account, which would have amounted to approximately $10.10 per Spring Valley Class A ordinary share. If a Public Shareholder exercises its redemption rights, then it will be exchanging its redeemed Public Shares for cash and will no longer own such shares. See “The Extraordinary General Meeting — Redemption Rights” in the Proxy Statement/Prospectus when it becomes available for a detailed description of the procedures to be followed if you wish to redeem your Public Shares for cash.
Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of such Public Shareholder or any other person with whom such Public Shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)),
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will be restricted from redeeming its Public Shares with respect to more than an aggregate of 15% of the Public Shares. Accordingly, if a Public Shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the Public Shares, then any such shares in excess of that 15% limit would not be redeemed for cash.
Pursuant to the Merger Agreement, following consummation of the Transactions, the current equityholders of NuScale LLC (the “NuScale Equityholders”) will hold 178,268,640 non-voting, economic NuScale LLC Class B Units and 178,268,640 voting, non-economic shares of NuScale Corp Class B Common Stock, which are collectively exchangeable for 178,268,640 voting, economic shares of NuScale Corp Class A Common Stock and have, together with the value of all NuScale Options, a stipulated value of $1.875 billion that was agreed upon by Spring Valley and NuScale LLC in the Merger Agreement. In addition to the consideration described above, each NuScale Equityholder may have the right to receive certain payments from NuScale Corp under the Tax Receivable Agreement (as defined below).
Following consummation of the Merger, NuScale Corp will be a “controlled company” within the meaning of the NYSE listing rules and, as a result, will qualify for, and intends to rely on, exemptions from certain corporate governance requirements. See “Management of NuScale Prior to and Following the Transactions — Controlled Company Exemption.”
The closing of the Transactions is subject to certain conditions, including, among other things: (i) the approval of the Condition Precedent Proposals by Spring Valley’s shareholders; (ii) the approval of the Transaction by members of NuScale LLC; (iii) the completion of the Domestication by Spring Valley in accordance with Section 388 of the Delaware General Corporation Law (the “DGCL”) and the Companies Law (2021 Revision) of the Cayman Islands; (iv) Closing Acquiror Cash (as defined below) of at least $200,000,000 at the Closing; (v) covenant and representation and warranty bring down conditions; (vi) the absence of a material adverse effect on the respective parties; (vii) the execution of the Tax Receivable Agreement by NuScale Corp, NuScale LLC and the NuScale Equityholders; and (viii) the listing of NuScale Corp Class A Common Stock to be issued in the Transactions on the NYSE. To the extent permitted by law, the conditions in the Merger Agreement may be waived by the parties thereto.
As used herein, “Closing Acquiror Cash” means, without duplication, an amount equal to (a) the funds contained in the Trust Account as of immediately prior to the Closing; plus (b) all other cash and cash equivalents of Spring Valley as of immediately prior to the Closing; minus (c) the aggregate amount of cash proceeds that will be required to satisfy the redemption of any shares of Spring Valley Class A ordinary shares (to the extent not already paid); plus (d) the aggregate proceeds of the PIPE Investment (as defined below) that is actually paid to Spring Valley at or prior to the Closing; minus (e) any Transaction Expenses (as defined in the Merger Agreement) in excess of $43,000,000 in the aggregate.
In connection with entering into the Merger Agreement, Spring Valley entered into subscription agreements (as amended from time to time, the “Subscription Agreements”), each dated as of December 13, 2021, March 29, 2022 or April 4, 2022, with certain institutional and other accredited investors (the “PIPE Investors”), pursuant to which, among other things, the PIPE Investors agreed to purchase an aggregate of 23,800,002 shares of NuScale Corp Class A Common Stock immediately prior to the Closing at an aggregate cash purchase price of $236,000,000 (the “PIPE Investment”). The Subscription Agreements contain customary representations, warranties, covenants and agreements of Spring Valley and the PIPE Investors and are subject to customary closing conditions (including, without limitation, that there is no amendment or modification to the Merger Agreement that is material and adverse to the PIPE Investor) and termination rights (including a termination right if the transaction contemplated by the Subscription Agreement has not been consummated by June 19, 2022 (which date is 30 days following the Termination Date under the Merger Agreement), other than as a result of breach by the terminating party).
All Spring Valley shareholders are cordially invited to attend the Special Meeting. To ensure your representation at the Special Meeting, however, you are urged to complete, sign, date and return the proxy card accompanying the Proxy Statement/Prospectus as soon as possible. If you are a shareholder of record holding ordinary shares, you may also cast your vote in person at the Special Meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the Special Meeting and vote in person, obtain a proxy from your broker
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or bank. If you do not vote or do not instruct your broker or bank how to vote, your failure to vote will have no effect on the vote count for the proposals to be voted on at the Special Meeting.
Your vote is important regardless of the number of shares you own. Whether you plan to attend the Special Meeting or not, please sign, date and return the proxy card accompanying the Proxy Statement/Prospectus as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.
If you have any questions or need assistance voting your ordinary shares, please contact MacKenzie Partners, Inc., our proxy solicitor, by calling (800) 322-2885, or banks and brokers can call collect at (212) 929-5500.
Thank you for your participation. We look forward to your continued support.
| | April 7, 2022 | | | By Order of the Board of Directors, | |
| | | | |
/s/ William Quinn
William Quinn
Chairman of the Board of Directors |
|
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IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST (I) IF YOU HOLD SPRING VALLEY CLASS A ORDINARY SHARES THROUGH UNITS, ELECT TO SEPARATE YOUR UNITS INTO THE UNDERLYING SPRING VALLEY CLASS A ORDINARY SHARES AND SPRING VALLEY PUBLIC WARRANTS PRIOR TO EXERCISING YOUR REDEMPTION RIGHTS WITH RESPECT TO THE PUBLIC SHARES UNDERLYING SUCH UNITS, (II) SUBMIT A WRITTEN REQUEST TO THE TRANSFER AGENT, THAT YOUR PUBLIC SHARES BE REDEEMED FOR CASH, AND (III) DELIVER YOUR SPRING VALLEY CLASS A ORDINARY SHARES TO THE TRANSFER AGENT, PHYSICALLY OR ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM, IN EACH CASE IN ACCORDANCE WITH THE PROCEDURES AND DEADLINES DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS. IF THE TRANSACTIONS ARE NOT CONSUMMATED, THEN THE PUBLIC SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “THE EXTRAORDINARY GENERAL MEETING — REDEMPTION RIGHTS” IN THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE FOR MORE SPECIFIC INSTRUCTIONS.
This notice was mailed by Spring Valley on April 7, 2022.
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TABLE OF CONTENTS
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x
ADDITIONAL INFORMATION
If you have questions about the Transactions or the Special Meeting, or if you need to obtain copies of the enclosed Proxy Statement/Prospectus, proxy card or other documents incorporated by reference in the Proxy Statement/Prospectus, you may contact Spring Valley’s proxy solicitor listed below. You will not be charged for any of the documents you request.
MacKenzie Partners, Inc.
1407 Broadway, 27th Floor
New York, New York 10018
Shareholders may call toll free: (800) 322-2885
Banks and Brokers may call collect: (212) 929-5500
1407 Broadway, 27th Floor
New York, New York 10018
Shareholders may call toll free: (800) 322-2885
Banks and Brokers may call collect: (212) 929-5500
In order for you to receive timely delivery of the documents in advance of the Special Meeting to be held on April 28, 2022, you must request the information no later than five business days prior to the date of the Special Meeting, by April 21, 2022.
You should rely only on information contained in or incorporated by reference into this document. No one has been authorized to provide you with information that is different from the information contained in or incorporated by reference into this document. This document is dated April 7, 2022. You should not assume that the information contained in, or incorporated by reference into, this document is accurate as of any date other than that date. Neither our mailing of this document to Spring Valley shareholders, nor the issuance of equity by Spring Valley in connection with the Transactions subsequent to that date, will create any implication to the contrary. For a more detailed description of the information incorporated by reference in the enclosed Proxy Statement/Prospectus and how you may obtain it, see the section captioned “Where You Can Find More Information” beginning on page 282 of the enclosed Proxy Statement/Prospectus.
1
TRADEMARKS
NuScale Power, LLC, its logo, and its other registered and common law trade names, trademarks and service marks, including NuScale Power Module™, VOYGR™ and Triple Crown For Nuclear Plant Safety™, are the property of NuScale Power, LLC.
This document contains references to trademarks and service marks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Proxy Statement/Prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
2
SELECTED DEFINITIONS
When used in this Proxy Statement/Prospectus, unless the context otherwise requires:
•
“A&R NuScale LLC Agreement” refers to the Sixth Amended and Restated Limited Liability Company Agreement of NuScale LLC, which shall be effective at the Effective Time.
•
“Adjournment Proposal” refers to the Shareholder Proposal to be considered at the Special Meeting to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the Special Meeting.
•
“Advisory Charter Proposal” refers to the eight sub-proposals to take effect upon the Closing if the Organizational Documents Proposal is approved consisting of Advisory Charter Proposal A, Advisory Charter Proposal B, Advisory Charter Proposal C, Advisory Charter Proposal D, Advisory Charter Proposal E, Advisory Charter Proposal F, Advisory Charter Proposal G and Advisory Charter Proposal H.
•
“ASC” refers to the Financial Accounting Standards Board Accounting Standards Codification.
•
“Cayman Islands Companies Act” refers to the Companies Act (As Revised) of the Cayman Islands, as the same may be amended from time to time.
•
“CFIUS” means the Committee on Foreign Investment in the United States.
•
“Closing” refers to the closing of the Merger.
•
“Closing Acquiror Cash” refers to, without duplication, an amount equal to (a) the funds contained in the Trust Account as of immediately prior to the Closing; plus (b) all other cash and cash equivalents of Spring Valley as of immediately prior to the Closing; minus (c) the aggregate amount of cash proceeds that will be required to satisfy the redemption of any shares of Spring Valley Class A ordinary shares (to the extent not already paid); plus (d) the aggregate proceeds of the PIPE Investment that is actually paid to Spring Valley at or prior to the Closing; minus (e) any Transaction Expenses (as defined in the Merger Agreement) in excess of $43,000,000 in the aggregate.
•
“Closing Date” refers to the date on which the Closing actually occurs.
•
“Condition Precedent Proposals” refers, collectively, the Merger Agreement Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Nasdaq Proposal, the Director Election Proposal and the Long-Term Incentive Plan Proposal.
•
“COVID-19” refers to the novel coronavirus pandemic.
•
“DGCL” refers to the Delaware General Corporation Law, as amended.
•
“DOE” refers to the U.S. Department of Energy.
•
“Domestication” refers to the continuation of Spring Valley by a way of domestication of Spring Valley into a Delaware corporation, with the ordinary shares of Spring Valley becoming shares of common stock of the Delaware corporation under the applicable provisions of the Cayman Islands Companies Act and the DGCL; the term includes all matters and necessary or ancillary changes in order to effect such Domestication, including the adoption of the Proposed Charter (substantially in the form attached hereto at Annex C) consistent with the DGCL and changing the name and registered office of Spring Valley.
•
“EBITDA” refers to earnings/loss before interest, taxes, depreciation and amortization.
•
“Effective Time” refers to the time when the Merger is consummated upon the filing of articles of merger or at such later time as may be agreed by Spring Valley and NuScale LLC in writing and specified in such articles of merger.
•
“Exchange Act” refers to the Securities Exchange Act of 1934, as amended.
•
“Exchange Ratio” refers to the Exchange Ratio as defined in the Merger Agreement.
•
“Existing NuScale Common Units” refers to the “Common Units” of NuScale LLC as defined in the Existing NuScale LLCA.
3
•
“Existing NuScale LLCA” refers to the Fifth Amended and Restated Limited Liability Company Agreement of NuScale LLC.
•
“Existing Organizational Documents” refers to Spring Valley’s Amended and Restated Memorandum and Articles of Association.
•
“FASB” refers to the Financial Accounting Standards Board.
•
“Fluor” refers to Fluor Enterprises, Inc., a California corporation, which is wholly owned by Fluor Corporation (NYSE: FLR).
•
“Fluor Convertible Loan Agreement” refers to that certain Amended and Restated Senior Secured Convertible Loan Agreement, dated as of September 30, 2011, between Fluor and NuScale LLC, as amended from time to time.
•
“Fluor Convertible Note” refers to that certain amended and restated secured convertible promissory note issued by NuScale LLC on September 30, 2011 in the aggregate principal amount of $10,281,427.49 pursuant to the Fluor Convertible Loan Agreement.
•
“G&A” refers to general and administrative expenses.
•
“Initial Shareholders” refers to the Sponsor Sub and Spring Valley’s three independent directors.
•
“IPO” or “Initial Public Offering” refers to the initial public offering of Spring Valley, which closed on November 27, 2020.
•
“Merger” refers to the merger of Merger Sub with and into NuScale LLC, with NuScale LLC as the surviving entity.
•
“Merger Agreement” refers to the Agreement and Plan of Merger, dated as of December 13, 2021 (as the same has been or may be amended, modified, supplemented or waived from time to time), by and among Spring Valley, Merger Sub and NuScale LLC, a copy of which is attached hereto as Annex A.
•
“Merger Sub” refers to Spring Valley Merger Sub, LLC, an Oregon limited liability company and a wholly owned subsidiary of Spring Valley.
•
“MWe” refers to one million watts of electric power.
•
“MWt” refer to one million watts of thermal power.
•
“Nasdaq” refers to the Nasdaq Capital Market LLC.
•
“NPM” refers to NuScale Power Module™.
•
“NRC” refers to the U.S. Nuclear Regulatory Commission.
•
“NuScale Corp” refers to NuScale Power Corporation, a Delaware corporation and the combined company following the consummation of the Transactions, and its consolidated subsidiaries, including NuScale LLC.
•
“NuScale Corp Board” refers to the board of directors of NuScale Corp after the closing of the Transactions.
•
“NuScale Corp Class A Common Stock” refers to shares of Class A common stock, par value $0.0001 per share, of NuScale Corp immediately after the Closing.
•
“NuScale Corp Class B Common Stock” refers to shares of Class B common stock, par value $0.0001 per share, of NuScale Corp immediately after the Closing.
•
“NuScale Corp Common Stock” refers collectively to shares of NuScale Corp Class A Common Stock and NuScale Corp Class B Common Stock immediately after the Closing.
•
“NuScale Corp Private Placement Warrants” refers to the Spring Valley Private Placement Warrants immediately after the Closing.
•
“NuScale Corp Public Warrants” refers to the Spring Valley Public Warrants immediately after the Closing.
4
•
“NuScale Corp Warrants” refers collectively to the NuScale Corp Public Warrants and the NuScale Corp Private Placement Warrants immediately after the Closing.
•
“NuScale Equityholders” refers to the holders of NuScale LLC Units.
•
“NuScale LLC” refers to NuScale Power, LLC, an Oregon limited liability company.
•
“NuScale LLC Class A Units” refers to the Class A common units of NuScale LLC issued to NuScale Corp immediately after the Closing.
•
“NuScale LLC Class B Units” refers to non-voting, Class B common units of NuScale LLC existing immediately after the Closing.
•
“NuScale LLC Common Units” refers to the collective NuScale LLC limited liability company interests existing immediately after the Closing.
•
“NuScale LLC Units” refers to the collective NuScale LLC limited liability company interests existing immediately prior to the Effective Time to be reclassified into a number of NuScale LLC Class B Units in the Merger.
•
“NYSE” means the New York Stock Exchange.
•
“PCAOB” refers to the Public Company Accounting Oversight Board.
•
“PIPE Investment” refers to the PIPE Investors’ commitment to purchase an aggregate of 23,800,002 shares of NuScale Corp Class A Common Stock immediately prior to the Closing at an aggregate cash purchase price of $236,000,000 pursuant to the Subscription Agreements, of which $30,000,000 has been committed by a foreign investor and is subject to review by CFIUS.
•
“PIPE Investors” refers, collectively, to the institutional and accredited investors that entered into Subscription Agreements with Spring Valley.
•
“Private Placement” refers to the private placement of 8,900,000 Spring Valley Private Placement Warrants, at a price of $1.00 per Spring Valley Private Placement Warrant with the Sponsor, generating gross proceeds of $8,900,000 consummated simultaneously with the closing of the Initial Public Offering on November 27, 2020.
•
“Proposed Bylaws” refers to the proposed new bylaws of NuScale Corp in connection with the Transactions.
•
“Proposed Charter” refers to the proposed new certificate of incorporation of NuScale Corp in connection with the Transactions.
•
“Proposed Organizational Documents” refers to the Proposed Charter and the Proposed Bylaws.
•
“Public Shareholder” refers to a holder of Public Shares.
•
“Public Shares” refers to Spring Valley Class A ordinary shares sold in the Initial Public Offering.
•
“R&D” means Research and Development.
•
“Registration Rights Agreement” refers to that certain registration and shareholder rights agreement, dated November 23, 2020, that will be amended and restated prior to Closing.
•
“SEC” refers to the United States Securities and Exchange Commission.
•
“Securities Act” refers to the Securities Act of 1933, as amended.
•
“Shareholder Proposals” refer, collectively, to (i) the Merger Agreement Proposal, (ii) the Domestication Proposal, (iii) the Organizational Documents Proposal, (iv) the Advisory Charter Proposals, (v) the Nasdaq Proposal, (vi) the Director Election Proposal, (vii) the Long-Term Incentive Proposal and (viii) the Adjournment Proposal.
•
“SMR” refers to a small modular reactor.
•
“Special Meeting” refers to the extraordinary general meeting of Spring Valley to be held on April 28, 2022 at 10:00 a.m., Central Time, to vote on matters relating to the Transactions.
5
•
“Sponsor” refers to Spring Valley Acquisition Sponsor, LLC, a Delaware limited liability company.
•
“Sponsor Letter Agreement” refers to the sponsor letter agreement, dated as of December 13, 2021, by and among Sponsor Sub, Spring Valley and NuScale LLC.
•
“Sponsor Sub” refers to SV Acquisition Sponsor Sub, LLC, a Delaware limited liability company.
•
“Spring Valley” refers to Spring Valley Acquisition Corp., a special purpose acquisition company incorporated as a Cayman Islands exempt company.
•
“Spring Valley Board” refers to the Spring Valley board of directors.
•
“Spring Valley Class A ordinary shares” refers to the Class A ordinary shares, par value $0.0001 per share, of Spring Valley that were previously sold pursuant to Spring Valley’s Registration Statement on Form S-1 (File No. 333-249067) that will automatically convert by operation of law into a number of shares of NuScale Corp Class A Common Stock on a one-for-one basis, as a result of the Domestication.
•
“Spring Valley Class B ordinary shares” refers to the Class B ordinary shares, par value $0.0001 per share of Spring Valley that will automatically convert by operation of law into a number of shares of Spring Valley Class A ordinary shares immediately prior to the Domestication, which will then automatically convert by operation of law into a number of shares of NuScale Corp Class A Common Stock on a one-for-one basis, as a result of the Domestication.
•
“Spring Valley Founder Shares” refers to Spring Valley Class B ordinary shares purchased prior to the Initial Public Offering.
•
“Spring Valley Letter Agreement” refers to that certain Letter Agreement, dated November 23, 2020, by and between Spring Valley, the Sponsor and each of the officers and directors of Spring Valley.
•
“Spring Valley ordinary shares” refers to the collective shares of Spring Valley Class A ordinary shares and Spring Valley Class B ordinary shares.
•
“Spring Valley Private Placement Warrants” refers to the 8,900,000 warrants to purchase Spring Valley Class A ordinary shares that were issued in a private placement concurrently with the IPO.
•
“Spring Valley Public Warrants” refers to the 11,500,000 redeemable warrants issued in the IPO, entitling the holder thereof to purchase Spring Valley Class A ordinary shares.
•
“Spring Valley Share Redemptions” refers to the exercise of redemption rights by any Spring Valley shareholder.
•
“Spring Valley Warrants” refers collectively to the Spring Valley Private Placement Warrants together with the Spring Valley Public Warrants.
•
“Subscription Agreements” refers to the subscription agreements (as amended from time to time) that Spring Valley entered into with the PIPE Investors in connection with the Merger Agreement, each dated as of December 13, 2021, March 29, 2022 or April 4, 2022.
•
“Support Agreements” refers to the support agreements, dated as of December 13, 2021, by and among Sponsor Sub, each of Spring Valley’s directors and NuScale LLC.
•
“Tax Receivable Agreement” refers to that certain tax receivable agreement that will be entered into concurrent with the Closing by and among NuScale Corp, NuScale LLC and the NuScale Equityholders.
•
“Transactions” refers to the transactions contemplated by the Merger Agreement.
•
“Trust Account” refers to the trust account of Spring Valley which holds the net proceeds from the IPO and certain of the proceeds received in respect of the PIPE investment, together with interest earned thereon, less amounts released to pay taxes.
•
“Units” refers to a unit which Spring Valley sold in the IPO consisting of one Spring Valley Class A ordinary share and one half of a Spring Valley Public Warrant.
6
•
“U.S. GAAP” or “GAAP” refers to generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.
•
“VWAP” refers to the dollar volume-weighted average price.
7
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Proxy Statement/Prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future, including those relating to the Transactions. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Proxy Statement/Prospectus may include, for example, statements about:
•
our ability to complete the Merger with NuScale LLC or, if we do not consummate such Merger, any other initial business combination;
•
satisfaction or waiver of the conditions to the Merger including, among others: (i) the approval by our shareholders of the Condition Precedent Proposals being obtained; (ii) any applicable waiting period under the Hart-Scott-Rodino Act of 1976, as amended (the “HSR Act”), relating to the Merger Agreement having expired or been terminated; (iii) Closing Acquiror Cash of at least $200 million; and (iv) the approval by the NYSE of our initial listing application in connection with the Transactions;
•
our receipt of the aggregate proceeds of the PIPE Investment from the PIPE Investors;
•
the occurrence of any event, change or other circumstances, including the outcome of any legal proceedings that may be instituted against Spring Valley and NuScale LLC following the announcement of the Transactions, that could give rise to the termination of the Merger Agreement;
•
NuScale Corp’s financial and business performance following the Transactions, including financial projections and business metrics;
•
the ability to obtain and/or maintain the listing of the NuScale Corp Class A Common Stock and the warrants to acquire NuScale Corp Class A Common Stock on the NYSE, and the potential liquidity and trading of such securities;
•
the amount of redemptions made by Public Shareholders;
•
the risk that the proposed Transactions disrupt current plans and operations of NuScale LLC as a result of the announcement and consummation of the proposed Transactions;
•
the ability to recognize the anticipated benefits of the proposed Transactions, which may be affected by, among other things, competition and the ability of the combined company to grow and manage growth profitably and retain its key employees;
•
the ability to obtain regulatory approvals for NuScale Corp to deploy its SMRs in the United States and abroad;
•
costs related to the proposed Transactions;
•
changes in applicable laws or regulations;
•
our success in retaining or recruiting, or changes required in, our officers, key employees or directors following the completion of the Transactions, and our ability to attract and retain key personnel;
•
our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving the Transactions;
•
forecasts regarding end-customer adoption rates and demand for NuScale Corp’s products in markets that are new and rapidly evolving;
•
macroeconomic conditions resulting from COVID-19;
•
availability of a limited number of suppliers for NuScale Corp’s products and services;
•
increases in costs, disruption of supply, or shortage of materials;
8
•
NuScale Corp’s dependence on a small number of customers, and failure to add new customers or expand sales to NuScale Corp’s existing customers;
•
substantial regulations, which are evolving, and unfavorable changes or failure by NuScale Corp to comply with these regulations;
•
product liability claims, which could harm NuScale Corp’s financial condition and liquidity if NuScale Corp is not able to successfully defend or insure against such claims;
•
changes to United States trade policies, including new tariffs or the renegotiation or termination of existing trade agreements or treaties;
•
various environmental and safety laws and regulations that could impose substantial costs upon NuScale Corp and negatively impact NuScale Corp’s ability to operate NuScale Corp’s manufacturing facilities; outages and disruptions of NuScale Corp’s services if it fails to maintain adequate security and supporting infrastructure as it scales NuScale Corp’s information technology systems;
•
availability of additional capital to support business growth;
•
failure to protect NuScale Corp’s intellectual property;
•
intellectual property rights claims by third parties, which could be costly to defend, related significant damages and resulting limits on NuScale Corp’s ability to use certain technologies, developments and projections relating to NuScale Corp’s competitors and industry;
•
the anticipated growth rates and market opportunities of NuScale Corp;
•
the period over which NuScale Corp anticipates its existing cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements;
•
the potential for NuScale Corp’s business development efforts to maximize the potential value of its portfolio;
•
NuScale Corp’s estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
•
NuScale Corp’s financial performance;
•
the inability to develop and maintain effective internal controls;
•
the diversion of management’s attention and consumption of resources as a result of potential acquisitions of other companies;
•
failure to maintain adequate operational and financial resources or raise additional capital or generate sufficient cash flows;
•
cyber-attacks and security vulnerabilities;
•
the effect of COVID-19 pandemic on the foregoing, including our ability to consummate the Transactions due to the uncertainty resulting from the recent COVID-19 pandemic; and
•
other factors detailed under the section entitled “Risk Factors.”
The forward-looking statements contained in this Proxy Statement/Prospectus are based on current expectations and beliefs concerning future developments and their potential effects on us and/or NuScale Corp. There can be no assurance that future developments affecting us and/or NuScale Corp will be those that we and/or NuScale Corp have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control or the control of NuScale Corp) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some of these risks and uncertainties may in the future be amplified by the COVID-19 outbreak and there may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. Neither we nor NuScale Corp undertake
9
any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. You should not take any statement regarding past trends or activities as a representation that the trends or activities will continue in the future.
Before any shareholder grants its proxy or instructs how its vote should be cast or vote on the proposals to be put to the Special Meeting, such shareholder should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this Proxy Statement/Prospectus may adversely affect us.
10
QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS
AND THE EXTRAORDINARY GENERAL MEETING
AND THE EXTRAORDINARY GENERAL MEETING
The following are answers to certain questions that you may have regarding the Transactions and the Special Meeting. We urge you to read carefully the remainder of this Proxy Statement/Prospectus because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the annexes to this Proxy Statement/Prospectus and the documents incorporated by reference herein.
QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS
Q:
WHAT ARE THE TRANSACTIONS?
A:
Spring Valley, Merger Sub and NuScale LLC have entered into the Merger Agreement pursuant to which, among other things:
(a)
Spring Valley shall domesticate as a corporation in the State of Delaware and change its name to NuScale Power Corporation.
(b)
Upon consummation of the Transactions, the combined company will be organized in an “UP-C” structure, which allows the NuScale Equityholders to retain their equity ownership in NuScale LLC and provides potential future tax benefits for NuScale Corp and the NuScale Equityholders when the NuScale Equityholders ultimately exchange their NuScale LLC equity for NuScale Corp Class A Common Stock that would not be achievable apart from the “UP-C” structure and that will be shared with the NuScale Equityholders under a tax receivable agreement. Upon completion of the Transactions, (i) NuScale Corp will be the sole manager of NuScale LLC, (ii) NuScale LLC will directly or indirectly hold substantially all of the consolidated assets and business of NuScale Corp and (iii) NuScale Corp will consolidate the financial results of NuScale LLC in its combined financial statements. Though the “UP-C” structure will result in NuScale Corp and NuScale LLC being separate entities, the legal entity structure (with NuScale Corp being the sole manager of NuScale LLC) will provide the holders of NuScale Corp Class A Common Stock and NuScale Corp Class B Common Stock with the same governance rights of the Company in all material respects as if an “UP-C” structure was not utilized.
(c)
All membership interests of Merger Sub shall be converted into the Pass Through Number (as defined below) of NuScale LLC Class A Units and NuScale Corp shall be admitted as a member and designated as the sole manager of NuScale LLC. The “Pass Through Number” is equal to the number of shares, after consummation of the Domestication, of NuScale Corp Class A Common Stock that are outstanding immediately after the Closing, after giving effect to all transactions contemplated by the Merger Agreement and in the Subscription Agreements.
(d)
The Existing NuScale LLCA will be amended and restated to become the A&R NuScale LLC Agreement and, in connection therewith, (1) each preferred unit of NuScale LLC will be re-classified into a certain number of Existing NuScale Common Units, and immediately after such re-classification, (2) each Existing NuScale Common Unit will be re-classified into a number of NuScale LLC Class B Units equal to the Exchange Ratio (as defined in the Merger Agreement) and (3) each holder of Existing NuScale Common Units will receive a number of shares of duly authorized, validly issued, fully paid and nonassessable, non-economic voting shares of NuScale Corp Class B Common Stock equal to the number of NuScale LLC Class B Units held by such NuScale Equityholder as a result of clause (2) above. The A&R NuScale LLC Agreement will provide the holders of NuScale LLC Class B Units the right to exchange their NuScale LLC Class B Units, together with the cancelation for no consideration of an equal number of shares of NuScale Corp Class B Common Stock, for NuScale Corp Class A Common Stock (or, upon the election of NuScale Corp, cash in an amount equal to the net proceeds raised by selling such NuScale Corp Class A Common Stock in a contemporaneous underwritten offering), subject to certain restrictions set forth therein.
(e)
Each option to purchase one Existing NuScale Common Unit (a “NuScale Option”) will be converted into an economically equivalent number of options to purchase shares of NuScale Corp
11
Class A Common Stock based on the Exchange Ratio with the same aggregate exercise price, terms and conditions (including vesting and exercisability terms) as were applicable to the NuScale Option immediately prior to the Effective Time.
(f)
On or prior to the Closing Date, NuScale LLC shall cause the outstanding principal and unpaid accrued interest due on the outstanding Fluor Convertible Note to be converted into Existing NuScale Common Units (which will then be converted into and exchanged for NuScale LLC Class B Units and NuScale Corp Class B Common Stock in accordance with clause (d)(2) and (d)(3) above), and such converted Fluor Convertible Notes will no longer be outstanding and will cease to exist. Any liens securing obligations under Fluor Convertible Notes will be released and each holder of Fluor Convertible Notes will thereafter cease to have any rights with respect to such securities.
(g)
Immediately prior to the Domestication, each of the Spring Valley Class B ordinary shares that are issued and outstanding immediately prior to the Domestication will be converted into Spring Valley Class A ordinary shares, which will then automatically convert by operation of law into one share of NuScale Corp Class A Common Stock as a result of the Domestication.
Spring Valley will hold the Special Meeting to, among other things, obtain the approvals required for the Transactions and you are receiving this Proxy Statement/Prospectus in connection with such meeting. See “The Transactions — The Merger Agreement” beginning on page 86. In addition, a copy of the Merger Agreement is attached to this Proxy Statement/Prospectus as Annex A. We urge you to read carefully this Proxy Statement/Prospectus and the Merger Agreement in their entirety. See “The Transactions — Related Agreements” for additional information on related agreements, including the Tax Receivable Agreement, being entered into in connection with the consummation of the Transactions.
Q:
WHY AM I RECEIVING THIS DOCUMENT?
A:
Spring Valley is sending this Proxy Statement/Prospectus to its shareholders to help them decide how to vote their Spring Valley ordinary shares with respect to the matters to be considered at the Special Meeting.
The Merger cannot be completed unless Spring Valley’s shareholders approve the Merger Agreement Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Nasdaq Proposal, the Director Election Proposal and the Long-Term Incentive Plan Proposal set forth in this Proxy Statement/Prospectus for their approval. Information about the Special Meeting, the Transactions and the other business to be considered by shareholders at the Special Meeting is contained in this Proxy Statement/Prospectus.
This document constitutes a proxy statement of Spring Valley and a prospectus of Spring Valley. It is a proxy statement because the Spring Valley Board is soliciting proxies using this Proxy Statement/Prospectus from its shareholders. It is a prospectus because Spring Valley, in connection with the Merger Agreement and the Transactions contemplated thereby, is offering shares of NuScale Corp Class A Common Stock in exchange for outstanding Spring Valley Class A ordinary shares. See “The Transactions — The Merger Agreement — Conversion; Consideration to NuScale Equityholders in the Transactions.”
Q:
WHAT WILL SPRING VALLEY SHAREHOLDERS OWN AS A RESULT OF THE TRANSACTIONS?
A:
As of the date of this Proxy Statement/Prospectus, there are 28,750,000 Spring Valley ordinary shares issued and outstanding, which includes an aggregate of 5,750,000 Spring Valley Class B ordinary shares held by the Initial Shareholders, including the Sponsor Sub. In addition, as of the date of this Proxy Statement/Prospectus, there is outstanding an aggregate of 20,400,000 Spring Valley Warrants to acquire ordinary shares, comprised of 11,500,000 Spring Valley Public Warrants and 8,900,000 Spring Valley Private Placement Warrants to acquire Spring Valley Class A ordinary shares.
Following the consummation of the Transactions, and assuming, among other things, (1) that no Spring Valley shareholders exercise redemption rights with respect to their Spring Valley ordinary shares
12
upon completion of the Transactions and (2) no exchange of NuScale LLC Class B Units and NuScale Corp Class B Common Stock for shares of NuScale Corp Class A Common Stock by NuScale Equityholders, holders of Spring Valley Class A ordinary shares and holders of Spring Valley Class B ordinary shares (including the Sponsor and its affiliates) will hold 43.8% and 10.9%, respectively, of the issued and outstanding shares of NuScale Corp Class A Common Stock and 0% of the issued and outstanding shares of NuScale Corp Class B Common Stock, and will accordingly hold 10.0% and 2.5%, respectively, of the NuScale Corp Common Stock expected to be outstanding immediately after the Transactions. See “Unaudited Pro Forma Condensed Combined Financial Information” and “The Transactions — Ownership of NuScale Corp” for additional information pertaining to the ownership of NuScale Corp following the consummation of the Transactions.
Q:
WHAT WILL NUSCALE EQUITYHOLDERS RECEIVE AS A RESULT OF THE TRANSACTIONS?
A:
As of the date of this Proxy Statement/Prospectus, there are 651,795,315.23 issued and outstanding NuScale LLC Units, 18,532,885.60 of which are designated as Common Units, 336,826,395.91 of which are designated as Series A Preferred Units, 67,674,314.93 of which are designated as Series A-1 Preferred Units, 68,348,828.04 of which are designated as Series A-2 Preferred Units, 60,091,287.13 of which are designated as Series A-3 Preferred Units, 30,903,171.56 of which are designated as Series A-4 Preferred Units and 69,418,432.05 of which are designated as Series A-5 Preferred Units pursuant to the Existing NuScale LLCA.
Following the consummation of the Transactions, and assuming, among other things, that no Spring Valley shareholders exercise redemption rights with respect to their Spring Valley ordinary shares upon completion of the Transactions, the NuScale Equityholders will hold 0% of the issued and outstanding NuScale Corp Class A Common Stock and 100% of the NuScale Corp Class B Common Stock, and accordingly will hold 77.8% of the NuScale Corp Common Stock expected to be outstanding immediately after the Transactions, and will hold 100% of the NuScale LLC Class B Units expected to be outstanding immediately after the Transactions. See “Unaudited Pro Forma Condensed Combined Financial Information” and “The Transactions — Ownership of NuScale Corp” for additional information pertaining to the ownership of NuScale Corp following the consummation of the Transactions.
Q:
WHAT EQUITY STAKE WILL CURRENT SPRING VALLEY SHAREHOLDERS AND NUSCALE EQUITYHOLDERS HOLD IN NUSCALE CORP IMMEDIATELY AFTER THE CONSUMMATION OF THE TRANSACTIONS?
A:
The following table summarizes the pro forma economic ownership of NuScale Corp Class A Common Stock following the consummation of the Transactions under the two redemption scenarios contemplated by this Proxy Statement/Prospectus (assuming, among other things, the full conversion of NuScale LLC Class B Units and NuScale Corp Class B Common Stock for shares of NuScale Corp Class A Common Stock by all NuScale Equityholders). For additional information, see “Unaudited Pro Forma Condensed Combined Financial Information.”
| | | |
Economic Interests in NuScale Corp
|
| |||||||||
| | | |
Assuming No
Redemptions(1) |
| |
Assuming Maximum
Redemptions(2) |
| ||||||
|
Spring Valley Public Shareholders
|
| | | | 10.0% | | | | | | 0.0% | | |
|
Initial Shareholders(3)
|
| | | | 1.8% | | | | | | 1.7% | | |
|
PIPE Investors
|
| | | | 10.4% | | | | | | 11.6% | | |
|
NuScale Equityholders
|
| | | | 77.8% | | | | | | 86.7% | | |
| Total | | | | | 100% | | | | | | 100% | | |
(1)
Assumes that no Spring Valley Public Shareholders exercise redemption rights with respect to their Spring Valley Class A ordinary shares for a pro rata share of the funds in the Trust Account.
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(2)
Assumes that Spring Valley Public Shareholders holding all 23,000,000 Spring Valley Class A ordinary shares will exercise their redemption rights for an aggregate payment of $232.2 million (based on the estimated per share redemption price of approximately $10.10 per share) from the Trust Account.
(3)
Includes 4,023,803 shares (including 3,903,803 shares held by the Sponsor and its affiliates) of NuScale Corp Class A Common Stock in the Assuming No Redemptions scenario, or 3,442,011 shares (including 3,322,011 shares held by the Sponsor and its affiliates) of NuScale Corp Class A Common Stock in the Assuming Maximum Redemptions scenario, subject to certain vesting forfeiture terms with respect to up to 35% of the NuScale Corp Common Stock beneficially owned by Sponsor immediately following the Closing. In both scenarios, does not include 500,000 shares to be acquired by certain affiliates of Spring Valley in the PIPE Investment.
The actual results will likely be within the parameters described by these two scenarios; however, there can be no assurance regarding which scenario will be closer to the actual results. Please see the section entitled “Notes to the Unaudited Pro Forma Condensed Combined Financial Information” for further information.
Q:
WHAT HAPPENS IF A SUBSTANTIAL NUMBER OF THE PUBLIC SHAREHOLDERS VOTE IN FAVOR OF THE MERGER AGREEMENT PROPOSAL AND EXERCISE THEIR REDEMPTION RIGHTS?
A:
Our Public Shareholders are not required to vote “AGAINST” the Merger Agreement Proposal in order to exercise their redemption rights. Accordingly, the Merger may be consummated even though the funds available from the Trust Account and the number of Public Shareholders are reduced as a result of redemptions by Public Shareholders, subject to the satisfaction or waiver of the condition that Closing Acquiror Cash equals no less than $200 million.
In no event will Spring Valley redeem Public Shares in an amount that would cause our net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001 after giving effect to the Transactions and the PIPE Investment.
Additionally, as a result of redemptions, the trading market for the NuScale Corp Common Stock may be less liquid than the market for the Public Shares was prior to consummation of the Transactions and we may not be able to meet the listing standards for the NYSE or another national securities exchange.
Q:
WHAT CONDITIONS MUST BE SATISFIED TO COMPLETE THE MERGER?
A:
The consummation of the Merger is conditioned upon, among other things, (i) the approval by the Spring Valley shareholders of the Condition Precedent Proposals being obtained; (ii) any applicable waiting period under the HSR Act relating to the Merger having expired or been terminated; (iii) the aggregate Closing Acquiror Cash being at least $200 million; and (iv) the NuScale Corp Common Stock to be issued in connection with the Transactions having been approved for listing on the NYSE. Therefore, unless these conditions are waived by the applicable parties to the Merger Agreement, the Merger Agreement could terminate and the Merger may not be consummated. For more information about conditions to the consummation of the Merger, see “The Transactions — The Merger Agreement.”
Q:
WHEN WILL THE TRANSACTIONS BE COMPLETED?
A:
The parties currently expect that the Transactions will be completed during the first half of 2022. However, neither Spring Valley nor NuScale LLC can assure you of when or if the Transactions will be completed, and it is possible that factors outside of the control of the companies could result in the Transactions being completed at a different time or not at all. See “Risk Factors — Risks Related to the Transactions and Spring Valley.” The Merger Agreement may be terminated by either NuScale LLC or Spring Valley if the Merger is not consummated by May 20, 2022, (as such date may be extended upon the mutual written consent of NuScale LLC and Spring Valley). See “The Transactions” beginning on page 86.
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Q:
WHAT HAPPENS IF THE TRANSACTIONS ARE NOT COMPLETED?
A:
If Spring Valley is not able to complete the Merger with NuScale LLC for any reason nor able to complete another business combination by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option), we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and the Spring Valley Board, liquidate and dissolve, subject in the cases of clauses (ii) and (iii) to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
QUESTIONS AND ANSWERS ABOUT SPRING VALLEY’S SPECIAL MEETING
Q:
WHAT AM I BEING ASKED TO VOTE ON AND WHY IS THIS APPROVAL NECESSARY?
A:
Spring Valley shareholders are being asked to vote on the following Shareholder Proposals:
1.
the Merger Agreement Proposal;
2.
the Domestication Proposal;
3.
the Organizational Documents Proposal;
4.
the Advisory Charter Proposal;
5.
the Nasdaq Proposal;
6.
the Director Election Proposal;
7.
the Long-Term Incentive Plan Proposal; and
8.
the Adjournment Proposal.
The Merger is conditioned upon the approval of the Merger Agreement Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Nasdaq Proposal, the Director Election Proposal and the Long-Term Incentive Plan Proposal, subject to the terms of the Merger Agreement. The Merger is not conditioned on the approval of the Advisory Charter Proposal or the Adjournment Proposal. If the Merger Agreement Proposal is not approved, the other proposals (except the Adjournment Proposal) will not be presented to the shareholders for a vote.
Q:
WHY IS SPRING VALLEY PROPOSING THE TRANSACTIONS?
A:
Spring Valley is a blank check company incorporated on August 20, 2020 as a Cayman Islands exempted entity 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, which we refer to throughout this Proxy Statement/Prospectus as our initial business combination. Based on Spring Valley’s business activities, it is a “shell company” as defined under the Exchange Act because it has no operations and nominal assets consisting almost entirely of cash.
Spring Valley has identified several general criteria and guidelines to evaluate prospective acquisition opportunities. Spring Valley has sought to acquire a business or company that: (i) is sustainability or energy transition focused; (ii) has an established business and recognized market leaders; (iii) will benefit from being a public company; (iv) has an experienced management team; (v) has an attractive long term business model; (vi) utilizes technology to create a strong barrier to entry; (vii) has a large addressable market; and (viii) has the potential to generate strong free cash flow.
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Based on its due diligence investigations of NuScale LLC and the industry in which it operates, including the financial and other information provided by NuScale LLC in the course of negotiations, the Spring Valley Board believes that NuScale LLC meets the general criteria and guidelines listed above. However, there is no assurance of this. See “The Transactions — The Spring Valley Board’s Reasons for the Transactions.”
Although the Spring Valley Board believes that the Merger with NuScale LLC presents a unique business combination opportunity and is in the best interests of Spring Valley and its shareholders, the Spring Valley Board did consider certain potentially material negative factors in arriving at that conclusion. These factors are discussed in greater detail in the sections entitled “The Transactions — The Spring Valley Board’s Reasons for the Transactions” and “Risk Factors — Risks Related to NuScale LLC’s Business and Industry.”
Q:
WHAT IS THE TAX RECEIVABLE AGREEMENT?
A:
In connection with the Closing, NuScale Corp will enter into the Tax Receivable Agreement with NuScale LLC, each of the TRA Holders (as defined in the Tax Receivable Agreement) party thereto and Fluor, in its capacity as TRA Representative (as defined in the Tax Receivable Agreement). Pursuant to the Tax Receivable Agreement, NuScale Corp will be required to pay 85% of the net cash tax savings from certain tax benefits, if any, that it realizes (or in certain cases is deemed to realize) as a result of any increases in tax basis and other tax benefits resulting from any exchange by the TRA Holders of NuScale LLC Class B Units for shares of NuScale Corp Class A Common Stock or cash in the future. Any such payments to TRA Holders will reduce the cash provided by the tax savings generated from future exchanges that would otherwise have been available to NuScale Corp for other uses, including reinvestment or dividends to Class A stockholders. Cash tax savings from the remaining 15% of the tax benefits will be retained by NuScale Corp. NuScale Corp’s obligations under the Tax Receivable Agreement accelerate upon a change in control and certain other termination events, as defined therein. These payments are the obligation of NuScale Corp and not of NuScale LLC.
The term of the Tax Receivable Agreement will continue until all such tax benefits have been utilized or expired unless NuScale Corp exercises its right to terminate the Tax Receivable Agreement for an amount representing the present value of anticipated future tax benefits under the Tax Receivable Agreement (computed using certain simplifying assumptions) or certain other acceleration events occur (including upon a change of control). For more information on the Tax Receivable Agreement, please see the sections entitled “Risk Factors — Risks Related to Our Structure and Governance — Pursuant to the Tax Receivable Agreement, NuScale Corp will be required to pay to certain NuScale Equityholders 85% of certain tax benefits, if any, that it realizes (or in certain cases is deemed to realize) as a result of any increases in tax basis and related tax benefits resulting from any exchange of NuScale LLC Units for shares of NuScale Corp Class A Common Stock or cash in the future, and those payments be be substantial” and “Certain Relationships and Related Party Transactions — Tax Receivable Agreement.”
Q:
HOW WILL THE COMBINED COMPANY BE MANAGED FOLLOWING THE TRANSACTIONS?
A:
Immediately following the Closing, it is expected that the current management of NuScale LLC will become the management of NuScale Corp, and the NuScale Corp Board will initially consist of eight (8) directors or, upon receipt of CFIUS approval of the Fluor-JNI Purchase (as defined below), nine (9) directors. Pursuant to the Merger Agreement and the JNI Rights Letter (as defined below), the NuScale Corp Board will initially consist of (i) seven (7) individuals designated by NuScale LLC, three (3) of whom shall each qualify as “independent directors” under the applicable listing and corporate governance rules and regulations of the NYSE, (ii) one (1) individual designated by Spring Valley, and (iii) upon receipt of CFIUS approval of the Fluor-JNI Purchase, one (1) individual designated by Japan NuScale Innovation, LLC. Please see the sections entitled “Management of NuScale Prior To and Following the Transactions” and “Certain Relationships and Related Party Transactions — NuScale LLC Related Person Transactions — Secondary Sale to Japan NuScale Innovation, LLC” for further information.
16
Q:
DID THE SPRING VALLEY BOARD OBTAIN A THIRD-PARTY VALUATION OR FAIRNESS OPINION IN DETERMINING WHETHER OR NOT TO PROCEED WITH THE TRANSACTIONS?
A:
The Spring Valley Board did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Transactions. Spring Valley’s officers, directors and advisors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of Spring Valley’s financial advisors, enabled them to make the necessary analyses and determinations regarding the Transactions. In addition, Spring Valley’s officers, directors and advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of Spring Valley’s officers, board of directors and advisors in valuing NuScale LLC’s business.
Q:
DO I HAVE REDEMPTION RIGHTS?
A:
If you are a holder of Public Shares, you have the right to request that we redeem all or a portion of your Public Shares for cash if you follow the procedures and deadlines described elsewhere in this Proxy Statement/Prospectus. Public Shareholders may elect to redeem all or a portion of the Public Shares held by them regardless of if or how they vote in respect of the Merger Agreement Proposal. If you wish to exercise your redemption rights, please see the answer to the next question: “How do I exercise my redemption rights?”
Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of such Public Shareholder or any other person with whom such Public Shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its Public Shares with respect to more than an aggregate of 15% of the Public Shares. Accordingly, if a Public Shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the Public Shares, then any such shares in excess of that 15% limit would not be redeemed for cash and such shares would be converted into NuScale Corp Class A Common Stock in connection with the Transactions.
The Initial Shareholders have agreed to waive their redemption rights with respect to all of their Spring Valley Class B ordinary shares in connection with the consummation of the Transactions. As is customary in transactions of this type, the Initial Shareholders did not receive any consideration for waiving their redemption rights. Such Spring Valley Class B ordinary shares will be excluded from the pro rata calculation used to determine the per-share redemption price.
Q:
HOW DO I EXERCISE MY REDEMPTION RIGHTS?
A:
If you are a holder of Spring Valley Class A ordinary shares and wish to exercise your redemption rights, you must demand that Spring Valley redeem your shares for cash no later than the second business day preceding the vote on the Merger Agreement Proposal by delivering your share certificates (if any) and other redemption forms to Continental Stock Transfer & Trust Company, Spring Valley’s transfer agent (the “transfer agent” or “Continental”), physically or electronically using The Depository Trust Company’s (“DTC”) Deposit and Withdrawal at Custodian (“DWAC”) system prior to the vote at the Special Meeting. Holders of Units must elect to separate the underlying Spring Valley Class A ordinary shares and Spring Valley Public Warrants prior to exercising redemption rights with respect to the Spring Valley Class A ordinary shares. If holders hold their Units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the Units into underlying Spring Valley Class A ordinary shares and Spring Valley Public Warrants, or if a holder holds Units registered in its own name, the holder must contact the transfer agent directly and instruct them to do so. Any holder of Spring Valley Class A ordinary shares will be entitled to demand that such holder’s shares be redeemed for a full pro rata portion of the amount then in the Trust Account (which, for illustrative purposes, was approximately $232.3 million, or approximately $10.10 per Spring Valley Class A ordinary share, as of March 25, 2022, the record date). Such amount, including interest earned on the funds held in the Trust Account and not previously released to Spring Valley to pay its income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), will be paid promptly upon consummation of the Transactions. However, the proceeds deposited in the Trust Account could
17
become subject to the claims of Spring Valley’s creditors, if any, which could have priority over the claims of Spring Valley’s Public Shareholders, regardless of whether such Public Shareholders vote for or against the Merger Agreement Proposal. Therefore, the per-share distribution from the Trust Account in such a situation may be less than originally anticipated due to such claims. Your vote on any Shareholder Proposal will have no impact on the amount you will receive upon exercise of your redemption rights.
Any request for redemption made by a holder of Spring Valley Class A ordinary shares may not be withdrawn once submitted to Spring Valley unless the Spring Valley Board determines (in its sole discretion) to permit the withdrawal of such redemption request (which it may do in whole or in part).
Any corrected or changed proxy card or written demand of redemption rights must be received by the transfer agent prior to the vote taken on the Merger Agreement Proposal at the Special Meeting. No demand for redemption will be honored unless the holder’s share certificates (if any) and other redemption forms have been delivered (either physically or electronically) to the transfer agent prior to the vote at the Special Meeting.
If a holder of Spring Valley Class A ordinary shares properly makes a request for redemption and the certificates for the Spring Valley Class A ordinary shares (if any) along with the redemption forms are delivered as described to Spring Valley’s transfer agent as described herein, then, if the Transactions are consummated, Spring Valley will redeem these shares for a pro rata portion of funds deposited in the Trust Account. If you exercise your redemption rights, then you will be exchanging your Spring Valley Class A ordinary shares for cash.
Q:
HOW DO REDEMPTIONS AFFECT THE VALUE OF MY NUSCALE CORP COMMON STOCK?
A: The value of shares of NuScale Corp Common Stock held by a non-redeeming Spring Valley Public Shareholder may be affected by the number of shares that are redeemed, as well as other events that may significantly dilute the value of such shares of NuScale Corp Common Stock. The following table shows the potential effect of varying levels of redemptions and certain dilutive events on the per share value of the NuScale Corp Common Stock held by non-redeeming Spring Valley Public Shareholders, in each case assuming an enterprise value of $1.875 billion for NuScale Corp upon consummation of the Merger.
| | | |
No Redemption
Scenario |
| |
50% Redemption
Scenario |
| |
Maximum
Redemption Scenario |
| |||||||||
|
Shares held by Spring Valley Public Shareholders
|
| | | | 23,000,000 | | | | | | 11,500,000 | | | | | | — | | |
|
Spring Valley Founder Shares(1)
|
| | | | 4,023,803 | | | | | | 3,786,813 | | | | | | 3,442,011 | | |
|
PIPE Shares
|
| | | | 23,800,002 | | | | | | 23,800,002 | | | | | | 23,800,002 | | |
|
NuScale Equityholders
|
| | | | 178,268,640 | | | | | | 178,268,640 | | | | | | 178,268,640 | | |
|
Total Shares
|
| | | | 229,092,445 | | | | | | 217,355,455 | | | | | | 205,510,653 | | |
|
Remaining NuScale Consideration Shares issuable upon exercise of NuScale Corp Options
|
| | | | 14,910,410 | | | | | | 14,910,410 | | | | | | 14,910,410 | | |
|
NuScale Corp Class A Common Stock issuable upon exercise of the Spring Valley Warrants
|
| | | | 20,400,000 | | | | | | 20,400,000 | | | | | | 20,400,000 | | |
|
Other – Earn Out Shares(1)
|
| | | | 1,726,197 | | | | | | 1,598,587 | | | | | | 1,412,924 | | |
|
Total Diluted Shares at Closing
|
| | | | 266,129,052 | | | | | | 254,264,452 | | | | | | 242,233,987 | | |
| Implied Value per Share: | | | | | | | | | | | | | | | | | | | |
|
Shares issued and outstanding(2)
|
| | | $ | 9.20 | | | | | $ | 9.16 | | | | | $ | 9.12 | | |
|
Shares issued, outstanding and fully diluted(3)
|
| | | $ | 7.97 | | | | | $ | 7.88 | | | | | $ | 7.79 | | |
|
Shares issued, outstanding, fully diluted assuming full vesting of Earn Out Shares(4)
|
| | | $ | 7.92 | | | | | $ | 7.83 | | | | | $ | 7.74 | | |
|
Effective Underwriting Fee(5)(6)
|
| | | | 2.70% | | | | | | 3.59% | | | | | | 5.36% | | |
18
(1)
Pursuant to the Sponsor Letter Agreement, if available cash is less than $432 million, at the Closing, Sponsor shall forfeit and cancel a number of Spring Valley Founder Shares equal to 895,065 in the Assuming Maximum Redemption scenario or 364,600 in the Assuming 50% Redemption scenario. Spring Valley Founders Shares includes “Earn Out Shares.” Fifty percent of the Earn Out Shares vest, pursuant to the Sponsor Letter Agreement, if, over any 20 trading days within a 30-day window during the 60 months following the closing, the dollar volume-weighted average price (“VWAP”) is greater than or equal to $12.00 per share. The remainder of the Earn Out Shares vest if, over any 20 trading days within a 30-day window during the 60 months following the closing, the VWAP is greater than or equal to $14.00 per share.
(2)
Calculation of implied value per share assumes (i) enterprise value of $1.875 billion of NuScale Corp upon consummation of the Merger, (ii) $236,000,000 of cash proceeds received from the PIPE Investment upon consummation of the Merger, (iii) approximately $232,320,939 of funds in the Trust Account immediately prior to any redemptions, (iv) no exercise of the 14,910,410 NuScale Corp Options, and (v) no exercise of the 20,400,000 NuScale Corp Warrants that will remain outstanding after consummation of the Merger regardless of the level of redemptions.
(3)
Calculation of implied value per share assumes (i) enterprise value of $1.875 billion of NuScale Corp upon consummation of the Merger, (ii) $236,000,000 of cash proceeds received from the PIPE Investment upon consummation of the Merger, (iii) approximately $232,320,939 of funds in the Trust Account immediately prior to any redemptions, (iv) exercise of the 14,910,410 NuScale Corp Options and (v) exercise of the 20,400,000 NuScale Corp Warrants that will remain outstanding after consummation of the Merger regardless of the level of redemptions.
(4)
Calculation of implied value per share assumes (i) enterprise value of $1.875 billion of NuScale Corp upon consummation of the Merger, (ii) $236,000,000 of cash proceeds received from the PIPE Investment upon consummation of the Merger, (iii) approximately $232,320,939 of funds in the Trust Account immediately prior to any redemptions, (iv) exercise of the 14,910,410 NuScale Corp Options, (v) exercise of the 20,400,000 NuScale Corp Warrants that will remain outstanding after consummation of the Merger regardless of the level of redemptions, and (vi) the Earn Out Shares indicated for each redemption scenario.
(5)
Includes $4,600,000 in underwriting fees paid in connection with Spring Valley’s Initial Public Offering and $8,050,000 in deferred underwriting fees in connection with Spring Valley’s Initial Public Offering.
(6)
The level of redemption impacts the effective underwriting fee incurred in connection with Spring Valley’s Initial Public Offering. In the Assuming No Redemption scenario, the effective underwriting fee is based on $236.0 million in proceeds from the PIPE Investment and $232.3 million in the Trust Account. In the Assuming 50% Redemption scenario, the effective underwriting fee is based on $236.0 million in proceeds from the PIPE Investment and $116.2 million in the Trust Account. In the Assuming Maximum Redemption scenario, the effective underwriting fee is based on $236.0 million in proceeds from the PIPE Investment and $0 in the Trust Account.
The foregoing table is provided for illustrative purposes only and there can be no assurance that the NuScale Corp Common Stock will trade at the illustrative per share values set forth therein, regardless of the levels of redemption. See “Risk Factors — Risks Related to the Transactions and Spring Valley — The price of NuScale Corp Common Stock and NuScale Corp’s warrants may be volatile.” Further, we have not received any indications from shareholders regarding their intentions to redeem or retain their shares of Spring Valley Class A ordinary shares upon consummation of the Merger and have not formulated any expectation as to which, if any, of the illustrative scenarios included in the foregoing table is most likely.
19
Q:
WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF EXERCISING MY REDEMPTION RIGHTS?
A:
We expect that a U.S. Holder (as defined in “Material United States Federal Income Tax Considerations — U.S.Holders” below) that exercises its redemption rights to receive cash from the Trust Account in exchange for its Public Shares will generally be treated as selling such Public Shares resulting in the recognition of capital gain or capital loss. There may be certain circumstances in which the redemption may be treated as a distribution for United States federal income tax purposes depending on the amount of NuScale Corp Common Stock that a U.S. Holder owns or is deemed to own (including through the ownership of NuScale Corp warrants). For a more complete discussion of the United States federal income tax considerations of an exercise of redemption rights, see “Material United States Federal Income Tax Considerations.”
Additionally, because the Domestication will occur immediately prior to the redemption of shares from U.S. Holders that exercise redemption rights, U.S. Holders exercising redemption rights will be subject to the potential tax consequences of Section 367 of the United States Internal Revenue Code of 1986, as amended (the “Code”), and the potential tax consequences of the rules applicable to a company treated as a “passive foreign investment company” (“PFIC”) as a result of the Domestication. The tax consequences of exercising redemption rights are discussed more fully below under “Material United States Federal Income Tax Considerations — U.S. Holders — Effects to U.S.Holders of Exercising Redemption Rights” beginning on page 159.
Q:
DO I HAVE APPRAISAL RIGHTS IN CONNECTION WITH THE PROPOSED MERGER AND THE PROPOSED DOMESTICATION?
A:
No. Neither Spring Valley shareholders nor Spring Valley warrant holders have appraisal rights in connection with the Merger or the Domestication under the Cayman Islands Companies Act or under the DGCL.
Q:
WHY IS SPRING VALLEY PROPOSING THE DOMESTICATION?
A:
The Spring Valley Board believes that there are significant advantages to us that will arise as a result of a change of our domicile to Delaware. Further, the Spring Valley Board believes that any direct benefit that the DGCL provides to a corporation also indirectly benefits its stockholders, who are the owners of the corporation. The Spring Valley Board believes that there are several reasons why transfer by way of continuation to Delaware is in the best interests of Spring Valley and its shareholders, including, (i) the prominence, predictability and flexibility of the DGCL, (ii) Delaware’s well-established principles of corporate governance and (iii) the increased ability for Delaware corporations to attract and retain qualified directors, each of the foregoing are discussed in greater detail in the section entitled “Proposal No. 2 — The Domestication Proposal — Reasons for the Domestication.”
To effect the Domestication, we will file an application for deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and file a certificate of corporate domestication and a certificate of incorporation with the Secretary of State of the State of Delaware, under which we will be domesticated and continue as a Delaware corporation.
The approval of the Domestication Proposal is a condition to Closing under the Merger Agreement. The approval of the Domestication Proposal requires a special resolution under the Cayman Islands Companies Act, being the affirmative vote of the holders of at least two-thirds (2/3rds) of the Spring Valley ordinary shares who, being present in person or represented by proxy at the extraordinary general meeting and entitled to vote on such matter, vote on such matter. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal.
Q:
WHAT IS INVOLVED WITH THE DOMESTICATION?
A:
The Domestication will require Spring Valley to file certain documents in both the Cayman Islands and the State of Delaware. At the effective time of the Domestication, Spring Valley will cease to be a company incorporated under the laws of the Cayman Islands and in connection with the Transactions,
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Spring Valley will continue as a Delaware corporation. The Existing Organizational Documents will be replaced by the Proposed Organizational Documents and your rights as a shareholder will cease to be governed by the laws of the Cayman Islands and will be governed by Delaware law. For further details, please see “Proposal No. 2 — The Domestication Proposal.”
Q:
HOW WILL THE DOMESTICATION AFFECT MY PUBLIC SHARES, PUBLIC WARRANTS AND UNITS?
A:
On the effective date of the Domestication, (i) if you choose not to redeem your Public Shares for cash, then (a) each then issued and outstanding Spring Valley Class A ordinary share that you hold will convert automatically, on a one-for-one basis, into one share of NuScale Corp Class A Common Stock and (b) each then issued and outstanding Spring Valley Public Warrant that you hold will convert automatically, on a one-for-one basis, into a warrant to acquire NuScale Corp Class A Common Stock; and (ii) NuScale Corp Class B Common Stock shall be authorized, each share of which will have voting rights equal to a share of NuScale Corp Class A Common Stock but which shall have no entitlement to earnings or distributions of NuScale Corp.
Q:
WHAT HAPPENS TO THE FUNDS DEPOSITED IN THE TRUST ACCOUNT AFTER CONSUMMATION OF THE TRANSACTIONS?
A:
Following the closing of the Initial Public Offering, an amount equal to $232,300,000 ($10.10 per unit) of the net proceeds from our Initial Public Offering and the sale of the Spring Valley Private Placement Warrants were placed in the Trust Account. As of December 31, 2021, funds in the Trust Account totaled approximately $232,320,939, all of which were held in United States treasury securities. These funds will remain in the Trust Account, except for the withdrawal of interest to pay income taxes, if any, until the earliest of (i) the completion of a business combination (including the closing of the Transactions) or (ii) the redemption of all of the Public Shares if we are unable to complete a business combination by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option), subject to applicable law.
If our initial business combination is paid for using equity or debt securities or not all of the funds released from the Trust Account are used for payment of the consideration in connection with our initial business combination or used for redemptions or purchases of the Public Shares, we may apply the balance of the cash released to us from the Trust Account for general corporate purposes, including for maintenance or expansion of operations of NuScale Corp, the payment of principal or interest due on indebtedness incurred in completing our Transactions, to fund the purchase of other companies or for working capital. See “Summary — Sources and Uses of Cash for the Transactions.”
Q:
WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE DOMESTICATION?
A:
As discussed more fully under “Material United States Federal Income Tax Considerations” below, it is intended that the Domestication qualify as a tax-free reorganization within the meaning of Section 368(a)(l)(F) of the Code. However, due to the absence of direct guidance on the application of Section 368(a)(1)(F) to a statutory conversion of a corporation holding only investment-type assets such as Spring Valley, this result is not entirely clear. Assuming that the Domestication so qualifies, U.S. Holders (as defined in “Material United States Federal Income Tax Considerations — U.S. Holders” below) of Spring Valley ordinary shares will be subject to Section 367(b) of the Code and, as a result:
A U.S. Holder of Spring Valley ordinary shares whose Spring Valley ordinary shares have a fair market value of less than $50,000 at the time of the Domestication should not recognize any gain or loss and generally should not be required to include any part of Spring Valley’s earnings in income;
A U.S. Holder of Spring Valley ordinary shares whose Spring Valley ordinary shares have a fair market value of $50,000 or more on the date of the Domestication, but who at the time of the Domestication owns (actually and constructively) less than 10% of the total combined voting power of all classes of Spring Valley ordinary shares entitled to vote and less than 10% of the total value of all classes of Spring Valley ordinary shares will generally recognize gain (but not loss) as a result of the Domestication. As an alternative to recognizing gain, such U.S. Holders may file an election to include in income as a dividend earnings and profits (as defined in the United States
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Treasury regulations (“Treasury Regulations”) under Section 367 of the Code) attributable to its Spring Valley ordinary shares provided certain other requirements are satisfied. Spring Valley does not expect that Spring Valley’s cumulative earnings and profits will be material at the time of the Domestication; and
A U.S. Holder of Spring Valley ordinary shares who at the time of the Domestication owns (actually and constructively) 10% or more of the total combined voting power of all classes of Spring Valley ordinary shares or 10% of the total value of all classes of Spring Valley ordinary shares entitled to vote will generally be required to include in income as a dividend earnings and profits (as defined in the Treasury Regulations under Section 367 of the Code) attributable to its Spring Valley ordinary shares. Spring Valley does not expect that Spring Valley’s cumulative earnings and profits will be material at the time of Domestication.
As discussed further under “Material United States Federal Income Tax Considerations” below, Spring Valley believes that it is likely classified as a PFIC for United States federal income tax purposes. In the event that Spring Valley is considered a PFIC then, notwithstanding the foregoing United States federal income tax consequences of the Domestication, proposed Treasury Regulations under Section 1291(f) of the Code (which have a retroactive effective date), if finalized in their current form, generally would require a U.S. Holder to recognize gain as a result of the Domestication. Any such gain would be taxed as ordinary income and an interest charge would apply based on a complex set of rules. However, it is difficult to predict whether, in what form, and with what effective date, final Treasury Regulations under Section 1291(f) of the Code will be adopted. Importantly, however, U.S. Holders that make or have made certain elections discussed further under “Material United States Federal Income Tax Considerations — U.S. Holders — PFIC Considerations” with respect to their Spring Valley ordinary shares are generally not subject to the same gain recognition rules under the currently proposed Treasury Regulations under Section 1291(f) of the Code. For a more complete discussion of the potential application of the PFIC rules to U.S. Holders as a result of the Domestication, see “Material United States Federal Income Tax Considerations — U.S. Holders — PFIC Considerations.”
Additionally, the Domestication may cause non-U.S. Holders (as defined in “Material United States Federal Income Tax Considerations — Non-U.S.Holders” below) to become subject to United States federal income withholding taxes on any dividends in respect of such non-U.S. Holder’s NuScale Corp Common Stock (or warrants) subsequent to the Domestication.
The tax consequences of the Domestication are complex and will depend on a holder’s particular circumstances. All holders are strongly urged to consult their tax advisors for a full description and understanding of the tax consequences of the Domestication, including the applicability and effect of United States federal, state, local and foreign income and other tax laws. For a more complete discussion of the United States federal income tax considerations of the Domestication, see “Material United States Federal Income Tax Considerations.”
Q:
HOW DOES THE SPONSOR INTEND TO VOTE ON THE SHAREHOLDER PROPOSALS?
A:
The Initial Shareholders own of record and are entitled to vote an aggregate of approximately 20% of the outstanding Spring Valley ordinary shares. Pursuant to the Support Agreement executed on December 13, 2021 in connection with the execution of the Merger Agreement, the Sponsor Sub has agreed, among other things, to vote all of its Spring Valley Class B ordinary shares and any Spring Valley Class A ordinary shares that Sponsor Sub holds beneficially or acquires record or beneficial ownership of after the execution date (i) in favor of each of the Shareholder Proposals; (ii) in favor of any proposal to adjourn a meeting at which there is a proposal for shareholders of Spring Valley to approve and adopt the Shareholder Proposals to a later date if there are not sufficient votes to approve and adopt the Shareholder Proposals, or if there are not sufficient shares present in person or represented by proxy at such meeting to constitute a quorum; and (iii) against any proposal in opposition to approval of the Merger Agreement or the Transactions. See “The Transactions — The Merger Agreement — Related Agreements — Support Agreement.”
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Q:
WHAT CONSTITUTES A QUORUM AT THE SPECIAL MEETING?
A:
The holders of a majority of the voting power of the issued and outstanding Spring Valley ordinary shares entitled to vote at the Special Meeting must be present, in person or virtually, or represented by proxy at the Special Meeting to constitute a quorum and in order to conduct business at the Special Meeting. Abstentions and broker non-votes will be counted as present for the purpose of determining a quorum. The holders of the Spring Valley Founder Shares, who currently own 20% of the issued and outstanding Spring Valley ordinary shares, will count towards this quorum. In the absence of a quorum, the chairman of the Special Meeting has power to adjourn the Special Meeting. As of the record date for the Special Meeting, 14,375,001 Spring Valley ordinary shares would be required to achieve a quorum.
Q:
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AT THE SPECIAL MEETING?
A:
The Merger Agreement Proposal: The approval of the Merger Agreement Proposal requires an ordinary resolution under the Cayman Islands Companies Act, being the affirmative vote of the holders of a majority of the Spring Valley ordinary shares who, being present and entitled to vote at the Special Meeting, vote at the Special Meeting. Spring Valley shareholders must approve the Merger Agreement Proposal in order for the Transactions to occur. If Spring Valley shareholders fail to approve the Merger Agreement Proposal, the Transactions will not occur. Pursuant to the Support Agreement, the Initial Shareholders have agreed to vote shares representing approximately 20% of the aggregate voting power of the Spring Valley ordinary shares in favor of the Merger Agreement Proposal.
The Domestication Proposal: The approval of the Domestication Proposal requires a special resolution under the Cayman Islands Companies Act, being the affirmative vote of the holders of at least two-thirds (2/3rds) of the Spring Valley ordinary shares who, being present and entitled to vote at the Special Meeting, vote at the Special Meeting. The Domestication Proposal is conditioned on the approval of the Merger Agreement Proposal. Therefore, if the Merger Agreement Proposal is not approved, the Domestication Proposal will have no effect, even if approved by Spring Valley’s Public Shareholders. Pursuant to the Support Agreement, the Initial Shareholders have agreed to vote shares representing approximately 20% of the aggregate voting power of the Spring Valley ordinary shares in favor of the Domestication Proposal.
The Organizational Documents Proposal: The approval of the Organizational Documents Proposal requires a special resolution under the Cayman Islands Companies Act, being the affirmative vote of the holders of at least two-thirds (2/3rds) of the Spring Valley ordinary shares who, being present and entitled to vote at the Special Meeting, vote at the Special Meeting. The Organizational Documents Proposal is conditioned on the approval of the Domestication Proposal, and, therefore, also conditioned on approval of the Merger Agreement Proposal. Therefore, if the Merger Agreement Proposal or the Domestication Proposal is not approved, the Organizational Documents Proposal will have no effect, even if approved by Spring Valley’s Public Shareholders. Pursuant to the Support Agreement, the Initial Shareholders have agreed to vote shares representing approximately 20% of the aggregate voting power of the Spring Valley ordinary shares in favor of the Organizational Documents Proposal.
The Advisory Charter Proposal: The approval of any of the Advisory Charter Proposal sub proposals is not otherwise required by Cayman Islands law or Delaware law separate and apart from the Organizational Documents Proposal, but pursuant to SEC guidance, Spring Valley is required to submit these provisions to its stockholders separately for approval. However, the stockholder votes regarding these proposals are advisory votes, and are not binding on Spring Valley or the Spring Valley Board (separate and apart from the approval of the Organizational Documents Proposal). Furthermore, the Transactions are not conditioned on the approval of the Advisory Charter Proposal (separate and apart from approval of the Organizational Documents Proposal). Pursuant to the Support Agreement, the Initial Shareholders have agreed to vote shares representing approximately 20% of the aggregate voting power of the Spring Valley ordinary shares in favor of the Advisory Charter Proposal.
The Nasdaq Proposal: The approval of the Nasdaq Proposal requires an ordinary resolution, being the affirmative vote of at least a majority of the votes cast by the holders of the issued Spring Valley ordinary shares present in person or represented by proxy at the Special Meeting and entitled to vote on
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such matter. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the Special Meeting, and otherwise will have no effect on the proposal. The Nasdaq Proposal is conditioned on the approval and adoption of each of the other Condition Precedent Proposals, including the Merger Agreement Proposal, the Domestication Proposal and the Organizational Documents Proposal. Therefore, if such proposals are not approved, the Nasdaq Proposal will have no effect, even if approved by Spring Valley’s Public Shareholders. Pursuant to the Support Agreement, the Initial Shareholders have agreed to vote shares representing approximately 20% of the aggregate voting power of the Spring Valley ordinary shares in favor of the Nasdaq Proposal.
The Director Election Proposal: The approval of the Director Election Proposal requires an ordinary resolution of the holders of the Spring Valley Class B ordinary shares, being the affirmative vote of at least a majority of the votes cast by the holders of the issued Spring Valley Class B ordinary shares present in person or represented by proxy at the Special Meeting and entitled to vote on such matter. The Director Election Proposal is conditioned on the approval of the other Condition Precedent Proposals, including the Merger Agreement Proposal, the Domestication Proposal, the Organizational Documents Proposal and the Nasdaq Proposal. Therefore, if any of those proposals is not approved, the Director Election Proposal will have no effect, even if otherwise approved. Pursuant to the Support Agreement, the Initial Shareholders have agreed to vote shares representing 100% of the aggregate voting power of the Spring Valley Class B ordinary shares in favor of the Director Election Proposal.
The Long-Term Incentive Plan Proposal: The approval of the Long-Term Incentive Plan Proposal requires an ordinary resolution, being the affirmative vote of the holders of a majority of the Spring Valley ordinary shares who, being present and entitled to vote at the Special Meeting, vote at the Special Meeting. The Long-Term Incentive Plan Proposal is conditioned on the approval of the Merger Agreement Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Director Election Proposal and the Nasdaq Proposal. Therefore, if such proposals are not approved, the Long-Term Incentive Plan Proposal will have no effect, even if approved by Spring Valley’s Public Shareholders. Pursuant to the Support Agreement, the Initial Shareholders have agreed to vote shares representing approximately 20% of the aggregate voting power of the Spring Valley ordinary shares in favor of the Long-Term Incentive Plan Proposal.
The Adjournment Proposal: The approval of the Adjournment Proposal requires an ordinary resolution under the Cayman Islands Companies Act, being the affirmative vote of the holders of a majority of the Spring Valley ordinary shares who, being present and entitled to vote at the Special Meeting, vote at the Special Meeting. The Adjournment Proposal is not conditioned upon any other Shareholder Proposal.
Q:
DO ANY OF SPRING VALLEY’S DIRECTORS OR OFFICERS HAVE INTERESTS IN THE TRANSACTIONS THAT MAY DIFFER FROM OR BE IN ADDITION TO THE INTERESTS OF SPRING VALLEY SHAREHOLDERS?
A:
Spring Valley’s executive officers and certain non-employee directors have interests in the Transactions that may be different from, or in addition to, the interests of Spring Valley’s shareholders generally. The Spring Valley Board was aware of and considered these interests to the extent such interests existed at the time, among other matters, in approving the Merger Agreement and in recommending that the Merger Agreement and the Transactions contemplated thereby be approved by the shareholders of Spring Valley. These interests include, among other things, the fact that:
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the Sponsor paid an aggregate of $25,000 for 7,187,500 Spring Valley Class B ordinary shares, 5,750,000 of which are currently owned directly or indirectly by the Initial Shareholders, the aggregate value of which is estimated to be approximately $76,043,750, assuming the per share value of the NuScale Corp Class A Common Stock is the same as the $10.58 per share closing price of the Spring Valley Class A ordinary shares on Nasdaq as of April 1, 2022, and these Spring Valley Class B ordinary shares will be worthless if a business combination is not consummated by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option);
•
the Sponsor paid $8,900,000 for its Spring Valley Private Placement Warrants, the aggregate value of which is estimated to be approximately $19,936,000, assuming the per warrant value of the NuScale
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Corp Warrants is the same as the $2.24 per warrant closing price of the Spring Valley Warrants on Nasdaq as of April 1, 2022, and the Spring Valley Private Placement Warrants would be worthless if a business combination is not consummated by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option);
•
affiliates of Spring Valley have agreed to purchase 500,000 shares of NuScale Corp Class A Common Stock at $10.00 per share, for an aggregate purchase price of $5,000,000, in the PIPE Investment on the same terms and conditions as the other PIPE Investors;
•
the Initial Shareholders and certain of Spring Valley’s current officers and directors have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Spring Valley ordinary shares (other than Public Shares) held by them if Spring Valley fails to complete an initial business combination by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option). No consideration was given to the Initial Shareholders in exchange for such waiver;
•
the continued indemnification of Spring Valley’s existing directors and officers and the continuation of Spring Valley’s directors’ and officers’ liability insurance after the consummation of the Transactions (i.e., a “tail policy”);
•
the Sponsor and Spring Valley’s officers and directors will lose their entire investment in Spring Valley and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option). Accordingly, Spring Valley may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option. As of the record date, the Sponsor and Spring Valley’s officers and directors and their affiliates had incurred approximately $21,000 of unpaid reimbursable expenses;
•
the Sponsor purchased its Spring Valley Class B ordinary shares from Spring Valley at a price of approximately $0.003 per Spring Valley Class B ordinary share, or an aggregate purchase price of $25,000. Given the differential in purchase price that the Sponsor paid for the Spring Valley Class B ordinary shares as compared to the price of the Spring Valley units sold in the IPO, the Initial Shareholders may realize a positive rate of return on such investment even if Spring Valley public shareholders experience a negative rate of return following the business combination;
•
if the Trust Account is liquidated, including in the event Spring Valley is unable to complete an initial business combination by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option), the Sponsor has agreed to indemnify Spring Valley to ensure that the proceeds in the Trust Account are not reduced below $10.00 per Public Share, or such lesser per Public Share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which Spring Valley has entered into an acquisition agreement or claims of any third party for services rendered or products sold to Spring Valley, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account; and
•
Spring Valley may be entitled to distribute or pay over funds held by Spring Valley outside the Trust Account to the Sponsor or any of its Affiliates prior to the Closing.
For additional information, see “The Transactions — Interests of Spring Valley Directors and Executive Officers in the Transactions” beginning on page 113 of this Proxy Statement/Prospectus.
For additional information regarding pre-existing relationships between certain of the parties to the Merger Agreement and certain of their affiliates, see “Risk Factors — Risks Related to the Transactions and Spring Valley — Since the Initial Shareholders and our executive officers have interests that are different, or in addition to (and which may conflict with), the interests of our shareholders, a conflict of interest may have existed in determining whether the Transactions with NuScale LLC are appropriate as an initial business combination. Such interests include that the Initial Shareholders and our executive officers will lose their entire investment in us if a business combination is not completed.”
Q:
WHAT DO I NEED TO DO NOW?
A:
After carefully reading and considering the information contained in this Proxy Statement/Prospectus, please submit your proxies as soon as possible so that your shares will be represented at the Special
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Meeting. Please follow the instructions set forth on the proxy card or on the voting instruction form provided by your broker, bank or other nominee if your shares are held in the name of your broker, bank or other nominee.
Q:
HOW DO I VOTE?
A:
If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, and were a holder of record of ordinary shares on March 25, 2022, the record date for the Special Meeting, you may vote with respect to the proposals in person or virtually at the Special Meeting, or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. For the avoidance of doubt, the record date cutoff does not apply to Spring Valley shareholders that hold their shares in registered form and are registered as shareholders in Spring Valley’s register of members. All holders of shares in registered form on the day of the Special Meeting are entitled to vote at the Special Meeting.
Q:
WHEN AND WHERE IS THE SPECIAL MEETING?
A:
The Special Meeting will be held at 10:00 a.m., Central Time, on April 28, 2022, at the offices of Kirkland & Ellis LLP located at 609 Main Street, Suite 4700, Houston, TX 77002, and via a virtual meeting at https://www.cstproxy.com/svac/2022, unless the Special Meeting is adjourned. As part of our precautions regarding COVID-19, we are also planning for the meeting to be held virtually over the Internet. We will post the details for such meeting on our website that will also be filed with the SEC as proxy material. Only shareholders who held Spring Valley ordinary shares at the close of business on the record date will be entitled to vote at the Shareholders Meeting. We plan to announce any such updates in a press release filed with the SEC and on our proxy website at https://www.cstproxy.com/svac/2022, and we encourage you to check this website prior to the meeting if you plan to attend.
Q:
IF MY SHARES ARE HELD IN “STREET NAME” BY A BROKER, BANK OR OTHER NOMINEE, WILL MY BROKER, BANK OR OTHER NOMINEE AUTOMATICALLY VOTE MY SHARES FOR ME?
A:
No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this Proxy Statement/Prospectus may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent. As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote.” Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the Special Meeting, and otherwise will have no effect on a particular proposal. If you decide to vote, you should provide instructions to your broker, bank or other nominee on how to vote in accordance with the information and procedures provided to you by your broker, bank or other nominee.
Q:
WHAT IMPACT WILL COVID-19 HAVE ON THE TRANSACTIONS?
A:
Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of COVID-19 on the business of Spring Valley and NuScale LLC, and there is no guarantee that efforts by Spring Valley and NuScale LLC to address the adverse impacts of COVID-19 will be effective. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and actions taken to contain COVID-19 or its impact, among others. If Spring Valley or NuScale LLC are unable to recover from a business disruption on a timely basis, the Transactions and NuScale Corp’s business, financial condition and results of operations following the completion of the Transactions would be adversely affected. The Transactions may also be delayed and adversely affected by COVID-19 and, as a result, become more costly. Each of Spring Valley and NuScale LLC may also incur additional costs to remedy damages caused by any such disruptions, which could adversely affect its financial condition and results of operations.
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Q:
WHO IS ENTITLED TO VOTE AT THE SPECIAL MEETING?
A:
We have fixed March 25, 2022 as the record date for the Special Meeting. If you were a shareholder of Spring Valley at the close of business on the record date, you are entitled to vote on matters that come before the Special Meeting. However, a shareholder may only vote his or her shares if he or she is present in person or is represented by proxy at the Special Meeting.
Q:
HOW MANY VOTES DO I HAVE?
A:
Spring Valley shareholders are entitled to one vote at the Special Meeting for each Spring Valley ordinary share held of record as of the record date. As of the close of business on the record date for the Special Meeting, there were 28,750,000 Spring Valley ordinary shares issued and outstanding, of which 23,000,000 were issued and outstanding Public Shares.
Q:
WHAT IF I ATTEND THE SPECIAL MEETING AND ABSTAIN OR DO NOT VOTE?
A:
For purposes of the Special Meeting, an abstention occurs when a shareholder attends the meeting and does not vote or returns a proxy with an “abstain” vote.
If you are a Spring Valley shareholder that attends the Special Meeting and fails to vote on the Merger Agreement Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Advisory Charter Proposal, the Nasdaq Proposal, the Director Election Proposal, the Long-Term Incentive Plan Proposal or the Adjournment Proposal, or if you respond to such proposals with an “abstain” vote, your failure to vote or “abstain” vote in each case will have no effect on the vote count for such proposals.
Q:
WHAT WILL HAPPEN IF I RETURN MY PROXY CARD WITHOUT INDICATING HOW TO VOTE?
A:
If you sign and return your proxy card without indicating how to vote on any particular Shareholder Proposal, the Spring Valley ordinary shares represented by your proxy will be voted as recommended by the Spring Valley Board with respect to that Shareholder Proposal.
Q:
MAY I CHANGE MY VOTE AFTER I HAVE DELIVERED MY PROXY OR VOTING INSTRUCTION CARD?
A:
Yes. Shareholders may send a later-dated, signed proxy card to our general counsel at our address set forth below so that it is received by our general counsel prior to the vote at the Special Meeting (which is scheduled to take place on April 28, 2022) or attend the Special Meeting in person and vote. Shareholders also may revoke their proxy by sending a notice of revocation to our general counsel, which must be received by our general counsel prior to the vote at the Special Meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote.
Q:
WHAT HAPPENS IF I FAIL TO TAKE ANY ACTION WITH RESPECT TO THE SPECIAL MEETING?
A:
If you fail to take any action with respect to the Special Meeting and the Transactions are approved by shareholders and consummated, you will continue to be a shareholder of Spring Valley. Failure to take any action with respect to the Special Meeting will not affect your ability to exercise your redemption rights. If you fail to take any action with respect to the Special Meeting and the Transactions are not approved, you will continue to be a shareholder of Spring Valley while Spring Valley searches for another target business with which to complete a business combination.
Q:
WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?
A:
Shareholders may receive more than one set of voting materials, including multiple copies of this Proxy Statement/Prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are
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registered under more than one name, you may receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your shares.
Q:
WHO WILL SOLICIT AND PAY THE COST OF SOLICITING PROXIES FOR THE SPECIAL MEETING?
A:
Spring Valley will pay the cost of soliciting proxies for the Special Meeting. Spring Valley has engaged MacKenzie Partners, Inc., as proxy solicitor (“MacKenzie”), to assist in the solicitation of proxies for the Special Meeting. Spring Valley has agreed to pay MacKenzie a fee of $12,500, plus disbursements, and will reimburse MacKenzie for its reasonable out-of-pocket expenses up to $7,500 and indemnify MacKenzie and its affiliates against certain claims, liabilities, losses, damages and expenses. Spring Valley will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of Spring Valley Class A ordinary shares for their expenses in forwarding soliciting materials to beneficial owners of Spring Valley Class A ordinary shares and in obtaining voting instructions from those owners. Spring Valley’s directors and officers may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.
Q:
WHERE CAN I FIND VOTING RESULTS OF THE SPECIAL MEETING?
A:
The preliminary voting results will be announced at the Special Meeting. Spring Valley will publish final voting results of the Special Meeting in a Current Report on Form 8-K within four business days after the Special Meeting.
Q:
WHOM SHOULD I CONTACT IF I HAVE ANY QUESTIONS ABOUT THE PROXY MATERIALS, VOTING OR THE TRANSACTIONS?
A:
If you have any questions about the proxy materials, need assistance submitting your proxy or voting your shares or need additional copies of this Proxy Statement/Prospectus or the enclosed proxy card, you should contact the proxy solicitation agent for Spring Valley, at the following address and telephone number:
MacKenzie Partners, Inc.
1407 Broadway, 27th Floor
New York, New York 10018
Individuals call toll-free: (800) 322-2885
Banks and brokers call: (212) 929-5500
1407 Broadway, 27th Floor
New York, New York 10018
Individuals call toll-free: (800) 322-2885
Banks and brokers call: (212) 929-5500
You also may obtain additional information about Spring Valley from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of Public Shares and you intend to seek redemption of your Public Shares, you will need to deliver your Public Shares (either physically or electronically) to Continental at the address below prior to the Special Meeting. Holders must complete the procedures for electing to redeem their Public Shares in the manner described above prior to 5:00 P.M., Eastern Time, on April 26, 2022 (two business days before the Special Meeting) in order for their shares to be redeemed. If you have questions regarding the certification of your position or delivery of your stock, please contact:
Mark Zimkind
Continental Stock Transfer & Trust Company
One State Street Plaza, 30th Floor
New York, New York 10004
E-mail: mzimkind@continentalstock.com
Continental Stock Transfer & Trust Company
One State Street Plaza, 30th Floor
New York, New York 10004
E-mail: mzimkind@continentalstock.com
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SUMMARY
This summary highlights selected information included in this document and does not contain all of the information that may be important to you. You should read this entire document and its appendices and the other documents to which Spring Valley and NuScale LLC refer to before you decide how to vote with respect to the Shareholder Proposals. Each item in this summary includes a page reference directing you to a more complete description of that item.
Information About the Parties to the Transactions
Spring Valley
Spring Valley is a blank check company whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. For more information regarding Spring Valley, see the section entitled “Information About Spring Valley” beginning on page 182.
Merger Sub
Merger Sub is a wholly owned subsidiary of Spring Valley formed solely for the purpose of effecting the Merger. Merger Sub was incorporated under the Oregon Limited Liability Company Act (“OLLCA”) on December 9, 2021. Merger Sub owns no material assets and does not operate any business.
NuScale LLC
NuScale LLC is an advanced nuclear technology company that is developing a SMR to generate steam that can be used for electrical generation, district heating, desalination, hydrogen production and other process heat applications. For more information regarding NuScale LLC, see the section entitled “Business of NuScale LLC” beginning on page 198.
The Merger Agreement
The terms and conditions of the Merger are contained in the Merger Agreement, which is attached to this document as Annex A and which is incorporated by reference herein in its entirety. Spring Valley encourages you to read the Merger Agreement carefully, as it is the legal document that governs the Transactions. For more information on the Merger Agreement, see the section entitled “The Transactions — The Merger Agreement.”
Structure of the Transactions
In connection with the Closing:
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Spring Valley will change its jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation under the laws of the State of Delaware upon which Spring Valley will change its name to “NuScale Power Corporation” and become NuScale Corp;
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Spring Valley will be designated as the sole manager of NuScale LLC; and
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Merger Sub, a wholly owned subsidiary of Spring Valley, will merge with and into NuScale LLC with NuScale LLC as the surviving entity of the Merger. Following the Merger, NuScale LLC will be a wholly controlled subsidiary of NuScale Corp (formerly known as Spring Valley prior to the Domestication).
Upon consummation of the transactions contemplated by the Merger Agreement, the combined company will be organized in an “UP-C” structure, in which substantially all of the assets and business of the combined company will be held by NuScale LLC. Spring Valley and the NuScale Equityholders will hold NuScale LLC Common Units. Spring Valley will be the sole manager of NuScale LLC. Spring Valley will issue to the NuScale Equityholders a number of shares of NuScale Corp Class B Common Stock equal to the number of NuScale LLC Class B Units held by the NuScale Equityholders. Spring Valley’s other
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shareholders will hold shares of NuScale Corp Class A Common Stock. Shares of NuScale Corp Class A Common Stock will be entitled to economic rights and one vote per share and shares of NuScale Corp Class B Common Stock will be entitled to one vote per share but no economic rights. The combined company’s business will continue to operate through NuScale LLC.
Simplified Post-Combination NuScale Corp Structure
The following diagram illustrates in simplified terms the expected structure of NuScale Corp and its operating subsidiaries upon the Closing.
![[MISSING IMAGE: tm2136469d16-fc_corpbw.jpg]](./Spring Valley Misc Offer_files/tm2136469d16-fc_corpbw.jpg)
The Private Placement
In connection with entering into the Merger Agreement, Spring Valley entered into the Subscription Agreements with certain PIPE Investors, pursuant to which, among other things, the PIPE Investors party thereto agreed to purchase an aggregate of 21,300,002 shares of NuScale Corp Class A Common Stock immediately prior to the Closing at an aggregate purchase price of $211,000,000. On March 29, 2022, Spring Valley entered into a Subscription Agreement with another PIPE Investor, pursuant to which, among other things, the PIPE Investor party thereto agreed to purchase 1,000,000 shares of NuScale Corp Class A Common Stock immediately prior to the Closing for a purchase price of $10,000,000. In addition, on April 4, 2022, Spring Valley entered into a Subscription Agreement with another PIPE Investor, pursuant to which, among other things, the PIPE Investor party thereto agreed to purchase 1,500,000 shares of NuScale Corp Class A Common Stock immediately prior to Closing for a purchase price of $15,000,000. $30,000,000 of the PIPE Investment has been committed by a foreign investor, and NuScale Corp expects to hold this amount as restricted cash pending approval of the investment by CFIUS. The Subscription Agreements contain customary representations, warranties, covenants and agreements of Spring Valley and the PIPE Investors and are subject to customary closing conditions (including, without limitation, that there is no amendment or modification to the Merger Agreement that is material and adverse to the PIPE Investors) and termination rights (including a termination right if the transactions contemplated by the
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Subscription Agreements have not been consummated by June 19, 2022 (which date is 30 days following the termination date under the Merger Agreement), other than as a result of breach by the terminating party). The PIPE Investments are expected to close immediately prior to the Closing.
For more information regarding the Subscription Agreements, see the section entitled “The Transactions — The Merger Agreement — Related Agreements — PIPE Investment.”
Conversion; Consideration to NuScale Equityholders in the Transactions (page 88)
The aggregate value of the equity to be held by the NuScale Equityholders following the Transactions shall equal 178,268,640 NuScale LLC Class B Units together with 178,268,640 shares of NuScale Corp Class B Common Stock (which will not have any economic value but will entitle the holder thereof to one vote per share), together with up to 14,910,410 shares of NuScale Corp Class A Common Stock upon exercise of the Options. The NuScale LLC Class B Units, together with the cancelation for no consideration of an equal number of shares of NuScale Corp Class B Common Stock, will be exchangeable for 178,268,640 shares of NuScale Corp Class A Common Stock (or cash, subject to certain restrictions).
In addition to the consideration described above, each NuScale Equityholder may have the right to receive certain payments under the Tax Receivable Agreement. In connection with the Closing, NuScale Corp will enter into the Tax Receivable Agreement with NuScale LLC, each of the TRA Holders (as defined in the Tax Receivable Agreement) party thereto and Fluor, in its capacity as TRA Representative (as defined in the Tax Receivable Agreement). Pursuant to the Tax Receivable Agreement, NuScale Corp will be required to pay 85% of the net cash tax savings from certain tax benefits, if any, that it realizes (or in certain cases is deemed to realize) as a result of any increases in tax basis and other tax benefits resulting from any exchange by the TRA Holders of NuScale LLC Class B Units for shares of NuScale Corp Class A Common Stock or cash in the future. Any such payments to TRA Holders will reduce the cash provided by the tax savings generated from future exchanges that would otherwise have been available to NuScale Corp for other uses, including reinvestment or dividends to Class A stockholders. Cash tax savings from the remaining 15% of the tax benefits will be retained by NuScale Corp. NuScale Corp’s obligations under the Tax Receivable Agreement accelerate upon a change in control and certain other termination events, as defined therein. These payments are the obligation of NuScale Corp and not of NuScale LLC.
The term of the Tax Receivable Agreement will continue until all such tax benefits have been utilized or expired unless NuScale Corp exercises its right to terminate the Tax Receivable Agreement for an amount representing the present value of anticipated future tax benefits under the Tax Receivable Agreement (computed using certain simplifying assumptions) or certain other acceleration events occur (including upon a change of control). For more information on the Tax Receivable Agreement, please see the sections entitled “Risk Factors — Risks Related to Our Structure and Governance — Pursuant to the Tax Receivable Agreement, NuScale Corp will be required to pay to certain NuScale Equityholders 85% of certain tax benefits, if any, that it realizes (or in certain cases is deemed to realize) as a result of any increases in tax basis and related tax benefits resulting from any exchange of NuScale LLC Units for shares of NuScale Corp Class A Common Stock or cash in the future, and those payments be be substantial” and “Certain Relationships and Related Party Transactions — Tax Receivable Agreement.”
For more information, see the section entitled “The Transactions — The Merger Agreement — Conversion; Consideration to NuScale Equityholders in the Transactions.”
Spring Valley Extraordinary Meeting and the Proposals (page 117)
The Special Meeting will be held at 10:00 a.m., Central Time, on April 28, 2022. For the purposes of the Existing Organizational Documents, the physical place of the meeting will be at the offices of Kirkland & Ellis LLP located at 609 Main Street, Suite 4700, Houston, TX 77002, and via a virtual meeting at https://www.cstproxy.com/svac/2022, unless the Special Meeting is adjourned. In light of COVID-19 and to support the well-being of Spring Valley’s shareholders, directors and officers, Spring Valley encourages you to use remote methods of attending the Special Meeting or to attend via proxy. You may attend the Special Meeting and vote your shares electronically during the Special Meeting via live webcast by visiting https://www.cstproxy.com/svac/2022. You will need the meeting control number that is printed on your proxy card to enter the Special Meeting. You may also attend the meeting telephonically by dialing 1-800-450-7155.
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At the Special Meeting, Spring Valley’s shareholders will be asked to approve the Merger Agreement Proposal, the Domestication Proposal, Organizational Documents Proposal, the Advisory Charter Proposal, the Nasdaq Proposal, the Director Election Proposal, the Long-Term Incentive Plan Proposal and the Adjournment Proposal (if necessary).
The Spring Valley Board has fixed the close of business on March 25, 2022 (the “record date”) as the record date for determining the holders of Spring Valley ordinary shares entitled to receive notice of and to vote at the Special Meeting. As of the record date, there were 23,000,000 Spring Valley Class A ordinary shares and 5,750,000 Spring Valley Class B ordinary shares outstanding and entitled to vote at the Special Meeting. Each Spring Valley ordinary share entitles the holder to one vote at the Special Meeting on each proposal to be considered at the Special Meeting. As of the record date, the Sponsor Sub and Spring Valley’s directors and officers and their affiliates owned and were entitled to vote 5,750,000 Spring Valley ordinary shares, representing approximately 20% of the Spring Valley ordinary shares outstanding on that date. Spring Valley currently expects that the Sponsor Sub and its directors and officers will vote their shares in favor of the Shareholder Proposals and, pursuant to the Sponsor Letter Agreement, the Sponsor Sub and directors and officers have agreed to do so. As of the record date, NuScale LLC did not beneficially hold any Spring Valley ordinary shares.
A majority of the voting power of the issued and outstanding Spring Valley ordinary shares entitled to vote at the Special Meeting must be present, in person or virtually, or represented by proxy at the Special Meeting to constitute a quorum and in order to conduct business at the Special Meeting.
Approval of the Merger Agreement Proposal requires an ordinary resolution under the Cayman Islands Companies Act, being the affirmative vote of the holders of a majority of the Spring Valley ordinary shares who, being present and entitled to vote at the Special Meeting, vote at the Special Meeting.
Approval of the Domestication Proposal requires a special resolution under the Cayman Islands Companies Act, being the affirmative vote of the holders of at least two-thirds (2/3rds) of the Spring Valley ordinary shares who, being present and entitled to vote at the Special Meeting, vote at the Special Meeting. Approval of the Organizational Documents Proposal requires a special resolution under the Cayman Islands Companies Act, being the affirmative vote of the holders of at least two-thirds (2/3rds) of the Spring Valley ordinary shares who, being present and entitled to vote at the Special Meeting, vote at the Special Meeting.
Approval of each of the principal changes to be made to the Existing Organizational Documents as part of the Advisory Charter Proposal requires an ordinary resolution under the Cayman Islands Companies Act, being the affirmative vote of the holders of a majority of the Spring Valley ordinary shares who, being present and entitled to vote at the Special Meeting, vote at the Special Meeting. Approval of the Nasdaq Proposal requires an ordinary resolution under the Cayman Islands Companies Act, being the affirmative vote of the holders of a majority of the Spring Valley ordinary shares who, being present and entitled to vote at the Special Meeting, vote at the Special Meeting.
Approval of the Director Election Proposal requires an ordinary resolution under Cayman Islands Companies Act, being the affirmative vote of the holders of a majority of the Spring Valley Class B ordinary shares who, being present and entitled to vote at the Special Meeting, vote at the Special Meeting.
Approval of the Long-Term Incentive Plan Proposal requires an ordinary resolution under the Cayman Islands Companies Act, being the affirmative vote of the holders of a majority of the Spring Valley ordinary shares who, being present and entitled to vote at the Special Meeting, vote at the Special Meeting. Approval of the Adjournment Proposal (if necessary) requires an ordinary resolution under the Cayman Islands Companies Act, being the affirmative vote of the holders of a majority of the Spring Valley ordinary shares who, being present and entitled to vote at the Special Meeting, vote at the Special Meeting.
The Merger is conditioned upon the approval of the Merger Agreement Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Nasdaq Proposal, the Director Election Proposal and the Long-Term Incentive Plan Proposal, subject to the terms of the Merger Agreement. The Merger is not conditioned on the Advisory Charter Proposal or the Adjournment Proposal. If the Merger Agreement Proposal is not approved, the other Shareholder Proposals (except the Adjournment Proposal) will not be presented to the shareholders for a vote.
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Recommendation of Spring Valley’s Board of Directors (page 119)
The Spring Valley Board has unanimously determined that the Merger Agreement Proposal is in the best interests of Spring Valley and its shareholders, has unanimously approved the Merger Agreement Proposal, and unanimously recommends that shareholders vote “FOR” the Merger Agreement Proposal, “FOR” the Domestication Proposal, “FOR” the Organizational Documents Proposal, “FOR” the Advisory Charter Proposal, “FOR” the Nasdaq Proposal, “FOR” the Director Election Proposal, “FOR” the Long-Term Incentive Plan Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the Special Meeting.
The Spring Valley Board’s Reasons for the Transactions
Spring Valley was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. The Spring Valley Board sought to do this by utilizing the network and industry experience of both the Sponsor and the Spring Valley Board and management to identify, acquire and operate one or more businesses. The members of the Spring Valley Board and management have extensive transactional experience, particularly in the broadly-defined sustainability industry, including but not limited to, energy and power, resource management, transportation, environmental services, water and advanced materials / chemicals in the United States and other developed countries.
As described under “The Transactions — Background of the Transactions,” the Spring Valley Board, in evaluating the Merger, consulted with Spring Valley’s management, legal and financial advisors. In reaching its unanimous decision to approve the Merger Agreement and the Transactions, the Spring Valley Board considered a range of factors, including, but not limited to, the factors discussed below. In light of the number and wide variety of factors considered in connection with its evaluation of the proposed combination, the Spring Valley Board did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors that it considered in reaching its determination and supporting its decision. The Spring Valley Board contemplated its decision as in the context of all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors. This explanation of Spring Valley’s reasons for approving the combination and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the section titled “Cautionary Statement Regarding Forward-Looking Statements.”
In approving the combination, the Spring Valley Board decided not to obtain a fairness opinion. The officers and directors of Spring Valley have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and background, together with the experience of their representatives, enabled them to make the necessary analyses and determinations regarding the Merger.
The Spring Valley Board considered a number of factors pertaining to the Merger as generally supporting its decision to enter into the Merger Agreement and the Transactions, including, but not limited to, the following: NuScale LLC’s strategic focus on and demonstrable contributions toward global decarbonization targets in the energy industry, the proprietary and innovative nature of its solution, the experience of the management team, the successful history of attracting high quality customer and supply chain partners and the prudent financial management of the business. More specifically, the Spring Valley Board took into consideration the following factors or made the following determinations, as applicable:
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Growing global support for nuclear power including SMRs’ potential to play a large role;
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Meets a sufficient number of the acquisition criteria that Spring Valley had established to evaluate prospective business combination targets;
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Multiple avenues to accelerate organic growth opportunities;
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Significant recurring value creation opportunities;
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Experienced management team;
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NuScale LLC’s post-closing financial condition;
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Strong commitment from NuScale LLC stakeholders; and
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Valuation supported by financial analysis and due diligence.
The Spring Valley Board also considered a variety of uncertainties, risks and other potentially negative factors relating to the Merger including, but not limited to, the following: redemptions, complexities related to the shareholder vote, litigation and threats of litigation and broader macro risks. Specifically, the Spring Valley Board considered the following issues and risks:
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Risk that the benefits described above may not be achieved;
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Risk of the liquidation of Spring Valley;
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Technology may not work as expected or produce power at a competitive price;
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The exclusivity provision in the Merger Agreement, which restricts Spring Valley’s ability to consider other potential business combinations;
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Spring Valley’s shareholders will receive a minority position in the combined company;
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Risks regarding the shareholder vote;
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Fluor will remain a majority shareholder;
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Limitations of review;
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Closing conditions;
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Potential litigation;
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Fees and expenses;
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Geo-political risks and uncertainties;
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Potential impacts of COVID-19; and
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Other risk factors.
In addition to considering the factors described above, the Spring Valley Board also considered that some officers and directors of Spring Valley might have interests in the Merger as individuals that are in addition to, and that may be different from, the interests of Spring Valley’s stockholders. Spring Valley’s independent directors reviewed and considered these interests during the negotiation of the Merger and in evaluating and unanimously approving, as members of the Spring Valley Board, the Merger Agreement and the Transactions.
The Spring Valley Board concluded that the potential benefits that it expected Spring Valley and its stockholders to achieve as a result of the Merger outweighed the potentially negative factors associated with the Merger. Accordingly, the Spring Valley Board unanimously determined that the Merger Agreement, and the Transactions, were advisable, fair to, and in the best interests of, Spring Valley and its stockholders.
For more information about the Spring Valley Board’s decision-making process concerning the Transactions, please see the section entitled “The Transactions — The Spring Valley Board’s Reasons for the Transactions.”
Satisfaction of 80% Test (page 113)
It is a requirement under the Existing Organizational Documents that any business acquired by Spring Valley have a fair market value equal to at least 80% of the balance of the funds in the Trust Account at the time of the execution of a definitive agreement for an initial business combination. Based on the financial analysis of NuScale LLC generally used to approve the Transaction, the Spring Valley Board determined that this requirement was met. The Spring Valley Board determined that the consideration being paid in the Transactions, which amount was negotiated at arms-length, was fair to and in the best interests of Spring Valley and its shareholders and appropriately reflected NuScale LLC’s value. In reaching this determination, the Spring Valley Board concluded that it was appropriate to base such valuation in part on qualitative factors such as management strength and depth, competitive positioning, customer relationships, and
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technical skills, as well as quantitative factors such as NuScale LLC’s historical growth rate and its potential for future growth in revenue and profits. The Spring Valley Board believes that the financial skills and background of its members qualify it to conclude that the acquisition of NuScale LLC met this requirement.
Regulatory Approvals (page 115)
Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (“FTC ”), certain transactions may not be consummated unless information has been furnished to the Antitrust Division and the FTC and certain waiting period requirements have been satisfied. On January 21, 2022, NuScale LLC and Spring Valley concluded that Notification and Report Forms were not required to be filed with the Antitrust Division and the FTC in connection with the consummation of the Transactions.
At any time before or after consummation of the Transactions, notwithstanding the parties’ conclusion that Notification and Report Forms were not required to be filed, the applicable competition authorities, the United States or any other applicable jurisdiction could take such action under applicable antitrust laws as such authority deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Transactions, conditionally approving the Transactions upon divestiture of NuScale Corp’s assets, subjecting the completion of the Transactions to regulatory conditions or seeking other remedies. Private parties may also seek to take legal action under the antitrust laws under certain circumstances. Spring Valley cannot assure you that the Antitrust Division, the FTC, any state attorney general, or any other government authority will not attempt to challenge the Transactions on antitrust grounds, and, if such a challenge is made, Spring Valley cannot assure you as to its result.
None of Spring Valley or NuScale LLC are aware of any other material regulatory approvals or actions that are required for completion of the Transactions. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.
Conditions to Closing (page 89)
The respective obligations of each party to the Merger Agreement to consummate the Merger are subject to the satisfaction or, if permitted by applicable law, waiver by mutual agreement of each party of the following conditions:
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any applicable waiting period under the HSR Act relating to the Transactions having been expired or been terminated and any agreements with any governmental authority not to consummate the Transactions having been expired or terminated;
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no order or law issued by any court of competent jurisdiction or other governmental entity or other legal restraint or prohibition preventing the consummation of the Transactions being in effect;
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the opportunity Spring Valley has provided to the Public Shareholders to have their shares of Spring Valley Class A ordinary shares redeemed for the consideration shall have been completed in accordance with the terms of the Merger Agreement and this Proxy Statement/Prospectus;
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this Proxy Statement/Prospectus becoming effective in accordance with the provisions of the Securities Act, no stop order being issued by the SEC and remaining in effect with respect to this Proxy Statement/Prospectus, and no proceeding seeking such a stop order being threatened or initiated by the SEC and remaining pending;
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the approval of each Condition Precedent Proposal, other than the Domestication Proposal, the Organizational Documents Proposal and the Director Election Proposal, by the affirmative vote of the holders of a majority of the Spring Valley ordinary shares cast at the extraordinary general meeting, with respect to the Director Election Proposal only, by the affirmative vote of the holders of a majority of the Spring Valley Class B ordinary shares cast at the Special Meeting and, with respect to the Domestication Proposal and the Organizational Documents Proposal only, the affirmative vote of holders of a two-thirds (2/3rds) majority of the Spring Valley Class A ordinary shares cast at the extraordinary general meeting;
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the approval of the Merger Agreement and, to the extent required, the Transactions, including the Merger (including (i) approval of the Transactions the holders of at least a majority of all outstanding preferred units of NuScale LLC and (ii) approval of the Transactions by the holders of a majority of the outstanding NuScale LLC Units, voting together as a single class on an as-converted basis); and
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the Spring Valley Class A ordinary shares will not have been redeemed in an amount that would cause Spring Valley’s net tangible assets to be less than $5,000,001.
For additional information about the other conditions to consummate the Transactions, please see the section titled “The Transactions — The Merger Agreement — Other Conditions to the Obligations of Spring Valley” and “The Transactions — The Merger Agreement — Other Conditions to the Obligations of NuScale LLC.”
Termination (page 96)
The Merger Agreement may be terminated and the Transactions may be abandoned under certain customary and limited circumstances at any time prior to the Closing, including, among others, the following:
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by mutual written consent of Spring Valley and NuScale LLC;
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prior to the Closing, by written notice to NuScale LLC from Spring Valley if (i) there is any breach of any representation, warranty, covenant or agreement on the part of NuScale LLC set forth in the Merger Agreement, such that certain conditions in the Merger Agreement would not be satisfied at the Closing (a “Terminating Company Breach”), except that, if any such Terminating Company Breach is curable by NuScale LLC through the exercise of its commercially reasonable efforts, then, for a period of up to 30 days (or any shorter period of the time that remains between the date Spring Valley provides written notice of such violation or breach and the Termination Date) after receipt by NuScale LLC of notice from Spring Valley of such breach, but only as long as NuScale LLC continues to use its commercially reasonable efforts to cure such Terminating Company Breach (the “Company Cure Period”), such termination shall not be effective, and such termination shall become effective only if the Terminating Company Breach is not cured within the Company Cure Period, (ii) the Closing has not occurred on or before May 20, 2022, as such date may be extended upon the mutual written consent of NuScale LLC and Spring Valley (the “Termination Date”), or (iii) the consummation of the Merger is permanently enjoined or prohibited by the terms of a final, non-appealable Governmental Order or other Law; provided, that the right to terminate the Merger Agreement in this manner shall not be available if either (A) Spring Valley’s failure to fulfill any obligation under the Merger Agreement has been the primary cause of, or primarily resulted in, the failure of the Closing to occur on or before such date or (B) Spring Valley is in breach of the Merger Agreement on such date, which breach could give rise to a right of NuScale LLC to terminate the Merger Agreement;
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prior to the Closing, by written notice to Spring Valley from NuScale LLC if (i) there is any breach of any representation, warranty, covenant or agreement on the part of Spring Valley set forth in the Merger Agreement, such that certain conditions in the Merger Agreement would not be satisfied at the Closing (a “Terminating Acquiror Breach”), except that, if any such Terminating Acquiror Breach is curable by Spring Valley through the exercise of its commercially reasonable efforts, then, for a period of up to 30 days (or any shorter period of the time that remains between the date NuScale LLC provides written notice of such violation or breach and the Termination Date) after receipt by Spring Valley of notice from NuScale LLC of such breach, but only as long as Spring Valley continues to use its commercially reasonable efforts to cure such Terminating Acquiror Breach (the “Acquiror Cure Period”), such termination shall not be effective, and such termination shall become effective only if the Terminating Acquiror Breach is not cured within the Acquiror Cure Period, (ii) the Closing has not occurred on or before the Termination Date, or (iii) the consummation of the Merger is permanently enjoined or prohibited by the terms of a final, non-appealable governmental order or other law; provided, that the right to terminate the Merger Agreement in this manner will not be available if either (A) NuScale LLC’s failure to fulfill any obligation under the Merger Agreement has been the primary cause of, or primarily resulted in, the failure of the Closing to occur on or before
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such date or (B) NuScale LLC is in breach of the Merger Agreement on such date, which breach could give rise to a right of Spring Valley to terminate the Merger Agreement;
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by written notice from NuScale LLC to Spring Valley if the Shareholder Proposals are not approved at the Special Meeting (subject to any adjournment or recess of the meeting); or
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by written notice from Spring Valley to NuScale LLC if the Company Unitholder Approvals (as defined in the Merger Agreement) have not been obtained within 10 Business Days (as defined in the Merger Agreement) following the date the Merger Agreement was executed.
If the Merger Agreement is validly terminated, none of the parties to the Merger Agreement will have any liability or any further obligation under the Merger Agreement other than customary confidentiality obligations, except in the case of a Willful Breach (as defined in the Merger Agreement) of the Merger Agreement.
Redemption Rights (page 121)
Pursuant to the Existing Organizational Documents, a Public Shareholder may request that Spring Valley redeem all or a portion of its Public Shares for cash if the Merger is consummated. As a holder of Public Shares, you will be entitled to receive cash for any Public Shares to be redeemed only if you:
(i) (a) hold Public Shares or (b) if you hold Public Shares through Units, you elect to separate your Units into the underlying Public Shares and Spring Valley Public Warrants prior to exercising your redemption rights with respect to the Public Shares;
(ii) submit a written request to Continental in which you (i) request that Spring Valley redeem all or a portion of your Public Shares for cash, and (ii) identify yourself as the beneficial holder of the Public Shares and provide your legal name, phone number and address; and
(iii) deliver your Public Shares to Continental physically or electronically through DTC’s DWAC system.
Holders must complete the procedures for electing to redeem their Public Shares in the manner described above prior to 5:00 P.M., Eastern Time, on April 26, 2022 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.
Holders of Units must elect to separate the Units into the underlying Public Shares and Spring Valley Public Warrants prior to exercising redemption rights with respect to the Public Shares. Public holders that hold their Units in an account at a brokerage firm or bank, must notify their broker or bank that they elect to separate the Units into the underlying Public Shares and Spring Valley Public Warrants, or if a holder holds Units registered in its own name, the holder must contact Continental directly and instruct them to do so. The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number and address to Continental in order to validly redeem its shares. Public Shareholders may elect to redeem all or a portion of the Public Shares held by them regardless of if or how they vote in respect of the Merger Agreement Proposal. If the Merger is not consummated, the Public Shares will be returned to the respective holder, broker or bank. If the Merger is consummated, and if a Public Shareholder properly exercises its right to redeem all or a portion of the Public Shares that it holds and timely delivers its shares to Continental, NuScale Corp will redeem such Public Shares for a per-share price, payable in cash, equal to the pro rata portion of the Trust Account, calculated as of two business days prior to the consummation of the Merger. For illustrative purposes, this would have amounted to approximately $10.10 per issued and outstanding Public Share, based on 23,000,000 shares subject to possible redemption as of December 31, 2021. If a Public Shareholder exercises its redemption rights in full, then it will be electing to exchange its Public Shares for cash and will no longer own Public Shares. The redemption takes place prior to the Domestication. See “The Extraordinary General Meeting — Redemption Rights” in this Proxy Statement/Prospectus for a detailed description of the procedures to be followed if you wish to redeem your Public Shares for cash.
Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of such Public Shareholder or any other person with whom such Public Shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its Public Shares with
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respect to more than an aggregate of 15% of the Public Shares. Accordingly, if a Public Shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the Public Shares, then any such shares in excess of that 15% limit would not be redeemed for cash.
The Initial Shareholders have, pursuant to the Support Agreements and the Sponsor Letter Agreement, agreed to, among other things, vote all of their ordinary shares in favor of the proposals being presented at the Special Meeting. As of the date of this Proxy Statement/Prospectus, the Initial Shareholders own 20.0% of the issued and outstanding Spring Valley ordinary shares. See “The Transactions — Related Agreements — Support Agreement” in the accompanying Proxy Statement/Prospectus for more information related to the Support Agreements.
Holders of the Spring Valley Warrants will not have redemption rights with respect to the Spring Valley Warrants.
Appraisal Rights (page 123)
Spring Valley’s shareholders will not have appraisal rights under the Cayman Islands Companies Act or otherwise in connection with the Merger Agreement Proposal or the other Shareholder Proposals.
Proxy Solicitation (page 123)
Proxies may be solicited by mail, telephone or in person. Spring Valley has engaged MacKenzie to assist in the solicitation of proxies. If a shareholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the Special Meeting. A shareholder also may change its vote by submitting a later-dated proxy as described in the section entitled “The Extraordinary General Meeting — Revoking Your Proxy.”
Interests of Spring Valley Directors and Executive Officers in the Transactions (page 126)
When you consider the recommendation of the Spring Valley Board in favor of approval of the Merger Agreement Proposal, you should keep in mind that the Initial Shareholders and certain of Spring Valley’s current officers and directors have interests in such proposal that are different from, or in addition to, those of Spring Valley shareholders and warrant holders generally. These interests include, among other things, the interests listed below:
•
the fact that our Initial Shareholders have agreed not to redeem any Spring Valley Class A ordinary shares held by them in connection with a shareholder vote to approve a proposed initial business combination (such as the Transactions);
•
the fact that the Sponsor paid an aggregate of $25,000 for 7,187,500 Spring Valley Class B ordinary shares, 5,750,000 of which are currently owned directly or indirectly by the Initial Shareholders, the aggregate value of which is estimated to be approximately $76,043,750, assuming the per share value of the NuScale Corp Class A Common Stock is the same as the $10.58 per share closing price of the Spring Valley Class A ordinary shares on Nasdaq as of April 1, 2022, and these Spring Valley Class B ordinary shares will be worthless if a business combination is not consummated by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option);
•
the fact that the Sponsor paid $8,900,000 for its Spring Valley Private Placement Warrants, the aggregate value of which is estimated to be approximately $19,936,000, assuming the per warrant value of the NuScale Corp Warrants is the same as the $2.24 per warrant closing price of the Spring Valley Warrants on Nasdaq as of April 1, 2022, and the Spring Valley Private Placement Warrants would be worthless if a business combination is not consummated by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option);
•
the fact that the affiliates of Spring Valley have agreed to purchase 500,000 shares of NuScale Corp Class A Common Stock at $10.00 per share, for an aggregate purchase price of $5,000,000, in the PIPE Investment on the same terms and conditions as the other PIPE Investors;
38
•
the fact that the Initial Shareholders and certain of Spring Valley’s current officers and directors have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Spring Valley ordinary shares (other than Public Shares) held by them if Spring Valley fails to complete an initial business combination by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option). No consideration was given to the Initial Shareholders or Spring Valley’s current officers and directors in exchange for such waiver;
•
the fact that the Registration Rights Agreement will be entered into by the Sponsor, the Sponsor Sub and certain other affiliates of Spring Valley;
•
the continued indemnification of Spring Valley’s existing directors and officers and the continuation of Spring Valley’s directors’ and officers’ liability insurance after the consummation of the Transactions (i.e., a “tail policy”);
•
the fact that the Sponsor and Spring Valley’s officers and directors will lose their entire investment in Spring Valley and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option) Accordingly, Spring Valley may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option). As of the record date, the Sponsor and Spring Valley’s officers and directors and their affiliates had incurred approximately $21,000 of unpaid reimbursable expenses;
•
the fact that the Sponsor purchased its Spring Valley Class B ordinary shares from Spring Valley at a price of approximately $0.003 per Spring Valley Class B ordinary share, or an aggregate purchase price of $25,000. Given the differential in purchase price that the Sponsor paid for the Spring Valley Class B ordinary shares as compared to the price of the Spring Valley units sold in the IPO, the Initial Shareholders may realize a positive rate of return on such investment even if Spring Valley public shareholders experience a negative rate of return following the business combination;
•
the fact that if the Trust Account is liquidated, including in the event Spring Valley is unable to complete an initial business combination by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option), the Sponsor has agreed to indemnify Spring Valley to ensure that the proceeds in the Trust Account are not reduced below $10.00 per Public Share, or such lesser per Public Share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which Spring Valley has entered into an acquisition agreement or claims of any third party for services rendered or products sold to Spring Valley, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account; and
•
the fact that Spring Valley may be entitled to distribute or pay over funds held by Spring Valley outside the Trust Account to the Sponsor or any of its Affiliates prior to the Closing.
The Initial Shareholders have, pursuant to the Support Agreements and the Sponsor Letter Agreement, agreed to, among other things, vote all of their ordinary shares in favor of the proposals being presented at the Special Meeting. As of the date of this Proxy Statement/Prospectus, the Initial Shareholders own 20.0% of the issued and outstanding ordinary shares. See “The Transactions — The Merger Agreement — Related Agreements — Support Agreements” in the accompanying Proxy Statement/Prospectus for more information related to the Support Agreements.
At any time at or prior to the Transactions, during a period when they are not then aware of any material nonpublic information regarding us or our securities, our Initial Shareholders, NuScale LLC and/or their directors, officers, advisors or respective affiliates may purchase Public Shares from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire Public Shares or vote their Public Shares in favor of the Condition Precedent Proposals. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record or beneficial holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our Initial Shareholders, NuScale LLC and/or their directors, officers, advisors or respective
39
affiliates who have agreed to vote in favor of this transaction purchase shares in privately negotiated transactions from Public Shareholders who have already elected to exercise their redemption rights, such selling shareholder would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that (i) the Merger Agreement Proposal, the Advisory Charter Proposal, the Nasdaq Proposal, the Long-Term Incentive Plan Proposal and the Adjournment Proposal are approved by the affirmative vote of at least a majority of the votes cast by the holders of the issued ordinary shares present in person or represented by proxy at the extraordinary general meeting and entitled to vote on such matter, (ii) the Domestication Proposal and the Organizational Documents Proposal are approved by the affirmative vote of at least a two-thirds (2/3rds) majority of the votes cast by the holders of the issued ordinary shares present in person or represented by proxy at the extraordinary general meeting and entitled to vote on such matter, (iii) the number of holders of Public Shares electing to redeem their Public Shares is limited and (iv) NuScale Corp’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) are at least $5,000,001 after giving effect to the Transactions and the PIPE Investment.
If such transactions described in the foregoing paragraph are effected, the consequence could be to cause the Transactions to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the extraordinary general meeting and would likely increase the chances that such proposals would be approved. We will file or submit a Current Report on Form 8-K to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be put to the extraordinary general meeting or the redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.
The existence of financial and personal interests of one or more of Spring Valley’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of Spring Valley and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, Spring Valley’s officers have interests in the Transactions that may conflict with your interests as a shareholder.
Stock Exchange Listing
We expect to list the shares of NuScale Corp Class A Common Stock and warrants to purchase shares of NuScale Corp Class A Common Stock on the NYSE under the proposed symbols “SMR” and “SMR WS” respectively.
Sources and Uses of Cash for the Transactions
The following tables summarize the sources and uses of cash in connection with the Transactions, assuming (i) none of Spring Valley’s outstanding Public Shares are redeemed in connection with the Transactions and (ii) all 23,000,000 Spring Valley Class A ordinary shares are redeemed in connection with the Transactions. Both the Assuming No Redemptions (as defined below) scenario and the Assuming Maximum Redemptions (as defined below) scenario assume that the per share redemption price is $10.10; the actual per share redemption price will be equal to the pro rata portion of the Trust Account calculated as of two business days prior to the consummation of the Transactions.
Estimated Sources and Uses of Cash (No Redemption)
| |
Source of Funds(1)
|
| |
Uses(1)
|
| ||||||||||||
| |
Existing Cash held in Trust
Account(2) |
| | | $ | 232,320,939 | | | |
Remaining Cash on Balance
Sheet |
| | | $ | 425,320,939 | | |
| |
PIPE Investment
|
| | | | 236,000,000 | | | |
Transaction Fees and Expenses
|
| | | | 43,000,000 | | |
| |
Total Sources
|
| | | $ | 468,320,939 | | | |
Total Uses
|
| | | $ | 468,320,939 | | |
(1)
Totals might be affected by rounding.
(2)
Approximate as of December 31, 2021.
40
Estimated Sources and Uses of Cash (Maximum Redemptions)
| |
Source of Funds(1)
|
| |
Uses(1)
|
| ||||||||||||
| |
Existing Cash held in Trust Account(2)
|
| | | $ | 232,320,939 | | | |
Remaining Cash on Balance
Sheet |
| | | $ | 193,020,939 | | |
| |
PIPE Investment
|
| | | | 236,000,000 | | | |
Spring Valley public redemption(3)
|
| | | | 232,300,000 | | |
| | | | | | | | | | |
Transaction Fees and Expenses
|
| | | | 43,000,000 | | |
| |
Total Sources
|
| | | $ | 468,320,939 | | | |
Total Uses
|
| | | $ | 468,320,939 | | |
(1)
Totals might be affected by rounding.
(2)
Approximate as of December 31, 2021.
(3)
Based on 23,000,000 Spring Valley Class A ordinary shares subject to possible redemption, which assumes the maximum number of Spring Valley Class A ordinary shares that can be redeemed at $10.10 per share.
Expected Accounting Treatment of the Transactions (page 115)
The Domestication
There will be no accounting effect or change in the carrying amount of the consolidated assets and liabilities of Spring Valley as a result of the Domestication. The business, capitalization, assets and liabilities and financial statements of NuScale Corp immediately following the Domestication will be the same as those of Spring Valley immediately prior to the Domestication.
The Merger
The Merger is expected to be accounted for as a reverse recapitalization as provided under GAAP. Under GAAP, Spring Valley is expected to be treated as the “acquired” company. This determination was primarily based on existing NuScale Equityholders comprising a relative majority of the expected voting power of the combined company, NuScale LLC’s operations prior to the acquisition comprising the only ongoing operations of NuScale Corp, NuScale LLC’s senior management comprising a majority of the senior management of NuScale Corp, and NuScale LLC initially designating a majority of the NuScale Corp Board. Accordingly, the financial statements of the combined entity will represent a continuation of the financial statements of NuScale LLC with the Merger being treated as the equivalent of NuScale LLC issuing equity for the net assets of Spring Valley, accompanied by a recapitalization. The net assets of NuScale LLC will be stated at historical cost, with no incremental goodwill or other intangible assets recorded for the effects of the Merger with Spring Valley.
Comparison of Corporate Governance and Shareholder Rights (page 260)
Following the consummation of the Transactions, the rights of Spring Valley shareholders who become NuScale Corp stockholders as a result of the Transactions will no longer be governed by the Existing Organizational Documents and instead will be governed by the Proposed Charter and the Proposed Bylaws of NuScale Corp. See “Proposal No. 2 — The Domestication Proposal — Comparison of Corporate Governance and Shareholder Rights” beginning on page 131.
NuScale Member Letter
NuScale LLC has received a letter on behalf of five holders of common units claiming that NuScale LLC may not amend the Existing LLCA to implement the conversion of NuScale LLC Preferred Units into NuScale LLC Common Units without the written consent of NuScale LLC members holding a majority of the NuScale LLC Common Units. NuScale LLC does not believe the holders’ claims have any merit.
Summary of Risk Factors (page 48)
The transactions described in this Proxy Statement/Prospectus and the investment in our securities involve significant risks, and you should carefully read and consider the factors discussed under “Risk
41
Factors.” The following is a summary of some of these risks. If any of the following events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
Risks Related to Our Structure and Governance
•
If the Transactions are consummated, we would be subject to risks related to our dependency on NuScale LLC to pay taxes, make payments under the Tax Receivable Agreement and pay dividends;
•
In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual tax benefits NuScale Corp realizes.
•
If NuScale LLC were treated as a corporation for United States federal income tax or state tax purposes, then the amount available for distribution by NuScale LLC could be substantially reduced and the value of NuScale Corp shares could be adversely affected;
•
NuScale Corp will be a “controlled company” under the NYSE listing standards, and as a result, its stockholders may not have certain corporate protections that are available to stockholders of companies that are not controlled companies;
Risks Related to NuScale LLC’s Business and Industry
•
NuScale LLC has not yet delivered an NPM to a customer or entered into a binding contract with a customer to deliver NPMs, and there is no guarantee that it will be able to do so;
•
Competitors in China and Russia currently operate commercial SMRs and may have advantages in marketing their SMRs to potential customers;
•
NuScale LLC may be unable to charge Utah Associated Municipal Power Systems (UAMPS), its first customer, for some costs NuScale LLC has incurred and it may be required to reimburse UAMPS if NuScale LLC fails to achieve specified performance measures;
•
Any delays in the development and manufacture of NPMs and related technology, the failure of any commercial or demonstration missions, or the failure to timely deliver NPMs to customers may adversely impact NuScale LLC’s business and financial condition;
•
NuScale LLC has incurred significant losses since inception, expects to incur losses in the future, and may not be able to achieve or maintain profitability;
•
The cost of electricity generated from nuclear sources may not be cost competitive with other electricity generation sources in some markets, and NuScale LLC may fail to effectively incorporate updates to the design, construction, and operations of NuScale LLC plants to ensure cost competitiveness, which could materially and adversely affect NuScale LLC’s business;
•
The market for SMRs is not yet established and may not achieve the growth potential expected or may grow more slowly than expected;
•
NuScale LLC’s commercialization strategy relies heavily on its relationship with Fluor, and other strategic investors and partners, who may have interests that diverge from NuScale LLC and who may not be easily replaced if their relationships terminate;
•
If manufacturing and construction issues are not identified prior to design finalization, long-lead procurement, and/or module fabrication, then those issues will be realized during production, fabrication, or construction and may impact plant deployment cost and schedule;
•
NuScale LLC and its customers operate in a politically sensitive environment, and may be affected by the public perception of nuclear energy and accidents, terrorist attacks or other high profile events involving nuclear materials;
•
NuScale LLC’s supply base may not be able to scale to the production levels necessary to meet sales projections, and a lack of availability and cost of component raw materials may affect the manufacturing processes for plant equipment and increase NuScale LLC’s costs;
42
•
NuScale LLC may be unable to adequately protect its intellectual property rights, in particular its rights in non-U.S. jurisdictions, and may be subject to infringement claims from others;
•
There is substantial doubt about NuScale LLC’s ability to continue as a going concern, and it may require additional future funding whether or not the Transactions are completed;
•
NuScale LLC’s SDA application for the 77 MWe power module has not yet been submitted to the NRC, and its approval is not guaranteed;
•
NuScale LLC’s design is only approved in the United States and it must obtain approvals on a country-by-country basis before it can sell its products abroad, which approvals may be delayed or denied or which may require modification to its design;
•
NuScale LLC’s customers must obtain additional, site-specific regulatory approvals before they can construct power plants using NPMs, which may be delayed or denied;
•
NuScale LLC’s business is subject to a wide variety of extensive and evolving laws and regulations — including export and import controls, nuclear material and nuclear power regulations, and environmental regulations — and changes in and/or failure to comply with such laws and regulations could have a material adverse effect on its business;
Risks Related to the Transactions and Spring Valley
•
We are subject to risks related to the significant subjectivity of our valuation methodologies and decision not to obtain third-party valuation in determining whether or not to pursue the Transactions;
•
The interests of the Initial Shareholders and our executive officers are different, or in addition to, the interests of our shareholders, which may give rise to actual or perceived conflicts of interest in connection with the Transactions;
•
The ability of our Public Shareholders to exercise redemption rights with respect to a large number of our Public Shares may not allow us to complete the most desirable business combination or optimize the capital structure of NuScale Corp;
•
Our Initial Shareholders, as well as NuScale LLC, our directors, executive officers, advisors and their affiliates may elect to purchase Public Shares prior to the consummation of the Transactions, which may influence the vote on the Transactions and reduce the public “float” of our Spring Valley Class A ordinary shares;
•
If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per share redemption amount received by shareholders may be less than $10.00 per share;
•
We are subject to risks related to the sale of total outstanding shares after the immediate resale restrictions have elapsed, which could cause the market price of NuScale Corp Common Stock to drop significantly;
•
Spring Valley Warrants will become exercisable for NuScale Corp Common Stock, which, if exercised, would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders;
•
We may redeem your unexpired Spring Valley Public Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless;
•
We are subject to risks related to effectuating the Domestication including potentially adverse tax consequences and less favorable shareholder rights under the DGCL than under Cayman Islands Law;
•
Spring Valley does not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete the Transactions even if a substantial majority of Public Shareholders have redeemed their shares;
•
Our directors may decide not to enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to Public Shareholders;
•
We may not have sufficient funds to satisfy indemnification claims of our directors and executive officers; and
43
•
If we are not able to complete the Merger with NuScale LLC nor able to complete another business combination by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option), we would cease all operations except for the purpose of winding up and we would redeem Spring Valley Class A ordinary shares and liquidate the Trust Account, in which case Public Shareholders may only receive approximately $10.10 per share, or less than such amount in certain circumstances, and Spring Valley Public Warrants will expire worthless.
Emerging Growth Company
Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies (“EGCs”) from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with such standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-EGCs but any such election to opt out is irrevocable. We intend to take advantage of the benefits of this extended transition period.
We will remain an EGC until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of Spring Valley’s IPO, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. We expect to remain an EGC until December 31, 2025, the last day of the fiscal year following the fifth anniversary of the completion of our Initial Public Offering.
Controlled Company
Following the Merger, we will be a “controlled company” under the NYSE rules, which means we will be exempt from certain NYSE corporate governance requirements, including the requirement to have a majority independent board of directors and compensation and nominating and governance committees comprised solely of independent directors.
44
SUMMARY UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION
CONDENSED COMBINED FINANCIAL INFORMATION
The following summary unaudited pro forma condensed combined financial information (the “Summary Pro Forma Information”) gives effect to the Transactions and related transactions more fully described elsewhere. Notwithstanding its legal form, the Transactions will be accounted for as a reverse recapitalization as provided under U.S. GAAP. As such, Spring Valley will be treated as the “acquired” company and NuScale LLC will be treated as the acquirer. Accordingly, the Transactions will be treated as though NuScale LLC issued ownership interests for the net assets of Spring Valley, accompanied by a recapitalization. Operations prior to the Transactions will be those of NuScale LLC. The summary unaudited condensed combined pro forma balance sheet as of December 31, 2021 gives pro forma effect to the Transactions and related transactions as if they had occurred on December 31, 2021. The summary unaudited pro forma condensed combined statement of operations data for the year ended December 31, 2021 gives pro forma effect to the Transactions and related transactions as if they had been consummated on January 1, 2021.
The Summary Pro Forma Information has been derived from and should be read in conjunction with both the more detailed historical information for NuScale LLC and Spring Valley appearing elsewhere in this Proxy Statement/Prospectus and the notes accompanying the unaudited pro forma condensed combined financial statements. The Summary Pro Forma Information appears for informational purposes only and may not be indicative of what NuScale Corp’s financial position or results of operations actually would have been had the Transactions been completed as of the dates indicated. In addition, the Summary Pro Forma Information is not indicative of NuScale Corp’s future financial position or operating results.
The Summary Pro Forma Information has been prepared using the assumptions below for the potential redemption by Public Shareholders for cash equal to their pro rata share of the aggregate amount in the Trust Account:
•
Assuming no Public Shareholders exercise redemption rights (“Assuming No Redemptions”); and
•
Assuming the Public Shareholders holding all 23,000,000 Spring Valley Class A ordinary shares exercise their redemption rights for an aggregate payment of $232,300,000 (based on the estimated per share redemption price of approximately $10.10 per share) from the Trust Account. Such amount represents the maximum number of Spring Valley Class A ordinary share redemptions that could occur (“Assuming Maximum Redemptions”).
| | | |
Pro Forma
Combined (Assuming No Redemptions) |
| |
Pro Forma
Combined (Assuming Maximum Redemptions) |
| ||||||
| | | |
(in thousands, except share
and per share data) |
| |||||||||
| Selected Unaudited Pro Forma Condensed Combined | | | | | | | | | | | | | |
| Statement of Operations Data for the Year Ended December 31, 2021 | | | | | | | | | | | | | |
|
Revenue
|
| | | $ | 2,862 | | | | | $ | 2,862 | | |
|
Net loss per share of common stock – basic and diluted
|
| | | $ | (0.45) | | | | | $ | (0.50) | | |
|
Weighted average number of shares of common stock outstanding – basic and
diluted |
| | | | 50,823,805 | | | | | | 27,242,013 | | |
45
| | | |
Pro Forma
Combined (Assuming No Redemptions) |
| |
Pro Forma
Combined (Assuming Maximum Redemptions) |
| ||||||
| | | |
(in thousands)
|
| |||||||||
| Selected Unaudited Pro Forma Combined | | | | | | | | | | | | | |
| Balance Sheet Data as of December 31, 2021 | | | | | | | | | | | | | |
|
Total assets
|
| | | $ | 546,239 | | | | | $ | 313,939 | | |
|
Total liabilities
|
| | | $ | 67,722 | | | | | $ | 67,722 | | |
|
Total equity
|
| | | $ | 478,517 | | | | | $ | 246,217 | | |
The following summarizes the NuScale Corp Common Stock outstanding under the two redemption scenarios:
| | | |
Assuming No
Redemptions |
| |
Assuming Maximum
Redemptions |
| ||||||||||||||||||
| | | |
Shares
|
| |
%
|
| |
Shares
|
| |
%
|
| ||||||||||||
|
Spring Valley Class A Shareholders
|
| | | | 23,000,000 | | | | | | 10.0% | | | | | | — | | | | | | 0.0% | | |
|
Spring Valley Founders(1)
|
| | | | 4,023,803 | | | | | | 1.8% | | | | | | 3,442,011 | | | | | | 1.7% | | |
|
Total Spring Valley
|
| | | | 27,023,803 | | | | | | 11.8% | | | | | | 3,442,011 | | | | | | 1.7% | | |
|
NuScale Equityholders
|
| | | | 178,268,640 | | | | | | 77.8% | | | | | | 178,268,640 | | | | | | 86.7% | | |
|
PIPE Shares
|
| | | | 23,800,002 | | | | | | 10.4% | | | | | | 23,800,002 | | | | | | 11.6% | | |
|
Total Shares at Closing (excluding shares below)
|
| | |
|
229,092,445
|
| | | |
|
100.0%
|
| | | |
|
205,510,653
|
| | | |
|
100.0%
|
| |
|
Remaining NuScale Consideration Shares – upon Exercise of
NuScale Corp Options |
| | | | 14,910,410 | | | | | | | | | | | | 14,910,410 | | | | | | | | |
|
Other – Earn Out Shares(1)
|
| | | | 1,726,197 | | | | | | | | | | | | 1,412,924 | | | | | | | | |
|
Total Diluted Shares at Closing (including shares above)
|
| | |
|
245,729,052
|
| | | | | | | | | |
|
221,833,987
|
| | | | | | | |
(1)
Pursuant to the Sponsor Letter Agreement, if available cash is less than $432 million, at the Closing, Sponsor shall forfeit and cancel a number of Spring Valley Founder Shares equal to 895,065 in the Assuming Maximum Redemptions scenario. Spring Valley Founders Shares includes “Earn Out Shares”. Fifty percent of the Earn Out Shares vest, pursuant to the Sponsor Letter Agreement, if, over any 20 trading days within a 30-day window during the 60 months following the closing, the dollar volume-weighted average price (“VWAP”) is greater than or equal to $12.00 per share. The remainder of the Earn Out Shares vest if, over any 20 trading days within a 30-day window during the 60 months following the closing, the VWAP is greater than or equal to $14.00 per share.
46
MARKET PRICE, TICKER SYMBOL AND DIVIDEND INFORMATION
Spring Valley
Spring Valley’s Units, Spring Valley Class A ordinary shares and Spring Valley Public Warrants are currently listed on the Nasdaq under the symbols “SVSVU,” “SV” and “SVSVW,” respectively.
The closing price of the Units, Spring Valley Class A ordinary shares and Spring Valley Public Warrants on December 13, 2021, the last trading day before announcement of the execution of the Merger Agreement, was $10.18, $9.95 and $0.52, respectively. As of March 25, 2022, the record date for the Special Meeting, the closing price of the Units, Spring Valley Class A ordinary shares and Spring Valley Public Warrants was $11.00, $10.16 and $1.58, respectively.
Holders of the Units, Spring Valley Class A ordinary shares and Spring Valley Public Warrants should obtain current market quotations for their securities. The market price of Spring Valley’s securities could vary at any time before consummation of the Transactions.
Holders
As of December 31, 2021, there was one holder of record of Spring Valley’s Units, one holder of record of Spring Valley Class A ordinary shares and one holder of record of Spring Valley Public Warrants. The number of holders of record does not include a substantially greater number of “street name” holders or beneficial holders whose Units, Public Shares and Spring Valley Public Warrants are held of record by banks, brokers and other financial institutions.
Dividend Policy
Spring Valley has not paid any cash dividends on its ordinary shares to date and does not intend to pay cash dividends prior to the completion of the Transactions. The payment of cash dividends in the future will be dependent upon NuScale Corp’s revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the Transactions. The payment of any cash dividends subsequent to the Transactions will be within the discretion of the NuScale Corp Board at such time. NuScale Corp’s ability to declare dividends may also be limited by restrictive covenants pursuant to any debt financing and applicable law.
NuScale LLC
Historical market price information for NuScale LLC’s membership interests is not provided because there is no public market for any membership interest of NuScale LLC.
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RISK FACTORS
We have identified the following risks and uncertainties that may have a material adverse effect on our business, financial condition, results of operations or reputation. The risks described below are not the only risks we face. Additional risks not presently known to us or that we currently believe are not material may also significantly affect our business, financial condition, results of operations or reputation. Our business could be harmed by any of these risks. In assessing these risks, you should also refer to the other information contained in this Proxy Statement/Prospectus, including our financial statements and related notes.
Risks Related to Our Structure and Governance
NuScale Corp will be a holding company and its only material asset after completion of the Transactions will be its interest in NuScale LLC, and it is accordingly dependent upon distributions made by its subsidiaries to pay taxes, make payments under the Tax Receivable Agreement and pay dividends.
Upon completion of the Transactions, NuScale Corp will be a holding company with no material assets other than its ownership of the NuScale LLC Common Units. As a result, NuScale Corp will have no independent means of generating revenue or cash flow. NuScale Corp’s ability to pay taxes, cause NuScale LLC to make payments under the Tax Receivable Agreement, and pay dividends will depend on the financial results and cash flows of NuScale LLC and the distributions it receives (directly or indirectly) from NuScale LLC. Deterioration in the financial condition, earnings or cash flow of NuScale LLC for any reason could limit or impair its ability to pay such distributions. Additionally, to the extent that NuScale Corp needs funds and NuScale LLC is restricted from making such distributions under applicable law or regulation or under the terms of any financing arrangements, or NuScale LLC is otherwise unable to provide such funds, it could materially adversely affect NuScale Corp’s liquidity and financial condition.
Subject to the discussion herein, NuScale LLC will continue to be treated as a partnership for United States federal income tax purposes and, as such, generally will not be subject to any entity-level United States federal income tax. Instead, taxable income will be allocated to holders of NuScale LLC Units. Accordingly, NuScale Corp will be required to pay income taxes on its allocable share of any net taxable income from NuScale LLC. Under the terms of the A&R NuScale LLC Agreement, NuScale LLC is obligated to make tax distributions to holders of the NuScale LLC Common Units calculated at certain assumed tax rates. In addition to income taxes, NuScale Corp is also expected to incur expenses related to its operations, including payment obligations under the Tax Receivable Agreement, which could be significant, and some of which will be reimbursed by NuScale LLC (excluding payment obligations under the Tax Receivable Agreement). NuScale Corp intends to cause NuScale LLC to make ordinary distributions and tax distributions to holders of the NuScale LLC Units on a pro rata basis in amounts sufficient to cover all applicable taxes, relevant operating expenses, payments under the Tax Receivable Agreement and dividends, if any, declared by NuScale Corp. However, as discussed above, NuScale LLC’s ability to make such distributions may be subject to various limitations and restrictions, including, but not limited to, retention of amounts necessary to satisfy the obligations of NuScale LLC and restrictions on distributions that would violate any applicable restrictions contained in NuScale LLC’s debt agreements, any applicable law or that would have the effect of rendering NuScale LLC insolvent. To the extent that NuScale Corp is unable to make payments under the Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a breach of a material obligation under the Tax Receivable Agreement and therefore accelerate payments under the Tax Receivable Agreement, which could be substantial.
Additionally, although NuScale LLC generally will not be subject to any entity-level United States federal income tax, it may be liable under recent United States federal tax legislation for adjustments to prior year tax returns, absent an election to the contrary. In the event NuScale LLC’s calculations of taxable income are incorrect, NuScale LLC and its members, including NuScale Corp, in later years may be subject to material liabilities pursuant to this legislation and its related guidance.
If NuScale LLC were treated as a corporation for United States federal income tax or state tax purposes, then the amount available for distribution by NuScale LLC could be substantially reduced and the value of NuScale Corp shares could be adversely affected.
An entity that would otherwise be classified as a partnership for United States federal income tax purposes (such as NuScale LLC) may nonetheless be treated as, and taxable as, a corporation if it is a
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“publicly traded partnership” unless an exception to such treatment applies. An entity that would otherwise be classified as a partnership for United States federal income tax purposes will be treated as a “publicly traded partnership” if interests in such entity are traded on an established securities market or interests in such entity are readily tradable on a secondary market or the substantial equivalent thereof. If NuScale LLC is determined to be treated as a “publicly traded partnership” (and taxable as a corporation) for United States federal income tax purposes, it would be taxable on its income at the United States federal income tax rates applicable to corporations and distributions by NuScale LLC to its partners (including NuScale Corp) could be taxable as dividends to such partners to the extent of the earnings and profits of NuScale LLC. In addition, we would no longer have the benefit of increases in the tax basis of NuScale LLC’s assets as a result of exchanges of NuScale LLC Common Units. Pursuant to the A&R NuScale LLC Agreement, certain NuScale Equityholders may, from time to time, subject to the terms of the A&R NuScale LLC Agreement, exchange their interests in NuScale LLC and have such interests redeemed by NuScale LLC for cash or NuScale Corp Class A Common Stock. While such exchanges could be treated as trading in the interests of NuScale LLC for purposes of testing “publicly traded partnership” status, the A&R NuScale LLC Agreement contains restrictions on redemptions and exchanges of interests in NuScale LLC that are intended to prevent NuScale LLC entities from being treated as a “publicly traded partnership” for United States federal income tax purposes. Such restrictions are designed to comply with certain safe harbors provided for under applicable United States federal income tax law. NuScale Corp may also impose additional restrictions on exchanges that it determines to be necessary or advisable so that NuScale LLC is not treated as a “publicly traded partnership” for United States federal income tax purposes. Accordingly, while such position is not free from doubt, NuScale LLC is expected to be operated such that it is not treated as a “publicly traded partnership” taxable as a corporation for United States federal income tax purposes and we intend to take the position that NuScale LLC is so treated as a result of exchanges of its interests pursuant to the A&R NuScale LLC Agreement.
Pursuant to the Tax Receivable Agreement, NuScale Corp will be required to pay to certain NuScale Equityholders 85% of certain tax benefits, if any, that it realizes (or in certain cases is deemed to realize) as a result of any increases in tax basis and related tax benefits resulting from any exchange of NuScale LLC Units for shares of NuScale Corp Class A Common Stock or cash in the future, and those payments may be substantial.
The NuScale Equityholders may in the future exchange their NuScale LLC Units, together with the cancelation for no consideration of an equal number of shares of NuScale Corp Class B Common Stock, for NuScale Corp Class A Common Stock (or, upon the election of NuScale Corp, cash in an amount equal to the net proceeds raised by selling such NuScale Corp Class A Common Stock in a contemporaneous underwritten offering), subject to certain restrictions. Such transactions are expected to result in increases in NuScale Corp’s share of the tax basis of the tangible and intangible assets of NuScale LLC. These increases in tax basis may result in increased tax depreciation and amortization deductions and therefore reduce the amount of income or franchise tax that NuScale Corp would otherwise be required to pay in the future had such sales and exchanges never occurred.
In connection with the Closing, NuScale Corp will enter into the Tax Receivable Agreement with NuScale LLC, each of the TRA Holders (as defined in the Tax Receivable Agreement) party thereto and Fluor, in its capacity as TRA Representative (as defined in the Tax Receivable Agreement). Pursuant to the Tax Receivable Agreement, NuScale Corp will be required to pay 85% of the net cash tax savings from certain tax benefits, if any, that it realizes (or in certain cases is deemed to realize) as a result of any increases in tax basis and other tax benefits resulting from any exchange by the TRA Holders of NuScale LLC Class B Units for shares of NuScale Corp Class A Common Stock or cash in the future. Any such payments to TRA Holders will reduce the cash provided by the tax savings generated from future exchanges that would otherwise have been available to NuScale Corp for other uses, including reinvestment or dividends to Class A stockholders. Cash tax savings from the remaining 15% of the tax benefits will be retained by NuScale Corp. NuScale Corp’s obligations under the Tax Receivable Agreement accelerate upon a change in control and certain other termination events, as defined therein. These payments are the obligation of NuScale Corp and not of NuScale LLC. The actual increase in NuScale Corp’s allocable share of NuScale LLC’s tax basis in its assets, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the timing of exchanges, the market price of the NuScale Corp Class A Common Stock at the time of the exchange, the extent to which such
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exchanges are taxable and the amount and timing of the recognition of NuScale Corp’s income. While many of the factors that will determine the amount of payments that NuScale Corp will make under the Tax Receivable Agreement are outside of its control, NuScale Corp expects that the payments it will make under the Tax Receivable Agreement will be substantial and could have a material adverse effect on NuScale Corp’s financial condition. Any payments made by NuScale Corp under the Tax Receivable Agreement will generally reduce the amount of overall cash flow that might have otherwise been available to NuScale Corp. To the extent that NuScale Corp is unable to make timely payments under the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid; however, nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore accelerate payments due under the Tax Receivable Agreement, as further described below. Furthermore, NuScale Corp’s future obligation to make payments under the Tax Receivable Agreement could make it a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that may be deemed realized under the Tax Receivable Agreement. See the section entitled “Certain Relationship and Related Party Transactions — Tax Receivable Agreement.”
In certain cases, payments under the Tax Receivable Agreement may exceed the actual tax benefits NuScale Corp realizes.
Payments under the Tax Receivable Agreement will be based on the tax reporting positions that NuScale Corp determines, and the U.S. Internal Revenue Service (“IRS”) or another taxing authority may challenge all or any part of the tax basis increases, as well as other tax positions that NuScale Corp takes, and a court may sustain such a challenge. In the event that any tax benefits initially claimed by NuScale Corp are disallowed, the NuScale Equityholders will not be required to reimburse NuScale Corp for any excess payments that may previously have been made under the Tax Receivable Agreement, for example, due to adjustments resulting from examinations by taxing authorities. Rather, excess payments made to such holders will be netted against any future cash payments otherwise required to be made by NuScale Corp under the Tax Receivable Agreement, if any, after the determination of such excess. However, a challenge to any tax benefits initially claimed by NuScale Corp may not arise for a number of years following the initial time of such payment or, even if challenged early, such excess cash payment may be greater than the amount of future cash payments that NuScale Corp might otherwise be required to make under the terms of the Tax Receivable Agreement and, as a result, there might not be future cash payments against which to net. As a result, in certain circumstances NuScale Corp could make payments under the Tax Receivable Agreement in excess of NuScale Corp’s actual income tax savings, which could materially impair NuScale Corp’s financial condition.
Moreover, the Tax Receivable Agreement provides that, in certain events, including a change of control, breach of a material obligation under the Tax Receivable Agreement, or NuScale Corp exercise of early termination rights, NuScale Corp obligations under the Tax Receivable Agreement will accelerate and NuScale Corp will be required to make a lump-sum cash payment to the NuScale Equityholders party to the Tax Receivable Agreement equal to the present value of all forecasted future payments that would have otherwise been made under the Tax Receivable Agreement, which lump-sum payment would be based on certain assumptions, including those relating to NuScale Corp future taxable income. The lump-sum payment could be substantial and could exceed the actual tax benefits that NuScale Corp realizes subsequent to such payment because such payment would be calculated assuming, among other things, that NuScale Corp would have certain tax benefits available to it and that NuScale Corp would be able to use the potential tax benefits in future years.
There may be a material negative effect on NuScale Corp’s liquidity if the payments required to be made by NuScale Corp under the Tax Receivable Agreement exceed the actual income or franchise tax savings that NuScale Corp realizes. Furthermore, NuScale Corp’s obligations to make payments under the Tax Receivable Agreement could also have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control.
Risks Related to NuScale LLC’s Business and Industry
The following risk factors will apply to NuScale LLC’s business and operations following the completion of the Transactions. These risk factors are not exhaustive, and investors are encouraged to perform their own
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investigation with respect to the business, financial condition, and prospects of NuScale LLC and its business, financial condition, and prospects following the completion of the Transactions. You should carefully consider the following risk factors in addition to the other information included in this Proxy Statement/Prospectus, including matters addressed in the section titled “Cautionary Statement Regarding Forward-Looking Statements.” NuScale LLC may face additional risks and uncertainties that are not presently known to it, or that it currently deems immaterial, which may also impair NuScale LLC’s business or financial condition. The following discussion should be read in conjunction with the financial statements of NuScale LLC and notes to the financial statements included herein.
Unless the context otherwise requires, all references in this subsection to the “Company,” “we,” “us” or “our” refer to the business of NuScale LLC.
Commercialization Risk Factors
We have not yet commercialized or sold NPMs, and a number of factors could prevent, delay or hinder commercialization.
We have not yet entered into a binding contract with a customer to deliver NPMs, and there is no guarantee that we will be able to do so.
The planned initial deployment of our NPM is subject to NuScale LLC reaching a binding agreement for its scope of supply with Utah Associated Municipal Power Systems (“UAMPS”) and UAMPS reaching a binding engineering, procurement, and construction (“EPC”) contract with Fluor. If NuScale LLC and Fluor do not enter into binding agreements with UAMPS, deployment of our NPM, power plants, and ongoing services could be significantly delayed, which could have a material adverse effect on our business and financial condition. Memoranda of understanding we have entered into with other potential purchasers are contingent, and may not result in binding agreements for the purchase of our products or services.
Competitors in China and Russia currently operate commercial SMRs, and may have advantages in marketing their SMRs to potential customers.
Competitors in Russia and China, such as Rosatom and China National Nuclear Corporation, currently operate commercial SMRs in those countries. Although their SMR designs have not been approved by the NRC or in any jurisdiction outside of their native countries, those competitors may have a competitive advantage if they are able to obtain approval comparable to Standard Design Approval (“SDA”), or if they can otherwise demonstrate to potential customers the value and benefits of their SMRs, particularly in jurisdictions that have less stringent regulatory requirements. In addition, these competitors may have access to greater government or other funding to develop and commercialize their SMRs than we do.
We may be unable to charge UAMPS, our first customer, for some costs we have incurred and we may be required to reimburse UAMPS if we fail to achieve specified performance measures.
We entered into a Cost Sharing Option Agreement and a Subaward Agreement in 2015 (collectively, the “CSO and Subaward Agreements”) that facilitate sharing a DOE award with UAMPS for early siting and licensing for the Carbon Free Power Project (“CFPP”). Under those agreements, the DOE has been paying half of the costs and UAMPS and NuScale LLC have shared the other half. We have incurred reimbursable costs of $4.1 million under the CSO and Subaward Agreements. If UAMPS determines to file a license application with the NRC for the CFPP, UAMPS must then pay us for those costs; however, if UAMPS, or its wholly-owned subsidiary, CFPP LLC, does not file a license application, we will be unable to bill those costs to UAMPS.
In conjunction with certain agreements related to the CFPP awarded to Fluor, pursuant to which we are developing the NRC license application for the CFPP and performing other site licensing and development activities, we entered into a Development Cost Reimbursement Agreement with UAMPS (the “DCRA”). Under the DCRA, we may be obligated to refund to UAMPS a percentage of its net development costs up to a specified cap, which vary based on the stage of project development, if (1) at specified times in the development of the CFPP, the estimated cost of electricity (based on increasingly accurate project cost
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estimates at various stages of development) exceeds an agreed target cost of $58.00/megawatt-hour (subject to adjustment as specified in the DCRA), or if Fluor does not timely provide a required comparison (which we refer to as an economic competitive test, or “ECT”), (2) the NRC does not issue design certification for the NuScale design by March 31, 2023, (3) the NRC does not issue SDA for the NuScale design within one year after the NRC’s published date for such approval after acceptance of the SDA application, or (4) NuScale LLC materially breaches the DCRA and the DCRA is terminated for cause. The reimbursement percentage and cap is 100% and $57 million until UAMPS or CFPP LLC submit a combined construction and operating license for approval to the NRC (“COLA”). After the COLA is submitted, the reimbursement percentage is 20% and (a) the cap for an ECT failure before final notice to proceed with NuScale plant construction is $60 million and (b) the cap for termination of the DCRA for cause is $120 million through deliver of a “Class 2” project cost estimate (an estimate that is accurate within -15% to +20%) and thereafter $180 million through the final notice to proceed, which requires a “Class 1” project cost estimate (an estimate that is accurate within -10% to +15%).
Any delays in the development and manufacture of NPMs and related technology may adversely impact our business and financial condition.
We have previously experienced, and may experience in the future, delays or other complications in the design, manufacture, production and delivery of NPMs and related technology that could prevent us from delivering NPMs in 2027 or beyond. If delays like this recur, if our remediation measures and process changes do not continue to be successful, if we fail to find a satisfactory manufacturer or if we experience issues with planned manufacturing activities or design and safety, we could experience issues or delays in sustaining or further increasing production and sales of NPMs.
If we encounter difficulties in scaling our production and delivery capabilities, if we fail to develop and successfully commercialize our NPMs and related technologies, if we fail to develop such technologies before our competitors or if such technologies fail to perform as expected, are inferior to those of our competitors or are perceived as less safe than those of our competitors, our business and financial condition could be materially and adversely impacted.
We have not yet delivered NPMs to customers, and any setbacks we may experience during our first commercial delivery planned for 2028 and other demonstration and commercial missions could have a material adverse effect on our business, financial condition and results of operation, and could harm our reputation.
The success of our business will depend on our ability to successfully deliver NPMs to customers on-time and on-budget at guaranteed performance levels, which would tend to establish greater confidence in our subsequent customers. There is no guarantee that our planned NPM deployments will be successful. There can be no assurance that we will not experience operational or process failures and other problems during our first commercial deployment or any planned deployment thereafter. Any failures or setbacks, particularly on our first commercial deployments, could harm our reputation and have a material adverse effect on our business and financial condition.
Any actual or perceived safety or reliability issues may result in significant reputational harm to our businesses, in addition to tort liability and other costs that may arise. Such issues could result in delaying or cancelling planned deployments of NPMs, increased regulation, or other systemic consequences. Our inability to meet our safety standards or adverse publicity affecting our reputation as a result of accidents or mechanical failures could have a material adverse effect on our business and financial condition.
We have incurred significant losses since inception, we expect to incur losses in the future, and we may not be able to achieve or maintain profitability.
We have incurred significant losses since our inception well beyond the support we have received through cost-sharing awards from the DOE. We have not yet delivered NPMs or VOYGR plants to customers, and it is difficult for us to predict our future operating results. As a result, our losses may be larger than anticipated, and we may not achieve profitability when expected or at all; even if we do, we may not be able to maintain or increase profitability.
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We expect our operating expenses to increase over the next several years as we commence deployment of NPMs, continue to refine and streamline our design and manufacturing processes for our NPMs, make technical improvements, hire additional employees and continue research and development efforts relating to new products and technologies. These efforts may be more costly than we expect and may not result in increased revenue, profits or growth in our business. Any failure to increase our revenue sufficiently to keep pace with our expenses could prevent us from achieving or maintaining profitability or positive cash flow. Furthermore, if our future growth and operating performance fail to meet investor or analyst expectations, or if we have future negative cash flow or losses resulting from our investment in acquiring customers or expanding our operations, this could have a material adverse effect on our business and financial condition.
The cost of electricity generated from nuclear sources may not be cost competitive with other electricity generation sources in some markets, which could materially and adversely affect our business.
Some electricity markets experience very low power prices due to a combination of subsidized renewables and low-cost fuel sources, and NuScale LLC may not be able to compete in these markets unless the benefits of the carbon-free, reliable and/or resilient energy generation provided by our NPMs are sufficiently valued in the market. Given the relatively lower electricity prices in the United States when compared to many international markets, the risk may be greater with respect to business in the United States. Moreover, historically very low (or negative) market prices are the result of surplus generation that cannot be curtailed and are transitory. These low prices do not reflect a price to beat for NuScale’s technology.
The market for SMRs generating nuclear power is not yet established and may not achieve the growth potential we expect or may grow more slowly than expected.
The market for SMRs has not yet been established. Our estimates for the total addressable market are based on a number of internal and third-party estimates, including our potential contracted revenue, the number of potential customers who have expressed interest in our NPMs, assumed prices and production costs for our NPMs, our ability to leverage our current logistical and operational processes, and general market conditions. However, our assumptions and the data underlying our estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors. As a result, our estimates of the annual total addressable market for our services, as well as the expected growth rate for the total addressable market for our services, may prove to be incorrect.
Our commercialization strategy relies heavily on our relationship with Fluor and other strategic investors and partners, who may have interests that diverge from ours and who may not be easily replaced if our relationships terminate.
We rely heavily upon our relationship with Fluor, our majority owner, and our relationships with other of our investors and strategic partners to commercialize our NPM and our other products and services. We granted Fluor certain rights to provide engineering, procurement and construction services in connection with NuScale LLC’s general plant design, project-specific designs and services typically performed by Fluor or its direct competitors. Similarly, we have entered into certain agreements with Doosan Heavy Industries and Construction Company, Ltd. (“Doosan”), IHI Corporation (“IHI”), and Sarens Nuclear & Industrial Services, LLC (“Sarens”) for certain planning, engineering, manufacturing and support activities, and JGC Holdings Corporation (“JGC”), an affiliate of Japan NuScale Innovation, LLC, related to the EPC and commissioning of the first NuScale LLC plant in the United States and in other specific geographic areas, and with Samsung C&T Corporation (“Samsung C&T”) related to certain EPC activities.
Our strategic partners may have interests that diverge from our interests, and which may hinder our ability to negotiate sales to customers. If we lose our agreements with strategic partners, we may need to find new contractors who may have less experience designing and building nuclear plants. This could substantially hinder our ability to expand our production capacity and installation of VOYGR plants, and could affect our business and our prospects.
We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy.
If our operations grow as planned, we may need to expand our sales and marketing, research and development, supply and manufacturing functions, and there is no guarantee that we will be able to scale
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the business and the manufacture of NPMs as planned, as there is no guarantee that we will be able to find suitable locations or partners for the expanded manufacture and operation of our NPMs or to broaden our internal capabilities.
Any failure to effectively incorporate updates to the design, construction, and operations of NuScale LLC plants to ensure cost competitiveness could reduce the marketability of the NuScale LLC design and has the potential to impact deployment schedules.
Updating the design, construction, and operations of NuScale LLC plants will be necessary to their competitiveness and attractiveness in the market, particularly in the United States where the price of power is generally lower. If we are not able to achieve and maintain cost-competitiveness in the United States or elsewhere, our business could be materially and adversely affected.
If manufacturing and construction issues are not identified prior to design finalization, long-lead procurement, and/or module fabrication, then those issues will be realized during production, fabrication, or construction and may impact plant deployment cost and schedule.
Our NPM design will be actively managed through design reviews, prototyping, involvement of external partners and application of industry lessons, but we could still fail to identify latent manufacturing and construction issues early enough to avoid negative effects on production, fabrication, construction or ultimate performance of our NPMs or plants. Where these issues arise at such later stages of deployment, plant deployment could be subject to greater costs or be significantly delayed, which could materially and adversely affect our business.
We and our customers operate in a politically sensitive environment, and the public perception of nuclear energy can affect our customers and us.
The risks associated with radioactive materials and the public perception of those risks can affect our business. Opposition by third parties can delay or prevent the construction of new nuclear power plants and can limit the operation of nuclear reactors. Adverse public reaction to developments in the use of nuclear power could directly affect our customers and indirectly affect our business. In the past, adverse public reaction, increased regulatory scrutiny and litigation have contributed to extended construction periods for new nuclear reactors, sometimes delaying construction schedules by decades or more or even shutting down operations. In addition, anti-nuclear groups in Germany successfully lobbied for the adoption of the Nuclear Exit Law in 2002, which requires the shutdown of all German nuclear power plants by 2022. Adverse public reaction could also lead to increased regulation or limitations on the activities of our customers, more onerous operating requirements or other conditions that could have a material adverse impact on our customers and our business.
Accidents involving nuclear power facilities, including but not limited to events similar to the Three Mile Island, Chernobyl and Fukushima Daiichi nuclear accidents, or terrorist acts or other high profile events involving radioactive materials could materially and adversely affect our customers and the markets in which we operate and increase regulatory requirements and costs that could materially and adversely affect our business.
Our future prospects are dependent upon a certain level of public support for nuclear power. Nuclear power faces strong opposition from certain competitive energy sources, individuals and organizations. The accident that occurred at the Fukushima nuclear power plant in Japan in 2011 increased public opposition to nuclear power in some countries, resulting in a slowdown in, or, in some cases, a complete halt to new construction of nuclear power plants, an early shut down of existing power plants or a dampening of the favorable regulatory climate needed to introduce new nuclear technologies all could negatively impact our business and prospects. As a result of the Fukushima accident, some countries that were considering launching new domestic nuclear power programs delayed or cancelled the preparatory activities they were planning to undertake as part of such programs. If accidents similar to the Fukushima disaster or other events, such as terrorist attacks involving nuclear facilities, occur, public opposition to nuclear power may increase, regulatory requirements and costs could become more onerous and customer demand for our NPMs could suffer, which could materially and adversely affect our business and operations.
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Our supply base may not be able to scale to the production levels necessary to meet sales projections.
NuScale LLC does not have manufacturing assets and relies on third party manufacturers to build our NPMs and associated equipment. Moreover, we are dependent on future supplier capability to meet production demands attendant to our forecasts. If our supply chain cannot meet the schedule demands of the market, our projected sales revenues could be materially impacted.
Lack of availability and cost of component raw materials may affect the manufacturing processes for plant equipment and increase our costs.
Recent global supply chain disruptions have increasingly affected both the availability and cost of raw materials, component manufacturing and deliveries. These disruptions may result in delays in equipment deliveries and cost escalations that could adversely affect our business.
We are highly dependent on our senior management team and other highly skilled personnel, and if we are not successful in attracting or retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
Our success depends, in significant part, on the continued services of our senior management team and on our ability to attract, motivate, develop and retain a sufficient number of other highly skilled personnel, including engineers, manufacturing and quality assurance, finance, marketing and sales personnel. Our senior management team has extensive experience in the energy and manufacturing industries, and we believe that their depth of experience is instrumental to our continued success. The loss of any one or more members of our senior management team, for any reason, including resignation or retirement, could impair our ability to execute our business strategy and have a material adverse effect on our business and financial condition if we are unable to successfully attract and retain qualified and highly skilled replacement personnel.
There is substantial doubt about our ability to continue as a going concern, and we may require additional future funding whether or not the Transactions are completed.
Based on our recurring losses and expectations to incur significant expenses and negative cash flows until at least 2024, management has identified substantial doubt about NuScale LLC’s ability to continue as a going concern through December 2022 if the Transactions are not completed, and in that case, we will require significant additional funding to continue our operations through commercialization. If we are unable to continue as a going concern, we may be forced to liquidate our assets and the values we receive for our assets in liquidation or dissolution could be significantly lower than the values reflected in our financial statements.
To date, we have not generated any material revenue, while we have substantial overhead expenses. We do not expect to generate meaningful revenue unless and until we are able to finalize development of and commercialize our SMR technology and related services, and we may not be able to do so on our anticipated timetable, if at all. We expect our expenses and capital expenditures to increase in connection with our ongoing activities, including developing and advancing our SMR and other products and services, obtaining NRC design certification of and SDA for our SMR and completing our manufacturing preparation and trials. In addition, upon the completion of the Transactions, we expect to incur additional costs associated with operating as a public company. Certain costs are not reasonably estimable at this time and we may require additional funding and our projections anticipate certain customer-sourced income that is not guaranteed.
We may seek to raise capital through private or public equity or debt financings or through other sources of financing. Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. If we raise additional funds by issuing equity securities, our stockholders will experience dilution. If we raise additional capital through debt financing, we may be subject to covenants that restrict our operations including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our securities, make certain investments, and engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders and members. If the needed financing is not available,
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or if the terms of financing are less desirable than we expect, we may be required to delay, scale back or terminate some or all of our research and development programs.
Our funding plan relies on cost-shared funding provided through a cooperative agreement with the DOE. Significant funding has been received from the DOE under four separate cost-share awards granted since 2013. As of December 31, 2021, the DOE has obligated $170.5 million to the current program. The overall DOE contribution to NuScale LLC commercialization funding is more than $425 million. The current DOE award is a $700 million award ($350 million in government funding to be matched by $350 million in private funding), which is subject to Congressional appropriations. Funding is subject to at least annual Congressional appropriations, which may not be forthcoming. As part of our arrangements with the DOE, we granted the DOE a worldwide, nonexclusive, paid-up license to our intellectual property and to manufacture our SMR technology, and the right to sublicense those rights if specified conditions arise, including if the DOE terminates the award due to material failure to comply with the terms and conditions of the award, or if we fail to meet our cost-sharing obligations or cease developing our SMR. As a result, if we are unable to continue as a going concern, the value of our intellectual property, including in liquidation, may be difficult to assess.
Our ability to protect our patents and other proprietary rights may be challenged and is not guaranteed, exposing us to the possible loss of competitive advantage.
We rely upon a combination of patents, trademarks, copyrights, trade secret, and commercial agreements such as confidentiality agreements, assignment agreements, and license agreements to protect the intellectual property associated with our NPMs and related technologies. These measures prevent third parties from using, practicing, selling, manufacturing, or otherwise commercially exploiting our NPMs and related technologies, which would erode our competitive position in our market. Our success depends in large part on our ability to obtain and enforce patent protection for our NPMs, as well as our ability to operate without infringing on or violating the proprietary rights of others. We own and have licensed rights to patents and pending patent applications, and will continue to file patent applications claiming new technologies directed to NPMs in the United States and in other jurisdictions based on factors such as commercial viability.
As with all industries, the patent position of power modules and nuclear energy companies generally is uncertain and is not a guaranteed right. During the patent procurement process, a patent office may require us or our licensors to narrow the scope of the claims of our or our licensors’ pending and future patent applications. This may limit the scope of patent protection and our or our licensors’ ability to claim patent infringement if the patent application is subsequently issued. In some cases, a patent application may not issue if we or our licensors are unable to overcome rejections from a patent office. If a patent application does not issue, we or our licensors may lose trade secret that is disclosed and published in the patent application and third parties may be able to exploit such published information in our patent application. Additionally, even if we obtain a patent registration in one jurisdiction (e.g., the United States), we cannot guarantee that we will obtain a patent registration for the same or related patent application in another jurisdiction (e.g., China) as patent laws differ from jurisdiction to jurisdiction. Additionally, maintaining and enforcing patent rights can involve complex legal and factual questions and may be subject to litigation in some cases. For example, third parties may challenge the validity of our or our licensors’ patents based on prior art at a tribunal such as the Patent Trial and Appeal Board at the United States Patent and Trademark Office and/or in a federal court. Because we cannot assure that all of the potentially relevant prior art relating to our patents and patent applications has been found, third parties may prevail in invalidating a patent or preventing a patent application from being issued as a patent. If we or our licensors are able to maintain valid patents or prevail in patent challenges instituted by third parties, we or our licensors may still bear the risk of third parties “designing around” our technologies to avoid an intellectual property infringement claim.
We enjoy only limited geographical protection with respect to certain patents and may not be able to protect our intellectual property rights throughout the world.
We do not have worldwide patent rights for our NPMs and related technologies because there is no such thing as worldwide or “international patent rights.” Accordingly, we may not be able to protect our intellectual property rights in certain jurisdictions and their legal systems. Filing, prosecuting and defending patents on our NPMs worldwide can pose several challenges. First, procuring patent rights in multiple
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jurisdictions would be cost prohibitive because individual patent offices in different jurisdictions will have to examine each patent application separately. Therefore, costs such as examination fees, translation fees, and attorney fees are considered. Once a patent is registered, we or our licensors will also have the continued obligation of paying maintenance fees periodically to avoid patents from becoming abandoned or lapsed. Second, the breadth of claims in patents may vary from jurisdiction to jurisdiction. For instance, certain patent offices may require narrower claims, resulting in patent rights that are less extensive. Further, as noted above, we may not be able to obtain patents in some jurisdictions even if we obtain patents in other jurisdictions. Accordingly, our competitors may operate in countries where we do not have patent protection and can freely use our technologies and discoveries in such countries to the extent such technologies and discoveries are publicly known or disclosed in countries where we do have patent protection or pending patent applications.
In addition, many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. Many countries also limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we or any of our licensors are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business and financial condition may be adversely affected.
We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market NPMs.
We cannot guarantee that any of our patent searches or analyses, including the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete or thorough because there may be hundreds of thousands of relevant patents worldwide. We also cannot be certain that we have identified each and every third-party patent and pending application in the United States and abroad that is relevant to or necessary for the commercialization of NPMs in any jurisdiction. The scope of a patent claim is generally determined by an interpretation of the law, the written disclosure in a patent, and the patent’s prosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect or not accepted by a court of competent jurisdiction. Our determination of the expiration date of any patent in the United States or abroad that we consider relevant may be incorrect or inaccurate. Our failure to identify and correctly interpret relevant patents may negatively impact our ability to develop and market NPMs.
In addition, there are several circumstances under which a patent application may not be published and accessible to us or our licensors. For example, patent applications in the United States and many foreign jurisdictions are typically not published until 18 months after filing, but some patent applications in the United States may be maintained in secrecy until the patents are issued. Publications in the scientific literature also often lag behind actual discoveries. Therefore, we cannot be certain that others have not filed patent applications for technology covered by our issued patents or our pending applications, or that we were the first to invent the technology. Our competitors may have filed, and may in the future file, patent applications covering NPMs or technology similar to ours without us knowing. Any such patent application may have priority over our patent applications or patents, which could require us to procure rights to issued patents covering such technologies in order to avoid infringement claims.
We may be subject to claims of ownership and other rights to our patents and other intellectual property by third parties.
Our confidentiality and intellectual property assignment agreements with our employees, consultants, and contractors generally provide that inventions conceived by the party in the course of rendering services to us will be our exclusive intellectual property. While we require our employees, consultants, and contractors to assign such intellectual property to us in the event that the intellectual property is not automatically assigned (e.g., as work made for hire), those agreements may not be honored and obligations to assign intellectual property may be challenged or breached. Moreover, there may be some circumstances, where we are unable to negotiate for such ownership rights and/or others misappropriate those rights in the process.
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We may be subject to claims that former employees, collaborators, or other third parties have an interest in our patents or other intellectual property as an owner, a joint owner, a licensee, an inventor, or a co-inventor. In the latter two cases, the failure to name the proper inventors on a patent application can result in the patents issuing thereon being unenforceable. Inventorship disputes may arise from conflicting views regarding the contributions of different individuals named as inventors, the effects of foreign laws where foreign nationals are involved in the development of the subject matter of the patent, conflicting obligations of third parties involved in developing our power modules or as a result of questions regarding co-ownership of potential joint inventions. Litigation may be necessary to resolve these and other claims challenging inventorship and/or ownership. Alternatively, or additionally, we may enter into agreements to clarify the scope of our rights in such intellectual property. If we fail in defending any such claims, in addition to paying monetary damages, we may lose exclusive ownership of, or right to use or license valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
Regulatory Risk Factors
Our SDA application for the 77 MWe power module has not yet been submitted to the NRC, and its approval is not guaranteed.
Increasing the power that can be generated by our NPMs is a key part of our plan, and our higher-capacity, 77 MWe power module is subject to obtaining SDA from the NRC. The need to obtain that approval complicates our licensing process and could affect the planned deployment schedule for our first NPMs. In particular, if the NRC disagrees with our licensing approach or the breadth and/or scope of the design changes proposed, the construction and operating license application process could take longer than currently expected, which could materially and adversely affect our business. Further, we face the risk that the NRC could impose terms in the SDA that are not acceptable to us.
Our design is only approved in the United States and we must obtain approvals on a country-by-country basis before we can sell our products abroad, which approvals may be delayed or denied or which may require modification to our design.
Our SMR design has not been approved in any country except the United States. Each country has its own safety approval that we must obtain before we can sell or install our NPMs abroad. Foreign approval processes may differ materially from the NRC process, and approvals may be denied or delayed in foreign countries, or some countries may require that we alter our design before obtaining approval. Denial or delay in approvals abroad could materially and adversely affect our business.
Our customers must obtain additional regulatory approvals before they construct power plants using our NPMs, and approvals may be denied or delayed.
The lead time to build a nuclear power facility is long, and requires site licensing and approvals from applicable regulatory agencies before a plant can be constructed. The regulatory framework to obtain approvals is complex, and varies from country to country. Any delays experienced by our customers in siting a power plant using our products and services could materially and adversely affect our business.
Our customers could incur substantial costs as a result of violations of, or liabilities under, environmental laws.
The operations and properties of our customers are subject to a variety of federal, state, local and foreign environmental, health and safety laws and regulations governing, among other things, air emissions, wastewater discharges, management and disposal of hazardous, non-hazardous and radioactive materials and waste and remediation of releases of hazardous materials. Although NuScale LLC’s business is to design and sell technology rather than to construct and own or operate power plants, we must design our technology so it complies with such laws and regulations. Compliance with environmental requirements could require our customers to incur significant expenditures or result in significant restrictions on their operations, and the failure to comply with such laws and regulations, including failing to obtain any necessary permits, could result in substantial fines or enforcement actions, including regulatory or judicial orders
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enjoining or curtailing operations or requiring our customers to conduct or fund remedial or corrective measures, install pollution control equipment or perform other actions. More vigorous enforcement by regulatory agencies, the future enactment of more stringent laws, regulations or permit requirements, including relating to climate change, or other unanticipated events may arise in the future and adversely impact the market for our products, which could materially and adversely affect our business, financial condition and results of operations.
We are subject to stringent United States export and import control laws and regulations. Unfavorable changes in these laws and regulations or United States government licensing policies, our failure to secure timely United States government authorizations under these laws and regulations, or our failure to comply with these laws and regulations could have a material adverse effect on our business, financial condition and results of operations.
The inability to secure and maintain required export licenses or authorizations could negatively impact our ability to compete successfully or market our SMR technology for commercial applications outside the United States. For example, if we were unable to obtain or maintain our licenses to export certain nuclear hardware, we would be effectively prohibited from exporting our SMR technology in non-United States locations, which would limit the number of customers to those in the United States. In addition, if we were unable to obtain authorization to export our technology, hardware, code or technical assistance, we would experience a limited market for our technology, which would provide a competitive edge to international suppliers of SMRs. In both cases, these restrictions could lead to an adverse impact on our ability to sell our commercial technology. Similarly, if we were unable to secure export authorization, we may need to implement design changes to our NPM to address issues with our domestic supplier chain, which may increase costs or result in delays in delivery of new plants and subsequent additional NPMs when ordered.
Failure to comply with export control laws and regulations could expose us to civil or criminal penalties, fines, investigations, more onerous compliance requirements, loss of export privileges, debarment from government contracts or limitations on our ability to enter into contracts with the United States government. In addition, any changes in export control regulations or United States government licensing policy, such as that necessary to implement United States government commitments to multilateral control regimes, may restrict our operations.
Our business is subject to a wide variety of extensive and evolving government laws and regulations. Changes in and/or failure to comply with such laws and regulations could have a material adverse effect on our business.
Regulatory risk factors associated with our business also include:
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our ability to obtain additional applicable approvals, licenses or certifications from regulatory agencies, if required, and to maintain current approvals, licenses or certifications;
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our ability to obtain regulatory approval for a site boundary emergency planning zone (“EPZ”) defined in such a fashion as will benefit the majority of U.S.-based customers;
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regulatory delays, delays imposed as a result of regulatory inspections, and changing regulatory requirements, may cause a delay in our ability to fulfill our existing or future orders, or cause planned plants to not be completed at all, many of which may be out of our control, including natural disasters, changes in governmental regulations or in the status of our regulatory approvals or applications or other events that force us to cancel or reschedule plant construction, which could have an adverse impact on our business and financial condition;
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regulatory, availability and other challenges may delay our progress in establishing the number of plant sites we require for our targeted build rate, which could have an adverse effect on our ability to grow our business; and
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challenges as a result of regulatory processes or in NuScale LLC’s ability to secure the necessary permissions to establish these plant sites could delay our ability to achieve our target build rate and could adversely affect our business.
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General Risk Factors
COVID-19 and any future widespread public health crisis could negatively affect various aspects of our business, make it more difficult for us to meet our obligations to our customers, and result in reduced demand for our products and services.
In an effort to halt the outbreak of COVID-19, a number of countries, including the United States, have placed significant restrictions on travel, many businesses have announced extended closures, and many businesses and governmental agencies have allowed employees to work remotely, which in some cases may reduce the effectiveness of those employees. These travel restrictions and business closures may in the future adversely affect our operations locally and worldwide, including our ability to obtain regulatory approvals and to manufacture, market, sell or distribute our products, which could materially and adversely affect our business. We cannot predict the impact that remote work will have on the culture of NuScale LLC and our employee retention.
Many of our customers and suppliers worldwide were affected by COVID-19 and temporarily closed their facilities, which impacted the speed of our customer engagement and research and development. The impact of COVID-19 on NuScale LLC’s operational and financial performance will depend on various future developments, including the duration and spread of the outbreak and impact on regulatory agencies, customers, suppliers and employees, all of which remain uncertain at this time.
State and federal responses to the COVID-19 pandemic may delay or prevent the consummation of the Transactions.
On December 21, 2021, Oregon Governor Kate Brown extended the state’s COVID-19 emergency declaration in response to a surge in confirmed and presumptive COVID-19 cases and hospitalizations. Given the ongoing and dynamic nature of the COVID-19 pandemic, it is difficult to predict the range of future responses and restrictions imposed by state and federal officials. These responses and restrictions could have an adverse impact on the business of Spring Valley, NuScale LLC and NuScale Corp. Additionally, possible shutdowns at the state or federal level, including of certain regulatory agencies, could delay or adversely impact our ability to consummate the Transactions, including increasing transaction costs. Each of Spring Valley and NuScale LLC may also incur additional costs to remedy damages caused by such disruptions, which could adversely affect its financial condition and results of operations.
Changes in tax laws or regulations may increase tax uncertainty and adversely affect results of our operations and our effective tax rate.
We will be subject to taxes in the United States and certain foreign jurisdictions. Due to economic and political conditions, tax rates in various jurisdictions, including the United States, may be subject to change. Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities and changes in tax laws or their interpretation. In addition, we may be subject to income tax audits by various tax jurisdictions. An adverse resolution by one or more taxing authorities could have a material impact on our finances. Further, we may be unable to utilize any net operating losses in the event a change in control is determined to have occurred.
We may become involved in litigation that may materially adversely affect us.
From time to time, we may become involved in various legal proceedings relating to matters incidental to the ordinary course of our business, including intellectual property, commercial, product liability, employment, class action, whistleblower and other litigation and claims, and governmental and other regulatory investigations and proceedings. Such matters can be time-consuming, divert management’s attention and resources from the operation of our business and cause us to incur significant expenses or liability or require us to change our business practices. Because of the potential risks, expenses and uncertainties of litigation, we may, from time to time, settle disputes, even where we believe that we have meritorious claims or defenses. Because litigation is inherently unpredictable, we cannot assure you that the results of any of these actions will not have a material adverse effect on our business.
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Risks Related to the Transactions and Spring Valley
Unless the context otherwise requires, any reference in this section of this Proxy Statement/Prospectus to “Spring Valley,” “we,” “us” or “our” refers to Spring Valley prior to the Transactions and to NuScale Corp and its subsidiaries following the Transactions.
Our Initial Shareholders have entered into letter agreements with us to vote in favor of the Transactions, regardless of how our Public Shareholders vote.
Unlike some other blank check companies in which the Initial Shareholders agree to vote their shares in accordance with the majority of the votes cast by the Public Shareholders in connection with an initial business combination, our Initial Shareholders, pursuant to the Support Agreements and the Sponsor Letter Agreement, have agreed, among other things, to vote all of their Public Shares and Spring Valley Class B ordinary shares in favor of all the proposals being presented at the extraordinary general meeting, including the Merger Agreement Proposal and the Transactions (including the Merger). As of the date of this Proxy Statement/Prospectus, our Initial Shareholders own 20.0% of the issued and outstanding ordinary shares (excluding the Spring Valley ordinary shares underlying the Spring Valley Private Placement Warrants).
If the conditions to the Merger Agreement are not met, the Merger may not occur.
Even if the Merger Agreement is approved by shareholders of Spring Valley and by the unitholders of NuScale LLC, specified conditions must be satisfied or waived before the parties to the Merger Agreement are obligated to complete the Merger. For a list of the material closing conditions contained in the Merger Agreement, see the section entitled “The Transactions — The Merger Agreement — Conditions to Closing of the Transactions.” Spring Valley and NuScale LLC may not satisfy all of the closing conditions in the Merger Agreement. If the closing conditions are not satisfied or waived, the Merger will not occur, or will be delayed pending later satisfaction or waiver, and such delay may cause Spring Valley and NuScale LLC to each lose some or all of the intended benefits of the Transactions.
Neither the Spring Valley Board nor any committee thereof obtained a third-party valuation in determining whether or not to pursue the Transactions.
Neither the Spring Valley Board nor any committee thereof is required to obtain an opinion from an independent investment banking or accounting firm that the price that Spring Valley is paying for NuScale LLC is fair to Spring Valley from a financial point of view. Neither the Spring Valley Board nor any committee thereof obtained a third party valuation in connection with the Transactions. In analyzing the Transactions, the Spring Valley Board and management conducted due diligence on NuScale LLC and researched the industry in which NuScale LLC operates. The Spring Valley Board reviewed, among other things, financial due diligence materials prepared by professional advisors, including quality of earnings reports and tax due diligence reports previously prepared in connection with NuScale LLC’s most recent issuance of preferred stock, financial and market data information on selected comparable companies, the implied purchase price multiple of NuScale LLC and the financial terms set forth in the Merger Agreement, and concluded that the Transactions were in the best interest of its shareholders. Accordingly, investors will be relying solely on the judgment of the Spring Valley Board and management in valuing NuScale LLC, and the Spring Valley Board and management may not have properly valued NuScale LLC’s business. The lack of a third-party valuation may also lead an increased number of shareholders to vote against the Transactions or demand redemption of their shares, which could potentially impact our ability to consummate the Transactions.
Future investments in NuScale Corp, including $30 million of the PIPE Investment committed by a foreign investor, or other transactions may be delayed or denied under U.S. foreign investment regulations.
Under the “Exon-Florio Amendment” to the U.S. Defense Production Act of 1950, as amended (the “DPA”), the U.S. President has the power to disrupt or block certain foreign investments in U.S. businesses if he determines that the transaction threatens U.S. national security. CFIUS has been delegated the authority to conduct national security reviews of certain foreign investments. CFIUS may impose mitigation conditions to grant clearance of a transaction. The Foreign Investment Risk Review Modernization Act (“FIRRMA”), enacted in 2018, amended the DPA to, among other things, expand CFIUS’s jurisdiction
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beyond acquisitions of control of U.S. businesses. Under FIRRMA, CFIUS also has jurisdiction over certain foreign non-controlling investments in U.S. businesses that have involvement with critical technology or critical infrastructure, or that collect and/or maintain sensitive personal data of U.S. citizens (“TID U.S. Businesses”), if the foreign investor receives specified triggering rights in connection with its investment. NuScale LLC is a TID U.S. Business because it develops and designs technologies that would be considered critical technologies. Certain foreign investments in TID U.S. Businesses are subject to mandatory filing with CFIUS. The potential restrictions on the ability of foreign persons to invest in us could limit our ability to engage in strategic transactions that could benefit our stockholders, including a change of control, and could also affect the price that an investor may be willing to pay for our common stock. As a general matter, such scrutiny and concomitant delays and conditions could make investment in us less attractive to certain investors.
NuScale LLC submits certain transactions with foreign entities to CFIUS for review, including $80 million in foreign investments received in 2021, which CFIUS approved in the fourth quarter of 2021. NuScale LLC expects to submit $30 million of the PIPE Investment committed by Samsung C&T to CFIUS for review, and until approved we expect to hold the $30 million as restricted cash. Although prior investments by Samsung C&T have been approved by CFIUS, we cannot be certain that its $30 million PIPE Investment will be approved.
Because NuScale Corp will become a publicly traded company through a merger as opposed to an underwritten public offering, no underwriter has conducted a due diligence investigation in connection with the Transactions.
In an underwritten public offering, underwriters typically conduct a due diligence investigation on the issuer to establish a due diligence defense against liability claims under federal securities laws. Because Spring Valley is already a publicly traded company, no underwriter has conducted due diligence in connection with the Transactions. While sponsors, private investors and management in a business combination undertake a certain level of due diligence, it is not necessarily the same level of due diligence undertaken by an underwriter in an underwritten public offering, and, therefore, there could be a heightened risk of an incorrect valuation of the business or material misstatements or omissions in this Proxy Statement/Prospectus.
Since the Initial Shareholders and our executive officers have interests that are different, or in addition to (and which may conflict with), the interests of our shareholders, a conflict of interest may have existed in determining whether the Transactions with NuScale LLC are appropriate as an initial business combination. Such interests include that the Initial Shareholders and our executive officers will lose their entire investment in us if a business combination is not completed.
When you consider the recommendation of the Spring Valley Board in favor of approval of the Merger Agreement Proposal, you should keep in mind that the Initial Shareholders and certain of Spring Valley’s current officers and directors have interests in such proposal that are different from, or in addition to (which may conflict with), those of Spring Valley shareholders and warrant holders generally.
These interests include, among other things, the interests listed below:
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the fact that our Initial Shareholders have agreed not to redeem any Spring Valley Class A ordinary shares held by them in connection with a shareholder vote to approve a proposed initial business combination (such as the Transactions);
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the fact that the Sponsor paid an aggregate of $25,000 for 7,187,500 Spring Valley Class B ordinary shares, 5,750,000 of which are currently owned directly or indirectly by the Initial Shareholders, the aggregate value of which is estimated to be approximately $76,043,750, assuming the per share value of the NuScale Corp Class A Common Stock is the same as the $10.58 per share closing price of the Spring Valley Class A ordinary shares on Nasdaq as of April 1, 2022, and these Spring Valley Class B ordinary shares will be worthless if a business combination is not consummated by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option);
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the fact that the Sponsor paid $8,900,000 for its Spring Valley Private Placement Warrants, the aggregate value of which is estimated to be approximately $19,936,000, assuming the per warrant value of the NuScale Corp Warrants is the same as the $2.24 per warrant closing price of the Spring
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Valley Warrants on Nasdaq as of April 1, 2022, and the Spring Valley Private Placement Warrants would be worthless if a business combination is not consummated by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option);
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the fact that the affiliates of Spring Valley have agreed to purchase 500,000 shares of NuScale Corp Common Stock at $10.00 per share, for an aggregate purchase price of $5,000,000, in the PIPE Investment on the same terms and conditions as the other PIPE Investors;
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the fact that the Initial Shareholders and certain of Spring Valley’s current officers and directors have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Spring Valley ordinary shares (other than Public Shares) held by them if Spring Valley fails to complete an initial business combination by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option). No consideration was given to the Initial Shareholders or Spring Valley’s current officers and directors in exchange for such waiver;
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the fact that the Registration Rights Agreement will be entered into by the Sponsor, the Sponsor Sub and certain other affiliates of Spring Valley;
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the continued indemnification of Spring Valley’s directors and officers and the continuation of Spring Valley’s directors’ and officers’ liability insurance after the consummation of the Transactions (i.e., a “tail policy”);
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the fact that the Sponsor and Spring Valley’s officers and directors will lose their entire investment in Spring Valley and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option). Accordingly, Spring Valley may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option). As of the record date, the Sponsor and Spring Valley’s officers and directors and their affiliates had incurred approximately $21,000 of unpaid reimbursable expenses;
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the fact that the Sponsor purchased its Spring Valley Class B ordinary shares from Spring Valley at a price of approximately $0.003 per Spring Valley Class B ordinary share, or an aggregate purchase price of $25,000. Given the differential in purchase price that the Sponsor paid for the Spring Valley Class B ordinary shares as compared to the price of the Spring Valley units sold in the IPO, the Initial Shareholders may realize a positive rate of return on such investment even if Spring Valley public shareholders experience a negative rate of return following the business combination;
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the fact that, following the Business Combination, the Initial Shareholders can earn a positive rate of return on their investment, even if other shareholders of Spring Valley experience a negative rate of return on their investment;
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the fact that if the Trust Account is liquidated, including in the event Spring Valley is unable to complete an initial business combination by May 27, 2022 (or November 27, 2022 if extended at the Sponsor’s option), the Sponsor has agreed to indemnify Spring Valley to ensure that the proceeds in the Trust Account are not reduced below $10.00 per Public Share, or such lesser per Public Share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which Spring Valley has entered into an acquisition agreement or claims of any third party for services rendered or products sold to Spring Valley, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account; and
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the fact that Spring Valley may be entitled to distribute or pay over funds held by Spring Valley outside the Trust Account to the Sponsor or any of its Affiliates prior to the Closing.
See “Proposal No. 1 — The Merger Agreement Proposal — Interests of Spring Valley Directors and Officers in the Transactions” for additional information on interests of Spring Valley’s directors and executive officers.
The personal and financial interests of the Initial Shareholders as well as Spring Valley’s directors and executive officers may have influenced their motivation in identifying and selecting NuScale LLC as business combination targets, completing an initial business combination with NuScale LLC and influencing the
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operation of the business following the initial business combination. In considering the recommendations of the Spring Valley Board to vote for the proposals, its shareholders should consider these interests.
The Sponsor and its affiliates may have interests in the Transactions that are different from the interests of the Public Shareholders.
The Sponsor and its affiliates have financial interests in the Transactions that are different from, or in addition to, those of other Public Shareholders generally. In addition, the Sponsor and its affiliates may be incentivized to complete the Transactions, or an alternative initial business combination with a less favorable company or on terms less favorable to shareholders, rather than to liquidate, in which case the Sponsor or its affiliates, would lose their entire investment. As a result, the Sponsor and its affiliates may have a conflict of interest in determining whether NuScale LLC is an appropriate business with which to effectuate a business combination and/or in evaluating the terms of the Transactions. The Spring Valley Board was aware of and considered these interests, among other matters, in evaluating and unanimously approving the Transactions and in recommending to Public Shareholders that they approve the Transactions.
The Sponsor and its affiliates may receive a positive return on 5,750,000 Spring Valley Founder Shares and 8,900,000 Spring Valley Private Placement Warrants (a certain number of which will be forfeited pursuant to the Sponsor Letter Agreement) even if Public Shareholders experience a negative return on their investment after consummation of the Transactions.
If Spring Valley is able to complete a business combination within the required time period, the Sponsor and its affiliates may receive a positive return on the 5,750,000 Spring Valley Founder Shares under the Assuming No Redemptions scenario and after giving effect to the 40,000 Spring Valley Founder Shares transferred to each of Spring Valley’s independent directors and the cancellation of 1,437,500 Spring Valley Class B ordinary shares, which were acquired by the Sponsor for an aggregate purchase price of $25,000 prior to the Initial Public Offering, and the 8,900,000 Spring Valley Private Placement Warrants (a certain number of which will be forfeited pursuant to the Sponsor Letter Agreement), which were acquired for an aggregate purchase price of $8,900,000 (or $1.00 per warrant) concurrently with completion of the Initial Public Offering, even if the Public Shareholders experience a negative return on their investment in the Spring Valley Class A ordinary shares and Spring Valley Private Placement Warrants after consummation of the Transactions. See “The Transactions — Related Agreements — Sponsor Letter Agreement” for additional information.
The exercise of Spring Valley’s directors’ and executive officers’ discretion in agreeing to changes or waivers in the terms of the Merger may result in a conflict of interest when determining whether such changes to the terms of the Merger or waivers of conditions are appropriate and in Spring Valley’s shareholders’ best interest.
In the period leading up to the Closing, events may occur that, pursuant to the Merger Agreement, would require Spring Valley to agree to amend the Merger Agreement, to consent to certain actions taken by NuScale LLC or to waive rights that Spring Valley is entitled to under the Merger Agreement. Such events could arise because of changes in the course of NuScale LLC’s business, a request by NuScale LLC to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement or the occurrence of other events that would have a material adverse effect on NuScale LLC’s business and would entitle Spring Valley to terminate the Merger Agreement. In any of such circumstances, it would be at Spring Valley’s discretion, acting through the Spring Valley Board, to grant its consent or waive those rights. The existence of financial and personal interests of one or more of the directors or executive officers described in the preceding risk factors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is best for Spring Valley and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining whether or not to take the requested action. As of the date of this Proxy Statement/Prospectus, Spring Valley does not believe there will be any changes or waivers that Spring Valley’s directors and executive officers would be likely to make after shareholder approval of the Merger Agreement Proposal has been obtained. While certain changes could be made without further shareholder approval, Spring Valley will circulate a new or amended Proxy Statement/Prospectus and resolicit Spring Valley’s shareholders if changes to the terms of the transaction that would have a material impact on its shareholders are required prior to the vote on the Merger Agreement Proposal.
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We will incur significant transaction costs.
We have incurred and expect to continue to incur significant, non-recurring costs in connection with consummating the Transactions. All expenses incurred in connection with the Transactions, including all legal, and other fees, expenses and costs, will be for the account of the party incurring such fees, expenses and costs. Our transaction expenses as a result of the Transactions are currently estimated to be $[43.6] million, including $8.0 million in accompanying deferred underwriting commissions, which are contingent upon the consummation of the Closing, subject to certain offsets for fees paid to the placement agents for the PIPE subscription financing.
Subsequent to consummation of the Transactions, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and the share price of our securities, which could cause you to lose some or all of your investment.
We cannot assure you that the due diligence conducted in relation to NuScale LLC has identified all material issues or risks associated with NuScale LLC, its business or the industry in which it competes. As a result of these factors, we may incur additional costs and expenses and we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in us reporting losses. Even if our due diligence has identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. If any of these risks materialize, this could have a material adverse effect on our financial condition and results of operations and could contribute to negative market perceptions about our securities or NuScale Corp. Accordingly, any shareholders of Spring Valley who choose to remain NuScale Corp stockholders following the Transactions could suffer a reduction in the value of their shares and warrants. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the registration statement or Proxy Statement/Prospectus relating to the Transactions contained an actionable material misstatement or material omission.
The Proposed Organizational Documents will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for substantially all disputes between NuScale Corp and its stockholders.
The Proposed Organizational Documents that will be effective upon the Domestication provide that the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, another state or federal court located within the State of Delaware, shall be the exclusive forum for certain actions and claims.
This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with NuScale Corp or any of NuScale Corp’s directors, officers, or other employees, which may discourage lawsuits with respect to such claims. However, stockholders will not be deemed to have waived NuScale Corp’s compliance with the federal securities laws and the rules and regulations thereunder and this provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act, which provides for the exclusive jurisdiction of the federal courts with respect to all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder, or the Securities Act. Further, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, both state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, the Proposed Organizational Documents provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. Accordingly, there is uncertainty as to whether a court would enforce such provision with respect to suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. If a court were to find the choice of forum provision contained in the Proposed Organizational Documents to be
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inapplicable or unenforceable in an action, NuScale Corp may incur additional costs associated with resolving such action in other jurisdictions, which could harm NuScale Corp’s business, results of operations and financial condition.
Our warrant agreement designates the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding the foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope of the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
The Spring Valley Warrants are accounted for as liabilities and the changes in value of the Spring Valley Warrants could have a material effect on our financial results.
The Spring Valley Warrants are classified as liabilities. Under this accounting treatment, we are required to measure the fair value of the Spring Valley Warrants at the end of each reporting period and recognize changes in the fair value from the prior period in our operating results for the current period. As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly based on factors which are outside our control. We expect that we will recognize non-cash gains or losses due to the quarterly fair valuation of the Spring Valley Warrants and that such gains or losses could be material.
The unaudited pro forma financial information included elsewhere in this Proxy Statement/Prospectus may not be indicative of what NuScale Corp’s actual financial position or results of operations would have been.
Spring Valley and NuScale LLC currently operate as separate companies and have had no prior history as a combined entity, and Spring Valley’s and NuScale LLC’s operations have not previously been managed on a combined basis. The pro forma financial information included in this Proxy Statement/Prospectus is presented for informational purposes only and is not necessarily indicative of the financial position or results of operations that would have actually occurred had the Transactions been completed at or as of the dates indicated, nor is it indicative of the future operating results or financial position of NuScale LLC. The pro forma statement of operations does not reflect future nonrecurring charges resulting from the
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Transactions. The unaudited pro forma financial information does not reflect future events that may occur after the Transactions and does not consider potential impacts of future market conditions on revenues or expenses. The pro forma financial information included in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” has been derived from Spring Valley’s and NuScale LLC’s historical financial statements and certain adjustments and assumptions have been made regarding NuScale LLC after giving effect to the Transactions. There may be differences between preliminary estimates in the pro forma financial information and the final acquisition accounting, which could result in material differences from the pro forma information presented in this Proxy Statement/Prospectus in respect of the estimated financial position and results of operations of NuScale LLC.
In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate and other factors may affect NuScale LLC’s financial condition or results of operations following the Closing. Any potential decline in NuScale LLC’s financial condition or results of operations may cause significant variations in the stock price of NuScale Corp.
The ability of our Public Shareholders to exercise redemption rights with respect to a large number of our Public Shares may not allow us to complete the most desirable business combination or optimize the capital structure of NuScale Corp.
At the time of entering into the Merger Agreement, we did not know how many shareholders may exercise their redemption rights, and therefore, we needed to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. The consummation of the Merger is conditioned upon, among other things, (i) the approval by our shareholders of the Condition Precedent Proposals being obtained; (ii) the expiration or termination of any applicable waiting period under the HSR Act relating to the Merger Agreement; (iii) Closing Acquiror Cash of at least $200 million; (iv) the approval by the NYSE of our initial listing application in connection with the Merger; and (v) the consummation of the Domestication. Therefore, unless these conditions are waived by the applicable parties to the Merger Agreement, the Merger Agreement could terminate and the Merger may not be consummated. For further details, see “The Transactions — The Merger Agreement — Conditions to Closing of the Transactions.”
Our Initial Shareholders, as well as NuScale LLC, our directors, executive officers, advisors and their affiliates may elect to purchase Public Shares prior to the consummation of the Transactions, which may influence the vote on the Transactions and reduce the public “float” of Spring Valley Class A ordinary shares.
At any time at or prior to the Transactions, during a period when they are not then aware of any material nonpublic information regarding us or our securities, our Initial Shareholders, NuScale LLC and/or their directors, officers, advisors or respective affiliates may purchase Public Shares from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire Public Shares or vote their Public Shares in favor of the Condition Precedent Proposals. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our Initial Shareholders, NuScale LLC and/or their directors, officers, advisors or respective affiliates who have agreed to vote in favor of this transaction purchase shares in privately negotiated transactions from Public Shareholders who have already elected to exercise their redemption rights, such selling shareholder would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that (i) the Merger Agreement Proposal, the Advisory Charter Proposal, the Nasdaq Proposal, the Long-Term Incentive Plan Proposal and the Adjournment Proposal are approved by the affirmative vote of at least a majority of the votes cast by the holders of the issued ordinary shares present in person or represented by proxy at the extraordinary general meeting and entitled to vote on such matter (“Majority Spring Valley Shareholder Approval”), (ii) the Domestication Proposal and the Organizational Documents Proposal are approved by the affirmative vote of at least a two-thirds (2/3rds) majority of the votes cast by the holders of the issued ordinary shares present in person or represented by proxy at the extraordinary general meeting and entitled to vote on such matter (“Supermajority Spring Valley Shareholder Approval”), (iii) the number of holders of
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Public Shares electing to redeem their Public Shares is limited and (iv) NuScale Corp’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) are at least $5,000,001 after giving effect to the Transactions and the PIPE Investment.
If such transactions are effected, the consequence could be to cause the Transactions to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the extraordinary general meeting and would likely increase the chances that such proposals would be approved.
In addition, if such purchases are made, the public “float” of our Public Shares and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per share redemption amount received by shareholders may be less than $10.00 per share (which was the offering price in our Initial Public Offering).
Our placing of funds in the Trust Account may not protect those funds from third-party claims against us. There is no guarantee that vendors, service providers (other than our independent registered public accounting firm), prospective business or other entities with which we do business will execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account. Even if they do execute such agreements, there is no guarantee that they would be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our Public Shares, if we are unable to complete a business combination within the prescribed time frame, or upon the exercise of a redemption right in connection with a business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the ten years following redemption. Accordingly, the per share redemption amount received by Public Shareholders could be less than the $10.10 per share initially held in the Trust Account, due to claims of such creditors. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduces the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under our indemnity of the underwriters of our Initial Public Offering against certain liabilities, including liabilities under the Securities Act. Moreover, even in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and we have not asked the Sponsor to reserve for such indemnification obligations. Therefore, we cannot assure you that the Sponsor would be able to satisfy those obligations. None of our officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
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In the event we distribute the proceeds in the Trust Account to Public Shareholders and subsequently file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and the Spring Valley Board may be exposed to claims of punitive damages.
If, after we distribute the proceeds in the Trust Account to Public Shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our shareholders. In addition, the Spring Valley Board may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing it and us to claims of punitive damages, by paying Public Shareholders from the Trust Account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of the Trust Account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable to a fine of $18,293.00 and to imprisonment for five years in the Cayman Islands.
If, before distributing the proceeds in the Trust Account to Public Shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the per share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the Trust Account to Public Shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete the Trust Account, the per share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
We are an EGC within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to “emerging growth companies” this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an EGC within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not EGCs including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important. We could be an EGC for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of Spring Valley Class A ordinary shares or, after the Transactions, the NuScale Corp Common Stock held by non-affiliates exceeds $700,000,000 as of any June 30 before that time, in which case we would no longer be an EGC as of the following December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts EGCs from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-EGCs but any such election to opt out is irrevocable. We intend to take advantage of the benefits of this extended transition period.
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Upon the listing of NuScale Corp’s Class A Common Stock on the NYSE, NuScale Corp will be a “controlled company” within the meaning of NYSE rules and, as a result, will qualify for exemptions from certain corporate governance requirements. The stockholders of NuScale Corp will not have the same protections afforded to stockholders of companies that are subject to such requirements.
Following the Merger, Fluor will own a majority of the voting power of our Common Stock. As a result, we will be a “controlled company” under the NYSE rules. As a controlled company, we will be exempt from certain corporate governance requirements, including those that would otherwise require our board of directors to have a majority of independent directors and require that we either establish compensation and nominating and corporate governance committees, each comprised entirely of independent directors, or otherwise ensure that the compensation of our executive officers and nominees of directors are determined or recommended to our board of directors by independent members of our board of directors. To the extent we rely on one or more of these exemptions, our stockholders will not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.
Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate the Transactions, require substantial financial and management resources and increase the time and costs of completing a business combination.
The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies. NuScale LLC is not a public reporting company required to comply with Section 404 of the Sarbanes-Oxley Act and NuScale Corp management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable to NuScale Corp after the Transactions. If we are not able to implement the requirements of Section 404, including any additional requirements once we are no longer an EGC, in a timely manner or with adequate compliance, we may not be able to assess whether our internal control over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of NuScale Corp Common Stock. Additionally, once we are no longer an EGC, we will be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting.
The price of NuScale Corp Common Stock and NuScale Corp’s warrants may be volatile.
Upon consummation of the Transactions, the price of NuScale Corp Common Stock and NuScale Corp’s warrants may fluctuate due to a variety of factors, including:
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changes in the industries in which NuScale Corp and its customers operate;
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variations in its operating performance and the performance of its competitors in general;
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material and adverse impacts of the COVID-19 pandemic on the markets and the broader global economy;
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actual or anticipated fluctuations in NuScale Corp’s quarterly or annual operating results;
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the public’s reaction to NuScale Corp’s press releases, its other public announcements and its filings with the SEC;
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NuScale Corp’s failure or the failure of its competitors to meet analysts’ projections or guidance that NuScale Corp or its competitors may give to the market;
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additions and departures of key personnel;
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changes in laws and regulations affecting its business;
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commencement of, or involvement in, litigation involving NuScale Corp;
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changes in NuScale Corp’s capital structure, such as future issuances of securities or the incurrence of additional debt;
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publication of research reports by securities analysts about NuScale Corp, its competitors or its industry;
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sales of shares of NuScale Corp Common Stock by the PIPE Investors; and
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general economic and political conditions such as recessions, interest rates, fuel prices, foreign currency fluctuations, international tariffs, social, political and economic risks and acts of war or terrorism.
These market and industry factors may materially reduce the market price of NuScale Corp Common Stock and NuScale Corp’s warrants regardless of the operating performance of NuScale Corp.
A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of NuScale Corp Common Stock to drop significantly, even if NuScale Corp’s business is doing well.
Sales of a substantial number of shares of NuScale Corp Common Stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of NuScale Corp Common Stock.
It is anticipated that, upon completion of the Transactions, (i) the NuScale Equityholders will own 77.8% of the outstanding NuScale Corp Common Stock and (ii) our Initial Shareholders will own 1.8% of the outstanding NuScale Corp Common Stock, in each case, assuming that none of Spring Valley’s outstanding Public Shares are redeemed in connection with the Merger, or 86.7% and 1.7%, respectively, assuming that all 23,000,000 of Spring Valley’s outstanding Public Shares are redeemed in connection with the Merger. These percentages assume that (i) 178,268,640 shares of NuScale Corp Common Stock are issued to the NuScale Equityholders at Closing; (ii) 23,800,002 shares of NuScale Corp Common Stock are issued in connection with the PIPE Investment; and (iii) no Spring Valley Warrants to purchase NuScale Corp Common Stock that will be outstanding immediately following Closing have been exercised. If the actual facts are different than these assumptions, the ownership percentages in NuScale Corp will be different.
Although the Sponsor and certain of NuScale LLC’s stockholders will be subject to certain restrictions regarding the transfer of NuScale Corp Common Stock, these shares may be sold after the expiration or early termination of the respective applicable lock-ups under the Sponsor Letter Agreement. We intend to file one or more registration statements shortly after the Closing to provide for the resale of such shares from time to time. As restrictions on resale end and the registration statements are available for use, the market price of NuScale Corp Common Stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.
Public Shareholders will experience immediate dilution as a consequence of the issuance of NuScale Corp Common Stock in the PIPE Investment and to the NuScale Equityholders entitling them to a significant voting stake in NuScale Corp.
In accordance with the terms and subject to the conditions of the Merger Agreement, we are issuing 23,800,002 shares of NuScale Corp Class A Common Stock in connection with the PIPE Investment and a number, subject to the Exchange Ratio (as defined in the Merger Agreement), of NuScale Corp Class B Common Stock (which will not have any economic value but will entitle the holder thereof to one vote per share) to the NuScale Equityholders. In addition, each NuScale Equityholder may have the right to receive certain payments from NuScale Corp under the Tax Receivable Agreement. For further details, see “The Transactions — Conversion; Consideration to NuScale Equityholders in the Transactions.”
The issuance of additional common stock will significantly dilute the equity interests of existing holders of Spring Valley securities, and may adversely affect prevailing market prices for the NuScale Corp Common Stock and/or the NuScale Corp warrants.
Public Shareholders who do not redeem their Spring Valley Class A ordinary shares will have a reduced ownership and voting interest after the Transactions and will exercise less influence over management of NuScale Corp.
Upon the issuance of NuScale Corp Class A Common Stock and NuScale Corp Class B Common Stock in connection with the Transactions, the percentage ownership of the Public Shareholders who do
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not redeem their shares of Spring Valley Class A ordinary shares will be diluted. The percentage of the NuScale Corp Common Stock that will be owned by Public Shareholders as a group will vary based on the number of Spring Valley Class A ordinary shares for which the holders thereof request redemption in connection with the Merger. To illustrate the potential ownership percentages of Public Shareholders under different redemption levels, based on the number of issued and outstanding shares of Spring Valley Class A ordinary shares and Spring Valley Class B ordinary shares on December 31, 2021, and based on the NuScale Corp Class A Common Stock and NuScale Corp Class B Common Stock expected to be issued in the Transactions and the NuScale Corp Class A Common Stock expected to be issued as part of the PIPE Investment, non-redeeming Public Shareholders, as a group, will own:
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if there are no redemptions of Public Shares, 10.0% of NuScale Corp Common Stock expected to be outstanding immediately after the Transactions; or
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if there are maximum redemptions, 0.0% of NuScale Corp Common Stock expected to be outstanding immediately after the Transactions.
Because of this, Public Shareholders, as a group, will have less influence on the NuScale Corp Board, management and policies of NuScale Corp than they now have on the Spring Valley Board, management and policies of Spring Valley. For further discussion of the assumptions underlying the no and maximum redemption scenarios set forth above, please see “Unaudited Pro Forma Condensed Combined Financial Information.”
The ownership percentage with respect to NuScale Corp following the Transactions do not take into account the following potential issuances of securities, which will result in further dilution to Public Shareholders who do not redeem their Public Shares:
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the issuance of up to 11,500,000 shares of NuScale Corp Class A Common Stock upon exercise of the Spring Valley Public Warrants at a price of $11.50 per share;
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the issuance of up to 8,900,000 shares of NuScale Corp Class A Common Stock upon exercise of the Spring Valley Private Placement Warrants held by the Sponsor at a price of $11.50 per share;
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the issuance of up to 14,910,410 shares of NuScale Corp Class A Common Stock upon exercise of the Options; and
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the issuance of up to a number of shares equal to 8% of the outstanding shares immediately after Closing of NuScale Corp Class A Common Stock under the 2022 Long-Term Incentive Plan.
If all such shares were issued immediately after the Transactions, based on the number of issued and outstanding shares of Spring Valley Class A ordinary shares and Spring Valley Class B ordinary shares, and based on the NuScale Corp Class A Common Stock and NuScale Corp Class B Common Stock expected to be issued in the Transactions and the NuScale Corp Class A Common Stock expected to be issued as part of the PIPE Investment, non-redeeming Public Shareholders, as a group, would own:
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if there are no redemptions of Public Shares, 8.1% of NuScale Corp Common Stock outstanding assuming all such shares were issued immediately after the Transactions; and
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if there are maximum redemptions of the outstanding Public Shares, 0.0% of NuScale Corp Common Stock outstanding assuming all such shares were issued immediately after the Transactions.
Spring Valley Warrants will become exercisable for NuScale Corp Common Stock, which, if exercised, would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders. However, the Spring Valley Warrants may never be in the money and may expire worthless.
If the Transactions are completed, outstanding warrants to purchase an aggregate of 20,400,000 shares of NuScale Corp Common Stock will become exercisable 30 days after the completion of the Merger in accordance with the terms of the warrant agreement governing those securities. The exercise price of these warrants will be $11.50 per share. To the extent such warrants are exercised, additional shares of NuScale Corp Common Stock will be issued, which will result in dilution to the holders of NuScale Corp Common Stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market or the fact that such warrants may be exercised could adversely affect
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the prevailing market prices of NuScale Corp Common Stock. However, there is no guarantee that the Spring Valley Public Warrants will ever be in the money prior to their expiration, and as such, the warrants may expire worthless.
The terms of the warrants may be amended in a manner adverse to a holder if holders of 65% of the then outstanding Spring Valley Public Warrants approve of such amendment.
The warrants were issued in registered form under a warrant agreement between Continental, as warrant agent, and Spring Valley. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision or correct any mistake, but requires the approval by the holders of 65% of the then-outstanding Spring Valley Public Warrants to make any change that adversely affects the interests of the registered holders of Spring Valley Public Warrants. Accordingly, we may amend the terms of the Spring Valley Public Warrants in a manner adverse to a holder if holders of 65% of the then-outstanding Spring Valley Public Warrants approve of such amendment and, solely with respect to any amendment to the terms of the Spring Valley Private Placement Warrants or any provision of the warrant agreement with respect to the Spring Valley Private Placement Warrants, 65% of the number of the then outstanding Spring Valley Private Placement Warrants. Although our ability to amend the terms of the Spring Valley Public Warrants with the consent of 65% of the then-outstanding Spring Valley Public Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash, shorten the exercise period or decrease the number of shares of NuScale Corp Common Stock purchasable upon exercise of a warrant.
We may redeem your unexpired Spring Valley Public Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Spring Valley Public Warrants worthless.
We have the ability to redeem the outstanding Spring Valley Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of Spring Valley Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for share subdivisions, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption and provided that certain other conditions are met. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. As a result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise the warrants. Redemption of the outstanding warrants could force you to (i) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, we expect would be substantially less than the market value of your warrants. Please see “Description of NuScale Corp’s Capital Stock — Warrants — Public Shareholder’s Warrants — Redemption of NuScale Corp Warrant when the price per share of NuScale Corp Class A Common Stock equals or exceeds $18.00.”
In addition, we have the ability to redeem the outstanding Spring Valley Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that the closing price of Spring Valley Class A ordinary shares equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under the heading “Description of NuScale Corp’s Capital Stock — Warrants — NuScale Corp Warrants — Anti-Dilution Adjustments”) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption and provided that certain other conditions are met, including that holders will be able to exercise their warrants prior to redemption for a number of Spring Valley Class A ordinary shares determined based on the redemption date and the fair market value of Spring Valley Class A ordinary shares. Please see “Description of NuScale Corp’s Capital Stock — Warrants — Public Shareholder’s Warrants — Redemption of NuScale Corp Warrant when the price per share of NuScale Corp Class A Common Stock equals or exceeds $10.00.” The value received upon exercise of the warrants may (1) be less than the value the holders would have received if they had exercised their warrants at a later time where the
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underlying share price is higher and (2) not compensate the holders for the value of the warrants, because the number of ordinary shares received is capped at 0.361 Spring Valley Class A ordinary shares per warrant (subject to adjustment) irrespective of the remaining life of the warrants.
None of the Spring Valley Private Placement Warrants will be redeemable by us (except as set forth under “Description of NuScale Corp’s Capital Stock — Warrants — NuScale Corp Warrants — Redemption of NuScale Corp Warrant when the price per share of NuScale Corp Class A Common Stock equals or exceeds $10.00”) so long as they are held by the Sponsor or its permitted transferees.
The NYSE may not list NuScale Corp’s securities on its exchange, which could limit investors’ ability to make transactions in NuScale Corp’s securities and subject NuScale Corp to additional trading restrictions.
An active trading market for NuScale Corp’s securities following the Transactions may never develop or, if developed, it may not be sustained. In connection with the Transactions, in order to continue to maintain the listing of our securities on Nasdaq, we will be required to demonstrate compliance with Nasdaq’s listing requirements. We will apply to have NuScale Corp’s securities listed on the NYSE upon consummation of the Transactions. We cannot assure you that we will be able to meet all listing requirements. Even if NuScale Corp’s securities are listed on the NYSE, NuScale Corp may be unable to maintain the listing of its securities in the future.
If NuScale Corp fails to meet the listing requirements and the NYSE does not list its securities on its exchange, NuScale LLC would not be required to consummate the Merger. In the event that NuScale LLC elected to waive this condition, and the Merger was consummated without NuScale Corp’s securities being listed on the NYSE or on another national securities exchange, NuScale Corp could face significant material adverse consequences, including:
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a limited availability of market quotations for NuScale Corp’s securities;
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reduced liquidity for NuScale Corp’s securities;
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a determination that NuScale Corp Common Stock is a “penny stock” which will require brokers trading in NuScale Corp Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for NuScale Corp’s securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” If NuScale Corp’s securities were not listed on the NYSE or another national securities exchange, such securities would not qualify as covered securities and we would be subject to regulation in each state in which we offer our securities because states are not preempted from regulating the sale of securities that are not covered securities.
Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the price and trading volume of our common shares.
Securities research analysts may establish and publish their own periodic projections for NuScale Corp following consummation of the Transactions. These projections may vary widely and may not accurately predict the results we actually achieve. Our share price may decline if our actual results do not match the projections of these securities research analysts. Similarly, if one or more of the analysts who write reports on us downgrades our stock or publishes inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, our share price or trading volume could decline. Moreover, if no analysts commence coverage of us, the market price and volume for our common shares could be adversely affected.
We are subject to, and NuScale Corp will be subject to, changing law and regulations regarding regulatory matters, corporate governance and public disclosure that have increased both Spring Valley’s costs and the risk of non-compliance and will increase both NuScale Corp’s costs and the risk of non-compliance.
We are, and NuScale Corp will be, subject to rules and regulations by various governing bodies, including the SEC, which are charged with the protection of investors and the oversight of companies
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whose securities are publicly traded, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing laws and regulations have resulted in, and NuScale Corp’s efforts to comply likely will result in, increased general and administrative expenses and a diversion of management time and attention.
Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to NuScale Corp’s disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed.
We may be subject to securities litigation, which is expensive and could divert management attention.
The market price of our common stock may be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert management’s attention from other business concerns, which could seriously harm our business.
During the pendency of the Transactions, Spring Valley will not be able to solicit, initiate or take any action to facilitate or encourage any inquiries or the making, submission or announcement of, or enter into a business combination with another party because of restrictions in the Merger Agreement. Furthermore, certain provisions of the Merger Agreement will discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.
During the pendency of the Transactions, Spring Valley will not be able to enter into a business combination with another party because of restrictions in the Merger Agreement. Furthermore, certain provisions of the Merger Agreement will discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement, in part because of the inability of the Spring Valley Board to change its recommendation in connection with the Transactions. The Merger Agreement does not permit the Spring Valley Board to change, withdraw, withhold, qualify or modify, or publicly propose to change, withdraw, withhold, qualify or modify its recommendation in favor of adoption of the Shareholder Proposals. Unless the Spring Valley Board determines in good faith, after consultation with and receipt of a written opinion of outside legal counsel, that the failure to change its recommendation would be inconsistent with its fiduciary duties under applicable law.
Certain covenants in the Merger Agreement impede the ability of Spring Valley to make acquisitions or complete certain other transactions pending completion of the Transactions. As a result, Spring Valley may be at a disadvantage to its competitors during that period. In addition, if the Transactions are not completed, these provisions will make it more difficult to complete an alternative business combination following the termination of the Merger Agreement due to the passage of time during which these provisions have remained in effect.
Spring Valley will not have any right to make damage claims against NuScale LLC for the breach of any representation, warranty or covenant made by NuScale LLC in the Merger Agreement.
The Merger Agreement provides that all of the representations, warranties and covenants of the parties contained therein shall not survive the Closing, except for those covenants contained therein that by their terms apply or are to be performed in whole or in part after the Closing. Accordingly, there are no remedies available to Spring Valley with respect to any breach of the representations, warranties, covenants or agreements of NuScale LLC after the Closing, and, as a result, Spring Valley will have no remedy available to it if the Merger is consummated and it is later revealed that there was a breach of any of the representations, warranties and covenants made by NuScale LLC at the time of the Merger (except, in limited instances, for those covenants contained therein that by their terms apply or are to be performed in whole or in part after the Closing).
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Spring Valley identified a material weakness in its internal control over financial reporting. This material weakness could continue to adversely affect Spring Valley’s ability to report its results of operations and financial condition accurately and in a timely manner.
Spring Valley’s management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Spring Valley’s management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As described in the Annual Report on Form 10-K of Spring Valley as of and for the period ended December 31, 2020, as amended, Spring Valley identified a material weakness in our internal control over financial reporting related to the accounting for a significant transaction related to the warrants we issued in connection with our initial public offering in November 2020. As a result of this material weakness, our management concluded that our internal control over financial reporting was not effective as of December 31, 2020. This material weakness resulted in a material misstatement of our warrant liabilities, change in fair value of warrant liabilities, additional paid-in capital, accumulated deficit and related financial disclosures as of and for the period from August 20, 2020 (inception) through December 31, 2020.
Spring Valley’s management and its audit committee also concluded that it was appropriate to restate previously issued financial statements for the affected periods.
We have identified a material weakness in our internal control over financial reporting related to Spring Valley’s application of ASC 480-10-S99-3A to its accounting classification of the Public Shares and the calculation of earnings per share. As a result of this material weakness, our management has concluded that our internal control over financial reporting was not effective as of December 31, 2020. Historically, a portion of Spring Valley Class A ordinary shares subject to possible redemption was classified as permanent equity to maintain shareholders’ equity greater than $5 million on the basis that Spring Valley will not redeem Spring Valley Class A ordinary shares in an amount that would cause its net tangible assets to be less than $5,000,001, as described in the charter. Pursuant to Spring Valley’s re-evaluation of its application of ASC 480-10-S99-3A to its accounting classification of Spring Valley Class A ordinary shares subject to possible redemption, Spring Valley’s management has determined that the Spring Valley Class A ordinary shares include certain provisions that require classification of all of the Spring Valley Class A ordinary shares as temporary equity regardless of the net tangible assets redemption limitation contained in the charter.
To respond to these material weaknesses, Spring Valley devoted, and plans to continue to devote, significant effort and resources to the remediation and improvement of its internal control over financial reporting. While Spring Valley has processes to identify and appropriately apply applicable accounting requirements, we plan to enhance these processes to better evaluate our research and understanding of the nuances of the complex accounting standards that apply to our financial statements. Spring Valley’s plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
Any failure to maintain such internal control could adversely impact Spring Valley’s ability to report its financial position and results from operations on a timely and accurate basis. If Spring Valley’s financial statements are not accurate, investors may not have a complete understanding of its operations. Likewise, if Spring Valley’s financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which the Spring Valley Class A ordinary shares is listed, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Failure to timely file will cause Spring Valley to be ineligible to utilize short form registration statements on Form S-3 or Form S-4, which may impair its ability to obtain capital in a timely fashion to execute its business strategies or issue shares to effect an acquisition. Ineffective internal controls could also cause
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investors to lose confidence in Spring Valley’s reported financial information, which could have a negative effect on the trading price of Spring Valley’s securities.
Spring Valley can give no assurance that the measures it has taken and plans to take in the future will remediate the material weaknesses identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if Spring Valley is successful in strengthening its controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
Risks Related to the Consummation of the Domestication
Unless the context otherwise requires, any reference in this section of this Proxy Statement/Prospectus to “we,” “us” or “our” refers to Spring Valley prior to the Transactions and to NuScale Corp and its subsidiaries following the Transactions.
The Domestication may result in adverse tax consequences for holders of Spring Valley Class A ordinary shares.
U.S. Holders (as defined in “Material United States Federal Income Tax Considerations”) may be subject to United States federal income tax as a result of the Domestication. Additionally, non-U.S. Holders (as defined in “Material United States Federal Income Tax Considerations”) may become subject to withholding tax on any dividends paid or deemed paid on NuScale Corp Class A Common Stock after the Domestication.
As discussed more fully under “Material United States Federal Income Tax Considerations,” the Domestication should constitute a tax-deferred reorganization within the meaning of Section 368(a)(l)(F) of the Code. Assuming the Domestication qualifies as a reorganization under Section 368(a)(1)(F) of the Code, subject to the PFIC rules described under “Material United States Federal Income Tax Considerations — U.S. Holders — PFIC Considerations” a U.S. Holder may recognize gain or loss with respect to its Spring Valley Class A ordinary shares or Spring Valley Public Warrants in an amount equal to the difference, if any, between the fair market value of the corresponding shares of NuScale Corp Class A Common Stock or warrants to purchase shares of NuScale Corp Class A Common Stock received in the Domestication and the U.S. Holder’s adjusted tax basis in its Public Shares and Spring Valley Public Warrants surrendered in exchange therefor.
If the Domestication qualifies as a tax-deferred reorganization within the meaning of Section 368(a)(1)(F) of the Code, U.S. Holders will be subject to Section 367(b) of the Code. As a result, (a) a U.S. Holder that on the day of the Domestication beneficially owns (actually or constructively) shares of our stock with a fair market value of less than $50,000 on the date of the Domestication generally will not recognize any gain or loss and will not be required to include any part of Spring Valley’s earnings in income in respect of the Domestication (b) a U.S. Holder that on the day of the Domestication beneficially owns (actually and constructively) shares of our stock with a fair market value of $50,000 or more, but less than 10% of the total combined voting power of all classes of our stock entitled to vote and less than 10% or more of the total value of all classes of our stock, generally will recognize gain (but not loss) in respect of the Domestication as if such U.S. Holder exchanged its Spring Valley Class A ordinary shares for shares of NuScale Corp Class A Common Stock in a taxable transaction, unless such U.S. Holder elects in accordance with applicable Treasury Regulations to include in income as a deemed dividend the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367(b) of the Code) attributable to the Spring Valley Class A ordinary shares held directly by such U.S. Holder, and (c) a U.S. Holder that on the day of the Domestication beneficially owns (directly or constructively) 10% or more of the total combined voting power of all classes of our stock entitled to vote or 10% or more of the total value of all classes of our stock, will generally be required to include in income as a deemed dividend the “all earnings and profits amount” attributable to the Spring Valley Class A ordinary shares held directly by such U.S. Holder. However, any such U.S. Holder that is a corporation may, under certain circumstances, effectively be exempt from taxation on a portion or all of the deemed dividend pursuant to Section 245A of the Code (commonly referred to as the participation exemption).
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Notwithstanding the foregoing, if Spring Valley qualifies as a PFIC, a U.S. Holder of Spring Valley Class A ordinary shares or Spring Valley Public Warrants may, in certain circumstances, still recognize gain (but not loss) upon the exchange of its Spring Valley Class A ordinary shares or Spring Valley Public Warrants for shares of NuScale Corp Class A Common Stock or warrants to purchase shares of NuScale Corp Class A Common Stock pursuant to the Domestication equal to the excess, if any, of the fair market value of the shares of NuScale Corp Class A Common Stock or warrants to purchase shares of NuScale Corp Class A Common Stock received in the Domestication over the U.S. Holder’s adjusted tax basis in the corresponding Spring Valley Class A ordinary shares or Spring Valley Public Warrants surrendered in exchange therefor. The tax on any such gain so recognized would be imposed at the rate applicable to ordinary income and an interest charge would apply. For a more complete discussion of the potential application of the PFIC rules to U.S. Holders as a result of the Domestication, see “Material United States Federal Income Tax Considerations — U.S. Holders — PFIC Considerations.”
All investors are urged to consult their tax advisors for the tax consequences of the Domestication to their particular situation. For a more detailed description of the United States federal income tax consequences associated with the Domestication, see “Material United States Federal Income Tax Considerations.”
Upon consummation of the Transactions, the rights of holders of NuScale Corp Common Stock arising under the DGCL as well as the Proposed Organizational Documents will differ from and may be less favorable to the rights of holders of Spring Valley Class A ordinary shares arising under the Cayman Islands Companies Act as well as our current memorandum and articles of association.
Upon consummation of the Transactions, the rights of holders of NuScale Corp Common Stock will arise under the Proposed Organizational Documents as well as the DGCL. Those new organizational documents and the DGCL contain provisions that differ in some respects from those in the Existing Organizational Documents and Cayman Islands law and, therefore, some rights of holders of NuScale Corp Common Stock could differ from the rights that holders of Spring Valley Class A ordinary shares currently possess. For instance, while class actions are generally not available to shareholders under the Cayman Islands Companies Act, such actions are generally available under the DGCL. This change could increase the likelihood that NuScale Corp becomes involved in costly litigation, which could have a material adverse effect on NuScale Corp.
In addition, there are differences between the Proposed Organizational Documents of NuScale Corp and the Existing Organizational Documents of Spring Valley. For a more detailed description of the rights of holders of NuScale Corp Common Stock and how they may differ from the rights of holders of Spring Valley Class A ordinary shares, please see “Comparison of Corporate Governance and Shareholder Rights.” The forms of the Proposed Charter and the Proposed Bylaws of NuScale Corp are attached as Annex C and Annex D, respectively, to this Proxy Statement/Prospectus, and we urge you to read them.
Risks Related to the Redemption
Unless the context otherwise requires, any reference in this section of this Proxy Statement/Prospectus to “we,” “us” or “our” refers to Spring Valley prior to the Transactions and to NuScale Corp and its subsidiaries following the Transactions.
Public Shareholders who wish to redeem their Public Shares for a pro rata portion of the Trust Account must comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline. If shareholders fail to comply with the redemption requirements specified in this Proxy Statement/Prospectus, they will not be entitled to redeem their Public Shares for a pro rata portion of the funds held in the Trust Account.
A Public Shareholder will be entitled to receive cash for any Public Shares to be redeemed only if such Public Shareholder: (i) (a) holds Public Shares, or (b) elects to separate its Units into the underlying Public Shares and Spring Valley Public Warrants prior to exercising its redemption rights with respect to the Public Shares if the Public Shareholder holds Public Shares through Units; (ii) submits a written request to Continental, Spring Valley’s transfer agent, in which it (a) requests that Spring Valley redeem all or a portion of its Public Shares for cash, and (b) identifies itself as a beneficial holder of the Public Shares and provides its legal name, phone number and address; and (iii) delivers its Public Shares to Continental,
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physically or electronically through DTC. Holders must complete the procedures for electing to redeem their Public Shares in the manner described above prior to 5:00 p.m., Eastern Time, on April 26, 2022 (two business days before the extraordinary general meeting) in order for their shares to be redeemed. In order to obtain a physical share certificate, a shareholder’s broker and/or clearing broker, DTC and Continental, will need to act to facilitate this request. It is Spring Valley’s understanding that shareholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because Spring Valley does not have any control over this process or over DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. If it takes longer than anticipated to obtain a physical certificate, Public Shareholders who wish to redeem their Public Shares may be unable to obtain physical certificates by the deadline for exercising their redemption rights and thus will be unable to redeem their shares.
If the Transactions are consummated, and if a Public Shareholder properly exercises its right to redeem all or a portion of the Public Shares that it holds and timely delivers its shares to Continental, Spring Valley will redeem such Public Shares for a per-share price, payable in cash, equal to the pro rata portion of the Trust Account established at the consummation of our Initial Public Offering, calculated as of two business days prior to the consummation of the Transactions. Please see the section entitled “The Extraordinary General Meeting — Redemption Rights” for additional information on how to exercise your redemption rights.
If a Public Shareholder fails to receive notice of Spring Valley’s offer to redeem Public Shares in connection with the Merger, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
If, despite Spring Valley’s compliance with the proxy rules, a Public Shareholder fails to receive Spring Valley’s proxy materials, such Public Shareholder may not become aware of the opportunity to redeem his, her or its Public Shares. In addition, the proxy materials that Spring Valley is furnishing to Public Shareholders in connection with the Merger describes the various procedures that must be complied with in order to validly redeem the Public Shares. In the event that a Public Shareholder fails to comply with these procedures, its Public Shares may not be redeemed. Please see the section entitled “The Extraordinary General Meeting — Redemption Rights” for additional information on how to exercise your redemption rights.
Spring Valley does not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete the Transactions even if a substantial majority of Public Shareholders have redeemed their shares.
The Existing Organizational Docu