- Hyperloop Transportation Technologies (HyperloopTT) has entered
into a definitive merger agreement with Forest Road Acquisition
Corp. II (NYSE: FRXB, FRXB.WS, and FRXB.U) and will trade under the
ticker “HYPE” upon closing.
- HyperloopTT is a leading technology licensing platform for the
disruptive hyperloop technology, with extensive intellectual
property (IP) assets, consisting of 66 global patents1 and more
than 80 trademarks.
- Strong relationships with the United States Department of
Transportation (“USDOT”) and the European Commission’s
Directorate-General for Mobility and Transport (“DG MOVE”) have
resulted in legislative and regulatory advancements and opened
pathways to expedite commercialization.
- HyperloopTT’s "Hyperloop-as-a-Service" business model will
enable it to potentially earn both upfront and recurring licensing
fees for sharing its technological IP and know-how with customers
including governments, infrastructure operators, and transportation
operators.
- HyperloopTT relies on an innovative, crowd-powered development
model based on a global network of technologists, scientists,
engineers, expert contributors, and partners, minimizing costs
while maximizing development speed.
- The transaction will result in the issuance of $289 million of
common stock to the shareholders and convertible note holders of
HyperloopTT at close, and the combined company will assume the
outstanding options and warrants of HyperloopTT.
- HyperloopTT expects to receive up to $330 million of net
proceeds, assuming no redemptions, to fund growth and accelerate
technology, testing, and resourcing globally, enabling potential
customers to build the next generation of transportation.
Hyperloop Transportation Technologies (“HyperloopTT” or “the
Company”), a leading transportation and technology licensing
company focused on realizing the hyperloop, and Forest Road
Acquisition Corp. II (“Forest Road”) (NYSE: FRXB, FRXB.WS, and
FRXB.U), a publicly traded special purpose acquisition company,
announced today that they have entered into a definitive merger
agreement (“Merger Agreement”) that is expected to result in
HyperloopTT becoming a publicly listed company.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20221121005951/en/
Upon the closing of the transaction, the newly combined company
will be named “Hyperloop Transportation Technologies'' and will
continue to be led by Chief Executive Officer Andrés de León and
the HyperloopTT management team.
A Leading Developer of Hyperloop IP
Led by an experienced team of hyperloop business and technology
professionals, HyperloopTT relies on a global network of
technologists, scientists, engineers, and expert contributors,
resulting in an asset-light technology development business model.
Through this partner network, the Company is driving a suite of
next generation technologies to power transportation in the
future.
Since its inception in 2013, HyperloopTT has made significant
progress towards the adoption of hyperloop systems. The Company
developed a full scale hyperloop test track in Toulouse, France, a
hyperloop insurance framework model, and model safety and
certification guidelines.
With the deployment of the Company’s test track, HyperloopTT has
built a robust technology portfolio relating to patents across
levitation and propulsion, low pressure tube transportation, and
passenger experience. These patents are the basis of a technology
that combines sustainability with the ability to reach destinations
faster, which can redefine the urban landscape, create new economic
opportunities, and disrupt the $2+ trillion transportation
industry.
What is Hyperloop?
Hyperloop is a vacuum tube-based system that moves people and
goods in levitating capsules at airplane speeds on the ground.
These speeds are achieved by using passive magnetic levitation
technology and a linear electric motor in a tube with minimal
pressure, reducing resistance. As a mobility solution with
transformative power, hyperloop is potentially cleaner, safer,
healthier, and more efficient than existing forms of
transportation.
HyperloopTT Investment Highlights
Through its combination of experience, capabilities, and
partners, HyperloopTT has an opportunity to transform the
multi-trillion-dollar transportation market.
- Technology with world-changing impact in a $2+ trillion
transportation market, of which HyperloopTT is well positioned
to capture early market share for hyperloop technology
- Nearly a decade of proprietary critical IP development,
including 66 global patents for hyperloop technologies, with 40
granted and 26 in process, across the spectrum of technologies
including levitation and propulsion, low pressure tube system, and
passenger experience
- Asset-light technology licensing business model with three
potential major revenue streams: one-time license fee during
system construction, annual license fees throughout the life of a
system, and annual take-rate of sales
- Working relationships with regulators in the U.S. and
Europe has resulted in legislative advancements with
opportunities for transportation industry grant access2
- Innovative expert contributors model, with more than 800
technology contributors worldwide since inception in 2013
- Several hyperloop projects in various stages globally,
including potential projects in Italy and the U.S.
- Experienced leadership team, with decades of executive
experience across leading global corporations
- Contemplated transaction structure provides attractive value
opportunity for shareholders
Management Commentary
Andrés de León, Chief Executive Officer of HyperloopTT
said, “This transaction is a major milestone for HyperloopTT and
the hyperloop industry as a whole. The transaction is a moment that
could not have been possible without our countless supporters
around the world, who have built HyperloopTT into a company that is
perfect for this moment. Our innovative business model has allowed
HyperloopTT to succeed, while facing enormous challenges. The team
has worked tirelessly these past nine years to gain the support of
the private and public sector in countries around the world. We
thank Forest Road for working with us through this process and
embrace this next step with humility, gratitude, and
determination.”
Tom Staggs and Kevin Mayer, Co-CEOs and Co-Chairpersons of
the Board of Directors of Forest Road, commented, “When we were
introduced to HyperloopTT we quickly saw its potential to address
some of the most profound transportation challenges of our time.
The Company has a deep base of intellectual property that gives it
a robust competitive advantage in this space. The Company’s
asset-light ‘Hyperloop-as-a-Service’ business model is built to
develop and support projects efficiently, presenting a possible
solution that is environmentally and economically-minded. We
believe their technology has the opportunity to create meaningful
shareholder value and positively impact our world.”
Robust Near-Term Project Pipeline
HyperloopTT is actively engaged in providing the European
Commission and the U.S. Department of Transportation (USDOT) with a
critical technical understanding of hyperloop systems. The
following are project opportunities HyperloopTT is currently
pursuing:
- Commercial prototype in Italy: Hyper Transfer Demonstrator
project. Final proposal for tender submitted in Q4 2022 as part of
a Consortium. Expect tender to choose the contract winner by Q1
2023.
- Multi-state commercial line project: Great Lakes Hyperloop
Feasibility study complete and HyperloopTT expected to facilitate
Environmental Impact Statement in 2023.
- Cargo hyperloop technology: HyperPort Cargo Solution, Germany.
Joint venture with Hamburger Hafen und Logistik AG (HHLA).
- Testing & certification MOU with ENSCO: Federal Rail
Administration’s Transportation Technology Center, Colorado, United
States.
- Commercial prototype site exploration: 3-mile passenger system,
R&D, and experience center, Canada.
Transaction Overview
The transaction ascribes to HyperloopTT a pre-money equity value
of approximately $600 million, including outstanding options and
warrants. Existing HyperloopTT shareholders and convertible note
holders will roll 100% of their interests in the transaction and
the combined company will assume the outstanding HyperloopTT
options and warrants, which will remain outstanding to the extent
not otherwise exercised prior to closing. Approximately $289
million of common stock will be issued at closing to the
HyperloopTT shareholders and convertible note holders. Assuming no
redemptions, the transaction is expected to deliver up to $330
million in net proceeds to the combined company at close. For more
information, please see the investor deck here.
The Boards of Directors of HyperloopTT and Forest Road have each
unanimously approved this transaction. The transaction is subject
to customary closing conditions, including the approval of the
stockholders of Forest Road. The transaction is expected to close
in the first half of 2023.
Additional information about the proposed transaction, including
a copy of the merger agreement and investor presentation, will be
provided in a Current Report on Form 8-K to be filed by Forest Road
with the Securities and Exchange Commission (“SEC”) and will be
available on the Forest Road website, the HyperloopTT investor page
and at the SEC’s website at http://www.sec.gov/.
Advisors
Paul Hastings LLP is serving as legal advisor to HyperloopTT and
Kirkland & Ellis LLP is serving as legal advisor to Forest
Road.
HyperloopTT Resources
Provided below are resources for further research:
Harvard Business School Case Study Link
Harvard Business School Case Study Link
Feasibility Study Link
About HyperloopTT
Hyperloop Transportation Technologies (www.hyperlooptt.com,
“HyperloopTT”) is an innovative transportation and technology
company focused on realizing the hyperloop, a system that moves
people and goods safely, efficiently, and sustainably by bringing
airplane speeds to the ground. Through the use of unique, patented
technology and a collaborative business model, HyperloopTT is
creating a potential new form of transportation.
HyperloopTT’s European Research and Development Center in
Toulouse, France, the aerospace capital of Europe, is home to a
full-scale test system. In 2019, HyperloopTT released the first
comprehensive feasibility study analyzing a hyperloop system, which
found that the system is economically and technically feasible and
will generate a profit without requiring government subsidies.
Founded in 2013, HyperloopTT is a global network of more than
800 engineers, creatives, and technologists, with 50 corporate and
university partners. Headquartered in Los Angeles, CA, and
Toulouse, France, HyperloopTT has offices in North and South
America, the Middle East, and Europe.
HyperloopTT is a proud signatory of the United Nations Global
Compact, reflecting the company’s commitment to the UN Sustainable
Development Goals.
About Forest Road Acquisition Corp. II
Forest Road Acquisition Corp. II, a blank check company formed
for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization, or similar
business combination with one or more businesses, raised $350
million in March 2021 and its securities are listed on the NYSE
under the tickers “FRXB” and “FRXB WS.” The Forest Road team
includes two former Disney senior executives — Tom Staggs, Co-CEO
and Co-Chairperson of the Board of Directors, Kevin Mayer, Co-CEO
and Co-Chairperson of the Board of Directors — and is strengthened
by the strategic connectivity and deal-making expertise of
directors, officers, and strategic advisors like Shaquille O'Neal,
Salil Mehta, Rick Hess, Harlan Cherniak, Keith Horn, Sheila Stamps,
Martin Luther King III, Zachary Tarica, Idan Shani, and Jeremy
Tarica. For more information, please visit
https://www.spacroadtwo.com/.
Important Information About the Business Combination and
Where to Find It
In connection with the proposed business combination (the
“Business Combination”), Forest Road intends to file a preliminary
proxy statement/prospectus and a definitive proxy statement/final
prospectus with the SEC. Forest Road’s stockholders and other
interested persons are advised to read, when available, the
preliminary proxy statement/prospectus and the amendments thereto
and the definitive proxy statement/final prospectus and documents
incorporated by reference therein filed in connection with the
Business Combination, as these materials will contain important
information about Forest Road and HyperloopTT and the Business
Combination. When available, the definitive proxy statement/final
prospectus and other relevant materials for the Business
Combination will be mailed to stockholders of Forest Road as of a
record date to be established for voting on the Business
Combination. Stockholders of Forest Road will also be able to
obtain copies of the preliminary proxy statement/prospectus, the
definitive proxy statement/final prospectus and other documents
filed with the SEC that will be incorporated by reference therein,
without charge, once available, at the SEC’s web site at
www.sec.gov, or by directing a request to: Forest Road Acquisition
Corp. II, 1177 Avenue of the Americas, 5th Floor, New York, New
York 10036, Attention: Idan Shani.
Participants in the Solicitation
Forest Road, Forest Road’s directors and executive officers and
the Forest Road Acquisition Sponsor II LLC, may be deemed
participants in the solicitation of proxies from Forest Road’s
stockholders with respect to the Business Combination. A list of
the names of those directors and executive officers and a
description of their interests in Forest Road is contained in the
Registration Statement on Form S-1, which was initially filed by
Forest Road with the SEC on February 18, 2021, and as amended, and
is available free of charge at the SEC’s web site at www.sec.gov,
or by directing a request to Forest Road Acquisition Corp. II, 1177
Avenue of the Americas, 5th Floor, New York, New York 10036,
Attention: Idan Shani. Additional information regarding the
interests of such participants will be contained in the definitive
proxy statement/final prospectus for the Business Combination when
available.
HyperloopTT and its respective directors and executive officers
may also be deemed to be participants in the solicitation of
proxies from the stockholders of Forest Road in connection with the
Business Combination. A list of the names of such directors and
executive officers and information regarding their interests in the
Business Combination will be included in the definitive proxy
statement/final prospectus for the proposed Business Combination
when available.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. Forest Road’s and
HyperloopTT’s actual results may differ from their expectations,
estimates and projections and consequently, you should not rely on
these forward looking statements as predictions of future events.
Words such as “expect,” “estimate,” “project,” “budget,”
“forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,”
“should,” “believes,” “predicts,” “potential,” “continue,” and
similar expressions are intended to identify such forward-looking
statements. These forward-looking statements include, without
limitation, Forest Road’s and HyperloopTT’s expectations with
respect to future performance and anticipated financial impacts of
the Business Combination, the satisfaction of the closing
conditions to the Business Combination and the timing of the
completion of the Business Combination. These forward-looking
statements involve significant risks and uncertainties that could
cause the actual results to differ materially from the expected
results. Most of these factors are outside Forest Road’s and
HyperloopTT’s control and are difficult to predict. Factors that
may cause such differences include, but are not limited to: (1) the
occurrence of any event, change or other circumstances that could
give rise to the termination of the Merger Agreement, (2) the
outcome of any legal proceedings that may be instituted against
Forest Road and HyperloopTT following the announcement of the
Merger Agreement and the transactions contemplated therein; (3) the
inability to complete the proposed transaction, including due to
failure to obtain approval of the stockholders of Forest Road,
certain regulatory approvals or satisfy other conditions to closing
in the Merger Agreement; (4) the occurrence of any event, change or
other circumstance that could give rise to the termination of the
Merger Agreement or could otherwise cause the transaction to fail
to close; (5) the impact of COVID-19 on HyperloopTT’s business
and/or the ability of the parties to complete the Business
Combination; (6) the inability to obtain or maintain the listing of
the shares of common stock of the post-acquisition company on a
national securities stock exchange following the Business
Combination; (7) the risk that the Business Combination disrupts
current plans and operations as a result of the announcement and
consummation of the Business Combination; (8) the ability to
recognize the anticipated benefits of the Business Combination,
which may be affected by, among other things, competition, the
ability of the combined company to grow and manage growth
profitably and retain its key employees; (9) costs related to the
Business Combination; (10) changes in applicable laws or
regulations; (11) the possibility that HyperloopTT or the combined
company may be adversely affected by other political, economic,
business, and/or competitive factors; and (12) other risks and
uncertainties indicated from time to time in the proxy
statement/prospectus relating to the Business Combination,
including those under “Risk Factors” therein, and in Forest Road’s
other filings with the SEC. Forest Road cautions that the foregoing
list of factors is not exclusive. Forest Road cautions readers not
to place undue reliance upon any forward-looking statements, which
speak only as of the date made. Forest Road does not undertake or
accept any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements to reflect
any change in its expectations or any change in events, conditions
or circumstances on which any such statement is based.
No Offer or Solicitation
This communication shall not constitute a solicitation of a
proxy, consent or authorization with respect to any securities or
in respect of the Business Combination. This communication shall
also not constitute an offer to sell or the solicitation of an
offer to buy any securities, nor shall there be any sale of
securities in any states or jurisdictions in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act, or an exemption therefrom.
1 Granted and in-process
2 As indicated by the formation of NETT Council at US Department
of Transportation, and the publication of the European Commission
(EC) Desk Standards, access to federal grant programs for hyperloop
maglev systems was made possible by publication of Hyperloop
Standards Desk Review, and classification of hyperloop under
Federal Rail Administration (FRA) as the regulatory authority
overseeing hyperloop system development.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221121005951/en/
Investor Relations: For HyperloopTT: Tom Cook, ICR
HyperloopTTir@icrinc.com For Forest Road:
HyperloopTT@spacroadtwo.com Media: For HyperloopTT: Keil
Decker, ICR HyperloopTTpr@icrinc.com Eric Becker, ICR
HyperloopTTpr@icrinc.com For Forest Road: Media@spacroadtwo.com
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