USA Rare Earth, Inc. (NASDAQ: USAR) shares withered Monday, as the company announced the special purpose vehicle that will purchase 100% of the Phase 1 production of rare earth materials produced by Serra Verde Group has completed its capitalization arrangements.
Pursuant to the capitalization transaction, totaling an upsized $1.55 billion in funding:
The Department of War has committed to a $750 million investment in the SPV - $250 million more than the $500 million originally contemplated under the Offtake Agreement. The agreement, which has both a take-or-pay arrangement and floor prices, is vital to support the development of an integrated rare earth value chain.
The SPV has secured a commitment letter from a Tier-1 institutional bank for a senior secured borrowing-base revolving credit facility in an aggregate principal amount of up to $500 million, subject to certain conditions precedent set forth therein. The Senior Debt Facility is intended to fund working capital for the SPV’s purchases of rare earth products from SV Management Switzerland.
Moreover, the U.S. government has entered into a forward purchase contract with the SPV for the purchase of not less than $300 million of rare earth payable products over five years.
USAR shares fell $1.33, or 6.9%, to $17.93.
