become due under the Tax Receivable Agreement is also by its nature imprecise. For purposes of the Tax Receivable Agreement, net cash savings in tax generally will be calculated by comparing the Company Group’s actual tax liability (determined by using the actual applicable U.S. federal income tax rate and an assumed combined state and local income tax rate) to the amount it would have been required to pay had it not been able to utilize any of the tax benefits subject to the Tax Receivable Agreement. Thus, the amount and timing of any payments under the Tax Receivable Agreement are also dependent upon significant future events, including those noted above in respect of estimating the amount and timing of the Company Group’s realization of tax benefits.
The term of the Tax Receivable Agreement commenced upon the completion of the Business Combination and will continue until all tax benefits that are subject to the Tax Receivable Agreement have been utilized or expired and all required payments are made, unless the Tax Receivable Agreement is terminated early (including upon a change of control). Any early termination payment may be made significantly in advance of, and may materially exceed, the actual realization, if any, of the future tax benefits to which the early termination payment relates.
Decisions we make in the course of running the business, such as with respect to mergers, asset sales, other forms of business combinations or other changes in control, may influence the timing and amount of payments that are received by the applicable holders of OpCo Units under the Tax Receivable Agreement. For example, the earlier disposition of assets following a redemption of OpCo Units may accelerate payments under the Tax Receivable Agreement and increase the present value of such payments, and the disposition of assets before a redemption of OpCo Units may increase the tax liability of applicable holders of OpCo Units without giving rise to any rights to receive payments under the Tax Receivable Agreement. Such effects may result in differences or conflicts of interest between the interests of the applicable holders of OpCo Units and other stockholders.
December 2024 Redemption and Secondary Offering
On December 16, 2024, we entered into a stock and unit purchase agreement (“SPA”) with OpCo and Holdings (together with its affiliates and as used in this section, “LS Power”). Pursuant to the SPA, and in connection with a notice delivered to the Company by LS Power, the Company and OpCo agreed to redeem from LS Power 23,000,000 OpCo Units and 23,000,000 shares of Class B Common Stock (plus up to an additional 3,450,000 Units and 3,450,000 shares of Class B Common Stock if the Underwriters’ Option (as defined below) was exercised in full). In exchange for the Units and Class B Shares included in the Redemption (as defined below), the Company and OpCo agreed to transfer 23,000,000 newly issued shares of the Class A Common Stock, plus up to an additional 3,450,000 Class A Common Stock if the Underwriters’ Option (as defined below) was exercised in full (collectively, the “Redemption”). The Redemption closed on December 17, 2024.
On December 16, 2024, we entered into an underwriting agreement (the “Underwriting Agreement”) with J.P. Morgan Securities LLC (“J.P. Morgan”), Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC and Evercore Group L.L.C., as representatives of the several underwriters (the “Underwriters”), and LS Power, as selling stockholder, relating to an underwritten public offering (the “Secondary Offering”) of 23,000,000 Class A Shares at a public offering price of $5.00 per share. Pursuant to the Underwriting Agreement, all 23,000,000 Class A Shares were sold by LS Power. Under the terms of the Underwriting Agreement, LS Power granted the Underwriters a 30-day option to purchase up to an additional 3,450,000 Class A Shares at the public offering price, less the underwriting discounts and commissions (the “Underwriters’ Option”). The number of Class A Shares issued pursuant to the Secondary Offering, including pursuant to any exercise of the Underwriters’ Option, equaled the number of New Class A Shares issued to LS Power pursuant to the Redemption. We did not receive any of the proceeds from the sale of the Class A Shares in the Secondary Offering.
The Secondary Offering closed on December 18, 2024. The Class A Shares were sold pursuant to an effective Registration Statement on Form S-3 (File No. 333-266753) (the “Registration Statement”), a base prospectus included as part of the Registration Statement, dated August 25, 2022, and a prospectus supplement, dated December 16, 2024 and filed with the SEC on December 18, 2024. The Underwriters did not exercise the Underwriters’ Option.
