Arq Announces $15 Million PIPE Transaction

Source: 5/16/2024, Location: North America

Entered Into $15 million PIPE at $7.00 per share, reflecting a roughly 3% discount to yesterday's close
Transaction resulted from unsolicited offer from new, accredited institutional investor
Bolsters long-term growth strategy, provides additional third-party validation of strategy and prospects

Arq, Inc., a producer of activated carbon and other environmentally efficient carbon products for use in purification and sustainable materials, announced that it has entered into a transaction with a new institutional accredited investor for the issuance and sale of approximately $15 million of common stock (the "PIPE"). The PIPE was priced at $7.00 per share, which will result in the issuance of 2,142,858 million new common equity shares in Arq, and a total ownership stake of 5.7% in the Company on a fully diluted basis.

The PIPE resulted from an unsolicited offer to purchase shares first received by the Company from the investor on the afternoon of May 9, 2024, following the release of Arq's first quarter 2024 earnings results and conference call. The PIPE's pricing of $7.00 per share reflects a discount of approximately 3% versus the closing price on May 15, 2024 of $7.25. Closing of the PIPE is subject to the satisfaction of customary conditions. The Company intends to promptly file a registration statement on Form S-3 to register the newly issued shares. Following closing of the transaction, Arq will have approximately 36.0 million shares issued and outstanding.

"I have consistently stated our lack of intent to issue equity to finance our business plan," stated Bob Rasmus, CEO of Arq. "This remained my position when first approached by an investor immediately following last week's earnings call. However, I will always be opportunistic and focused on what best maximizes shareholder value. We believe this transaction reflects an extremely attractive and accretive financing that further de-risks our strategic investment at Red River. Further, this transaction allows us to maintain a conservative balance sheet, while also maintaining flexibility and dry powder."

"This financing will meaningfully reduce our cost of capital, create an even clearer pathway to achieving three years or less payback at Red River and enable an even more efficient debt refinancing process," continued Mr. Rasmus. "Our first-ever Granular Activated Carbon ("GAC") contract announced last week reflected customer validation for our unique solutions and today's financing clearly exhibits additional investor validation of our overall business strategy."

Mr. Rasmus concluded, "I am encouraged by Arq's strong equity price performance realized since joining the team, which we believe is the result of our improving execution, exciting growth opportunities, and regulatory tailwinds. Today's announcement validates all that we are doing and I remain incredibly excited and motivated to execute further on our strategy for the benefit of all shareholders."

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