American Resources Corporation (NASDAQ:AREC) has entered into a binding term sheet for its subsidiary American Infrastructure Corporation to merge with CGrowth Capital, as part of its spin out from the company.
American Infrastructure Corporation (AIC) is a raw material supplier to the infrastructure marketplace with a focus on iron ore, titanium and metallurgical carbon.
In conjunction with the merger, the company has developed a structure to support future financing for both organic and acquisition growth within the infrastructure marketplace, aligning with its overall business strategy.
Under the terms of the share exchange agreement with CGrowth Capital, AIC will become a wholly owned subsidiary of CGrowth Capital, which will change its name to American Infrastructure Holding Corporation.
The American Infrastructure team will assume management and nominate new board members, with Nick Link, the former Chief Executive Officer of CGrowth Capita, remaining on the board of the combined entity.
The existing operations and assets of CGrowth Capita will be spun-out of that entity concurrent with this transaction, leaving the operations of AIC as the primary operations of the combined entity.
American Resources has received multiple letters of intent for structured transactions over the past year ranging from US$150 million to US$280 million in total value to American Infrastructure.
The company says the structured nature of such previous transactions were not acceptable to the board. The current merger “is structured to reflect the growth opportunities and achieve such value for the combined entity with additional growth capital to unlock additional value in the future”.
AIC Executive Chairman Mark Jensen says he believes the merger with CGrowth Capital represents a significant milestone for American Infrastructure, advancing its goal of achieving a senior exchange listing and providing a pathway for capital to support growth initiatives – both organic and through strategic acquisitions.
“As one of the last remaining metallurgical carbon growth platforms, we are confident in the strength of our asset base, which we believe is among the lowest cost in the industry,” Jensen says.
“Over the next four years, we are well positioned to drive production and cash flow for our investors with relatively minimal capital expenditure required. We also believe this is an opportune time to be a pure-play infrastructure company, especially with the increasing focus on domestic infrastructure initiatives in the United States.
“Our strategy remains centered on leveraging our royalty and leasehold production model, which allows us to generate cash flow by partnering with experienced local operators who have a proven track record of success in the region.”
Jensen adds that the company is optimistic about the opportunities ahead in 2025 as it continues to grow the business.
American Infrastructure Corporation’s current operations are primarily focused on the extraction, processing, transportation, and distribution of coal for a variety of industries, with a primary focus on metallurgical quality coal to the steel industry.
It has six coal mining and processing operating subsidiaries in the metallurgical carbon industry located in Eastern Kentucky and West Virginia along with a substantial iron ore and titanium asset base in the mining region of Jamaica.
CGrowth Capital is a public holding company for alternative and undervalued assets. The company is sector and industry agnostic and currently consists of two divisions including mining and sports technology.
The company is focused on investing in growth-oriented opportunities where the company’s capital, expertise, and capabilities can help create significant added value for shareholders.
Write to Adam Orlando at Mining.com.au
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