Form Energy closes US$270m credit facility with tax-credit advance and US$1bn accordion

Form Energy has closed a US$270m credit facility combining revolving working-capital funding with advances against US manufacturing tax credits, while an accordion could expand total credit under the debt structure to as much as US$1bn.

The US battery manufacturer said the financing comprises a revolving credit facility and a tax-credit advance facility linked to credits generated through production of eligible components under the Section 45X Advanced Manufacturing Production Credit.

The second component effectively allows Form Energy to bring forward liquidity associated with tax credits that arise as qualifying manufacturing takes place, rather than waiting until those credits are ultimately monetised through the normal tax process.

The tax-credit facility contains an accordion that can provide for up to US$1bn of total credit under the debt facility. That maximum should not be treated as committed or currently drawn funding. The amount confirmed as closed is US$270m.

Barclays acted as sole structuring bank and initial coordinating lead arranger. Citi, Jefferies, JPMorgan Chase, RBC Capital Markets, Société Générale, Stifel and Wells Fargo also joined the lending syndicate. TPG Capital BD acted as debt adviser.

Form Energy said the proceeds will fund manufacturing expansion and working-capital requirements as it increases production of iron-air battery systems at its Form Factory 1 plant in Weirton, West Virginia.

The debt follows a US$750m Series G equity round completed in August, which took the company’s total equity funding above US$2bn.

The combination is notable from a working-capital perspective. Manufacturing expansion typically requires cash for labour, raw materials, inventory and production before finished equipment generates customer receipts. The revolving facility provides conventional liquidity against that operating cycle, while the tax-credit advance introduces a second source of cash tied to production activity.

Form Energy has not disclosed the split between the revolver and tax-credit facility, initial drawings, pricing, maturity, advance rates against tax credits or detailed security arrangements.

The financing therefore gives the manufacturer US$270m of newly closed debt capacity while potentially creating substantially greater headroom as production, and the associated tax credits, increase.