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CO2 Energy Transition Corp. (NASDAQ:NOEM), a special purpose acquisition company with a market capitalization of $95.57 million and currently trading at $9.94, has entered into a convertible promissory note with its sponsor, CO2 Energy Transition, LLC, according to an 8-K filing with the SEC. InvestingPro analysis shows the company maintains a FAIR financial health score, suggesting stable operational conditions. The agreement, dated March 31, 2025, and executed on April 15, 2025, provides the company with up to $1.5 million in drawdowns, which will be used as working capital.
The note does not bear interest and is payable at the earlier of the completion of the company’s first business combination or the date of the company’s winding up. The sponsor has the discretion to convert outstanding amounts into units consisting of one share of common stock, one warrant, and one right. Each warrant allows the holder to purchase one share of common stock at $11.50, while every eight rights will convert into one share of common stock post-business combination.
The conversion price for the units is set at $10.00 each. These units will be identical to the private placement units issued during the company’s initial public offering. The securities to be issued under this note will be unregistered, relying on an exemption provided by Section 4(a)(2) of the Securities Act.
If the full amount of the note is borrowed and converted, it could result in the issuance of a maximum of 150,000 Working Capital Units. The warrants included in these units will be exercisable under the same conditions as those included in the IPO, with the exception that they will not be transferable for 30 days post-business combination, barring certain limited exceptions.
This financial move comes as CO2 Energy Transition Corp. continues to seek a business combination in line with its strategy to invest in businesses that are positioned to benefit from the global transition towards a low carbon economy.
The registration rights agreement dated November 20, 2024, includes these shares, warrants, and rights as "Registrable Securities." This means that the sponsor and certain other security holders have rights to register these securities for public resale under certain conditions.
The information provided is based on the company’s latest SEC filing and serves to keep investors informed about CO2 Energy Transition Corp.’s financial arrangements as they continue to navigate the capital markets. The stock currently trades near its 52-week low of $9.78, presenting an interesting situation for investors tracking SPAC opportunities. For comprehensive analysis and additional insights, including more than 6 exclusive ProTips, consider subscribing to InvestingPro.
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