Company: VGASW
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001628280-25-015480
Chunk: 22

Company: Verde Clean Fuels, Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1
Chunk 22
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usiness Combination operations of Verde Clean Fuels, and Intermediate’s management team retaining similar roles at Verde Clean Fuels. Further, Holdings continues to control the Company's Board of Directors (the "Board" or "Board of Directors") through its majority voting rights. Under ASC 805, the assets, liabilities, and noncontrolling interests of Intermediate are recognized at their carrying amounts on the date of the Business Combination.

Following the completion of the Business Combination, the combined company is organized in an “Up-C” structure and the only direct assets of Verde Clean Fuels consists of equity interests in OpCo, whose only direct assets consists of equity interests in Intermediate. The up-C structure allows Holdings to retain its equity ownership through OpCo, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of Class C OpCo Units, and provides potential future tax benefits for Verde Clean Fuels when the holders of Class C OpCo Units ultimately exchange their Class C OpCo Units and shares of the Company’s Class C Common Stock for shares of Class A Common Stock in Verde Clean Fuels. We are the sole managing member of OpCo. As such, we consolidate OpCo, and the unitholders that hold economic interests directly in OpCo are presented as redeemable noncontrolling interests in our financial statements.

Holders of Class C OpCo Units, other than Verde Clean Fuels, have the right (a "redemption right"), subject to certain limitations, to exchange all or a portion of its Class C OpCo Units and a corresponding number of shares of Class C Common Stock for, at OpCo’s election, (i) shares of Class A Common Stock on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, or (ii) an equivalent amount of cash.

On the Closing Date, in connection with the consummation of the Business Combination, Verde Clean Fuels entered into a tax receivable agreement (the “Tax Receivable Agreement”) with Holdings (together with its permitted transferees, the “TRA Holders,” and each a “TRA Holder”). Pursuant to the Tax Receivable Agreement, Verde Clean Fuels is required to pay each TRA Holder 85% of the amount of net cash savings, if any, in U.S. federal, state and local income and franchise tax that Verde Clean Fuels actually realizes (computed using certain simplifying assumptions) or is deemed to realize in