USA Law and Practice Contributed by: Elena Rubinov, George Casey, Heiko Schiwek, Vinita Sithapathy, Pierre-Emmanuel Perais and Clara Pang, Linklaters LLP
Centers for USD40 billion in the largest global data centre deal to date. Several large infrastructure projects are under way in the US, with larger infrastructure projects focusing on transportation, such as the Los Angeles Metro 28 by ‘28 Initiative, the Texas Central High-Speed Railway and the JFK Airport expansion. The estimated cost of the largest renewable energy project, the SunZia Wind and Transmission Project in Arizona and New Mexico, is USD11 billion. 2. Establishing and Exiting Early- Stage Companies in the Energy and Infrastructure Industry 2.1 Establishing and Financing a New Company In the US, business formation and operation are regu- lated at the state level. Delaware remains the most popular state for forming companies due to: • access to the Delaware Court of Chancery and its business law specialisation and case law; • incorporation or formation at minimal cost without any minimum capital requirement; and • the predictability of incorporation outcomes and flexible governance statutes under the Delaware General Corporation Law (DGCL). Popular entity types are: • limited liability companies (LLCs); • general and limited partnerships; and • corporations. While corporations are generally the main entity type in the US, LLCs are the dominant project-level entity form for E&I transactions in the US due to: • limited liability for equity-holders and sponsors; • pass-through tax treatment, facilitating after-tax return optimisation and investment by infrastruc- ture and tax equity participants; • contractual flexibility; and
• accommodation of non-recourse project finance, including holdco and back-leverage structures, dividend blocks, and lender step-in rights. E&I early-stage companies face unique financing chal- lenges, including: • the capital-intensive nature of development; • long permitting and interconnection timelines; • reliance on contracted cash flows (offtake agree- ments, tolling agreements, user-free concessions); • regulatory barriers and public-utility oversight; and • complex federal and state incentive requirements. Sources of early-stage capital include: • angel investors and family offices interested in diversifying their investments and maximising the long-term gains potential of early-stage energy companies; • government-sponsored funds and other govern- ment programmes/grants – public policy tools pro- viding financial support to innovative companies; • foreign investors – including high net worth foreign residents or institutional funds with foreign partners or sponsors seeking lucrative opportunities in the US; • accelerators – energy programmes providing ser- vices to founders; • VC funds specialising in infrastructure and clean energy; • private equity infrastructure funds (more likely in mature early-stage companies); or • project-level development financing or pre-NTP (before a notice to proceed) capital from investors or lenders. 2.2 Liquidity Events Private or Public? A US-based E&I company is more likely to remain pri- vate than opt for an initial public offering (IPO), given the costs and resources needed to operate as a public company. Consequently, a private sale may be pre- ferred due to the simpler process and faster liquidity. If a US company decides to go public, it will likely choose a US exchange, particularly if its sharehold- ers are primarily domestic. US exchanges offer signifi-
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