Five shareholders who own NuScale Power common stock are suing the company over actions they argue will dilute share value by up to $90 million.
The suit comes as NuScale finalizes a merger with special purpose acquisition company Spring Valley Acquisition Corp that would result in NuScale becoming a publicly traded company.
Founded in 2007, NuScale is an advanced nuclear power company. It makes a small modular reactor, or SMR, that it says offers several advantages over conventional nuclear.
The lawsuit was filed April 25 in Oregon Circuit Court in Washington County. A special meeting of Spring Valley stockholders is slated for April 28 to give their approval to the merger. It is unclear if the lawsuit has adjusted the timeline of the meeting or the merger.
NuScale declined to comment on the suit or on if the meeting would take place.
The plaintiffs are former NuScale employees who hold common shares. They are challenging changes made by the company to its operating agreement that would convert preferred shares of the company to common shares at a ratio that is more than 1:1.
As a result, the amount of common shares in NuScale would go from 738 million to 1,107 million, according to the complaint. The plaintiffs were shareholders prior to the merger proposal, which was announced in December 2021.
The plaintiffs are not against the merger. Their issue is with how the preferred shares are being converted. They argue in the complaint that common shareholders were not given the chance to vote on the operating agreement changes.
“Plaintiffs generally support the merger and do not dispute the $1.875 billion stated value for the existing equity in NuScale. However ... Plaintiffs oppose other actions that have been approved, but not implemented, in connection with the transaction,” the complaint states.
Up to now, NuScale’s pending SPAC merger hadn’t hit any speed bumps, which was notable as the SPAC boom of the last two years appears to be slowing.
A SPAC raises money from investors and goes public as a shell company, then targets a private company to merge with and take public. Through Spring Valley, NuScale is aiming for a listing on the New York Stock Exchange under the ticker symbol SMR, and reap IPO proceeds of upwards of $400 million.
