Item 1A. Risk Factors
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors disclosed in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 12, 2026, except as set forth below.
We entered into a substantial commitment to acquire turbine equipment for which we have not yet secured financing, and our failure to timely obtain financing or perform our obligations under the related agreements could have a material adverse effect on our business, financial condition, and results of operations.
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On May 30, 2026, we entered into an Asset Purchase Agreement (the “APA”) with Energy World Corporation Ltd. (the “Seller”) to acquire approximately 460 MW of Siemens gas turbines, generators, a steam turbine, and ancillary equipment for a total purchase price of $350.0 million, plus approximately $100.0 million of additional costs we expect to incur for transportation, refurbishment, insurance, and logistics. As of June 30, 2026, we paid $8.2 million of the purchase price, and we paid an additional $3.0 million subsequent to quarter end. The remaining balance of approximately $338.8 million is expected to become payable in accordance with the APA, with the substantial majority due in connection with delivery of the equipment, which is currently anticipated in the second half of 2026.
This remaining commitment significantly exceeds our total liquidity of $84.2 million as of June 30, 2026. We are evaluating financing alternatives, which may include project-level financing, structured financing arrangements supported by our contracted revenue base, proceeds from long-term offtake agreements, borrowings under our New Credit Facility, and issuances of debt or equity securities. We have not secured commitments for this financing, and there can be no assurance that financing will be available to us on acceptable terms, or at all. If we are unable to obtain sufficient financing on a timely basis, we may be unable to satisfy our payment obligations under the APA, which could result in a breach or default under that agreement, forfeiture of amounts we have already paid, termination of the APA, litigation, and other damages, any of which could have a material adverse effect on our business, financial condition, cash flows, and results of operations.
The turbine equipment we are acquiring is intended to support our proposed expansion of generation capacity through MISO’s ERAS program. Our ability to complete that expansion and to realize the anticipated benefits of the equipment is subject to MISO’s approval of our ERAS application and other construction, permitting, financing, and regulatory contingencies, many of which are outside our control and have not yet been satisfied. If we do not obtain the necessary approvals, or if the expansion project does not otherwise proceed, we may be unable to deploy the equipment as planned, and our alternatives may be limited to selling the project together with the equipment or selling the equipment on a standalone basis, potentially at a loss and on terms less favorable than we currently anticipate.
The turbine equipment must be transported internationally and domestically through a complex, multi-stage logistics process, and delays, damage, or cost overruns in that process could adversely affect the cost, timing, and expected benefits of our planned expansion.
The turbine equipment we are acquiring under the APA is currently located outside the United States and must be transported through a complex, multi-stage logistics process before it can be placed into service, including disassembly and packaging, international ocean shipment to the United States, customs and import clearance, and overland transport to a Siemens facility for inspection and refurbishment, followed by transport to the site of our planned expansion at our Merom Generating Station in Sullivan County, Indiana. The equipment consists of large, heavy, and specialized components that require heavy-lift vessels, specialized rigging and transport equipment, and oversize and overweight load permits, and we will rely on the Seller, its designated vendors, Siemens, and other third-party carriers and logistics providers, whose performance is largely outside our control.
This process is subject to numerous risks, including damage to or loss of the equipment in transit; limited availability of qualified vessels, carriers, and equipment; port congestion and labor disruptions; adverse weather; delays in obtaining export licenses, import clearances, and transport permits; geopolitical events and disruptions to shipping lanes; and the imposition of, or changes in, tariffs, duties, and other trade measures applicable to imports into the United States. The equipment includes long-lead-time components that would be difficult, time-consuming, and costly to repair or replace if damaged or lost in transit. Any insurance we maintain on the equipment during transport may not be sufficient to cover all losses and would not compensate us for delays to our planned expansion.
Our estimate of approximately $100.0 million of transportation, refurbishment, insurance, and logistics costs is based on assumptions regarding, among other things, shipping costs, carrier and equipment availability, tariff and duty rates, permitting timelines, and the scope of refurbishment work required, any of which may prove inaccurate, and actual costs could materially exceed that estimate, increasing the amount of financing we require. In addition, because the substantial majority of the purchase price under the APA becomes payable in connection with delivery of the equipment, delays in the logistics process could affect the timing of our payment obligations and our financing plans. Any material delay,
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damage, or cost overrun could delay our planned expansion, jeopardize milestones associated with MISO's ERAS program, increase project costs, and impair our ability to realize the anticipated benefits of the equipment, any of which could have a material adverse effect on our business, financial condition, cash flows, and results of operations.
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