American Resources' American Infrastructure: A New Era in Infrastructure Investing

American Resources Corporation (NASDAQ:AREC) has made a significant move in the infrastructure sector with the successful merger of its subsidiary, American Infrastructure Corporation (AIC), with CGrowth Capital, Inc. (OTC:CGRA). The newly formed entity, American Infrastructure Holding Corporation, is poised to become a major player in the infrastructure materials market, with a focus on metallurgical carbon, iron ore, and titanium. This merger represents a strategic pivot that could significantly enhance shareholder value through multiple channels.



The strategic positioning of the merged entity as a pure-play infrastructure company aligns with the current domestic infrastructure initiatives and potential government contracts. The company's diverse asset portfolio, spanning metallurgical carbon operations in Appalachia and mineral assets in Jamaica, positions it well to capitalize on both traditional infrastructure and clean energy transitions. This diversity allows the company to supply raw materials for various infrastructure projects, increasing its chances of securing government contracts. Additionally, the company's low-cost position and minimal required capital expenditure for production growth over the next four years suggest strong operational efficiency, making it more competitive in bidding for government contracts and private infrastructure projects.

The Series A Preferred Stock conversion feature is expected to have a significant impact on shareholder value and the company's ability to unlock embedded value. This feature allows AIC shareholders to convert their preferred stock into common shares of the post-merger combined entity, American Infrastructure Holding Corporation, at their discretion. The conversion will automatically occur twelve months after the merger, with an anti-dilution provision ensuring that any Series A Preferred shares not converted by the twelve-month anniversary will automatically convert into common stock of the combined entity, representing 92% ownership of the common stock outstanding in American Infrastructure Holding Corporation at that time.



This conversion feature provides flexibility for shareholders, allowing them to decide when to convert their preferred stock into common shares, which could potentially maximize their returns. By converting their preferred stock into common shares, shareholders will have a direct stake in the company's future growth and performance, aligning their interests with those of the management team. The 92% ownership stake that AIC shareholders will have in the combined entity after the conversion is a significant aspect of the deal structure, reflecting the value that AIC brings to the merger and the potential for future growth and value creation. Previous term sheets valuing AIC operations between $150 million to $280 million suggest that there is substantial embedded value in AIC's operations, which could be unlocked through this public vehicle structure.

The planned uplisting to a senior national exchange could significantly improve American Infrastructure Holding's access to capital markets and institutional investors. This is because senior exchanges typically have higher liquidity and visibility, attracting more institutional investors who prefer to invest in publicly traded companies on these exchanges. For instance, the NASDAQ, a senior national exchange, has a larger investor base and more stringent listing requirements, which can enhance the company's credibility and attractiveness to investors. Moreover, an uplisting to a senior national exchange could potentially reduce the cost of capital for future acquisitions. With improved access to capital markets and institutional investors, the company may be able to secure financing at more favorable terms, enabling it to pursue strategic acquisitions more efficiently. This is particularly relevant given the company's focus on distressed asset acquisition in the infrastructure sector and its royalty and leasehold production model, which presents a scalable growth strategy with potentially lower operational risk.

In conclusion, the merger of American Infrastructure Corporation with CGrowth Capital, Inc. represents a strategic move that could significantly enhance shareholder value through multiple channels. The strategic positioning of the merged entity as a pure-play infrastructure company aligns with the current domestic infrastructure initiatives and potential government contracts. The Series A Preferred Stock conversion feature is expected to have a significant impact on shareholder value and the company's ability to unlock embedded value. The planned uplisting to a senior national exchange could significantly improve the company's access to capital markets and institutional investors, ultimately facilitating potential acquisitions. As the company continues to grow and expand its operations, investors should keep a close eye on American Infrastructure Holding Corporation for potential investment opportunities.