American Resources Corporation's AREC subsidiary, American Infrastructure Corporation ("AIC"), has signed an agreement to merge with CGrowth Capital, Inc. (“CGRA”). The terms of the contract specify that American Infrastructure Corporation will become a fully owned subsidiary of CGrowth Capital, which will change its name to American Infrastructure Holding Corporation. The American Infrastructure team will assume the management of CGRA, and the existing operations and assets of CGRA will be spun out of that entity under this transaction, leaving the operations of American Infrastructure Corporation as the primary operation.

The structure of the transaction is in the form of a tax-free exchange of American Infrastructure Corporation’s shares for shares of CGrowth Capital. American Infrastructure’s common shareholders will receive Series A preferred stock as consideration, which can be converted into common shares of the combined entity, American Infrastructure Holding Corporation, at the holder’s discretion. The Series A preferred stock will automatically convert into common stock twelve months post merger.

The merger marks a significant milestone for American Infrastructure, providing a pathway to support growth initiatives through organic and strategic acquisitions. American Infrastructure Corporation, being one of the last remaining metallurgical carbon growth platforms, has an asset base that is strong and believed to be among the lowest cost in the industry. The company will emphasize its royalty and leasehold production model strategy.

AREC stock has plunged 51.3% in the past year compared with the 19.5% decline in the industry.

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AREC’s Zacks Rank and Key Picks

AREC currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation CRS, MAG Silver Corp. (MAG) and Fortuna Mining Corp. FSM. While CRS and MAG sport a Zacks Rank #1 (Strong Buy) each at present, FSM carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Carpenter Technology beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 14.1%. CRS’ shares have soared 177% in the past year.

The Zacks Consensus Estimate for MAG Silver’s current-year earnings is pegged at 75 cents per share. MAG surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average earnings surprise of 17.1%. The stock has gained 40.4% in the past year.

The Zacks Consensus Estimate for Fortuna Mining’s current-year earnings is pegged at 48 cents, indicating a year-over-year rise of 118.2%. FSM’s earnings beat the Zacks Consensus Estimate in two of the last four quarters while missing in the other two with an average earnings surprise of 53.6%. The stock has gained 23.3% in the past year.


 

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