Clean Earth Acquisitions Corp. (NASDAQ:CLIN) announced in an 8-K this afternoon that it has lowered the valuation for its climate technology target Alternus (OSE:ALT) and reduced the earnout shares for the deal.

At deal announcement, Alternus had a pre-money valuation of $550 million and Clean Earth originally agreed to issue Alternus Energy a number of shares equal to $550 million plus or minus an estimated working capital adjustment, of which 1,000,000 shares would be deposited into a working capital escrow account to satisfy any post-closing working capital adjustments.

But, the parties have now agreed to reduce this valuation by 50%, from $550 million to $275 million.

As a result of this change, Clean Earth will issue a number of shares to Alternus equal to $275 million, plus or minus an estimated working capital adjustment of which 1,000,000 shares will be deposited into a working capital escrow account.

Additionally, the parties have agreed to reduce the earnout shares from 35 million shares to 20 million shares and modify the earnout milestones.

These shares will be deposited into an earnout escrow account and will be released to Alternus if the Adjusted EBITDA for the fiscal year ending on December 31, 2023 is at least $16 million and the company’s share price is at least $11.00 for a minimum number of trading days, then 6,000,000 shares will be released. If Adjusted EBITDA for the fiscal year ending on December 31, 2024 is at least $52 million and the company’s share price is at least $13.00 for a minimum number of trading days, then 6,000,000 shares will be released. And if Adjusted EBITDA for the fiscal year ending on December 31, 2025 is at least $156 million and the company’s share price is at least $15.00 for a minimum number of trading days, then 8,000,000 earnout shares will be released to Alternus.

If any of the earnout milestones are not met, the earnout shares that would have been released to the seller will be released if a subsequent earnout milestone is met. In addition, if any earnout milestone based on Adjusted EBITDA has been met, but the corresponding earnout milestone based on share price has not been met, the shares may be released if share price targets or a calculated share price based on a multiple of Adjusted EBITDA reduced by net debt are met during the five-year period from the date of the applicable milestone.

Furthermore, Citigroup, one of the underwriters of Clean Earth’s IPO, agreed to forfeit the remaining deferred discount payment of $3,622,500 that is to be paid to them upon the consummation of a business combination, such that when taken together with that certain letter agreement, Citigroup agrees to forfeit the entire deferred discount payment of $7,245,000.

Clean Earth announced its $992 million deal with Alternus in October 2022. Dublin, Ireland-based Alternus installs, owns and operates midsized utility scale solar plants and plans to have about 3.5 GW of generation assets in this portfolio by 2025.