T1 Energy Inc.TE
T1 Energy Inc. Fair Value Disclosure
FAIR VALUE MEASUREMENT
Financial liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, consisted of the following (in thousands):
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Anti-dilution Right | $ | — | $ | — | $ | 45,754 | $ | 45,754 | $ | — | $ | — | $ | 18,454 | $ | 18,454 | ||||||||||||||||||||||||||||||||||
| Private Warrants | — | — | 11,662 | 11,662 | — | — | 3,306 | 3,306 | ||||||||||||||||||||||||||||||||||||||||||
| Share Purchase Agreement | — | — | — | — | — | — | 14,905 | 14,905 | ||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | — | 1,059 | — | 1,059 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
We measure our Anti-dilution Right, Private Warrants, and Share Purchase Agreement at fair value based on significant inputs not observable in the market, which caused them to be classified as Level 3 measurements within the fair value hierarchy. The valuation uses assumptions and estimates that we believe a market participant would use when making the same valuation. Changes in the fair value of the Anti-dilution Right and Share Purchase Agreement are recognized in derivative liabilities fair value adjustment in the consolidated statements of operations and comprehensive loss. Changes in the fair value of the Private Warrants were recognized under warrant liability fair value adjustment in the consolidated statements of operations and comprehensive loss.
The fair value of interest rate swaps is determined using valuation models that incorporate observable market inputs including interest rate yield curves and credit spreads and is classified within Level 2 of the fair value hierarchy. Changes in the fair value of interest rate swaps are recognized in other (expense) income, net in the consolidated statements of operations and comprehensive loss. Interest rate swap liabilities are presented as other long-term liabilities on the consolidated balance sheets.
As of December 31, 2025 and 2024, the carrying amounts of the Company’s cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and other current liabilities approximate their respective fair values due to the short-term maturities of these instruments.
The carrying amount of the Company’s debt instruments approximates fair value, as the current borrowing base rates for the Senior Secured Credit Facility does not materially differ from market rates of similar borrowings and the related party debt instruments were recorded at fair value on the closing date of the Trina Business Combination.
Anti-dilution Right
The Anti-dilution Right was valued using the Black-Scholes-Merton option pricing model. See Note 11 – Redeemable Preferred Stock, Anti-dilution Right, and Share Purchase Agreement above for further details. Our use of the Black-Scholes-Merton option pricing model for the Anti-dilution Right, required the use of subjective assumptions, including:
•The risk-free interest rate assumption was based on the U.S. Treasury rates commensurate with the contractual terms of the Anti-dilution Right.
•The expected term was determined based on the expiration date of the Anti-dilution Right.
•The expected volatility assumption was based on the implied volatility from the Company’s stock price.
The fair value of the Anti-dilution Right was determined using this approach, exercise prices of $1.70 and $1.90 and a share price of $6.68 as of December 31, 2025, and an exercise price of $2.50 and a share price of $2.58 as of December 31, 2024. A decrease in the risk-free interest rate, and an increase in each of the expected term or expected volatility, in isolation, would increase the fair value measurement, while an increase in the risk-free interest rate, and a decrease in each of the expected term or expected volatility would decrease the fair value measurement of the Anti-dilution Right.
Share Purchase Agreement
On September 10, 2025, the Company and the investor entered into a Termination Letter pursuant to which the Share Purchase Agreement is terminated and in consideration for the termination of the Share Purchase Agreement, the Company agreed to pay the investor $5.0 million and issue 7.0 million Penny Warrants, see Note 10 – Warrants and Note 11 – Redeemable Preferred Stock, Anti-dilution Right, and Share Purchase Agreement above for further details. The Share Purchase Agreement was valued using the Black-Scholes-Merton option pricing model. Our use of the Black-Scholes-Merton option pricing model for the Share Purchase Agreement, required the use of subjective assumptions, including:
•The risk-free interest rate assumption was based on the U.S. Treasury Rates commensurate with the contractual terms of the Share Purchase Agreement.
•The expected term was determined based on the expected transaction date of the Share Purchase Agreement.
•The expected volatility assumption was based on the implied volatility from the Company’s stock price.
The fair value of the Share Purchase Agreement was determined using this approach, an exercise price of $1.05, and a share price of $1.94 as of market close on September 9, 2025, and a share price of $2.58 as of December 31, 2024. The Share Purchase Agreement was terminated on September 10, 2025.
Private Warrants
The Private Warrants were valued using the Black-Scholes-Merton option pricing model. See Note 10 – Warrants above for further details. Our use of the Black-Scholes-Merton option pricing model for the Private Warrants required the use of subjective assumptions, including:
•The risk-free interest rate assumption was based on the U.S. Treasury Rates commensurate with the contractual terms of the Private Warrants.
•The expected term was determined based on the expiration date of the Private Warrants.
•The expected volatility assumption was based on the implied volatility from the publicly traded Public Warrants.
The fair value of the Private Warrants was determined using this approach, an exercise price of $11.50, and a share price of $6.68 as of December 31, 2025, and $2.58 as of December 31, 2024. A decrease in the risk-free interest rate, and an increase in each of the expected term or expected volatility, in isolation, would increase the fair value measurement, while an increase in the risk-free interest rate, and a decrease in each of the expected term or expected volatility would decrease the fair value measurement of the Private Warrants.
Rollforward of Level 3 Fair Value Instruments
The changes in the Level 3 instruments measured at fair value on a recurring basis were as follows (in thousands):
| Year ended December 31, 2025 | |||||||||||||||||||||||
| Anti-dilution Right | Private Warrants | Share Purchase Agreement | |||||||||||||||||||||
| Balance (beginning of period) | $ | 18,454 | $ | 3,306 | $ | 14,905 | |||||||||||||||||
| Fair value measurement adjustments | 33,456 | 8,356 | (2,233) | ||||||||||||||||||||
Settlements | (6,156) | — | (12,672) | ||||||||||||||||||||
| Balance (end of period) | $ | 45,754 | $ | 11,662 | $ | — | |||||||||||||||||
| Year ended December 31, 2024 | |||||||||||||||||||||||
| Anti-dilution Right | Private Warrants | Share Purchase Agreement | |||||||||||||||||||||
| Balance (beginning of period) | $ | — | $ | 2,025 | $ | — | |||||||||||||||||
| Business combination | 18,454 | — | — | ||||||||||||||||||||
| Fair value measurement adjustments | — | 1,291 | 14,905 | ||||||||||||||||||||
| Reclassification to Public Warrants | — | (10) | — | ||||||||||||||||||||
Settlements | — | — | — | ||||||||||||||||||||
| Balance (end of period) | $ | 18,454 | $ | 3,306 | $ | 14,905 | |||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 31, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
| 2023 | Feb 29, 2024 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.