Heliogen-Zeo deal under scrutiny: KSF investigates valuation and shareholder fairness in $10m sale

The proposed acquisition of Heliogen, Inc. (OTC: HLGN) by Zeo Energy Corp (NasdaqCM: ZEO) has sparked legal and investor scrutiny following an announcement by shareholder rights law firm Kahn Swick & Foti, LLC (KSF). Led by former Louisiana Attorney General Charles C. Foti, Jr., the firm is investigating whether the terms of the $10 million deal adequately serve the interests of Heliogen’s shareholders or whether the transaction significantly undervalues the company’s assets and potential.

According to the transaction structure, Heliogen shareholders are to receive Zeo Energy Class A common stock valued at approximately $10 million in total. This is based on a Zeo share price of $1.5859, with the final consideration subject to downward adjustments depending on Heliogen’s net cash position at closing. These caveats have raised concerns among institutional and retail investors alike, especially considering Heliogen’s once lofty valuation during its SPAC debut.

What Are the Terms of the Heliogen-Zeo Energy Merger?

The deal entails Zeo Energy Corp acquiring all outstanding equity of Heliogen, a solar energy technology company now trading on the over-the-counter (OTC) markets after a NYSE delisting. In exchange, Heliogen investors are set to receive Zeo shares totaling an estimated $10 million in value, although this figure is variable based on closing conditions.

The valuation metric—$1.5859 per Zeo share—establishes a conversion benchmark. However, the transaction includes an adjustment mechanism based on Heliogen’s cash reserves, potentially reducing the final payout. This has fueled investor skepticism about whether the sale represents a fair market outcome or a distressed asset disposal.

Critically, Heliogen had once commanded a valuation of approximately $2 billion when it merged with Athena Technology Acquisition Corp. via SPAC in 2021. The stark contrast between that valuation and today’s exit figure has become a flashpoint for litigation risk and investor backlash.

Why Was Heliogen Once Considered a Promising Clean Energy Innovator?

Heliogen was positioned as a pioneering clean energy firm with proprietary solar thermal technology. Its core innovation centered on modular heliostat systems capable of concentrating sunlight to generate extreme industrial heat exceeding 1,000°C—sufficient for cement kilns, hydrogen production, and other fossil fuel-intensive operations.

The company marketed its technology as a transformative solution for decarbonizing hard-to-abate sectors. With early backing from notable figures like Bill Gates and public support from the U.S. Department of Energy, Heliogen generated early excitement. Its SPAC-backed IPO was emblematic of a broader wave of speculative enthusiasm for climate-tech startups during the 2020–2021 period.

However, the transition from pilot demonstrations to commercial-scale deployments proved challenging. High capital expenditures, long sales cycles, and a tight funding environment caused revenue volatility. By 2023, Heliogen faced execution hurdles, management turnover, and pressure to cut costs—factors that contributed to its declining financial health and eroding investor confidence.

Why Is KSF Challenging the Deal’s Process and Valuation?

KSF’s investigation targets two main issues: the fairness of the valuation and the transparency of the deal process. The firm is evaluating whether Heliogen’s board explored strategic alternatives—such as restructuring, additional capital raising, or licensing its technology to other operators—before agreeing to a low-equity conversion deal.

The law firm also aims to assess whether shareholders were provided sufficient disclosures about the rationale for the transaction, or whether internal stakeholders may have conflicts of interest. In past cases involving SPAC-era companies, KSF has represented investors who alleged boards rushed transactions without canvassing the market for better terms.

Given the significant drop from a $2 billion valuation to a $10 million exit, legal experts suggest the company’s independent directors could face scrutiny if the sale is challenged in court.

How Has Heliogen’s Stock Price and Sentiment Shifted?

Heliogen (OTC: HLGN) has experienced a dramatic collapse in shareholder value. In late 2021, post-SPAC shares traded well above $10. But by 2023, shares had plunged due to missed commercialization targets and growing investor disillusionment with pre-revenue clean energy plays. The company was eventually delisted from the NYSE and now trades on the OTC markets with much lower liquidity and institutional coverage.

At the time of the Zeo acquisition announcement, HLGN’s market cap was already hovering near the $10 million transaction value, indicating that the public market had already heavily discounted the company’s future potential.

Zeo Energy (NasdaqCM: ZEO), meanwhile, is a relatively new entrant to the clean energy market and remains thinly traded. The stock showed limited volatility post-announcement, suggesting that investors view the transaction as low-risk for Zeo—likely due to the distressed nature of the asset being acquired.

Investor sentiment among Heliogen shareholders remains negative, with most observers viewing the deal as a last-resort option rather than a strategic combination of equals. There has also been minimal evidence of institutional accumulation or activist intervention in HLGN since the transaction’s disclosure.

What Does This Mean for HLGN Shareholders and the Broader Market?

The transaction places long-time Heliogen shareholders—particularly those who invested during the SPAC phase—in a difficult position. Retail forums have seen increasing discussion around potential legal remedies, with some investors exploring collective action to demand better terms or disclosures.

The deal also underscores a broader trend in the clean energy market: SPAC-era firms with unproven revenue models are struggling to survive in a high-rate, post-hype capital environment. Dozens of similar companies are facing pressure to sell, restructure, or shut down entirely.

Some analysts argue that Zeo’s move is opportunistic, potentially allowing the company to absorb Heliogen’s intellectual property, technical team, and customer leads for a fraction of prior valuations. If Zeo is able to productize these assets effectively, the transaction may serve as a long-term win for its shareholders—even if Heliogen investors realize minimal recovery.

Could the Deal Face Regulatory or Shareholder Resistance?

The investigation by KSF could represent the first step toward shareholder litigation, which might aim to block the transaction, demand higher compensation, or improve disclosure standards. While such legal challenges often fail to overturn deals, they can result in settlement payments, increased transparency, or revised consideration.

If additional investors join the pushback or if competing offers surface, the board could be compelled to reconsider the deal. However, given Heliogen’s precarious financial state and limited alternatives, many stakeholders may see the Zeo offer as the least disruptive resolution.

The transaction does not yet appear to have drawn regulatory scrutiny, but that could change if shareholder concerns escalate or if evidence of flawed process emerges during proxy statement filings.

What Should Investors Watch for Next?

The critical next step will be the release of Heliogen’s proxy statement, which is expected to outline the financial rationale, board deliberations, and fairness opinion supporting the deal. Investors should scrutinize this document for any signs of inadequate oversight, conflicted advisors, or lack of alternative bids.

The proxy will also reveal who is leading negotiations, whether Heliogen’s board engaged third-party financial advisors, and what liquidation value (if any) the company might have in the absence of this transaction.

Investors who remain concerned about the merger may contact KSF or similar shareholder rights firms to explore next steps. Given the post-SPAC collapse cycle unfolding across the market, this case could set an important precedent for how struggling clean energy firms navigate exits under distress.