Investing.com -- Existing ESS Tech stockholders would hold roughly 5% to 10% of the combined company under the proposed business combination announced in early August, chief executive Drew Buckley told Investing.com.

The disclosure provides a key detail after ESS revealed it has signed a non-binding letter of intent with an unnamed private company in the energy sector, a transaction the company has said implies a combined enterprise value of about $515 million and a premium valuation for ESS at signing.

“Based on the current contemplated structure and subject to final valuations, ESS stockholders are expected to own approximately 5% to 10% of the combined company at closing,” Buckley remarked.

He also clarified how the premium is defined. It applies to ESS's “fully diluted market capitalization at the time the definitive agreement is signed,” rather than to a particular day's share price or a volume-weighted average.

It is not yet locked in.

"The LOI is non-binding, and the final transaction terms, including the valuation, exchange ratio and resulting ownership, will be established in the definitive agreements," Buckley said. "We should characterize the premium as the current proposed structure rather than a contractual commitment under the LOI."

ESS shares are currently trading around $0.33, and the company priced a $3.2 million registered direct offering last month at $0.50 a share alongside warrants for a further 12.8 million shares.

Neither party is disclosing how the $515 million combined enterprise value splits between the two businesses. Buckley noted that individual valuations will be determined during negotiation of the definitive agreement and disclosed when the transaction documentation is finalized.

He declined to say whether ESS would be the surviving entity or whether the current listing, name and ticker would carry over, saying the structure remains under evaluation and that he would not speculate on the mechanics before they are finalized.

On what the counterparty brings, Buckley described an established operating platform with a track record of revenue-generating commercial execution, complementary to ESS's core business.

"This is not about combining two development-stage businesses or duplicating capabilities," he said. "The strategic rationale is to bring together technology and commercial execution to create greater scale and speed to market."

In Q2, ESS reported revenue of $73 thousand, compared with $2.4 million in the prior-year period, which the company put down to "fewer deliveries of equipment to customers."

Buckley stated that the company remains focused on executing existing priorities while the transaction process progresses, with the final impact on specific contracts and commitments to be addressed in the definitive agreement.

The company is targeting a definitive agreement by the end of September and a close before year-end, subject to due diligence, agreement on final terms, and board, stockholder and regulatory approvals, including compliance with listing requirements.