What happened

Shares of U.S. exploration and production company Torchlight Energy (TRCH) fell as much as 12% today. And while the stock had clawed back some of its losses by 1:30 p.m. EDT, it was still lower by a painful 10%. A news release that didn't actually provide much new information caused the dour mood on Wall Street.

So what

Torchlight Energy agreed to be acquired by Canada's Metamaterial in late 2020. The two businesses have virtually nothing in common, given that Torchlight drills for oil and natural gas, and Metamaterial makes "high performance functional materials and nanocomposite products." In fact, after the merger, as the plan stands now, Torchlight's energy assets will be jettisoned. The whole point of the merger is basically for Metamaterial to get a U.S. listing without going through the effort of making an initial public offering (IPO).   

A group of people made to look like floor traders.

Image source: Getty Images.

The problem is that the merger was expected to be completed by now but has been delayed multiple times. This morning marked the latest update, pushing key dates off into the future. At this point, Torchlight appears to be awaiting Securities and Exchange Commission (SEC) approval of needed documents. Both Torchlight and Metamaterial are still working together to get this over the finish line, so the deal doesn't appear to be in danger of unraveling. However, the longer the delay the more time investors have to worry about just such an outcome -- which helps explain why each delay brings with it a stock sell-off.  

Now what

This is a rather complex merger with a very unique purpose. It is probably best to view Torchlight as a special situation play at this point, something that most investors would likely be better off avoiding. If you like the idea of investing in Metamaterial as a company, you should probably just wait until the deal is consummated, assuming that this eventually happens, of course.