Ballard Closes Strategic Collaboration With Weichai Power
-- Total gross proceeds of $183.8M at $3.54 per share
-- New China joint venture and $90M technology transfer program
VANCOUVER, Nov. 13, 2018 /PRNewswire/ - Ballard Power Systems (NASDAQ: BLDP; TSX: BLDP) today announced that the Company has successfully closed a strategic collaboration transaction with Weichai Power Co., Ltd. ("Weichai"; http://en.weichaipower.com/), initially detailed in a press release issued on August 29, 2018.
"This strategic collaboration with Weichai - a leading automotive equipment manufacturer specializing in the production of powertrains, automobiles, intelligent logistics, automotive parts and components - underscores our high conviction in the opportunity for Fuel Cell Electric Vehicles, or FCEVs, in China's Heavy Duty Motive market," said Randy MacEwen, Ballard President and CEO. "We see our collaboration with Weichai as an important validation of the FCEV value proposition and Ballard's technology leadership in PEM fuel cells. We expect our partnership to be a positive long-term catalyst for Ballard's business and for shareholder value."
Ballard's strategic collaboration with Weichai includes the following key elements:
i. Equity Investment - an equity investment in Ballard has been
made by Weichai in the amount of approximately $163.6
million, representing a 19.9% interest in the company,
through the subscription and purchase of shares from
treasury at a price of $3.54, which reflects a 15% premium
to the 30-day VWAP of $3.08 on August 29, 2018.
In addition, Zhongshan Broad-Ocean Motor Co., Ltd. - a
current Ballard strategic investor and Chinese partner
("Broad-Ocean"; www.broad-ocean.com/en/index.html) -
has invested a further approximately $20.2 million, through
the subscription and purchase of shares from treasury at
the same price of $3.54 to maintain its 9.9% ownership
position in Ballard.
As a result, the Weichai and Broad-Ocean equity investments
in Ballard have generated total gross proceeds of
approximately $183.8 million. The use of proceeds are
expected to include investment in Ballard's core fuel cell
business, equity contributions to a joint venture company
("JV") established by Weichai and Ballard to finance
Ballard's ownership position in the joint venture's
operations, and support of potential M&A transactions.
The Weichai and Broad-Ocean investments are subject to 2-
year "standstill" and resale restrictions (subject to
customary exceptions). For so long as Weichai holds at
least 15% of Ballard's outstanding shares, it will have the
right to nominate two directors to Ballard's board of
directors, and Ballard will expand its board from the
current seven directors to nine directors. Weichai has also
agreed that, in the event of a third-party offer to buy
Ballard, Weichai will have the right to make a superior
proposal or otherwise must vote its shares in accordance
with the Ballard board recommendation.
ii. China Joint Venture and Technology Transfer - Weichai and
Ballard will establish a joint venture company in Shandong
Province to support China's Fuel Cell Electric Vehicle
market, with Ballard holding an initial 49% ownership
position. The JV will manufacture Ballard's next-
generation LCS fuel cell stack and LCS-based power modules
for bus, commercial truck and forklift applications with
exclusive rights in China and will pay Ballard $90 million
under a program to transfer technology to the JV in order
to enable these manufacturing activities. The JV will
purchase Membrane Electrode Assemblies (MEAs) for LCS fuel
cell stacks exclusively from Ballard under a long-term
supply agreement.
Weichai and Ballard will fund pro rata shares of the JV
based on an agreed business plan. Weichai will hold three
of five JV board seats and Ballard will hold two, with
Ballard having certain shareholder protection provisions.
Ballard will also retain an exclusive right to the
transferred technologies outside China.
Broad-Ocean has also expressed an interest in acquiring a
10% ownership position in the JV, which would
correspondingly reduce Ballard's ownership position from
49% to 39%. Discussions regarding this investment are
currently underway between the parties.
iii. Fuel Cell Sales - Weichai intends to build and supply at
least 2,000 fuel cell modules by 2021 for commercial
vehicles using Ballard technology. Specific terms related
to the scope of supply, product mix, pricing and timing of
shipments are under discussion between the parties.
Ballard is continuing discussions with the Synergy-Ballard joint venture and other partners in China to address current issues and future opportunities.
About Ballard Power Systems
Ballard Power Systems (NASDAQ: BLDP; TSX: BLDP) provides clean energy products that reduce customer costs and risks, and helps customers solve difficult technical and business challenges in power and energy. To learn more about Ballard, please visit www.ballard.com.
This release contains forward-looking statements concerning future events or developments, including the closing of the announced transaction, the performance of the joint venture, anticipated product development efforts and product performance, customer benefits and market demand for our products. These forward-looking statements reflect Ballard's current expectations as contemplated under section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any such forward-looking statements are based on Ballard's assumptions relating to its financial forecasts and expectations regarding its product development efforts, manufacturing capacity, and market demand.
These statements involve risks and uncertainties that may cause Ballard's actual results to be materially different, including general economic and regulatory changes, detrimental reliance on third parties, performance risks related to existing joint venture and partners, successfully achieving our business plans and achieving and sustaining profitability. For a detailed discussion of these and other risk factors that could affect Ballard's future performance, please refer to Ballard's most recent Annual Information Form. Readers should not place undue reliance on Ballard's forward-looking statements and Ballard assumes no obligation to update or release any revisions to these forward looking statements, other than as required under applicable legislation.
This press release does not constitute an offer to sell or the solicitation of an offer to buy securities. The Ballard Common Shares have not been registered under the United States Securities Act of 1933, as amended, or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
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SOURCE Ballard Power Systems Inc.
