Ballard Undertakes Next Phase of Fuel Cell Commercialization
Ballard Power Systems Inc. (Vancouver, BC) reported the the closing of a transaction with Japanese partner EBARA Corp. (Tokyo, Japan) and their jointly-owned company, Ebara Ballard Corp. (Tokyo, Japan), that will provide funding for the next generation of cogeneration fuel cell stack and system technology. An memorandum of understanding related to the transaction was signed in May. The agreement will provide Ballard approximately $30 million in cash over four years, through development funding and equity contributions.
The transaction covers a broad range of activities that will enhance Ballard's competitive position and commitment to the Japanese stationary cogeneration market. Under its terms Ballard will receive $18 million for the ongoing development of the current and next-generation 1 kW combined heat and power cogeneration fuel cell stack, subject to the completion of the work pursuant to technical milestones under the development program. This funding would be received over the next four years. EBARA Ballard will gain rights, over time, through an exclusive, royalty-bearing license, to assemble, service, develop, manufacture, and sell stationary cogeneration fuel cell stacks in Japan, as part of a joint long-term strategy to localize development and manufacturing in Japan for the Japanese market.
Ballard will retain all rights related to stationary cogeneration fuel cell markets outside of Japan. Ballard will receive an equity investment from EBARA of $11.7 million in two equal payments. The first half of the equity investment was received at closing, with the payment by EBARA to Ballard of $5,850,000 in exchange for 1,004,178 Ballard common shares. The second half of the equity investment will be made in September 2006.
"The agreement with EBARA serves to strengthen Ballard's already robust position in Japan, and opens the doors to other markets where we have the exclusive right to access and leverage our fuel cell technology," said Ballard President and Chief Executive Officer Dennis Campbell. "Our next-generation technology development is well underway, with a focus on reduced cost and increased durability to a targeted lifetime of 40,000 hours, for a market launch in 2008."
