Quantum Announces Letter of Intent for $20 MillionNovember 29, 2009 by Jeff Shepard
Quantum Fuel Systems Technologies Worldwide, Inc. announced that it and its subsidiary, Quantum Solar Energy, Inc. has entered into a non-binding letter of intent with New Energy Systems, LLC, which sets forth the terms by which NES would invest $20 million in Quantum Solar in exchange for a 34% ownership interest in Quantum Solar. Quantum Solar will use the investment proceeds to establish a state of the art solar photovoltaic module manufacturing facility in Irvine, California, with an expected annual capacity of 45 MW.
Quantum Solar will utilize the advanced crystalline silicon technologies and manufacturing expertise of Asola Advanced and Automotive Solar Systems GmbH, an affiliate of Quantum and Quantum Solar. Serial production is anticipated to begin in the spring of 2010. Part of the production output from Quantum Solar is expected to be sold to NES for its solar energy business initiatives in California.
Quantum Solar is also expected to supply modules to Schneider Power, Inc. for their portfolio of utility-scale solar energy generation projects. As announced on November 25, 2009, Quantum and Schneider Power have signed a definitive agreement for Quantum to acquire all of the outstanding capital stock of Schneider Power. That transaction is expected to close in the second quarter of 2010.
Pursuant to the terms of the Letter of Intent, NES would invest $20 million in exchange for Series A convertible preferred stock, which would be convertible into shares of Quantum Solar common stock on a one-for-one basis. NES would receive a cumulative preferred dividend equal to 2.5% of the investment amount, or $500,000 annually, for the lesser of seven years or until such time that NES has received a total return on its investment equal to $6 million. The transaction is expected to close within ninety days. Upon closing, Quantum Solar would be owned 51% by Quantum, 34% by NES (on a fully converted basis), and 15% by Asola. Quantum and NES shall each have the right to appoint two members to serve on Quantum Solar’s board of directors.
"We are very excited about the investment by NES", said Alan P. Niedzwiecki, the President and CEO of Quantum. "Their timely investment allows us to quickly launch our solar electricity generation products, which will be utilized in solar energy projects developed by NES as well as Schneider Power. NES has an impressive pipeline of renewable energy projects in California. We are seeing a jump in demand for high quality solar modules made in the USA, as customers and investors strive to ensure reliable long-term production of clean electricity, in many private and state- owned solar projects across the nation."
The closing is subject to and conditioned upon a number factors including NES’ completion of due diligence and the successful negotiation and execution of definitive agreements.