SPI invests $33 Million and Sets Partnership with ZBB Energy

April 16, 2015 by Jeff Shepard

ZBB Energy Corporation today announced its intention to enter into a supply agreement with Solar Power, Inc. (SPI) for energy storage systems with total combined power output of 40MW over a period of four years. The value of the initial supply agreement is estimated at $80 million to $120 million, depending on the mix of storage applications and installation requirements. This supply agreement will be entered into at the closing of a Securities Purchase Agreement (SPA) between SPI and ZBB that was executed today and is valued at $33.4 million, consisting of a combination of newly issued common stock and convertible preferred stock of ZBB. Under the terms of the SPA, SPI will purchase 8,000,000 shares of ZBB common stock for approximately $5.3 million at a price per share of $0.6678 and 28,048 shares of ZBB Series C Convertible Preferred Stock for approximately $28.0 million. The aggregate purchase price of the purchased preferred shares was determined based on a price of $0.6678 per common equivalent.

The Purchased Preferred Shares are only convertible upon the completion of specific procurement milestones detailed in the Supply Agreement. With this infusion of capital, ZBB will have in excess of $45 million of cash on its balance sheet. The strategic partnership creates a solar industry powerhouse that will combine solar photovoltaic (PV) systems with energy storage and systems management solutions for utility, commercial and residential applications.

"In a short period of time, SPI has become a major global player in providing PV systems solutions and innovative renewable energy financing models. SPI has a strong, worldwide presence in the highest growth markets for our products. This agreement gives us immediate access to regions and countries where we lack a presence today, providing a major opportunity for ZBB to become a global leader in energy storage and energy management systems," said Paul Koeppe, Chairman of ZBB Energy. "In addition, we expect this partnership to completely change the paradigm at ZBB from development stage to a high growth manufacturing company."

ZBB Energy has recently expanded its product portfolio to include dedicated commercial and industrial building focused solutions, naturally complementing SPI's strength in addressing distributed generation (DG) system solutions. In addition, SPI's significant presence in utility-scale PV projects provides an excellent opportunity for ZBB's next-generation multi-MWh storage products.

"This partnership between SPI and ZBB is all about accelerating global solar penetration through the marriage of solar plus storage," said Xiaofeng Peng, Chairman of SPI. "Energy storage systems are becoming vital to PV system expansion worldwide due to a number of factors, and we believe that ZBB's leading technology will help SPI become an early-mover in capturing this huge global opportunity. In particular, the global shift toward distributed generation (DG) solar has magnified the need to develop viable energy storage solutions for the commercial and industrial segments. We believe the integration of storage and energy management will become an increasing differentiator for solar companies, and this partnership positions SPI strongly to address these needs in the coming years."

In addition to the initial $33.4 million investment into ZBB Energy, the Securities Purchase Agreement also contemplates that ZBB will issue to SPI a warrant to purchase 50,000,000 shares of ZBB common stock for an aggregate purchase price of $36.7 million and a per share exercise price equal to $0.7346.

The closing of the SPA and execution of the Supply Agreement is expected to take place following satisfaction of various closing conditions under the SPA, including obtaining the approval of the Company's shareholders. ZBB has agreed to prepare a proxy statement and convene and hold a special meeting of the Company's shareholders to consider and approve the SPA.