Greentech Lead Asia: FuelCell Energy, a manufacturer of
fuel cell power plants, announced its partnership with its South Korean
partner, POSCO Energy.
The agreement enables POSCO Energy to purchase 20,000,000
shares of FCEL common stock at a price of $1.50 per share for $30 million.
Proceeds will be used for general corporate purposes. The transaction is
expected to close in April 2012.
The expanded agreement is for a 120 MW multi-year order
commitment, acceleration of deliveries under the existing 70 MW order, and a
license commitment which provides for the manufacturing of Direct FuelCell
(DFC) components in South Korea by October 2014.
“We are experiencing increasing demand for
ultra-clean baseload fuel cell power plants from electric utilities and
independent power producers under the South Korean Renewable Portfolio Standard
and we are projecting significant demand from the commercial building market in
South Korea as well as exports to other Asian countries,” said Soung-Sik
Cho, president and CEO, POSCO Energy.
The company said POSCO Energy will be investing in
increased capacity to meet growing demand as the capacity of the existing
FuelCell Energy production facility in the USA is not sufficient to meet its
mutual global demand forecasts.
“This strategic transaction reflects significant
progress for FuelCell Energy and our ultra-clean stationary fuel cell power
plants as we execute on our global growth plans, strengthen our balance sheet and
drive to profitability,” said Chip Bottone, president and chief executive
officer for FuelCell Energy.
POSCO Energy will order 120 MW of fuel cell kits for
delivery starting in 2013 and concluding in 2016, all to be produced at the
Torrington, Connecticut production facility owned by FuelCell Energy.
Additionally, the MOU contemplates that the existing 70 MW order will be
accelerated from 2.8 MW of fuel cell kits delivered each month to 4.2 MW per
month, beginning in August 2012.
“The 120 megawatt order provides a committed level
of production for our Torrington Connecticut production facility for the next
several years, which provides certainty to our supply chain and increases
capacity utilization,” Bottone added.
The license agreement will provide for the manufacture of
Direct FuelCell components in Korea in a facility owned by POSCO Energy. POSCO
Energy will provide the land and building in Pohang, South Korea for the
manufacturing facility along with all necessary funding for construction and daily
operation of the facility.
POSCO Energy will pay a one-time licensing fee upon
execution of the agreement and an on-going royalty. The expanded license
agreement is expected to be finalized in the Company’s third quarter of 2012.