- Expected to generate $170M
minimum revenue over 5-years
VANCOUVER and FOSHAN,
China, Oct.
25, 2016 /CNW/ - Ballard Power Systems (NASDAQ: BLDP; TSX:
BLD) today announced the closing of its joint venture transaction
with Guangdong Nation Synergy Hydrogen Power Technology Co. Ltd.
("Synergy") for the establishment of an FCvelocity®-9SSL
fuel cell stack production operation in the City of Yunfu, in
China's Guangdong Province. As of closing, Ballard
received initial payments totaling $10.9
million.
The transaction has an estimated minimum value to Ballard of
$170 million over 5-years and
includes these key elements:
- Ballard is expected to receive $20
million in Technology Solutions revenue for technology
transfer services, test equipment, production equipment
specification and procurement services, training and commissioning
support in relation to the establishment of a production line in
Yunfu for the manufacture and assembly of
FCvelocity®-9SSL fuel cell stacks, with most of this
revenue expected to be recognized in 2017;
- A joint venture – named Guangdong Synergy Ballard Hydrogen
Power Co., Ltd. ("JVCo") –has been registered to undertake the
FCvelocity®-9SSL fuel cell stack manufacturing
operations, with JVCo owned 90% by Synergy and 10% by Ballard;
and
- On commissioning of the stack production line, expected in late
2017, Ballard will be the exclusive supplier of membrane electrode
assemblies (MEAs) for each fuel cell stack manufactured by JVCo,
with minimum annual MEA volume commitments on a "take or pay" basis
totaling in excess of $150 million
over the initial 5-year term, from 2017 to 2021.
Randy MacEwen, Ballard's
President and CEO said, "Our localization strategy in China is risk adjusted, capital light and
IP-protected. We expect this landmark stack assembly transaction to
deliver a number of high-value benefits to Ballard, including
attractive near term and long-term deal economics and cash flows,
positive market reception, scaling of MEA production with
guaranteed volumes, and capital efficiency. And, Ballard is not
exposed to any compromise of our core intellectual property since
we will maintain MEA production at our headquarters in Canada."
After commissioning of the operation, JVCo will have an
exclusive right to manufacture and sell FCvelocity®-9SSL
stacks in China. Exclusivity will
be subject to certain performance criteria of the joint venture,
including compliance with: a code of ethics; Ballard's quality
policies and branding practices; payment terms; and certain
intellectual property covenants, as well as achievement of the
minimum annual "take or pay" MEA volumes. Ballard will have the
exclusive right to purchase FCvelocity®-9SSL fuel cell
stacks and sub-components from the joint venture for sale outside
China.
Ballard will contribute approximately $1.0 million for its 10% interest in JVCo. Under
the terms of the agreement, Ballard has the right to appoint one of
the three JVCo board directors and Ballard's CEO was appointed to
the board of JVCo effective as of closing. Ballard has veto rights
over certain key JVCo decisions and has no further obligation to
provide future funding to JVCo.
The fuel cell stacks manufactured by JVCo are expected to be
used primarily in locally-assembled fuel cell engines to provide
propulsion power for zero-emission buses and commercial vehicles in
China.
About Ballard Power Systems
Ballard Power Systems
(NASDAQ: BLDP; TSX: BLD) provides clean energy products that reduce
customer costs and risks, and helps customers solve difficult
technical and business challenges in their fuel cell programs. To
learn more about Ballard, please visit www.ballard.com.
This release contains forward-looking statements concerning
expected revenues and other benefits of the transactions, market
interest in our products, anticipated market demand for fuel cell
products and available government subsidies. 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, 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.
SOURCE Ballard Power Systems Inc.