- Ballard has received $19.0M in
related payments
VANCOUVER and YUNFU,
CHINA, Dec.
22, 2016 /CNW/ - Ballard Power Systems (NASDAQ: BLDP; TSX:
BLD) today has provided an update regarding significant progress
being made toward the establishment and commissioning of an
FCvelocity®-9SSL fuel cell stack production operation in
the City of Yunfu, in Guangdong
Province, China. As of
closing on this transaction in October
2016, Ballard had received payments totaling $10.9 million and since then has received further
payments of $8.1 million in relation
to a contract milestone, for a total of $19.0 million.
The transaction to establish a production operation was
announced on July 18, 2016 and has a
contemplated minimum value to Ballard of $170 million over 5-years. The transaction
includes these key elements:
- Ballard will receive approximately $20.0
million in Technology Solutions revenue for technology
transfer and other services 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 Q4 2016 through 2017;
- At the October 25, 2016 closing
of the transaction, the Guangdong Synergy Ballard Hydrogen Power
Co., Ltd. ("JVCo") joint venture was created to undertake stack
manufacturing operations; JVCo is owned 90% by Guangdong Nation
Synergy Hydrogen Power Technology Co. Ltd. and 10% by Ballard;
and
- On commissioning of the operation by JVCo, 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.
Significant progress has already been made to achieve the
targeted commissioning of the JVCo manufacturing operation in
late-2017. All long lead-time capital equipment items for the JVCo
production line have now been specified and ordered, the layout and
key infrastructure requirements of the manufacturing facility have
been advanced and facility construction is underway. All equipment
is expected to be installed in the facility during the first half
of 2017, with process qualification work scheduled for the second
half of 2017. It is expected that commissioning will be completed
and production will begin in late-2017.
"Progress is on-track to ready the joint venture fuel cell stack
production operation," said David
Whyte, Ballard Vice President
– Operations. "Our business model in China offers near-, mid- and long-term cash
flow streams at various points in the value chain. We have already
received $19 million from this stack
JV transaction and our $150 million
long-term MEA supply contract provides forward visibility on
baseload MEA production volumes. In addition to minimum MEA
volumes, we also expect Ballard to realize value at the stack level
from our participation in JVCo. Finally, at the module level
we expect to receive technology transfer fees as well as recurring
royalty payments from modules assembled by localization partners,
while also driving demand for stacks from the JVCo production line
for use in those modules."
Mr. Whyte continued, "With Ballard having exclusive rights to
sell stacks produced by JVCo outside of China, we expect to have access to additional
production capacity for future stack sales by Ballard around the
globe, which mitigates the need for future capital spend on
in-house capacity. In summary, our approach to localizing
production is risk adjusted, capital light and IP
protected."
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.