|PlugPower grid-parallel CHP system platform.|
Interros, a major Russian investment firm, and Norilsk Nickel, the world’s largest producer of nickel and palladium, have agreed to make a $217 million cash investment in Plug Power, a provider of stationary PEM fuel-cell systems and systems for on-site hydrogen generation.
The investment is being made through Smart Hydrogen, a joint venture of the principal Interros investors and Norilsk Nickel formed to participate in the global hydrogen economy. Combined with earlier purchases of Plug Power stock, the investors will hold about 35% of Plug Power’s common stock outstanding following the close of the transaction.
Plug Power and Honda recently signed two agreements to continue expanding the companies’ collaborative efforts on home co-generation of heating, power and hydrogen. (Earlier post.)
The parties have entered into a definitive agreement for the investment and the transaction is expected to close this summer, subject to approval by Plug Power’s shareholders, regulatory approvals, including Hart-Scott-Rodino antitrust clearance, and customary closing conditions.
We view this as a transformational investment for Plug Power. After this investment closes, Plug Power will have approximately $285 million in cash and marketable securities and be well positioned to accelerate and broaden our business strategy.—Dr. Roger Saillant, president and CEO of Plug Power
Following the closing of the transaction, the parties intend to explore opportunities regarding how Interros and Norilsk Nickel can add value to Plug Power, specifically in the areas of technology and distribution.
For Interros and Norilsk Nickel, the investment in Plug Power reflects a convergence of multiple needs and opportunities. As one of the world’s largest suppliers of precious metals, including the largest producer of palladium for industrial use and the fourth-largest producer of platinum, Norilsk Nickel expects to see significant benefit as the success of fuel cell technology results in the broader use of palladium and platinum.
In addition, Norilsk Nickel’s mining activities and other operations in remote sections of Russia create significant need for reliable and affordable energy production, an end market potentially served by the use of fuel cells.
Plug Power expects to receive cash of $217 million in exchange for shares of Class B Capital Stock that are convertible into 39.5 million shares of common stock. The purchase price per share of common stock in the transaction, on an as-converted basis, is $5.50. The Class B Capital Stock will be a new class of stock that is economically equivalent to, and convertible into common stock. The terms of the Class B Capital Stock and the investment include certain approval and other rights and certain standstill and other restrictions. Pursuant to these rights, the investors initially will be able to appoint up to four of the eleven directors on Plug Power’s board of directors.
In December 2005, the investors purchased approximately 2.7 million shares of Plug Power common stock from General Electric. Concurrent with the closing of the new investment, the investors are expected to purchase 1.825 million shares of Plug Power common stock from DTE Energy Foundation. Immediately following the closing of the investment transactions, on a combined basis, the investors are expected to hold approximately 35% of Plug Power’s outstanding common stock on an as-converted basis.
Plug Power currently offers three major lines of product:
GenCore systems for backup power in market applications such as telecommunications and utilities.
GenSys systems for off-grid, primer power applications.
GenSite for on-site hydrogen production.
Plug Power is focused on commercializing PEM fuel-cells systems ranging in size from 1 kilowatt to 100 kilowatts. The company has currently shipped some 650 fuel-cell systems to customers.