Smith Electric Vehicles secures new strategic investor and battery supplier; production to resume in Kansas City in mid-2014
Smith Electric Vehicles (SEV) has secured a $42-million commitment from Li-ion battery developer and manufacturer Sinopoly Battery Limited for a conditional subscription of Series AA convertible promissory notes, Series E preferred stock and common stock of post-listing of SEV in the amounts of US$2 million, US$10 million and US$30 million, respectively.
The $42-million investment will position Sinopoly as a strategic shareholder in Smith Electric. Under the agreement, Sinopoly will become Smith Electric’s exclusive supplier for batteries in vehicle applications that are compatible with Smith Electric’s platforms and customer requirements. Sinopoly will also become a preferred supplier for certain electric vehicle components that can be manufactured in its Hangzhou facility. The first $2 million in funding closed Monday, and the remainder will be invested in two tranches pending milestones to be achieved by both companies in the coming months.
Upon the completion of the funding, Sinopoly is estimated to be the single largest shareholder of SEV, holding no less than 19% equity interest. Sinopoly is entitled to appoint one director in SEV after the completion of the listing.
Smith Electric will resume production in its Kansas City, Missouri, facility in mid-summer 2014. The company said that the suspension of production in the fourth quarter of 2013 was in order to transition its supply chain to Tier 1 suppliers, enabling Smith Electric to produce its vehicles at a lower cost.
Sinopoly has Li-ion battery production bases in Jilin and Tianjin. The total designed annual battery production capacity of the Jilin production base is 120 million Ah. The current designed annual battery production capacity of the Tianjin production base is 130 million Ah. A maximum of 1.5 billion to 2.0 billion Ah annual battery production capacity facilities can be built at the Tianjin production site, which will be one of the group’s core production bases in the future.
Sinopoly’s investment in Smith represents an important and strategic advance step in establishing Sinopoly as a significant integrated player in the EV industry. The combined expertise of Smith and Sinopoly, which will adopt the name of FDG Electric Vehicles Limited shortly, along with the macro-subsidy policy for alternative energy vehicles, uniquely positions us to capitalize on the rapidly growing commercial EV market in China and the US.—Cao Zhong, the chairman and executive director of Sinopoly Battery
Sinopoly’s investment in Smith Electric Vehicles marks an important milestone in recapitalizing and restructuring the company in preparation for the public market. This agreement underscores Sinopoly's institutional understanding of the global electric vehicle industry and the company's commitment to working with Smith Electric to create a major player in the market."—Charles Gassenheimer, chairman of the board of Smith Electric Vehicles
Gassenheimer, the former CEO of Li-ion battery company Ener 1, was appointed chairman of Smith Electric Vehicles in April 2014.