Ballard terminates two fuel-cell license agreements with Azure in China; will not hit 2014 revenue and EBITDA targets
Ballard Power Systems has given termination notice on two fuel-cell licensing agreements in the China market as a result of what it said were material breaches of these agreements by Azure Hydrogen. The first license agreement, originally announced on 26 September 2013, is related to the assembly of Ballard’s FCvelocity-HD7 Bus fuel-cell power modules in China for the Chinese market. (Earlier post.) The second license agreement, announced on 19 June 2014, is related to the assembly of Ballard’s ElectraGen Telecom Backup Power systems in China for the Chinese market.
Ballard said that as a result of Azure’s breaches under both contracts, and despite its good faith efforts to reach a settlement, Ballard terminated both contracts and will consider its legal remedies.
Azure’s breaches and the resultant contract terminations will negatively impact the Ballard’s 2014 financial performance. Ballard had previously expected to collect approximately $4.5 million of cash from Azure in 2014 Q4 and had previously expected to recognize additional revenue of more than $3 million under the Azure contracts in 2014 Q4. The Company will not book any revenue under these contracts in 2014 Q4 and expects to record an impairment of approximately $4.5 million for the outstanding receivables owed by Azure.
Ballard said it will not achieve its 2014 revenue and Adjusted EBITDA guidance. Ballard will provide further details on its conference call in late February when it will be discussing its 2014 audited financial statements and 2015 outlook.