Plug Power Announces Acquisition of General Hydrogen
Acquisition broadens electric lift truck portfolio following recent
acquisition of Cellex Power
LATHAM, N.Y.; RICHMOND, British Columbia, May 7 /PRNewswire-FirstCall/ -- Plug Power Inc. (Nasdaq: PLUG), a leader in providing clean, reliable on-site energy products, today announced the acquisition of General Hydrogen Corporation, a leader in the development and commercialization of fuel cell power units that provide motive power for electric lift trucks and other mobile industrial equipment. Plug Power paid approximately USD 10 million, consisting of approximately USD 7 million in cash and the assumption of USD 3 million in senior secured loans previously made by Plug Power to General Hydrogen, for all of the outstanding capital stock of General Hydrogen. In addition, the shareholders of General Hydrogen received warrants to purchase up to 571,429 shares of Plug Power Common Stock. The warrants become exercisable when Plug Power's Common Stock trades at a volume weighted average price of USD 7.00 or more for 10 consecutive trading days. The warrants carry an exercise price of USD .01 per share and expire four years from the date of issuance. General Hydrogen is located in Richmond, British Columbia, Canada, within close proximity to Cellex Power Products, Inc., another top supplier of fuel cell power solutions for electric lift trucks, which Plug Power acquired last month. Plug Power plans to integrate the two companies into one operation managed by Chris Reid, Cellex Power's current President. "By acquiring both General Hydrogen and Cellex Power, clear leaders in their industry, we expect to realize significant technology and operational synergies as we pursue high-value applications in the material handling market," said Dr. Roger Saillant, Plug Power's President and CEO. "Further, we anticipate that higher volume commercial product manufacturing activities will be established in Plug Power's Latham, N.Y. facility." General Hydrogen's initial product focus has been on the larger class 1 sit-down lift trucks that are typically used in manufacturing operations. Cellex Power has focused its initial product initiatives on class 3 rider pallet trucks primarily used to transport and select goods within large distribution centers before delivery to retail stores. Both companies are developing fuel cell power units for class 2 stand-up reach trucks, which provide flexibility and maximum floor space utilization for large distribution centers. General Hydrogen and Cellex Power are targeting the estimated USD 1.5 billion motive power market in which lead-acid batteries are the incumbent technology. Fuel cell power units allow users to increase productivity and reduce operating costs through a quick hydrogen refueling process that eliminates the need to change batteries repeatedly throughout the day. They also eliminate the environmental and safety issues traditionally associated with lead-acid batteries. "We intend to leverage Plug Power's existing commercial infrastructure and expect to avoid some of the expenditures typically associated with the transition from a pre-commercial to commercial enterprise," said Dr. Saillant. "Given Plug Power's financial and operational strength and the combined fuel cell expertise of the three companies, we expect to accelerate product development for all three classes of electric lift trucks. This enhanced scale and breadth of applications will increase the economic value delivered to our customers while improving our ability to realize meaningful sales volumes." Large lift truck fleet users typically operate at least two of the three electric lift truck classes in their warehouses and therefore require a battery handling system and associated maintenance labor to meet their throughput requirements. Having all three electric lift truck classes in its product portfolio would enable Plug Power to create a much more compelling value proposition by allowing customers to convert the motive power requirements for their entire fleets to proton exchange membrane (PEM) fuel cell technology. Coincident with the acquisition of General Hydrogen, Plug Power has entered into a two-year agreement with Ballard Power Systems Inc. for the purchase of fuel cell stacks for Plug Power's commercial needs with respect to electric lift truck applications, replacing the previous agreement between General Hydrogen and Ballard. The General Hydrogen and Cellex Power products were designed around the Ballard stack and have generated tens of thousands of operating hours to validate reliability and performance. Under the new agreement, Plug Power and Ballard will work together to drive reliable, low- cost solutions that are expected to significantly improve the outlook for fuel cell commercialization of material handling applications. With the Cellex Power and General Hydrogen acquisitions, Plug Power has positioned itself to engage both telecommunications and material handling as attractive near-term markets and central components of the Company's revenue growth strategy. About General Hydrogen Corporation General Hydrogen, which was founded in 1999, is headquartered in Richmond, British Columbia, near Vancouver, and has a sales and service center in Gallatin, Tennessee. It is a private, Delaware-registered company that develops and commercializes fuel cell power units and hydrogen fueling solutions to address the motive power requirements of a variety of electric lift trucks used in material handling applications in indoor manufacturing operations and large-scale distribution centers. General Hydrogen uses fuel cell stacks made by Ballard Power Systems Inc. as a component of its fuel cell power units. For more information, please visit http://www.generalhydrogen.com. About Plug Power Plug Power Inc. (Nasdaq: PLUG), an established leader in the development and deployment of clean, reliable, on-site energy products, currently integrates fuel cell technology into backup power products for telecommunications, utility and uninterruptible power supply applications, as well as motive power products for material handling applications. The Company is actively engaged with private and public customers in targeted markets throughout the world, including North America, Europe, the Middle East, Russia, South Africa and South America. For more information about how to join Plug Power's energy revolution as an investor, customer, supplier or strategic partner, please visit http://www.plugpower.com. Safe Harbor Statement This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to the expected benefits of the Cellex Power and General Hydrogen acquisitions. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward- looking statements, including, without limitation, the risk that the General Hydrogen acquisition is unsuccessful or that the anticipated synergies of the Cellex Power and General Hydrogen acquisitions are not realized, that unit orders will not ship, be installed and/or convert to revenue, in whole or in part; Plug Power's ability to develop commercially viable on-site energy products; the cost and timing of developing Plug Power's on-site energy products; market acceptance of Plug Power's on-site energy products; Plug Power's ability to manufacture on-site energy products on a large-scale commercial basis; competitive factors, such as price competition and competition from other traditional and alternative energy companies; the cost and availability of components and parts for Plug Power's on-site energy products; Plug Power's ability to establish relationships with third parties with respect to product development, manufacturing, distribution and servicing and the supply of key product components; Plug Power's ability to protect its intellectual property; Plug Power's ability to lower the cost of its on-site energy products and demonstrate their reliability; the cost of complying with current and future governmental regulations; the impact of deregulation and restructuring of the electric utility industry on demand for Plug Power's on- site energy products and other risks and uncertainties discussed under "Item IA-Risk Factors" in Plug Power's annual report on Form 10-K for the fiscal year ended December 31, 2006, filed with the Securities and Exchange Commission ("SEC") on March 16, 2007, and the reports Plug Power files from time to time with the SEC. Plug Power does not intend to and undertakes no duty to update the information contained in this press release.
SOURCE Plug Power Inc.
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