Ballard Power Systems (TSX: BLD; NASDAQ: BLDP) announced Tusday that it sold the remaining stake in the automotive fuel cell business that it developed to an unnamed financial institution.
Ballard chose to monetize its rights under the Share Purchase Agreement with Ford Motor Company (NYSE: F) relating to Ballard's 19.9% equity interest in Automotive Fuel Cell Cooperation Corp. (AFCC).
Ballard will receive total gross proceeds of approximately $44.5 million: a $37 million payment immediately and a further contingent payment of $7.5 million due upon maturation of the Share Purchase Agreement on or before January 31, 2013. Ballard's receipt of the contingent payment is subject to the financial institution's rights in the transaction remaining unsubordinated.
Ballard sold the majority of AFCC to Ford and Daimer AG (NYSE: DAI) in the beginning of 2008.
Bruce Cousins, Ballard's Chief Financial Officer said, "Given the recent improvement in public debt market conditions and Ford's credit rating, we believe that this is the appropriate time to monetize this non-core investment."
John Sheridan, Ballard's President & CEO said, "The cash proceeds from this transaction bolster Ballard's strong balance sheet and strengthen our positioning to execute our clean energy growth priorities in backup power, supplemental power, distributed generation and motive power applications."
Ballard expects to book a gain associated with this transaction of approximately $34 million in its fourth quarter results. This transaction does not affect Ballard's business relationships with AFCC, Daimler, Ford, and their affiliates. Ballard will continue to supply technical services and fuel cell components and modules.
As part of the monetization agreement, Ballard has pledged its shares in AFCC and assigned its right to "put" or sell those shares to Ford for $65 million plus interest after January 31, 2013. The value of the monetization of the agreement with a financial institution was determined based on a number of variables, including Ford's cost of borrowing, expected future London Interbank Offered Rates (LIBOR), time remaining to the Share Purchase Agreement's maturity date and general market and other conditions. All required approvals from Daimler AG, Ford and AFCC were received prior to the closing of this transaction. Ballard's intellectual property rights are unaffected by this transaction.
Daimler Supply Agreement
In a separate release, Ballard announced a supply agreement with Daimler AG for FCvelocity(TM) fuel cell products for Daimler AG's fuel cell car and bus programs.
Ballard said the agreement provides for minimum revenue of approximately $24 million over eighteen months from April 2010, with roughly equal distribution in 2010 and 2011.