HYDROGENICS CORPORATION
100 Caster Ave.
Woodbridge, Ontario L4L 5Y9, Canada
Phone: 905-851-8866
Fax: 905-851-2328
hydrogenics.com
The people at HYDROGENICS hope their products will cell themselves.
The company makes industrial-grade proton-exchange membrane (PEM)
fuel cell automated test stations. HYDROGENICS markets the test stations
under the FCATS name and sells the stations to companies for use in fuel
cell systems and materials development activities. Other products
HYDROGENICS is developing include fuel cells that can deliver reliable,
uninterrupted power in harsh weather conditions, and a fuel cell for
powering a military device that detects chemical and biological agents in the
field. The company has plans for transportation and portable power
applications as well. CEO Pierre Rivard owns 23% of HYDROGENICS.
hoovers.com
Date went public: Oct 27, 2000
Filing Date: Jul 31, 2000
Proposed offer price: $10.00 to $12.00
Actual offer price: $12.00
First day open: $14.00
First day close: $12.25
Shares offered (mil.): 7.0
Offering amount (mil.): $84.0
Post-offering shares (mil.): 35.5
Underwriters:
Salomon Smith Barney
CIBC World Markets
BMO Nesbitt Burns Inc.
Friday October 27, 3:42 pm Eastern Time
Hydrogenics IPO runs then limps on debut
(UPDATE: All figures in U.S. dollars unless noted)
By Ian Karleff
TORONTO, Oct 27 (Reuters) - Fuel-cell testing firm Hydrogenics Inc.
(Nasdaq:HYGS - news) (Toronto:HYG.TO - news) hit the ground running on
Friday as investors bought the shares in the latest offering of a company
exploiting the need for reliable, environmentally friendly energy.
Hydrogenics -- based in Woodbridge, Ontario, near Toronto -- began trading
on Friday on Nasdaq with the first trades at $15, or 25 percent above the $12
offering price, at the top end of the expected range. On the Toronto Stock Exchange it opened at
C$20.50.
A source familiar with the offering said the shares were oversubscribed and ``very well received'' in
North America and Europe, with the majority of interest coming from outside Canada.
But by midday the shares had retreated from their earlier highs, trading up 11/16 at $12-11/16.
Shares in other fuel-cell companies were performing well on Friday with Ballard Power Systems Inc.
(Toronto:BLD.TO - news) up 1 percent, and DCH Technology (AMEX:DCH - news) and FuelCell
Energy (NasdaqNM:FCEL - news) up about 8 percent.
Hydrogenics manufactures automated fuel-cell test stations that monitor and control a fuel cell's
power output, pressure, temperature, humidity and potential contaminants.
Pierre Rivard, Hydrogenics chief executive, told Reuters that his company is focused on helping
development stage fuel-cell companies with their test and control equipment.
``We are focused on the pick and shovel of the fuel-cell industry giving us a unique position in this
multibillion-dollar market,'' said Rivard.
Hydrogenics is also developing a fuel cell for use in harsh environments, specifically one that
operates at minus 40 degrees Celsius. The company said in a prospectus that it plans to deliver
demonstration units in the second half of 2000.
Hydrogenics' largest customers for test stations include General Motors (NYSE:GM - news),
Johnson Matthey Plc (quote from Yahoo! UK & Ireland: JMAT.L), Minnesota Mining and Manufacturing
Co. (NYSE:MMM - news) as well as the U.S. Army.
Peter Tertzakian, analyst at Goepel McDermid Inc. who follows the fuel-cell industry closely, said
Hydrogenics competes with a handful of companies that specialise in testing equipment as well as
the fuel-cell manufacturers themselves.
The company is the latest in a string of recent public entrants to catch investor interest amid a
deregulating energy industry and a heightened need from consumers for reliable and lower cost
energy.
``The way to characterise the industry is it's emerging. It's an early horse race, and investors are
betting on many horses,'' said Tertzakian.
``As we get closer to commercialization, the race will rationalise and the winners and losers will
emerge, so now it's hard to say who the clear winners are going to be,'' he added.
Tertzakian said Hydrogenics' current customer base and the fact that it attracted financing makes it
a ``credible contender in the race.''
Hydrogenics sold 7 million shares in the North American offering for net proceeds of $76.5 million
and said it will use the proceeds for research and development, potential acquisitions and capital
expenditures.
Shares outstanding after the offering total 35.5 million, giving the company a market capitalisation of
$532.5 million based on the opening trading price of $15.
When the offering is complete, Rivard and managers Boyd Taylor and Joseph Cargnelli, will each
own 18.5 percent, with management owning an aggregate 58 percent stake.
Working Ventures Canadian Fund, CIBC Capital Partners and the Micro-Generation Technology
Fund each will own more than 7 percent.
Salomon Smith Barney is the lead underwriter on the deal with CIBC World Markets and Nesbitt
Burns acting as co-managers.
For the first six months of 2000 Hydrogenics earned $83,000 on revenue of $4.5 million, compared
with a loss of $148,000 on sales of $774,000 in the same period of 1999.
Rivard said not only are there visionaries in the Canadian government promoting the industry, but
five universities in the province of Ontario have fuel-cell research programmes, and there is a large
auto industry with a significant base of skills.
``There are very few areas in the world that we know of that have such a fertile university and
manufacturing breeding ground,'' Rivard added.
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