Electric City Corp. and CIT Announce Agreement to Fund Major Growth Initiatives Proceeds to finance world's first virtual "Negawatt" power system targeted for California marketplace
ELK GROVE VILLAGE, Ill., Dec 5, 2000 (BUSINESS WIRE) -- Electric City Corp. (OTC Bulletin Board: ECCC chart, msgs) announced today that it has entered into an agreement with CIT Structured Finance, an operating group of CIT (NYSE: CIT chart, msgs; TSE: CIT.U chart, msgs).
The preliminary funding plan calls for CIT Structured Finance to arrange up to $100 million financing for the Company's first virtual "Negawatt" power system - a revolutionary initiative targeted to the California energy marketplace. CIT has also agreed to finance sales of Electric City's technology through traditional equipment leasing programs and its new Shared Savings Program.
"This financing plan will give Electric City the ability to accelerate the development of our Virtual Negawatt Power Plant (VNPP)," says John Mitola, CEO of Electric City Corp. "By producing Negawatts instead of Megawatts into a deregulated energy market, the VNPP is expected to spearhead rapid growth for our EnergySaver business. We are confident that reducing is better than producing when electric systems are experiencing severe shortages and environmental constraints like those seen in California this year."
The VNPP program calls for an initial phase requiring the installation of approximately 5000 of the Company's EnergySaver units. They will provide up to 200 Megawatts of on-demand, real time electricity demand shedding. In typical applications, the EnergySaver reduces consumption of power in commercial, industrial and municipal lighting systems by 30% while automatically maintaining appropriate lighting levels.
"We are pleased to partner with CIT Structured Finance," Mitola explains. "They have the experience we need having underwritten $1 billion in merchant power projects and have a keen understanding of the electric power industry. CIT co-developed our VNPP concept and created the innovative shared savings program - a program that simplifies the customer contact process. As one of the largest equipment finance companies in the world, CIT also has the ability to provide traditional equipment financing programs to support our customers."
The VNPP and shared savings program are innovative concepts for the energy industry. Using a third party financing vehicle arranged by CIT, Electric City intends to install the EnergySaver at customers' facilities at no charge. Once the system is installed, targeted customers in key energy markets will be able to save energy and reduce their monthly electric bill and share the savings with the financing vehicle. In exchange for their free EnergySaver system, customers allow the Electric City operating company to significantly reduce their demand on peak days, without turning the lights off or creating any negative impact to users. All of this will take place automatically with the use of Electric City's GlobalCommander remote control system. The operator will then use the GlobalCommander controls to provide on demand, large-scale Negawatts for sale to the wholesale energy marketplace.
Unlike most demand side management technologies, the GlobalCommander and EnergySaver can produce Negawatts with real-time measurement and verification and without any complicated participation by the customer. "We are confident our cost to produce Negawatts is below that of new peak generating stations. Furthermore, we do not have any of the negatives associated with power plant development such as fuel and operating costs, difficulties in siting a plant, or any environmental impact," states Mitola.
While Electric City is focusing its initial development in California, it believes there is a strong opportunity to develop its VNPP technology in other energy markets, including select markets in the Northeast and Midwest.
"We believe that Electric City has the right combination of innovative technology and strong leadership required to succeed in today's deregulated energy marketplace," says Guy Piazza, Managing Director of CIT Structured Finance. "Their EnergySaver technology, coupled with the development of the VNPP, has significant possibilities in an era of deregulation and the growing need for environmentally friendly and cost effective power sources. We believe that the system has great potential in California's current energy marketplace, setting the stage for growth throughout the industry."
As a result of their arrangement with CIT, Electric City will soon be announcing details of the startup of its operations in California.
CIT is focusing its efforts on the E-Tech industry and further developing the shared savings program to expand its power and energy financing practice. Many of the new E-Tech entrants have excellent products but are finding that their customers are more likely to buy if the financing is pre-arranged and accomplished through the savings that the technology produces.
About CIT
Founded in 1908 and with over $50 billion in total managed assets, CIT (www.cit.com) is the largest publicly owned commercial finance organization. CIT Structured Finance is one of six operating groups of CIT . Fortune magazine named CIT one of America's Most Admired Company's in February 2000. InformationWEEK Magazine ranks CIT #2 in its annual survey of top 500 companies using innovation in IT.
About Electric City Corporation
Electric City is a leading developer, manufacturer and integrator of energy savings technologies and custom electric switchgear. The Company currently markets the EnergySaver, the GlobalCommander and custom switchgear. Electric City is based in Elk Grove Village, Illinois and is traded under the symbol ECCC. Additional information is available at the Company's website at www.electriccityeccc.com
This news release includes forward-looking statements that reflect Electric City's current expectations about its future results, performance, prospects and opportunities. Electric City has tried to identify these forward-looking statements by using words and phrases such as "may," "will," "expects," "anticipates," "believes," "intends," "estimates", "should", "typical", "we are confident" or similar expressions. These forward-looking statements are based on information currently available to Electric City and are subject to a number of risks, uncertainties and other factors that could cause Electric City's actual results, performance, prospects or opportunities in the remainder of 2000 and beyond to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, without limitation, the actual financial impact of the virtual Negawatt plant concept and the venture's ability to close the financing required to launch the effort. For further information about these and other risks, uncertainties and factors, please review the disclosure included under the caption "Risk Factors" in Electric City's filings with the Securities and Exchange Commission. Except as required by the federal securities laws, Electric City undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this news release.
Contact:
Electric City Corporation
Greg Rice
847/437-1666
grice@electriccityeccc.com
or
CIT
Stephanie MacDonald
416/507-5239
stephanie.macdonald@cit.com
or
Stanton Crenshaw, for CIT
Kara DiCamillo
203/359-8772
kdicamillo@stanton-crenshaw.com
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