VRB Power Signs LOI to Acquire Reliable Power and Exclusive Technology Rights from Sumitomo Electric Industries
Wednesday April 27, 9:30 am ET
VANCOUVER, April 27 /CNW/ - VRB Power Systems Inc. (TSX-V: VRB - News) is pleased to announce the signing of a Letter of Intent to acquire Reliable Power Inc. ("Reliable Power"), a privately held Washington DC based company. Upon closing, this acquisition consolidates the key VRB technology suppliers, provides VRB Power with exclusive manufacturing and supplier rights to Sumitomo Electric Industries' VRB technology and will significantly lower VRB Power's cost of the 42kW VRB cell stacks.
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In February 2000, Sumitomo Electric Industries ("SEI") of Japan acquired a patent license to the VRB technology from Pinnacle VRB Ltd. Prior to this, SEI had been developing the VRB technology for approximately 10 years. Much of SEI's development efforts extended to the key component of the VRB technology - the 42kW VRB cell stack. VRB Power purchased these large cell stacks from SEI, the only manufacturer and supplier in the world, which are currently in use in the PacifiCorp Castle Valley facility. In the past 5 years, SEI has completed 16 operational VRB systems in Japan which include peak shaving, utility and renewable energy storage applications.
Reliable Power (www.reliablepowerinc.com) was formed in December 2000, and was to serve as an extension of SEI's marketing efforts of the SEI-VRB Technology in North America. In April 2004, Reliable Power negotiated a technology transfer and exclusive patent license agreement with SEI allowing Reliable Power to make, use and sell the SEI-VRB technology in North America, Mexico and the Caribbean. One of the key aspects of this technology transfer was that it gave Reliable Power the ability to manufacture SEI's 42kW VRB cell stacks in North America.
"The acquisition of Reliable Power is of significant strategic importance", states Tim Hennessy, CEO of VRB Power. "This acquisition consolidates the key VRB technology suppliers in the world into one main global provider. SEI's many years of cell stack development work will be brought in-house, allowing VRB Power to rapidly manufacture SEI's 42kW cell stacks locally in our Richmond facility. This will significantly reduce VRB Power's current cost of the 42kW VRB cell stacks otherwise purchased from SEI. The knowledge of efficient, low cost mass manufacturing acquired in October 2004 from Regenesys and VRB Power's own internal development work will be incorporated with the SEI-VRB technology - resulting in internal production capabilities of optimized, low cost and high quality 42kW VRB cell stacks".
"Reliable Power has chosen VRB Power as a strategic suitor for the acquisition of the SEI technology because of their knowledge and expertise in the North American and European energy markets," said John Venners, President of Reliable Power. "Amalgamating the efforts of SEI, Sumitomo Corporation, Reliable Power and VRB Power will greatly accelerate the market opportunity regarding the VRB Technology."
This acquisition will also provide VRB Power with detailed, long-term technical performance and operational data from the significant number of existing SEI installations and variety of applications. As well, SEI's years of materials testing and experience will provide VRB Power with life cycle performance data on the various elements within the VRB system, information that cannot otherwise be obtained rapidly. This information will also be utilized as an important component of VRB Power's sales and marketing efforts to demonstrate the credibility and viability of the VRB technology to potential customers.
In support of this acquisition, SEI has agreed to expand on the existing license under the current Reliable Power agreement to now include a world-wide license to SEI's patents and technology (excluding Japan). VRB Power's license is subject to royalty payments, with minimum annual royalty targets to maintain exclusivity provisions.
"SEI is pleased to support Reliable Power and VRB Power in this consolidation and focusing of efforts relating to the VRB Technology. This acquisition will now provide clarity to prospective purchasers and accelerate efforts in cost reductions of the VRB technology", states Masanori Hara, General Manager, Business Planning, VRB Department of SEI.
Terms of the Reliable Power acquisition include, subject to regulatory acceptance, compensation of $2.5MM USD in units of VRB Power and payment of $500,000 USD in cash. Each unit will be comprised of one common share plus one common share purchase warrant. Three common share purchase warrants will entitle the holder to acquire two VRB Power common shares for a period of one year. Pricing of the shares will be determined by a 10 day trailing average prior to completion. Pricing of the share purchase warrants will be fixed at a 25% premium above the deemed share purchase price. A majority of the shares will be subject to a contractual one year hold period and released 25% quarterly thereafter. The balance will be subject to a contractual six month hold period. The purchase price of Reliable Power may increase by up to $350,000 USD, payable in common shares, if certain ongoing negotiations regarding royalty rates and extended exclusivity provisions are successful.
The Definitive Agreements between VRB Power and Reliable Power are currently being drafted and the transaction is expected to close in approximately 2 weeks. The terms of the Letter of Intent are subject to the execution of the Definitive Agreement and completion of due diligence by VRB Power.
About Sumitomo Electric Industries
Sumitomo Electric Industries, located in Osaka, Japan, was established in 1897. SEI's primary business includes the manufacturing and sales of electric wires and cables. SEI currently employs approximately 5,000 people and is a publicly listed company on the Tokyo Stock Exchange. www.sei.co.jp
About VRB Power
Based in Vancouver, B.C. Canada, VRB Power Systems Inc. ("VRB Power") is an electrochemical energy storage company that has commercialized the patented Vanadium Redox Battery Energy Storage System ("VRB-ESS") and has acquired the intellectual property rights and assets comprising the Regenesys Energy Storage System ("RGN-ESS") for the purpose of developing similar but larger scale flow battery systems. Both technologies represent a new enabling capability to effectively store electricity on demand. They can provide direct economic benefits to utilities and end users in terms of improved power quality, reliability and energy efficiency. They are particularly well suited to load levelling (peak shaving), electrical power arbitrage, grid stability enhancements, capital deferment and Remote Area Power Supply (RAPS) applications. The company is primarily focused on stationary power sources such as utility substations, commercial buildings, production facilities, telecommunication operations, cellular radio sites, and renewable resource generation such as wind farms - creating the ability to provide "firm" capacity. As a "green" technology, the VRB-ESS is characterized by very low ecological impact unlike most other conventional energy storage systems that rely on toxic substances such as lead, zinc or cadmium. VRB Power is publicly listed on the TSX Venture Exchange ("VRB") and the OTC Pinksheets ("VRBPF").
Warning: The Company relies upon litigation protection for
"forward-looking statements"
"The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release"
Vince Sorace
President, VRB Power Systems Inc.
newswire.ca
For further information
VRB Power Systems Inc., (604) 697-8820
Or visit the company's web site at: www.vrbpower.com
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Source: VRB Power Systems Inc.
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