FuelCell Energy to acquire Global Thermoelectric for US$80 million in stock
Shareholders Of Both Companies Are Anticipated To Benefit From
Strong Strategic And Technological Synergies.
DANBURY, CT AND CALGARY, AB, Aug. 4 /CNW/ - FuelCell Energy, Inc.
("FuelCell")(NasdaqNM: FCEL), the industry leader in the commercialization of
carbonate fuel cell products for stationary power, and Global Thermoelectric
Inc. ("Global") (TSX:GLE), a leading developer of solid oxide fuel cell
("SOFC") technology, today announced that they have entered into a definitive
agreement for FuelCell to acquire Global in an all-stock transaction. Under
the terms of the agreement, the transaction is valued at US$2.72, or
approximately CDN$3.82, per Global common share for a total value of
approximately US$80 million, or approximately CDN$112 million(1). The proposed
combination has the unanimous support of both companies' boards of directors.
Jerry D. Leitman, Chairman, President and CEO of FuelCell, said, "We
believe that this combination represents an excellent strategic and
technological fit. Global's advanced SOFC technology has a strong
complementary fit with our core carbonate technology and product development
expertise and will also strengthen our position throughout the 10-year,
US$139 million Solid-State Energy Conversion Alliance ("SECA") contract
recently awarded to FuelCell by the US Department of Energy."
Leitman added, "The combined company will also benefit from a
rationalization of R&D and administrative expenses and the consolidation of
financial, technology and intellectual property resources. Additionally, the
combined entity will have improved access to capital and expanded strategic
relationships with distributors, suppliers and government agencies. Further,
and most importantly, we will be well positioned to continue our emphasis on
the commercialization of our Direct FuelCell(R) products."
Peter Garrett, Global's President and CEO said, "The combination of
FuelCell's and Global's leading technologies, resources, and the resulting
market opportunities is fully complementary and will create a stronger new
entity and a very attractive investment. Upon completion of the transaction,
Global shareholders will have the opportunity to own stock in a top tier fuel
cell company with cash reserves in excess of US$200 million (or
CDN$280 million), enhanced equity currency, greater liquidity and better
opportunities for realizing future shareholder value. Given our complementary
technologies and FuelCell's role within SECA, I am confident that the combined
company will have a bright future."
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(1) Based on exchange rate of CDN$1.4048 to US$1 as of close of business
on August 1, 2003
Transaction Terms
-----------------
The exchange ratio for determining the number of shares of FuelCell
common stock or exchangeable shares that a Global shareholder will receive for
each Global share will be equal to US$2.72, or approximately CDN$3.82, divided
by FuelCell's 20-day volume-weighted average share price ending on the third
trading day preceding the Global shareholders meeting to be called to approve
the transaction. However, if the 20-day volume-weighted average trading price
of FuelCell stock is less than US$7.96, the exchange ratio will be 0.342, and
if the 20-day volume-weighted average FuelCell trading price is greater than
US$9.74, the exchange ratio will be 0.279.
Global shareholders will be entitled to elect to receive either shares of
FuelCell common stock or exchangeable shares to be listed on The Toronto Stock
Exchange. The disposition of Global shares in exchange for exchangeable shares
by Canadian residents holding Global shares as capital property will not
result in a taxable Canadian transaction and will qualify as Canadian property
for RRSP, RRIF, RESP and other savings and pension plans as long as the
exchangeable shares remain listed on a Canadian stock exchange. The
exchangeable shares will also have equivalent voting and dividend rights as
FuelCell common stock.
At closing, outstanding options to purchase Global shares will be assumed
by FuelCell and will represent options to purchase FuelCell common stock based
on the transaction exchange ratio and the existing terms of each individual
option agreement.
Following the close of the transaction, Global shareholders will own
approximately 17% to 20% of the fully diluted shares of FuelCell. One person,
possibly two, nominated by Global will be appointed to the board of FuelCell.
The transaction is expected to close in the fourth quarter of 2003 and is
subject to approval by the shareholders of each company, court approval,
regulatory approvals and other customary closing conditions, including mutual
covenants related to cash and working capital positions at closing. The
transaction will be implemented pursuant to a plan of arrangement under the
Business Corporations Act (Alberta). As a result of the proposed combination
with FuelCell, Global has terminated the Combination Agreement dated as of
April 8, 2003, and amended as of June 27, 2003, with Quantum Fuel System
Technologies Worldwide, Inc., and has paid a US$2 million break-up fee in
accordance with the terms thereof.
Where to Find Additional Information
------------------------------------
FuelCell and Global intend to file a Joint Management Information
Circular and Proxy Statement regarding the proposed transaction with the U.S.
Securities and Exchange Commission and the securities commissions or
equivalent regulatory authorities in each of the Provinces of Canada.
Investors and stockholders are urged to carefully read the Joint Management
Information Circular and Proxy Statement when it becomes available because it
will contain important information about FuelCell, Global and the proposed
transaction. Investors and stockholders may obtain a free copy of the proxy
statement when it is available, and all of FuelCell's annual, quarterly and
current reports, at the SEC's web site at www.sec.gov. A free copy of the
Proxy Statement, and all of FuelCell's annual, quarterly and current reports,
may also be obtained from FuelCell by directing a request to Investor
Relations at (203) 825-6000. Global's regulatory filings, including annual and
quarterly reports may be accessed at www.sedar.com or at www.globalte.com. For
further information on Global, shareholders and investors may contact Mark
Kryzan, Director, Corporate Affairs at (403) 204-6100. FuelCell, Global and
their executive officers and directors may be deemed to be participants in the
solicitation of proxies from FuelCell and Global shareholders in favor of the
proposed transaction. Information regarding the security ownership and other
interests of FuelCell's and Global's executive officers and directors will be
included in the Joint Management Information Circular and Proxy Statement.
Lazard acted as financial advisor to FuelCell; Citigroup acted as
financial advisor to Global. Robinson & Cole LLP and Stikeman Elliott LLP
acted as counsel to FuelCell. Bennett Jones LLP and Dorsey & Whitney LLP acted
as counsel to Global.
Conference Call/Webcast
-----------------------
FuelCell and Global will host a conference call and webcast on Tuesday,
August 5, 2003 at 8:30 A.M. (EDT) to discuss the transaction. Investors can
access the call by dialing 877-692-2588 or via live webcast from either
company's website at www.fce.com or www.globalte.com. Webcast participants
should allot extra time before the webcast begins to register and, if
necessary, download and install audio software.
A replay of the call will also be available shortly after the call ends
on August 5, 2003 through August 12, 2003. To access the replay, dial
877-519-4471 and enter 4097030 as the conference ID number. Additionally, the
archived webcast will be available on the company websites for 30 days.
About FuelCell Energy, Inc.
---------------------------
FuelCell Energy, Inc., based in Danbury, Connecticut, is a world leader
in the development and manufacture of highly efficient hydrogen fuel cells for
clean electric power generation, currently offering DFC power plant products
ranging in size from 250 kilowatts to 2 megawatts for applications up to 50
megawatts. FuelCell has developed strategic and commercial distribution
alliances for its carbonate Direct FuelCell technology with MTU CFC Solutions
Gmbh, a subsidiary of DaimlerChrysler AG, in Europe; Marubeni Corporation in
Asia; and Caterpillar, PPL Energy Plus, Chevron Energy Solutions and Alliance
Power in the U.S. FuelCell Energy is developing Direct FuelCell technology for
stationary power plants with the U.S. Department of Energy through their
Office of Fossil Energy's National Energy Technology Laboratory. More
information is available at www.FuelCellenergy.com.
About Global Thermoelectric Inc.
--------------------------------
Global Thermoelectric Inc. (www.globalte.com) is a world leader in the
development of SOFC products. Global is also the world's largest manufacturer
and distributor of thermoelectric stationary power generators for use in
remote locations. Global is developing fuel cell products that are compatible
with natural gas or propane. Global is currently prototyping systems to
address residential and remote applications. Global is listed on The Toronto
Stock Exchange (stock symbol: GLE).
Forward Looking Statements
--------------------------
This press release contains forward-looking statements within the meaning
of the "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. The forward-looking statements contained in this release include
statements about future financial and operating results and the proposed
transaction. These forward-looking statements are based on management's
current expectations and beliefs and are subject to a number of risks and
uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements. The forward-looking statements
are subject to a number of risks, assumptions and uncertainties that could
cause actual results to differ materially from those projected in such forward-
looking statements. These risks, assumptions and uncertainties include: the
risk that FuelCell's and Global's businesses will not be integrated
successfully; costs related to the transaction; failure of FuelCell's or
Global's stockholders to approve the transaction; the satisfaction of closing
conditions including the receipt of regulatory approvals; the failure by
FuelCell to retain key employees of the combined company; the failure by the
combined company to develop, manufacture, market and deliver products within
currently estimated time frames and budgets; the inability to achieve revenues
from combined lines of products; and other risks affecting FuelCell's and
Global's businesses generally as set forth, in the case of FuelCell, in
FuelCell's most recent filings with the Commission. The forward-looking
statements contained herein speak only as of the date of this press release.
FuelCell expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any such statement to reflect any change in
FuelCell's expectations or any change in events, conditions or circumstances
on which any such statement is based.
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