FuelCell Energy Announces Manufacturing Agreement With Partner, POSCO Energy
*$26 million license payment for manufacturing rights
*POSCO Energy to pay royalties for each fuel cell power plant sold over the
next 15 years
DANBURY, Conn., Nov. 5, 2012 (GLOBE NEWSWIRE) -- FuelCell Energy, Inc.
(Nasdaq:FCEL), a global leader in the design, manufacture, operation and
service of ultra-clean, efficient and reliable fuel cell power plants, today
announced the execution of a series of strategic initiatives with its South
Korean partner, POSCO Energy, to expand the market for stationary fuel cell
power plants in Asia, including a license agreement for POSCO Energy to
manufacture Direct FuelCell® (DFC®) power plants in South Korea and sell
throughout Asia. POSCO Energy is Korea's largest independent power producer
and is a subsidiary of POSCO, a leading global steel producer.
"With growing demand in South Korea and strong interest in Asian markets for
ultra-clean distributed power generation, manufacturing in South Korea is
necessary to meet customer expectations of lead times and costs," said
Jung-Gon Kim, Senior Vice President, POSCO Energy. "Local manufacturing is a
cornerstone of our growth plans in South Korea and we will continue to work
closely with FuelCell Energy to develop other Asian markets."
The Cell Technology Transfer and License Agreement provides POSCO Energy the
rights to manufacture carbonate fuel cell components in South Korea based on
DFC technology and grants commercial rights to Asian markets. The agreement
harmonizes two prior license agreements so that POSCO Energy has rights to
manufacture the entire carbonate DFC power plant.
"This license agreement enables our partnership to expand global market growth
while leveraging our respective capital and local production capacity," said
Chip Bottone, President and Chief Executive Officer, FuelCell Energy, Inc.
"POSCO Energy will manufacture in South Korea for the South Korean market and
export markets in Asia."
A production facility will be built at the POSCO Energy campus in Pohang,
South Korea to produce up to 140 megawatts of fuel cell components annually,
with equipment initially procured for an expected annual production volume of
70 megawatts. Construction will begin in early 2013 and fuel cell component
production is expected to start in late 2014 or early 2015. FuelCell Energy
will collaborate with POSCO Energy under the license agreement to provide
design and procurement assistance for the facility. POSCO Energy has already
invested in fuel cell module assembly capabilities and balance of plant
manufacturing at its Pohang campus.
"A second source of global supply and production capacity for our DFC fuel
cell modules is important to project investors and customers," commented
Michael Bishop, Chief Financial Officer, FuelCell Energy, Inc. "This licensing
agreement is a key development milestone for accelerating global expansion of
highly efficient and environmentally friendly fuel cell power plants."
The License Agreement payments total $18 million and the amendment to prior
agreements totals $8 million. The initial payment of $10 million was received
on November 1, 2012. POSCO Energy will also pay a 3.0 percent royalty to
FuelCell Energy for each power plant built and sold by POSCO Energy during the
next 15 years. This royalty is expected to develop into a consistent and
growing revenue stream as the Asian fuel cell market expands. The license
agreement may be extended for two additional terms of five years each by
DFC power plants excel at solving energy, environmental and business problems
by providing ultra clean, efficient and reliable distributed power generation
solutions. Direct FuelCells combine a fuel such as natural gas or renewable
biogas with oxygen from the ambient air to efficiently produce ultra-clean
electricity and usable high quality heat through an electrochemical process.
DFC power plants emit virtually no pollutants due to the absence of
combustion. Avoiding the emission of nitrogen oxide (NOx), sulfur dioxide
(SOx) and particulate matter supports clean air regulations and benefits
public health. The high efficiency of the fuel cell power generation process
reduces fuel costs and carbon emissions, and producing both electricity and
heat from the same unit of fuel further supports favorable economics while
also promoting sustainability.
POSCO Energy is a wholly owned subsidiary of POSCO, a leading global steel
producer headquartered in Pohang, South Korea. With annual revenues of
approximately $1.8 billion in 2011, POSCO Energy is the largest independent
power producer in South Korea with power generation assets that provide power
to POSCO and to the electric grid. POSCO Energy also develops and sells new
and renewable power generation facilities and owns power generation assets in
Southeast Asian countries including Indonesia and Vietnam as well as a solar
park in Nevada, USA. The parent, POSCO, is publicly held, trading on the
Korean Stock Exchange under the symbol 005490 and on the New York Stock
Exchange under symbol PKX.
About FuelCell Energy
Direct FuelCell® power plants are generating ultra-clean, efficient and
reliable power at more than 50 locations worldwide. With approximately 300
megawatts of power generation capacity installed or in backlog, FuelCell
Energy is a global leader in providing ultra-clean baseload distributed
generation to utilities, industrial operations, universities, municipal water
treatment facilities, government installations and other customers around the
world. The Company's power plants have generated more than one billion
kilowatt hours of ultra-clean power using a variety of fuels including
renewable biogas from wastewater treatment and food processing, as well as
clean natural gas.For more information please visit our website at
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The FuelCell Energy, Inc. logo is available
This news release contains forward-looking statements, including statements
regarding the Company's plans and expectations regarding the continuing
development, commercialization and financing of its fuel cell technology and
business plans. All forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
projected. Factors that could cause such a difference include, without
limitation, whether the Company is able to reach definitive agreements on the
terms contemplated in the memorandums of agreement with POSCO Energy, general
risks associated with product development, manufacturing, changes in the
regulatory environment, customer strategies, potential volatility of energy
prices, rapid technological change, competition, and the Company's ability to
achieve its sales plans and cost reduction targets, as well as other risks set
forth in the Company's filings with the Securities and Exchange Commission.
The forward-looking statements contained herein speak only as of the date of
this press release. The Company expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any such statement
to reflect any change in the Company's expectations or any change in events,
conditions or circumstances on which any such statement is based.
Direct FuelCell, DFC, DFC/T, DFC-H2 and FuelCell Energy, Inc. are all
registered trademarks of FuelCell Energy, Inc. DFC-ERG is a registered
trademark jointly owned by Enbridge, Inc. and FuelCell Energy, Inc.
CONTACT: FuelCell Energy, Inc.
Kurt Goddard, Vice President Investor Relations
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