Plug Power Gets Russian Investment; Shares Surge 23%

Plug Power Inc. (PLUG), the developer of electricity-producing fuel cells, said it will get a $217 million investment from a Russian hydrogen-power venture that expects to own 35 percent of the company eventually. Plug Power's shares climbed 23 percent.

Smart Hydrogen, a joint venture of investment firm Interros Co. and Norilsk Nickel, will receive new stock that may be converted into 39.5 million common shares, representing a 31 percent stake, Plug Power said today in a statement.

Interros and Norilsk, the world's biggest nickel and palladium miner, bought 2.7 million shares of Latham, New York- based Plug Power from General Electric Co. (GE) in December and plan to buy 1.8 million shares from DTE Energy Foundation. Smart Hydrogen will own 35 percent of Plug Power when the investments are completed in June.

``Russia has had a long-standing commitment in hydrogen technology that goes back to the space program in the 1950s,'' Chief Executive Officer Roger Saillant said during a conference call.

Plug Power shares rose $1.10 to $5.98 as of 4 p.m. New York time in Nasdaq Stock Market trading after climbing as high as $6.45.

Norilsk's CEO Mikhail Prokhorov said in an e-mailed statement the deal would stimulate demand for palladium, which is used in hydrogen technology, and allow the company to expand into high-technology manufacturing.

Option for More

Interros's Deputy General Director Sergei Batekhin said at a press conference in Moscow the deal includes an option for Smart Hydrogen to increase its holding within five years.

Smart Hydrogen will have the right to appoint as many as four of Plug Power's 11 directors, Plug Power said. Plug Power will have $285 million in cash and securities to expand its business, Saillant said in a statement. If the DTE purchase falls through, Plug Power will issue $10 million in new shares, the company said.

The investment provides marketing opportunities in Russia, Europe and Asia, Saillant said. Its effect on sales is ``uncertain.''

``We have had a constrained mindset,'' Saillant said. ``This allows us to look at breadth and scope.''

Plug Power also gains a partner that can supply palladium for use in hydrogen purification and platinum, a main catalyst in fuel cells, Saillant said.

Smart Hydrogen contacted Plug Power in December, Chief Financial Officer David Neumann said.

``They wanted to make a significant minority investment,'' Neumann said. ``By going to 35 percent, they could meet their desire to have a meaningful stake in Plug Power and show their commitment to the company.''

To contact the reporter on this story: Nancy Kercheval in Washington at nkercheval@bloomberg.net.

To contact the editor responsible for this story: Glenn Holdcraft at gholdcraft@bloomberg.net.

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