FuelCell Surges on Biggest Order to South Korea’s Posco
FuelCell climbed 13 percent to $1.03 at the close in New York, the most since Feb. 22.
Posco (005490), South Korea’s largest steelmaker and FuelCell’s top shareholder, will pay $181 million for 121.8 megawatts of power plants, the Danbury, Connecticut-based company said today in a statement.
Posco is also licensing the technology to make fuel cells to sell in Asia, providing a “second source of global supply and production capacity,” FuelCell Chief Financial Officer Michael Bishop said in a separate statement.
“This licensing agreement is a key development milestone for accelerating global expansion” of fuel cells, Bishop said.
The deal builds upon a 2009 licensing agreement that had Posco assembling fuel cells to sell in Asia. FuelCell received a $10 million payment on Nov. 1 as part of an amended licensing agreement totaling $26 million, and will get a 3 percent royalty fee for power plants built and sold by Posco for 15 years.
FuelCell’s systems use a chemical reaction to produce electricity from natural gas or methane. Gyeongbuk, South Korea- based Posco is FuelCell’s largest customer and owns a 17 percent stake, according to data compiled by Bloomberg.
The steelmaker will begin construction next year on a fuel- cell factory at its Posco Energy unit’s facility in Pohang, South Korea. The company plans to produce as much as 140 megawatts of fuel-cell components a year at the site, starting by early 2015, according to the statement.
The systems Posco agreed to buy in today’s deal will be produced at FuelCell’s factory in Torrington, Connecticut.
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