For educational use

http://www.corporatefinancingweek.com/cfw/article.html?NOAUTH=1&SECTION=inthenews&XP_TABLE=current&XP_RECORD=966008556

August 14, 2000 VOL. XXVI, NO. 33

BANKERS BRACING FOR FUEL CELL COMPANY BOOM. Vanessa VanderZanden

Bankers are bracing for a wave of fuel cell companies, which are currently in the final stages of researching and developing more efficient ways of producing energy, to hit the capital markets. Many such companies will commercialize in the next year, and then will need large capital injections to fuel growth. Its a hot area, said one banker. Its brand new in the last year. So far theres no leader in terms of an investment bank in the industry. A lot of banks are chasing the business, the banker said. Fuel cells are expected to be used in everything from automobiles to household electricity. One company, FuelCell Energy, is seeking to tap either the debt or equity markets soon.

The second half of the year will see many of these companies going public, the banker added. Two companies came to market just last week. Millennium Cell, a fuel cell enabling company, raised $300 million and H Power, a fuel cell company, raised $1 billion. The banker said most companies issuing IPOs in the coming months will raise amounts within that range. Bankers decline to name potential companies planning deals. Everybody that wants to sell these products will have to mass produce them which will be a capital intensive project, said Paul Freemont, electricity analyst at Jefferies & Co. Most companies will have products out and running strong by 2004 and 2005, Freemont said. He added that while many new companies will issue stock, funding will come from a variety of markets.

[FuelCell Energy is] growing like crazy, increasing capacity for production, said a FuelCell spokeswoman. We may not come to market until 2002, but if we sense the market is ready it could be as soon as four months from now, she said. The Danbury, Conn.-based developer of a carbonate fuel cell system, called the Direct FuelCell System, will concentrate foremost on the construction of a new 65,000 square foot facility in Torrington, Conn., as well as other projects which the spokeswoman would not disclose. The Torrington facility is expected to be completed at the end of January. After that point, the company will look to commercialize and no longer receive funds from the Department of Energy.

The company has not yet chosen banks to lead a deal and the spokeswoman said it is too early to tell what will play determining factors in the decision process. She could not provide a ball park range for how much money the company will look to raise and could not speculate on what would affect how FuelCell chooses one financing package over another. There are no specific numbers in the market the company will seek before.

Ballard Power Systems and Plug Power began the financing craze earlier this year and remain the two leading names in the industry. The U.S. government has stipulated that by 2003, vehicles need to operate with 0 emissions, which is currently only possible through fuel cells. Cars running on gasoline use only about 25% of the available energy, while fuel cells reap 75% of the available energy, said the banker. These more efficient sources will draw hydrogen out of oil products at factories as opposed to in each individual vehicle, enabling disposal of the polluting by-products on site, rather than spreading the waste over a vast expanse through car exhaust pipes.

-- K (infosurf@yahoo.com), August 17, 2000

Answers

Ballard

Yeah!!

-- Rachel Gibson (rgibson@hotmail.com), August 17, 2000.