Highpower International Enters Into Equity Tranfer Agreement
Highpower International, Inc. (NASDAQ: HPJ) ("Highpower" or the "Company"), a developer, manufacturer, and marketer of lithium ion and nickel-metal hydride (Ni-MH) rechargeable batteries, battery management systems, and a provider of battery recycling, today announced that its wholly-owned subsidiary, Huizhou Highpower Technology Co., Ltd ("Huizhou Highpower"), has entered into an equity transfer and capital increase agreement ("Agreement") whereby Huizhou Highpower will sell most of its shares of Huizhou Yipeng Energy Technology Co., Ltd. ("Yipeng"), an electric vehicle power battery system solutions provider specializing in the plug-in hybrid electric vehicle (PHEV) and electric vehicle (EV) bus market in China, to Xiamen Jiupai Yuanjiang New Power Equity Investment Partnership ("New Power") for an aggregate consideration of RMB71.0 million (approximately $10.3 million).
Pursuant to the terms of the Agreement, the Company will receive RMB71.0 million (approximately $10.3 million) in cash for the transfer of 29.58% of equity of Yipeng. In connection with the transfer, the Company will also receive approximately RMB50 million (approximately $7.3 million) in outstanding accounts receivable due from Yipeng. To date, the Company has invested a total of approximately RMB65 million (approximately $9.4 million, including $6.5 million in equipment) in Yipeng. New Power will also make an additional equity investment of RMB60 million (approximately $8.7 million) in Yipeng based on Yipeng's post valuation of RMB300 million (approximately $43.6 million). As a result of the equity transfer and New Power's additional investment, Huizhou Highpower's equity ownership of Yipeng will decrease from 35.4% to 4.654%.
Highpower's potential benefits from the transaction include:
- Approximately RMB20 million (approximately $2.9 million) of potential investment income from 2016;
- Approximately RMB45 million (approximately $6.5 million) of investment in equipment will be returned in cash;
- Yipeng will pay to Huizhou Highpower approximately RMB50 million (approximately $7.3 million) related to outstanding accounts receivable; and
- With the cash received from the transaction, Highpower plans to invest more capital in R&D as well as additional production capacity for batteries, including power cells for electric vehicles.
Mr. George Pan, Chairman and CEO of Highpower International, commented, "We are pleased to have entered into an agreement to transfer our equity interest in Yipeng to New Power. Highpower's competitive edge lies in our cell technology and manufacturing capabilities, and we are deeply focused on strengthening our core cell business including Ni-MH and Li-ion batteries. Power solutions are becoming the main bottleneck of the rapidly developing EV and energy storage devices, and cells are the core focal point for emerging power solutions. We believe we are wellpositioned to capture the opportunities associated with the growing demand for high-quality cells, which we consider to be our principal strength."