HHP Summit 2017

Westport Reports Cartesian Financing

January 12, 2016 in Companies, investments, NGVs by Rich Piellisch  |  No Comments

As Much as $71.3 Million from Global Private Equity Firm
‘Removes Any Concern Regarding Westport’s Balance Sheet’

Westport Innovations said Monday that it’s entered into an agreement with New York’s Cartesian Capital Group for as much as $71.3 million in financing.

“The financing agreement immediately provides $17.5 million in non-dilutive capital with up to $53.8 million in additional capital contingent on reaching key milestones and establishing new investment opportunities,” Westport said, with a contingent payment derived substantially from future HPDI/high pressure direct injection product sales.

Westport CEO David Demers

Westport CEO David Demers

Cartesian managing partner and founder Peter Yu will be appointed to the Westport board.

Key Stipulations

Westport cites four key investment tranches:

  • $17.5 million immediately, in consideration for an innovative technology income streaming facility: contingent payments to Cartesian are based on a percentage of amounts received by Westport on select HPDI and joint venture products in excess of agreed thresholds through 2025.
  • $17.5 million in convertible debenture notes: The convertible debenture notes, expected to close upon completion of the Fuel Systems Solutions (FSYS) merger scheduled for mid-February, feature a 9% coupon, a 4.5 year term, and are convertible into newly issued shares of Westport at $2.31 per share – a 51% premium to Friday, January 8th’s closing price. Fifty percent of the convertible debenture notes may be converted into equity at Westport’s election if, after two years, the share price is greater than $4.62 for 20 out of 30 days and reflects more than $3 million in average daily trading volume.
  • $16.3 million through the sale of assets: Westport has agreed to sell $16.3 million in assets to Cartesian, subject to final due diligence, and expects this transaction to be completed by May 30th. Details of the assets will be disclosed upon completion.
  • $20 million in additional streaming capacity: Cartesian has committed up to an additional $20 million to Westport to support two or more product development ventures as may be agreed upon between the parties. The new streaming facilities would provide development funding for Westport in exchange for a contingent payment on products developed by the new ventures.

The investment agreement also provides for Westport to receive 30% of gains realized by Cartesian if certain return thresholds are met.

“This financing creates a solid financial foundation and clear path to the commercial launch of key products,” Westport CEO David Demers said in a release. “It also removes any concern regarding Westport’s balance sheet.”

Low Oil Price ‘Has Masked the Importance of Methane’

“The commitment from Cartesian signifies the importance of natural gas to the environment and ratifies that short-term energy market volatility has masked the importance of methane as a transport fuel,” Demers said.

“The natural gas engine and vehicle industry has a compelling future and Westport represents a key part of that future. This financing will be a critical part our of our success.”

‘An Industry that Is Essential’

“The pending merger with Fuel Systems Solutions, combined with this financing agreement, creates a formidable global force in the natural gas engine and vehicle market. With the financing behind us and the merger progressing towards completion, we can increase our focus on streamlining operations, investing in innovative technology and launching key products into attractive markets,” Demers added.

According to Yu, as quoted in the Westport announcement, Westport’s proven technology, unmatched innovation capabilities, and world-class management will continue to lead and drive the natural gas engine industry – an industry that is essential for sustainable global growth.”

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Source: Westport Innovations with Fleets & Fuels follow-up

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