Power Solutions International Announces Strategic Investment and Collaboration Agreement With Weichai America Corp.
Significantly strengthens Power Solutions financial position with new equity capital and establishes substantial strategic growth and cost savings opportunities
The two companies have also agreed to a strategic collaboration agreement under which they will work together to accelerate market penetration opportunities for each company's respective product lines across various geographic markets and end user segments. Through the alliance, PSI will gain access to Weichai's international manufacturing facilities and supply chain network.
The alliance will provide significant strategic benefits to PSI by leveraging Weichai's strengths and capabilities in engine research and development, manufacturing capabilities, procurement, distribution and extensive sales channels in
Under the terms of the strategic collaboration agreement, PSI and Weichai have identified specific areas of initial cooperation including the development of engines for stationary natural gas applications based on Weichai's base engines, the identification of suitable Weichai products to be developed for sale in
As part of the agreement, Weichai America will purchase 2,728,752 newly issued shares of Common Stock of PSI at
If the Preferred Stock has not been automatically converted into Common Stock within 180 days after the closing date (the "Accrual Date"), holders of Preferred Stock shall be entitled to participate equally and ratably with the holders of shares of Common Stock in all dividends on the shares of Common Stock as if the Preferred Stock were converted into shares of
Common Stock. Following the Accrual Date, the holder of Preferred Stock shall be entitled to quarterly cumulative dividends at the annual rate of 10 percent of the
Additionally, Weichai America will be issued a stock purchase warrant upon the closing date which will have a limited exercise window of 90 days beginning on the eighteen month anniversary of the date of issuance. The warrant is exercisable for 4,055,709 shares of Common Stock, or such number of additional shares of Common Stock such that upon exercise Weichai America holds an aggregate number of shares of Common Stock equal to 51 percent of the total Common Stock outstanding. The warrant will be exercisable at a price per share of Common Stock equal to 85 percent of the VWAP during the preceding 20 consecutive trading day period prior to exercise,
or 50 percent of such preceding VWAP price if the Company is delisted from Nasdaq. The exercise price is subject to further reduction pursuant to a formula that provides for such adjustment in case the Company's 2017 adjusted EBITDA is less than
Strengthened Financial Position and Capital Structure
On the date of closing, the size of the Company's board of directors will be increased to seven and the Company will appoint as directors two individuals designated by Weichai America, one of whom will be chairman of the board. Thereafter, at the next annual meeting of Company stockholders the Company will nominate three individuals designated by Weichai America, one of whom will be chairman of the board.
In addition, PSI and Weichai will establish a steering committee to oversee the implementation of the strategic collaboration, comprising three top-level executives from each company. The committee will provide strategic direction and make informed decisions regarding the direction, management and implementation of the collaboration projects.
Timing and Conditions to Close
The closing is anticipated to occur no later than
About Power Solutions International, Inc.
PSI develops and delivers powertrains purpose built for the Class 3 through Class 7 medium duty trucks and buses for the North American and Asian markets, which includes work trucks, school and transit buses, terminal tractors, and various other vocational vehicles. In addition, PSI develops and delivers complete industrial power systems that are used worldwide in stationary and mobile power generation applications supporting standby, prime, distributed generation, demand response, and co-generation power (CHP) applications; and mobile industrial applications that include forklifts, aerial lifts, industrial sweepers, aircraft ground support, arbor, agricultural and construction equipment. For more information on PSI, visit www.psiengines.com.
Founded in 2002,
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements, regarding the current expectations of the Company about its prospects and opportunities. These forward-looking statements are covered by the "Safe Harbor for Forward-Looking Statements" provided by the Private Securities Litigation Reform Act of 1995. The Company has tried to identify these forward looking statements by using words such as "expect," "contemplate," "anticipate," "estimate," "plan," "will," "would," "should," "forecast," "believe," "outlook, " "guidance," "projection," "target" or similar expressions, but these words are not the exclusive means for identifying such statements. The Company cautions that a number of risks, uncertainties and other factors could cause the Company's actual results to differ materially from those expressed in, or implied by, the forward-looking statements, including, without limitation, the final results of the Audit Committee's internal review as it impacts the Company's accounting, accounting policies and internal control over financial reporting; the reasons giving rise to the resignation of the Company's prior independent registered public accounting firm; the time and effort required to complete the restatement of the affected financial statements and amend the related Form 10-K and Form 10-Q filings; the Nasdaq Hearing Panel's decision and inability to file delinquent periodic reports within the deadlines imposed by Nasdaq and the potential delisting of the Company's Common Stock from Nasdaq and any adverse effects resulting therefrom; the subsequent discovery of additional adjustments to the Company's previously issued financial statements; the timing of completion of necessary re-audits, interim reviews and audits by the new independent registered public accounting firm; the timing of completion of steps to address and the inability to address and remedy, material weaknesses; the identification of additional material weaknesses or significant deficiencies; risks relating to the substantial costs and diversion of personnel's attention and resources deployed to address the financial reporting and internal control matters and related class action litigation; the impact of the resignation of the Company's former independent registered public accounting firm on the Company relationship with its lender and trade creditors and the potential for defaults and exercise of creditor remedies and the implications of the same for its strategic alternatives process; the impact of the previously disclosed investigation initiated by the
Actual events or results may differ materially from the Company's expectations. For a detailed discussion of factors that could affect the Company's future operating results, please see the Company's filings with the
Power Solutions International, Inc. Jeremy LessarisVP of Global Marketing & Communications+1 (630) 350-9400 firstname.lastname@example.org Power Solutions International, Inc. Philip KranzDirector of Investor Relations +1 (630) 451-5402 Philip.Kranz@psiengines.com
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