FOR IMMEDIATE RELEASE
CONTACT: James Spiezio
Beacon Power Corporation
978-694-9121
spiezio@beaconpower.com
BEACON POWER TO ACQUIRE NXTPHASE AND THE COMBINED COMPANIES TO RECEIVE
EQUITY INVESTMENT OF $4.4M
WILMINGTON, Mass. - April 25, 2005 - Beacon Power Corporation (Nasdaq: BCON), a
company that designs advanced products for electric power and grid voltage and
frequency regulation, today announced that it has entered into an agreement to
acquire NxtPhase T&D Corporation, a privately held Canadian supplier of digital
and fiber optic products for electric power and grid monitoring and control.
Under the agreement, at closing, Beacon will acquire NxtPhase for approximately
15.7 million new common shares of Beacon (subject to adjustment as described in
the agreement), which will be distributed to NxtPhase investor shareholders.
Also, immediately after closing, Beacon will grant restricted stock units
covering approximately 2.7 million new common shares of Beacon to the NxtPhase
employees. As of April 22, 2005, the closing bid price of Beacon Power shares on
Nasdaq was $0.84 per share. The proposed acquisition of NxtPhase is subject to
regulatory approval and Beacon and NxtPhase shareholder approval. This agreement
results from introductions made by Perseus, L.L.C.
An aggregate of $4.4 million of equity financing has also been committed to
Beacon and to NxtPhase by a fund affiliated with Perseus. Perseus has committed
to invest $2.9 million in Beacon to fund operations, in exchange for
approximately 3.5 million newly issued Beacon common shares. Perseus has also
committed $1.5 million of equity financing to fund NxtPhase operations during
and after the acquisition. Beacon has agreed to issue warrants covering up to
1.22 million shares to Perseus, exercisable at $1.01 per share. In addition,
Perseus has paid $100,000 to Beacon Power to extend by two years (until May 23,
2007) preexisting warrants that are already held by Perseus, covering 1,333,333
Beacon shares at an exercise price of $2.25 per share. Perseus, NxtPhase, and
Beacon Power are affiliates of one another.
Bill Capp, Beacon Power president and CEO, said, "The acquisition of NxtPhase, a
leading supplier of advanced grid electronics, is consistent with our commitment
to provide the most innovative solutions for today's electrical grid. Both
Beacon and NxtPhase share a common vision, with complementary technologies and
cultures. We believe the two companies will be stronger as a combined entity in
terms of customer base, market access, technology portfolio, product development
opportunities, and outside investment potential. This acquisition will bring an
immediate increase to Beacon's revenue and, we believe, lead to greater
shareholder value."
Andrea Johnston, NxtPhase president and CEO, added, "With the challenges facing
grid operators today, we are convinced that utilities will be looking to invest
in new technology to maintain stable and reliable operation and expand
throughput capacity. Joining forces with Beacon Power allows us to bring
together some of these best-in-class technologies to deliver better-performing,
more cost-effective solutions. We are supportive of the strategic vision and
look forward to the expanded capital market access and appeal that the combined
company will offer."
John Fox, Perseus managing director and NxtPhase board member, remarked, "The
global electric power infrastructure requires a technology overhaul. We are
committed to funding strong companies that can offer innovative solutions to
serve this sector, and, in so doing, build the foundation for a solid long-term
investment."
NxtPhase has sold products to more than 100 electric utility customers in North
America and Europe, providing advanced systems for measurement, protection and
control applications through direct market channels and OEM relationships. The
Company manufactures and markets optical sensors to measure current and voltage,
protective relays and digital fault recorders - all key components for reliable
electrical grid operation. Current and voltage sensors provide the fundamental
source information for all control functions and bulk power financial
transactions. NxtPhase optical sensors make fiber optic-based measurements and
offer significant improvements in accuracy, installed cost, environmental
performance and safety as compared to conventional sensors. NxtPhase sensors are
gaining market acceptance and are protected by a portfolio of more than 20 owned
or licensed patents.
Headquartered in Vancouver, British Columbia, NxtPhase has sales and
manufacturing operations in the U.S. and Canada. NxtPhase (including its
predecessor) recorded 2004 revenues of more than $3 million. Following the
acquisition, NxtPhase will operate as a wholly owned subsidiary of Beacon Power
and will retain the well-established NxtPhase brand name.
About NxtPhase T&D Corporation
NxtPhase T&D Corporation develops, manufactures, and markets optical sensors and
digital protection and recording solutions that are designed to improve the way
high-voltage electric power is managed in a competitive electric power industry.
Optical current and voltage sensing products offer more accurate digital
information, broader dynamic range, wider bandwidth, improved safety, and
significant environmental benefits compared with conventional technologies.
Digital recorders provide operators with information required to improve grid
reliability and to better understand the causes of and to protect against
blackouts. NxtPhase T&D Corporation is a privately held company with sales and
manufacturing operations in the U.S. and Canada. For more information, visit
www.nxtphase.com.
About Perseus, L.L.C.
Perseus, L.L.C. is a merchant bank and private equity fund management company
with offices in Washington, D.C. and New York City. Perseus generally invests in
companies in which it can participate in the company's strategic planning,
operations and development and thereby add significant value to the investment.
In particular, Perseus invests in companies that have unique strategic
characteristics i.e., proprietary intellectual property, powerful brands,
distinctive content or a highly skilled work force. Perseus and its affiliates
manage several investment funds with total commitments in excess of $2.0
billion. All references in this press release to Perseus are intended to refer
to affiliates of Perseus, L.L.C.
About Beacon Power Corporation
Beacon Power Corporation designs sustainable energy storage and power conversion
solutions that would provide reliable electric power for the utility, renewable
energy, and distributed generation markets. Beacon's Smart Energy Matrix is a
design concept for a megawatt-level, utility-grade flywheel-based energy storage
solution that would provide sustainable power quality services for frequency
regulation, and support the demand for reliable, distributed electrical power.
Beacon is a publicly traded company with its research, development and
manufacturing facility in the U.S. For more information, visit
www.beaconpower.com.
Safe Harbor Statements under the Private Securities Litigation Reform Act of
1995:
Material contained in this press release may include statements that are not
historical facts and are considered "forward-looking" within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements reflect Beacon Power Corporation's current views about future events
and financial performances. These forward-looking statements are identified by
the use of terms and phrases such as "believe," "expect," "plan," "anticipate,"
and similar expressions identifying forward-looking statements. Investors should
not rely on forward-looking statements because they are subject to a variety of
risks, uncertainties, and other factors that could cause actual results to
differ materially from Beacon Power Corporation's expectation. These factors
include: a short operating history; a history of losses and anticipated
continued losses from operations; a need to raise additional capital combined
with a questionable ability to do so; conditions in target markets; no
experience manufacturing any product on a commercial basis; limited commercial
contracts for sales to date; little experience managing operations in
geographically dispersed locations; the dependence of sales on the achievement
of product development and commercialization milestones; the uncertainty of the
political and economic climate of any foreign countries into which Beacon hopes
to sell or in which it operates, including the uncertainty of enforcing
contracts and the potential substantial fluctuation in currency exchange rates
in those countries; significant technological challenges to successfully
complete product development; dependence on third-party suppliers; intense
competition from companies with greater financial resources; possible government
regulation that would impede the ability to market products; possible product
liability claims and the negative publicity which could result; any failure to
protect intellectual property; the possible need in the future to hire and
retain key executives, particularly in light of the substantial workforce
reductions during 2001 and 2002; the recent volatility in the stock price of
companies operating in the same sector; the difficulties that often arise in
integrating operations of companies after a merger or acquisition; the power of
controlling shareholders and the limited ability of others to influence the
outcome of matters put to the vote of shareholders. These factors are elaborated
upon and other factors may be disclosed from time to time in Beacon Power
Corporation's filings with the Securities and Exchange Commission. Beacon Power
Corporation expressly does not undertake any duty to update forward-looking
statements.