Manufacturing  June 29, 2016

Longmont-based UQM Technologies to sell controlling stake to Hong Kong group

LONGMONT — Electric-motor maker UQM Technologies Inc. (NYSE: UQM) announced on Tuesday that it has struck a deal to sell a controlling stake in the company to a subsidiary of Hong Kong-based Hybrid Kinetic Group Limited for $48 million in cash.

The deal will help Longmont-based UQM, which will continue to operate as a standalone company, continue to gain a foothold in China, where it expects much of its future business to come from. Last fall, the company announced a 10-year supply contract with Chinese firm ITL Efficiency Corp. that could provide $400 million in revenue for UQM over the life of the deal.

In a regulatory filing made Tuesday, UQM officials said the company’s headquarters will remain in Longmont for at least three years following the close of the transaction, as will primary research and development efforts. But UQM chief financial officer David Rosenthal said in an interview Wednesday that company officials anticipate maintaining the local headquarters, R&D and manufacturing for the Americas and other parts of the world besides China well into the future, adding that he expects the new deal with HKG to be a job creator locally.

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UQM employs 50 people, all at its 130,000-square-foot facility at 4120 Specialty Place, which is technically in an unincorporated portion of Weld County.

While some of the new cash infusion will be used to build a 30,000 to 40,000-square-foot manufacturing facility in China by 2018, the money will also be used to expand UQM’s global presence in other parts of the world.

“We expect that we’re going to be adding more manufacturing and engineering talent here in Colorado,” Rosenthal said.

UQM current management will remain in place at least through their existing employment contracts that terminate on June 30, 2017. UQM’s board, meanwhile, will expand to nine directors, including five nominated by the buyer, UQM’s CEO and three of UQM’s four current independent directors.

The deal, expected to close within four to six months, is subject to approval of both companies’ boards, as well as various regulatory approvals, including by the Committee on Foreign Investment in the United Sates for the controlling investment by a foreign-controlled entity. Two-thirds of UQM common stockholders must also approve the deal.

Under terms of the deal, HKG subsidiary American Compass Inc., will buy 66.5 million newly issued shares of UQM common stock for 72 cents per share, a 6.4 percent premium over the average trading price for the 90 days ending Monday. That will amount to 58 percent of UQM’s common stock, or about 54 percent on a fully diluted basis.

UQM shareholders will continue to hold their shares in the company, and UQM stock will continue to trade on the New York Stock Exchange.

In early trading Wednesday morning, UQM shares shot up as high as 83 cents per share, from Tuesday’s close of 62 cents. But they’d lost all of those gains by late in the trading day.

UQM’s product is a multi-faceted electric propulsion system — targeted mostly at light-duty trucks, vans and heavy-duty transit buses — that includes motors, inverters and software. The company reported revenue of $5.3 million and a net loss of $6.9 million for its fiscal year that ended March 31.

While a majority of UQM’s business today comes from the United States, Rosenthal noted that China is the world’s largest market for electric vehicles. He said the company has known for years that to be successful it would have to have a presence in China, and also that it would be difficult to do that without help.

Rosenthal said UQM officials have been seeking some sort of strategic partner for a couple of years, eyeing three main criteria for a partner, those being: capital, the infrastructure to help build a manufacturing plant in China, and connections in China to help UQM gain access to a customer base there.

“It has been a very long and thoughtful process,” Rosenthal said.

While the overarching focus of seeking such a deal was to gain a foothold in China, UQM had also made a commitment to ITL to start manufacturing in China by 2018.

“This gives us a path to do that,” Rosenthal said.

He said the first place proceeds from the sale will be deployed is in building and equipping the China plant, which will take roughly $10 million. He said money will also go toward expanding R&D efforts on new-product development and on expanding marketing activities in new places around the world.

He said the company has plenty of room to grow at its Longmont facility.

Founded in 1967 as Unique Mobility Inc., the company is a veteran of the EV industry that has been through several iterations of itself.

The company had grown to about 100 employees in 2013 when it took a major hit from the bankruptcy of California-based electric-car manufacturer CODA Auto. UQM had contracted to build thousands of propulsion systems for CODA’s passenger cars, ramping up and spending heavily on inventory. CODA’s collapse subsequently has led to tough times for UQM in recent years as the company has tried to recover.

LONGMONT — Electric-motor maker UQM Technologies Inc. (NYSE: UQM) announced on Tuesday that it has struck a deal to sell a controlling stake in the company to a subsidiary of Hong Kong-based Hybrid Kinetic Group Limited for $48 million in cash.

The deal will help Longmont-based UQM, which will continue to operate as a standalone company, continue to gain a foothold in China, where it expects much of its future business to come from. Last fall, the company announced a 10-year supply contract with Chinese firm ITL…

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