Ener1, Inc. announced that it has executed an agreement with its principal shareholder, Ener1 Group, for the purchase of common stock and warrants for $65 million. The investment, which is expected to close later this week, is subject to customary closing conditions.
"The commitment of new capital from Ener1 Group is another strong vote of confidence from our most significant shareholder," said Ener1, Inc. CEO and Chairman Charles Gassenheimer. "Even in this difficult capital markets environment, Ener1 has a compelling growth story that is clearly able to attract the type of long term private equity capital needed to scale our business. Further evidence of this ability is reflected by our ongoing discussions with one of our significant shareholders to increase their investment in Ener1 to a level necessary to achieve positive cash flow."
Ener1 Group will purchase 18,678,161 shares of common stock and 8 million warrants. The warrants, three million of which are exercisable into Ener1 common stock at a strike price of $3.48, and five million with a strike price of $4.40, have a five-year maturity and are not exercisable for six months from the date of issuance.
Ener1 Group is an investment vehicle established by Russian industrialist and entrepreneur Boris G. Zingarevich, a long-established world leader in the sustainable forest products industry who more recently branched out into commercial real estate development and clean technology. Zingarevich currently sits on the board of a joint venture between a Russian manufacturing company he co-founded and International Paper Company, the largest pulp and paper company in the world.
"It is clear to see that technological innovation, particularly in the energy field, will be a key driver for economic development in the 21st century," commented Zingarevich, whose principal business is based in St. Petersburg, traditionally Russia’s window on the west. "Thanks to new possibilities in energy storage, transportation electrification and smart grids are two developments happening now that will change economies and society in many positive ways."
Ener1’s principal operating subsidiary, EnerDel, Inc., announced last month that it had achieved an important automotive-grade certification, Production Part Approval Process (PPAP), for THINK, the maker of the world’s first fully homologated pure electric vehicle, and had begun shipping battery packs to be installed in THINK vehicles for commercial sale in European and North American markets.
The new capital injection adds to funds from the U.S. Energy Department (DOE) under the federal government’s Advanced Battery Manufacturing Initiative to ramp up production at EnerDel’s facilities in Indianapolis to a rate of 900 electric vehicle battery packs per month, a production point at which EnerDel expects to be EBITDA break-even. EnerDel has also entered the term sheet negotiation phase with DOE on a long-term, low-interest loan under the Advanced Technology Vehicle Manufacturing Program.
The new equity injection for Ener1, Inc. comes on the heels of the company’s announcement last week of a manufacturing joint venture with Wanxiang Corp., the largest tier-one supplier to the Chinese auto industry. This joint venture is expected to provide Ener1 with access to such potential Chinese customers as SAIC, Chana, Haima, Guangzhou and Yutong, the world’s second-largest bus maker.
