Bloomberg News

FuelCell Surges on Biggest Order to South Korea’s Posco

November 05, 2012

FuelCell Energy Inc., (FCEL:US) a U.S. manufacturer of fuel-cell power plants, jumped the most in more than eight months after announcing its biggest order to date.

FuelCell climbed 13 percent to $1.03 at the close in New York, the most since Feb. 22.

Posco (005490), South Korea’s largest steelmaker and FuelCell’s top shareholder, will pay $181 million for 121.8 megawatts of power plants, the Danbury, Connecticut-based company said today in a statement.

Posco is also licensing the technology to make fuel cells to sell in Asia, providing a “second source of global supply and production capacity,” FuelCell Chief Financial Officer Michael Bishop said in a separate statement.

“This licensing agreement is a key development milestone for accelerating global expansion” of fuel cells, Bishop said.

The deal builds upon a 2009 licensing agreement that had Posco assembling fuel cells to sell in Asia. FuelCell received a $10 million payment on Nov. 1 as part of an amended licensing agreement totaling $26 million, and will get a 3 percent royalty fee for power plants built and sold by Posco for 15 years.

FuelCell’s systems use a chemical reaction to produce electricity from natural gas or methane. Gyeongbuk, South Korea- based Posco is FuelCell’s largest customer and owns a 17 percent stake, according to data compiled by Bloomberg.

The steelmaker will begin construction next year on a fuel- cell factory at its Posco Energy unit’s facility in Pohang, South Korea. The company plans to produce as much as 140 megawatts of fuel-cell components a year at the site, starting by early 2015, according to the statement.

The systems Posco agreed to buy in today’s deal will be produced at FuelCell’s factory in Torrington, Connecticut.

To contact the reporter on this story: Christopher Martin in New York at cmartin11@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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Companies Mentioned

  • FCEL
    (FuelCell Energy Inc)
    • $2.45 USD
    • 0.06
    • 2.45%
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