Altair Nanotechnologies, Inc. recently reached a definitive agreement whereby China-based Canon Investment Holdings Limited would purchase newly issued common shares of Altair Nanotechnologies, Inc. resulting in Canon holding 51% of Altair’s fully diluted common shares immediately following closing.
Headquartered in Zhuhai, China, Canon is the holding company of Yintong Energy Company Ltd. (YTE), which is a manufacturer of high-capacity and high-power lithium battery products. Yintong’s lithium battery modules are made with a proprietary circular design and are used in a range of customer applications, including mass transit and energy storage solutions.
Canon has agreed to purchase approximately 125,917,996 shares at $0.3882 per share, providing $48.9 million in proceeds to fund the contemplated establishment of a lithium-titanate manufacturing facility in China and Altair’s working capital requirements and operations in the United States.
Under a separate conditional supply and technology license agreement, Altair has agreed to sell to YTE an ALTI-ESS 1 Megawatt system, battery cells, and its proprietary lithium-titanate material to be used in the production of battery cells in China.
The agreement provides up to $6.6 million in revenue to Altair by the end of 2011 including an advance of $2.0 million for lithium-titanate at the time of signing; Altair is committed to ship 20 metric tons of this material prior to year-end. Purchases of $4.6 million under the supply agreement are conditional upon closing of the transaction. YTE has the option to require repayment of any portion of the $2.0 million advance not offset by shipped orders if the share subscription agreement is terminated by Altair under certain conditions.
Altairnano also agreed to provide YTE with an exclusive license to its technology to manufacture battery cells using its advanced lithium-titanate materials for the Greater China market, and a non-exclusive license with respect to the remainder of Asia, Australia and New Zealand, but excluding any Middle-Eastern Country.
Under the terms of the license agreement, YTE may grant sub-licenses to affiliated companies and Altair retains the right to license third parties for the contract manufacture of cells, outside of China, for Altair’s business requirements.
Under an investor rights agreement, Canon will have the right to appoint a number of directors to the Board that is proportionate to its holdings, have certain registration rights and have certain rights to purchase additional shares in connection with dilutive issuances.
Closing of the transaction is subject to certain conditions, including shareholder approval at a special shareholders meeting anticipated to be held in December 2010, receipt of regulatory approval for the transaction from the Committee on Foreign Investment in the United States (CFIUS), and winding up certain defense contracts.
Altair’s board intends to implement the reverse stock split as previously approved by shareholders, by 15 November 2010.
JMP Securities is the financial advisor to the Company and provided the Board of the Company with a Fairness Opinion in relation to the proposed transaction. PacBridge Capital Partners is the financial advisor to Canon Investment Holdings Limited.
(A hat-tip to Bob!)