Ballard Shareholders OK Sale of German Subsidiary

The shareholders of Ballard Power Systems (TSX:BLD; NASDAQ:BLDP) have approved the sale of the company’s German subsidiary, Ballard Power Systems AG (BPSAG), to DaimlerChrysler AG and Ford Motor Company. The transaction received overwhelming support, with 97.65% of shares voted, excluding those of DaimlerChrysler and Ford, in favor of the sale.

“The vote in favor of the sale reflects the recognition by Ballard shareholders of the value in this transaction,” said Dennis Campbell, Ballard’s President and Chief Executive Officer. “Ballard will now be clearly focused on our core competency – fuel cell development – and on reaching the targets outlined in our Technology ‘Road Map’.”

Ballard stands to receive more than $20 million in US cash. The transaction is expected to close on August 31, 2005.

“It relieves us of a significant financial burden that we were eager to get rid of,” Ballard CEO Dennis Campbell said in an interview after the shareholder vote. “The biggest benefit to us is the reduction in future cash consumption.”

DaimlerChrysler and Ford will return nine million common shares to Ballard in exchange for Ballard’s 50.1% interest in Ballard Power Systems AG, a developer of fuel cell support systems.

The sale will reduce Ballard’s annual cash consumption by about US$25 million, and the the company will be reimbursed for net operating expenses between Aug. 1, 2004 and the closing date of the deal, estimated to be worth more than $20 million US.

Ballard will continue to be responsible for the design, development and manufacture of vehicular fuel cells for its alliance partners, while DaimlerChrysler and Ford will be jointly responsible for the design, development and manufacture of the vehicular fuel cell support system.

Upon closing, the parties will enter into the Fourth Alliance Agreement and development agreements for the next generation vehicular fuel cell and electric drive train, under which DaimlerChrysler and Ford will provide Ballard up to $59 million in development funding over the next four years.