Ballard and GPU Joint Venture

Subject: UFTO Note – Ballard and GPU Joint Venture
Date: Fri, 20 Dec 1996 10:44:23 -0800
From: Ed Beardsworth

| ** UFTO ** Edward Beardsworth ** Consultant
| 951 Lincoln Ave. tel 415-328-5670
| Palo Alto CA 94301-3041 fax 415-328-5675

Below is a recent press release on a joint venture between Ballard and GPU. Ballard also announced receiving $30 Million from the Canadian government to support commercialization of stationary fuel cell power plants. —


Dec. 17, 1996

Ballard Power Systems and GPU International, Inc. (GPUI), a subsidiary of GPU Inc., a major international electric company based in New Jersey, announced today that they have formed a venture for the commercialization of Fuel Cell Stationary Power Plants using the Ballard Proton Exchange Membrane (PEM) Fuel Cell.

Under the terms of the agreement, which is subject to final regulatory approval, Ballard Power Systems has created a new subsidiary, Ballard Generation Systems Inc., to commercialize Fuel Cell Stationary Power Plants. Ballard Generation Systems will develop, market and manufacture Fuel Cell Stationary Power Plants worldwide and will be based in Burnaby, B.C. Ballard Power Systems, the parent company, will supply the fuel cells for these power plants. GPU International will invest US$23.25 million (Can$31.2 million) over the next two years in the subsidiary, Ballard Generation Systems, for up to a 19.3% share of Ballard Generation Systems, two 250 kW fuel cell power plants for field trials, and non-transferrable warrants to purchase 100,000 Common shares in Ballard Power Systems at a price of $27.45 per share.

In addition to GPUI’s investment in Ballard Generation Systems, it will bring to the company its considerable expertise in world energy markets and an understanding of user requirements which will contribute to the development of Ballard Fuel Cell Stationary Power Plants.

GPU International is the non-regulated arm of GPU, Inc. GPU serves a worldwide population of over 13 million people with 4.4 million customers located in 12 countries. It had 1995 revenues of over US$3.8 billion and assets of about US$10 billion. GPU, Inc. shares are on the New York Stock Exchange.

“Under growing deregulation, Ballard Fuel Cell Stationary Power Plants will become an important part of the energy market. These power plants will provide power for a broad range of market applications including Premium Power,” said Bruce L. Levy, President and CEO of GPU International. “We see that by combining Ballard’s clear lead in proton exchange membrane fuel cells and power plants with GPU’s expertise in the world energy business, we can together build a growing, successful and profitable business.”

“We are pleased to welcome GPU as a strategic partner and investor in our stationary power business,” said Firoz Rasul, President and Chief Executive Officer of Ballard. “GPU has distinguished itself as a leader in the deregulated electric power industry worldwide and has participated in the commercialization of innovative energy products and applications. Ballard Fuel Cell Power Plants will address the needs of the substantial markets that are emerging for environmentally clean, high quality power generated at the customer’s site.”

“GPU International has made investments in power-related projects throughout the world,” said GPUI’s Levy. “We feel that fuel cell power plants will open up considerable new markets in the power business within the next 5 years.”

“To marshal the resources needed to bring each of our products to market effectively, our plan is to join forces with a carefully chosen team of marketing and manufacturing partners,” said Mossadiq Umedaly, Vice President and Chief Financial Officer of Ballard Power Systems. “GPUI brings deep insight in the international electric power markets, which will contribute to the commercial success of Ballard Fuel Cell power plants. The equity participation by GPUI also enables Ballard to capitalize on the value of its stationary power plant technology beyond the fuel cell, and establishes the value for this subsidiary, before GPUI’s investment of $31.2 million at more than $130 million.”

Ballard Power Systems is the world leader in the development of proton exchange membrane fuel cell power systems. The heart of its products is the Ballard Fuel Cell, a proprietary zero-emission engine that converts natural gas, methanol, or hydrogen fuel into electricity without combustion. Ballard Fuel Cells are currently being used by leading international companies including Daimler-Benz, General Motors, Hitachi, Honda, Volkswagen and Volvo to develop zero-emission vehicles and clean stationary power plants.

Ballard’s Common shares are listed on The Toronto Stock Exchange under the trading symbol “BLD” and on the Nasdaq National Market System under the symbol “BLDPF”.

/For further information: Paul Lancaster, Ballard Power Systems Inc. (604) 454-0900, fax (604) 412-4700; Michael A. Lundy, Lundy Associates, Inc. (201) 660-1100, fax (201) 660-1104 or Patrick M. Dool, GPU International, Inc. (201) 263-6951, fax (201) 263-6977/ (BLD. BLDPF)

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