Daimler to Buy H2 Fuel Cell Products From Ballard

VANCOUVER, British Columbia, Dec 22, 2009; Nicole Mordant wriyting for Reuters reported that Ballard Power Systems will supply Daimler AG with fuel cell products for the automaker's clean energy car and bus programs, Ballard said on Tuesday.

The two, who are already partners in an automotive fuel cell venture, have entered a supply agreement that will earn Ballard revenue of at least C$24 million ($22.6 million) over 18 months, starting from April 2010.

Vancouver-based Ballard designs and manufactures hydrogen fuel cells. German carmaker Daimler, like other automakers, is working on designing cleaner-burning vehicles.

The announcement is the second from Ballard on Tuesday after it earlier said it will get a C$44.5 million cash injection after offloading its rights to a stake in a fuel cell research group.

Ballard said it had closed a deal to sell its rights to a 19.9 percent stake in Automotive Fuel Cell Cooperation Corp (AFCC) -- a private company it owns jointly with Daimler and Ford Motor Co -- to an unnamed financial institution.

Ballard will receive about C$44.5 million -- comprising C$37 million today and C$7.5 million later.

As part of the deal, Ballard has pledged its shares in AFCC, as well as its right to sell these shares, to Ford for C$65 million plus interest after Jan. 13, 2013. The financial institution will now get this money in four years time.

Ballard spokeswoman Lori Rozali said the company did the deal mostly to mitigate risk. "The risk is tied specifically to Ford and everything that is happening in the automotive sector," she said.

Ballard expects to book a gain of C$34 million in its fourth quarter because of the deal.

Daimler holds a 50.1 percent stake in AFCC and Ford 30 percent.

The supply agreement announcement came out after the market closed.

Vancouver-headquartered AFCC was formed in 2007 around Ballard's former automotive fuel cell unit. After many years of research but no commercial product, Ballard sold the unit saying it would take too much money and time to develop an affordable propulsion system technology on its own.

Ballard, which makes fuel cells for forklifts, buses and back-up power generation, said it will continue to supply technical services and fuel cell components and modules to AFCC.

Editing for Reuters by Rob Wilson