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New
Release -- Superconductor Week does not edit or endorse the following
news release: AMSC
Strengthens Utility, Industrial and Wind Energy Product Offerings with
Acquisition of Power Quality Systems, Inc.
Westborough, MA, 7 March 2007:
American Superconductor
Corporation (NASDAQ:
AMSC), a leading energy technologies company, announced today that it has
signed a definitive merger agreement to acquire Power Quality Systems, Inc. (PQS)
in an all-stock transaction valued at approximately $3.8 million, or
approximately 1.3 times PQS sales for calendar year 2006. Based in Pennsylvania,
PQS offers reactive compensation products known as Static VAR Compensators, or "SVCs,"
based on its proprietary thyristor switch technology. These products enhance the
reliability of power transmission and distribution grids and greatly improve the
quality of power for manufacturing operations. The acquisition is expected to
close in April 2007.
Thyristor switches are the heart of many power
electronic-based reactive compensation products, including SVC systems. These
systems are used to regulate and stabilize power grid voltage, which increases
grid reliability and allows more power to be transmitted over existing power
transmission lines. Utilizing PQS's proprietary thyristor switch, AMSC expects
to offer SVC systems that not only have a lower initial cost, but also lower
energy and maintenance costs and a smaller footprint when compared with
conventional products.
"The proprietary technology PQS has developed and
marketed over the past 10 years will significantly enhance AMSC's reactive
compensation product offerings," said Greg Yurek, founder and chief executive
officer of AMSC. "PQS sales to date have been mostly limited to municipal and
co-operative electric utilities and smaller industrial operations. AMSC expects
to utilize its worldwide sales force and business relationships with large
electric utilities to accelerate the growth in sales of PQS's product line. In
addition, by combining PQS product offerings with AMSC's control system
technology and transmission grid engineering expertise, we expect to be able to
more effectively address larger-scale SVC order opportunities from utilities.
The addressable market for large-scale SVC solutions in the U.S. alone is
approximately $100 million annually, and it is increasing rapidly as electric
utilities focus on strengthening the nation's transmission infrastructure."
AMSC's current reactive compensation offerings
for electric utilities include Dynamic-Volt-Ampere-Reactive systems, or D-VAR(R)
systems, and a dynamically controlled SVC solution, also known as a Dynamic VAR
Compensator, or DVC(TM) system. Power Quality Systems has an installed base of
more than 60 SVC systems with ratings of up to 28 megaVAR (MVAR) in North
American utility grids and industrial sites.
AMSC has agreed to purchase PQS for approximately
$3.8 million worth of stock. The shares are subject to a lockup agreement
whereby the current owners of PQS may sell only a certain number of shares per
year through March 2009. While the current owners are financial participants
only and will not be employed by AMSC subsequent to the acquisition, all key PQS
engineering personnel are expected to remain with the company. The all-stock
transaction also includes an earn-out opportunity with the potential for up to
an additional 475,000 shares of AMSC common stock to be issued to PQS's current
owners based on the achievement of certain order growth targets for existing PQS
products for the fiscal years ending March 2008 and 2009.
For the 12 months ended December 31, 2006, PQS's
unaudited financial results include revenues of approximately $3 million and a
net loss of approximately $400,000. This compares with revenues of approximately
$1.2 million and a net loss of approximately $900,000 the prior year. AMSC
expects to increase sales of PQS's current product line by approximately 67% to
$5 million for FYMarch2008. AMSC is not assuming any long-term debt in the
transaction, and it expects the acquisition to be immediately accretive to
earnings before interest, taxes, depreciation, amortization and stock-based
compensation (EBITDAS).
AMSC's Power Electronic Systems business unit,
with the inclusion of Windtec and PQS, is expected to grow its revenues from
approximately $25 million in FYMarch2007 to at least $55 million in FYMarch2008.
This compares with the company's previous forecast for $50 million in Power
Electronic Systems sales. AMSC also expects that the acquisition of PQS will
enable it to increase its backlog of orders for large-scale SVC solutions during
FYMarch2008, which it expects to recognize as revenue in FYMarch2009 and beyond.
About AMSC
AMSC (American Superconductor Corporation -
NASDAQ: AMSC) is a leading energy technologies company. The company develops and
sells a wide range of products and solutions based on power electronic systems
and high temperature superconductor (HTS) wires that dramatically improve the
efficiency, reliability and quality of electricity during its generation,
transmission, distribution and use. The company is a dominant force in
alternative energy, offering grid interconnection solutions as well as licensed
wind energy designs and electrical systems. As the world's principal supplier of
HTS wire, AMSC is enabling a new generation of compact, high-power electrical
products, including motors, generators, power cables, grid-level surge
protectors, and advanced transportation and defense systems. AMSC also provides
utility and industrial customers worldwide with voltage regulation systems that
dramatically enhance power grid capacity, reliability and security, as well as
industrial productivity. The company's technologies are protected by a broad and
deep intellectual property portfolio consisting of hundreds of patents and
licenses worldwide. More information is available at
www.amsuper.com.
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