Westpoint Fuel Systems Inc (NASDAQ:WPRT) On The Highway To Growth Through Partnership With China and Securing Long-Term Funding
Westport Fuel Systems Inc (NASDAQ:WPRT) engages in manufacture of alternative fuel systems and components. It operates through four business segments: automotive, industrial, corporate and technology investments and Cummins Westport Inc.
The automobile segment designs, manufactures and sells compressed natural gas and liquid petroleum gas components as well as systems for passenger cars, light-duty trucks and medium duty vehicles while the industrial business segment manufactures alternative fuel components and systems for use in off-road mobile as well as stationary equipment.
The corporate and technology investment segment is involved in advanced research and development programmes, corporate oversight and general administrative duties. Finally, the Cummins Westpoint incorporation segment serve the heavy-duty on highway engine markets. The Weichal Westpoint Inc segment develops, manufactures and sells fuel engines and parts. The company was founded on June 1, 2016 and is headquartered in Vancouver, Canada.
Memorandum With Chinese Firm
WPRT on 22nd December signed an MOU, which sources say is non-binding, with Weichal Power Company Ltd at a ceremony hosted by the Chairman and CEO of Weichal Group, Mr Tan Xuguang. This MOU sets the framework for finding development, marketing and commercialization of Westport High Pressure Direct Injection technology in China (“Westport HPDI”).
According to the MOU, WPRT will provide support for the HPDI development activities to meet China VI emission standards and will supply certain components. A definitive agreement is expected to be signed by the two parties in early 2018.
WPRT prides itself as a driver in innovation to power a cleaner environment.In this regard they invent, engineer, manufacture and supply clean burning fuel systems and components that can change the way the world moves. They said technology delivers performance, fuel efficiency and environmental benefits to address the challenges of global climate change and urban air quality.
The Loan Facility
Meanwhile, WPRT announced on 21st December that they had secured a loan of $20 million.
The loan was sourced from EDC and is a secured long-term loan that matures on 31st December 2021, repayable in quarterly instalments and attracts an initial interest of 9% plus fees with the rate reducing to 6% upon achieving certain milestones. Funding of the loan is expected to be finalized in the coming weeks having met all the necessary customary traditions.
The CFO of WPRT, AshakoAchuthan, stated that commercialization of Westport HPDI 2.0 technology has begun and expects production to grow in 2018. He said he is happy to see the company partner with EDC in driving clean technology solutions to another level.
Macsenn, Director of EDC’s Clean Tech team, admits that WPRT has proven technology leadership, has an innovation mindset to be a global champion in the cleantech sector. He indicated that EDC is happy to help Westport to scale their new Westport HPDI 2.0 product internationally.
Canada has ambitious goals to combat global climate change and Macseen was of the view that providing this financing to WPRT is one-way EDC can contribute to a clean global environment while also supporting growth of innovation in the Canadian space.
EDC is Canada’s export credit agency, providing financing, insurance, bonding, trade, knowledge and connections to support Canadian companies sell and invest abroad.
As at December 26, 2017 WPRT stock had jumped by 13.7% on account of this new development. This was after the company announced the new loan and business agreement. Although the company has been marred with losses for years, investors are hopeful that the company will turn a corner to profitability. The company has in the past year seen a decline in losses and expansion in revenue. Therefore, expanding in China is likely to continue this positive momentum.