WILSONVILLE, ORE., August 27, 2014 ─ XZERES Corp. (OTCQB: XPWR), a global clean energy solutions company, has completed a financing with Wells Fargo Bank, N.A. and strategic investors for total proceeds of $19.9 million.
The financing included a new $15 million term loan by Wells Fargo Bank, N.A. at an interest rate of Libor+3%, with a seven-year amortization schedule and due in 18 months. The company sold 14.1 million common shares and converted outstanding warrants into 3.2 million common shares for net proceeds of $4.9 million in transactions involving existing investors. In the financing, XZERES retired all of the company’s outstanding preferred stock and eliminated a significant amount of its outstanding warrants totaling approximately 7 million equivalent shares.
As part of the transaction, the company retired its higher interest bearing loans from Renewable Power Resources (RPR), Hanover Holdings, and another note holder totaling approximately $12.8 million. In addition, the note holders forgave approximately $350,000 in accrued interest. The company retired its outstanding convertible series A preferred stock under a repurchase agreement with the holder of the preferred stock.
As a result of the transaction, the company reduced its annual interest expense by approximately $1 million, as well as obtained additional funds for working capital in excess of $5.5 million to support its growth plans.
Steven Shum, XZERES’ CFO, commented: "The financing transaction provides additional working capital to support our expanded product line and assists us to more effectively pursue a growing number market opportunities around the world. This includes the wind markets in Japan, Vietnam, India, Philippines, as well as in Europe and the Americas. We have now partnered with a leading commercial bank and simultaneously improved the overall strength of our balance sheet. We are fortunate that the key investors from RPR have been instrumental in supporting the company’s efforts to date, understanding our long-term strategy and vision, and continuing to support our forward plans including this significant financing transaction.”
The company is working on a substantial pipeline of global opportunities with its broad product offering. While not an all-inclusive list of the company’s rapidly expanding opportunities, some of the active, near-term initiatives include:
- • UK Sales – Gale Force, the company’s leading customer in the UK, has been actively promoting the Feed-in-Tariff Co-Operation (FITCO) program since the fall of 2013. The program enables a landowner to receive a turbine and the power it generates for free while Gale Force collects the available Feed-In-Tariff (FIT) payments.
Gale Force has committed significant capital for its UK investment fund, with a focus on purchasing the XZERES 10kW turbine. Gale Force is working with a number of project partners in the country who assist in identifying quality sites, meeting with the landowner, and securing the lease contract for Gale Force. After the site has planning and connection approval, Gale Force then purchases the system from XZERES.
Gale Force and the project partners have already secured a number of sites and are working toward reaching a minimum monthly goal of 15-30 systems. Gale Force has indicated that it will be increasing the number of orders in the coming months to match their planned installation sites in the UK. The average equipment sales price from XZERES, for the 10kW system, is approximately $55,000.
- • Japan Sales & FITCO – XZERES has been actively working through the certification process to have its systems approved for the FIT program in Japan. Gale Force, in conjunction with various in-country project developers, also intends to support a FITCO model (similar to the UK effort) for this new market.
- • Worldwide Skystream – The acquisition of the Skystream product afforded the company an exceptional product with a large existing installed base and significant brand presence globally. Based on the turbine’s proven performance and diverse applications it is believed to be the best product on the market for its size range to which there are substantial global opportunities.
While the product was off the market for approximately eight months before the company purchased it, XZERES has re-engaged numerous dealers around the world and continues to see increased quoting and pipeline momentum. The company expects it to be a strong contributor to its growth. Skystream enjoyed a significant global presence with more than 8,500 installed systems in over 110 countries around the world and the company believes there continues to be a very strong market worldwide for the Skystream turbine.
- • Worldwide XZERES 50kW Turbine – With the addition of a 50kW system, the company can now better address customer solutions and capture additional business opportunities. In addition to the substantial pipeline of opportunities that already exist for the 50kW, the company anticipates that Gale Force will incorporate the 50kW system into their activities in the UK and elsewhere. There are a number of sites in the UK that have already been identified for the new 50kW system and the company expects to generate meaningful revenue near-term from this product.
- • Southeast Asia Project – XZERES continues to actively support a potentially large remote-island electrification project in the Southeast Asia region. The project included providing a demonstration unit, which successfully passed the defined criteria, and then assisting the company’s local project partner with identifying the broader scope of the project. More importantly, the company received its first commercial order for an initial project.
- • Caribbean and Other Remote Areas – XZERES currently has a number of other specific activities being pursued in multiple areas of the Caribbean, some of which the company anticipates should further augment its growth this year.
- • Domestic Sales and Lease – XZERES launched a leasing program for the domestic market that is similar in concept to the popular domestic solar leasing models. It complements the company’s existing sales efforts. XZERES is focused on specific regions where the customer economics are the most attractive.
XZERES Corp. is a global renewable energy company. The company designs and manufactures on- and off-grid distributed wind turbine systems as well as energy efficiency solutions for commercial, light industrial and residential markets. XZERES’ products reduce energy costs and carbon footprints. Headquartered in Wilsonville, Oregon, XZERES’ international distribution network supports the deployment of its products in 110 countries and on all seven continents. For more information please visit www.xzeres.com
About XZERES Turbines
XZERES’ Skystream 2.4, XZERES 10, and XZERES 50 wind turbines are the best-in-class small scale wind turbines for agricultural, residential, small business and microgrid applications. With over 9,300 installations, XZERES turbines are the leading, small-scale wind energy solutions.
Forward-Looking Statements and Safe Harbor Statement:
The information provided herein may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those identified under "Risk Factors" in the Company’s filings made with the Securities Exchange Commission. Actual results may differ materially from those contemplated by these forward-looking statements and the Company does not undertake to update any of these forward-looking statements to reflect a change in its views or events or circumstances that occur after the date of this press release.
Investor Relations Contact: Liolios Group, Inc. Ron Both Tel 1-949-574-3860 XPWR@liolios.comReturn to News News