ZBB Energy Corporation (NYSE Amex: ZBB), the leading developer of intelligent, renewable energy power platforms, announced today it has entered into agreements for establishment of a joint venture company that will initially assemble and ultimately manufacture ZBB products for sale in the power management industry on an exclusive basis in mainland China and on a non-exclusive basis in Hong Kong and Taiwan. The new company will build a new state-of-the-art manufacturing center in WuHu City, Anhui Province that will begin operations in early 2012.
The joint venture partners comprising the China JV Company (Chinese name registration pending) include, ZBB PowerSav Holdings Limited, AnHui Xinlong Electrical Company (Xinlong Electrical) and WuHu Huarui Power Transmission & Transformation Engineering Company (WuHu Huarui).
ZBB and PowerSav have been working together since November 2010 to identify an optimal path and partnerships to enter the China market. More than 75 potential joint venture partners and 25 cities and governments were diligently screened to determine the ideal joint venture partners and a city and government very supportive of providing a location for "new energy" technology. Xinlong Electrical and WuHu Huarui met every criteria established for the joint venture partners, and the city and government of WuHu demonstrated their strong support by way of providing a host of incentives to locate in their city.
This joint venture enables ZBB to take its products into China's high growth market with exceptionally strong partners, and represents a core component of ZBB's global partnership strategy to offer the lowest cost, intelligent power management storage products available in emerging markets that offer significant growth opportunities.
Said Eric Apfelbach, CEO of ZBB Energy, "The opportunity and demand in China for our products is tremendous. Our joint venture with these three partners will enable the penetration of both our flow battery and power electronics products by giving us channel access to China's grid companies."
Key terms of the joint venture include cash and technology capital investments of approximately $13.4 million. ZBB's capital contributions to the joint venture will be a contribution of technology to the China JV Company via a license agreement valued at approximately $4.0 million. ZBB's indirect equity interest in the China JV Company will equal approximately 33%. ZBB will maintain control over the joint venture through its Board of Directors positions.
The China JV Company will have an exclusive, royalty-free license to manufacture and sell ZBB's ZESS Zinc Bromide flow battery, version three (V3) battery (50kW) and ZESS POWR PECC (up to 250kW) in mainland China and a non-exclusive royalty-free license to manufacture and distribute the products in Hong Kong and Taiwan in the power management industry.
Additionally, ZBB and the China JV Company will enter into supply agreements under which the China JV Company will purchase certain manufactured products from ZBB and ZBB may purchase certain manufactured products from the China JV Company.
Pursuant to a Management Services Agreement, ZBB PowerSav Holdings will provide certain management services to the China JV Company in exchange for a management services fee equal to five percent of net sales for the first five years and three percent of net sales for the subsequent three years.
Pursuant to a Research and Development Agreement, the China JV Company may request ZBB to provide research and development services upon commercially reasonable terms and conditions. The China JV Company would pay ZBB's fully-loaded costs and expenses incurred in providing such services.
The joint venture will be established upon governmental approvals from China, anticipated to be received in November 2011.
About ZBB Energy Corporation
ZBB Energy Corporation (NYSE Amex: ZBB) provides advanced electrical power management platforms targeted at the growing global need for distributed renewable energy, energy efficiency, power quality, and grid modernization. ZBB and its power electronics subsidiary, Tier Electronics, LLC have developed a portfolio of intelligent power management platforms that directly integrate multiple renewable and conventional onsite generation sources with rechargeable Zinc-Bromide flow batteries and other storage technology. The company also offers advanced systems to directly connect wind and solar equipment to the grid and systems that can form various levels of micro-grids. Tier Electronics participates in the energy efficiency markets through their hybrid vehicle control systems, and power quality markets with their line of regulation solutions. Together, these platforms solve a wide range of electrical system challenges in global markets for utility, governmental, commercial, industrial and residential end customers. A developer and manufacturer of its modular, scalable and environmentally friendly power systems, ZBB Energy was founded in 1998 and is headquartered in Wisconsin, USA with offices also located in Perth, Western Australia. For more information, visit www.zbbenergy.com.
About Xinlong Electrical
Xinlong Electrical manufactures a wide range of power transmission and transformer equipment, including high and low-voltage power electronics, automation and control systems and power quality and conditioning systems. Xinlong Electrical is publicly traded on the Shenzhen Stock Exchange, with Registered Capital of RMB165 million. From 22 locations throughout China, Xinlong Electrical has more than 450 sales resources, as well as aftermarket field support and project integration teams serving key market segments such as State Grid and South Grid electricity and power projects, transportation, telecommunications, industrial and commercial building and manufacturing. For more information, visit www.ah-xinlong.com.
About WuHu Huarui
Wuhu Huarui is a distinct leader in the design, engineering and deployment of UHV transmission systems, major business locate in more than 20 provinces throughout China. With 2010 revenue of $100 Million, WuHu Huarui specializes in electric power transmission and substation project construction, and has strong and long established relationships with both State Grid and South Grid companies. Wuhu Huarui has municipal engineering projects, covering power electricity, roads, railways, metro transport, shipbuilding and other segments. For more information, visitwww.whhrsbd.com.
About PowerSav
PowerSav Incorporated provides vital "new energy" solutions to the China market, enabling the country to alter the energy mix to high-efficiency renewable sources and away from coal and oil. With breakthrough products in LED lighting, advanced energy storage and energy management systems, and "Smart Grid" infrastructure, PowerSav Inc. addresses many of the highest growth markets in China. The PowerSav products and services are critical to supporting the needs of China's rapidly growing population. For more information, visit www.powersav.net.
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