Kawasaki Heavy Industries, Ltd. and Catalytica EnergySystems, Inc. (NASDAQ: CESI) announced today that a definitive agreementhas been reached for Kawasaki to purchase the Xonon Cool Combustion®catalytic combustion technology and associated gas turbine assets fromCatalytica Energy Systems. Under the terms of the agreement, CatalyticaEnergy Systems will receive $2.1 million in cash proceeds from the sale inexchange for the assignment and license of intellectual property relatingto its Xonon Cool Combustion system, the transfer of certain assets, andtraining. This transaction is expected to be completed by the end ofAugust, subject to customary closing conditions, the delivery of assets,and the securing of certain consents. Effective upon the closing of thetransaction, Kawasaki and Catalytica Energy Systems agreed to release anddischarge each other from and against all potential claims.
Rob Zack, president and CEO of Catalytica Energy Systems, stated, "Thismove is consistent with the steps we have taken in recent months to divestof non-core businesses, assets and technologies, and to maintain financialviability by reducing our costs. Completing this sale will both strengthenour balance sheet and enable us to more fully focus our resources andcapital on our other business activities in line with our objective ofrealizing increased shareholder value. We are pleased that Kawasaki hascommitted to acquire this technology and that the ultra-low emissionscapabilities and environmental benefits of our Xonon Cool Combustion systemwill continue to be available in the market."
Hiro Matsumura, president of Kawasaki Gas Turbines-Americas, added, "XononCool Combustion is the only commercially available catalytic combustionsystem and pollution prevention technology capable of achieving nitrogenoxides (NOx) emissions of less than 3 parts per million (ppm) in gasturbine operation. The Xonon technology strongly complements ourcommitment to providing eco-friendly energy through our GREEN Gas TurbinesInitiative, and we are proud to be the only gas turbine manufacturer tooffer the Xonon Cool Combustion system as part of our product line. Ouracquisition of this technology advances our objective of strengthening ourbusiness in the U.S., a market where Xonon has already been well receivedby our customers. We look forward to the potential for commercializingXonon throughout our family of gas turbines, and continuing to offer ourcustomers an environmentally-friendly and cost-effective approach formaintaining compliance with the most stringent emissions regulations."
Kawasaki Heavy Industries, Ltd. (KHI) is a leading global comprehensivemanufacturer of transportation equipment and industrial goods. With a broadtechnological base that encompasses mastery of the land, sea, and air, theKHI Group manufactures ships, rolling stock, aircraft and jet engines, gasturbine power generators, refuse incinerators, industrial plants, steelstructures, and a wide range of manufacturing equipment and systems. KHIalso produces such world-famous consumer products as Kawasaki-brandmotorcycles and Jet Ski® watercraft.
Catalytica Energy Systems provides innovative products and services to meetthe growing demand for emissions control solutions in the power generationand transportation industries. Through its SCR-Tech subsidiary(www.SCR-Tech.com), the Company offers a variety of services for coal-firedpower plants using selective catalytic reduction (SCR) systems to reducenitrogen oxides (NOx) emissions. These services include SCR catalystmanagement, cleaning and regeneration, as well as consulting services tohelp power plant operators optimize efficiency and reduce overall NOxcompliance costs. Catalytica Energy Systems' other business activitiesinclude the design, development and manufacture of advanced products basedon its proprietary catalyst and fuel processing technologies to offercost-effective solutions for reducing emissions from combustion-relatedapplications. The Company's Xonon® Diesel Fuel Processing technology isdesigned to facilitate a significant reduction in particulate matter andNOx emissions from mobile and stationary diesel engines by improving theperformance of diesel particulate filters and NOx adsorber catalystsystems. Find Catalytica Energy Systems on the Worldwide Web atwww.CatalyticaEnergy.com.
This news release contains forward-looking statements within the meaning ofthe Securities Exchange Act of 1934, as amended, and is subject to the safeharbors created therein. These statements include, but are not limited to,those regarding the terms, prospects, timing and anticipated proceedsrelating to the completion of a sale of Catalytica Energy Systems' XononCool Combustion gas turbine technology and assets to Kawasaki, theCompany's belief that its divestiture of its gas turbine business andredeployment of capital and resources offer the greatest potential returnon investment, and the Company's beliefs regarding the effect of thetransaction on the Company's balance sheet and cost structure. Thesestatements are subject to risks and uncertainties that could cause actualresults and events to differ materially from those expressed in theforward-looking statements. These risks and uncertainties include, amongothers, the risk that the transaction will not close or will not closewithin the expected time frame or on the terms and conditions anticipatedby the Company; the ability of the Company to satisfy the conditionsprecedent to the closing of the transaction, including the risk ofobtaining necessary consents; the risks associated with the development,generally, of the Company's overall strategic objectives; the ability ofthe Company to strengthen its balance sheet, improve sustainability, andbuild additional value in its business; possible fluctuations in economicconditions affecting the markets for the Company's products and services;the risk that a market may not develop or be maintained for the Company'sproducts and services; the existence of unanticipated technical, commercialor other setbacks related to the Company's emissions reduction solutionsfor diesel engines that could result in termination of one or more of itsproduct development efforts; unanticipated events that could impact theCompany's ability to manage the SCR-Tech business; difficulties or delaysin strengthening SCR-Tech's sales and marketing activities or in executingSCR-Tech's business strategy; changes in the environmental requirementsrelating to certain emissions; the uncertainty of marketing, projectdevelopment and installation timelines and regulatory review outcomes; thepossibility that the Company may be unable to maintain current or developfuture strategic relationships for its products and services, includingwith OEMs, other strategic partners, and utility customers; the possibilitythat an OEM or other strategic partner could decide not to pursuedevelopment or commercialization of its products, which could negativelyand adversely impact our business or results of operations; and the otherrisks set forth in the Company's most recent Form 10-K and subsequent Forms10-Q filed with the Securities and Exchange Commission. The Companyundertakes no obligation to update any forward-looking statements toreflect new information, events, or circumstances occurring after the dateof this release.
CONTACT:For Kawasaki:Simon Phillips(281) 970-3255, ext. 13
For Catalytica Energy Systems:Megan MeloniInvestor Relations(650) 940-6253
SOURCE: Catalytica Energy Systems, Inc., Kawasaki Heavy Industries, Ltd.