Westport Fuel Systems Inc. announces that it has entered into agreements to sell an 11.7% interest in the Weichai Westport Inc. (WWI) joint venture for gross proceeds of 48.2 million RMB (approximately US$7.2 million) to Weichai Holding Group Co., Ltd. (Weichai) and an additional undisclosed purchaser. Associated with the sale, Westport Fuel Systems will also receive a dividend payment of 23.8 million RMB (approximately US$3.5 million) from the joint venture, generating total gross proceeds of 72.0 million RMB (approximately US$10.7 million). This transaction is consistent with the company's focus on strengthening its liquidity position.
Westport Fuel Systems supports the goal of Weichai to increase its majority ownership position in WWI. Westport Fuel Systems will still hold a minority interest in WWI and remains a committed partner in the joint venture. The company continues to advance development of its High Pressure Direct Injection 2.0 (Westport HPDI 2.0) products with WWI, with commercial launch in China planned for 2017. In addition, Westport Fuel Systems has signed a framework agreement with WWI for the supply of alternative fuel system components.
"China remains an important market for us and we are dedicated to supporting our OEM customers," says Nancy Gougarty, CEO of Westport Fuel Systems. "There is increasing urgency around the globe to address urban air quality issues and natural gas fueled vehicles can play an integral role in reducing emissions. The WWI joint venture remains well positioned to support China's transportation market and we continue to advance the commercialization of our HPDI technology in support of the heavy-duty sector. Our ongoing relationship with the joint venture will provide a strong foundation in support of our efforts to grow Westport's presence in both these market segments. Further, this sale helps address our corporate goal of strengthening our balance sheet."
The company will account for its minority interest in WWI through the cost accounting method as previously disclosed in its Q2 2016 financial results. Final release of all funds to Westport Fuel Systems remains subject to customary Chinese approval processes and foreign exchange.