Composite
Technology
Corporation Innovative Solutions for the Power Industry
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FOR IMMEDIATE RELEASE
COMPOSITE TECHNOLOGY SIGNS AGREEMENT TO ACQUIRE EU ENERGY PLC
SECURING RIGHT TO ACQUIRE THE XXXXXX TURBINE BUSINESS
IRVINE, CA - June 5, 2006 - Composite Technology Corporation (CTC) (OTC Bulletin
Board: CPTC) is pleased to announce the execution of the Share Exchange
Agreement with shareholders of EU Energy plc representing at least 95% of the
issued and outstanding shares of EU Energy plc (EU Energy), which allows the
acquisition of 100% of EU Energy. EU Energy owns 100% of the issued and
outstanding capital stock of a group of companies which own the rights to
produce and sell worldwide the XxXxxx range of wind energy generation turbines.
Under the terms of the Share Exchange Agreement, subject to customary closing
conditions, the EU Energy shareholders executing such agreement have agreed to
transfer all of their shares in EU Energy to CTC, and, following a special EU
Energy Shareholders' Meeting on the 14th of June and a closing scheduled for
July 3, 2006, CTC expects to receive 100% of the ownership of EU Energy, with
any dissenting shareholders transferring their shares in accordance with the
terms of certain "drag along" rights. The entire share capital of EU Energy will
be transferred to CTC in exchange for 39,169,665 shares of CTC's unregistered
common stock. The shares of CTC common stock issued to the five major
shareholders and representing 73.89% of the total EU Energy issued and
outstanding shares will be subject to a lock-up agreement with indemnification
obligations, in an "EU Energy Principals' Agreement". Mr. Xxxxxxx Xxxxxx, the
CEO of EU Energy, will be appointed as the President of CTC while Xx. Xxxxxx
Xxxxxxxx will remain as Chief Executive Officer of CTC following completion of
the acquisition.
The pricing of the transaction was established based on the CTC share price at
the close on May 11, 2006 and each selling shareholder will receive three (3)
CTC shares of common stock for every two (2) shares of EU Energy. This fixes the
value of EU Energy at approximately $60.7 million.
Through various frame agreements for the new 2 megawatt (MW) D8.2 60Hz wind
energy turbines, EU Energy customers have agreed to purchase 2,526MW (1,263
turbines) for delivery in 2007-2012, including certain customers which have
signed turbine purchase agreements for 286MW (142 turbines) for delivery in
2007. These frame agreements represent anticipated revenue of approximately $2.8
billion for EU Energy. Supply agreements with vendors of the major components
for the D8.2 turbines are in place for 2007 production commitments. EU Energy
plans to assemble and deliver two 50Hz D8.1 turbines during 2006. The initial
production for the 60Hz D8.2 turbines for delivery in 2007 will be assembled in
Lubeck, Germany, until a planned assembly facility in North America is
completed.
Additionally, EU Energy has entered into non-exclusive license agreements with
two companies to produce and sell the existing 1.25MW D6 turbine in China and
another non-exclusive license agreement with another Chinese company to produce
and sell the existing 2MW D8 turbine there as well. EU Energy has also signed a
Letter of Intent for an Indian joint venture to produce the D6 turbine in India.
The Share Exchange Agreement will be filed under Form 8-K with the Securities
and Exchange Commission (SEC) within the next three business days.
0000 XxXxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000 Tel: 000.000.0000
Fax: 000.000.0000 xxx.xxxxxxxxxxxxxxxxx.xxx
Xxxxxx X Xxxxxxxx, CEO of CTC and Xxxxxxx Xxxxxx, CEO of EU Energy have released
the following joint statement: "CTC and the EU Energy team have been working
together for two years to identify and secure excellence in wind power
technologies that will accelerate the implementation of wind power generation as
an economically viable reality for renewable energy. We believe that XxXxxx
turbines and CTC conductors, each address urgent issues facing congested grid
systems as well as the need for reliable renewable energy, while contributing
significantly to efforts to make the electrical supply industry greener, and
more efficient. We look forward to making our vision a real alternative for the
industry." Xx. Xxxxxxxx further stated, "The XxXxxx product line combines the
best of the tradition of German engineering and reliability with important
innovations that is designed to set the next benchmark in wind generation
performance and economics."
EU Energy/XxXxxx has two existing turbine models rated at 1.25MW and 2MW. The
flagship 2MW D8 turbine was introduced in Europe in 2002 and with its gearbox
that has had a zero-failure rating over the past five years, it has been noted
as one of the most reliable turbines in the industry. The next generation of
turbines to be introduced next year, known as the D8.2 and D8.1, are in the
final stages of development and will integrate the advanced WinDrive
hydrodynamic torque converter developed by Voith. The new torque converter will
be directly attached to XxXxxx'x proven drive train and control system and will
use a synchronous AC generator that connects directly to the power grid without
the use of power conversion electronics. This novel arrangement will eliminate
many of the traditional problems associated with integrating wind energy into
the modern grid. These enhanced versions will be sold as the D8.2 in the U.S.,
Canada and other 60Hz markets and the D8.1 worldwide in 50Hz markets.
ABOUT CTC:
Composite Technology Corporation, based in Irvine, California, develops,
manufactures and sells novel products that introduce the advantages of high
performance composite materials to create superior applications for the
generation, transmission and distribution of electrical power. The company's
novel and proprietary Aluminum Composite Core Conductor (ACCC) is a cost
effective solution for the introduction of reserve electrical transmission
capacity into a saturated electrical grid, while reducing operating costs and in
many cases capital costs. The elimination of significant sag at higher operating
temperatures allows users of ACCC to reduce transmission bottlenecks, span large
distances, reduce supporting structures and improve grid reliability. ACCC is
superior to conventional conductors of the same diameter in many ways,
including:
o Replaces existing steel core conductors and increases energy capacity up
to 2 times
o Virtually eliminates sag caused by high load, high-temperature conditions
o Requires fewer structures along new Rights of Way, reducing construction
costs and time
o Reduces line losses compared with same diameter conventional cables at
same operating temperatures
o Eliminates any bi-metallic corrosion issues
For further information visit our website at: xxxx://xxx.xxxxxxxxxxxxxxxxx.xxx
For Investor Relations Contact: Xxxxx Xxxxxxxx, (000) 000 0000
For Media Relations Contact: Xxxxx X. Xxxxxx (000) 000-0000
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This press release may contain forward-looking statements, as defined in the
Securities Reform Act of 1995 (the "Reform Act"). The safe harbor for
forward-looking statements provided to companies by the Reform Act does not
apply to Composite Technology Corporation (Company). However, actual events or
results may differ from the Company's expectations on a negative or positive
basis and are subject to a number of known and unknown risks and uncertainties
including, but not limited to, competition with larger companies, development of
and demand for a new technology, risks associated with a startup company, risks
associated with international transactions, general economic conditions,
availability of funds for capital expenditure by customers, availability of
timely financing, cash flow, timely delivery by suppliers, or the Company's
ability to manage growth. In addition, the closing of the EU Energy acquisition
is subject to the satisfaction of a number of customary closing conditions. If
these conditions are not satisfied, the acquisition may not be completed. Also,
the achievement of the benefits of the EU Energy acquisition is subject to risks
associated with acquisitions generally such as the potential for higher than
anticipated integration costs, failure to achieve anticipated synergies, failure
to retain key employees, the loss of customers, and failure to execute on the EU
Energy business plan. Other risk factors attributable to the Company's business
segment may affect the actual results achieved by the Company and are included
in the Company's Annual Report filed with the SEC on Form 10-K for fiscal year
ended September 30, 2005 and subsequent Quarterly Reports on Form 10-Q and
subsequent Current Reports filed on Form 8-K.
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