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B.C. hydrogen companies Loop Energy, H2 plan merger

H2 looks to raise $15M as part of transaction

Vancouver-based hydrogen fuel cell company Loop Energy Inc. (LPEN-T) and Chilliwack, B.C.-based mobile hydrogen generator maker H2 Portable Power Corp. announced an intent to merge amid Loop’s business challenges.

H2 Portable also announced it plans to raise approximately $15 million for growth capital and stability for the merged company. H2 Portable will also be providing $2 million to Loop in February to maintain operations until the anticipated closing of the transaction.

Ben Nyland, president and CEO of Loop, has resigned following the signing of the amalgamation, with Paul Cataford appointed interim CEO and Daryl Musselman tapped as interim CFO and COO. Nyland will remain as a director of Loop.

Loop and H2 collaborated in 2023, when Loop provided hydrogen fuel cell systems to H2 Portable for use in its hydrogen-electric gensets.

“Hydrogen is the way, and customers are asking for solutions to replace their diesel-powered equipment,” Scott Mason, CEO of H2 Portable Power Corp, said in a release about the planned acquisition.

“This transaction provides what the hydrogen sector in Canada and around the world is missing – the integration of fuel cells into transformative equipment the market can begin adopting now, not in another five or 10 years. We are partnering with industry leaders and government to deliver on the promise of the zero-emissions hydrogen economy.”

Details of the transaction

The transaction, if completed, will see the following board members on the company:

  • Scott Mason, president and CEO of Rosedale, B.C-headquartered industrial equipment manufacturer TYCROP Manufacturing Ltd.;
  • Gary Teichrob, chief design officer at TYCROP;
  • Ken Hallat, former director of Sun Rype Products and a founding director of Sleeman Breweries;
  • Greg Bay, founding Partner of Cypress Capital Management Ltd.; and
  • Jim Barton, former president for Canada and Midwest at Hub International.

H2 Portable has a strategic product development and manufacturing partnership with TYCROP, as previously reported by Sustainable Biz Canada.

In the amalgamation plan, H2 Portable will join with a Loop subsidiary. Loop will acquire all of the issued and outstanding common shares of H2 Portable, while H2 Portable shareholders will receive common shares of Loop. The transaction will give H2 a backdoor listing in the TSX as well.

If the merger is completed, existing shareholders of Loop will own approximately nine per cent to 9.6 per cent of the shares of the combined entity. Shareholders of H2 Portable will own approximately 60.5 per cent to 62 per cent of the combined entity shares on a fully diluted basis.

Investors in the $15-million concurrent financing are expected to own 28.4 per cent to 30.5 per cent of the combined entity shares on a fully diluted basis.

Loop’s leased real estate portfolio will be downsized and non-core equipment sold off as part of the transaction.

The combined company will provide a platform to deliver hydrogen energy equipment across both companies’ existing and prospective customer bases, a report states, as well as leverage Loop’s supply of hydrogen fuel cells for industrial use cases.

The merger is expected to be complete in April 2024 if approved by shareholders and regulators.

About Loop and H2 Portable

Loop develops and designs fuel cell systems such as hydrogen fuel cell modules for buses, trucks, power systems and construction equipment.

The Vancouver-based company laid off approximately two-third of its employees and shut down its China office in September 2023, referencing a challenging economy for the hydrogen fuel cell market.

To pivot, Loop said in October 2023 it would explore divesting its module business, develop a new hydrogen fuel cell stack and seek investors.

H2 Portable develops hydrogen-powered portable systems, such as generators for movie sets and construction sites where grid power is often limited.

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