Locations
HPQ Silicon Inc. (HPQ-X) is setting the groundwork to form a U.S. company where the Montreal-based sustainable materials firm can develop, finance and commercialize its North American battery activities.
For the proposed spinoff, named NewCo, HPQ has partnered with Dubai-based Open Markets L.L.C-FZ to aid with the formation. The collaboration is to establish the management, capital, customers, partnerships and operations of NewCo.
HPQ is targeting approximately $20 million (all figures US) in initial financing for NewCo.
Other than developing a plasma-based process of producing commercial-grade fumed silica from quartz, HPQ is behind silicon-based anode materials for use in lithium-ion cells and batteries. Compared to graphite cells, the silicon substitutes are expected to have more energy capacity and density, with applications in grid-scale energy storage and consumer electronics.
“We’ve made meaningful technical progress, and our focus is now shifting toward building a commercially operating business,” Bernard Tourillon, the chairman, president and CEO of HPQ, said in an email exchange with Sustainable Biz Canada.
NewCo's possible responsibilities
For years, HPQ and its partner Novacium invested in battery technologies with an eye to scaling it up to a business, Tourillon said. Such an intent demands a “different level” of investment, management expertise and operational infrastructure, he added.
By establishing a separate company, HPQ can raise capital to commercialize its battery business without relying on issuing HPQ shares and diluting the value for shareholders, Tourillon continued.
If formed, NewCo would become HPQ’s dedicated corporate and operating platform responsible for developing and commercializing its North American battery business.
NewCo’s responsibilities would include establishing manufacturing capabilities, developing customer relationships, building supply chains, recruiting management and securing capital.
Under the proposed governance structure of NewCo, HPQ's CEO would serve as chairman of NewCo’s board. Day-to-day operations, business execution and commercial development would be handled by NewCo’s management team.
The plan with the initial raise is to cover activities such as recruiting employees and investing approximately $8 million for acquiring production equipment and manufacturing capabilities.
Additionally, HPQ would contribute certain North American battery-related rights and commercial agreements to NewCo, in exchange for $4.2 million in cash consideration and an expected 55 per cent equity interest in NewCo following the initial financing.
The eventual production scale of NewCo, Tourillon said, is dependent on conditions such as how much financing is secured, the chosen manufacturing strategy and the commercial opportunities that have been developed.
Creating a 'commercially viable battery business'
Establishing NewCo in the U.S. could provide a dedicated platform for pursuing opportunities such as a listing on a major U.S. stock exchange, Tourillion said, while developing commercial activities across North America.
A shortlist of potential locations for a NewCo headquarters has yet to be finalized, he added.
With the assistance of Open Markets, HPQ is outlining the corporate and operating framework for NewCo, recruiting executives and arranging financing. HPQ is scouting for a CEO, CFO and other executives to lead NewCo.
“Ultimately, our objective isn’t simply to establish another company,” Tourillion said. “It’s to build a commercially viable battery business with the financial resources, leadership and customer relationships needed to succeed independently.”
Tourillion stressed the plan to develop NewCo is preliminary and NewCo has not been incorporated, nor have binding financing commitments been secured.
Industry Events
Locations
