- Clean energy company Xebec Adsorption (XBC) has strengthened its existing partnership with Chinese energy firm Shenergy Group
- Xebec Shanghai’s joint venture partnership will receive a direct strategic equity investment of C$3.4 million from Shenergy
- The investment will be in exchange for debt and interest owed by Xebec for its share buyback obligation
- Together, the companies will pursue opportunities to develop hydrogen infrastructure in China, in response to the country’s new hydrogen policy
- Xebec Adsorption is up 2.46 per cent and is currently trading for $5.42 per share
Clean energy company Xebec Adsorption (XBC) has strengthened its existing partnership with Chinese energy firm Shenergy Group.
The existing Sino-Joint Venture with Xebec Shanghai will receive a direct strategic equity investment of C$3.4 million from Shenergy. The investment will be in exchange for debt and interest which Xebec owes for the company’s share buyback obligations.
The $3.4 million of long-term debt will be moved into the equity section of Xebec’s balance sheet, with $1.7 million in consideration being paid for outstanding interest owed.
Following this transaction, Xebec will own 60 per cent of the Sino-Joint Venture, with 35 per cent belonging to Shenergy, and the remaining five per cent held by a management incentive pool.
This strengthening of the companies’ pre-existing partnership is in response to China’s new hydrogen policy. In September, the country announced an aggressive hydrogen policy, which included a target of 1 million fuel cell electric vehicles on the road by 2030.
China soon followed up this hydrogen policy with an impressive pledge to make the nation carbon neutral by 2060. Hydrogen will play a central role in reducing the world’s greenhouse gas emissions, by replacing the use of higher carbon-based fuels.
As such, Xebec and Shenergy will pursue and open large-scale opportunities to develop hydrogen infrastructure in China. As a state-owned energy firm, Shenergy is already tasked with building out hydrogen infrastructure in Shanghai, and other Chinese cities.
Xebec’s President and CEO, Kurt Sorschak, said the company is excited about taking its partnership with Shenergy to the next level.
“Shenergy is an energy leader in China, and has been a key partner for Xebec Shanghai since 2015,” he said.
“They saw an opportunity to further our relationship by making a strategic equity investment into Xebec as they prepare for China’s new hydrogen policy, one of the most aggressive in the world,” he added.
Kurt went on to say that the partnership will help Xebec to grow its hydrogen business in Asia, and will also positively impact its activities in Europe and North America.
The definitive agreements for Shenergy’s investment in Xebec were signed at the end of October, with closing expected to occur at the end of December.
Xebec Adsorption is up 2.46 per cent and is trading for $5.42 per share, as of 12:07pm EST.