FUELCELL ENERGY, INC. (NASDAQ:FCEL) Files An 8-K Other Events
Item 8.01 Other Events.
As previously disclosed, from approximately 2007 through 2015, FuelCell Energy, Inc. (the “Company”), through a series of manufacturing and technology transfer agreements entered into in 2007, 2009 and 2012 (the “License Agreements”), relied on POSCO Energy Co., Ltd. (“POSCO Energy”) to develop and grow the South Korean and Asian markets for the Company’s fuel cell products and services. While the License Agreements remain in effect, due to certain actions and inactions of POSCO Energy, the Company has not realized any material revenues, royalties or new projects developed by POSCO Energy since 2016.
Also as disclosed in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended October 31, 2019, in November 2019, POSCO Energy spun-off its fuel cell business into a new entity, Korea Fuel Cell, Ltd. (“KFC”). As part of the spin-off, POSCO Energy transferred manufacturing and service rights under the License Agreements to KFC, but retained distribution rights, including trademarks, and severed its own liability under the License Agreements. We believe that these actions are all in material breach of the terms of the License Agreements and are effectively a misappropriation of the Company’s intellectual property. We have previously formally objected to POSCO Energy’s spin-off, and POSCO Energy has posted a bond to secure any liabilities to the Company arising out of the spin-off.
On February 19, 2020, the Company, through its Korean counsel, notified POSCO Energy in writing that it is in material breach of its obligations under the License Agreements by (i) its actions in connection with the spin-off of the fuel cell business to KFC, (ii) its suspension of performance through its cessation of all sales activities since late 2015 and its abandonment of its fuel cell business in Asia, and (iii) its disclosure of material nonpublic information to third parties and its public pronouncements about the fuel cell business on television and in print media that have caused reputational damage to the fuel cell business, the Company and its products. The Company also notified POSCO Energy that, under the terms of the License Agreements, it has 60 days to fully cure its breaches to the Company’s satisfaction and that failure to cure will lead to termination of the License Agreements.
About FUELCELL ENERGY, INC. (NASDAQ:FCEL)
FuelCell Energy, Inc. is an integrated fuel cell company. The Company designs, manufactures, sells, installs, operates and services stationary fuel cell power plants for distributed power generation. The Company’s segment is fuel cell power plant production and research. The Company’s power plants provide on-site power and utility grid support. The Company’s plants operate in approximately 50 locations on approximately three continents and generate approximately four billion kilowatt hours (kWh) of electricity. The Company’s fuel cell products, Direct FuelCell (DFC) power plants offer power generation for customers, including approximately 2.8 megawatts DFC3000, approximately 1.4 megawatts DFC1500 and approximately 300 kilowatts DFC300 plus derivations of the DFC product for specific applications. The Company offers project development; engineering procurement and construction (EPC) services operations and maintenance, and project finance.