Westport Fuel Systems Inc (USA) (NASDAQ:WPRT) announced that it has entered into agreements to sell an 11.7% interest in the Weichai Westport Inc. (“WWI”) joint venture for gross proceeds of 48.2 million RMB (approximately US$7.2 million) to Weichai Holding Group Co., Ltd. (“Weichai”) and an additional undisclosed purchaser. Associated with the sale, Westport Fuel Systems will also receive a dividend payment of 23.8 million RMB (approximately US$3.5 million) from the joint venture, generating total gross proceeds of 72.0 million RMB (approximately US$10.7 million). This transaction is consistent with the company’s focus on strengthening its liquidity position.
Westport Fuel Systems is pleased to support the goal of Weichai to increase its majority ownership position in WWI. Westport Fuel Systems will still hold a minority interest in WWI and remains a committed partner in the joint venture. The company continues to advance development of its High Pressure Direct Injection 2.0 (“Westport™ HPDI 2.0”) products with WWI, with commercial launch in China planned for 2017. In addition, Westport Fuel Systems has signed a framework agreement with WWI for the supply of alternative fuel system components.
“China remains an important market for us and we are dedicated to supporting our OEM customers,” said Nancy Gougarty, CEO of Westport Fuel Systems. “There is increasing urgency around the globe to address urban air quality issues and natural gas fueled vehicles can play an integral role in reducing emissions. The WWI joint venture remains well positioned to support China’s transportation market and we continue to advance the commercialization of our HPDI technology in support of the heavy-duty sector. Our ongoing relationship with the joint venture will provide a strong foundation in support of our efforts to grow Westport’s presence in both these market segments. Further, this sale helps address our corporate goal of strengthening our balance sheet.”
The company will account for its minority interest in WWI through the cost accounting method as previously disclosed in its Q2 2016 financial results. Final release of all funds to Westport Fuel Systems remains subject to customary Chinese approval processes and foreign exchange. (Original Source)
Shares of Westport closed last Friday at $1.57, down $0.02 or -1.26%. WPRT has a 1-year high of $4.01 and a 1-year low of $1.29. The stock’s 50-day moving average is $1.47 and its 200-day moving average is $2.03.
On the ratings front, Westport has been the subject of a number of recent research reports. In a report issued on June 20, Rodman & Renshaw analyst Amit Dayal initiated coverage with a Buy rating on WPRT and a price target of $5, which represents a potential upside of 218.5% from where the stock is currently trading. Separately, on June 1, Canaccord’s John Quealy reiterated a Hold rating on the stock and has a price target of $5.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Amit Dayal and John Quealy have a total average return of -19.1% and 2.2% respectively. Dayal has a success rate of 29% and is ranked #3934 out of 4122 analysts, while Quealy has a success rate of 48.5% and is ranked #1104.
Westport Fuel Systems, Inc. engineers, manufactures and supplies alternative fuel systems and components. It offers brands for transportation and industrial applications. The company was founded on June 1, 2016 and is headquartered in Vancouver, Canada.