Bloom Energy Shares Spike Higher After Receiving $4.5 Billion Order From SK Ecoplant

Source: Streetwise Reports   10/25/2021

Bloom Energy Corp. shares traded 37% higher after the company reported it is significantly expanding its partnership with SK ecoplant of South Korea to establish a market leadership position in the hydrogen economy.

Fuel cell technology firm Bloom Energy Corp. (BE:NYSE) is focused on delivering reliable, resilient, and always-on electric power that is clean and cost-effective. Along with SK ecoplant, a member of South Korea’s SK Group, Bloom Energy today announced the two companies “are expanding their existing partnership to fortify their market leadership in power generation and to establish market leadership in the hydrogen economy.”

The two firms reported that over a period of three years through 2024, SK ecoplant has agreed to purchase a minimum of 500 megawatts (MW) from Bloom Energy. The expanded partnership between the two companies represents a $4.5 billion revenue commitment by SK ecoplant.

The agreement between the companies calls for the creation of two hydrogen innovation centers in the U.S. and South Korea to advance the commercialization of green hydrogen. In addition, SK ecoplant will invest approximately $500 million in Bloom Energy.

The two companies formed a strategic partnership about three years ago and since that time have established projects totaling around 200 MW of capacity generating over $1.8 billion of equipment and projected service revenue.

The firms noted that today’s announcement calls for an additional 500 MW of power, or more, between 2022 and 2025, which is expected to result in approximately $4.5 billion in equipment and future service revenue over three years.

SK ecoplant’s CEO Kyung-II Park commented, “Bloom Energy is SK ecoplant’s largest strategic partner in clean energy…We have seen the unparalleled performance of Bloom Energy’s product over the past three years and the company’s ability to execute and deliver a superior solution. We have also had firsthand experience with Bloom’s new hydrogen fuel cells and highly efficient electrolyzers, and we are excited about the competitive advantage we will have.”

“We are demonstrating our confidence and furthering our commitment to this partnership by making this financial investment,” CEO Park added.

Bloom Energy’s Founder, Chairman and CEO KR Sridhar stated, “From the start of our relationship with SK ecoplant, we have recognized that working together will accelerate our growth and enable SK to become a leader in clean energy and infrastructure solutions…SK ecoplant’s confidence to invest in us is a clear validation of our products and our people. Together, we can accelerate the hydrogen economy on a global basis.”

The report mentioned that under the terms of the new agreement, Bloom Energy and SK ecoplant will establish hydrogen innovation centers in both the U.S. and South Korea for the purposes of “significantly accelerating the global market expansion for Bloom Energy’s hydrogen fuel cell and hydrogen electrolyser products.” The agreement also includes provisions for Bloom and SK ecoplant to extend their strategic alliance to other global markets.

Under the terms of the new agreement, SK ecoplant has agreed to invest approximately $500 million in Bloom Energy. The report listed that “SK ecoplant will invest $255 million in Bloom Energy by acquiring 10 million shares of zero coupon, non-voting redeemable convertible preferred stock at a price of $25.50 per share.”

SK ecoplant will also have the option to acquire an additional 11 million shares of Bloom’s Class A common shares until November 30, 2023 at prevailing market prices with a 15 % premium. The companies advised that the investment transaction is expected to close within 45 days, subject to ordinary closing conditions and regulatory approvals.

SK ecoplant, is based in Seoul South Korea and is an affiliate of the SK Group. The company is engaged int the engineering and construction of power plants, chemical plants, large infrastructure projects, construction and housing. The company recently stated that “its new goal to become a leading global eco-friendly and new energy company that connects the environment, people and finance through technology.”

Bloom Energy is a clean energy company headquartered in San Jose, Calif. The firm stated that “its Bloom Energy Server delivers highly reliable and resilient, always-on electric power that is clean, cost-effective, and ideal for microgrid applications.”

Bloom Energy began the day with a market cap of around $3.5 billion with approximately 173.6 million shares outstanding and a short interest of about 10.7%. BE shares opened 25% higher today at $25.25 (+$5.06, +25.06%) over Friday’s $20.19 closing price. The stock has traded today between $24.84 and $28.13 per share and at present is trading at $27.69 (+$7.50, +37.15%).

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