Chinese battery maker to purchase control of Altair

A Chinese company plans to purchase a controlling interest in Reno's Altair Nanotechnologies.

And Altair is looking to invest a portion of the $49.8 million it will raise in the deal to build a Chinese manufacturing facility to meet the demand from its largest shareholder.

Altair's management said last week it struck a deal to sell a 51 percent interest in the company to Canon Investment Holdings, a Chinese company that owns battery maker Zhuhail Yintong Energy Co. Ltd., commonly known as YTE.

Canon Investment Holdings will pay a bit less than 39 cents a share to purchase 125.9 million newly issued shares of Altair. The publicly held shares were trading at about 69 cents a share before the deal was announced.

Terry Copeland, president and chief executive officer of Altair, said his company also has agreed to sell big quantities of lithium titanate oxide the key ingredient in its power-storage systems to YTE.

In fact, he said, the proposed quantities are so large that Altair's staff and board are seriously looking at development of a manufacturing facility in China.

Currently, Altair produces lithium titanate exclusively at its Reno facility. YTE contracted to buy 20 metric tons of the material for delivery by the end of this year, and Altair would get $6.6 million by the end of 2011 for sales to YTE.

Over the longer term, Copeland said last week, YTE could demand as much as 5,000 tons of lithium titanate a year to make batteries for electric buses and other users.

YTE will hold an exclusive license to make batteries with the Altair technology for the Chinese market, and will hold a non-exclusive license to manufacture the batteries for markets elsewhere in Asia, Australia and New Zealand.

Copeland said the transaction, which requires approval of Altair shareholders, is expected to close by end of January.

He said the company didn't shop controlling interest in itself to other potential suitors, but it's left the door open for better offers. Canon would be due a breakup fee of $3 million if that happens.

After the transaction closes, Canon will name five of the nine directors on Altair's board. Al Yousuf LLC, a Dubai company that purchased a 14 percent take in Altair in 2007, paying $3.50 a share for 11.48 million shares, will hold one of the remaining board seats.

As Altair comes under the control of a foreign company, it will wind up contracts it holds with the U.S. Defense Department, Copeland said. Defense contracts accounted for most of the company's revenues of $1.5 million in the quarter ended June 30.

JMP Securities acted as advisor to Altair on the transaction. Canon Investment Holdings was advised by PacBridge Capital Partners.