By FIONA ROTHERHAM
Fletcher Challenge Energy's volatile share price has rebounded before today's Nasdaq listing of US-based Capstone Turbine Corporation, in which Fletcher Energy has a 10 per cent stake.
California-based Capstone sells microturbines - small generators producing electricity and heat.
Fuel cell and microturbine technology is a hot talking point worldwide, although it remains more expensive than conventional power.
Capstone is planning to raise around $US115 million through an initial public offer of 8.3 million shares to finance expansion. Around $US11 million will go to Fletcher Energy as part-payment after Capstone last year bought back exclusive marketing rights for its stationary products.
The indicative price range per share is $US10 to $US12. UBS Warburg analyst Paul Richardson said that valued Fletcher's stake at between $170 million and $200 million, compared with the $20 million on its books.
Analysts say the listing could add 50c to Fletcher Energy's share price, which has already increased by a third this year with a string of good news, including higher than expected estimated reserves from its Pohokura gas find. Its share price closed up 20c yesterday to $6.40.
Fletcher Energy paid $US11 million for a 21 per cent stake in Capstone in 1996, and has since invested a further $US11 million in working capital.
Fletcher Energy is restricted in selling its holding for a period after the share sale.
Other shareholders include Microsoft co-founder Paul Allen, Compaq Computer chairman Benjamin Rosen and Canadian utility Hydro-Quebec.
Capstone has never made a profit and funded its expansion from capital raisings. But its first quarter revenues this year were $US4 million compared with $US7 million for the previous full financial year.
Last September, it announced commercial sales of its 30 kilowatt microturbine system, which can be fitted with power management electronics to operate on its own or be integrated with a power grid.
It has sold more than 300 units, with double that number on back order.
The compact systems are expected to be deployed where organisations want to reduce costs during peak demand or want an assured power standby.
They are now in use on buses in Los Angeles and Nashville and rubbish trucks in Japan.
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