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Chart Industries completes expanded investment in HTEC

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Hydrocarbon Engineering,

Chart Industries Inc. has announced the completion of an expanded investment in HTEC Hydrogen Technology & Energy Corp. (HTEC).

Chart’s existing ownership in HTEC, following an initial investment that was completed in December 2020, was 15.6% of its capital stock on a fully-diluted basis. The latest investment expanded Chart’s ownership to a total of 25% of HTEC’s capital stock on a fully-diluted basis. As part of the expanded ownership, Chart partnered with I Squared Capital, an independent global infrastructure investment manager focusing on clean energy, utilities, digital infrastructure, transport and social infrastructure, which acquired 35% of HTEC’s capital stock on a fully-diluted basis in this transaction.

Together, Chart and I Squared Capital own 60% of HTEC. This investment provides HTEC with significant capital to fund new green hydrogen production projects and to expand its hydrogen fuelling station portfolio serving both the light-duty and heavy-duty markets. Among other things, Chart’s agreement with I Squared Capital provides Chart with preferential rights with respect to the purchase of shares of HTEC capital stock from this transaction that I Squared Capital may decide to sell in the future. In certain circumstances, Chart’s purchase of HTEC shares from I Squared Capital may be completed using Chart’s common stock.

HTEC designs, builds and operates hydrogen infrastructure to support the increasing hydrogen demand landscape, including hydrogen fuel cell electric vehicles. HTEC is active across the hydrogen value chain in Canada, with multiple green hydrogen production projects in its backlog and six stations expected by year-end 2021. Through its Technology Solutions platform, HTEC is also a leader in providing consulting services for companies growing their presence in the hydrogen space. Together, HTEC and Chart bring a comprehensive set of solutions to the North American hydrogen market. HTEC has a suite of actionable green hydrogen production projects, existing retail fuelling station networks and heavy-duty fuelling station experience in British Columbia, Quebec and Alberta, Canada. Chart brings broad process technology, including hydrogen liquefaction, and a 56-year history of building hydrogen equipment, including but not limited to storage tanks, hydrogen trailers and heat exchangers.

In conjunction with this strategic investment, Chart’s and HTEC’s existing binding commercial Memorandum of Understanding (MoU) remains in place and is approved and supported by I Squared Capital. The MoU establishes the commercial collaboration and equipment supply arrangements for Chart to supply HTEC projects. HTEC’s customer base, including Shell, 7 Eleven, Toyota and Hyundai, along with its solid relationships with Canadian governments, will help facilitate opportunities to expand Chart’s equipment presence both geographically and across its global customer base.

“Our increased investment in HTEC and partnership with I Squared Capital is highly strategic. It capitalises HTEC well to address near term opportunities where Chart can benefit as a core supply partner, while also providing flexibility to further consolidate our ownership position in a high-growth hydrogen business with a significant Canadian presence and customer base,” stated Jill Evanko, Chart’s CEO and President. “Canada is a high growth market for hydrogen, given the government’s commitments to the clean energy transition, with the hydrogen sector being a meaningful part of that commitment.”

“This additional vote of confidence from Chart and new investment from I Squared Capital gives HTEC the funding and partnerships necessary to accelerate our development of low carbon hydrogen solutions, which are crucial to rapidly hit global net-zero targets,” added Colin Armstrong, HTEC’s President and CEO. “We are pleased to be working very closely with both organisations.”

“I Squared Capital has tracked the growth of hydrogen in North America for some time and is excited to partner with two industry leading companies in HTEC and Chart in a sector that is so vital for the energy transition revolution,” said Thomas Lefebvre, Partner at I Squared Capital.

Winston & Strawn LLP and Stikeman Elliott LLP served as legal advisors to Chart on the transaction. I Squared Capital used Stikeman Elliott LLP and Kirkland & Ellis LLP as legal advisors and Greenhill & Co. as financial advisor. Fort Capital Partners acted as financial advisor to HTEC on the transaction, and Blake, Cassels & Graydon LLP as legal counsel.

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