June 2008

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ALBANY, NY - An internal reorganization by a major Russian investor group that holds a big chunk of fuel cell developer Plug Power here has led to a complicated reshuffling of holdings among the group’s partners, including the naming of a new representative for the Russians on Plug’s board.

But, contrary to some media reports, it did not mean that the Russian group, Smart Hydrogen, Inc., was pulling out of the American company altogether, a Plug Power executive told H&FCL.

Smart Hydrogen, a partnership of two super-rich Russian oligarchs, Mikhail Prokhorov and Vladimir Potanin, invested $217 million in Plug Power two years ago (H&FCL May 06), a move that allowed Plug Power to acquire two Canadian companies, Cellex Power and General Hydrogen (H&FCL June 07). Potanin is president of Interros Holding Company, a global-scale investment firm, and Prokhorov is director general of Norilsk Nickel, described at the time of the buy-in as the world’s largest producer of nickel and palladium and the fourth-largest producer of platinum, a catalyst material essential in fuel cell technology.

All told, the Russian investors acquired about one third of Plug Power at the time.

Under the complicated restructuring, Potanin’s interest in Smart Hydrogen, holder of all of Plug Power’s Class B capital stock, increased to 50%. Potanin is said to be close to Russian former president and now prime minister Vladimir Putin. The other 50% are still owned by Norilsk Nickel. According to media reports, Prokhorov will no longer own any Plug stock, but will maintain a minority interest in Norilsk.

As part of the deal, Smart Hydrogen is replacing its departing boss, Sergey Polikarpov, as a Plug director with an American, Michael McGuire. McGuire is founder and managing partner of Triple Trunk Capital LLC, a company described in the Plug Power release as providing liquidity to second-tier corporate clients and second-tier banks in the Russian market. Previously, McGuire was founder and managing director of ARIA Worldwide, Inc. which focused on commodity trading and structured trade finance in Russia and Slavic republics.

The bottom line, for now at least, seems to be that the Russians are maintaining their position in Plug. “As an industry leader, Plug Power is still a key piece of Smart Hydrogen’s broader strategy to invest in the hydrogen fuel cell industry in the United States and elsewhere,” the Plug release quoted Sergey Batekhin, managing director of Interros Holding Co. and one of Smart Hydrogen’s four Plug directors, as saying. “We have consistently purchased additional Plug Power stock through our top-up rights in order to maintain a 35% stake in the company.”

Officially, Smart Hydrogen is headquartered in Limassol, Cyprus, according to an April 22 S-3 form filed by Plug Power. Filing this Securities and Exchange Commission registration form of shares held by Smart Hydrogen, Inc. was required within 18 months after the original $217 million investment, a deal that closed in June 2006 but there are various restrictions to any possible sale.

“It is our belief right now that the Smart Hydrogen group is not looking to move out of their 35% position,” Cathy Yudzevich, Plug Power’s manager of investor relations, told H&FCL by e-mail. “They are also maintaining their four board positions. We expect they will remain supportive of Plug Power, but like everyone else, are waiting to see evidence of market traction.”

Contacts: Plug Power, media, Eoin Connolly, 518/782-7700, ext 1643; investors, Cathy Yudzevich, 518/782-7700, ext 1448.