GPU and Ballard expand strategic relationship for stationary fuel cells

MORRISTOWN, NJ & VANCOUVER, Canada, Aug. 23, 2001 – Ballard Power Systems and GPU, Inc. announced today that their respective subsidiaries, Ballard Generation Systems (BGS) and GPU Diversified Holdings LLC have restructured their relationship to allow for increased focus on the market and distribution aspects of commercializing fuel cell products for stationary applications.

In anticipation of the launching of commercial stationary power generators by 2003, BGS has appointed GPU as a non-exclusive distributor of Ballard stationary fuel cell power generators in the Northeast and North Central United States. GPU plans to market Ballard fuel cell stationary power generators to both residential and commercial consumers of distributed generation resources.

In addition, GPU Diversified Holdings will exchange its shares in BGS in return for Ballard Power Systems stock. Ballard Power Systems will receive GPU’s 12.6% interest in Ballard Generation Systems in return for issuing GPU 1,366,063 Common shares in Ballard Power Systems for a total value of US $29.7 million (based upon the closing price on August 22, 2001 on the Nasdaq market).

“GPU was a founding partner with Ballard Power Systems when Ballard Generation Systems was created in 1996. We have worked well together over the past five years to understand the market requirements for fuel cell products. The time is now right to move that relationship from a partner in product development, to a partner in accessing the market for our products,” said Jim Kirsch, President of Ballard Generation Systems. “We believe that building on the successful working relationship between GPU and Ballard will be a key part of bringing commercial BALLARD® fuel cell products to market.”

“We greatly value our relationship with Ballard and are looking forward to offering consumers BALLARD® fuel cell power generators as they enter the market,” said Fred Hafer, Chairman, President and Chief Executive Officer of GPU, Inc. “There is no doubt that fuel cells will be major contributors to the energy supplies in the U.S. and around the world. It is exciting to be part of this advancement.”

“We are always looking for ways to improve and optimize the relationships we have with Ballard’s strategic partners to ensure that they successfully bring our products to market,” said Firoz Rasul, Ballard Power Systems’ Chairman and Chief Executive Officer. “Realigning our relationship with GPU is the first step in focusing on the market and simplifying our stationary alliance structure, consistent with Ballard’s overall strategy.”

The closing of the transaction with GPU is subject to receipt of applicable regulatory approvals in Canada and the United States.

Ballard Generation Systems was formed to commercialize PEM fuel cell stationary power generators that use the BALLARD® fuel cell. Following this transaction, Ballard Power Systems will own 71.5% of BGS.

GPU Diversified Holdings LLC is a wholly owned subsidiary of GPU, Inc. involved in a variety of non-regulated businesses and customer-driven technology development initiatives. GPU, Inc. is a registered public utility holding company providing utility and utility-related services to customers throughout the world. GPU serves 4.6 million customers directly through its electric companies – GPU Energy in the US, GPU Power UK in England, and Emdersa in Argentina. It serves an additional 1.4 million customers indirectly through GPU GasNet, its gas transmission subsidiary in Australia. The company’s independent power project business units own interests in and operate seven projects in five countries. GPU’s 2000 revenues were $5.2 billion and its total assets were more than $19 billion. GPU’s other subsidiaries include MYR Group Inc., GPU Advanced Resources, Inc., GPU Nuclear, Inc., GPU Service, Inc. GPU Telcom Services, Inc. and GPU Diversified Holdings LLC. (http://www.gpu.com).

Ballard Power Systems is a developer, manufacturer and marketer of zero-emission proton exchange membrane fuel cells for use in transportation, electricity generation and portable power products.

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