Weichai Deal Rockets Power Solutions International, Inc. (NASDAQ:PSIX) Shares

Power Solutions International, Inc. (NASDAQ:PSIX)

In 2014, Power Solutions International, Inc. (NASDAQ:PSIX) was trading over $80 but today it is struggling to get over $10 per share. However today a research firm, Lake Street, upgraded their rating on PSIX shares from “Sell” to “Hold”. That good news comes one day after the company issued a press release regarding a share purchase and strategic collaboration agreement with Weichai America Corp. Weichai Power Co., Ltd., a China-based leading global designer and manufacturer of diesel engines, sells its products in more than 110 countries around the world.

Terms

Weichai America will purchase 2,728,752 newly issued shares of Common Stock of Power Solutions International, Inc. (NASDAQ:PSIX) at $8.00 per share for a total of $21,830,016. Weichai will also purchase 2,385,624 shares of Series B Convertible Perpetual Preferred Stock of the Company (automatically convertible into 4,771,248 shares of Common Stock 20 days following the distribution of an information statement relating to stockholder written consent) for an aggregate purchase price of $38,169,984, reflecting an as converted price of $8.00 per share of Common Stock. Following the transactions, Weichai America will own an aggregate of 40.71% of PSI’s total issued and outstanding common stock on a fully diluted basis (assuming the conversion of the purchased Preferred Stock into Company Common Stock as of such time).

Collaboration Agreement

The two companies have also agreed to a strategic collaboration agreement under which they will work together to accelerate market penetration opportunities for each company’s respective product lines across various geographic markets and end user segments. Through the alliance, Power Solutions International, Inc. (NASDAQ:PSIX) will gain access to Weichai’s international manufacturing facilities and supply chain network. The collaboration will enable Power Solutions International, Inc. (NASDAQ:PSIX) to broaden its existing product portfolio to meet the demands of its customers, improve its speed to market, and provide expanded access and exposure to new markets.

This deal should come as welcome news to shareholders of Power Solutions International, Inc. (NASDAQ:PSIX). PSIX shares have been under pressure for some time. Currently they are trading well below their 52-week high of $20.97 but also well above their 52-week low of $2.76. Short sellers have profited handsomely but many are still short PSIX shares as the shares have a short float figure over 42%. Also of interest is that company insiders own over 58% of the shares – of the outstanding 11.14 million outstanding shares, only 4.66 million are part of the float.

3/28/2017
Ticker Symbol AKER
Last Price a/o 2:30 PM EST  $                      8.36
Average Volume                    249,500
Market Cap (mlns)  $                    71.30
Sales (mlns) $365.10
Shares Outstanding (mlns) 11.14
Share Float (mlns) 4.66
Shortable Yes
Optionable No
Inside Ownership 58.97%
Short Float 42.41%
Short Interest Ratio 7.92
Quarterly Return -41.18%
YTD Return -14.67%
Year Return -44.64%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

Author: Marcus Anderson

Marc has a degree in economics and a MSc. in Finance. Marc worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

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