Under terms of the previously announced agreement, Distributed Energy Systems received $12.5 million in cash from Perseus. In exchange, the company issued Perseus 12.5% senior secured promissory notes, due on March 1, 2008 and secured by all of the assets of Distributed Energy Systems and its material subsidiaries. The company also issued to Perseus a five-year warrant for up to 7,954,536 shares of common stock at an exercise price of $0.80 per share.

The company said the definitive transaction agreement contemplates an additional $15 million investment by Perseus. Closing of the subsequent investment is subject to approval by the shareholders of Distributed Energy Systems. Proceeds from this investment would be used to repay in full the initial $12.5 million loan.

Upon funding of this $15 million, the company will issue a senior secured convertible promissory note, due on November 30, 2008. This note will be convertible into shares of Distributed Energy Systems' common stock at $1.20 per share, or at 75% of its market price, whichever is lower, at the time Perseus makes the investment.

Simultaneous with the issuance of the $15 million note, Distributed Energy Systems would issue a warrant to Perseus for up to 34,989,629 shares of common stock at exercise prices ranging from $0.80 to $3.00 per share. In addition, Distributed Energy Systems is pursuing commercially reasonable efforts to sell its Proton Energy Systems business. Further details of the financing transaction and its provisions are contained in the company's 8-K filings.

Ambrose L. Schwallie, Distributed Energy Systems' chief executive officer, said: "Thanks to the Distributed Energy Systems team and the knowledgeable energy group at Perseus, we have reached an agreement that bolsters our financial resources. It is a vital first step that, we believe, will facilitate the action required to reach operating profitability."

Bud Cherry, chairman of the Distributed Energy Systems Board of Directors, commented: "The closing of this initial transaction was identified in our recent SEC filing as a critical step in the rebuilding of the company. We are pleased that our leadership and the Perseus team were able achieve this milestone. We welcome the support and participation of Perseus, an experienced energy technology investor. Distributed Energy Systems must now execute and deliver results which create value for all of our stakeholders."

John C. Fox, senior managing director of Perseus, stated: "Distributed generation is part of the energy wave of the future. We made an investment in Distributed Energy Systems because we believe the company is well positioned to capitalize on the increasing global demand for distributed generation power technologies."

earlier related report
SkyPower sells equity stake to Lehman Brothers Private Equity
Toronto (SPX) Jun 06 - SkyPower Corp., one of Canada's leading renewable energy companies with a substantial portfolio of wind and solar projects across Canada has announced today that Lehman Brothers and its Private Equity business have acquired a significant equity stake in the company.

The investment includes an up-front acquisition payment, commitments to future project financing as well as other investment opportunities in the renewable energy sector.

A portion of the up-front payment will be used by the Adler Renewable Energy Foundation (AREF) a foundation which is being formed to help provide select schools and needy communities in Canada the ability to benefit from clean renewable power by having solar or wind power to augment or replace where possible their current power needs.

The current SkyPower management team, led by its Founder and Chief Executive Officer, Kerry Adler, will continue to be responsible for and oversee all ongoing day-to-day operations as well as the strategic direction of the company.

Kerry Adler, President and Chief Executive Officer of SkyPower commented: "This is an important milestone for SkyPower, our stakeholders and our partners. This transaction with Lehman Brothers provides us a unique solid platform whereby we can accelerate the growth of our business.

We believe that we will be better positioned to capture increased opportunities as part of our mandate and commitment to help Canada become a global environmental leader by developing our vast natural renewable power resources and generating clean, green renewable power. Lehman Brothers has clearly demonstrated its leadership and environmental responsibility, and speaking on behalf of the entire SkyPower team we are proud to be affiliated with an organization that is as committed to addressing the issues of climate change."

"We are excited to partner with the SkyPower management team in embracing the dynamic growth opportunities available in wind and solar energy,'' said Michael Odrich, global head of Private Equity for Lehman Brothers. "This investment is consistent with our Private Equity strategy of backing premier management teams and underscores the Firm's commitment to renewable energy."

Stated Theodore Roosevelt IV, chairman of Lehman Brothers' Council on Climate Change, "Our investment in SkyPower demonstrates the necessary linkage between sound financial decisions and a better environment."

Since its inception in 2003, SkyPower has focused on developing wind and solar power projects and has focused on a community-based development strategy which aims to include the First Nations of Canada and local municipalities in their renewable energy efforts. The extensive background of the SkyPower team and advisors of over 40 strong and growing, is the cornerstone and most critical component of SkyPower's strategic plan.

The vast experience of the team which come from industry sectors such as energy, telecom, real estate, BPO (business process outsourcing), banking and engineering has provided SkyPower with the talent and tools that will ensure its continued penetration and success in the renewable energy industry.

SkyPower was advised on the transaction by Marathon Capital headquartered in Bannockburn, Illinois, and Genuity Capital Markets based out of Toronto, Ontario. The transaction is expected to close in mid June 2007 and specific terms of the transaction were not disclosed.

Related Links
Perseus
Distributed Energy Systems Corp
All About Solar Energy at SolarDaily.com

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