+++++++++++++++++++++++++ * Consortium backs Australian challenge for share of the automotive world change to 42-volt systems
* 9 million vehicle market over next five years
* Funding for completion of production prototypes of CMC's Sytec 42-volt Auxiliary Power Unit (APU) - a "category killer"
Australian listed company CMC Power Systems Limited (ASX: CSY) has arranged an $8.8 million commitment from an investor consortium which will enable completion of production prototypes of its Sytec 42-volt Auxiliary Power Unit (APU) - a power pack critical for the global change to 42-volt systems for vehicles.
CMC Power Systems Limited is one of two or three potential key power pack providers in the evolution to 42-volt systems which is now beginning among leading automotive manufacturers to meet the higher electric requirements of modern vehicles. Nine million vehicles are expected to be manufactured with 42-volt systems during the next five years as the system is gradually introduced.
CMC Power Systems Limited has arranged the funds from a private consortium and with the signing of Heads of Agreement has received the first tranche of $1.1 million from MeesPierson Asia Limited, the worldwide Private Bankers of Fortis.
Fortis ranks among the 20 largest financial institutions in Europe and MeesPierson is one of Europe's top ten private banks.
The balance of the funding is to be provided by the private consortium in several tranches linked to the achievement of technical milestones in the APU development project.
CMC Power Systems Limited CEO Steve Arblaster said today that the funding would take the company through to the point where the first sales orders are secured.
"CMC Power Systems Limited has already reached the point where it has a low cost commercial power pack and has global strategic alliance partners in place to bring the unit to market," he said.
42-VOLT EVOLUTION STARTS THIS YEAR
Mr Arblaster said that: "In a virtually unheralded 'sea change' that will impact all cars and trucks, the automotive industry is beginning a rapid move to 42-volt electric systems to handle the power requirements of this next generation of vehicles.
"Systems are being introduced this year to a few top marque models and nine million vehicles will be produced with 42-volt power packs over the next five years. Before the end of the decade, production of 42-volt equipped vehicles will have risen to over ten million a year.
"In the same way that all vehicles moved from 6-volt systems to 12-volt systems back in the early 1950s, now the industry is about to move to 42-volt systems, where power output requirements will be beyond the capacity of current alternators/ generators to provide.
"A race existsbetween automotive designers globally to provide a low cost power pack for a commercially viable 42-volt generating system - and CMC Power Systems Limited is ahead in terms of its development schedule and ability to provide a low cost solution.
"CMC Power Systems Limited, which has an established track record of designing and engineering highly efficient, lightweight engines through unique patented innovations, eight months ago began developing its APU in response to the automotive industry's migration to 42-volt technology. This is being developed in conjunction with a world renowned UK-based engine development house.
The APU power pack is a small "drop-in" unit which incorporates an ultra-light, ultra-compact, advanced design four-stroke 500cc Sytec engine, a generator and an engine management system."
Early this year CMC Power Systems Limited, which is headquartered in Sydney and has its research and development facilities in Melbourne, formed a strategic alliance with the Aria Group, a leading California-based automotive design house, to form Aria Power Products, which will secure strategic partnerships with world class engine manufacturers and suppliers to ensure successful product acceptance by customers.
Aria is one of the largest independent and progressive automotive design houses in the US, whose clients include Toyota, Nissan, DaimlerChrysler, Bentley/Rolls Royce, and BMW.
CMC Power Systems Limited'sdevelopment schedule is to have a working prototype APU manufactured and commissioned for testing by the end of September this year and by the end of December initiate design and production tooling.
SHARES AND OPTIONS
Under the agreement, the investment consortium may contribute up to $8.8million to subscribe for 80 million ordinary shares at $0.11 cents each.
In addition, as part of the agreement CMC Power Systems Limited will grant 50 million options exerciseable on orbefore 31 May 2006 at $0.40 cents per share.
Tony Tang Company Secretary CMC Power Systems Limited (02) 9699 9000
For further information Steve Arblaster CEO CMC Power Systems Limited (02) 9699 9000
Doug Macdonald Capital Group 0408 143 404
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