December 17, 2004

Solectria and Azure Dynamics Announce Merger Agreement

WOBURN, Massachusetts, U.S.A. - Solectria Corporation (“Solectria”), a leading US hybrid electric power train and components supplier to the US military and builder of parallel hybrid electric systems for commercial vehicles is pleased to announce they have reached an agreement with Azure Dynamics Corporation (-TSX AZD & LSE - ADC ) (“Azure”, “Azure Dynamics”) a leading developer of hybrid electric drive trains for commercial vehicles, to have Azure acquire all of its outstanding shares.

Solectria shareholders will exchange all issued and outstanding preferred and common shares for approximately 25,681,000 of Azure’s common shares. Warrant and Option holders will be given an opportunity to exercise their rights prior to the closing, which is expected to occur before the end of January 2005.

Solectria and Azure Dynamics believe that this joining of forces creates many significant benefits to their respective shareholders:

• Solectria is a supplier of hybrid electric vehicles to the US Military and of heavy-duty hybrid electric commercial vehicles to customers such as DHL and USPS;
• Solectria is based in Boston, Massachusetts thereby providing Azure with an established base from which to immediately expand its US business;
• Solectria has focused on the light and heavy vehicle weight categories which when combined with Azure’s focus on light and medium categories provides the combined company with a broader based product offering;
• The broader product offering can be marketed over a wider geographic territory, in particular with Azure’s UK and European focus;
• The addition of Solectria’s employees will double Azure’s engineering base - the combined company will have well over 25,000,000 miles of hybrid electric and electric vehicle experience;
• Solectria has an established Parts and Services operation thus providing Azure with important additional infrastructure; in addition Solectria is ISO 9001: 2000 certified;
• Solectria’s product range is complementary to Azure’s - Solectria has Parallel hybrid technology and products whereas Azure has Series hybrids and as a result cross-selling opportunities are immediately available along with shortened development time and costs.

John Mulcair, the President and COO of Solectria, said, “This merger has amazing synergies with regard to products, markets and the skill levels of the people in both organizations, combined we will clearly be the world leader in commercial hybrids.”

Azure’s CEO Campbell Deacon stated, “This is a great opportunity for Azure to gain a US base and strengthen our market-leading position. We believe the hybrid electric commercial vehicle industry is going to experience consolidation in the near and medium term and this acquisition positions Azure at the forefront of our industry and as a world leader in hybrid electric systems for commercial vehicles.”

Wu Tzu Chien, President of ST Kinetics, a major shareholder of Solectria, said, “This is an excellent way for ST Kinetics to move our investment in hybrid electric technology into a more dominant market position. We believe this partnership will unlock the value, built over many years, in Solectria. The complementary nature of our product lines creates engineering and sales synergies. We see significant opportunities for Azure in the Far East and China and will be working with them to develop these markets.”

John Mulcair will become President and COO of the combined company. David Deacon Azures President and COO will remain on its Board of Directors and become Executive VP Marketing and Business Development. He will retain responsibility for branding, marketing, high level sales and will continue as a company spokesman to the industry and the media. James Worden, founding shareholder and CEO of Solectria, will independently pursue opportunities in the renewable energy sector and become a member of the Azure Dynamics Advisory Board.

Azure Dynamics Corporation provides Hybrid Electric and Electric Vehicle technology for commercial and military vehicles. Azure is a public company trading on both the TSX Exchange in Canada as well as the AIM market in London, UK. The Company is currently working with various partners and customers worldwide including Purolator Courier Ltd., Canada Post, London Taxis International, US Department of Defence, Leyland Product Development, Renault Trucks UK and the United States Postal Service. Azure has employees based in North America and Europe. For more company information please visit our website at www.azuredynamics.com.

Solectria Corporation, of Woburn, Massachusetts, is an ISO 9001-2000 certified, world leader in the development and manufacturing of a wide range of components for electric, hybrid, and fuel cell vehicles, and for the distributed generation of electric power. Solectria also provides comprehensive engineering services for electric drive train design and integration. Over 4,000 vehicles worldwide (greater than 25 million miles) -- including cars, trucks, buses, and industrial machines -- rely on Solectria's proprietary drive system technology. For more information please visit www.solectria.com

FOR MORE INFORMATION ON SOLECTRIA, CONTACT:

Mark Federle, Vice-President, Sales and Marketing (781) 932-9009
Email: marketing@solectria.com

back to top

Copyright 2005 Solectria Corporation. All rights reserved.