Who Might Buy Zenn Motors?

On Wednesday, at its annual meeting, shareholders of Zenn Motor (TSXV:ZNN) agreed to renew their “poison pill” shareholder rights plan.

It’s been a long time in limbo for Zenn shareholders, the re-upped plan was originally implemented in late 2008. In the meantime, shares of the company have fallen from $6.40 in mid-2009 to recent lows barely above the $.50 cent mark.

Fiscal 2011 was a particularly difficult year for the Toronto-based electric car hopeful. The company had to make a serious reduction in head count and suspend its investment in EEStor, a Texas company that claims to have developed a revolutionary new capacitor for electricity storage that can reduce the weight of a conventional lead-acid battery by 90%. If Zenn does not find a suitor, it will almost certainly need to go back to the markets to raise capital, because its financial commitment to EEStor is milestone based.

Zenn Motors, which was founded in 2000, originally planned to build its own “Zero Emission No Noise” electric cars. The result was NEV, or “Neighbourhood Electric Vehicle” which hit the markets late in 2006. These vehicles were called LSV’s or “low-speed vehicles”, because they could only reach a speed of 40 km/h. The NEV never went into mass production. In 2009, Zenn decided to shift directions, and to instead focus on building a highway capable electric drive system to market to major auto manufacturers.

With a little more than $1.2-million left in the bank, it’s clear that anyone looking to acquire Zenn would do so mainly for their interest in EEStor. In April of 2007, Zenn invested 2.5 million for 3.8% of the company, then increased that interest to 10.7% with another $5-million investment in mid-2009. Although EEStor has been criticized a “secretive” by some, the company has attracted A-List investors such as former Dell Vice-Chairman Morton Topfer, venture capital heavyweights Kleiner Perkins and global defense giant Lockheed Martin who, in 2008, signed a deal with for the exclusive rights to integrate and market EESU units in military and homeland security applications. Zenn shareholders no doubt hope these investors might like EEStor enough to poke around at its interest in the company.

Shares of Zenn Motors closed Thursday down 3.3% to $.88 cents.

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