Clean Diesel Technologies and Catalytic Solutions plan to merge

18 May 2010

Clean Diesel Technologies, Inc. (CDTI) of Bridgeport, CT and Catalytic Solutions, Inc. (CSI) of Ventura, CA have announced a merger agreement. The proposed merger will combine the businesses of CDTI and CSI, with CSI becoming a wholly-owned subsidiary of CDTI. In exchange for their CSI shares, current security holders of CSI will receive shares of CDTI and warrants to purchase CDTI common stock.

Each company will also undertake a capital raise prior to the merger in order to meet the target cash thresholds set out in the merger agreement that would ensure CSI shareholders would receive 60% of the shares of the combined company and CDTI shareholders would own 40% of the shares of the combined company, and, in the case of CSI, to raise cash for operations prior to the merger. CDTI has obtained commitments to raise $1.0 million at the time of the merger through the sale of common stock and warrants. CSI is contemplating raising $4.0 million, half prior to the merger and half at the time of the merger, through a private placement of convertible subordinated notes to a group of accredited investors, which will convert into equity at the time of the merger.

CDTI is a developer of clean diesel technologies, including the Platinum Plus fuel additive and other products.

CSI was founded in 1996 as an automotive catalysts coating company. In December 2007, CSI acquired Engine Control Systems, a supplier of retrofit and OEM diesel emission control products for heavy-duty engines. The heavy-duty diesel systems, not significantly affected by the recession, remain the strongest part of the CSI business.

Source: CDTI