Hydrogen Engine plans 1.5 million share PIPE, $35.5 million offering of notes with warrants

New York, May 22 - Hydrogen Engine Center, Inc. said it plans to sell up to 1.5 million shares of common stock in a private placement and $35.5 million of 8% senior corporate notes due 2010.

The notes will be sold with warrants for 25% of the value of the funds raised in the offering and will be exercisable at the average bid price of the company's stock at the close of business on the settlement date, with a floor of $5.00 per share.

Pricing for the stock sale will be the average bid price for the stock at the close of business for the 20 days prior to settlement.

Riderwood Group Inc. will lead both offerings.

Funds will be used to fund continued expansion.

The company noted that its stock price has "risen considerably amidst increased news coverage in the past few days."

"Although we are gratified by the interest of investors, we are aware of no new or additional company information that would cause the price of our stock to rise so sharply," said Ted Hollinger, president, in a news release.

Hydrogen Engine stock closed at $21.00, up $10.50 on Monday.

Hydrogen Engine is an Algona, Iowa, maker of flex-fuel internal combustion engines for the industrial and power generation markets. Its products can run on hydrogen, gasoline, propane, natural gas or ethanol and, with the addition of a fuel reformer, on biodiesel.

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