Superalloy Powders Technical Assistance and Powder Supply Agreements

3 Months Ended

Sep. 30, 2013

Superalloy Powders Technical Assistance and Powder Supply Agreements

Superalloy Powders Technical Assistance and Powder Supply Agreements

13. Superalloy Powders Technical Assistance and Powder Supply Agreements

On September 30, 2013, the Company entered in to a multi-level agreement with United Technologies Corporation (“UTC”), through its Pratt & Whitney Division, which includes a technical assistance agreement and a long-term powder supply agreement. The technical assistance agreement provides for the licensing of technology associated with the production of superalloy powders. As a result of the agreements, the Company  plans to build a superalloy powder facility which is expected to take approximately 18 months to construct at an estimated cost of $20 million. Once the facility is qualified by UTC, the Company will supply UTC with superalloy powder for up to 20 years. The powder supply agreement provides for minimum guaranteed purchase quantities of specified materials for a period of 12 years.

According to the terms of the technology licensing agreement, the Company agreed to pay a $13.0 million up-front license fee, which is payable in equal quarterly installments beginning on December 15, 2013.  As of September 30, 2013, the $13.0 million up-front license fee is included in other assets and accrued liabilities.