New Energy Systems L.L.C. is set to become a new major shareholder in Quantum Solar Energy Inc. through a $20 million investment that would translate to a 34 percent ownership stake.

In a non-binding letter of intent agreed by both companies on Wednesday, New Energy will secure Series A preferred stock convertible into shares of Quantum Solar common stock on a one-for-one basis.

It will also receive a cumulative preferred dividend of $500,000 annually within seven years or until the company has received a total return of $6 million on its investment.

Once the transaction comes into force within 90 days, Quantum Fuel Systems Technologies Worldwide Inc. would own 51 percent of Quantum Solar, while New Energy and Asola Advanced and Automotive Solar Systems, an affiliate of Quantum and Quantum Solar, would own 34 percent and 15 percent respectively.

Quantum and New Energy will also have the right to appoint two members to Quantum Solar’s board.

Quantum Solar plans to use the new investment to construct a solar photovoltaic module manufacturing plant with a 45-megawatt annual capacity in Irvine, California. Serial production is expected to begin in 2010.

Quantum Solar expects to sell part of the production output of the proposed manufacturing facility to New Energy for its solar energy operations in California. It will also provide modules for Schneider Power Inc.’s portfolio of utility-scale solar power projects.

Earlier this week, Quantum also said it has signed a definitive agreement with Schneider Power under which Quantum will acquire all of Schneider Power’s outstanding common shares in a stock-for-stock exchange. The transaction is expected to close in the second quarter of 2010.

Quantum is a Nasdaq-listed alternative energy company that is involved in the development and production of alternative fuel and solar power generation technologies. The company is based in Irvine, California.

-   Natassia Y. Laforteza