TFG Radiant, Ascent Solar sign long-term partnership, including deal to establish CIGS fab in China

Financials

  • ASTI
    NASDAQ
    1.83
    +0.06 (3.39%)
    4:00PM EDT

Flexible CIGS thin-film PV developer/manufacturer Ascent Solar and TFG Radiant have signed a long-term strategic partnership that encompasses more than $275 million plus royalties. The deal includes investments by TFG Radiant in Ascent and a joint development agreement between the two companies to establish manufacturing facilities in East Asia. Under the terms of the agreement, TFG Radiant has also committed $165 million for the initial East Asia fab, bringing the total deal value to about $450 million plus royalties.

TFG Radiant is a joint venture of Radiant Group, a Chinese conglomerate in construction and real estate, and Tertius Financial Group, a private investment firm based in Singapore.

TFG Radiant has bought 6,400,000 shares of Ascent stock at a price of $1.15 per share (equivalent to $7.36 million), which represents a premium of 56% relative to the closing price of Ascent stock on Aug. 12. In addition, under certain conditions—including Ascent obtaining the approval of its shareholders as well as TFG Radiant meeting certain performance requirements relating to the initial fab construction—the group will receive the right to purchase an additional 9,500,000 shares of Ascent stock at a price of $1.55 per share (equivalent to $14.7 million).

There are approximately 37, 320,000 outstanding shares of Ascent stock, with about 21% of those shares owned by institutional investors, according to Google Finance. The TFG Radiant share purchases called for in the deal would account for 19.77% and 29.3%, respectively, of the solar company’s holdings.

In connection with the investment, TFG Radiant has the right initially to appoint one member to Ascent’s board and the entitlement to appoint a second member if TFG Radiant’s ownership percentage increases in the future pursuant to the exercise of its stock purchase option.

As part of the partnership, Ascent has agreed to exclusively license its technology for fabrication and distribution of lightweight CIGS PV modules to TFG Radiant for the East Asia territory, which includes China, Taiwan, Hong Kong, Malaysia, Indonesia, Thailand, Korea, and Singapore. Ascent retains all rights for the US and rest of the world.

The strategic alliance calls for Ascent to develop a next-generation PV production line in Colorado, in addition to continuing to ramp its existing fabs and improve its technology. Based on Ascent’s technology, TFG Radiant will build its first fabrication facility in China, a fab with 100MW of initial production capacity, with a projected direct investment of over $165 million.

TFG Radiant will cover consulting costs for Ascent personnel in helping to install equipment and bring the Chinese fab online. Ascent will receive partial ownership of the facility and royalties on all sales from that site. TFG Radiant also has the right to build, at its cost, multiple additional fabs for the East Asian markets, and Ascent will receive partial ownership, royalties, and consulting fees for all such factories.

The timeline for construction of the Chinese fab and its exact location have not been disclosed.

Ascent will garner license fees and nonrecurring engineering fees from TFG Radiant. In addition, Ascent will also receive milestone payments tied to the achievement of certain production and cost goals. The total of such milestone payments could exceed $250 million over the course of several years.

“This partnership is transformative in nature, said Ascent’s chairman, Amit Kumar. “It is based on the complementary expertise of TFG Radiant, in metal roofing and construction in one of the world’s largest markets, and Ascent, in market-leading flexible CIGS technology. This partnership enables Ascent to pursue the building-integrated and building-applied photovoltaic markets with a partner that will finance and drive manufacturing, sales, marketing, distribution, and installation.

“Ascent will receive ownership in the offshore fabs, and a royalty that will drop directly to our bottom line. Ascent will continue to develop and serve the premium markets through its current and future plants in the US. We will also seek similar partnerships for other geographies. Strategically, this type of partnership enables us to focus on R&D, and product and plant development, while our partners focus on scale up, cost reduction, and commercialization,” he explained.

Ron Eller, who replaced Farhad Moghadam as Ascent’s president/CEO in March as part of a company reorganization, noted that TFG Radiant will “bring expertise in innovative roof design and materials, balance of system design, volume manufacturing, and broad access to the East Asian markets. While we continue to ramp our current Colorado fabs, this arrangement enables us to work with a key partner to build the first non-U.S. and largest CIGS fab based on Ascent’s unique, flexible, monolithically integrated technology.

“TFG Radiant has the market leadership, distribution channels, installation capability and infrastructure, and established and highly motivated customer base that will accelerate the market for Ascent’s CIGS products in East Asia. TFG Radiant’s major financial and strategic commitments to this alliance are a strong endorsement of Ascent’s flexible CIGS technology,” he added.

“We have evaluated multiple PV technologies for rooftop and other applications,” said Inbo Lee, president/CEO of TFG Radiant. “After an extensive review of Ascent’s PV technology and its ease of adoption to roofing applications, we are convinced that Ascent’s ultralight flexible modules are the best for China and East Asia, which we expect to be the largest markets in the world.”

“Having been Ascent’s exclusive distributor in China for the past year, we know this is the product our customers want. The partnership with Ascent will strengthen our leadership position in innovative metal roofing and construction, and propel us to be the market leader in building integrated, building applied and other solar applications in the East Asia markets. Needless to say, this partnership is very important and strategic to our future growth,” he concluded.

Ascent will hold a conference call to discuss its second-quarter financial results and more details about the agreement with TFG Radiant at 3 pm MDT today (Aug. 15).

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