Few should be surprised that Energy Conversion Devices (ECD) and its wholly owned subsidiary, United Solar Ovonic (USO), have entered Chapter 11 proceedings in the US Bankruptcy Court for the Eastern District of Michigan. ECD announced separately the sale of another subsidiary, Ovonic Battery Company, to BASF for US$58 million in cash. ECD said that it would also sell USO, which had produced Uni-Solar-branded flexible silicon thin-film substrates. Solar Integrated Technologies, ECD’s previously acquired EPC and BIPV construction firm, also filed for bankruptcy under Chapter 7 rules in separate proceedings.
ECD had stopped production of all thin-film products last year as it struggled and failed to reduce manufacturing costs as prices plummeted and inventory increased. The company also faced deadlines on note holder repayments, while failing to turn an annual profit in its many years of operation.
“We firmly believe there is a strong and sustainable commercial market for UNI-SOLAR products. USO's next-generation, 12% efficient, flexible PV products build upon 25 years of PV experience and enable highly competitive production costs with a fundamentally differentiated product. However, our current capital structure and legacy costs are preventing USO from making the investments necessary for the future of the business without restructuring through the bankruptcy process,” said Julian Hawkins, ECD's president and chief executive officer. “The processes we initiated today will afford greater opportunity for ECD to maximize value for its stakeholders and conduct an orderly sale of USO to ensure it is viable and successful for the long run.”
Regrettably, ECD had been touting its next-generation technology for many years, without having brought the technology to market.
ECD also noted that its bond holders, approximately 70% of the company's US$263.2 million Convertible Senior Notes due in 2013, had approved the decision on bankruptcy proceedings.
With the proceeds from the OBC sale to BASF (which closed after quarter-end), ECD said it had approximately US$145 million in unrestricted cash and short-term investments.
The company was supposed to report quarterly results today. However, the company will now report monthly sales via the courts during the Chapter 11 proceedings.