Energy Conversion Devices (ECD), based in Auburn Hills, MI, has filed for Chapter 11 bankruptcy and intends to sell its assets, including its main subsidiary United Solar Ovonic (Uni-Solar).
“We firmly believe there is a strong and sustainable commercial market for Uni-Solar products,” Julian Hawkins, ECD’s CEO and president, said.
“However our current capital structure and legacy costs are preventing [Uni-Solar] from making the investments necessary for the future of the business without restructuring through the bankruptcy process,” she said.
The solar roofing manufacturer employs 750 workers, 60 percent of which are in Michigan. The staff will “remain active employees” during the sales process though some have been furloughed, said company spokesman Michael Schostak.
The company has brought on the investment banking firm Quarton Partners to help manage the sale of its assets, which it hopes to be completed in about 90 days. ECD has approximately $145 million in cash and short-term investments to enable it to operate through the bankruptcy proceedings and, surprisingly enough, will not need debtor-in-possession financing, according to Katherine Yung of the Detroit Free Press.
“The bankruptcy follows an unsuccessful effort by ECD to find additional capital. In November, the money-losing company suspended manufacturing to cope with high inventory levels and announced the layoffs of 500 employees,” Yung writes.
“Its sales have suffered from cutbacks in solar energy incentives in Europe and a worldwide glut of solar panels. Analysts also said the company’s technology was no longer competitive,” Yung adds.
As a direct result of the ECD bankruptcy filing, the company’s shareholders will take a serious hit.
The company said it “does not expect to generate proceeds sufficient to satisfy all of the company’s pre-existing obligations to its creditors.” Furthermore, it expects that “no distributions will be made to holders of its common stock unless it realizes a greater-than-expected value from the sale of its assets.”
Its common stock will be extinguished once its bankruptcy plan has received court approval, according to the report.
“Long before it turned its focus to solar energy, ECD had pioneered nickel-metal-hydride batteries. The company was founded in Detroit by Stanford Ovshinsky, a famous local scientist and inventor, 51 years ago,” Yung writes. “In 1990, ECD established United Solar Ovonic, which eventually became a leading producer of thin-film solar laminates for industrial and commercial buildings around the world.”
In fact, Uni-Solar was so successful that it actually expanded and opened four Michigan plants. However, since 2009, the company has been in decline -- some think because of “increasing competition.”
ECD has lost more than $765 million in the last two years.