Operations Will Continue During Sale Process
Ovonic Battery Company Sold to BASF Corporation
Energy Conversion Devices, Inc. ("ECD" or the "Company")
(Nasdaq:ENER), a pioneer in materials science and renewable energy
technologies, today voluntarily filed a petition for relief under
Chapter 11 in the U.S. Bankruptcy Court for the Eastern District of
Michigan ("Court"). As part of its bankruptcy plan, ECD intends to
sell through separate sales its wholly owned operating subsidiary
United Solar Ovonic LLC ("USO") and other assets, including its
minority stake in Ovonyx, Inc. The Company has received support for
its operating and divestiture plan pursuant to a formal Plan
Support Agreement executed by the Company with holders of
approximately 70% of the Company's $263.2 million in outstanding 3%
Convertible Senior Notes due 2013.
Sale of United Solar
USO, which will continue to operate during the sale process, has
also voluntarily filed a petition for relief under Chapter 11 in
the U.S. Bankruptcy Court for the Eastern District of Michigan. USO
is the global leader in manufacturing flexible, lightweight
thin-film photovoltaic ("PV") products for use in the commercial
rooftop and building-integrated markets. USO's Open Solar™
initiative has begun to show traction with new partnerships
resulting in an integrated roofing product with Marcegaglia in
Italy, and consumer products including the award-winning
SolarKindle cover for the Kindle™ e-reader.
"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."
The Company has retained the investment banking firm Quarton
Partners, LLC to manage the sale process, which is expected to be
completed in 90 days. To participate in the USO sale process,
please contact Andre A. Augier at +1 (248) 594-0400 or
aaugier@quartonpartners.com. For general questions about USO or its
restructuring, please contact the Company at the numbers below.
Sale of OBC and Other Businesses and Assets
On February 13, ECD sold its majority owned subsidiary, Ovonic
Battery Company, Inc. ("OBC"), to BASF Corporation for the gross
purchase price of $58 million in cash before transaction fees,
minority participations, and working capital and other adjustments.
OBC is the inventor and worldwide licensor of nickel-metal hydride
("NiMH") rechargeable battery technology and is pursuing advanced
battery technologies, including cathode materials for lithium-ion
chemistry batteries. 35 OBC employees have been hired by BASF as
part of this transaction. ECD's financial advisors on the
transaction were Quarton Partners, LLC and legal advisors were
Honigman, Miller, Schwartz and Cohn LLP.
ECD maintains a portfolio of other assets including intellectual
property, miscellaneous fixed assets, and an approximately 39%
stake in its Ovonyx, Inc. joint venture. Ovonyx holds the patents
in, and is pursuing the commercialization of, phase-change random
access memory ("PCM" or "PRAM"), also known as Ovonic Universal
Memory ("OUM"). Ovonyx is a joint venture with its co-founder Tyler
Lowrey and its shareholders include Intel Corporation. Ovonyx's
licensees include Micron, Samsung, Hynix, and ST Microelectronics,
among others. Quarton Partners, LLC will also manage the sale of
these additional assets.
Disposition of Solar Integrated
Technologies
Solar Integrated Technologies, Inc. ("SIT"), a U.S.-based wholly
owned subsidiary of ECD, has voluntarily filed a petition for
relief under Chapter 7 in the U.S. Bankruptcy Court for the Eastern
District of Michigan in a separate proceeding. SIT is an
engineering, procurement and construction management company with
solar installations in the U.S. and Western Europe. As a result of
this filing, SIT and its European subsidiary, Solar Integrated
Technologies GmbH, will continue to operate, though separately from
ECD and USO, during the disposition of the SIT proceeding.
Abbreviated Financial Results
For the quarter ended December 31, 2011, the Company generated
consolidated revenues of approximately $20 million and shipped
approximately 11 megawatts. The Company continued to operate at
unsustainable levels, resulting in substantial losses and a
continued decline in cash balances. With the proceeds from the OBC
transaction (which closed after quarter-end), ECD presently has
approximately $145 million in unrestricted cash and short-term
investments. The Company has determined that its current
financial position is insufficient to sustain the current operating
environment and make the necessary investments for the future of
the business, without restructuring through the bankruptcy process.
However, current cash is anticipated to be sufficient for expected
operations during the Chapter 11 proceeding, and therefore the
Company is not expected to require third-party debtor-in-possession
financing.
ECD will file with the Securities Exchange Commission a Form
12b-25 today that notifies investors that the Company will not be
able to file its quarterly report on Form 10-Q for the quarter
ended December 31, 2011. The Company has devoted its limited
available financial and accounting resources to prepare for the
bankruptcy filing and sale process. The Company intends to
make such disclosures as are required in the bankruptcy process,
including monthly reports.
Case Information
Information about the ECD and USO cases as well as relevant
information for customers, suppliers and partners can be found in
the "Restructuring" section of the Company's website at
www.energyconversiondevices.com. Media inquiries should be directed
to the Company at the contacts listed below. Parties interested in
acquiring USO or other ECD assets should contact Andre A. Augier at
Quarton Partners, LLC at +1 (248) 594-0400 or
aaugier@quartonpartners.com.
ECD has retained Honigman Miller Schwartz and Cohn LLP as legal
counsel and AlixPartners as financial advisors to assist the
company in the Chapter 11 process.
Based upon the estimated value of the Company's assets and
forecasted costs and operating losses during the Chapter 11
process, the Company does not expect to generate proceeds
sufficient to satisfy all of the Company's pre-existing obligations
to its creditors. Accordingly, unless the Company realizes
greater-than-expected value from the sales process, the Company
expects that no distributions will be made to holders of common
stock and the common stock will be extinguished upon confirmation
of the Chapter 11 plan.
About Energy Conversion
Devices
Energy Conversion Devices ("ECD") (Nasdaq:ENER) has a renowned
51 year history since its formation in Detroit, Michigan and has
been a pioneer in materials science and renewable energy technology
development. The company has been awarded over 500 U.S. patents and
international counterparts for its achievements. ECD's United Solar
wholly owned subsidiary has been a global leader in
building-integrated and rooftop photovoltaics for over 25 years.
The company manufactures, sells and installs thin-film solar
laminates that convert sunlight to clean, renewable energy using
proprietary technology. UNI-SOLAR® brand products are unique
because of their flexibility, light weight, ease of installation,
durability, and real-world energy production. ECD's Ovonyx joint
venture is the worldwide licensor of phase change memory ("PCM")
technology. For more information, please visit ECD on the web at
energyconversiondevices.com and on Facebook, and follow ECD on
Twitter @ECD_ENER.
Safe Harbor Statement
This release contains forward-looking statements within the
meaning of the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements do
not constitute guarantees of future performance. Forward-looking
statements include statements concerning our plans, objectives,
goals, strategies, future events, future net sales or performance,
capital expenditures, financing needs, restructuring, plans or
intentions relating to expansions, business trends and other
information that is not historical information. For example,
forward-looking statements included above are: "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"; and, "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". All forward-looking
statements are based upon information available to us on the date
of this release and are subject to risks, uncertainties and other
factors, many of which are outside of our control, that could cause
actual results to differ materially from the results discussed in
the forward-looking statements. Risks that could cause such
results to differ include, but are not limited to:
- the potential adverse impact of the bankruptcy proceedings on
our businesses and therefore the value of our assets;
- our ability to obtain court approval with respect to motions we
make in the bankruptcy proceedings from time to time;
- our ability to maintain our customer relationships and
establish new relationships;
- our ability to identify a buyer that is interested in acquiring
USO on an on-going basis at a price that will be supported by our
creditors;
- the worldwide market for solar energy systems;
- changes to government incentives related to solar energy;
- our customers' ability to access capital to finance the
purchase of our products;
- our ability to achieve expense reductions and levels of
one-time costs, including restructuring charges;
- our ability to meet all the terms and conditions of our debt
obligations;
- our ability through technology improvements to reduce cost and
improve the conversion efficiency of our solar products.
The risks and uncertainties and the terms of any reorganization
or liquidation plan ultimately confirmed by the Court can affect
the value of our various pre-petition liabilities, common stock and
other securities. No assurance can be given as to what values, if
any, will be ascribed in the bankruptcy proceedings to each of
these constituencies. A plan of reorganization or liquidation could
result in holders of our liabilities and securities receiving no
value for their interests. Because of such possibilities, the value
of these liabilities and securities is highly speculative.
Accordingly, we urge caution be exercised with respect to existing
and future investments in any of these liabilities and
securities.
The risk factors identified in the ECD filings with the
Securities and Exchange Commission, including the company's most
recent Annual Report on Form 10-K and most recent Quarterly Report
on Form 10-Q, could impact any forward-looking statements contained
in this release. Energy Conversion Devices, Inc. assumes no
responsibility to update any forward-looking statements contained
herein, except as required by law.
CONTACT: Michael E. Schostak
Director of Business Development & Communications
Energy Conversion Devices, Inc.
+1 (248) 299-6063
investor.relations@energyconversiondevices.com
Steven Blow
Eisbrenner Public Relations
+1 (248) 303-1067
sblow@eisbrenner.com
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