It was really just a matter of time for Energy Conversion Devices (ENER). The once promising leader in flexible thin film solar filed for bankruptcy protection this morning, dousing the optimism of recent wins by wholly owned subsidiary United Solar which the company plans to sell. USO landed a deal for integrated rooftop solar in Italy and most recently a deal with SolarFocus to power Amazon’s Kindles through solar. That subsidiary would make a nice asset for a more financially sound solar company. Yesterday, the company sold majority owned subsidiary Ovonic Battery to BASF Corp for $58 million.
The bottom line is that ECD’s current financial position and operations were unsustainable without bankruptcy, but the company did say it has enough cash to operate throughout Chapter 11 proceedings without the need for financing. However they also acknowledged not being able to pay previous creditors and that stockholders are SOL. That’s fancy financial jargon for shit outta luck.
“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.”
Solar skeptics will undoubtedly run with this news as further evidence that solar doesn’t work and should be abandoned. That’s unfortunate because the bankruptcies we’ve seen in solar over the past year is a natural part of a young, but maturing industry. This isn’t the end of it. We’ll see further consolidation through mergers, buyouts and bankruptcies and that’s all part of the process.