Energy Conversion Devices Files Chapter 11; Seeks Sale of Businesses
Energy Conversion Devices, Inc. (ECD) has 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.
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."
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.
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.
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