Solar Integrated Technologies Inc. has sold its 30% interest in Dachland GmbH, a privately-owned German company that specializes in installing single-ply, green and photovoltaic roofing systems, for nominal cash consideration. Solar Integrated also entered into a supply arrangement with Dachland pursuant to which Dachland has agreed to purchase from Solar Integrated at least 8 MW of building integrated photovoltaic (BIPV) roofing systems through 2008.
As part of the transaction, Solar Integrated was released from all of its indemnification and bank guarantee obligations of up to US $4.1 million under the terms of its original investment. As a result of the sale, Solar Integrated expects to take a one-time, non-cash charge in the fourth quarter of 2005 of approximately US $1.8 million.
"The key driver for the Dachland investment was to provide Solar Integrated with a sales and installation platform for expansion into the critical German market," stated Jon W. Slangerup, Chief Executive Officer of Solar Integrated. "However, as we began to penetrate the market in Europe, we became strategically focused on developing additional distribution channels with qualified installation capabilities. In 2005, we made significant progress with this approach, including commercial arrangements with Dachland and through a Cooperation Agreement with our strategic partner, Sarnafil International AG. In the last six months of 2005, we sold and delivered a total of 16 projects in France, Germany and Spain."
"We have concluded that it is preferable to have commercial relationships that deliver margin-generating sales with installation performed by qualified third parties, not through a captive investment," added Frederik W. Mowinckel, Chief Operating Officer – Europe. "The sale of our equity position in Dachland has aligned our corporate structure with this strategic approach, while eliminating potential contingent liabilities and the commitment of managing a minority investment. With Sarnafil and Dachland as productive distribution channels, we look forward to continuing our aggressive market expansion into Europe."
In a separate development, Solar Integrated signed a revolving line of credit with an affiliate of GE Energy Financial Services for up to US$20 million. The credit facility is for a term of up to five years, and will be used for working capital and other general corporate purposes. Solar Integrated granted GE Energy Financial Services five-year warrants to purchase up to 2,000,000 shares of common stock of Solar Integrated at a strike price of US$3.392 per share.
"This US$20 million credit facility with an affiliate of GE Energy Financial Services, coupled with our recent US$37 million private placement of convertible notes, will support our growth," Slangerup stated. "We are very pleased that we are able to deepen our relationship with GE."
