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Tuesday, 14 February 2012 10:14

Energy Conversion Devices files Chapter 11 bankruptcy

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Energy Conversion Devices files Chapter 11 bankruptcy MiBiz File Photo
AUBURN HILLS — Solar energy company Energy Conversion Devices (Nasdaq: ENER), the parent company of United Solar Ovonic LLC with operations in Greenville, announced today that it was filing for Chapter 11.

ECD has retained Honigman Miller Schwartz and Cohn LLP as legal counsel and AlixPartners as financial advisers for the Chapter 11 process.

The company said it plans to sell the various divisions of its business, including USO, a wholly owned subsidiary. USO, which will continue to operate during the sale process, has also filed for Chapter 11.

The company manufactures flexible, thin-film photovoltaic products for building-mounted and other applications.

United Solar has two plants in Greenville, Mich. in Montcalm County. After the closure of Electrolux, many locals hoped USO spelled a positive future, but the company went through repeated layoffs and furloughs and never seemed to achieve stability in its operations.

ECD also built a plant in Battle Creek in 2009, but never moved into the facility as market conditions soured with the global recession. The company at one time had strong European sales, but changes to incentive programs negatively impacted sales.

“We firmly believe there is a strong and sustainable commercial market for Uni-Solar products. USO’s next-generation, 12-percent 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,” stated Julian Hawkins, president and CEO of ECD.

ECD said it has retained the investment banking firm Quarton Partners LLC of Birmingham, Mich. to manage the sale process, which is expected to be completed in 90 days.

The company also announced that it sold its majority owned subsidiary Ovonic Battery Company Inc. 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 rechargeable battery technology and is pursuing advanced battery technologies, including cathode materials for lithium-ion chemistry batteries. Honigman, Miller, Schwartz and Cohn LLP served as legal adviser to ECD on the OBC transaction.

After the sale of OBC, ECD said has $145 million in unrestricted cash and short-term investments. It said the current financial position was insufficient for the company to be sustainable and to make necessary business investments, which resulted in the bankruptcy filing. The company expects to have sufficient cash to operate during the proceedings and does not expect to require third-party debtor-in-possession financing.

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