One of the major owners in STR Holdings of Enfield unloaded two-thirds of its investment in the beleaguered solar manufacturer at a $30 million loss, according to filings with the U.S. Securities & Exchange Commission.
Los Angeles investment firm Red Mountain Capital Partners had once been the third largest owner of STR’s stock, but after three years that included fights over the direction of the company and the leadership of its board of directors, Red Mountain appears to be opting out of its investment, willing to recoup as little as 16 cents on the dollar.
Red Mountain Capital Partners spent $53 million between August 2011 and August 2012 to acquire 6.2 million shares of STR stock, for an average purchase price of $8.54 per share.
However, starting Dec. 17, Red Mountain sold 4.2 million shares of stock, accepting offers as low as $1.28 per share. By Jan. 24, Red Mountain reduced its STR ownership stake from 14.9 percent to 4.8 percent.
So, even though those shares cost Red Mountain $36 million to acquire, the investment firm was willing to sell them for $6 million.
The remaining value of Red Mountain’s ownership stake in STR is $3 million. The investment firm is no longer required to disclose its sales of STR stock to the SEC, as its ownership stake is less than 5 percent.
Neither Red Mountain nor STR returned calls for comment.
STR’s stock price was valued as high as $26 per share in November 2010, but after years of quarterly losses and the departure of its top customer, the company’s stock now is valued at $1.48 per share. The company has closed its East Windsor manufacturing facility and laid off more than 170 employees, including its chief operating officer.
Red Mountain stepped into STR in August 2011, buying up huge chunks of stock and saying that the then $11 per share stock price was undervalued. As the investment firm’s ownership stake grew, its managing partner, Willem Mesdag, demanded a seat on the STR board, saying he could help return the company to profitability.
STR officials blocked Mesdag’s attempt to get on the board and convinced him to agree to stop buying the company’s ownership stake in exchange for certain confidential information about the direction of the company.
Mesdag apparently decided to cut his firm’s losses in December as his initial $53 million investment has now returned $6 million from stock sales and $3 million in stock value.
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