Enfield solar parts manufacturer STR Holdings announced on Tuesday its intention to sell the controlling interest in its company to a Chinese developer for $21.7 million by the end of the year.
Zhenfa Energy Group Co. will hold 51 percent of the shares in STR if the deal closes as planned in the fourth quarter. Zhenfa – which is based in Chongqing, China and employs 1,600 people – is a developer of solar arrays, installing 1.3 gigawatts of solar systems last year and owning a stake in 40 of those projects.
After the closing, Zhenfa will appoint four of the seven members of STR’s board of directors. The other three will be existing STR board members, including CEO Robert Yorgensen.
STR will remain headquartered in Connecticut after the closing, and its senior management team will continue running day-to-day operations. STR in July reworked the bonus payment contracts for two of its executives, noting the duo still would receive their bonuses if the company was sold, but not if it was liquidated.
STR plans to leverage its new relationship with Zhenfa to drive sales of STR solar encapsulants to Chinese solar panel manufacturers. STR lost its top customer – California-based First Solar – last year, forcing the company to lay off the majority of its Connecticut workforce, cease construction on a planned East Windsor manufacturing facility, and idle its own Chinese production facility.
As a stipulation of the deal, Zhenfa for five years will provide a rent-free, 108,000-square-foot production facility in China for STR to make its solar encapsulants. Zhenfa also will help STR with marketing, branding, receiving tax abatements, and developing its Chinese workforce.
Once the deal with Zhenfa is completed, STR plans to reward the stockholders of the other 49 percent interest in the company with a $22.6 million dividend payment, the majority of which will be funded by Zhenfa’s $21.7 million. STR is issuing new shares to give Zhenfa its controlling interest. The amount of STR shares on the market will increase from 26.5 million to 54.2 million.
The $21.7 million purchase price for a controlling stake in the company represents quite the fall for STR, which could have gotten $718 million for those same shares as little as three years ago.
STR’s stock price peaked at nearly $26 per share in November 2011, the same year it was named as one of the top technology firms in Connecticut by accounting company Marcum and was raking it roughly $70 million in quarterly revenues. The Zhenfa purchase price values each STR share at $1.60.
STR on Tuesday also announced its quarterly earnings report. In its fourth quarter ended June 30, STR’s net loss was $1.6 million, or 6 cents per share, an improvement from the $4.5 million net loss, or 11 cents per share, in the fourth quarter 2013.
