Solar Thin Films, Inc. (OTCBB: SLTN), a developer, manufacturer and
marketer of manufacturing equipment for the production of
"thin-film" amorphous silicon photovoltaic solar modules, has
entered into a share exchange agreement to acquire Algatec Solar AG
("Algatec"), a German company that produces and markets metallurgic
silicon crystalline solar panels or modules.
Under the terms of the proposed transaction, the stockholders of
Algatec will exchange 100% of the shares of capital stock of
Algatec for 50,000 shares of Solar Thin Films Series B-5
convertible preferred stock. The Series B-5 preferred stock is
convertible at any time at the option of the holders into that
number of shares of Solar Thin Films common stock as shall
represent 60% of its fully diluted common stock as at the date of
closing of the Algatec acquisition, after giving effect to the
share exchange and any additional shares of common stock issued or
issuable in connection with any convertible securities or warrants
issued prior to the acquisition. The shares issued to the Algatec
stockholders are, however, subject to dilution resulting from the
"Algatec Financing" described below or from the exercise of any of
the 12.0 million outstanding Solar Thin Film warrants, exercisable
at prices ranging from $2.00 to $3.30 per share. At the present
time, a total of approximately 57.8 million shares of Solar Thin
Films common stock are issued and outstanding.
Algatec currently has a backlog of contracted-for orders for
crystalline photovoltaic solar modules of approximately 92 MW in
2009. Approximately 87% of the 2009 backlog, or 80 MW, is
represented by sales to Q-Cells International GmbH, a leading
producer of metallurgical crystalline and other solar cells capable
of converting solar energy into electricity. Algatec has entered
into an OEM agreement with Q-Cells for the sale of approximately 80
MW of crystalline photovoltaic solar modules in 2009, which Algatec
believes will represent approximately $100.0 million in 2009
revenues. The OEM agreement with Q-Cells expires on December 31,
2009, and the renewal or extension of such agreement beyond such
date is subject to negotiation and mutual agreement of the
parties.
Based on its unaudited statement of operations, for the nine
months ended September 30, 2008, Algatec and its predecessor
generated approximately EUR 1.27 million (approximately USD $1.65
million) in net income on revenues of approximately EUR 8.6 million
(approximately USD $11.2 million), as compared to its 2007 results
of a loss of EUR 378,000 on revenues of EUR 2.5 million.
In order to increase its production capacity to meet its order
backlog, Algatec will have to expand its existing manufacturing
facility located in Prosen, Germany and install five lines of
production equipment in its facility. The cost of such facility
expansion and production lines is approximately EUR 34.6 million
(USD $50.0 million). Completion of the Algatec acquisition is
subject to a number of conditions, including execution of mutually
acceptable definitive agreements, mutual due diligence by the
parties, and completion of a $50.0 million debt financing for
Algatec (the "Algatec Financing"). Solar Thin Films, Inc. is
analyzing a number of fixed asset and equipment financing
alternatives for Algatec, including a potential high yield senior
secured note offering.
Consummation of the acquisition of Algatec is subject to a
number of conditions, including consummation of the Algatec
Financing by March 31, 2009 on terms satisfactory to the Algatec
management and Solar Thin Films. There can be no assurance that
Solar Thin Films will be able to consummate the Algatec Financing
or the proposed Algatec acquisition.
In a related development, on November 3, 2008, Algatec Equity
Partners, L.P., a Delaware limited partnership (the "Partnership")
invested an aggregate of $3.22 million in the equity of Algatec to
enable it to acquire all of the assets, equity and operations of
its predecessor limited partnership. The Partnership also acquired
27.5% of the outstanding share capital of Algatec. The Partnership
has also agreed to lend to Algatec on or before November 30, 2008,
an additional $2,600,000 or approximately EUR 2,000,000. Upon
funding of the loan, the Partnership will receive an additional
21.5% of the outstanding share capital of Algatec, thereby
increasing its ownership to an aggregate of 49% of the outstanding
share capital of Algatec. The operating management of Algatec will
own the remaining 51% of Algatec equity. The Rubin Family
Irrevocable Stock Trust invested $1.5 million as a limited partner
of the Partnership on the same terms as other limited partners and
owns a 15% interest in the general partner of the Partnership.
Under the partnership agreement, the limited partners own 95% of
the equity and assets of the Partnership and the general partner
owns 5%.
Based on its currently outstanding shares, and assuming no
additional shares of common stock or equity type securities are
issued prior to the closing of the Algatec acquisition, an
additional 86,675,400 shares of Solar Thin common stock will be
issued to all of the Algatec stockholders, including up to
42,470,946 shares to be issued to the Partnership. In such
connection, assuming it makes no further investment in the
Partnership, The Rubin Family Irrevocable Stock Trust will receive
as a partner of the Partnership (in addition to its current
ownership of 6,117,114 shares of Solar Thin Films common stock)
approximately an additional 10,511,558 shares of common stock.
Robert M. Rubin is the Chairman and Chief Financial Officer of
Solar Thin Films.
Commenting on the proposed transaction, Mr. Rubin stated,
"Combining forces with Algatec enables Solar Thin Films to produce
both equipment for amorphous silicon modules as well metallurgical
crystalline photovoltaic modules. With our recent agreements to
acquire BudaSolar Ltd. of Hungary and our proposed acquisition of
Algatec, Solar Thin Films is positioning itself to command
leading-edge technical expertise in the development of equipment
and modules utilizing of variety of technological innovations."
This press release is not a complete description of the Letter
of Intent and the transactions contemplated therein. For additional
information, a copy of the agreement and related transaction
documents can be found in Solar Thin Film's Current Report on Form
8-K filed with the Securities and Exchange Commission on November
6, 2008.
About Solar Thin Films
Solar Thin Films (www.solarthinfilms.com) develops, manufactures
and markets a complete line of manufacturing equipment for the
production of "thin-film" amorphous silicon photovoltaic ("PV")
modules, together with a wholly owned subsidiary based in Budapest,
Hungary. Personnel associated with the company have been
responsible for the setup of nearly a dozen amorphous silicon
photovoltaic factories worldwide. The Company sells both "turnkey
systems" to customers including CG Solar in China and Grupo
Unisolar in Spain, and contracted equipment to customers including
EPV Solar (Hamilton, NJ, USA). Its line of thin-film photovoltaic
manufacturing equipment positions the Company to take advantage of
the rapidly growing demand for solar modules and an expected market
shift towards "thin film" PV modules as part of a cost effective,
"clean technology" energy solution.
Forward-Looking Safe Harbor Statement
Statements in this news release regarding future financial and
operating results, potential applications of the Company's
technology, opportunities for the Company, and any other statements
about the future expectations, beliefs, goals, plans, or prospects
expressed constitute forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Any
statements that are not statements of historical fact (including
statements containing the words "will," "believes," "plans,"
"anticipates," "expects," "estimates," and similar expressions)
should also be considered to be forward-looking statements. There
are a number of important factors that could cause actual results
or events to differ materially from those indicated by such
forward-looking statements including: limited operating history,
need for future capital, and economic conditions generally.
Additional information on potential factors that could affect
results and other risks and uncertainties are detailed from time to
time in the Company's periodic reports, including Forms 10-K, 10-Q,
8-K, and other forms filed with the Securities and Exchange
Commission ("SEC").
These statements, and other forward-looking statements, are not
guarantees of future performance and involve risks and
uncertainties.
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