November 7, 2008
Solar Thin Films, Inc. Enters Into Agreement to Acquire Algatec Solar AG
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.
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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SOURCE: Solar Thin Films, Inc.