Solar Thin Films, Inc. (OTC BB:SLTN.OB), 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, a German company that produces and markets metallurgic silicon crystalline solar panels.
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.
Algatec currently has a backlog of contracted-for orders for crystalline photovoltaic solar modules of approximately 92 megawatts (MW) in 2009. Approximately 87% of the 2009 backlog, or 80 MW, is represented by sales to Q-Cells International GmbH (QCE.DE), 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.
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.
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."
About Solar Thin Films
Solar Thin Films 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.
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