Intel, Goldman Sachs-Backed SpectraWatt Files for Bankruptcy
SpectraWatt Inc., a closely held solar cell manufacturer backed by units of Intel Corp. (INTC) and Goldman Sachs Group Inc. (GS), filed for Chapter 11 bankruptcy protection, the second solar company to do so this month.
The Hopewell Junction, New York-based company owes creditors $38.7 million and plans to auction almost all of its assets, which it valued at $33.9 million in a filing with the U.S. Bankruptcy Court in Poughkeepsie, New York.
SpectraWatt was forced to seek protection from creditors because of competition from Chinese rivals and deteriorating prices in the solar cell industry, according to the Aug. 19 filing. Evergreen Solar Inc. cited similar reasons for its Aug. 15 bankruptcy filing.
“United States-based manufacturers are under a great deal of stress because of the emergence of manufacturers in China, who receive considerable government and financial support,” SpectraWatt’s Chief Restructuring Officer and Chief Executive Officer Brad Walker said in the filing. “This support, coupled with China’s inexpensive production costs, have created a competitive advantage for Chinese manufacturers and allowed them to become price leaders within the industry.”
SpectraWatt had a “noncompetitive production line based in the U.S., without means to reduce that cost,” Edwin Mok, an analyst for Needham & Co., said today in an e-mail. As solar prices fell, the company was “stuck in a situation where there was nothing else they could do.”
Both SpectraWatt and Evergreen have technology that’s “not competitive, and there was no method to reduce cost to make it competitive with Asian manufacturers,” he said.
Prices of solar cells dropped by more than a third this year to 81 cents a watt in July, according to Bloomberg New Energy Finance’s monthly spot survey.
SpectraWatt shut down its Hopewell Junction manufacturing plant in April, dismissing all 117 workers. It relocated its headquarters there in 2009 from Hillsboro, Oregon.
The solar cell maker also said it had received defective manufacturing equipment and silicon wafers from vendors, forcing it to sell finished products at reduced prices that led to losses, according to the filing.
The company has received interest from foreign buyers though hasn’t secured a lead bidder for the planned auction because the potential buyers aren’t familiar with U.S. bankruptcy policies, it said. SpectraWatt wants to hold the auction Sept. 28, before the market is inundated with equipment from other failing solar companies.
“Within the next three to six months, there is a high likelihood that a significant amount of used solar cell manufacturing equipment and related assets will flood the market and drive down the value of the debtor’s assets,” Walker said in the filing.
SpectraWatt was spun off from Intel, the world’s biggest chipmaker, in June 2008 and raised $50 million by selling preferred stock to its former parent and other investors including Goldman’s Cogentrix Energy LLC, PCG Clean Energy & Technology Fund LLC and Berlin-based solar panel maker Solon SE (SOO1), according to court documents.
Evergreen Solar, a rival U.S. solar panel maker, sought bankruptcy protection last week, owing creditors about $485.6 million. Evergreen’s convertible noteholders have agreed to buy the company at auction offering to forgive debt owed to them instead of cash.
The case is In re SpectraWatt Inc, 11-37366, U.S. Bankruptcy Court, Southern District of New York (Poughkeepsie).
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