China's Zhenfa Energy to take control of US firm STR

Aug 12, 2014 - Chinese solar plants developer Zhenfa Energy Group Co Ltd will buy a 51% stake in US solar encapsulant maker STR Holdings Inc (NYSE:STRI) for USD 21.7 million (EUR 16.3m), the latter said today.

The purchase of the stake comes with an agreement that calls for Zhenfa to assist STR with the marketing and distribution of its encapsulant products to Chinese customers. The contract also envisages Zhenfa giving STR rent-free manufacturing facility in China for five years and helping it with raw materials and recruiting. The deal reflects STR new strategy to reduce capital expenditure by relocating manufacturing to China.

Under the terms of the deal, Zhenfa will buy some 27.6 million newly issued STR shares at USD 0.784 apiece. The proceeds will then be combined with about USD 900,000 of available STR cash and distributed as a special cash dividend to stockholders other than Zhenfa.

The transaction needs to be cleared by STR’s investors and certain regulators in both the US and China. Following its completion, which is scheduled to occur in the final quarter of the year, Zhenfa will have four seats on STR’s board of directors.

STR, or Specialized Technology Resources, makes encapsulants for photovoltaic (PV) modules. It is based in the US state of Connecticut and has locations in Spain, Malaysia, India, Japan and South Korea. The company closed 2013 with a loss of USD 18 million under the burden of restructuring costs. It had to close one of its plants in Connecticut, hit by the loss of its largest customer, troubled US solar panels maker First Solar. STR's sales plummeted 67% to USD 31.9 million last year.

Its soon-to-be controlling stockholder has a business that instals, owns and operates utility-scale PV power plants primarily in China. Last year, Zhenfa contracted about 1.3 GW of solar system installations.

(USD 1.0 = EUR 0.749)

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