We Warned You: Energy Conversion, One More Solar Bankruptcy
"Guess that recent rally from $0.30 to $1.50 was all for naught," remarked Morningstar analyst Steven Simko, who maintained all along that Energy Conversion Devices did not have the capital to make the cost reductions that would be required to compete.
The bankruptcy shouldn't come as a surprise to anyone familiar with basic solar economics, where high-cost manufacturers like Energy Conversion are at a severe disadvantage in today's oversupplied, low cost, commoditized solar panel environment.Shares are down 78% on Tuesday and back near the 30-cent mark. The only issue in Energy Conversion's bankruptcy was timing. Because its convertible notes weren't due until 2013, there was a chance that the company wouldn't be forced to act until that bond deadline. Energy Conversion said in a release about its bankruptcy, though, that it had reached an agreement with 70% of the company's $263.2 million in outstanding 3% Convertible Senior Notes due 2013. In reality, the handwriting had been on the wall for longer, decades actually. In 30 years of operation, the company never turned a profit. Energy Conversion was able to sell its battery subsidiary to BASF for $58 million. However, the company now faces the grim prospect of trying to find a buyer for its solar manufacturing operations in bankruptcy. Solyndra, the most high profile of all the recent solar bankruptcies, recently
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