By Portland Business Journal

Solexant Corp. executives will join Gov. Ted Kulongoski on Tuesday to announce the companyâ¿¿s plan to build a $200 million solar module manufacturing plant in Gresham that could one day employ 1,000.

The San Jose, Calif.-based solar technology firm is planning a 100,000-square-foot plant that will initially employ 100 before growing to 170 at full production.

According to city of Gresham documents, Solexant plans to eventually double the size of the initial plant before growing by another 800 megawatt for a total of 1 gigawatts of annual production.

At its full build-out, the plant could employ up to 1,000 people, rivaling the size of the Hillsboro plant operated by Germanyâ¿¿s SolarWorld A.G.

News of Solexantâ¿¿s plans first emerged in late May when its request for a $25 million loan came before the Oregon Department of Energy.

The location of its planned manufacturing plant, however, remained a question.

When Solexant first applied for the state loan in November it listed an address in Fairview where it would occupy an initial 126,000-square-foot building. A news release from the state said the company was considering sites near Gresham and Wilsonville.

As of May 20, CEO Damoder Reddy said the company had yet to choose a location.

The setting of Tuesdayâ¿¿s news conference settles the question: Kulongoski will join local leaders and company representatives outside Gresham City Hall.

Privately held Solexant is a four-year-old, venture-backed developer of what it refers to as ⿿ultra-thin-film solar cells.⿝ Its technology, first developed at the Lawrence Berkeley National Lab in California, increases solar cell efficiency while reducing manufacturing costs, according to the company⿿s website.

In early June the company said it secured a $41.5 million Series C round of financing, which it will use to help build out the Oregon plant. The round was led by Olympus Capital Partners.

Solexant has also received pre-certification for a state Business Energy Tax Credit to cover half of a $37.5 million project cost.

The $25 million loan from the state would be the largest in the roughly 30-year history of the state Energy Loan Program.

Under the terms of the loan, already approved by the Department of Energyâ¿¿s loan committee, the $25 million would be dispersed in three payments: Two $6 million payments and a final $13 million tranche.

Partly because of the size of the loan, the state is requiring that the $13 million portion of the loan be backed-up by a third-party in case Solexant defaults.

The Gresham City Council on Tuesday will take action on a plan that would have the city step in to repay the Department of Energy loan should Solexant fail to pay.

By the time the $13 million portion of the loan is dispersed, Solexant is expected to be generating a profit from modules produced at the Gresham plant.

According to the agreement with Gresham, Solexant has agreed that any future manufacturing expansion will occur in Gresham. The company must pay a penalty if they move out of Gresham or build a cell manufacturing plant somewhere else before growing the Gresham plant to 1 gigawatt capacity.

According to city documents, Solexant will pay Gresham a $30,000 fee when the agreement is signed and another $30,000 when the $13 million portion of the loan is dispersed.

The second payment can be waived if Solexant buys property in Gresham for its 1 gigawatt expansion prior to the final loan dispersal.

Even if it doesnâ¿¿t default on the loan, Solexant could be charged $100,000 per year during the 10-year payback period for the third loan disbursement if it doesnâ¿¿t meet agreed-upon production and profitability levels, according to the city.

Copyright 2010 American City Business Journals

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