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Tuesday, August 29, 2006

AstroPower: Decline of a solar photovoltaic star remains an untold tragedy?

Back in May, General Electric (NYSE:GE) announced the layoff of 85 workers and solar cell production would cease at its Glasgow, Delaware, plant. GE acquired the plant and assets of AstroPower from bankruptcy in March 2004 to form GE Energy, Solar Technologies. As always, delawareonline: The News Journal, in an article by provides the best coverage of events at GE Solar and the former AstroPower. While GE is expanding solar module production using cells from outside suppliers, does this event mark the end of the both recycled wafer and APex™ Silicon-Film™ solar cell technologies developed by solar industry pioneer AstroPower? GE's Global Research Centers will likely continue solar research programs directed towards high performance and low cost photovoltaic cells in the pursuit of ECOMAGINATIONSM. However, there are no posts regarding photovoltaics at the GE Global Research Blog, From Edison's Desk.

As the worldwide solar photovoltaic industry expands production at a rapid pace and confronts silicon shortages and solar module demand growth fluctuations, the rapid decline of industry high flier AstroPower may provide some sobering lessons.

First, let’s review a chronicle of events leading to the bankruptcy of AstroPower and the aftermath.

July 31, 2001 - AstroPower, Inc. today announced that it has signed an agreement to acquire Aplicaciones Tecnicas de la Energia, S.A., commonly known as Atersa, a privately held company based in Valencia, Spain.

August 1, 2002 - AstroPower, Inc. Reports Second Quarter Results

AstroPower stunned analysts and investors with their second quarter 2002 results. Revenue was $20.4 million representing (1%) one percent sequential growth and $4.9 million below analyst estimates, sparking nine class action lawsuits. The Stanford Law School Securities Class Action Clearinghouse has the AstroPower, Inc. Company and Case Information. The lawsuits allege that AstroPower misrepresented its financial and business status between Feb 22, 2002, and August 1, 2002. In addition to AstroPower, Inc., CEO Allen Barnett, Ph.D., and CFO Thomas Stiner are named as individual defendants.

April 1, 2003 - AstroPower delays filing of 2002 fourth quarter and annual results to the SEC.

April 21, 2003 - AstroPower, Inc. announced today that it received a NASDAQ Staff Determination letter on April 17, 2003 indicating that AstroPower does not comply with the requirements for continued listing set forth in Marketplace Rule 4310 (c) (14) as a result of its failure to timely file its Annual Report on Form 10-K for the year ended December 31, 2002 with the Securities and Exchange Commission. Accordingly, shares of AstroPower's common stock are subject to delisting from the NASDAQ National Market. As a result, the trading symbol for AstroPower common stock will be changed from APWR to APWRE at the opening of business on April 22, 2003.

May 27, 2003 - AstroPower's CEO and CFO resign
The Board of Directors then accepted the resignations of Allen Barnett, Ph.D., the Company’s Chief Executive Officer, and of Thomas Stiner, the Company’s Chief Financial Officer, from their respective executive positions with AstroPower and removed two other management employees.

July 24, 2003 - AstroPower, Inc. Announces NASDAQ Delisting

July 25, 2003 - AstroPower, Inc. Engages Bridge Associates to Provide Interim Management and Operational and Financial Consulting Services

February 1, 2004 - AstroPower, Inc. (OTC: APWR.PK) announced today that it has reached an agreement to sell certain of its U.S. business assets to GE Energy. To facilitate the sale, among other reasons, AstroPower has filed a petition for reorganization under Chapter 11 of the Bankruptcy Code in United States Bankruptcy Court in Delaware.

It is interesting to note that Evergreen Solar (NASDAQ:ESLR), Files Objections With AstroPower Bankruptcy Court, was also interested in acquiring the assets of AstroPower and felt the sale had not been open and fair.

March 12, 2004 - AstroPower, Inc. (OTC: APWRQ.PK) announced today the US Bankruptcy Court presiding over AstroPower’s Chapter 11 proceeding approved the sale of most of AstroPower Inc.’s US business assets to General Electric Company’s designee Heritage Power LLC. The sale price was $15 million cash plus the assumption of certain liabilities. The sale is expected to close by the end of March.

June 16, 2004 - Registrant filed a Motion with the US Bankruptcy Court in the District of Delaware announcing that it has reached an agreement to sell 100% of the equity of Aplicaciones Techicas de la Encergia, S.L.(Atersa), its Spanish subsidiary, to Elecnor, S.A., (Elecnor) a Spanish concern.

July 14, 2004 - AstroPower, Inc. announced that the US Bankruptcy Court presiding over AstroPower’s Chapter 11 proceeding approved AstroPower’s participation in the disposition by an AstroPower subsidiary of 100% of the share capital of Aplicaciones Tecnicas de la Encergia, S.L.(Atersa) its Spanish operations to Elecnor, S.A.., (Elecnor) a Spanish Corporation on July 12, 2004. The sale closed on July 14, 2004 in Madrid Spain. The sale price was 3.0 million euros. This transaction completes the sale of substantially all of the assets of AstroPower Inc. and its nondebtor subsidiaries.


December 10, 2004 - Bankruptcy or Receivership Final Plan approved.


In a final twist to the AstroPower saga, AstroPower Liquidating Trust, operated by Bridge Associates, has sued KPMG for mismanaging company audits.

So what went wrong at AstroPower? This question may remain unanswered even after all the lawsuits proceed through the courts.

Bridge Associates, the turnaround and crisis management firm brought in to salvage AstroPower, has an informative case summary regarding the still current “engagement”. Bridge Associates summarizes the AstroPower challenge as follows. “The Company discovered a substantial financial reporting misstatement which led to the departure of high level executives. The Company also faced a severe liquidity crisis caused by historical operating losses and significant research and development spending.”

Per Bridge Associates, there are apparently two dimensions to AstroPower’s demise.

1) Allegedly, the company was inflating revenues and profits in the 2002 class period and may even have been incurring losses. In the past, AstroPower had research contract revenue recognition issues. See U.S. sues AstroPower for $7.9 mln in contract dispute.

2) Most likely, although this is pure speculation, Silicon Film production was troubled and wasting company cash and material resources. GE Solar ceasing solar cell production is perhaps the best confirmation that Silicon Film continues to have unidentified manufacturing issues.

While the broad stokes of the AstroPower story seem clear, the details of misstatements, mismanagement, losses, and production issues have still not emerged.

For an uncensored view point, AstroPower fufills (fulfills ed.) legacy is an unflattering, unsubstantiated, and anonymous blog entry by a supposed, former AstroPower employee.

APWR: an electrifying experience provides an individual investor’s post mortem of his failed AstroPower investment and how to recognize the signs of trouble.

Dr. Barnett’s research and professional reputation have not been diminished by the AstroPower saga. In November 2005, Dr. Barnett, as principal investigator and research professor, was chosen to lead a broad consortium of 15 universities, corporations and laboratories, spearheaded by the University of Delaware (UDEL), to develop Very High Efficiency Solar Cells (VHESC) with 50% efficiency within the next 50 months. The Defense Advanced Research Projects Agency (DARPA) is funding the VHESC effort with up to $33.6 million of a potential $53 million research budget.

In Silicon Valley, the highest flying companies tend to stumble around the time they move into a new headquarters "palace". AstroPower’s troubles may have started before February 2002, when they moved into their new 158,000 square foot facility with America’s Largest Installed Solar Power System. But the former AstroPower headquarters building in Glasgow, Delaware, may indeed be cursed. Since the Christina School District acquired the building with plans to convert it into a middle school, a financial crisis at the district, prompted by a severe budget shortfall, forced the plan to be delayed.

If you have first hand insights into the decline of AstroPower, please submit your anonymous comments or email me - confidential sources will not be identified.

(Full disclosure: I owned shares of APWRE stock when it was delisted from the NASDAQ.)

10 Comments:

Blogger FashionLover said...

GOOD ONE! Impressed... Women's Fashion Trends

5:36 AM  
Blogger Edgar A. Gunther said...

Question from a comment on the Ruse Part 1 article.

Mr. Gunther:
How much money did you lose with Astropower stock???

I lost an amount significant to me on APWRE stock, but it was only a small percentage of my porfolio. Regardless of the specific circumstances about the AstroPower bankrupcy, this was a poor trade for two reasons:
1) I should not have bought a stock with unresolved financial restatement issues. AstroPower never filed a 10K again.
2) I thought the stock was cheap and couldn't go lower. Of course, stocks can always go to zero. And it did!

11:42 PM  
Anonymous Anonymous said...

Good summary Edgar. You're right, those "previous employees" were inconsequential.

There were a lot of things that resulted in AstroPower's downfall. Astropower's good old boys have been resurrected in the form of "Blue Square Energy". Let's hope thier problems weren't resurrected as well.

Solar energy doesn't need another black eye.

I must admit, I'm still surprised Alan's reputation has seemed to walk away from that whole debacle unscathed. I hear however that the lawsuits (and the whole incident) have taken their toll on him, and of that I am not surprised. I remember when things started going south in late 2002 - he seemed to lose a lot of his zest. And he was a zesty guy.

-Dave

4:22 AM  
Anonymous Anonymous said...

Glad you liked my (uncensored) blog... it's not really intended for serious consumption (or possibly just "consumption, period"), but I laughed at the thought of what people must think when they got there through your article.

On a more serious note, I always thought that the key to AstroPower's undoing was that Bush's 2002 budget drastically cut alternative energy funding, immediately after AstroPower underwent substantial expansion (I think that their new "palace" was completed in 2001). I imagine that an alternative energy company that does significant R&D must depend heavily on government money to stay solvent, and that having that underpinning cut out from beneath them immediately after such an expansion was disastrous. I always figured that the events that occurred afterwards were just a poor solution to being put in a bind like that. That's just a guess based on reading the news, though.

12:24 PM  
Blogger Edgar A. Gunther said...

Here is an online cached
copy of AstroPower
fufills legacy
; otherwise try here.
  The original Blog has been "reset" and the domain might have
been grabbed by someone new.

12:14 AM  
Anonymous Anonymous said...

The explanation of Astropower's demise is very simple: Allen Barnett is a born crook. He has the character traits of a middle-level Mafioso. I was a member of the faculty search committee at the University of Delaware when Barnett first applied for the post of director of the Institute of Energy Conversion. I immediately recognized his CV as grossly inflated, the work of a BS artist, and recommended strongly that he not be hired. I was outvoted. Subsequent events proved me right. In one egregious case he attempted to file as sole author of a US Patent which was in fact the work of his subordinates. Fortunately we stopped that one. Nevertheless the guy seems to have led a charmed life, and somehow escaped exposure until now. He bounces from one failed venture to another, always with a facile explanation. His former employees know the whole story. So does his first boss, Fred Adler, who set him up as CEO of Xciton and shortly removed him again.

9:04 PM  
Blogger Edgar A. Gunther said...

Carl Nelson Consulting has a nice summary of AstroPower news history with an SBIR spin.

11:56 PM  
Anonymous Anonymous said...

Allen Barnett should be in jail. He is now the PI of a $50 million project at UD for high efficiency solar cells for the military. Truly, if we give crooks the technology to develop, god save american soldiers.

6:43 PM  
Anonymous Anonymous said...

Astropower Securites Litigation seems to have come to a conclusion. Ca. $99 million in claims were received and a pool of $490,000 was established to pay them off. That's less than one-half cent per dollar. Don't you wish you could pay off your debts at half a cent on the dollar?
I filed a claim for $3576.62 and received a check for $15.24. That's about 0.426 cents on the dollar. The difference was siphoned off by lawyers.
Lest you think Barnett has changed his spots, go to www.bluesquareenergy.com. This is a new PV player whose president and CEO is Jeffrey Barnett, Allen's son. Sonny has a college degree in EE, but his principal qualification seems to be that he once worked for Daddy. Allen's name is not listed among management, but I feel quite certain that this is a shadow corporation with AMB playing the role of puppet-master.

5:25 PM  
Anonymous Anonymous said...

"The mills of the gods grind slowly but they grind exceeding fine." Regarding Allen Barnett's expulsion from Blue Square Energy, I am pleased beyond measure to see him finally exposed for the charlatan he is. Let us hope the feds now follow through on his threatened indictment for malfeasance on the DARPA project.

5:03 PM  

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