Day4 Energy announces job losses, new CEO and business merger16. November 2011 | Industry & Suppliers, Markets & Trends | By: Becky Stuart
Day4 Energy has announced that 28 employees will be let go as part of cost cutting measures designed to weather the current solar storm. It has also signed a letter of intent with Ever Energy Ltd to merge its operations, and announced a new CEO.
In announcing its third quarter (Q3) financial results, Day4 recognizes that the photovoltaic industry is in the midst of a "deep crisis". To help it stay afloat, the company has said that 28 employees, mainly based in the B.C. Canada offices, will be made redundant, thus reducing its full time workforce to 108. In April, it made 30 employees redundant, due to restructuring.
A spokesperson tells pv magazine that the company also took the decision back in July to cease module production with Jabil Circuits in Poland. At peak capacity, reached in August 2010, 100 megawatts (MW) worth of modules were being produced by Jabil for Day4.
In other news, the company has signed a letter of intent with Taiwan solar cell manufacturer, Ever Energy, to merge its operations through a plan of arrangement. Day4 said that the transaction is further subject to "negotiation of a definitive agreement, due diligence, Board of Directors, shareholder, court and regulatory approvals, and the continued listing of the merged company is subject to TSX approval." No details were issued about the proposed timeframe of the merger or financial sums.
The spokesperson did say though that Day4 entered into an agreement with Ever Energy to sell certain equipment for a total consideration of $4 million on November 11. It also signed an agreement with the Taiwanese company back in September, under which its Day4 DNA photovoltaic cells will be manufactured in Taiwan.
The company says that it has also contracted deliveries of equipment for a total of 135 megawatts of licensed Day4 DNA manufacturing capabilities.
Furthermore, John MacDonald, who served as CEO since the company’s inception, has stepped down from his position. He will remain as board chairman, however. George Rubin has been appointed to the role of president and CEO in his place.
To boost finances, Day4 says that it has secured additional near term liquidity through a strategic investment from Wangs Brother Motor Company Ltd, which is a major shareholder of Ever Energy. The private placement consists of two tranches totaling $1.9 million. The first, worth around $850,000 was closed yesterday, November 15. The second tranche, meanwhile, is expected to close over the course of the next few weeks. "The issue price per share is approximately $0.17 per share and the proceeds will be used for general corporate purposes," said the company.
In terms of Day4 Energy’s Q3 results, the outlook is bleak. At $14.5 million, revenues have taken a big tumble, from $41.3 million in Q3 2010, and $23.3 million in Q2 2011. The downturn was attributed to the general market conditions and the discontinuation of the company’s solar module manufacturing.
Gross loss, meanwhile, was 20.4 percent in Q3 2011, compared to a 4.2 percent gross margin in Q3 2010, and a 7.8 percent gross loss in Q2 2011. "Negative gross margin in the quarter ended September 30, 2011 is largely attributable to the direct costs of exiting from our long-term manufacturing contract and related fees (warehousing, carrying charges and late fees), as well as a further write-down of inventory values as prices continue to fall," said Day4 in a statement released.
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