Californian solar installer Westinghouse Solar Inc. has called off its proposed merger with Australian solar company CBD Energy Ltd., citing ‘continued delays and uncertainty' over when the deal would be completed in a submission to the U.S. Securities and Exchange Commission (SEC).
And the Californian company, targeted by its Australian counterpart to offer a way into the U.S. market, is likely to be forced to change its name after falling behind with licensing payments to Westinghouse Electric.
Westinghouse Solar and CBD Energy had agreed on September 21 to extend the outside date for completion of their merger from the end of October to the end of January or under certain circumstances, from the end of 2012 to the end of March.
With those deadlines having passed without completion, Westinghouse Solar has taken its option of calling off the merger.
In its SEC submission last Monday, the American installer said it had hoped for completion of the deal by the end of September and added: "the target date for completion has been repeatedly delayed, and the necessary registration statement has yet to be completed and filed. The uncertainty has resulted in a disruption in the company's supply relationships, leading to a significant decline in the company's revenue and the implementation by the company of significant cost reductions including the layoff of employees."
An announcement of the impending merger by CBD on May 9 stated its prospective partner had already implemented cost reductions amounting to US$1 million per year.
Change of name for Westinghouse Solar
Westinghouse Solar expects to have to change its name and will propose a new name at its annual meeting in September.
The installer owes Westinghouse Electric $382,500 of the $750,000 due for selling products under the Westinghouse brand last year as well as $250,000 for the first three months of this year.
With a further $250,000 instalment due next Wednesday, and with Westinghouse Electric announcing its intent to issue a breach of contract notice today, Westinghouse Solar told the SEC: "Due to the company's limited resources, it is unlikely that payment will be made for past due license fees within the 30-day cure period which will result in the termination of the license agreement."
If, as expected, the licencing deal is terminated, the installer has six months to clear any inventory marked with the Westinghouse brand.
Westinghouse Solar announced on May 30 it had signed a supply agreement with Australian module assembler Environmental Engineering Group a preferred supplier of CBD to assemble its panels using Taiwanese cells for distribution in the U.S. market.