Valoe’s Lithuanian gamble rides on latest fundraising attempt


When Finnish high-efficiency module maker Valoe Corp announced it had taken ownership of Lithuanian solar cell manufacturing business Solitek last month, there appeared to be some discrepancies in the purchase price to be paid for the cell production line.

pv magazine wrote to Valoe to ask exactly how much had been – or would be – paid to Solitek parent Global BOD for a production line which Valoe planned to open by the end of the year with an initial 60 MW annual production capacity for its top of the line interdigitated back-contact (IBC) products.

We never received a reply. However, the answers to our questions have been offered up in the nine-month financial update now issued by Valoe.

Has the Finnish solar start-up paid for the production line or not? Not yet, it turns out.

The story of the €3.5m factory

The total value of the sale appears to have been agreed at €3.5 million. As we reported in February, when the deal was announced, Veloe blithely stated it was preparing to raise €5 million to pay for the site and to convert it to produce its IBC cells using production line equipment it had purchased in May last year from Italian manufacturer Megacell Srl in a liquidation sale.

It has now been revealed Valoe had paid only €300,000 of the purchase price in February and had agreed to stump up the balance in May. When that didn’t happen, the agreement was revised, with seller Global BOD agreeing it would accept €2.8 million of the money owed by the end of September in return for 70% of its cell manufacturing business and on the understanding Valoe would cough up the remaining €400,000 within 12 months.

Fast forward to last month, when Valoe announced it had taken ownership of the cell manufacturing operation in Vilnius. In the intervening period, Global BOD had again agreed to extend the payment deadline for the initial €2.8 million of the €3.2 million owed, this time to October 18. When Valoe proudly announced it had taken ownership ten days after that date, it was under payment terms which had again been revised.

Crucial cash call

Under the new arrangement, Global BOD agreed to lower the immediate payment demand to €2 million plus a €500,000 convertible bond (CB) issued by Valoe by November 4 which would carry 8% interest and mature at the end of January. Under the latest terms of the deal, Valoe must now find a further €1.1 million by the end of this month or Global BOD will be entitled to claim back money out of the convertible bond up to any shortfall it is still owed.

Whether Valoe can raise the cash it needs to complete the purchase – plus the estimated €1.2 million it requires to convert the Lithuanian line to start knocking out modules in “early 2020” – depends on the popularity of a €3.5 million CB it issued on Monday, and which remains open to subscribers until December 18.

The Finnish company was forced to try its hand at another fundraising after the €7 million shares offering it launched in September raised only €3.45 million.

Lines of credit

Valoe’s latest financial update, for the first three quarters of the year, reported cashflow losses of €1.5 million plus 12-month commitments amounting to trade payables of €1.6 million, other debts of €1 million and other short-term borrowings of €900,000 on top of the €8 million required for its strategy, which includes the cost of purchasing and starting Lithuanian production.

A list of the potential sources of income set against that reads like a company desperately scouring the cupboards for the last crumbs of food. There is mention of the €800,000 left out of a €4.1 million loan from Business Finland, €1.5 million in finance available from Winance Investment – of which €500,000 has now already been drawn down – and the chance to bank €600,000 last month from EU Horizon 2020 funding for projects to improve the effectiveness of European PV manufacturing, plus another €300,000 from the same source in March. On top of that, the cell manufacturing business Veloe has finally taken ownership of was part of the same Horizon 2020 consortium, meaning the Finnish company can tap a further €600,000. Result!

However, despite orders worth €1.6 million to supply modules to ForUs Capital for two projects in Finland, there is nothing on offer from the rest of the business, which lost €400,000 to the end of September on net sales of just €200,000. Those reverses were crystallized in the last quarter, which brought net sales of €100,000 and a net loss of €1.4 million.

Potential salvation

Chief executive and majority shareholder Iikka Savisalo isn’t kidding when he says: “The company’s financial situation and working capital situation will remain very tight in 2019.”

There is light at the end of the tunnel, he insisted, in the form of a one-year, $12 million (€10.8 million) IBC cell order from an unnamed U.S. client. That alone would ensure positive cashflow next year, claims the company before adding the ominous caveats, providing Veloe raises the funds required to complete purchase of the Lithuanian line and get it up and running, and the order materializes and it achieves the planned profitability. The Lithuanian factory is already overdue – it was previously slated to start production in the second half of this year.

The strategy section of the nine-month report talks positively about Veloe’s ability to win other orders once its IBC cells are flying out of Vilnius as well as the company’s work on lightweight, flexible cells for use on cars and airplanes – an untapped market free of significant competitors. There is even talk of designing a solar module that will last more than a century, but there appears little for investors to grab onto except such blue-sky futurology.

Overseas reverses

Contrast that with the progress of Veloe’s first production line equipment order. In February 2016, the company announced it would supply equipment for a 120-150 MW annual capacity module fab for new market entrant LS Corp, in Ethiopia. The company is yet to bank any financial benefit from that order.

Elsewhere, the report admits the prospects of its “Asian customer” following through with a planned €26.5 million order in Asia grow dimmer by the day.

And so it all comes back to Monday’s fundraising exercise. By December 18, or shortly after, we should learn whether Veloe will finally escape its start-up phase – to use Savisalo’s description – by kicking on with Lithuanian production or whether it will be “obliged to abandon its expansion strategy” and revert to producing modules from its existing 20 MW pilot production facility in Finland.

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