Arise places all projects under review
Email the author February 05, 2009
Chuck Howitt
RECORD STAFF
WATERLOO
A sudden downturn in the solar industry has prompted Arise Technologies to place all projects under review, including its new silicon pilot plant scheduled to open this year in Kitchener.
In a news release, Vern Heinrichs, Arise's interim chief executive officer, said the Waterloo company is re-examining all its spending plans and operating budgets in the wake of the global recession, which has prompted some of Arise's major customers to defer purchases.
"This may mean delaying some projects at least until conditions improve and financing becomes more available at reasonable terms, or even terminating them for now," he said.
The company's shares (TSX:APV) plunged in the wake of the news, falling 20.5 per cent yesterday and losing eight cents to end the day at 31 cents.
Arise is currently retrofitting a 68,000-square-foot plant on Washburn Drive after signing a 10-year lease for the building. The plant will refine high-purity silicon used to make photovoltaic or PV cells which convert solar energy into electricity.
It is a test facility to determine whether the company's technology is feasible on a larger scale.
In the same news release, Arise said it is reducing its fourth-quarter revenue projections to between $18.5 million and $19.5 million, from the $21 million to $24 million it originally forecast. Its fourth-quarter financial results for 2008 will be released March 9.
The company is also taking a writedown of $2.8 million in the value of photovoltaic cells and silicon in its inventory due to the decline in prices for those products and the deferral of purchases by customers.
In an interview, chief financial officer Dave Chornaby wouldn't comment on the future of the Kitchener plant except to say the project is "under review."
The sudden belt-tightening, announced one week after the resignation of former chief executive Bart Tichelman, was prompted after three major customers, all based in Germany but who sell globally, began to defer purchases in December, he said. Those customers make solar modules used on rooftops and other locations using photovoltaic cells made by Arise at its German plant, which opened in April to take advantage of Germany's bold incentives for green energy. Shipments of photovoltaic cells from the German plant for the second half of 2008 were 11.2 megawatts, down from an expected 12 to 13 megawatts. "We're not the first solar company to report a slowing in demand," Chornaby said.
He said there are no plans for layoffs. The company employs 52 people in Canada and 65 in Germany and expects to hire another 35 to 40 people when a second production line starts at the German plant in the spring.
On the positive side, Arise said it reduced its scrap rate of photovoltaic cells by about 20 per cent in the third quarter. As well, delays in the startup of the second production line in Germany have been cleared up. |
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