Boston, MA 08/13/2014 (wallstreetpr) – STR Holdings, Inc. (NYSE:STRI). partnered with China-based Zhenfa Energy Group Co., Ltd to promote the solar products and continue to grow its business across the world.
Deal Overview
Zhenfa will purchase newly issued shares of STR for ~$27.6 million. It represents 51% of STR’s outstanding shares for a purchase price of ~$21.7 million ($1.30 per share on the closing price of August 8, 2014). It represents 23% premium over the closing price.
On completion, Zhenfa owns major stake (51%) as the outstanding shares will increase from 26.5 million to 54.2 million, and STR, on the other end, continues to own 49% of the stake.
STR will use the proceeds received on sale of shares to Zhenfa to pay a dividend to its shareholders other than Zhenfa at $0.85 per share with an aggregate dividend amount of ~$22.6 million.
In addition, STR Holdings, Inc. (NYSE:STRI) will use the available cash of $0.9 million to pay special dividend payout and transaction-related expenses. Even, STR expects to stock split to offer special dividend, which is subject to the approval of shareholders.
On completion, the Company’s Board will have seven members team. Zhenfa will nominate four members, and three people will be from the STR’s existing member including CEO Robert S. Yorgensen.
Greentech Capital Advisors and Brown Rudnick LLP and Martin Hu & Partners acts as financial and legal advisors to STR respectively. Similarly, Dojane Capital becomes the financial advisor to Zhenfa and, and Polsinelli PC will the legal advisor.
Operational benefits
As per the agreement, Zhenfa will support STR Holdings, Inc. (NYSE:STRI) in its operation in China including sales, marketing and manufacturing facility, raw material procurement and other local assistance such as tax benefits and incentives.
Sales service agreement between the companies will help STR Holdings, Inc. (NYSE:STRI) to drive sales in China. Zhenfa will offer the assistance in sales and distribution of encapsulant products to Chinese solar module manufacturers. So, the management of STR believes that the partnership with Zhenfa will further strengthen the position in China.
