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September 16, 2014

Before deal, STR couldn't find buyer, considered liquidation

STR Holdings will continue to be headquartered in Enfield after the Chinese firm Zhenfa takes over majority ownership.

Before selling a majority stake in the company for $22 million to a Chinese developer, the board of directors of Enfield solar parts maker STR Holdings couldn’t find a suitable buyer for the company and considered liquidating its assets, according to a letter sent to its shareholders.

STR on Aug. 12 agreed in principal to sell 51 percent of the company’s stock to China solar array developer Zhenfa Energy Group Co. at $1.60 per share, the bulk of which will be used to give a special dividend to shareholders.

In asking shareholders to approve the deal, STR’s board said the Zhenfa deal offered STR’s best entry into China, which the board feels will be the No. 1 spot for solar panel manufacturing in the coming years, according to the shareholder letter that was filed with the U.S. Securities & Exchange Commission.

The board said the Zhenfa deal is the best option compared to the other alternatives it considered. No other potential buyer offered a deal with acceptable terms, and no one else would approach $1.60 per share. The other option the board considered was liquidation of the company’s assets.

STR lost its top customer – California-based First Solar – last year, forcing the company to lay off the majority of its Connecticut workforce, cease construction on a planned East Windsor manufacturing facility, and idle its own Chinese production facility.

As a stipulation of the deal, Zhenfa for five years will provide a rent-free, 108,000-square-foot production facility in China for STR to make its solar encapsulants. Zhenfa also will help STR with marketing, branding, receiving tax abatements, and developing its Chinese workforce.

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