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Flabeg Solar U.S. Corp. plant to stay out of business

| Thursday, Nov. 28, 2013, 8:55 p.m.
Justin Merriman | Tribune-Review
William Otto, president of FLABEG Solar, a once high-flying maker of solar power equipment that opened a plant in Clinton near the airport to some fanfare, has abandoned efforts to restructure from a Chapter 11 bankruptcy and resume business. A deal with a Chinese company to fund FLABEG Solar’s reorganization and to purchase a vital piece of equipment fell through, according to bankruptcy court records. A judge is considering a contempt of court order against the Chinese company for defaulting on the deal.
Justin Merriman | Tribune-Review
William Otto, president of FLABEG Solar, a once high-flying maker of solar power equipment that opened a plant in Clinton near the airport to some fanfare, has abandoned efforts to restructure from a Chapter 11 bankruptcy and resume business. A deal with a Chinese company to fund FLABEG Solar’s reorganization and to purchase a vital piece of equipment fell through, according to bankruptcy court records. A judge is considering a contempt of court order against the Chinese company for defaulting on the deal.
Justin Merriman | Tribune-Review
William Otto, president of FLABEG Solar, a once high-flying maker of solar power equipment that opened a plant in Clinton near the airport to some fanfare, has abandoned efforts to restructure from a Chapter 11 bankruptcy and resume business. A deal with a Chinese company to fund FLABEG Solar’s reorganization and to purchase a vital piece of equipment fell through, according to bankruptcy court records. A judge is considering a contempt of court order against the Chinese company for defaulting on the deal.

Eight months after solar mirror manufacturer Flabeg Solar U.S. Corp. in Findlay shut down operations, its remaining executives have abandoned their goal of restarting the company.

Their hope of reorganizing under a Chapter 11 bankruptcy ended this month when a Chinese mirror manufacturer failed to complete a court-approved purchase of a piece of mirror manufacturing equipment for $900,000 and to follow through on a letter of intent to fund a reorganization plan, court records show.

“We were trying to figure out a way to reorganize and resume production,” Flabeg President William Otto said this week.

But the failure of the Chinese deal — and pressure from building owner The Buncher Co. to move out so a new tenant can move into the sprawling plant in Clinton — brought about a decision to close permanently.

“The equipment will be sold at auction on Dec. 17, and all the assets have to be taken out by Jan. 15, after which there will not be any operations of the company,” Otto said. “We have some litigation to take care of, then the company will go out of business.”

The Pittsburgh Post-Gazette will move into the building and install a new printing press, Otto said. Representatives of the newspaper have visited the plant, and its intent to move in was discussed in court, he said.

Brian Goetz, vice president of Buncher, and officials with the Post-Gazette did not return calls for comment.

A hearing is scheduled for Tuesday before Bankruptcy Court Judge Carlota M. Bohm in Pittsburgh on a motion filed by Flabeg's attorney for contempt of court against Zhejiang Damin Glass Co. Inc. of Hangzhou, China, for violating the court-approved sale. Zhejiang Damin Glass representatives did not respond to email messages and calls seeking comment.

Flabeg's parent company, Flabeg GmbH, opened the $30 million plant in Clinton Commerce Park in late 2009 hoping to take advantage of the emerging solar power industry worldwide — with the help of $9 million in job creation grants, loans and other financial aid from the state and Allegheny County.

The plant, more than four football fields in size, is about a mile from Pittsburgh International Airport. While in operation, it produced 1 million large solar collection mirrors whose parabolic shape concentrates and reflects solar rays into fluid-filled tubes. The resulting steam turns power turbines that produce electricity.

In March, the plant shutdown unexpectedly when Flabeg Gmbh cut off funding amid its own financial problems, Otto said. At its height in 2011, the plant employed 240 and had sales of about $30 million, he said.

After the plant shutdown, 10 former employees of Flabeg Solar petitioned the bankruptcy court to place the company in Chapter 7 liquidation bankruptcy for not paying severance. Otto, previously Flabeg Solar's general counsel before taking over as president in June, said he set a new goal of restarting the company and converted the case to a Chapter 11 reorganization.

“In July, I sent our sales manager to China to find business,” Otto said. “He was very successful.” Among his contacts, he found Zhejiang Damin Glass. “They were interested in a piece of equipment we bought but never used,” an oven made by Glasstech Inc. of Perrysburg, Ohio, that heats flat glass and bends it into the shape of a solar reflector, a high-temperature and high-precision process, Otto said.

Flabeg paid $4.3 million for it and agreed to sell it for $900,000, he said. There were no other bidders, and the court approved the sale, records show.

“They appeared to be acting in good faith,” Otto said.

Zhejiang Damin Glass paid a $100,000 deposit and agreed to pay the rest in cash and a letter of credit by Oct. 31, but it was never delivered, records say.

In September, Zhejiang Damin Glass sent Otto a letter of intent saying it “is interested in funding a plan of reorganization of Flabeg Solar US Corp. with the goal of acquiring the reorganized entity. We ... would like you to understand that we have a sincere interest in moving forward.”

Later representatives of Zhejiang Damin Glass said its lender was balking at funding both the purchase of the oven and plan of reorganization.

“They told us their bank was dragging its feet on both,” Otto said. “With the letter of intent, we had a strong feeling that the China deal was our solution to getting back into business, so we did not continue to market the company to other potential buyers. That killed our future.

“I don't know how this is going to turn out,” he said, referring to the contempt of court motion hearing on Tuesday.

Otto believes Zhejiang Damin Glass has an affiliate in the United States, and “if so, we're going to work on our collection actions. You don't like to think ill of people, but sometimes it happens.”

John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or joravecz@tribweb.com.

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