Advanced Energy to Wind Down Inverter Business
Advanced Energy Industries, Inc has announced that it has made a strategic decision to focus solely on its Precision Power business and wind down its Solar Inverter business, which is operated under AE Solar Energy Inc., AEI Power GmbH and their subsidiaries.
"Following on the heels of a strong 2014 and first quarter 2015 in Precision Power that reinforced the strength of our business model, and after an extensive strategic process over the last six months, we concluded that focusing solely on our Precision Power business, and exiting the Solar Inverter business aligns with our long-term goal of maximizing value for our shareholders," said Yuval Wasserman, President and CEO of Advanced Energy.
Advanced Energy expects to record a pre-tax charge of approximately $260 million to $290 million related to the wind down of the Solar Inverter business operations, the majority of which will be recorded in the second quarter of 2015. Of this write down, approximately $150 million relates to the impairment of goodwill and intangibles, $45 million to $75 million to the write down of inventory, fixed and other assets, $15 million for employee termination cost, $10 million for tax valuation allowances and the remaining $40 million for other costs to exit the business. Cash costs for severance and other expenses related to this decision are expected to range from $30 million to $45 million of which we expect $20 million to $30 million will be in 2015 with the remainder in subsequent years. These costs will be recorded as impairment and restructuring charges on the company's income statement. The company plans to fund the cash costs through internally generated funds.
Over the past six months the company has engaged in a rigorous process exploring and evaluating various strategic alternatives for the Solar Inverter business, including a potential sale, joint venture, partnership, spin-off, licensing and other alternatives. To date, strategic discussions with third parties regarding the sale of the entire business have not provided sufficient value and terms that were in the best interest of our shareholders, customers, employees and partners. Therefore, the company has made the decision to wind down the Solar Inverter business.
The company anticipates an orderly wind down of the Solar Inverter business, with AE Solar Energy Inc., AEI Power GmbH and their subsidiaries supporting their customers, the installed base and fulfilling customer purchase orders on hand.
