Solar Thin Films, Inc.
TWST: Please start with a broad history of Solar Thin Films.
Mr. Rubin: I got involved with Solar Thin Films (SLTZ) in 2005. It was a company that was created out of the breakdown in communism in the early 1990s, and a bunch of Ph.D.s and engineers, and mathematicians and those types of people got together and decided to take their efforts away from military and into what they believed to be a future in solar. So they created a little business that manufactured equipment that was able to manufacture thin-film or amorphous silicon. That business really was the beginning of the development of thin-film technology. And it was a small business. They built the first plant in the 1990s and the early 2000s, and I guess they ran out of money in 2004 and 2005. After I got involved with the company, we did a private placement for $0.5 million, and we did another placement for about $1 million, $1.25 million, $1.50 million. And then in June of 2006, we completed a reverse merger into a public vehicle, and we raised $6 million in that phase.
TWST: What are your specific products and services, and what are their applications?
Mr. Rubin: The company is dramatically changing at this point. One major change is that we are now manufacturing the equipment in Hungary after the acquisition of Buda, which brings to us a very nice backlog. Additionally, we have been chosen as the vendor in Dalian City, in China. They are building a new city that will house approximately 8 million people, and that city is going to be all solar. We've been chosen as the vendor to build the equipment that allows to make the modules. The first order is about $140 million, and it is the first of nine orders.
TWST: How did that contract come about?
Mr. Rubin: Even though the solar business is a very large business with a lot of people participating in it, in the thin-film end of it, there are not a lot of participants with the ability to not only manufacture the equipment, but also to turn on the equipment and make it produce the right megawatts. That is the key to the industry. The equipment to do the metal bending, a lot of people can do that. But to build the software and to build all the machinery that produces the panels at the right megawatts or the right watts is very, very tough. The people in China did a lot of investigation, and although our company is small, we were best suited for the job. We anticipate that this contract will bring over a billion dollars in sales to us.
Subsequently, about a year and a half ago, we found this little company in Germany called Algatec, and they are in the other side of the business. They make what's called the crystalline panels, which is made out of the silicon cell as opposed to amorphous silicon material. We found this little company, and we put a private group together led by me. And we bought 47% of that company for $6 million, and at least 47% of that company is being merged up into the public company also. And through 2009, they did about $30 million to $35 million in the year, and they probably could triple this year in revenue and profits. We are about to announce two more acquisitions. We are setting up a module manufacturing plant in Pennsylvania that will make modules and will have a relationship with a very large Chinese company that will supply the cells to us. And we are also going to announce an acquisition of a group that has expertise in putting together solar farms. The addition of those companies will make us a fully integrated company with the ability to manufacture, distribute and finance solar farms.
TWST: What are your competitive advantages?
Mr. Rubin: With the acquisition in Hungary, we now have the most experience in the industry. Although the company in Hungary is small, it has 20 to 25 years' experience. No one in the industry has that kind of history in manufacturing the equipment and the ability to make it work, and that's a huge advantage to us. In the German company, we have a company growing rapidly that has its cost of manufacturing very low. By the way, our cost of manufacturing our equipment, the thin-film equipment, is about $0.80 a watt; it's very low. So in the manufacturing end of the business, we have tremendous cost advantages. Some of it is because of technology and some of it's because of good manufacturing skill. With our own capabilities and our acquisitions, we will have the ability to package solar farms and build solar farms around the globe, using the manufacturing to supply the solar farms.
TWST: How important is R&D to your company?
Mr. Rubin: That's a very good question because I have been in a lot of businesses and in most businesses, the standard answer is, "R&D is very important." It is important in this industry, but it isn't necessarily the most important item. Let me give you an example. Let's say you want to build a solar farm, which is basically a utility. You want to build 100 megawatts, and let's say the 100-megawatt solar farm will cost you $500 million. You go to Deutsche Bank, just to use an example, and Deutsche Bank says, "We like the idea, we see it can work, we see the payback," so forth and so on. And it's a 25-year payback or, let's say, a 15-year payback, and we know the panels are left for 40 years. And if you then say, "We are not using thin film or we are not using crystalline, we are using this new technology that the efficiency is 30% instead of 15%, you know what Deutsche is going to say? They are going to ask how long the panel has been out on the market. You say, "Well, it's new, so we're not really sure how long they will last," and Deutsche Bank doesn't want to fund the project. They want to know that those panels are going to be there for 15 years at least. So technology, even though it's important, is a much harder breakthrough in this industry.
TWST: Is the solar market continuing to grow? Do you anticipate 2010 will be a good year for the solar market?
Mr. Rubin: Well, look what happened in Louisiana. The world has woken up to the fact that we are killing this earth. It's not just a question of will the company or will the industry grow, it's a question how fast it's going to grow. This industry is 10 years away from even close to maturity. It is a worldwide market. The economy in India is growing at 8% to 10%. Let's just think about it. An economy of a 1.6 billion people growing at 8% to 10%, their cities go down six to eight hours a day with no electricity. So it's not just the environmental issues, which are key, you can build the infrastructure in some of these countries. China is enormous. Just look at the new Dalian City - 8 million people - they are building a new solar city.
TWST: How you would you like the company look in five years? How will it be different?
Mr. Rubin: I think, driven by the partnerships, we will be creating solar utilities with the manufacturing feed into the farms, which creates a solar utility that we own.
TWST: Tell us about your background.
Mr. Rubin: I started in business in the 1970s with no money in the home health care business. At the end of the day, it was the largest home health care company in the United States, which we sold in 1993. It was called Lifetime Corporation, and it was nursing agencies and quality care. I subsequently financed a lot of businesses in different industries, and that's how I got into this.
TWST: What made you interested in the solar sector?
Mr. Rubin: To be very honest, it was the opportunity because I could see that solar was going to be a huge industry.
TWST: Is there anything you would like to add?
Mr. Rubin: This is a business that is just in its infancy. I am talking about industry-wide - not only of my company, but industry-wide - this is a business that's in its infancy. You almost cannot go wrong by investing in the industry per se and being patient. Like every industry, well-managed companies are going to succeed. Even the ones that are small now will turn into very large companies over the next five to 10 years.
TWST: Thank you. (LMR)
Solar Thin Films, Inc.
116 John Street
New York, NY, 10038