Solar lighting maker to concentrate on large projects
Two and a half years after getting into the home solar power business, Carmanah Technologies is selling off the unit to its former owner.
The Victoria-based solar lighting manufacturer announced Wednesday it has signed a purchase agreement with David Egles, who will pay $1.5 million for the inventory and various equipment and fittings at the company's leased facility in Barrie, Ont.
The deal also allows Egles -- who sold Soltek Powersource Ltd. to Carmanah in May 2005 for $10 million -- access to marketing material and customer and vendor lists.
Carmanah will also amend Egles' non-compete agreement, allowing him to return to solar home power as a private business. Egles also resigned from Carmanah's board and relinquished his position as senior vice-president of business strategy.
He operated Soltek Powersource Ltd. with co-founder Michael Cannon. The company had been profitable since its inception in 1988. It had 65 employees and was the market leader in Canada for solar panels and power systems when Carmanah bought the company.
The deal with Egles follows Carmanah's announcement Nov. 22 that it would narrow its focus on core markets, cut costs and shore up its sagging share price.
The move is part of a "100-day plan" announced by new CEO Ted Lattimore last fall to move to a more defined suite of solar-powered lighting products and generating systems intended to let the company focus on its strength of designing large industrial and commercial products.
The company believes building custom products for the home is better served by smaller craftsman organizations.
Carmanah also announced it would eliminate its transit lighting products, saying that work tends to be too specialized to be able to take advantage of economies of scale in order to grow profitably.
"By selling the assets and obligations of our home power division, we can efficiently and effectively recapture and redirect our capital to our core strategic markets," Lattimore said.
Lattimore added the transaction does not restrict Carmanah from re-entering the solar home power market in future.
The company was named 2007 B.C. Exporter of the Year in November.
Despite boasting $15.4 million in revenues in the third quarter ending Sept. 30, Carmanah reported a loss of $800,000, and $4.3 million in losses year-to-date.
Egles was not immediately available to comment.
Carmanah shares were up a penny to $1.20 on the TSX.