Monolith Solar looks to regain footing

The Enterprise — Michael Koff
Construction of Monolith Solar’s new headquarters at the Vista Technology Campus in Slingerlands was stopped in September, four months after it began. New Chief Executive Officer Christopher Stroud hopes to recommence building and hiring back workers in 2019.

SLINGERLANDS — Monolith Solar’s new chief executive officer, Christopher Stroud, is optimistic that, in the face of money woes and lawsuits, his company will be able to rebound in 2019.

Stroud joined the company in July as its vice president of business development; he has been CEO since early October.

He joined the company, he said, because of its great reputation.

“It’s hard to drive very far in New York State without seeing a Monolith sign,” Stroud said. “So, their reputation certainly proceeded them. And, the more I learned about the organization — looking at the projects and the things that the business has accomplished — the more I wanted to be part of that.”

However, Stroud was not aware of the financial troubles that the company was having when he agreed to sign on.  

For the last five years, he had been director of operations for General Electric’s Renewable Energy “startup,” which, he said, in the last four years had shifted its focus from the manufacturing of equipment to the development and construction of solar projects, the same work that Monolith performs.     

Monolith had experienced tremendous growth every year since its inception, in 2008, former chief executive officer, Michael Hickey, told The Enterprise in August. The company had been listed by Solar Power World Magazine as the fourth largest solar contractor in New York State; nationwide, it was 85th.

In September, construction of the company’s new $4.9 million headquarters at the Vista Technology Campus in Slingerlands was halted, and with it, the layoff of 58 workers and “pausing” of all commercial solar-system installation. But, Stroud said, Monolith is still “pursuing” some smaller residential construction.

The company currently has 30 employees, Stroud said.

Monolith stopped its own commercial-construction work as well the building of its new headquarters, Stroud said, because it was restructuring its liquidity. “During a transaction like that,” he said, “it’s best not to make ongoing purchases and financial commitments.”

Asked to explain what is meant by Monolith “restructuring its liquidity,” Stroud likened it to refinancing a mortgage.  

“Restructuring liquidity,” is also known as restructuring debt.

Stroud said that he anticipates a “restructuring transaction” to be complete by the end of 2018, and that Monolith will be “ramping ourselves back up” in 2019. He said that it’s difficult to commit to hiring back all the workers who were laid off without knowing how the company will come out of the restructuring transaction. “But we’re positive; we’re bullish,” he added.

With a “restructuring transaction,” Stroud said, Monolith is not looking to sell itself or seeking another company to merge with. “We are simply refinancing the same way that you would go find a lender, or an investor, or somebody if you were refinancing a mortgage,” he said.

Stroud was then asked if that meant the company was seeking new financing.

“I would say that that’s not even 100-percent accurate because we have signed a term sheet with another party,” Stroud said. “So, we’re not actively seeking that investment; we’re in the process of executing the transaction.”

He went on, “It’s accurate to say that we’re closing a transaction; we’re not in the marketplace seeking new investment. We feel like we have located the investors we want to work with and we’re in the process of executing a transaction, and have been for several weeks.”

IDA’s role

The Bethlehem Industrial Development Agency, in 2015, granted Monolith about $677,000 in tax breaks.

Monolith received a mortgage-tax exemption; sales-tax exemptions on construction materials for its new building as well as an exemption for the equipment that will fill the building; and an assessment exemption.

As part of that agreement, Monolith agreed to create 76 new jobs and maintain 49 existing jobs between Jan., 1, 2015, and Dec. 31, 2019.

Thomas Connolly, the executive director of the Bethlehem Industrial Development Agency, said this week that there are consequences if a company fails to keep up its side of the bargain.

About 16 years ago, a company failed to meet a target number for new jobs, and the IDA was able to “clawback” about $50,000 in benefits.

Stroud was asked if Monolith’s deal with the Bethlehem Industrial Development Agency goes away if certain milestones have not been met, and he said that it’s the company’s intention to honor its agreements, but beyond that, he would not comment.

The Enterprise then asked how much of the $677,000 in tax breaks Monolith had taken advantage of. Stroud answered: “I don’t think that we have prepared specific details of that level for this conversation.”

In May, Monolith secured $4 million in building loans from Pioneer Savings Bank, according to Albany County records. One loan was for $3,040,000; the other for $960,000. The two mortgages filed with the Albany County Clerk, show that Monolith did not pay a mortgage tax, which in Albany County is $1.25 per $100 of mortgage. The company’s savings from the tax exemption would be $50,000.

Connolly said the IDA won’t know completely which of the tax incentives Monolith had taken advantage of until it reports to the IDA, in January 2019.

Also in January, the company has to report to the IDA the number of jobs at 85 Vista Blvd., but, because the building has yet to be completed, Monolith has all of 2019 to meet the employment numbers laid out in the agreement.

“Optimism” despite liens and lawsuits

The company, Stroud said, has about a year’s worth of work on its backlog. It’s one of the reasons, he said, that there is a lot of optimism with the new restructuring. “In addition to the restructuring component, it [the backlog] provides us with a very significant line for construction,” Stroud said, noting that construction financing in the solar industry can be difficult to obtain.

And for Monolith, it’s another reason to be optimistic.

Because the company owns the solar systems it installs, having that established portfolio of projects, or collateral, makes it an appealing partner.

In July, Pioneer Savings Bank filed two UCC-1 liens against Monolith. UCC stands for the Uniform Commercial Code and comes from an assemblage of set rules that govern commercial transactions in the United States.

Asked to explain the liens, Stroud said, “I would simply say that, in the restructuring of liquidity, any organization has debtors and creditors and addressing short- and long-term debt is part of that transaction. These types of things are par for the course during a financial restructuring.”

A UCC lien is a claim against a company’s assets; it does not mean that the assets are being repossessed immediately. The UCC lien establishes that the bank has first priority should something occur.

Monolith is also facing a number of lawsuits from vendors for nonpayment.

A lawsuit was filed on Sept. 17 against Monolith Solar by Consolidated Electrical Distributors, and its subsidiary, CED Greentech, which sells solar photovoltaic and electrical products, in the Supreme Court of the State of New York of Albany County, the lowest rung of the state’s three-tiered court system.

The suit alleges that Monolith has not paid $1.19 million to CED Greentech for goods and merchandise that it purchased between May 1 and Aug. 27.

CED Greentech alleges that Monolith had been paid by a third party for the materials provided by CED Greentech, but Monolith has “failed and refused to make full payment” to CED Greentech.

Further, according to court papers, its says that Monolith misappropriated funds when it paid others with money intended, by law, for CED Greentech.

A lawsuit filed on Sept. 17 by Couch-White LLP alleges that Monolith has failed to make payments on nearly $80,000 that it owes the law firm.  

On Oct. 23, a summons with notice was issued against Monolith by the Supreme Court of Albany County on behalf of Solar Foundations USA Incorporated for a breach of contract.

The notice says that Solar Foundations is seeking monetary damages.

“Upon your failure to appear, judgment will be taken against you by default in the sum of $178,138.36 as of October 15, 2018, plus interest, attorneys’ fees, and the costs of this action,” the notice states.

Stroud was asked if he had concerns with the number of lawsuits filed against Monolith.

He answered, “We feel like this process of diligence and resolution of the restructuring transaction will address all of those concerns in due time.”

The Enterprise also asked Stroud if Pioneer Savings Bank had halted its funding of Monolith’s new headquarters, and was told: “I would say out of respect for our business relationship with Pioneer and confidentiality, we really probably wouldn’t disclose a lot of detail.” The Albany Business Review reported, in late October, that Pioneer had stopped its financing.

Government support for solar energy

The solar industry has been the beneficiary of both state and federal government largesse.

In New York, because of the state’s Clean Energy Standard, 28 percent of in-state energy generation comes from renewable sources; by 2030, it’s supposed to be 50 percent. Solar accounts for about 1.1 percent of energy generation in New York, according to the Solar Energy Industries Association, an industry lobbyist.

In 2014, the state invested $1 billion in its NY-Sun initiative to expand solar capacity throughout New York. Governor Andrew M. Cuomo, in March, announced $1.4 billion for 26 large-scale renewable energy projects, 22 of which are solar farms. In October, it was announced that the state would make available $40 million to support solar projects that integrate energy storage.

Monolith has close to $10 million in state contracts, as part of its solar highway initiative.

In the United States, renewable energy accounts for about 13 percent of energy production, according to the United States Department of Energy. Solar accounts for about 1 percent of energy production.

In 2016, according to the Congressional Research Service, federal tax-related support for the energy sector was estimated to be $18.2 billion; $11.4 billion for renewable energy and $5.2 billion for fossil fuels.

The Joint Committee on Taxation estimated that, in 2016, there had been $2.4 billion in tax credits claimed by the solar industry.

Between 2017 and 2021, the Joint Committee on Taxation estimates, the solar industry will claim nearly $12 billion in tax credits.

 

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