Plextronics files for Chapter 11

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As a technology company, Plextronics was often running on the edge, said president and CEO Andy Hannah.

"That's where you want to be with a technology company," he said.

But sometimes when you're running on the edge, you fall over.

Plextronics, which started in 2002 as a hot Carnegie Mellon University spinoff, has filed for Chapter 11 bankruptcy reorganization protection. The Harmar-based company, a darling of the tech industry, drew millions in venture capital funding and millions more in grants from government agencies and local economic developers.

The initial plan was to develop solar ink cells, a product that could make it easier and more affordable to make solar energy panels -- and tap a growing alternative energy market. But solar panels became less expensive within the past three years, in part because the cost of silicon dropped significantly.

Meanwhile, Plextronics was also working in the growing field of organic light-emitting diodes, also known as OLEDs. A lot of the research the company used to develop solar ink cells was transferable to OLED technology, though the materials used are different.

OLEDs can feature flexible screens, which offers a variety of new options for the way people watch TV, use wristwatches, play with tablet computers, talk on the phone and even read the newspaper.

"Sometimes, you can be too far ahead of the markets," Mr. Hannah said.

While OLED technology is already being sold -- the Samsung Galaxy smartphone features OLED screens, for example -- industry analysts predict the television market likely will not take off until 2016.

The cheapest OLED TVs currently sell for $6,000, with some prices soaring to $15,000. Advances in technology, such as the kind being developed at Plextronics, will help make those prices more competitive with current LED and LCD (liquid crystal display) models routinely available for less than $500.

The conductive inks that Plextronics is developing would make it much cheaper to produce OLED TVs and lights. Essentially, the inks would allow inkjet printers to produce OLED panels, a much cheaper and easier process to manufacture the televisions.

But it is likely still a few years until the market is ready to adopt the kinds of materials Plextronics is developing, Mr. Hannah said. And that's a problem.

Plextronics may have been too cutting edge for its own good.

According to the bankruptcy filing, the company owes between $10 million and $50 million to more than 100 creditors.

Most of the company's competitors, such as Wilmington, Del.-based DuPont and Japanese electronics company Epson -- are big enough to underwrite their own research as development continues over the next three years. Plextronics, which employed 72 people at its height in 2012, did not have access to that kind of capital and could not find an investment partner with the patience for the long game.

Mr. Hannah said the company had been seeking that particular type of financing for the past 15 months. Plextronics had several discussions with a number of companies but could never find the right fit.

Without the money, it couldn't afford the time.

"You're always surprised that you don't find the right situation," Mr. Hannah said. "I think that when you look at early-stage companies, the market for raising capital is a very inefficient process."

Plextronics was borne out of conductive polymer research from Richard McCullough, the former vice president of research at Carnegie Mellon who currently works as the vice provost of research at Harvard.

In 2006, the company announced it raised $13.1 million in venture capital. The following year, it raised $20.6 million to increase its research. Plextronics also brought in $7.3 million in federal dollars since 2007, the majority of which came through nine grants.

The company reported $5 million in annual revenues, according to a 2012 purchasing contract with the U.S. Department of Commerce. The company included grants and sales in its reported revenue.

At this point, Plextronics is looking for a buyer. The company is seeking to sell itself in an auction under Section 363 of the U.S. Bankruptcy code.

Solvay America Inc., the Houston-based subsidiary of a Belgian chemical company, set the "stalking horse bid," which sets the low bar in the auction proceedings that others have to beat if they want to buy the company. Mr. Hannah declined to share terms of that bid as well as other financial information for Plextronics.

Bids must be submitted by Feb. 28, and the company anticipates the sale will be finalized by the end of March.

In the meantime, Plextronics has secured enough bridge financing from Solvay, Newlin Investment Co. of Sewickley and other existing investors to continue operations as the bankruptcy proceedings play out.

It's not clear if whoever buys Plextronics will keep the business here or move operations elsewhere. The company currently runs all its operations -- research, development, manufacturing and sales -- out of its Harmar offices.

Mr. Hannah is hopeful that after the auction, Plextronics' development will help spur growth in the OLED market. He also hopes Pittsburgh will continue to be a leader in the emerging field, "given the unique capabilities we have built here."

"This is an outcome that can still have a good ending," he said.


Michael Sanserino: msanserino@post-gazette.com, 412-263-1969 and Twitter @msanserino.

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