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SunSi Energies Inc. (SSIE-OTC: BB) |
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October 8, 2010 Issue |
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The Most Powerful Name In Corporate News and Information |
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CURRENT ISSUE | COVER ARCHIVES | INDEX | CONTACT | FINANCIALS | SERVICES | HOME PAGE |
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As The Only Publicly Traded ‘Pure Play’ Trichlorosilane (TCS) Producer In The World, SunSi Energies Inc. Is Focused On Becoming The Largest TCS Producer In China, As Well As In The World |
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SunSi Energies’ goal is to acquire, develop and operate a portfolio of high quality Trichlorosilane (TCS) production facilities that are strategically located, as well as possess a potential for future growth and expansion. Relatively unknown, but essential to the solar industry, TCS is the main feedstock of the solar industry, used in the production of polysilicon. It is believed that SunSi has become the first and only "pure play" public company in the world honed on the production of TCS. SunSi Energies Inc. is quickly positioning itself to take advantage of one of the fastest growing trends and markets in the world today – the solar market. More specifically, SunSi is entering the solar market in China by acquiring the assets of well-established chemical facilities producing TCS.
SunSi Energies Inc. is traded on the NASDAQ OTC Bulletin Board under the ticker "SSIE". SunSi Energies owns 100% of a Hong Kong-based company, SunSi Energies Hong Kong Limited (SunSi HK). SunSi HK will be one of the entities through which SunSi Energies will acquire Chinese TCS production facilities. SunSi’s objective is to control 125,000 Metric Tons (MT) of TCS per year within the next 3 years through expansion and / or acquisitions.
On December 12th, 2009, SunSi HK secured the exclusive international distribution rights on the TCS produced at the Zibo Baoyun Chemical facility (ZBC). At this time, the exportation of TCS outside of China is minimal as most of its production is used to supply the country’s high demand. SunSi has already identified several potential foreign buyers, which would provide for higher margins. In fact, we are now in the negotiation and accreditation process with some of them. The lower cost of production in China is advantageous when competing globally; one that SunSi intends to capitalize on to increase its profits and international client base. All of the TCS sold by SunSi outside of China will generate revenues for SunSi HK.
On April 29th, 2010, SunSi HK signed
a definitive agreement to acquire 90% of Zibo Baokai Commerce and Trade Co.
(“Baokai”). The company currently generates between $ 1M and $ 1.5M USD per
month in TCS sales within China. At the date of this summary, we are waiting
for the issuance of a business license in order to consummate the
acquisition. All of the other terms necessary for this acquisition,
including a U.S. GAAP audit, were completed on July 31st, 2010,
when the Articles of Association and Joint Venture Agreement were signed.
When completed, this acquisition will enable SunSi to generate revenues and
create a presence within the Chinese TCS markets. It will additionally give
SunSi access to 25,000 MT of TCS for both the local Chinese and the
international markets.
On August 3rd, 2010, SunSi HK signed
a Letter of Intent (LOI) with Wendeng He Xie Silicon Co. Ltd. (Wendeng) for
the acquisition of 60% of its existing 20,000 MT TCS facility. As part of
this LOI, SunSi plans to increase Wendeng’s capacity by 40,000 MT/year
within the first full year following its acquisition. The due diligence
process is well underway and should be completed within the next 3 months. Michel G. Laporte has been the CEO and President of SunSi Energies Inc. since early 2009. He is an accomplished business leader with over 20 years of domestic and international business experience working in Canada, United States, Europe, China and Central America, including Costa Rica where he currently resides.
Michel also possesses numerous years of experience in both marketing and management. From 1986 to 1992, he worked in Europe as a Business Finder and Developer in the fields of Mutual Funds, Life Insurance, as well as Private Placements. Through his extensive experience, Mr. Laporte has become a knowledgeable leader in the domestic and international financial arenas, especially in the structuring of genuine global portfolios that include investment products in various currencies and covering several asset classes.
Mr. Laporte was an instructor with the Canadian Armed Forces. He started his military career in 1981 in Ontario, Canada, where he subsequently served in South Germany. Mr. Laporte studied Civil Engineering. |
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Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com, Published - October 8, 2010
Mr. Laporte: Our goal is to become the
largest TCS (Trichlorosilane) producer in China as well as in the world. We
are the first publicly traded company ‘pure play’ TCS company in the world
and we are pretty excited about that. Mr. Laporte: TCS is very important. It is the main feedstock of the solar industry as it is used in the production of polysilicon. It was originally used, and still is, in the computer chip industry, but the solar industry started to pick up and the product began to be used to make solar panels. What we have seen in terms of growth is pretty aggressive. For example, in 2000, almost 100% of TCS was used for the computer chip industry and in 2007, it got to 50/50 between computer chip and solar. As you know, the computer chip business is pretty stable now, with an annual growth of 5% to 7%. So, the real growth we are seeing in our product and our sector is really coming from the solar industry now. We are, therefore, selling most of our products to the solar industry.
CEOCFO: What exactly is TCS?
CEOCFO: Do you own a Hong Kong company? Mr. Laporte: That is correct, to do business in China. We are a publicly traded company in the United States. The publicly traded company owns 100% of a Hong Kong-based company, SunSi Energies Hong Kong Inc., which makes it a lot easier to deal with China for money in, money out, that sort of thing. Hong Kong, after all, is a special administrative region and has special privileges that create a beautiful relationship between mainland China and Hong Kong, which makes it easier.
CEOCFO: Who are your customers? Mr. Laporte: Large companies and that is one of the advantages that we have: we don’t deal at the retail level. We are the first players on the solar value chain. It starts with us, the Trichlorosilane producer, and it moves down to the polysilicon and then, down the value chain to silicone ingots, followed by the wafer, cells and modules, and eventually, the solar system itself. Our customers are usually big players, therefore, we sell to the polysilicon maker; the product from ZBC and Wendeng is currently being sold in China to JDK Solar, and to GCL Solar. These are just a couple of companies, but they are all billion-dollar companies - all large and well known.
CEOCFO: Are they looking for the increased purity? Mr. Laporte: Purity is important and, once you get it, you get it. The specs that our clients demand are very high and we are making sure that we are delivering what they need. We are always trying to improve efficiency at reduced costs, but not at the expense of quality.
CEOCFO: Why are these companies dealing with you; is this strictly treated as a commodity? Mr. Laporte: TCS is a commodity, but it is a very unusual commodity. It is not one of those where you can go on the Internet to find a price. Just to give you an idea, 75% of the world’s market for TCS is controlled by 6 or 7 companies outside of China. 25% of the world’s production has been produced in China, where there are about 25 players and most of them are small mom and pop operations. Hence, if you are looking for TCS outside of China, you are looking to do business with companies such as MEMC, and Dow Chemicals, which are multi-billion dollar companies. They produce TCS, but as well, hundreds of other products. With Dow Chemicals, for instance, TCS is not their main focus; it is just one of the chemicals that they produce. In China, everything that has been produced, which is approximately 25% of the world’s production, is used within China right now. The demand in China is very strong, as the Chinese government is pushing hard to make the shift to greener energy. Therefore, that is helping to keep the product in China (it is not exporting that product right now). We are the first player to come online and our intentions are very clear: to produce more TCS in China, as well as export it. The reason why we want to export outside of China is that we can get a much better price for that product than in China. The resulting profit margins, obviously, are a lot more exciting for us.
CEOCFO: I know that you want to become
the largest TCS producer in the world, how do you go about doing that?
CEOCFO: What is the financial picture like for SunSi today? Mr. Laporte: Very healthy. We have about $600 thousand in the bank and “no gun to our head”. We have quite a few shareholders, who are family-style shareholders. They know where we are going, they are sticking to us and that is one of the reasons we don’t have a lot of volume. If you look on a daily basis, we don’t trade a lot. People see this company moving forward in a very dynamic way; there are not many sellers out there, and the company is not very well known to be honest, so that is where we are today. Our goal was to close the first and second acquisitions and then, go out there to tell the world who we are. We have been very quiet. The company is managed by Richard St-Julien and I, and both of us are heavily involved financially in the company. Furthermore, we don’t take salaries, and we don’t have an expense account. So the funds are really used to grow the company, make acquisitions, and pay accounting and attorneys’ fees, but other than that, we are very slim and our upside is obviously building value. I own shares in the company and my intention is to build value, not just for me, but all of our shareholders. That is how I look at being rewarded.
CEOCFO: How did you come into the opportunity or the concept to do this? Mr. Laporte: Richard had done some work in China before and did it pretty well. The same Chinese group had some friends, so there was an opportunity that came up to be able to purchase a TCS facility. You will recall that back in 2008, everything collapsed; this provided some nice opportunities. Most people were selling, some others were buying and the ones who were buying at the bottom did extremely well. That is how we looked at it. They approached us to ask if there was an interest in doing something in the sector. Because I like the green alternative energy sector, we looked at it. We spent over a million dollars, Richard and I, doing the due diligence before even raising a dollar, before going out to look for investors. We agreed to lead the company. Basically, that is how it came about, through word of mouth contacts that we had in China.
CEOCFO: Where are we today; are there enough production facilities to meet the demand?
Mr. Laporte: I think that because of
what happened in 2008, there will be some shortage situations and it is not
too difficult to understand. What happened is that you had some polysilicon
players that needed TCS to make their polysilicon, so, they decided to build
TCS facilities. This made sense to some extent because if you are going to
need this product to produce your own products, then, why not produce those
while you are at it. However, those are multi-million dollar projects; they
are very expensive, so the entry barrier is really high. Therefore, because
of what happened in 2008 and early 2009, a lot of those polysilicon
producers decided to just stay focused on their core business, and not
expand their facility by including a TCS facility, for example. That was
good news for us as it allows us to keep supplying the polysilicon producers
out there, including the big ones; that’s what is exciting. Again, we don’t
deal with small players at the retail level; we are not involved there at
all. If this company ever gets to have seven or eight clients, we are very
happy. Right now, all of the TCS at ZBC and Wendeng is sold and we are
happy, but we want to grow and are fine with never having fifty or a hundred
clients, which is not feasible in our business. |
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Michel
G. Laporte