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OLEDWorks LLC has settled a dispute with a Massachusetts bank, ending a nail-biting episode for the fledgling maker of organic light-emitting diodes.
The 2-year-old startup founded by ex-Eastman Kodak Co. scientists is working to bring to market technology they helped Kodak develop. The Rochester-area company's hopes were nearly dashed when Cambridge Trust Co. abruptly pulled out of a deal to sell OLEDWorks a critical piece of equipment.
After Cambridge Trust unilaterally canceled the sale without warning in early December, OLEDWorks took the dispute to court, seeking an emergency order to force the bank to honor the deal it agreed to in October. The lawsuit, filed Dec. 7 in U.S. District Court in Rochester, was settled out of court, a Dec. 28 court filing shows.
"Details of the settlement are confidential, but we are pleased with the outcome," Michael Boroson, co-founder and chief technology officer, wrote in an email this week. "We have received and installed the research and development equipment in question and remain focused on developing and manufacturing the latest in OLED technologies."
Organic LEDs are used in applications such as lighting panels and flat-panel and mobile phone displays. They use less electricity than traditional LEDs and can be applied on a variety of substrates.
Boroson and John Hamer, co-founder and chief operating officer, had secured a number of OLED patents for Kodak, and their company was started after they bought rights to the technology. If OLEDWorks takes off, the founders said in 2011, it will expand its local workforce from what was then eight employees to 50 or more.
Those hopes came down to the wire as OLEDWorks hunted for a Phoenix coating machine last year. They seemed to be fulfilled when a used machine was found for sale by a Massachusetts manufacturer, the company stated in its Dec. 7 court complaint. But the deal it struck with Cambridge NanoTech Inc. to buy the used Phoenix went off track after Cambridge Trust seized the machine in a foreclosure on the manufacturer.
In October, the bank agreed to let OLEDWorks purchase the Phoenix and a larger and more expensive coating machine it had seized in the foreclosure for $350,000. That reflected a discount of roughly one-third from the $540,000 OLEDWorks had been ready to pay Cambridge Nanotech for the Phoenix alone, OLEDWorks states in court papers. But in December, a bank official canceled the deal.
The bank explained the cancellation in an email as an attempt to get more money for the machines, OLEDWorks claimed in a Dec. 14 amendment to its original complaint.
OLEDWorks' filing quotes an unidentified bank official as stating in the email, "We have received communication from other interested parties. ... I need to entertain their offers to ensure we are maximizing the value of our collateral."
If Cambridge Trust were allowed to renege on its promise to sell the thin-film coating machine, "there is significant risk our new startup company will fail," Boroson said in a sworn statement. OLEDWorks needed to acquire and install the Phoenix coating machine in time to fill orders at an annual lighting industry trade show in April.
Before the case was settled, Cambridge Trust senior vice president Robert Davis wrote in an email comment to the Rochester Business Journal: "The bank is taking this very seriously. Our legal counsel is discussing the dispute with OLEDWorks' counsel, and we are actively seeking to find a mutually agreeable solution."
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