The Scythe Swings at Solazyme: 50+ laid off, following expansion of Solazyme Bunge JV

In California, Solazyme reports:

“As part of Solazyme, Inc.’s continuing strategy to focus its operations on targeted, higher-value product categories, on January 29, 2016, Solazyme undertook another step in streamlining operations. This step included a reduction in headcount that is expected to reduce the number of employees by more than 20% when completed, and is concentrated in areas that are less essential to Solazyme’s core operational focus going forward.

In addition to manufacturing operations, the cuts hit the area of bioproduct applications.

As of its last public report, Solazyme had a workforce of 266, indicating that more than 60 employees would have been caught up in this round of layoffs.

Thecompany said that the restructuring follows the expansion of the Solazyme Bunge JV into food in October 2015 and the December 2015 consolidation of manufacturing operations. Collectively, and when fully implemented, the above initiatives are expected to reduce Solazyme’s annual cash burn, including investments in the Solazyme Bunge JV, by approximately $40 million. These sequential steps have been undertaken to leverage Solazyme’s assets to focus on higher-value products and markets, and Solazyme expects to follow them up with the announcement of additional growth-focused activities in these areas.

Solazyme said that it “anticipates recording a charge of approximately $1 million to $1.5 million in the first quarter of 2016 as a result of the foregoing headcount reductions. Solazyme ended December 31, 2015 with cash and cash equivalents of approximately $98 million, and expects to report full year-end financial results in early March 2016.”

The cash burn may well be the most important item on Solazyme’s agenda, given that the company’s stock is languishing at $1.65 owing to slow deployment in Brazil associated with light customer demand and commissioning delays, as well as low oil prices. According to its SEC filings, Solazyme burned through $19 million in cash in Q4, and with oil prices expected to remain depressed through most of 2016 and five quarters of cash in the bank, a ruinous capital riase, a debt issue or restructuring was in the cards.  With $201 million in debt, an affordable debt issue may have proven difficult to place.

The company also had a reduction in workforce in December 2014, which required a charge of approximately $3.0 million to $5.0 million, incouding up to $2.0 million for severance payments, COBRA premium payments and outplacement assistance. In conjunction with the 2014 restructuring, the CEO Jonathan Wolfson reduced his base salary by 25%, and all of the other members of the Company’s executive management team volunteered to reduce their base salary by 10%.