Luz Restructures in Deal With Swiss Firm : Energy: The solar power firm is trying to avert bankruptcy. The agreement would allow it to build its 10th power plant.

In a last-ditch effort to save the company from bankruptcy, foundering Luz International--the world’s largest solar energy producer--has launched an unannounced restructuring that includes the departure of its founders and a deal with a giant Swiss industrial concern.

Westwood-based Luz, battered by low energy prices and the dwindling of tax subsidies that supported the fledgling solar business, said Friday that it has reached a tentative agreement with ABB Asea Brown Boveri, headquartered in Zurich, that will allow it to build its 10th solar power plant in the Mojave Desert.

The privately held firm’s founding partners, Patrick Francois and Arnold Goldman, are leaving the company pursuant to the deal, Luz officials confirmed.

“Luz as we knew it is gone,” said Tandy Manes, who recently was named president of Luz Partnership Management Inc. and chief executive of Luz Engineering Corp., two of the firm’s subsidiaries.

“In order to go forward with this new relationship, there had to be changes at the senior management level,” Manes said. “The founders were very strong, powerful, dynamic people and wanted to take the corporation in their own direction.”

The company was founded in 1979 by Goldman, 48, an electrical engineer who dreamed of cities lit by solar-generated electricity and Francois, 48, a French textile manufacturer he met in Israel in the 1970s.

Their firm, named for a Biblical site, set out to build big solar-electricity generating facilities. And in that oil-shocked era, as federal and state incentives were set up to promote alternative energy, Luz prospered, building nine giant solar energy facilities in Southern California’s Mojave Desert.

Encouraged by the California Public Utilities Commission, Luz has sold electricity primarily to Southern California Edison Co.

But with lower gas and oil prices and less reliable federal and state tax credits in recent years, Luz has had trouble raising capital to build new facilities.

“We’ve continued to lower the cost per energy unit at our facilities,” Manes said, “but we can’t keep pace with declining tax credits and declining energy rates.”

In July, Luz, which produces 90% of the world’s solar power, laid off 350 workers--half its work force--and closed its Israel-based solar-equipment production plant.

Under the tentative deal, ABBEV Energy Ventures--the ABB subsidiary that builds the turbines used in Luz solar power plants--will assist in funding Luz’s 10th thermal solar energy plant and enter into a joint venture with Luz to construct additional plants.

The deal has been approved by Luz’s board and a majority of the firm’s shareholders, but still must be accepted by Luz’s creditors. Manes said he hopes that the deal will be finalized Monday.

If it collapses, “Luz probably will have no other realistic option than to go into bankruptcy,” Manes said.

Though it was countermanded by the state Legislature, former Gov. George Deukmejian’s veto last year of a measure to extend California’ property tax credit for solar energy ventures “started this spiral,” for Luz, according to V. John White, executive director of the Coalition for Energy Efficiency & Renewable Technologies, an alternative-energy advocacy group.

The “coup de grace, “ White said Friday, was uncertainty this year whether Congress would extend federal tax credits for the solar industry.

White, concerned that California-based companies will lose their leading edge in the solar industry, has called for a summit meeting of the PUC, Southern California Edison and other utilities to come to Luz’s rescue themselves.

Others think the deal with ABB could do all the saving that Luz needs.

“This new agreement is very promising,” said Arthur O’Donnell, editor of the industry newsletter California Energy Markets. “It shows confidence from one of their largest vendors. They’re working with a good technology . . . and at least the deal allows them to survive and to continue competing.”