Bloomberg News

Q-Cells Soars on Deal to Save Solar-Cell Maker: Frankfurt Mover

February 02, 2012

Feb. 1 (Bloomberg) -- Q-Cells SE, once the world’s largest maker of solar cells, had a record surge in Frankfurt trading after reaching an agreement with bondholders to salvage the company.

Q-Cells, based in Thalheim, Germany, climbed 40 percent to 46.5 euro cents as of the close in Frankfurt. It was the steepest one-day gain since the company started trading in 2005. Q-Cells reached an agreement “in principle” with the main holders of its 2012, 2014 and 2015 convertible bonds to complete a financing restructuring in one step after last month seeking to pursue a two-step transaction.

The restructuring may help save the solar company, which has plunged to a fraction of its value since first selling shares more than six years ago. At its peak, Q-Cells traded as high as 80.95 euros in December 2007. The bondholders, mainly institutional investors, will be able to swap their debt for 95 percent of equity, Ina von Spies, a company spokeswoman, said on a conference call. Holders of the 2012 note will also get a cash payment of 20 million euros ($26 million), she said.

“If enough Q-Cells bondholders agree, the deal will be very positive as it means no risk of bankruptcy during 2012 and no liquidity issues for the next two years,” Katharina Cholewa, an analyst at WestLB, said today by phone. “However, the upside for the shares will depend on how much cash the company has left after this restructuring and when it returns to profitability.”

Insolvency Filings

German solar manufacturers including Q-Cells and Conergy AG are under pressure from Chinese rivals that have boosted capacity even as international prices slumped. Berlin-based module maker Solon SE and Solar Millennium AG, with headquarters in Erlangen, filed for insolvency in December. Conergy, once Germany’s largest solar company, is owned by creditors since July.

“Q-Cells wins time as a bankruptcy is off the table for at least this year,” Alla Gorelova, an analyst with Steubing AG, said by phone from Frankfurt. “That reduces insecurity with potential customers planning large-scale projects that take several months to complete and may make it easier for the company to win orders.”

Apart from raising sales, Q-Cells will have to reduce solar-cell production costs as it competes with Asian peers, Gorelova said.

Q-Cells, which forecast operating losses through 2013 on Jan. 24, has lost more than 10 percent of its value this year. The bondholders stand to collectively hold 95 percent of the company’s issued share capital upon completion of the transaction.

The bondholders agreed to leave “maximum cash” in the company after an independent review of its medium-term business plan, Q-Cells said. The solar maker had 304 million euros of liquidity as of Dec. 31.

Implementing the agreement is subject to shareholder approval at an extraordinary general meeting, Q-Cells said. They include Good Energies, which held about 15 percent as of Jan. 16, Alberta Rohardt, a spokeswoman for Q-Cells, said by e-mail. The company expects to complete the restructuring in the second half of the year.

--With reporting from Marc Roca in London. Editors: Angela Cullen, Stephen Cunningham.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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