Phoenix Solar concludes financing package; announces redundancies; sees falling financials

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In addition to securing the financial package, the German photovoltaic company has been given a term through to March 2014. "The centrepiece is a new syndicated loan agreement signed today consisting of cash and guarantee facilities of a total volume of around EUR 100 million with the existing banking syndicate under the lead management of BayernLB," it explained in a statement released. "The financing volume fully covers that required for operations in the context of planning through to 31 March 2014."

The need for a financing package arose after Phoenix Solar failed to meet the agreements attached to its previous syndicated loan agreement, having suffered "negative business development" last year, due to the weak market conditions.

Culled workforce

Phoenix Solar says the financing amount was agreed upon "on the basis of a restructuring plan", which was created together with external consultants. It has reportedly been largely implemented.

The restructuring plan has included the loss of a significant amount of the company’s workforce. Overall, it will shed around 60 percent of its German employees by the end of the first half of this year. It aims to be left with around 130 employees in the country, and 230 worldwide.

Furthermore, negotiations on an existing long-term photovoltaic module contract have been successfully concluded. "Future focus of the restructuring process will be on the ongoing optimisation of internal processes and concerted measures to expand international business," continued the statement.

Falling financials

In 2011, Phoenix Solar suffered massive financial losses. Revenues dropped 38.1 percent from 2010, from €635.7 million to €393.5 million. While negative, the company says its international revenues grew by 36.8 percent to hit €225 million.

EBIT, meanwhile, fell from a healthy €36.4 million in 2010, to a very negative €-84.7 million last year. "This figure is very strongly impacted by considerable write-downs on inventories due to the extraordinarily sharp decline in prices in 2011 as well as by one-off effects from the impairment of project rights," explained the company.

In the red

For 2012, the company predicts consolidated revenues of between €210 million and €240 million, and an EBIT of €-25 million to €-19 million. "The Executive Board anticipates a return to rising revenues in the region of EUR 280 to 310 million and an EBIT of EUR –5 to 0 million in the financial year 2013," it concluded.