Centrosolar aims to reduce debts with far-reaching measures


Centrosolar Group AG has today announced a sweeping restructuring program for its debt burden, which totals around €90 million. The Germany-based company’s restructuring program calls for far-reaching contributions on the part of all of the parties involved, announced chairman of the board Alexander Kirsch.

All in all, three sets of measures are planned. Centrosolar has reported that reorganization will also take place in the operative sphere. The aim will be a more leaner photovoltaics enterprise. Plans are to cut 20% of the company’s overhead costs, indicated Kirsch.

The divisions affected include administration, sales, purchasing and marketing. The number of staff in these divisions will be reduced from the approximately 250 currently employed, to less than 200, said Kirsch. The company also plans to refocus its sales division. Smaller sales offices, for example, are to be closed.

In addition, upper management will defer a substantial share of their salaries for the benefit of the company. The number of employees in production has already been reduced in recent months. Nevertheless, the company stressed that staff can still be flexibly deployed, depending on the capacity utilization at the respective plants. However, no further cuts are planned in this sphere.

Kirsch stressed that Centrosolar plans to maintain its module production activities in Wismar. There are also no plan to relocate production to Asia. The plant in Wismar, for instance, experienced 50% capacity utilization in 2012. This indicated that the market for photovoltaic rooftop systems in Germany is particularly stable, while there is repeated fluctuation in the case of large-scale projects elsewhere.

Altogether, however, Centrosolar generates only about a quarter of its sales in Germany. The company is also strongly represented in France where its modules greatly profit from the special prices for integrated systems.

A second item involved the "financial reorganization" of the company. A €50 million bond is to be converted into equity capital in the form of shares, Kirsch explained further. The company hopes to win the support of bond creditors and shareholders so that they will also go along with the plan. The financial creditors – that is, banks and lenders – have already expressed their support.

In addition, they promised to partly defer interest and redemption and to make their financing available up to the end of 2014. It is precisely with this step that the company hopes will help it to slash approximately half of its €90 million debt, said Kirsch.

Moreover, a capital increase through the issue of new shares is planned in order to be able to get fresh money and to provide equity dilution protection for existing shareholders. The respective bond creditors and shareholders are to be informed about these measures at meetings within the course of the month to come.

Additional information from the company indicated that its independent subsidiary Centrosolar Glas is also planning a comprehensive restructuring program. This will involve a reduction of capacities in Germany as well as accompanying financial contributions on the part of local financial creditors.

At the same time, the Munich-based photovoltaics company submitted preliminary figures for the financial year just elapsed. As a result of the continued severe crisis in the photovoltaics industry, sales plummeted by 22% to €228 million. However, the report went on to say that the company’s sales did remain at the level of the previous year.

While net financial indebtedness was around €90 million at the end of the year, the company had liquid funds in the amount of €18.3 million. Centrosolar plans to submit final figures for financial year 2012 at the end of March.

Translated by Alan Faulcon; edited by Jonathan Gifford.

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