Struggling under a 184 million ($241 million) mountain of debt, Spanish solar group Isofotón on Thursday announced it was facing an additional 100 million ($131 million) in unforeseen contingencies as it seeks to reach an agreement with creditors.
The company, which filed for restructuring legal proceedings on June 4 with the Mercantile Court in Málaga, said it was working on a plan to reinforce its capital through new investors and creditors by swapping debt for equity.
Isofotón’s current liabilities totaled 184 million but the company said unforeseen contingencies incurred by the previous management prior to 2010 added at least 100 million to its overall debt.
As previously reported in pv magazine, Isofotón has been hit by a number of severe problems, including a $96 million lawsuit by U.S. polysilicon manufacturer Hemlock, the refusal of banks to refinance its growing debt and the demand by the Spanish government that it return three subsidies of unspecified amount that it received and invested under its previous management.
The Málaga -based company said the legal proceedings were aimed at speeding up the reorganization of its debt and defining a feasible agreement to manage liabilities in the shortest time possible while strengthening and facilitating the development of its business.
Despite its precarious situation, Isofotón said it was carrying out activities as usual and meeting commitments to partners and clients while continuing to manufacture and deliver from its factories in Málaga and in the U.S. state of Ohio.
The company described the current legal procedure as the final piece of a restructuring process that also includes the loss of 353 employees at its factory in Málaga in an effort to adjust resources to current demand.
The "worldwide photovoltaic sector is going through an acute adjustment phase due to the changing energy matrix and unfair competition from Asia," the group said in a statement.
Illustrating its situation, the company said its sales in 2010 reached 120 million, with labor costs of 29 million. In late 2012, the company saw revenue halved while production and labor costs remained unchanged, making it a challenging feat to "maintain an efficient business plan."
Nevertheless, Isofotón said it remained committed "to a sector that is and will be crucial in defining the 21st-century economic and energy model, underlining the solidity of its viable business plan thanks to its international positioning on five continents and with a comprehensive portfolio of projects in markets that are key for the future of the sector, Latin America, Japan, Saudi Arabia, and the commitment and effectiveness of its workers."
The company added that it was "undergoing a tough adjustment plan but one that is in line with what other companies from this sector are experiencing and from which our business will emerge with renewed strength."